Banco Bradesco SA

BOVESPA:BBDC4

Earnings Call Analysis

Bradesco Q3 2024 Shows Steady Growth and Financial Health

In Q3 2024, Bradesco reported a recurring net income of BRL 5.2 billion, up nearly 11% from the previous quarter, reflecting solid profitability growth. Total revenue reached BRL 30.6 billion, an increase of 3.7% quarter-on-quarter. The loan portfolio expanded to BRL 944 billion, with a growth of 3.5%, driven by a 10% increase in individual loans and a remarkable 17% in small and medium enterprises. The insurance division also thrived, with net income rising 8.1%. Looking forward, the bank expects a net interest income growth of 8%-9%, supported by enhanced portfolio quality and reduced provisions.

Solid Growth in Net Income

In the third quarter of 2024, the company reported a recurring net income of BRL 5.2 billion, marking an impressive growth of nearly 11% compared to the second quarter. This consistent growth reflects the company's commitment to delivering on their promises, with a notable increase from over 12% growth in the previous quarter.

Revenue Increase Driven by Diverse Segments

Total revenues for the quarter reached BRL 30.6 billion, which is a quarter-on-quarter increase of 3.7%. This growth can be attributed to various segments: net interest income saw a rise of 2.7%, fee and commission income grew by 2.8%, and revenues from the insurance group jumped significantly by 8.7%.

Loan Growth Across Client Segments

The company’s loan book expanded by 3.5% to nearly BRL 944 billion. Notably, lending to individuals increased by a robust 10%, and small and medium-sized enterprises experienced an impressive growth of almost 17%. Growth in large corporates remained modest at 0.7%, indicating a balanced approach to lending across different sectors.

Improved Profitability and Efficiency

The profitability of the company has shown positive momentum, with key metrics like the net interest income driven by client needs and reduced loan loss provisions. This reflects effective management of credit risk and enhanced operational efficiencies amidst increasing revenues.

Strong Performance in Insurance Business

The insurance segment demonstrated remarkable strength, achieving a return on average equity (ROAE) of nearly 24%. This performance further underscores the diversified strength of the company and its ability to carve out significant revenue streams.

Outlook and Future Guidance

The guidance for future growth remains optimistic, with management implying continued revenue increase and margins improving slightly due to cost control measures. Investors can expect growth driven by increased customer acquisition and stronger performance across loan origination channels.

Conclusion: A Well-Balanced Financial Position

Overall, the earnings report reveals a company on an upward trajectory, characterized by strong net income growth, a diverse revenue base, and solid performance across both traditional banking and insurance services. With continued focus on credit growth and risk management, the outlook is positive for sustainable long-term performance.

Earnings Call Transcript 2024-Q3

[Marcelo de Noronha, executive]

Good day, everyone. I am Marcelo Noronha. I am here to present the earnings of the Third Quarter of 2024. I'm speaking at Cidade de Deus. It's a little over 10:30, 10:31. It's a pleasure to be with you again. Thank you for joining us. And we'll speak about the balance sheet of the third quarter, and then I'll sit with my colleagues to answer some of the questions from our colleagues of the sell side.



I'll start with the earnings of Q3 '24, which we received. We had a recurring net income of BRL 5.2 billion, growing almost 11% compared to the second quarter '24. In the past quarter, as a reminder, we grew more than 12% quarter-on-quarter. So we have been delivering what we committed to do. We don't promise things. We deliver things. And we are growing step-by-step consistently. And here, we have a snapshot of everything we're going to present to you today during this video conference call.



Our profitability is growing. It's a solid and safe profitability growth. Our NII evolves driven by client NII and reduction of loan loss provision expense. We'll speak more about that. Productivity gains with rising revenues, risk growth of our credit risk controlled and the footprint adjustment, balanced credit portfolio growth and improving delinquency ratios, operating expenses evolving as expected and the insurance group delivering an ROAE that was very relevant, almost 24%, growing practically all the lines. And we'll speak about increased stake in Cielo as a result of the tender offer we had and with the closing in the month of September. So moving forward.



Let's speak about total revenue in the quarter, BRL 30.6 billion. And I'm always comparing quarter-on-quarter more than year-on-year. So, 3.7% quarter-on-quarter. And we wanted to break it down for you fee and commission income. So we have three blocks here. Total net interest income growing 2.7% quarter-on-quarter, fee and commission income growing 2.8%, in the insurance group, 8.7% growth. And we have this performance of growth comparing quarter-on-quarter. So increasing 3.7% in terms of total revenue.



Our loan book, almost BRL 944 billion, again, growing 3.5% quarter-on-quarter. Within this some data of average daily origination, loan granting through digital channels. But what matters is to show you the whole set. We're growing in all segments of clients, 7.6% in total, but in individuals, we're growing 10%.



Large corporates, of course, it follows its natural trend, again, with a positive growth of 0.7% and small and medium-sized enterprises up almost 17%. And I'll speak more about that momentarily when we speak about the loan book.



This conclusion when we look at this is that we see big traction in the bank. We grew practically 100% of the credit modalities in all segments of clients, individuals, large corporates, some SMEs. But let's look at the whole macro picture because it gives us a lot of information. First, on individuals, growing 3.9% quarter-on-quarter. Now let's look at the mix.



Payroll deductible loans. I think that the Brazilian Central Bank communicated their September statistics. We grew a little bit above the market. But please note that we grew 0.25% more than the market. So we are growing in line with the market, perhaps with a little more traction. But let's look at the way we are growing.



Payroll loans, we grew 2%. The market grew 1.9% and we have an important portfolio, collateralized portfolio. The same goes to vehicle 4%, real estate finance, which brings a lot of client municipality and long-term relationship of 3.3% and 11.2% year-on-year. And this applies to rural loans with 16.5% growth. So when we look at the whole mix, we are talking about growing loans to individuals, but in very safe lines of credit with collaterals.



In the case of credit card, quarter-on-quarter, we grew 2.2%. However, when we break down the portfolio and look at high net worth clients, we're growing 4.5%. So when we speak about NII, you will note that in the case of credit card, it's losing share in our NII because the lower income clients, they are more prone to pay in installment, paying interest and having more revolving credit. The high income is a transactable. They pay their statements fully every month. So we gain based on interchange fees and not based on intermediation fees.



When I look at consumer credit growing 5.9% quarter-on-quarter. When we look at this accounting line item, that's growth of personal loans with very high margins. But what I mean to say is that we are doing our homework, so we can have a good quality of assets. What we are originating here is half of personal loans we're originating is with collaterals, guarantees.



