Itau Unibanco Holding S.A. Sponsored ADR Pfd Stock

Good morning, everyone. My name is Gustavo. And it is a pleasure to have you joining us for our Second Quarter 2026 Earnings video conference.

As always, Milton will walk you through our performance. And afterwards, we will have our traditional Q&A session during which analysts and investors will be able to interact directly with us.

Before handing the floor over to Milton, I would like to share a few instructions to help you make the most of today's event. For those accessing the webcast through our website, there are 3 audio options available: the entire content in Portuguese, the entire content in English or the original audio. The first 2 options offers simultaneous translation.

[Operator Instructions] Today's presentation is available for download on both our hotsite and as always, on our Investor Relations website.

With that, I will now hand you over to Milton, and we will reconvene later for the Q&A session.

Milton, over to you.

Good morning. Welcome to another earnings release as we discuss our second quarter 2026 results. You will see an executive presentation focused on the key drivers of our results, with the objective of leaving ample time for our traditional Q&A session. We delivered a strong quarter with consistent results, high profitability and excellent credit quality indicators, very much in line with the consistency we have been delivering over recent quarters.

Let's move directly to the numbers. This quarter, we delivered recurring net income of BRL 12.4 billion representing growth of 7.8% compared to the second quarter of last year and of 1% compared to the previous quarter. This was, therefore, another very solid result.

How does this translate into profitability? On a consolidated basis, ROE reached 24.3%, while in Brazil, it reached 25.7%. As always, we also present profitability adjusted to a CET1 capital ratio of 11.5%, which is close to where we believe the market operates and is also our minimum capital appetite threshold. On this basis, consolidated ROE would have reached 25.1%, while ROE in Brazil would have reached 26.7%. This is perhaps the most comparable metric across earnings releases, and it demonstrates our ability to generate strong returns not only in Brazil, but also on a consolidated basis.

Turning to the loan portfolio. We posted healthy growth, reaching BRL 1.522 trillion, up by 2.7% quarter-over-quarter and by nearly 10% year-over-year. This reflects our ability to grow with quality, supported by sound portfolio dynamics and disciplined capital allocation.

Moving on to NII with clients. We also delivered a very solid result of BRL 32.6 billion an increase of 3.3% compared to the first quarter of 2026 and a 5% compared to the second quarter of 2025. It is important to highlight this acceleration. Results are very solid, and I will provide more detail shortly.

Moving to noninterest expenses. Growth remained well under control at 3.1% year-over-year. It is worth remembering that we have been investing continuously for many years always with a long-term perspective. These figures demonstrate not only our ability to continue investing in the business with quality but also our ability to pursue efficiency wherever it needs to be found on a daily basis. This reflects strong cost discipline across the organization. All of this has translated into a common equity Tier 1 ratio of 12.3%, once again demonstrating a very solid and high-quality capital base with an increase of 30 basis points compared to March.

It is worth remembering that we did an early dividend distribution at the end of last year, which meant that we entered 2026 with a highly optimized capital position. We also had the regulatory phase-in effects, which still had an impact during the first quarter, and yet we continue to generate capital with strong quality. I will return to this topic in more detail later in the presentation.

Turning back to the loan portfolio. I will walk through the figures from the bottom up as that may be easier to follow. In Brazil, the portfolio grew by 9.6% year-over-year and 2.6% quarter-over-quarter, which is very healthy growth. Large companies posted growth of 10% year-over-year and 4.4% quarter-over-quarter, once again reflecting strong discipline in capital allocation and expected returns. These are very long-term balance sheet transactions, which makes disciplined capital allocation, particularly important.

Next, let me provide more details, starting with micro, small and medium-sized companies. We posted healthy growth of 1.5% in the quarter and 11.6% year-over-year. More important than growth itself, however, is the quality and risk profile of this portfolio. The portfolio of government-backed programs grew by 7.2% in the quarter while originations increased by 47.3% over the same period. Once again, this reflects our discipline in delivering the best products under the best conditions, while maintaining strong risk management and capital allocation standards.

Payroll lending has continued to be a very important growth driver for us, particularly private payroll loans under the new product. The overall payroll loan portfolio grew by 3.5% in the quarter and 11.7% year-over-year. When we take a closer look at private payroll loans, the portfolio expanded by 14.3% in the quarter and 90.1% year-over-year.

From the outset, we were able to capitalize on this opportunity very effectively delivering value to our clients, while generating strong and consistent growth with delinquency remaining fully under control. This also affects the dynamics of our personal lending portfolio. Since for clients who are eligible for private payroll loans, particularly, formerly employed workers. We have increasingly prioritized this product over traditional unsecured personal lending due both to its pricing advantages and its priority in the repayment structure.

Finally, turning to mortgage lending. It is important to remember that our funding structure is differentiated relative to the market, enabling us to remain highly competitive in this segment while serving our clients effectively and allocating resources efficiently. The mortgage portfolio grew by 3.9% in the quarter, and by 13.3% year-over-year, reaching BRL 152 billion. In fact, the mortgage portfolio has now surpassed our credit card portfolio, which has historically been of our most important portfolios at approximately BRL 150 billion. Mortgage lending is a long-term product that fosters strong client loyalty and reciprocity, which is why this strategy is so important for us.

Today, we are the largest private sector bank in this segment with BRL 36 billion in originations over the last 12 months and a 55% market share among private banks. Once again, this demonstrates how our funding structure, our clients' investment profile, and our funding capacity allow us to sustain a mortgage portfolio at these levels.

Now let me turn to NII with clients and highlight 2 points: First, total NII increased by BRL 1.1 billion, representing growth of 3.3% in the quarter, including working capital and other effects. We posted growth in the working capital and other categories in addition to the impact of investment rates and we're able to monetize our capital very effectively, reaching BRL 3.9 billion in working capital during the quarter.

When we look at core NII, we see growth of BRL 800 million or 2.9% in the quarter, broadly distributed across all components. Average volumes contributed positively. Product mix was broadly neutral for margins. Liability margins and asset spreads were slightly positive. And we also benefited from a calendar effect as this quarter had 1 additional calendar day, which positively affected liabilities. Latin America and other also contributed positively. So as I mentioned, this was a broadly distributed result, demonstrating our ability to generate core NII alongside an effective strategy for monetizing working capital and supporting the bank's capital generation.

When we translate NII into margin percentages, particularly risk-adjusted NIM, which is the way we manage the balance sheet, we have positive news to share. As I always say, generating a very high margin only to give it back through credit costs is not a sensible capital allocation strategy. What we have shown consistently is our ability to manage margins with discipline and consistency. Risk-adjusted NIM reached 6.2%, representing a slight increase of 10 basis points in the quarter on a consolidated basis. The same dynamic was observed in Brazil, where NIM increased from 6.6% to 6.7% reflecting our disciplined portfolio management and delivering very solid results. Therefore, this is very positive news on the margin front.

Turning to NII with the market. Although results may appear stable compared to previous periods, I believe that we are all aware of all the challenges we have been facing in financial markets and the level of volatility we have experienced, both in local and global markets. Even so, we delivered another solid quarter, supported by consistent risk management. This discipline and the quality of the results we deliver are extremely important. As a result, NII with the market reached BRL 900 million.

