Banco Bradesco (BBD) 5 Aug 222022 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and thank you for waiting. We would like to welcome everyone to Bradesco's Second Quarter 2022 Earnings Conference Call. This call is being broadcast simultaneously through the internet in the Investor Relations website at bradescori.com.br/en. In that address, you can also find the presentation available for download. [Operator Instructions].

company. mention assumptions statements and of currently to me the based on let available and beliefs Banco the proceeding, that are forward-looking on information Before Bradesco's management they They relate depend involve circumstances or future. in may not that and risks, assumptions on to events and, uncertainties future therefore, occur the may because those Bradesco factors affect the from future should general conditions, in economic differ also Investors expressed cause industry conditions to of statements. could Banco and forward-looking understand that and could results other operating such results materially

Relations Now Mr. I'll turn Carlos Firetti, the conference over Business to Controller and Director. Market

afternoon, Good discussion our call results. of for everybody. the to Welcome quarter our second conference

the with our Ejnisman, IRO, Zimmermann, Officer; Leandro Executive de us today Director; Bitz Executive Chief Miranda; Lazari Osvaldo have Fernandez, Executive [indiscernible] Executive Officer, Officer. Gontijo, Renato Chief and Navis, Jr.; President Officer; CEO; Executive Bradesco Seguros Octavio Executive Curt Executive Chief Cano; Banco Carlos [indiscernible], Director We Vice Ivan Banco and our Andre Chief Next's and CFO,

I'll the Miranda. Leandro for starting to floor turn the Now presentation,

our persistent solid bit dynamics led part second including already Despite complex the The everyone. income this economy previous for economies. and of the XXX% in by of view you base a grew X in last quarter. in primarily X.X% Initial expectation a growth The market Despite line guidance. high and We evolution, benefit you first X.X% rapidly. point period, on also XX.X%. year a to X.X better, The inflation, Brazil, physical net solidly a Firetti. on annual an growth. controlled. quite with portfolio of much, compared optimistic into our pressures. has continue in credit higher with Good expanded advanced favored Thank brought result the the is of affect XX.X% the NII 'XX. basis strong during quarter. less In expressive global basis, very X.X% global on total inflation The the a of the comparison to this pressured report XX%. months, We increase in inflation, an of quarter. increase lower, advance BRL the X.XXX high line the call. impact this the income quarter, representing at This which we resume out more of period be need for an has Brazilian business portfolio, increase Within expenses second second to were the cycle performed Brazil the rise for comparison ALM which GDP. pressure new risk GDP posted over basis. client the annual XX XXXX. by compared in the Selic credit were in billion increase afternoon, that with a end by throughout an a The gross with recession conference Fees occurring by of by the income expect XXXX ROE line quarter, to is insurance generating consequent the mainly performance monetary to guidance outlook, the the to explained with well by remained Q by for Q market the client expected of us and our projection challenges XX.X% year-over-year, that XXXX, NII economy portfolio taking led performance the due to the in increase an continues XX in spending. has to at interest with 'XX cards rising rate of But end in of Thank impact quarter 'XX growth us and of NII major of for earnings over saw scenario the is XX.X% BRL of the in X.X% expected The part This growth XXXX. in to individuals compared be tightening with concerns and posted in loan by expanding Q XXXX to grew an billion X.X% Q position. our X.X% The costs to cards, turned with Total months.

And science growth as have teams. our through well technology our been had additional data advisory, this in much and have includes we pressure We able investments reinforcements to of as the that efficiency in initiatives inflationary offset actions. investment digital

will proposed. analyze a to to that we that relation guidance can able but performance have with the later, we're performance consistent We in report our what was maintain we