Secondly, the other half of this is personal loans to high net worth individuals. And only a small part is going to lower income individuals with a slightly higher margin, and it requires more provisions. But overall, it is not going to change our curve of losses and delinquency. What does this means? We're working with smaller spreads. When I look at payroll deductible loans, the IMS loan, the spread working with is 30% lower than the spread we used to work with the NIM that we used to have before for INSS. That's why external channels find it hard to make new INSS operations more difficult because 100% of what we originated is sold through our own channels. So we have a much safer portfolio requiring much less provisions and with an NII growing but growing steadily because we're working with better quality.



With companies, we are growing 3.2% quarter-on-quarter. When we speak about micro and SMEs, we're talking about a 5% increase. Please note that big growth comes from the middle market with companies earning more than BRL 50 million per annum. They are the ones growing but in the other segments. In retail, the SMEs making between BRL 3 million to BRL 50 million, they are also growing. We're growing all of them, but growing even more in the middle market.



Now let's look at the portfolio real estate, 5.5% with collaterals, guarantees. In foreign trade finance, we have a lot of traction with large companies and with the middle market. With a cost of risk that is very good. And the same applies to CDC and vehicle leasing growing 2.3%. When we break down working capital, you will see in the full income statement that we have securities with debentures and working capital. So net of the large companies, and if we focus on the middle market and small businesses, these 2 segments up to BRL 3 million and BRL 3 to BRL 50 million. What do we find?



For your information, number one, in some segments, origination or 80% of origination is collateralized, real guarantees or we can ensure good quality receivables or we work with government programs such as PC, PNE and FGI. Depending on these, we go to BRL 4.8 million turnover in the case of FGI with companies up to BRL 300 million. So we're growing quite well here. So what is the decision? What was our decision at the beginning with all of the modeling. Our guiding star for decision-making regarding risk appetite from growth, it's called RAR, risk-adjusted return. We ran a lot of simulations in terms of growing working capital for small businesses. And we realized that even with a much higher rate, we had an RAR much higher of 60% when we operate with FTI and PN.



This is what is guiding us. NII is lower, but the level of cost of risk and provisions is much lower. And this gives us stability with this portfolio mix. And this gives us a p of looking at the future considering everything we are doing when we grant loan for working capital with PN or FGI, the margin is 5%, 5.5%, perhaps one line with a slightly higher, but this is more geared to high middle and large companies and for SMEs. On the other hand, losses almost 0 here. So we have good modeling, good models, good traction. This is what we've been doing. And I can tell you, Bradesco is one of the leaders in granting these types of loans in the Brazilian market. Now talking about credit vintages based 100 average of 2019. This is our level of origination. I'm speaking about mass market individuals.



So we continue with a very good balance in our vintages over 30 growing production, but based on those modalities I mentioned. Origination was very good in Q3, but always looking at the mix and the rating of clients. I remember that in the prior quarter, I mentioned this. In the case of individuals in 2019, we had 50%, 51% individuals with a rating between A and B, 74%, 75% in addition to having a mix. And that's why delinquency is dropping. And we obviously need few provisions for these vintages. And this is why we see low cost of risk. Now looking at mass market companies I'm looking at SMEs, same base 100 2019 average.



We have very good vintages. Past quarter. You asked about this, growing way below 100. But we note with the bars that the level of origination is not so leveraged as it is with individuals. There are marked differences in the market. Individuals are growing real growing more than 6%. Level of unemployment in Brazil was 6.7%, but companies are different. And we want to operate safely with our portfolio mix. And we can see over 90 days delinquency reducing requiring provisions. So net interest income is.



Let's look at credit cards. It used to have a share in the past year ago, 8%, dropping to 7.5%. That's what I mean. I'm working with the transactions with a better risk. Market NII, we have been talking about this with our Investor Relations team. And our focus is on the NII net of provisions based on risk-adjusted return growing 6.8% growing consistently. What we need to look at 8 or 9 depends on the mix. We have to know how much we will deliver in terms of cost of provision to have the best combinations. 8 or 9, no problem. But how much will it cost for us to deliver constant growth in our NII.



That's when we look at RAR for our decision-making. And I can tell you in payroll deductible loans, the level of RAR is good. It's high, good traction. But in the case of IMS loans, the spread is 30% more compared to what we are originating now compared to what used to be originated before the prices were controlled. RAR in working capital, again, it is a high RAR sometimes 60% in the programs with guarantees. Then we get to credit indicators. Loan indicators dropping delinquency, of course, will start dropping at a lower pace, but we have stable coverage ratios and NPL creation as well.



You can see on the slide. Our expenses with expanded loan loss provisions of course are dropping, and we'll have fewer loan loss provisions in the new vintages because we have better quality vintages and we have the portfolio mix. And of course, the improved efficiency not only with modeling, with our credit policies, portfolio management and also improved efficiency in the collection work of our credit team. And I'm speaking about fee and commission income. I'll speak about Cielo.



Here, we have the normalization of this consolidation. We closed the tender offer of Cielo in September. Our fees and commissions income, excluding this was 2.8%, excluding the stake in Cielo and 4.3% comparing 9 months of '24 with 9 months of '23. And Cielo in this case did not produce any quarterly gain.



Actually, we had a negative consolidation. Our earnings would have been a little higher if we have not had the negative consolidation of Cielo. And I'm speaking directly about card income. Draw your attention to the fact that growth net of sale would be 0.3% quarter-on-quarter. But we have an important comparison when we look at income, 15% against 1.5% year-on-year. I talked about the transactors, but this is us. And please note that we are growing practically all revenue streams, whatever the period you look at.



And I draw your attention to our asset, the increase of our AUM, increasing EUR 55 billion E will have an AUM close to BRL 1 trillion, and this is reflected in an increase in fee and commissions income, 11% for asset management. Bradesco asset, we won very important awards in the sector.



Next, looking at operating expenses, the same thing I said about Cielo. When we normalize the consolidation of Cielo, we're talking about a 2% growth quarter-on-quarter. And in the 9 months, which is what goes into the guidance, 9.1%. But look at the red box. If we look at personnel plus administrative expenses, our growth in the organization is 0.6% quarter-on-quarter and in 9 months, 4.6%. So perfectly controlled.





When we have a trend upwards in this indicator, we may have fixed expenses, labor expenses without considering the consolidation of Cielo, the card business. However, we have been investing in [indiscernible] and the growth of operating expenses there has been a high 2 digit. And even Cielo is now investing in their transformation. But if we exclude that, if we look at the banking business plus the insurance group, then the growth would not have been 8.4%, would have been 7.2%, in line with our plan, even with the investment we've made.