We also continue to incur costs associated with capital index hedge ratio. But as part of our strategy to protect our capital position and enhance earnings predictability, we continue to believe that this remains the appropriate approach for the bank's balance sheet. Even considering this cost, we delivered a very solid performance in NII with the market.

Turning to commissions, fees and results from insurance. I will once again comment on the figures from the bottom up. You will see that results from insurance, pension plans and premium bonds increased by 8.7% year-over-year and 12.8% and compared to the first half of 2025. Our core insurance operation continues to grow very consistently on both a quarterly and year-over-year basis. We have delivered many consecutive quarters of growth with results at a substantially different level compared to 5 years ago, reflecting very strong progress.

Moving on to advisory services and brokerage. Revenues increased by 32.5% year-over-year and by 25.3% in the first half compared to the same period last year. This line is largely composed of fixed income transactions, and our approach has been one of strict capital allocation and risk discipline. As a result, many of these transactions are ultimately retained on our balance sheet and what we evaluate is the expected return profile, ensuring that returns remain consistent and aligned with our cost of capital, while also carefully assessing the type of risk we are retaining over the long term, considering both fixed income market pricing dynamics and credit risk. Therefore, we remain very comfortable with the quality of the assets that have been retained on our balance sheet.

Moving on to asset management. Revenues grew by 7.3% year-over-year. More importantly, despite not being an exceptional quarter for performance fees, we still achieved 11.0% growth in the first half compared to the same period last year. There are some lines that we deliberately continue to disclose, particularly, current accounts for individuals, which declined both in the quarter and year-over-year to demonstrate that this is precisely the direction we expect. We have been redefining our current account packages in an effort to serve clients more effectively while simultaneously increasing customer lifetime value and reducing friction in our customer relationships. This is why we continue to disclose this line separately, providing visibility into the significant transformation taking place in our revenue mix, with revenues becoming increasingly more sustainable, higher quality, and supportive of greater customer lifetime value.

Revenues from card issuance are closely linked to the risk profile of the portfolio we have been originating. Over the last years, we carried out a very significant derisking process and today, we operate a portfolio with delinquency levels that are substantially below market averages, roughly half of the system levels, while delivering quality growth and double-digit expansion in the target segments where we have chosen to grow. Therefore, we are very satisfied with the quality of the results we have achieved.

That said, as I mentioned previously, we have observed some moderation in this line throughout the year as a function of economic activity levels. I will discuss our guidance later on, but this is the line where we are making an adjustment. As I have mentioned in previous quarters, we already saw some risk that performance could trend closer to the lower end of the range. Therefore, we believe it was prudent to revise our full year growth expectations this quarter. I will provide more details on this adjustment shortly.

Turning to credit quality. We delivered another quarter of strong consistency. Looking at Brazil, consolidated NPL 15 to 90 days remained stable and fully in line with the previous quarter. In Brazil, the individuals portfolio also remained stable at approximately 3.0%.

In SMEs, we saw a slight increase, fully consistent with what I have been discussing over recent quarters. We continue to expect normalization of this indicator with the gradual stabilization of the grace periods associated with government-backed programs, which, as I previously showed are highly relevant within our portfolio. We are now approaching the end of these grace periods. We should still experience an additional quarter of increases, particularly in NPL over 90 days, which I will discuss in greater detail shortly.

Looking at long-term delinquency. The overall indicator remained stable as did Brazil's indicator this quarter. These are very positive developments for cost of credit, particularly in an environment with household indebtedness increasing, household leverage rising, and interest rates remaining restrictive. Even under these conditions, we have been able to navigate the cycle with a high degree of discipline and consistency.

Looking specifically at Brazil, the delinquency in the individuals portfolio increased slightly by 10 basis points but we have absolutely no concerns regarding this portfolio. I also wanted to provide greater transparency regarding the impact of the Desenrola program. We had 371,000 clients impacted and BRL 1.1 billion in renegotiated loans but the effect on our indicators was immaterial. To put this into perspective, the impact on cost of credit was BRL 60 million during the quarter, while the impact on the delinquency indicator was only 2 basis points.

Why am I highlighting this? Because we achieved a 12% market share in this program. When the program was launched, our expectation was to operate with approximately 10% market share. We performed somewhat better than expected, although the target customer profile consisting of individuals earning up to 5 minimum wages is not necessarily the primary focus of our portfolios.

The key message, however, is that our risk management framework continues to perform with a very high level of quality, regardless of any specific program. In this particular case, the effect on our indicators was immaterial. This is the indicator I mentioned earlier, with SMEs increasing from 1.9% to 2.0%, we are still operating at levels that are significantly below those observed in the past when this indicator ranged between 2.3% and 2.5%, and that is only natural.

However, there is a mechanical effect related to the expiration of grace periods as government-backed programs mature. Previously, we benefited from these grace periods as the denominator grew significantly without any impact on the numerator. As these grace periods begin to expire, we naturally see this increase in the indicator. Our best estimate is that this indicator should increase by another 10 basis points next quarter, reaching approximately 2.1% which remains well below levels observed not so long ago, such as in September 2024.

It is important to remember that the market is dynamic, but our current expectation is for this indicator to stabilize at around 2.1% over the coming quarters. Once again, this reinforces the fact that we are looking at a mechanical effect and not a source of concern despite all the challenges we have been observing in the market. Therefore, delinquency indicators continue to provide very positive news.

Regarding the portfolio by stages, I do not have any major highlights here. Stage 2 and Stage 3 portfolios remain broadly in line with expectations However, I would like to draw your attention to the Stage 2 coverage ratio, particularly the reduction observed this quarter in the company's portfolio. It is important to note that we do not manage the business by stage classification. Our management approach is based on expected loss. Therefore, if you compare the sum of short-term delinquency NPL 15 to 90 days plus NPL over 90 days with the share of the portfolio classified in each stage, you will notice that stage allocations are substantially higher.

What happens is that, particularly in wholesale, when there are migrations from Stage 2 to Stage 3 or from Stage 1 to Stage 2, these effects become visible. This quarter, we experienced migrations of clients from Stage 2 to Stage 3. Typically, clients leave Stage 2 with a relatively high level of coverage when they are ready to migrate. And this affects the overall coverage ratio.

Once again, this is essentially a mechanical effect that is fully accounted for in our projections and in our cost of credit, which I will discuss shortly. There is no specific issue behind this movement. In the MD&A, you will find the breakdown by retail and wholesale segments. But this remains a purely mechanical effect with no cause for concern. It simply reflects the natural migration of clients between stages, all of whom already had adequate provisioning levels.

Turning to cost of credit. You can see remarkable stability in this series from the first quarter of 2025 through today with cost of credit running at 2.7% of the portfolio throughout the period. This is an impressive level of stability. Naturally, nominal figures increase as the portfolio grows, which is why it is important to compare nominal growth in credit costs against the growth of the portfolio itself. That is exactly what we have observed.

Cost of credit recorded only a slight increase, reaching BRL 10.1 billion. As I mentioned earlier, the impact of the Desenrola program was immaterial, both overall and during the quarter.

Moving on to the renegotiated portfolio. It continues to operate at very comfortable and appropriate levels, although there are some specific effects worth mentioning. I had previously indicated that at some point, the nominal figures would naturally tend to increase. This is expected given the significant derisking process we have carried out over recent years. However, we also have specific one-off effects such as the inclusion of the Desenrola portfolio.