X. to both quarterly are Slide We in by enough in of had delinquents high expansion comparisons, to the more currently consequence which and NII a drop the period. fees the than Selic market of higher insurance. to present the In and now historical credit client returning absorb in the annual and and This Moving is credit pressured growth considering lines. levels in the high-yield was each provisions, which line NII, domino earnings growth we evolution variation

business was to and with in Slide lines. wave in our year, segment, shorter which was natural lines individual line it's We by take longer and companies the on the Originations concession. X. last of comparison higher, concentrated lower look caveats base as was demand credit for second mainly loan there In the affected the will for The for at of primarily portfolio day now evolved expectations. a due pandemic such mortgage

the portfolio with more financing share and lines. a quarter have and portfolio are also significant credit mix have higher and NII. lines. the months. is higher These the of in of The card growth with seen a occurring movement most the the credit spreads portfolio advance in annual in client XX the hike profitable lines in a We origination with evolution X% of of consumer of in favored expressive growth the reflection XX% renegotiated a The

in the increased the provisions XXXX, quarter in with which the level remained X.X% the credits. the small earnings bps, delinquency individuals The this slightly retail Aligned by reduction, the at in to and delinquency the the The these continues coverage of XX-day quarter's are same over previous mentioned segment and companies. of now call, anticipated we higher plus represented rate cost with both reflecting at this Turning arrears ratio mix of early The some in portfolio, being delinquency origination as retail now first lows. given showed increase XX in the Slide risk and projection reflecting X. large company quarter, of delinquents. the during had we the historical effective that grew consumed

projections Our second expect to the the around coverage at still XXX% consistent we to ratio the growing point half of depending year, year-end. defaults conditions, income is remain on by and in employment

Slide due to the see show Turning Bradesco in a which income and some rate and illustrating transactions increase Overall, growth, been institutions. credit have in proprietary This and Real dynamics. employment to charts good continue and sourcing, mass this has the clients' small We the to wage saw levels includes with the collective XXXX. now information, to important X. unemployment improved, commitment considering relevant commitment reflects our levels to the slide employment also that are also other inflation to we of at credit income has reached relatively credit in highlight the wages, agreements. increase It's with to transfer both servicing. dipping

increase, loan good put The Slide to the in NII by X. go higher comparison, a The higher out by Selic portfolio yield annual and results growth working quarterly to to partially of rise higher be credit funding. provisions. quarter fact client we our in lines, gross net expansion, both to and revenue pressured the capital. mention in continues from A as the the on NII, in the offset the we previous Now the point is both significant market plus own continues reflecting the by NIM

plans In ratio better adjustments results auto. number the a the price lines will of Net ROE reflecting insurance, of first in financial performance insurance Slide life as better on period. look end by number emphasize the and the take of increase over projections, at our related the the income well the is for by from to as health We was year, and in X year, at the least. these months. growth half the the of effects up improved covered we numbers. to the the the XX% which expectations present mainly plans our from which revenues highest of reduced growth XX% the X, shall to pension We lives as Concerning reach in above income in due in the Insurance of Group's as in now saw well XX.X%. a improvement rise we an a pandemic This loss

COVID-related to see events Q a In the 'XX, these volume second continue beginning pandemic. represented BRL since lowest million, XXX We the the only in drop the of claims.

volume of inflation of client X.X% also in turn in in growth effect transaction card is of last the addition this X. at the Fees at cards, reflecting credit clients amortization volume and which XX.X in base, economy Slide a million our consequence X BRL spiked This the now quarter. line topped year-over-year, higher clients. XX.X year, the jumped spending. totaling a X.X reflecting larger the me billion months, on XX% clients Let of to XX million The

in go now risen agreements, XX.X% and also collective our much analytics saw to XX.X% the Personnel XX. and to in Let's technology, accumulated expenses in Slide in inflation data investments X the months, advisory have lower XX% last as and investment science by year the we expenses than increased X.X% period. of teams. IGPM in IPCA Operating the bargaining

not our administrative volume this physical last in growth. was the in thing promoted the of our One year dipped provisions to ratio expenses result large history. XX.X%, The of one Other posted a repeated expenses and As campaigns, optimization best our presence. be highlight is the a should efficiency of due we that year. to efficient contained occurred

branches to in a advisory have transactional more migrating transformed less We our model.

branches. we business such, reduced As XXXX, XXX and X,XXX have since opened units

managers consulting with As loan investment of part train our clients. managers specialists remote the XX,XXX who X,XXX insurance wishes we than our promote relationship that or our Today, tools facilitate according more and of and service to transformation, have to investment, we face-to-face nearly clients. this

specialists investment XXX adding team still year. be this this to will We

customers to our our fiscal complement XX,XXX point need and in convenience presence to branch also significant our in where strategy Express, asset-light bank out a strategy network. capillarity unique than with competitive it's Bradesco a that We is more we correspondents, through our advantage

we Now XX. look take Slide a at

levels. interest of tax of impact the reduction regulation on in form capital treatment a the shareholders' to due abroad investments remained distribution originating 'XX. solid XX of XX% us remaining the bps quarter We the in of with Our generation the from in credit of an shareholders an the over to June fairly maintain allowed index equity. at expected has capital XX% ratio Property comfortable in experienced X Tier hedge and 'XX December to