Now it's also important to look at our footprint revision, another 415 transactions. So we come to the third quarter with a change in 1,041 points of sale. We had an expectation of 1,000 points of sale, 250 transformations. The number we delivered is higher and that we're still accelerating now in the fourth quarter of 2024, although our client base has grown now additional 1.8 million clients. If we look at the insurance group, we had a great performance this level of growth in premium revenue with a net income of BRL 2.4 billion and ROA of 23.7%, a growth of 8.1% quarter-on-quarter.



And if we look at insurance operations, we had 8.7% quarter-on-quarter and 4.2% compared to the same period last year, the 9 months and look at the combined ratio also coming down to 86.6%. You will have all of these figures in our presentation. Our Tier 1 ratio growing 0.1% quarter-on-quarter. It's now 12.7% stable capital. This is what we're showing coming to our guidance we've had the normalization of Cielo in the mid column.



And when we look at the expanded loan portfolio, we've announced earlier this year that we were in line with the guidance, and that's it. We're delivering as planned. When we look at net interest income and expanded loan loss provisions, and we always talk about these 2 indicators hand in hand. You can see the NII, which is important because it impacts our bottom line. You look at our fee and commissions income, including and excluding Cielo, operating expenses and the income from insurance where you have a combination of the baseline in the previous quarter, it was excluded from the guidance, but it is now included, and we will deliver the guidance as planned.



Now a few topics about the change the bank. This is a balance of what we delivered in this quarter. We now have a new IT colleague. We have made progress in our culture. We conducted a survey with 74% responses, a great level of engagement, and we're still growing. We have hired not only IT professionals. And of course, that increases operating expenses, but we've hired senior professionals who have joined our team at the bank.



We invested in our business unit for credit also in middle market with 8 units, 8 new branches last quarter. We've also invested in fixed income so that we have more resources to be able to meet the demand. We are also continuing our efforts in footprint adjustment. Two inorganic items are here. I told you we have completed Cielo tender offer and that did not really impact our result. I mean it had a slight negative impact. Our results could have been a little better.



And the John Deere Bank acquisition had an approval by CADE. We are expecting the Brazilian Central Bank approval to close the deal this year. So 8 months after we launched the plan, we are now launching a new segment of clients for high net worth individuals. And I'll speak more about that. That's our expectation for the last quarter, more investment in digital channels. We will have more hires in technology. We will continue to review our footprint. We will also expand SMEs in that segment between BRL 3 million and BRL 50 million a year. We are also accelerating our gains in cash management.



As I mentioned last quarter about Bradesco Expresso, we delivered 2 platforms. We were going to do the rollout until the end of November. But yesterday, we concluded the branch rollout, bringing a better experience to our service centers and also to all users of Bradesco Expresso. And in the next quarter, I'll bring more news about this.



Now coming to the conclusions, we have been able to grow profitability with a solid and safe position. Our top line is growing. We have traction in all segments and products, but focusing on the risk-adjusted return, the RAR because that will determine our net income. We have a new segmentation for individuals. We will talk about that and our transformation efforts, we are accelerating the execution of our plan. And now that's the reason why we're all wearing the red vest. This is Bradesco's color, but it's a brand new tone because we now have a new segment for high net worth individuals. It is here under the wealth management vertical with a different value proposition for our high net worth individual clients.



I will now show you a video. It's a 3-minute video because we cannot give you a longer presentation, but this video will be talking about the new segment. And the video is presented by the project leader, the person in charge of implementing the new segment, Andres [Indiscernible]. So let us now watch the video, and I will come here for the Q&A session we will have immediately after the video. We also have our IR colleagues to talk to you to talk to the buy side and to the sell side. So let's watch the video, and then we will be here with Cassiano and Andre to answer your questions. Thank you for being with us. Let us now look at our new segment. Thank you.



Listening to our clients has made us build 8 decades of a solid one of the largest financial groups in the world and one of the best market wealth managers. This close relationship with clients has inspired us to launch a new segment, a new proposal in our strategy of wealth management, considering different service international, extend data analysis and technology advance. We now have extended these resources to the whole organization.



With all of this information, we built a new value proposition with a new concept of service closer to clients, exclusive credit card, international full banking, connecting the excellence of our functions also in the United States in addition to a unique experience and benefits to this segment has high relevance for Bradesco. And now we want to improve our relationship and gain principality among these clients, improving our profitability, customer satisfaction and NPS. So now I will invite you to learn more about this new concept, new solutions in a unique experience and our new segment for high net worth individual credit cards connecting the excellence of our functions also in the United States. In addition to a unique experience and benefits to [ file the workloads ]. This segment has high relevance for Bradesco. And now we want to improve our relationship and gin municipality among these clients, improving our profitability, customer satisfaction and NPS. So now I will invite you to learn more about this new concept, new solutions in a unique experience.



[indiscernible] our new segment for high net worth individual.



[Presentation]



That's great. So this was the summary of our new segment on the video. I must tell you, we feel great pride in this team that worked to launch the new statement. We have three flagships, which you can actually see on the [indiscernible]. One will be here on Padilha de Lima and [indiscernible], another one in Rio in the neighborhood of [indiscernible] and one more unit in [ Campinas ]. As of tomorrow, our team will be there. We have been trained, and we will begin to invite our clients to enjoy this new experience.



By late January '25, we will have between 45,000 and 50,000 clients in the new segment, which we will continue to expand until 2026. We will also have geographical expansion throughout Brazil in the main locations that have been selected for this new segment for high net worth individuals with a new value proposition for these clients. And I believe we will have more opportunity to talk about that in the future with you.



And now Andre, over to you.

[Andre Carvalho, executive]

Thank you, Marcelo. Thank you, Cassiano. It's a pleasure to be here with you. Good morning, everyone. I'd like to tell you that Ivan Gontijo, CEO of our Insurance Group, is here with us today remotely is with us online. You can ask your questions either in Portuguese or English. You just have to send your questions by e-mail to [e-mail] or you can use this WhatsApp number 1197-443-238 or you can use this QR code.

[Operator]

The first question comes from Eduardo Rosman from BTG.