Out-of-court restructurings and other restructuring plans that have recently been approved are also included in these figures, among other items. Therefore, this increase is driven by specific and isolated factors. What matters most is the relative indicator, which remains very well behaved and once again demonstrates the strength of our portfolios. Turning to noninterest expenses. The news is very positive. Commercial and administrative expenses declined by 0.5% year-over-year and increased 3.2% in the first half of 2026 compared with the first half of 2025 remaining below both inflation and collective bargaining adjustments.

Looking at total Brazil expenses, growth reached 3.1% year-over-year and 4.1% in the first half of 2026 compared with the same period last year. This once again demonstrates our cost discipline across the organization and the meaningful progress we have made, particularly in those segments where we needed to improve efficiency in order to become increasingly competitive. This is a direct result of our management strategy, and we can certainly discuss it further during the Q&A session.

Overall, I'm very pleased with the progress we have achieved on this agenda. As a result of this strategy, the efficiency ratio reached 35.5% in Brazil in the second quarter and 37.4% on a consolidated basis. Looking at the first half comparison, we continue to make progress, improving from 35.7% in the first half of 2025 to 35.2% in the first half of 2026 in Brazil and from 37.5% to 37.3% on a consolidated basis. Therefore, I'm very satisfied with the efficiency ratio of the institution as a whole. It is also important to note that all expenses are included in this metric. There are no additional expenses outside the figures presented here, which further reinforces the strength and quality of the results we are delivering.

All of this ultimately reflects our capital generation capacity. We generated 0.8% through earnings retention during the period. We had a 0.3% reduction related to dividends and interest on capital provisions and a further 0.1% reduction from risk-weighted assets. As a result, we ended the quarter with a common equity Tier 1 ratio of 12.3%, a very strong and solid capital position with further growth expected, which should allow us to have our traditional discussion regarding additional dividend distributions at the beginning of the following year. This clearly demonstrates the strength of our capital generation capacity.

We also report additional Tier 1 capital at 1.5%. It is worth noting that the actual figure is 1.7% but regulatory limits restrict the amount that can be recognized, which is why we present 1.5% here. This results in a very solid Tier 1 capital ratio and reinforces the strength of our capital generation base.

Finally, regarding my comments on guidance, I have 2 observations to make. We maintained the previously disclosed guidance ranges, including loan portfolio growth, NII with clients, NII with the market, cost of credit, and noninterest expenses. The only change we made was to commissions and fees and to results from insurance, which, as I mentioned earlier, is closely linked to the level of economic activity. We revised the expected growth range to between 2% and 5%, whereas at the beginning of the year, we expected growth between 5% and 9%. We are making this adjustment to better reflect the trends we have been observing. If we see positive surprises in economic activity or attractive market windows, we will naturally seek to capitalize on them in the best possible way. However, we believe that making this adjustment is the most prudent course of action at this point.

The second comment I would like to make is not a change in guidance itself, but rather a comment on the position of the guidance. If you recalculate the implied results, I would ask you to consider the effective tax rate at the lower end of the range, which reflects our best current estimate. If you run the math based on those assumptions, you will see that the implied bottom line remains unchanged, despite the revision to fee income and insurance results, assuming the effective tax rate remains closer to the lower end of the range, the bottom line outlook is effectively the same.

This once again demonstrates our ability to provide visibility and deliver consistent earnings, even if the contribution by line item ends up differing from our original assumptions. We still have 2 quarters ahead of us with important challenges to navigate. The year is far from over, but we believe that we are very well positioned to deliver on our objectives over the next 2 quarters. As always, should anything change, I will communicate it to you in a timely manner.

Well, everyone, as I stated earlier, these are very solid results. We delivered quality performance across all lines. I believe it is extremely important to look at the bank's balance sheet and just as importantly, to understand where earnings are being generated. Above all, what matters is discipline and consistency, allocating capital effectively, generating appropriate returns on allocated capital, deepening primary banking relationships with our clients, increasing engagement, strengthening relationships and managing a transformation process that is occurring at a pace we have never experienced before, whether in terms of cultural transformation or digital transformation. We have been able to execute and coordinate all these changes simultaneously.

These are structural changes to our business models carried out with a high degree of discipline, strong execution focus, and most importantly, with a realistic understanding of the many challenges ahead. Both the macroeconomic and microeconomic environments require close attention. The level of indebtedness among both companies and households in a restrictive interest rate environment requires caution. Nevertheless, we have been navigating this environment successfully, always maintaining a long-term perspective. Thank you once again for your time and continued trust.

I will now join Gabriel and Gustavo for our traditional Q&A session. See you shortly.

Welcome once again from our studio for the Q&A session. We're going to start. And beforehand, this is a 2 language session. We're going to answer the questions in the language that they are made. [Operator Instructions]

First question comes from Bernardo Guttmann, XP Investments. The floor is yours.

Congratulations on the results. Question about the margin with the clients. The quarter was good without the offenders of the first quarter, but any accumulated of the semester, the line is a bit below 5% against a guidance that starts at 5% and goes to 9%. The guidance was kept, I want to understand where the acceleration is coming from in the second semester, more volume, more mix, margin of liabilities, or any relevant own capital, in this account. And the Selic rate and the cycle turning, how do you foresee the behavior of the margin of liabilities from now on?

Thank you, Bernardo. Great to see you. Thank you for the initial words. It's a good topic, so we can start the discussion. Your question is more specific about the guidance, but I want to talk about the specific growth of the margin. We see the portfolio growing about 10%, maybe a bit below. It should, in the next quarters have a bit of a reduction, but it's still above the midpoint of the guidance. It should stay there.

And due to the dynamics of growth, it should be in a higher threshold. There is a Colombia operation that leaves now in July, BRL 10 billion of credit that allows us to grow in the previous base, and we're talking about a delta growth.

Second effect, the margin, as we see it today, it's growing below the portfolio. Some asked, why is the margin growing below? The explanation is the same one as the next quarters. First, when we look at the portfolio, we see the margin of assets of credit growing aligned with our portfolio. So when we open the margin, we have the credit assets. We have liabilities. We have working capital, and we have structured operations.

First, relevant information for you is that the margin of assets is growing aligned with the average results. In the margin of liabilities, we had in the previous years, an important acceleration with the interest rate hike and an increase also in the performance. We see a strong activity. So we have a relevant growth especially last year in the liability margin. And the price which is what we tend to analyze along with the balance.

In this quarter, we have the base effect with the assets when we compare it with the previous -- with the first quarter, the first quarter of last year, we had the full capital. And last year, we did an anticipation of the dividend. So we got into the first semester with capital with a lower threshold. That's the effect on the working capital.

Fourth effect that really explains the volatility of the margin are the structured operations. LatAm doesn't really bring a lot of volatility. There is an exchange rate effect on the results, but the structured of the wholesale they have volatility effects. So when we look at the 2 quarters, the expectation is that the range still comprises our best opinion of projections. Of course, it depends on the activity and a series of factors.

Nonetheless, we can see some volatility in the margin in the third, fourth quarter, but due to the seasonality of the structured operations of the wholesale that tend to be stronger in the fourth quarter. So when we do the projection of the margin, everything else constant. We believe that the current range comprises -- it's a range. It's not a point. It comprises that -- so when we see the effect of the interest rate, we had an effect of rate itself when we look at the implicit working capital in regards to the previous quarter.