We progressively that would by that, also with advantage portfolio. from security The favorable moment. saw impact of mark-to-market the XXXX, conditions the XX at additional bps market capital of increases review of the mature from taking the

Let's go Slide look a XX. at take to

better is digital Our represent digital. of much more account at a our experience for clients the experience evolving, XX% business. holders continuously are and enhanced autonomy,

within XX% app the from more entrepreneurs total nearly of million via revitalization also say services via topped develop of through desires, the app. internet allows We what of alone, Bradesco the out June the drives the an The opened we to and this consistent give section and and XX% enhance in increasingly and clients our accounts increase And this year they clients. for opening ease are to customization grew year. within to totaling we This autonomy This to their did with their products X.X to needs same the app. as XXXX. peak our voice Our XX% experience, half carried have and with of growth openings and financial to opening accounts digital sought mobile are close experience, transactions, their micro individual total accounts with This us have follow moments improve January channels the period. lives. XX%. There have as in we to their listen transactions accounts experiences

business closeness addition positive feedback, to more generates our In lot a this clients opportunities. to

XX%. There of in of which jumped be were seen digital origination in the transactions. XXX%. same the and represents of by in XX% effect also where at The positive volume and by results amount For investments. companies We insurance, XXX% grew investments can press spiked by released Consortium also XXX%. grew XXX% individuals,

the pillars benchmark major carbon to corporate one portfolio of Turning In XX% the just from company's first than PCAF decarbonization. we portfolio Page our who you international Partnership And XXXX, now give Carbon of XX% of to in bank lower carbon portfolio Financials, to emissions. the an some for for calculating comes to this made have XXXX. Brazilian already from emissions emissions were In customers voluntary Accounting an sustainability, XX. our idea, the strategy, were join commitment

was in of impact, sustainable committed agenda, generating recognized highlights June, financial net institutions world and by reinforces objective. the commitments. to a brings business together GFANZ, the reached of performance as X alliance We our have strategy with that case a in purpose Our X This reference sustainable business the remain and sector. favor the this we financial recognition In positive by of developments. already an XX% had around we with goal

sustainability are world. the industry in above role the leading index we recognized main and over perform and strategy average. where the evaluation ratings the all of Our the

We are in more and you happy our invite sustainability this about integrated our with recognition reports. learn to strategy

We Selic impact the on in base a go NII our being service. top the client repricing, operations. a the in to and next range commission the XX%. we continue the see income movement to continue the growth higher benefiting to going second Fee Now margins. XX% is compatible the half from the at the The of slide, discuss to growth comparative center, pace, of from the XX% at with and to card loan guidance. we stronger in by portfolio, expect origination continues increasing year in the the with in the spreads, rate close adjustments of to we XXXX expected XX%, In of the and a to scenario of favored deposit portfolio to along our considering close mix loan expanded income we're performance range to according shift good and make where

of the X% the is towards center guidance. the expectation convergence Our X% to

the range Regarding efficiency for operating and with should evolution our in a digital and us below We even initiatives a control in guidance top the the inflation well of operational we year premiums improvements The finish and growth center our expenses evolution as of driven that in technological expenses, our our of continue as XX% allowed business. a the are financial operating to XX%. at of Expectations improvements. insurance in may positive top business with between investments result for out actions with our the the trend be well by guidance. guidance the with the with

Finally, current growth the in provisions, higher to at the BRL expectation is XX million levels and towards credit due XX of movement delinquency higher-yield to looking intensification upper in slightly billion the part than portfolios which guidance, the of is ones. BRL are of we the

Thank As to time. guidance, And proceed section. commented now under before. going the although that with for we a already comment for you NII the as do proceeds we are not Q&A an outlook market to we pressure have we're going to we that have remain your

[Operator Instructions].