[Eduardo Rosman, analyst]

I have a question. Hello, good morning. I apologize my camera is not working so well [indiscernible] picture today. But my question is about the loan portfolio growth are again opening the doors of bank for clients looking for loans. You will try and recover that once it's market share with a loss [indiscernible] but when we look at the loan portfolio, the profitability is lower not only in corporate but also in payroll deducted loans. You then [indiscernible] spoke about that in his presentation.



So I'd like to hear from you about growth and the prospect of growth? And what is your #1 concern if inflation and unemployment or maybe the price would have to be more prudent with that. I'd like to understand the speed of this recovery.

[Marcelo de Noronha, executive]

Thank you, Rosman for the question. It is a deep question and it certainly relates back to what I said. Yes, we are conducting this movement based on data. We want to have the right mix and the right ratings, because let's think about it. Think about an individual who went through financial stress in the last 3 years. Have they recovered completely? They may have a job.



The real individual income is growing more than 6% a year. But have these people truly been able to pay back their liabilities? Well, if you look at banks models, you will see many of them have not. So we do not want to play the game of financial stress. We want to have a safe portfolio with the right risk-adjusted return because that has an impact on the bottom line.



So for example, you say, well, I had an expectation of a higher NII. Well, some time ago, we prepared a new plan, a 60-day plan. We conducted -- we've executed the plan, and we were looking at a certain level of risk. I mean we have a very high penetration in all client segments. Otherwise, we wouldn't have so much traction as well as we do. However, as we build this new business unit and with the integrated work we are conducting with have wage needs. Well, we realized that if we could use FGI and [indiscernible] more we would have a much better risk-adjusted return because although the NII can be lower, you need less provisions and so that is more an attractive line of business for us.



If you look at the ranking of this different collateral projects from NIM, FGI, you will see that Bradesco has a great traction and we have a very attractive risk-adjusted return. So looking at our channels, we're always looking for the best RAR, because that's the name of the game. We may not have a quick growth of NII, but we have a significant growth of our profit, of our net income. So don't be surprised. Our provisions are now lower than in the past. Why? Well, because the quality of risk is much better and also the mix has a much better quality. And when we look at the current economic scenario once, I can tell you that looking at our strategy, we feel very confident about what we've been doing.



I just had a meeting with journalists and one of the journalists asked about the economic scenario. Said, well, the economic scenario has worsened. What is that? What do we mean by a worsened economic scenario?



First, if we look at the current scenario, we may have a deterioration, but I think this is less probable. This is less probable than the second option. A benign outlook, we are not really considering. So we may have a change in the exchange rate. Yes, we may. And inflation will certainly grow more grow faster. And this would be a more stressed scenario, but I don't really believe in it. Let's wait for the new measures to be taken by the Finance Minister, Minister had because yesterday, we had important statements that we will have more expenses, which means that we will need more expense control. And we believe this is good news.



However, what do I view as the most probable scenario? Interest rates growing up to 13%, maybe closing the year at 175. The unemployment in Brazil is currently 6.7%. However, there are regional variations. For example, Sao Paulo has a higher unemployment and also Central West that has 5.2% unemployment rate. So we have regional differences in Brazil. And the GDP will be growing 3% this year, inflation about 0.5%. If this is the scenario we expect what we have next year real income is growing this year 6.3% unemployment.



And if we project the scenario towards the future, R, what will we see? I mean I'm sharing more information with you using your question, Russ. You will see the GDP will probably grow slower about 2%, 2.1%, but there will be growth. The expected unemployment level will not be very different from the conclusion, I'll come to that conclusion in a minute. And what about real income? It may grow between 2% and 2.5% next year. So look here, the market for individual would possibly be good. We have great traction. That's what we want because this is risk we consider good.



We actively participated in the auction of the INSS because we want to have a clear strategy to operate in this line of business. So we will continue to monitor this. If we had a financial stress, we feel safe because of our current for individuals, but what we are truly looking at is the risk-adjusted return. This is what really moves the needle. Now looking at the company clients because of these programs that provide collaterals and because of the specific credit lines we are offering, we feel confident about what we've been doing. And we're growing in cross-selling. We are attracting new clients. We are attracting companies so my answer to that journalist was what is the scenario? Will it deteriorate? But what does it mean? It means this, but is this probable? Well, it depends.



And depending on what happens, we'll make a decision. I fear for the country. Nobody wants to see high unemployment. Nobody wants to see economy growing slower. They don't want financial stress. So I hope the most probable scenario will materialize. And it's not bad. It's not a bad scenario at all for our country. And also, it's not bad for our business because the next question is and what will happen to me? Maybe for different you will have different consequences. But for us here, we are very much aware of the current scenario. We see a good correlation in terms of interest rate increase. We continue to monitor our risk models and also NPL.



However, we have 2 important variables here, especially one, which is when the population loses income. And how may that happen? Well, if you have a very high inflation, if you look at the current deviation that would be the price of beef today. But the other price seem to be under control. And the other issue would be if the unemployment rate was lower because that would end up reducing individuals' income.



But this is what we project. I believe we will have a controlled expected loss and lower provisions for the new vintages and a growing NII. We will be growing in fee and commission income. We will be also growing in the insurance group. That's where we place our expectations. I'm sorry for such a long answer. I just wanted to add more information about the current economic scenario.

[Operator]

Next question from Renato Meloni with Autonomous.

[Renato Meloni, analyst]

I'd like to understand the dynamic of client NII and provision because in your presentation, it seems clear that there is some difficulty in going back to accelerating growth in mass retail, both for SMEs and individuals. Justify that with the cost of risk? And are there other challenges, for example, regaining principality of these clients? And the second part of the question is how important is the change of bank strategy depending on this acceleration? And then will you have to the plans for next year?



Thank you for the question. But let me clarify. Perhaps I was not clear. We are not decelerating the mass market, neither in SMEs. Let me give you some data. There is a public rank. That's PN ranking. You will see which bank is ranking first or second in distribution to SMEs.



We're talking about companies making client base we have [indiscernible] don't want to mention competitors, but Banco do Brazil is fighting for the #1 position with us. So we have client [indiscernible] with clients with a good loans that will ensure constant growth. So change the bank helps in our company because we will deliver a number of better initiatives of our organization, which will make our organization more competitive. One of them is the new segment, the principal segment that we were calling the affluent and the credit BU, which is super important for us with a number of quick wins.



And then later, Renato, in the future opportunity, we can explore this in more detail. The SME segment with 122 branches increasing to 150 that increased remarkably our penetration and quality of risk. Our portfolio management improved. You will remember that in the credit business unit, we created a new unit of portfolio management. They have delivered to us with a prediction of default in the middle market companies will turnover up to PLN 300 million.