But when we normalize the [ wrap ] effects and also in this quarter, the working capital had a lower effect which is selling the real estate that stays in the working capital, we see the rate of the working capital being aligned with the previous quarter. And remember, we do the long-term hedge of these operations, the liability and the working capital. Even in a cycle of interest rate, the pass through to the margin is not automatic. There is an temporal gap as the hedges are done for the longer vertices.

So we depend on the activity because the activity of liability work together. We have a cash pressure stronger and also the individual, the efficiency, they pressure the liabilities, they grow the balance and the margin will depend on the dynamic of the interest rates, which depend on internal, external and the macro factors. We have everything depending on the scenario, inflation, the interest rates on the United States. So we can have a clear vision.

Next question Gustavo Schroden from Citibank.

Congratulations on the results. Quite solid. I apologize, and I'm going to insist in the issue of the question of Bernardo, but I'm going to try and bring it towards the optics of growing the portfolio.

If we analyze the bank, it has a few lines, and it's focused on the private payroll loans, small companies. So I wanted to understand what is the sustainability of this level of growth in these 3 main vectors of growth. The small- and medium-sized companies always exposed to a higher interest rate that we should have, even though we are expecting cuts. We are still going to have a Selic rate higher, macro scenario challenging, the private payroll loan, Consignado is a product that has delinquency pressures.

There is a gap in the interest rates. So we need to understand the size of this market. Is it possible to keep this level of growth for the next 12 months, and the real estate -- when you have higher interest rates. So I really want to understand what is the dynamic of the portfolio from now on to sustain this growth of NII that is more pure of credit?

And a follow-up on the structured operations. Maybe we should expect a contribution for the semester for the end of the year. So if you can clarify, what is the dynamic of the dividends that come from the quasi-equity operations that you have? They are linear? Do we have a seasonality here in because it's more concentrated towards the end of the year. So we wanted to understand those nuances.

Thank you, Gustavo. Thank you for the question. Great you see you. Let me try and bring forth a few relevant events. The SMEs. We managed to grow, grow with quality, with great dynamics, healthy of risk management. And with a clear strategy for many quarters to grow in the government programs. It's a guaranteed portfolio. And we've decreased in the government programs, one with the better ratings customers, we build a portfolio with them all throughout the years. It's a portfolio that has performed, regardless of the challenging context and the cost of credit and results in a profitability level are being delivered very solidly for a segment.

So government still helps to withhold the delinquency at a lower threshold, but even the clients that are not in the government products, we're growing with quality. I've explained in the presentation about the delay. I want to reinforce. We've seen a stability in the delays in the SMEs, mainly because of the mechanical issues of the deadlines. Since they are tending to 0, we have a mechanical growth of NPL. The guarantees are exercised, depending on the program, depending 90 days, maybe 180 days. So they go through the delays before you execute guarantee.

So there should be another 10 bps of growth than stability -- well, given the information that we have right now, the scenario is dynamic. If we have the deterioration, we're going to bring more information. The private payroll loan, in the previous product that was -- you had specific agreements, BRL 40 billion market. So we had 30% of the market BRL 12 billion of portfolio. It's a product that we are learning to work throughout the years by the know-how giving it to the credit to the companies or the individuals. The private payroll loan Consignado, is the junction of these 2 managements.

From the inception, we're focusing on a public that is the target audience for this product. It's a public that most of them have an account -- checking account in the bank. We haven't operated in the open sea because of the delinquency that is very high. The stability of the operation is still relevant issues and some processes that need to evolve.

Messages. We are growing with quality. We should stabilize the deadlines, delays, indices similar to the previous product and we're going to see the nominals that are going to grow. Well, the portfolio grows a lot, obviously. It's not going to grow at annum. It should stabilize, but we see great opportunities to produce with great risks and a dynamic of delinquency that is very adequate.

Most importantly, we are running, and I presented that we're running at about half of the indicator of the delays of the system, the data has been published recently. We're running with an indicator of delays maybe at half. So it's an operation that creates value, generates profitability. And most importantly, we service our clients with the products that are more adequate. This is the focus. I want to be a bank focused on the client. I want to offer a product that is cheaper. And it helps to explain why the individuals, they don't grow. In the employees, we drop in 7%. And we grow -- well, there is an exchange, so we can avoid the over-indebtedness of our clients.

I brought the data that in our portfolio, our clients have performed and the delay levels have been very well behaved. So there was a comeback of the change of the mechanics of the real estate credit 65% directed, 20% compulsory, and 15% free resources. Of the 20% of the compulsory 5% came back. So that generated an additional resources, and we have the real estate credit in the client vision. How I service the client in the completeness of their needs in the best way possible and given the mix that we have between treasury and savings and all the hedges that we do, we grow with quality because we see that portfolio. We need to see it as the funding comes back.

The model changes next year. We have gradual releases of compulsory, 1.5% for the next 10 years at the limit in a time, you have 2 forces. One is savings more pressured. It just dropped 0.6% in this period. So it has a behavior that is stable. Well, you have the order strength, which is the increase to the direction that will release funding to the market. So we still see the capacity to grow pricing correctly.

If you compare it to any other banks, and I'm talking about the private ones, our return for every real margin in credit is the best, given our relationship of treasury and real estate credit. We are very comfortable. Companies are depending on the capital market.

We have a capital market that is more erratic over the last month, 2 months weaker, 1 more active. Up ahead, it depends on the activities, which will drive our capacity to grow. Most importantly, we've been very disciplined in the capital allocation and returns. Very easy to grow portfolio with the wrong returns. When we look at the whole portfolio that we have, vehicles, big companies, we've seen the level of appetite in the market that is higher. When we see the operation of the model of return with the allocated capital and we have an accuracy level that is very high, in these models, we see that these operations are destroying the value for the shareholders when they're below capital.

This is not the dynamic -- our vision. So we see opportunities of increasing in allocation. The portfolio will continue to grow with quality. We've grown in the companies and individuals and the best clients and the best ratings, resilient public, and we've grown margin of assets in the same level. And what decelerated is structured and liabilities. Well, dividends, your question. It doesn't have a very clear dynamic because every company releases their dividends whenever they want. So you have to have a fiscal base to be able to operate with these operations.

So this is a care that we have, the issues of the DTAs, which is very relevant. Secondly, typically, the companies give dividends at the end of the year, the end of the first. But eventually, there's going to be a structuring. The client needs rescue and they're going to pay an extraordinary dividend. It's been erratic for us, this portfolio. It's difficult to affirm how the margin will behave because since we are at -- well, any marginal operation will generate volatility. That's why we are looking at the guidance, well, at the end of the year, since the dividend is going to be paid, then we have more surety in our operations.

Next question. Beatriz, UBS.

Our question is about efficiency. In the quarter, it's a bit higher due to seasonality. But we see a trend that is very good. Do you still see a space for an improvement in this index? And if you ask what are the main drivers -- for continuous improvement.

Thank you, Beatriz. Do you remember that in the previous quarter, we brought a bit of a view of the efficiency level in time, looking at a few segments of business. We had efficiency indices that were benchmarks and where we saw segments that are still scalable from the standpoint of efficiency indices. The efficiency index depends on the revenue. That's the focus. We see that this is the best second quarter that we had, the best first semester that we had in the efficiency semester. There is a seasonality.