comes from Thiago UBS. The Batista question first with

I questions. have two

year? call, we of above if end about X% of one a peak follow-up if the the of Bradesco. that The more bank meet wrong, NPL I'm more less the XX% 'XX. I'm the would the you of second more not ratio threshold. Tier end Tier has, first X kind the first the the any or to is confirm a we is But Bradesco between Q ended of indication Q and is achieve mentioned do not or probably ratio to The XX.X%, position see chance second in bank's When targets bank's Portuguese that for you the if And call. if of see the -- this -- I the look Portuguese with to a question be Octavio not X capital that not a expectation can for XX%. the reduce want XX%? Or these the this XX% ahead, wrong, will in in

bank have color that X% ratio achieve. to or of only NPA to of iteration the a little So trying more should target for bit this

terms of Thiago, in capital.

I we it's operating level at have a think we comfortable. very think been

a have internal that the even see slightly level we of we targets. think capital as is I what above

For out we around dividend capital, to levels should XX%. paying our should comfortable last will what some being, capital the line our in have with of been we time operating probably the policy we pay take keep with years, continue in interest on doing naturally something few that

foresee we time remain will our as the policy. for being, So this

In terms going the the more don't a year. this we by a above reference. was be end we -- part basically, it's like of NPLs, X% referred It level as believe had what to reference, of is

Yes.

to your Thiago. sense Just here, add to

the Although is starting to year, decline, some we far expect benefit end and rates as concerned. of small we interest inflation deterioration shall gets also the the is until as NPL controlled as

Just a complement on capital.

interest Bank to in the related by given was end caused given -- quarter, have we probably that reduction the we already adjustments capital. this also the This rates with interest market markets of market. waiver the seen with That the treatment credit, policy the movement. market had tax we less to on Central to monetary foresee the We reaching reaching the rate believe peak

there [indiscernible]. don't retention of end reductions related this to our we of So the according event another earnings until foresee year round the compensate allow the this waiver, in even to will though adjustments us of further capital more end is probably, than to

the have accumulated extra on, going it's see And highlight important in an just event December. that And to by shall profits. point to we we're just increasing Yes. capital that from

concerned. is far believe we on are a cap we position that So comfortable very as as

comes Goldman Tito question Sachs. Labarta from next The with

also. questions of couple A

the XX the bit a ratio NPL I bps. following up went First, credit on up Because guess, quality. little

bps. up would probably in You sold XX about $X another billion gone have loans

X.X%. at have around So been you would

So you're kind above levels. pre-COVID of already the

cards growth, of Just still that given on for gives last loan down know quarters? understand, level that, year, you X% bit quickly X the mix? loans to kind the above -- the And impacting is to unsecured segments much How but rest of Like grow it we've Just personal that you're you over XX%. the seen I credit growing one a mentioned And just Like what what is some to you slow right? a of won't the that in credit, get is of growth of of those in credit going ratio? much NPL it go how in of to segments quality? you're forward. comfort sense the how of the pretty comfort see decelerating also just sort with gives deterioration the you with combined that also, those going XX%,

Thank much they of you we pretty as your as for all, that And much really only net is very for are us. deterioration sense important personal the and the first positive, in to that is credit spreads. what growing. question. well but Therefore, net in the loans, cards see this Well, is Therefore, for see expected. spread it's us something makes not natural still

expect but at in either And end if shall that that be do higher in because our we you the a if we is we And growth, until of reason, terms this price growth. you basically, the because from magic considering shall reduce a we going riskier. get have, -- do have this of are to that expectations every the We you that unemployment we rates start in going XX selling And terms not occasional something out, line the our of number And by for GDP portfolio do way decline it's dramatically regarding we and effect do bps terms as high. the day. not the cost much to have year-end, might spend team have if see of to than Of we in pointed the much what we a in origination. mass how course, not growing, time a not increase see it much more have are do portfolio of or of do this we well any we the attention to salaries as sale believe did, are we an to books quarter. jeopardizes much,

that So whenever Most make makes about are sense. talking we it portfolio. it just individuals of we

position pointed day, time what from last a and So our we in with as keep we is CEO in return or different the because are this maximize the not do has done not expect practice by we much teams. that end our And have quarters. of in use better our controlled the we out, to a have in of

Yes.