So we have very important deliveries in portfolio management in granting loans to clients in our time frame for approval of loans in the wholesale bank dropped by 40%. So we have good traction in large corporates, middle market, SMEs and also individuals, I want to with my team to grant high-quality credit and deliver perennial deliveries. And I don't want to have a good margin and then have a trough, a peak in a trough.



And also cost management is under control. We're reducing the footprint and we are managing our personnel and administrative expenses, which are very much under control and our cost to serve is under control for the whole organization, also in terms of internal processes. Another interesting element to mention is credit program was launched, providing collateral for micro companies, micro enterprises in the company.

Very few banks started operating with this. Bradesco was the first one. And you can do it all via our app. So we have good traction, but we are now going to deliver an NII that will peak and then get to a trough.

[Andre Carvalho, executive]

And let me answer that, Marcelo. There are 2 slides in the presentation that Marcelo just showing the new credit vintages. The first slide shows our origination in mass retail individuals and then mass market for companies. And we show significant growth in both in Q3 against Q2, even stronger performance in mass market individuals. So we don't see any difficulties in growing these 2 segments. But we're growing carefully because we will get a long run. We want to continue to grow quarter after quarter.

[Operator]

Next question by Yuri Fernandes with JPMorgan.

[Yuri Fernandes, analyst]

I'd like to have an update in ROE converting to cost of capital. We have that question almost every call. I'd like to get an update from you. Last time was asked that this was going to be gradual but it was doing better than expected, but that would be aligned with loan loss provision and improvement of the top line and NII. But I'd like to focus on the cost of capital because in Brazil, we have a higher cost of capital. So my question for 2026, are we going to see a higher ROE because the ROE is improving, but doesn't seem to be improving in Brazil. So how to balance these.

[Marcelo de Noronha, executive]

Thank you for the question. You always mentioned that that's our mission and our target, our goal regardless of the cost of capital being a little higher or not. We'll pursue it. And our expectation is to deliver better returns quarter after quarter and growing absolute results. This is our expectation and growing. And with the reduction in footprint, we had a reduction in our headcount. But we also hired for the credit business unit and for technology people with greater seniority and we have to pay 4 or 5x more and that will have the operating expenses.



But still, that's where we are going. We will pursue this balance. And what matters is that we pursue this with quality. This gives us some predictability and gives some predictability for the market. Cassano, do you want to add?

[Cassiano Scarpelli, executive]

No, not really. I think you said it all. We continue to do strong in the initiatives you mentioned. And we have spoken with you about that. The matter is how much more we want to bring this working for it. But we have [indiscernible] we have the dynamic of our balance sheet, one of continuity and this shows that we're very serious about 2025 and in the future to continue to change the bank and the transformation is led by Marcelo and under my responsibility.



The outcome of that is bank as we have always been more and more profitable every quarter and with clear consistency in how to serve our clients, how they want, so we can get that [indiscernible] in all segments. That's very important because that's all the transformation is about.

[Operator]

The next question comes from Thiago Bovolenta Batista from UBS Investment Bank.

[Thiago Bovolenta Batista, analyst]

My question is about investment in technology. It seems like the bank is investing more in technology to close the gap compared to peers. How much can this become easier now with artificial intelligence? How will that help close the gap? And if we do this now, I mean, is it easier to do it now than it would have been a few years ago? And also a follow-up about the basic interest rate. You spoke about 13% or around 13% next year. What would be the impact if the basic interest rate really confirms at this level? What would be the impact in a few years?

[Marcelo de Noronha, executive]

Well, thank you, Thiago, for participating. Thank you for your question. It's a pleasure to have you with us. About technology, we do not see a technology gap. Our diagnosis shows we have an opportunity to increase significantly our productivity because we have more third parties than our own employees and that changes our productivity. We also want to have a more senior team. And then we want to roll out this initiative to the whole organization using our enterprise agility is more restricted. So we are investing in line with the large players on the market. Sometimes we press the gas pedal a little bit more but the fact is that artificial intelligence has been with us for some time now.



VIA has evolved. It's now moving into Gen AI, but VIA has been with us for quite some time. We have been using artificial intelligence, machine learning to develop models in our business units, but we're using that very strongly also in our pricing efforts regardless of the value proposition we have in each business unit. So we do have a lot of use of artificial intelligence even in pricing so that we can price in micro clusters even at coming down to the client level. And that will support our digital channels, which we call business experience. So we continue to work hard on this also on other fronts.



If you think about technology development, you see Gen AI, we are also using that in our daily work, and that will expand even further. However, we want to translate that into a better experience for clients and operating efficiency gains.



About the interest rates, maybe I'd like to answer. Well, I believe the interest rate curve is still under stress. We'll have to wait and see.



However, at first sight, I believe the effect is neutral. I mean, from our point of view and looking at 2025, there will be higher floating gains, but then I will have perhaps a lower result in asset and liability management. So even if it is at this level of 13%, I do not see a great impact. But of course, there will be other consequences. I mean, if we have such a high interest rate, the inflation will be different, and then we will have a different scenario altogether.



Yes, let us wait for the U.S. elections, which will also have an influence on this on the foreign exchange rate and other variables on the Brazilian market.

[Operator]

Daniel Vaz from Safra, you have a question?

[Daniel Vaz, analyst]

As I was listening to your presentation, we believe you were focusing on risk-adjusted return and also on the mass market with collateralized credit lines. But if you think about other lines, I mean, how was the result of the testing you did in the last few months? What was the return you had in the vintages that you tried and then you stepped back. And now you are advancing in collateralized lines because we think about fintechs, many of them are providing clean loans without collateral. And so can you tell us more about this market where you played or did not play in the last 3 to 6 months?

[Marcelo de Noronha, executive]

Thank you, Daniel, for the question. I can tell you that we always look at the risk-adjusted return. Even at the wholesale bank, if you talk to any one of our regional managers, they will say, I have a dynamic curve of the risk-adjusted return for every client.



And that's omnichannel the officers can have that information on the mobile, on the tablet, and they also have a risk-adjusted return simulator. So you can work on the margin only if you have the right level of risk-adjusted return because that is the target that our officers have to meet. If we look at small businesses, individuals and even high net worth individuals, when we do pricing, when we look at the price of risk, we always consider that in every opportunity we have.



In SMEs, we may have an RAR as high as 60%. But when we had clean loans, you could never reach such a high RAR. We were at the lower quartile. However, yes, we do provide clean loans in some selected clusters. Remember, we are a large payroll payer for companies. And so I know our clients' cash flow. We also provide payroll deductible loans and then you can have other types of relationship that come out of these transactions. So we do have clean loans, but only for very good credit rating clients.