First semester is where we see less expenses and the levers are what we've seen the application of technology. A lot of the fruits of the investments that the bank has done throughout the years, they -- their fruits and we get to an efficiency level, that is very good. It's a virtuous trend. It's not from this period. If you have the longer periods of the bank, you're going to see this. We believe that this has a potential of the plans, the level of detail, the discipline that the bank has and scalability is big, and it's what we expect for the future.

And I reinforce the words of Gabriel. Yes, it's very demanding, yes.

Marcelo Mizrahi, BBI.

Congratulations on the results. I want to see the service line with a review of the guidance, but I wanted to understand more of the dynamics that provoke this review. And what is the strategy of the bank, about the issuance of credit cards, the lines of payment, the payments of companies, [ acquirers ], and even the insurance line, I wanted to understand the service lines up ahead.

But looking at the dynamic of this activity, the mix services should have a behavior that is more cautious and lower growth maybe for next year, given the growth of cash that is potentially lower, these lines can be affected. What is in here, what is the change of strategy? The maintenance of the strategy, do you agree with this vision? Thinking about the mix of the portfolio, the strategy of the bank, do we think about this weaker line in the next quarters?

Thank you for your participation. I think it's great that we can talk about this line because there was a change. And for every component of the services and insurance, there should be a small explanation. So first, talking about credit cards. Specifically individuals, there is a double effect. If we can summarize our strategy. First, throughout the years, we did a derisking, important derisking in the portfolio. In the income toward the less resilient publics, we did a derisking that is very relevant. Looking here on the rearview mirror, we lost marginally revenue. We saved important volumes of loss of credit. So the strategy was good.

Second, we've been ever more focused in the high income which is where we're growing the portfolio. And when we grow in these publics, it's a product that is clearly more expensive. We do a reduction of the payments -- monthly payments. So we reduce the friction, and we are generating an operation that is completely dedicated to the vision of lifetime value engagement with the client, reduced the friction of the yearly rate, but the rewards are more expensive.

We see the players using the credit card as a cost of acquisition of the client, making it more expensive. And in our vision the public demands, better service with best conditions. And in the standpoint of the vision of product and this -- we have the exchange in an adequate rhythm. There is a strategy with the services and insurance. A great deal of the growth has been financed with the portfolio with the interest rates. And we are using the product of credit card as a finance for the consumption and not as a product for the client that has a more deteriorated situation and has a overdraft or the payment of the credit card.

There is a series of -- we're increasing the elasticity for the high-income clients. And we're doing this in a very material way. So this component has to be in the context of the credit card strategy, but it's in the margin of the clients. It's not in the revenue of services for the credit card. The administration of resources, is very important.

The per fee, even though there is a more difficult market, we are the second asset that has a good performance relative, but it wasn't good for everyone. Again, so it means that since per fee comes in the second quarter and the fourth quarter, we had a lower performance than the third quarter of last year. So it's a risk management dynamic. We hope to be in the correct side even though with the volatility is difficult to generate per fee results.

And on the other hand, we are growing the balances. And the rates are kept and that generates resources for administration. And also the consortium has helped a lot. When we talk about the investment bank, when we see ECM M&A stopped. We have a good -- and fixed income is a better month in June. But we have to remember, we like to look at the operations of the bonds and real estate, specifically in the rankings, joining what is origination and distribution.

As you can see, we are still the leaders with a big advantage in distribution and it shows that a lot of the origination we distributed in the market. And we don't do those operations exclusively for balance. We do it by the good dynamic of the capital markets and the operations for the distribution of the market. And this is an important component to see because these operations when you see the result all in, which is the spread of credit plus fee that you get. And then we've seen operations in the market that are very much below the cost of capital. So a great deal of the operations that we lost, we lost because of price because the operation doesn't return cost of capital.

And it's been years operating. It's not difficult to do the calculation of capital allocation and return the operations that come between 1% and 12% that destroy value in the vision of the client, but there is an important vision that depends on the dynamic of the market, and it depends on the higher risk. These returns that I'm mentioning are considering the fee which is recognized again. So the risk that you recognize, the risk that you run is big -- recognized big risks and the duration of these portfolios might be 7 years. So you have that tied down for that time. You have an asset of low profitability because it gives 12 of return, considering 12 on average. We've seen operations below that considering the fee.

So that dynamic is bad. You recognize a fee, you do a big result. And eventually, you might be recognizing the operation with a lower profitability at the long term, which is dilutive for the profitability.

The other one, we try to be very careful with the credit looking at the operations that we will lose because of appetite. It goes through any reasons, but sometimes we don't do any -- some operations because it affects the market as a whole.

When we go to insurance, we've had an important component for growth of the operation of the core, the bancassurance is doing well. What doesn't mean that deadline is exclusively for our bancassurance.

It brings [ wraps ] and other effects, you might have some volatility there in the yearly and quarter-on-quarter, the patrimony equivalents, we have public data and that's been displayed and this is clear. So we can grow with a lot of quality. We've grown in the year-on-year. The premiums issued are relevant and with the numbers very well behaved. The government has -- the social security has an important result as well. So looking up ahead, so it depends on the activity, but every line has a different strategy. It's important that we have that vision of the client and companies I didn't talk about the flows of receivables.

It's important that we brought Rede in-house. In the results of Rede there is a double effect. First, the mix that we grow more in the wholesale than the retail, which affects the results. Secondly, the integration of the bank to the business, so we don't look at the vision of the product. We look at clients. The floating in the business of Rede ,it's not in this line. It's where the margin will decline. It's an adjustment that we should do up ahead, having a clear view of the whole and a big offender are the packages of companies, tariffs that we are reducing directionally.

And the objection of this reduction is to remove the friction, increasing the lifetime value and creating long-term value. So we see the rates of engagement with the packages. And the individuals are dropping. We're generating a result that it's 1/3 of what we generated in the past. When we did the transition without being the bank more efficient, more focused with the client, that for the long term is very relevant. And for the future, it depends on the activities. Let's see how can we grow in this. And briefly we will be budgeting in 2027. Post-election, the space of the interest rates, they are going to facilitate the opening of some of these lines.

Now we have our Yuri Fernandes.

Congratulations. Well, the profitability growing less in portfolio, so quality, vision of results. But I wanted to go back to asset quality. This presentation you commented -- I just wanted to know on the 15-90 for the individuals and SMEs. And there is a seasonal improvement. And a part of this level, you explained, which is with the government programs. But even the individuals, I shouldn't have a lot of effect on that, you reflect upon it. It's not a vertiginous drop. It's going to be 10, 20 bps, and it's flat.

So I want to understand is if you're comfort with the asset quality, well, things are not going to improve a lot. There is a worsening. I know that Itaú has a better balance, you are more prepared, but we are concerned, are we going to see any levels of worsening or no? This is a scenario of comfort, stability to understand. And if you can explain what happened with the 15 to 90.

Thank you, great to see you. First, I believe that what you've felt that I've tried to transmit during the presentation, you captured it very well. Evidently, the scenario, if we look at the previous quarter and about now the delays that are published in the products, we see a relevant increase with the over 90 delays. First information on our side. We didn't change. At any point, our policies of write-off for any product. The 4966, it gives you liberty, but we've kept it as is. Since our expectation to take the clients write-off didn't change.