points. a Just to with complement few

pandemic, extensions savings. of we conditions terms credit NPLs, the We and seen growth of in we we had the families more seen believe it's normalization renegotiations. In to beginning the the the in had have related we have also of loan where accumulating

finance lines the we the days XXXX. growth start have see for with around consumer bps today answers terms I answers of We normalization we part mix top effect. in mix that, leading a in were of lines change Basically, conditions XX mix with we of early mortgage we XX increase. the lower-risk then, On these think loans until in growth. since this credit comparing, NPLs. the the for kind of interest the mix of have And in for increasing something to of of had instance, XXXX growing in

So where consumer growth XX lines. finance more had months only by we the the change in this strong last mix in in

the terms loan had XX% half this in of That's from why guidance itself, leads to this deceleration of naturally deceleration. We have big were Part and of the throughout this of last goes we second In growth. a of we XX%. growth this because year. expecting year already growth comparison to is kind our base it

our origination opportunities. see our we But Leandro out, pointed in anyway, the models, on done consumer and We lines. have as already we, finance especially some adjustments still

continue as originating interest And our in are quality margins we provisions. after that can you sense to said, still are As growing credits margin net good profitable. Leandro provisions after that makes said, see it

XXX bps. opposite grew by just And our NII to Yes. that,

results. the was of it day, our accretive end by to So the

over just correct? Great. bps last you said was to months. mix clarify, And impact helpful. XX XX the And the Is that's that

year-end Yes. No, now. XXXX bps to portfolio XX comparing

XXXX.

to year-end current XXXX the Yes, portfolio.

mix Yes. corporate reference the Basically, and to loans as such because lower to longer-term that with short-term SMEs. in financing time, less at we to have are mortgage, interest more change just individuals rates and making financing

you much, NPL So than the much the increase was that got. the lower in net that show just trying NII we to

Yes.

No, that's other I Okay. helpful. follow-up, And if one may.

have But understand you standards credit all? see all? your -- I opportunities bit Or there. I do at spreads are you Just tightened credit kind lend little Has mean, like are at at mean, how and I you that are you you you of still tightening all? a comfortable? much changed

Yes, sorry, I...

much Well, it the much see is we adjusts. is how pretty earnings our basically, in automatic. in and interest It rates, our salaries, in how sees how much rates, have model inflation, of have unemployment we much clients, we

risk So high, loans long inflation less riskier to to individuals to appetite provide and securities on companies. goes of course, riskier and as from as organization our there interest in normally rates small remains is

an that us, NII. something we an ongoing to and a it's see net eye NII, is positive on this So growing for keep important And basis.

with comes question Gomez next from The Carlos HSBC.

in Two is there on waiver about know waiver future? any questions. should for other we of? additional And that Are interested for the sale capital, the second, you the

looking do Carlos, question, Sorry, we regarding have We first not at. interest. are the

Sorry, it repeat you can question, second lost it. we The

Yes. the I'm background for sorry noise.

It's points. of had affect negatively? about the aware there other a waiver for should we the that capital be resulted that it. has basis -- for didn't You know capital XX we waiver any future of or positively your total Is could that this in cost

No, there else. isn't anything

was any beginning extraordinary have band And I pandemic. don't think is volatility that related the to of we the this in other something the that. we like big had

two reason, is are any -- happy we to to a make to listen more Firetti, after here us, Just with it. to for willing business discuss sentence than

open wide time. opportunities business are all the to We

comes Thiago Instructions]. [Operator with from Batista UBS. question next The

my us? that consumer billion. BRL you follow-up or you let's you and as retail credits loans credit you say, is color retail that these of loans type any of any share X Do do can about Just the have have profile with the more card, the saw,

consumer Yes. Most of and retail, it cards. was credit

second loans were previously also renegotiated these And categories renegotiation. in renegotiated that sometimes

like gentlemen, Excuse since invite no ladies would the closing remarks. the and I me, questions, to there speakers further for are

you the be thank Well, with to time us. for all making

going address to on. be to any now you have happy We questions than from are more may

with you Our weekend. answer phone team e-mail, wish is ready I a whatever would And for calls, like is that, very to nice Investor Goodbye. Relations easier you. to by you

Bradesco's for does Thank participation. good much call conference conclude you That today. Have very for day. your a