Obviously, we always work within a certain range of expected losses compared to the price that is the margin provided by each client. When we provide clean loans, that is the case. However, we have to be realistic, Daniel. Individuals of lower income who had delinquency issues in the past, have they fully recovered? Have they been able to repay all of their liabilities? Do they have a higher risk? I mean, we conduct a battery of tests. We are testing all the time. And I'll tell you Brazil is a blue ocean. There is risk everywhere you look. So you have to take care of your own portfolio.



Of course, I respect the strategy of other players, but we feel very confident about what we've been doing to deliver results that can be sustainable. We do provide clean loans. However, that do not hurt our results. I mean, unless you have a specific situation, a very large company, that's not the case. Thank you for the question, Daniel. And please continue to observe we work case by case.

[Operator]

Next question from Mario Pierry with Bank of America.

[Mario Pierry, analyst]

Let us focus on Insurance .45% of the earnings coming from insurance and we see increased profit in health insurance. In the 9 months, it's growing 66% year-on-year. I'd like to understand what are the drivers here? Can you maintain this level of growth next year? Also in the insurance business, the P&C profit grew 76% quarter-on-quarter. I imagine that this might have been some effect of the state of Rio Grande do Sul and everything that happened there. Perhaps you could explain the P&C phenomenon.

[Marcelo de Noronha, executive]

I would like to invite our colleague Ivan to answer your questions. Ivan.

[Ivan Gontijo, executive]

Thank you, Marcelo. I'd like to thank Mario with Bank of America for the question. So here is your answer. Insurance Group growth, if you like at the line items, it happened in all of the revenue streams or companies products in segments; savings, bonds, health, pension growing very in a robust way, and P&C, as you well observed.



In the combined ratios, we can see substantial improvement in this quarter in all line items in, all countries in terms of the claims ratio. That gives us robust results as well as, we improve the operational -- up to business and that's why Marcelo mentioned that our results had 2/3 coming from the operational part and 1/3 from the financial part.



So to your question about health insurance. We started adopting some practices over the year that started reaping the fruits now in Q3, but these are things that have been implemented since the start of the year with some adjustments made regarding some excessive use of the health plans and also tackling frauds, of course that led to a decrease in claims ratio, providing us with a better operative result. Perceptively, to answer your question, we are comfortable , we will continue to do this web ,which I insist is guided at the beginning of the year and the results are only showing now but cost improvement should continue in the next Quarter.



Regarding year results are showing now improve should Q3 and Q2 events related to the South. Those events were observed in the balance sheet of Q2. And now in Q3, without these events in the South, we were able to grow the P&C more comfort, lower claims ratio and with the commercial and admin ratios, which were extremely positive. This is how we can explain this positive result for both of the companies that you mentioned.

[Marcelo de Noronha, executive]

Excellent, Mario. Thank you for the question. I can add saying that we have good traction in all of distribution at the bank very strong also for the insurance business.

[Operator]

Next question from Pedro Leduc with Itaú.

[Pedro Leduc, analyst]

I want to know about NII. And I guess that the year in February, the first stage of ROE recovery came from loss provision got that and then growing the portfolio. You get in there, too. Next would be NII, and that's starting SG&A in the future. So this sequence to improve ROE normal provision portfolio NII, now that you have the new vintages, you have pricing and you have funding and increase in the next 12 months. So that's what I would like to know well.

[Marcelo de Noronha, executive]

I think that we can continue in the trend that you mentioned and that you mentioned so well. We'll grow depending on the scenario that we mentioned, portfolio mix. But you can promise I don't like to promise I'd like to deliver. Now I've been saying this over and over. But what we have in mind is if we deliver an NII which is stable, I spoke about 8%, 9%, it doesn't matter, high or low. If we deliver this with an adequate cost of provision, this is what we need to do because that's our NII net of. And that's why we use the risk-adjusted return continue to grow NII behavior will depend on the mix because if I can originate payroll deductible loans, the deductible loan, it lost share, but it is good. It gives me [indiscernible] than other it will bring us more NII will require very little provision.



So this is the balance that we continue to have our expectation is to grow our NII over time and deliver a more consistent we should not forget part of this NII that we've been working not only with SMEs with our principles and also with our principles because we want to have greater in the net. So it's a mix of we'll have the right trend and this will allow us to take the next strong 2025. Thank you for the question, Is not a big change, but I believe it is renewal. We do not have more hedging, but we're monitoring the risk... If the rates go up, you have an opportunity to have gains on the liability side. But when you have volatility on the market, you also have opportunities in the trading portfolio and also in other business. So our policy of not doing However, we have also reduced the risk of using other levers.

[Operator]

The next question is from Eduardo Nishio from Brasil Plural Corretora de Cambio

[Eduardo Nishio, analyst]

In 2016 and now if you could provide an update about the future and the [indiscernible] loan loss provisions. We are attracting better ratings, a safer mix. And so we will continue to see delinquency coming down. And this is something we believe we will be able to control unless, I mean, we have a surprise coming from large corporations, which we don't really expect. So I believe it may go back to the previous levels.

[Marcelo de Noronha, executive]

Now about compensation, this is the first months when our compensation is based on individual evaluation. Of course, we have different ways, the level of responsibility of each executive is considered. A client segments are receiving incentives depending on what they can deliver. This is what we call extrinsic motivation because we also have the engagement of our dreams and our professionals. And we will see that at year-end. Our compensation plan at all levels, both at the branches and for executives, each person is being evaluated according to the deliveries.



I will now hand it over to Andre and because they will speak about our footprint now about digital banking, I can come back to provide an answer to you because we have been working with Tulio. Tulio has just joined the company. He came from the market. He will be responsible for a few products and the digital mass segment. So we have been working. We will soon be able to provide more information.

[Andre Carvalho, executive]

Yes, we are now at the level of 5,000 points of sale or points of service. We did see an evolution in the cost to serve 1,041 points of sale is a big number. But we have not only a qualitative and quantitative analysis, but we also look at the behavior of clients -- we also have our ears at the branch level to look at the behavior of clients to see if we have any kind of attrition and how our Bradesco Expresso is serving clients in each region. We analyze all of these actually for us to participate in the INSS we have to provide this data. And we've been testing new models.