We don't do that for provision or using the degrees of freedom for that. Number two, the derisking of the portfolio that is relevant was done. Today, with the margin, we've managed to grow in a relevant way with a more resilient portfolios with the natural -- with the individuals and the company's wholesale retail that has brought a lot of important results. What is the twist for the short-term delay? If you go back and look at how much we've grown, in the first quarter in regards to the fourth quarter of the last year in the delays -- short delays, you're going to see that we grow much less than what we grew originally. So you see there we've grown 23 bps.

It was much below to what we've managed to grow. So seasonally, we see a recovery higher with short-term debt because the first quarter seasonally is higher because of that. So we don't expect to see it. But since it was lower, only 23 basis points and removing 23, 24 is the best indicator of the series, then we ran at 50 bps 60 bps in previous quarters. It goes less in the subsequent quarters. So there isn't any signal. It's more difficult. We've worked with the indicators, but no signal of concern for our portfolio. So the requirable for the information that we have now, the income that is higher, interest rate that is higher.

There is an over offering of credit in the market. Over the years, we are very disciplined to grow in the correct way, but we are very at ease with the indicators. You can expect stability. These are volatilities, variations that are miniscule. So no type of concern.

If you look at the cost of credit, the portfolio is very well. If you see the renegotiated portfolio that grows in this quarter, we have 2 important explanations. First is the Desenrola, the program of the government.

And secondly, in the renegotiated portfolio, we have still legal proceedings of last year, and you can only consider renegotiated once it's been -- the plan has been implemented legally. So when you look at the provisions, the creation is stronger now for the second quarter because it's seasonal. If you go back to the previous quarters, it's behavior is very similar from the rollout for the short to the long, it grows in creation. There is a mechanical effect. We don't do provisions with the creation. We do expected loss, some were in the delays. In short, we anticipate the first quarter and the second quarter, we don't see that effect. The coverage over creation that as is a wholesale as a whole since we have guaranteed products so they demand less provisions.

So whatever you see, we are very comfortable with the indicators of credit. Don't see in that any type of message. Our best estimation is stability. We don't have the best estimation for the individuals and the -- that's why individuals for the companies and SMEs, it can worsen basis in the next quarter and then stable in onwards. With the information available now, it can worsen but it's not what we are saying.

And in general, without the delays and we should bring in the next quarter, which helps to bring the indicators of the market. And our indicators, it's clear how we've distanced ourselves from the market. The mouth had been very open, and we are consistent with the growth of portfolio that is very adequate and the long-term view. That's the message.

Now for the next question, Renato Meloni, Autonomous.

Congratulations on the execution. I wanted to start in a broad question. If you can tell us, Milton about the cycle of credit in the industry in the second semester and getting into 2027? So you have -- how much is that helping with the interest rates in 2027? Well, with the previous comment, if you have any deceleration with the growth and the conversion for the guidance, where is that growth coming from? There is maybe you're going to get above the guidance.

Thank you, Renato. The cycle of credit, we've had it for many years. It will manifest differently from the different segments and the different products in every segment. So the choice of how to give credit in a long term and the management of portfolio is vital for what we are delivering. Because when we see the portfolio, you look at guidance, you look at macro, you look at the current conditions. You see all the models, and we had great results. We've advanced in artificial intelligence, and an important results for the credit management.

The cycle of credit, we've seen a compromise of income. Government programs that are various of nature in this umbrella had an important impact. In our portfolio, it's immaterial, but it's BRL 1.5 billion renegotiated. We presented [ 0.02%] with the cost of credit. But for other players, probably the impact is higher, given the share of the program and given the public with the -- which is less of our profile, and we also work in that public.

So the cycle of credit will be challenging because the United States, possibly two hikes on the interest rates, the high -- the curves are going to be opening. There's going to be pressure. The premium of the risk for Brazil is short-term is well priced, possibly a cutoff of the meeting, which is the base scenario. But it depends on the United States. Because if the interest rates are higher, then naturally, that will pull the exchange rate and that will generate -- it will be difficult actually to work of the Central Bank. That remains to be seen.

So we see that these programs are helping, but there are one-offs. They are not forever. So nothing substitute the discipline of risk management. What we see today is an excess of credit given to the market is an excess of regulation that opened the market in a relevant way.

There is a lot of players operating. There is a lot of credit for the growth of credit is in the -- clients are over in debt. The clients had 4 or 5 credit cards. Now we have 5, 6 credit cards for individuals. So we grow the resilient clients, we help them to do that transition in the best way possible. But it's a scenario that inspires care. For 2027, we still need to understand the real capacity. But now your final question is, why don't you see that you have a better condition the balance is higher, so you can grow because then we're going to get the mistakes on the long term. So we need to have that discipline. That discipline has brought us here.

So once you lose that discipline because you think that you need to grow, either to deliver results or to grow the top line, you deliver everything in the PDD, thereafter. And that affects the capital and it worsens your capacity to give credit again. You're in defensive and you decrease the appetite. So we always want to be always on, giving credit with quality, but with the clients that are more resilient. Always looking at the long-term. But I always say, when we see the market growing irrationally, we always need to make a decision. We lose the market share or if we are going to lose market share or money, we'd rather lose market share. So this is the adjustment of the portfolio.

Now Daniel Vaz, Safra. The floor is yours.

Congratulations on the results, the stability, the cost of risk, a bank that is always predictable and stable.

I wanted to go back to my question, efficiency indices. We've heard with Milton and I wanted to understand the management of the cost if -- I hope that is very far away from that, but there is a scenario where your revenue growth single digit, how much management could you have a cost contingency to keep the ROI? What limits the cost of cost? Is it more institutional, regulatory or simply is a deliberate choice, speed, of investment, crossing with your revenue. And looking at what we are doing now. You have a review of footprint. But how much of ahead that has AI applied to your business? Thinking about what was done from now on, and now you have 100% support of AI? Or do you still debate that? Or is that being supported? And...

Thank you. Thank you, Daniel. Thank you for the initial comments. Well, I'm going to see the glass half full. Comment that I wanted to do is the first cost is what is in our hands. Of course, the revenue, we have a production, which is the mechanical, the portfolio. And when I look to the future, the revenue is uncertain. It depends on activity. It depends on delinquency and so on. But the cost is under management. We decelerated importantly with the cost of the growth without foregoing the long-term view. We're never going to kill the future. We are always going to generate value for the clients investing in experienced, digital experience and delivering a bank that is ever better for our clients. Opening new businesses, doing new fronts, all of that we're doing, but we can do both. We can invest in opening the space for that investment.

I don't have a silver bullet. It's a series of initiatives that Gabriel has done with the Executive Committee and the bank a deep work, all the levers, mapped initiatives. So that's where we're going, certainly. Of course, if we have technology or any other way of accelerating the process, we will do so. We are careful with the discipline of the tokens. We are never inhibiting innovation, how we're going to do the intelligent management and so on. But efficiency for us is a mantra. It's never as important as it's been now. So with the segments that we can win in competitiveness, and we can advance with the market, we have 5 percentage point advances with consistency.