Bradesco Expresso has gained principality Marcelo spoke about how the platforms of Bradesco Expresso have improved. So that's part of the vertical channel of client service, even non-account holders. So, we continue to monitor and we still have adjustments to make to improve our cost to serve in the mass market. So, I believe we are in a comfortable position to attract the best profitability for the mass market. Would you like to speak about the loan loss provision?



Well, when we look at our points of sale, we are advancing at a quick speed, and we have actually anticipated future adjustments in 2024 and 2025. We have temporary expenses to conduct be adjusted. However, this will not be present in our operating expenses. So, the impact will be seen as of 2026.



We are still in a vicious circle because the virtuous circle will begin in 2026 rate when we will have our efficiency level closer to the target of 30%. What it's interesting to say that our plan is being executed.

[Eduardo Nishio, analyst]

I mean, do we have perfect numbers?

[Andre Carvalho, executive]

Not yet, but we will see a great impact as of 2026. Now about loan loss provisions, we're always based on credit risk. As Marcelo said, we now have a vintage of higher quality. So, we have lower needs for loan loss provisions. Every time we have a new portfolio, we calculate a new loan loss provision. The credit risk has come down to 3% now, which is very close to what we consider normal. It may even go up slightly, but controlled. So, we see a portfolio expansion with controlled credit risk so that we will have a better NII. And that is what truly moves the needle at the bottom. And this is what Marcelo said.

[Operator]

The next question comes from Tito Labarta from Goldman Sachs.

[Daer Labarta, analyst]

I have 2 brief questions, hopefully, if I can. Just first on your deposit growth. We saw a nice pickup on your demand deposits, but savings and time were down a bit on the quarter and still haven't really grown much on a year-over-year basis. Just to understand the drivers of the deposit growth and the demand savings and time. Is competition impacting that at all? Or what's the driver behind that and the somewhat muted growth overall?



And then the second question was on your fee income because we saw good growth in asset management, up 11% in the quarter, even though the investment funds and managed portfolios didn't grow as fast. And also, the loan fees were up 9% on the quarter. Loan growth was good, but didn't grow that fast. So just to understand the drivers of those 2 fee income lines, if you can.

[Marcelo de Noronha, executive]

Now Andre, Tito was asking about deposits. Its demand deposits. Yes, it has grown. But we can look at it in different combinations because with some clients, we even pay -- I mean, because it's good for us to have these demand deposits. So, this number is growing. We can provide further information to you after the call. We can provide more details on this. But we are growing in demand deposit. We have a good level of traction in terms of our relationship with these clients. Now savings accounts, I mean, it is only natural. This is something very Brazilian, and it is, in fact, a challenge for the real estate market.



So -- but we feel very comfortable vis-a-vis the competition. We have shown we are competitive. Otherwise, we would not be growing on these lines. But yes, we have things coming out of one line and into another line. But we are looking at all of this, trying to do better every day, delivering a non-friction experience to clients, be them micro companies, high net worth individuals, different clients using different channels. We're always looking at providing the best possible experience. And let me open for you to add.

[Andre Carvalho, executive]

Yes. If I could add, Marcelo, I think it is important to say, and I mean, even Tito spoke about competition, demand deposit and savings account -- you always have market competition. That's clear. I mean looking for attracting clients using FGC and brokerage firms and investment companies are also doing that. And there's a high demand for CDB, certificates of deposit. But I can talk to you, Tito, about our demand deposits. So, demand deposits and savings account, although they are growing slightly, that is always connected to the principality of the relationship when we open an account, we continue to grow 1.8 million accounts even though we have adjusted our footprint. And the other element is improving our cash, the insertion, the introduction of our cash management. We now have client centricity in all of these lines. So, we have a positive number in demand deposit. And we also have new transactions from FTC.



So, we see this migration and a higher demand for certificates of deposit has received a number of awards as a wealth manager. [Indiscernible] has received a number of awards and BRL 55 billion in assets under management. That's also an important number.



He asked about asset management, we said that we have a BRL 33 billion increase in AUM, now BRL 55 billion. And now we have a performance fee because we had a great performance in some of our funds. So, assets under management have been growing quarter after quarter. That's helping us a lot. In terms of loans and services, that is something -- I mean, in a number of lines, we may have a lower spread in a few credit lines, but we are having more cross-selling, and we have developed skills to work with that. That's why when you look at the top line, you were adding the revenues coming from insurance, fee and commissions and also NII.

[Marcelo de Noronha, executive]

And if you look at company clients, we charge fees every we have a monthly fee. And also, he asked about the capital market. You know that variable income, the equity market is at a standstill right now in Brazil. And that's a pity for the market. However, fixed income is certainly growing. That is why we have more colleagues. We've expanded the team because we see a lot of opportunity here, and we are adding value. We believe we will grow this quarter and also next year. This is the expectation we have in the Investment Bank.

[Operator]

Turning to Carlos Gomez-Lopez from HSBC. Carlos?

[Carlos Gomez-Lopez, analyst]

So, 2 questions on other segments. You mentioned the investments that you are doing in credit cards. You mentioned the investments that you are doing with [ Eelo and Alelo ] investment in debit cards. Does it make sense to continue to push the debit cards when perhaps they're going to be replaced by PIX? How do you see that market evolving? And the second would be on your new segment principle. How does it relate with Prime?

[Marcelo de Noronha, executive]

You can speak about this dynamic of debit cards because there's an initiative in the bank regarding that.

[Andre Carvalho, executive]

Yes. Carlos, thank you for the question. We have been working exactly to understand this dynamic of debit cards vis-a-vis -- and the trend is that more and more with one channel more digital with less plastic. And this start of these news that Marcelo mentioned, we will be communicating particularly in the last quarter. But investments are made to clearly maintain our status quo we have been doing a lot of so that we won't have any cannibalization so that we can have a direct effective digital channel for our clients.

[Marcelo de Noronha, executive]

Carlos, let me say something cannibalization by PIX is natural, but the volume captured through debit cards is still significant. We see this in the bank in the market, and we see that to us, this is an economically better business. Now with the interchange and with this obvious cannibalization, it does make sense to send out mentioned they can use virtual cards. That's what we're working virtual cards to be distributed to clients. So as long as we can maintain that as long as clients want to use fine. And of course, we'll be prepared for a natural evolution in that regard with PIX and debit cards.