We're going to continue to reduce the retail, adjusting the cost of service, so we can be more competitive with the digital, given all the investment that we've done in technology and transformation of journeys, which allows us to service our clients with the best digital experience. And just I'm going to take a step back. In the last month, we had competitive NPS of 18 points produced by [ Prism ], which shows the competitive NPS for the market for the winner of the digital experiences. We closed a gap, which was 18 points through these years with the investments and the digital transformation. We are ready to capture the benefits of the digital, Gabriel can give you more information.

I'd like to answer, starting with your question about the result. About the predictability, about the stability. It shows how we're doing things. At the end of the day, it's not difficult to grow the credit portfolio. The consequences of what's later is part of the decision-making process. So having a cost in a way that is sustainable for the clients, with a series of investments that we have to do today to create value in the future. So the efficiency level is very important. It's an engine of competitiveness of the bank. But at the end of the day is the maximization of values. This is what we can do better for our shareholders and our clients.

There isn't one initiative. AI is a lever that is important. We are implementing. We are bearing the fruits. We have initiatives that we're doing. At the same time for you to do this. It goes through expenses. The AI expenses in the bank will increase, but it generates efficiencies, will generate revenues. So it's not different from all the transformation that we had with cloud before. Its expenses that increased, but you generate the development of the products for the efficiency of the processes and the bank as a whole. The answer, Milton, is very complete, but we are doing the best that we can do with the times that we -- that is sustainable, and we can generate value for the shareholders.

Now we are going to switch in English as we have Tito Labarta with us from Goldman Sachs.

Congrats also on the strong results as usual. I also want to ask you a little bit about the industry, your position in the industry, you're delivering about a 26% ROE in Brazil at a time where a lot of your incumbent competitors are struggling to do double digits, right? And there's concerns about the credit cycle, growth slowing, high interest rate environment? And how do you think about that competitive dynamics because that could create some incentives for some irrationality, perhaps from some of your competitors to try to improve their position relative to yours.

And we saw some -- maybe some pressure on fees, maybe that's related to competition. But how do you think about the competitive dynamics? We also recently saw there was an indexed that ranked you as one of the top 2 banks in Latin America in terms of AI. On the one hand, I think the leaders globally typically increase the gap relative to the laggards, right? Is that a scenario that we're seeing? Or could competitive dynamics change? And could they close the gap to some extent? How do you see, given where we are in the cycle, given your position and given where your competitors are today, your ability to sustain these levels of profitability and maybe some of the risks to that?

Thank you, Tito. Good to see you. Thank you for your initial comments. So it's important to state at the very beginning that we have many competitors, in all the segments that we operate. So if you go to the wholesale business, you have Itaú BBA, then you have incumbent competitors, other competitors for all the rankings and competitors for credit, for cash management, for derivatives, for FX, for everything. Then you go to the wealth management, then you have other competitors for investments, for asset management, so on and so forth. Then this is the same rule that applies for all the other segments, okay?

So we have -- when we talk about competitors, I think the first comment I'd like to say is that we have a huge respect for all of them. And I think all of them are doing their homework, everybody trying to compete to be more competitive in the long term, making their investments, trying to grow. Everybody has a budget. Everybody has a board. Everybody has incentives. So this is life as it always was. But then we have to segment a little bit to understand, I would say, competitors' behavior.

First of all, you're right. We've been able, fortunately, to deliver 2 digits and a strong 20-plus return on equity in the last years. And we are always trying to deliver the best value creation for our shareholders. And it depends a lot of cost of equity that today we pretty much set at 14.75%. This is where we believe our cost of equity is set, okay? So whenever we are generating at 14.75% plus, we are creating value to the shareholders. If we are operating there and less than that, we are deploying capital in the wrong way. So this is the discipline we have. It's true that whenever you need to show some results, you try to grow fast and growing portfolios and to underwrite credit in a rational way. We wouldn't be doing that because I believe this is not sustainable.

And whenever we see some irrationality and it's happening in some segments. We give one step behind and say, that's okay because it's not sustainable. And you know that for a few months, you will see that more clear. And then after that, you will see the market being disciplined again. Why is that? Because then, you will show your profits or your revenue growing, but your profit will grow, but your return on equity will be low. And so the stock will be at the end of the day, looking for the capability to have to create value to the shareholders. So this is very, very important for your price book and also for your price earnings.

And the other thing that market will be looking at is the tangible equity of every institution because the level of leverage you get, when you have a small tangible equity, it's a huge leverage. It's not made for make mistake because if you make mistakes in credit, you have just a small portion of our equity, real capable to absorb losses. So that's why we believe it's not sustainable.

Otherwise, you have to raise capital in the market more and more. So what we are seeing is that there is a irrationality in some segments. This is not enabling us or preventing us to grow. We are growing and growing with discipline. But when we see that, we give a step behind and keep doing the way we believe for the long term. So this discipline is key for the long term.

So when people ask me, what is advantage different that you see when you look to your market? It's the discipline in allocating capital. I think this is for many years and will be for the coming years, key. But we see room to grow, we see room to grow our portfolio. So the strategy, the experience is not only a matter of price. Clients are looking for better experience. Clients are looking for a full bank that offer you all the products. There is competitive, of course, but has a journey, a digital journey that is excellent. So this is the way we are offering the bank to our clients, and the discipline will be always here. So let's see, in the coming quarters, and time is time. So let's wait and see how sustainable are those approaches.

Now we are going to move back to Portuguese because we have Eduardo Rosman with BTG Pactual.

Now let's go with the credit cycle and see your opinion. How do you see the system being prepared for a crisis, economic one? The market changed a lot. The companies, the capital markets they multiplied. And for example, the FIDC industry, there is BRL 100 million. That dilutes risk on the one side, but it causes changes. And we don't see how the capital markets would react to a crisis. If they would go to the same direction, the individuals, they've lost a lot of shares. We have platforms. Everybody wants to be a bank every 2 days. So how do you compare with the previous crisis? And how do you see the system for potential crisis?

Thank you, Rosman. Thank you for the question. When we see the current scenario, there is a lot of changes. We have the of credit with the financial system. We have to look at the banking. Well, the volumes are very relevant. And today, we have at least 2 Itaú in credit, corporate credit in the system. And we've never had capital markets that is so relevant. This is great because the companies, they have access to market, to bank, to credit, long-term operations that in the past were public banks now the market can absorb.

But we're going to see -- if we see a relevant crisis of credit, then there's going to be relevant challenges than in the past. Last banks, banks in capital markets discussing. We've had a few cases, we've managed to somehow negotiate in a rational way with all the participants, but it's always a challenge.

Second point audit Regulation is key. And today, the amount of players is very high. So you have a market that is supervision the Central Bank does their work. They also have their budgets, and we are in favor of increasing the budget for the Central Bank because it's the same thing as giving credit. And we don't have the structure of -- well, you open the market and you don't have a supervision. Again, follow up on the evolution of the market, not by the speed, but the quality and the limitations, the physical limitations, in fact. That's an important theme that we've discussed. We defend the increase of the budget for the Central Bank, so they can supervision. And then is the unsupervised. The neobanks, the newcomers they brings the operations to the balance, but they distribute to the fund. A great deal of the risk goes back there. So these are capital markets, but it's a risk. It's almost a shadow bank that we have low visibility to what is inside the FIDCs.

And when you have a situation of stress, who is the owner of the receivables, these are situations that come up, and we are going to have to deal with that. The compromise of revenue is very high. The indicators of delay is above 90 are going up. We have to see the data of the market and the level of credit that was distributed in the market is much higher than the market could absorb.