Now the new -- we're also working primarily with the clients because they are there. It's not like we are opening a new market front to gain new clients. Of course, new clients are always welcome. They want to open checking accounts with us. That's great. We are inviting our own clients. But as of January, Carlos, you are invited to visit our new business office. And of course, new clients will be very, very welcome. But we already have the clients. They are with Prime. They're being worked on. And the managers will be sitting side by side. So, clients will have no discontinuity when they migrate to the new affluent segment. And we have been working with the remodeling, and we are working on the value proposition of Prime that means working with different accounts for the managers of Prime and with a much more objective value proposition for clients.



Clients want to have self-service, but they still want to have contact with their manager, their investment advisers, our colleague mentioned in the video. So, it all speaks this segment, but we are also working to deliver an even better value proposition to our individual clients.

[Andre Carvalho, executive]

And let me add to that that was also asked. The new segment is above the prime and a superior quartile BRL 300,000 investments up to BRL 10 million. So, it is between prime and private. It is a qualified high net worth individuals.

[Carlos Gomez-Lopez, analyst]

And the idea is to maintain both.

[Andre Carvalho, executive]

Yes, we'll maintain both Prime for all of the category up to BRL 25. Prime, principal and [indiscernible]. That's all for individuals.

[Operator]

Next question from Bernardo Guttmann with XP.

[Bernardo Guttmann, analyst]

I have one specific question about the behavior of the agribusiness portfolio. Looking at the rural portfolio, there's a relevant delta between growth of rural loans for individuals, which posted strong growth, 16% quarter-on-quarter against a reduction in companies. What is the strategy of the bank for this segment also considering the slightly more challenging scenario with delinquency in the sector?

[Marcelo de Noronha, executive]

Thank you, Bernardo. Well, actually, this was the only company portfolio that showed a drop quarter-on-quarter because we had some and some companies closing down bigger companies that went to the market. Given the offering with good custody and this we have good penetration in individuals and they're kind of mixed with legal companies in agribusiness.



So, we have a lot of collateral business for these groups. So, we posted growth for rural individuals for the companies that's linked to bigger companies that access the capital market because they had an attractive cost. But we stand strong in that sector. We have our distribution of agribusiness in different segments. We have people well positioned for this and some news about -- this business we have with [ John Deere ] is something we want to close this year. So, we'll start next year. So that's kind of the phenomenon that explains the difference between the 2 portfolios, but we also have a very good quality of risk. Our delinquency rate in the agribusiness portfolio is absolutely stable.

[Operator]

Next question from Henrique Navarro from Santander.

[Henrique Navarro, analyst]

I'm sorry, I'd like to go back to a topic that has created some more noise in the interactions you may not look at client NII and growth, but maybe look at NII net of provisions. When you look at this number, 27%, will be fine. So, my question is about the future. You have already shed light about the fourth quarter, you said you will continue to have accelerated growth.



But what about 2027, you will look at client NII net of provisions, and looking at 2025, I know that will come closer to the year-end, but how much growth is Bradesco recovery market share? Market share that has always been in terms of principality, continue to have your previous share of the -- and how much of that depends on gaining market share in the competition with other players just so that we have an idea about 2025.

[Marcelo de Noronha, executive]

Thank you, Navarro for the question and thank you for your comments. Thanks for being with us. Navarro, I will tell you that I feel extremely confident. We are growing client base in mass individuals. Our high net worth individuals, I mean, we are growing. We already have a huge base, but we are growing in the prime segment. Look at the private. I'm sure we have also been gaining market share. Our value proposition has become increasingly more robust. And we now have this new segment, the principle between prime and private.



So, we have a great penetration in all of these segments. I believe that there will be a natural principality in line with our fair market share. If we did not have that, we would not have such a high level of traction. I mean our portfolios are growing and the portfolios that we want to see growing delivering what we plan to deliver to clients. We are growing in fee and commission income. I showed you how our credit card holders are transactors and this segment of transactors is growing.



So, we want to gain market share. We have gained a little bit, but not much. I mean we gained share in this quarter, and we will certainly be well positioned. This is our expectation. But with the right portfolio, also in insurance, I believe we have great traction. We have been reviewing our footprint and growing the client base.



Of course, many of these new clients are payroll deductible clients, but we also do cross-selling with these clients. So, we see that we have a great penetration in the client base. And with our fair share, we have everything needed for 2025 to be even better than 2024. As I said, we have a lot of traction. That's why I feel so confident in all client segments and verticals. I mean, when we have monoline, for example, auto loans. But if you look at heavy vehicle loans, trucks and heavy vehicles, we have a very significant share, which we will further accelerate now with our business with [ John Deere ].



So, we have a great penetration in all business lines where we operate. The insurance group, as Ivan mentioned, I mean -- and even I told you, we have a lot of traction also in the insurance group. I mean, look at our penetration, look at our share, our risk appetite has decreased a little bit, but we are now pursuing the right quality. This is our expectation, and we expect to deliver a higher top line and have a credit cost under control in 2025.

[Andre Carvalho, executive]

Looking at client NII, there are 3 main drivers. First, portfolio growth. Marcelo and Cassiano were clear, telling you that we continue to grow this portfolio. Next, our cost of funding is below 5% of the CDI. And we are taking action to lower that even further, which will help us improve our client NII. And again, look at our spread, which is the risk-adjusted return. We don't want to have more spread with a higher loan loss provisions. We're always looking at the RAR. So, these drivers will help us. The first 2 will certainly help us in the third one, too.

[Operator]

Now the last question with Brian Flores from Citi.

[Brian Flores, analyst]

It's a brief question about the impact of the interest rate, thinking about the market NII now. I think we are now closer to EUR 2 billion in 2024. And looking at the scenario you described with a higher basic interest rate, do you believe that in 2025, could we dream of having an NII similar to this one, similar to the one in '24?

[Cassiano Scarpelli, executive]

Obviously, we're not talking about 2025 yet. But I can tell you that we have a more neutral view. I mean we do not have our structure hedged, but we do have important action that make our liability management more neutral. For 2025, we still don't have a clear view of what will happen to the market. So, I prefer to talk about that when we publish our guidance. But I believe we have a more neutral position now for this new higher interest rate cycle.

[Operator]

Well, we are closing the question-and-answer session. Those questions we were not able to answer here will be answered by our Investor Relations team. I'd like to turn the floor to Marcelo for his final statement. And I'd like to let you know in our IR website, you can find the whole package of our results.

[Marcelo de Noronha, executive]

Thank you, Andre. Thank you, Cassiano. I'd like to thank all of you for joining us today. Our team is always available, myself and Cassiano also are available to answer any more questions you might have. We'll be meeting soon, and I expect you to join in the next earnings conference call. Thank you very much.