So today, it's very easy to have a credit card. There is no annual fee, you can have 6 credit cards. You're not going to pay the fee. You create the effect of the sudden death. And then you go from one to the next, and then you leave the bank that has -- that is the main one. So the scenario in the individuals, SMEs are very pressured.

The level of interest rate is very concerning and there's difficult capacity of the companies of investing and paying. The agribusiness has its challenges, perfect storm, the price of commodities, the price of fertilizer, logistics, with the war, several signs that the situation worsened at the margin. Now market is liquid. Several actors operating, internal usage coming to the funds, the first market into the market relevant and can generate an impact and we go through the dynamic of prices. There is volatility in the spreads of credit, but there is important thresholds that are competitive. So the market has absorbed. Those that use the window have used it well.

And if you need to sell it because of a cash flow, there's going to be a hit that is very big. So that's where we're going to have to follow. But the scenario worsened at the margin, and we're going to have to see the unfolding of the structural interest rates and the economy activity. We cannot depend on the transference and the public expenses. We need to bring private investments in, in these levels of interest rates, it's more difficult.

Mario Pierry from Bank of America.

Congratulations on the results. Milton, going back to services. As you explained a lot, there is the review of the guidance. But I wanted to understand, how is -- what that has to do with the migration? You've talked about the migration of the clients for the [ One Itaú ]. In the revenue, and we're going to have the cross-sell of products. And we have that review of the revenue that we see that the migration occurred but the benefits are not as good as we expected. How do you see that migration and the benefits for the results of the bank?

Thank you for the initial comments. And, no. That's not the explanation. We're very positive with the evolution of the migration of One Itaú that we've done throughout the quarter. First, we concluded the migration. Second, the NPS levels above 80, very strong with a small friction, 99.3% of the clients migrated with a digital experience that is very solid, and we managed to get 18 points of NPS in regards to the leader of the digital bank.

The new products, more than 20 products launched in the period with a level of activation that is very strong. So transference of limits, the management of expenses, there is an adjustment of limit of the credit cards. So there is a lot of products that has important results. We quadrupled the open -- the volume of accounts in the bank. Over 70% of the clients have 3 products of the bank. So we've managed this. So the checking account is relevant. And here, there are opportunities to grow in credit with a client that you knew. There is a relationship with a credit card, but you didn't explore full bank. With the private payroll loan or whatever. That is in the margin with the client. It's in the growth of the portfolio.

It's not in the margin of services. Credit card is there of this product, of this public. And in this public that we migrated, we did the derisking and it affects negatively and we are reducing a big reduction if somebody doesn't grow. So it's the one that affects marginally this effect with the portfolio of services.

So One Itaú is doing well. Opportunities for growth in the individuals, it's growing very well. The transformation of this BU, when I do an analysis of the last 7 months, it's great work with solid results, quality growth, everything that we discussed in Itaú day, and we've communicated has been executed in an impeccable way.

And the results are following. So we see the profitability generating value, segments that were more deficit. The difficult Itaú Digital is the capacity of growing in the niches with the segments. With quality, and we have to get in practice 67% of the initiatives that were mapped are going to be executed until the end of the year. We should do it. And the growth should come in the subsequent years. We're very excited about the evolution of the real estate, in the natural, first. And the individual, second. Where we had structural programs that were very relevant. We've managed to execute it very well. I'm very excited for the future.

And now we're getting back to English as we have Carlos Gomez-Lopez from HSBC with us.

Gabriel, Milton, Gustavo, once again, congratulations on the results and the consistency of the results, which is so difficult. I wanted to ask about one of those things that are unchangeable in life, which is taxes. Do you differentiate yourselves not only for the higher profitability, but also for being the bank with probably the highest effective tax rate? But when you think about it from the policymaker point of view, the system as a whole probably is paying less taxes today than they were before. And with the amortization of the DTAs, possibly even more.

Are you concerned that in the next administration, there could be a pressure for the industry to pay more? And in that sense, what can you do to protect yourselves, either through Febraban or something else? And where could you see pressures coming for a higher taxation?

Yes. Thank you. Thank you, Carlos. I think first answer of your question is that there is a huge stock in the market of DTAs and tax credit. So the DTA and the tax credit is a tax that was paid at a certain moment or you have to deal with that when you go and you move for the coming year. So this is relevant. I think at the end of the day, whenever a bank has a situation of tax credit, to avoid having losses in the tax credit that will reduce from your capital base. The first thing that a bank should do is, well, to avoid doing operations that reduce your tax base. So this is one thing.

The second one is to reduce the IOC. So you are not obliged to do 100% of the IOC. You can do up to, but you need to have a positive tax situation to make it happen. So I believe banks will need in a certain moment, to adjust the IOC.

The third one is the payout. So I think banks have the capability to reduce payout as well to retain more capital, if for any reason they will face difficulties with the tax credit. But the IOC is there. I don't see any discussion about it. It's not only for banks, but it's for the whole industry. It's true that our system, our industry retains a huge amount of capital in the balance sheet.

And why is that? Because it's regulated activity. So the Central Bank requires that for you to make the credit and to have a portfolio the size we have, you need to retain capital. And this capital that you retain, at the end of the day has the benefit of the IOC. But you have, in the other hand, a very high level of tax -- corporate tax rate for banks in Brazil, which is 45%, and there is an increase for financial companies in the consumer finance and also for IPs in the recent years. So I think there is no risk of this discussion because it has to do with the level of capital, and I think banks at a certain point they will have to reduce the IOC.

It's not our base case. We don't have any issue with that. But I think the market might need to reduce IOC in order to avoid having losses in their tax credit that will reduce capital. I think this is something that we might see, and this will necessarily increase their effective rate.

Now we go back to Portuguese. Eduardo Nishio from Genial.

I have a question that is for the efficiency level. I wanted to hear from you. From your standpoint of cost and revenues, if the number of employees is dropping very high, 5.5% in the year. And in the branches, we have a drop of 90%. So I need to know until when this process, where are you in this stage of making your footprint adequate, which is 2,000. Do you see more space for reduction? And in the part of revenues, which is difficult to make it tangible, the Super App. If you can share with us a few numbers of cross-selling. Do you have those numbers to tell us? And the launching of the generative AI with a Super App, what is the proposal that you expect from this launch?

Thank you, Nishio. About the first part of your question, when we look at the number of branches, we always do a review of the footprint from the client inwards. So demand by the branches is dropping. The flow is 1/4 of what it was in the pandemic -- the pandemic came, there is a digitalization and we are always reviewing our business model.

Our value proposition sees how we're going to service the client. What is digital, what is remote, what is in the digital branch, what is in the remote, what is the physical? That is part of the process. We don't give guidance on the amount of branches or headcount. Naturally, the turnover -- natural turnover of the bank, as we understand that we can absorb, being more efficient and at the same time, adjusting the value proposition and the business model for the clients.

We're going in the first month we did a review. But we have a review of the proposal of the value and -- all of that is being discussed. So we have a commitment with the client and the business model. And we have to adjust it as necessary. This is what we are trying to do, generating the minimum fracture and with the most care.

About efficiency. We talked about the Super App. The migrated clients, 50 million are migrated. We have 70% of the clients with 50% of the products and the opening of the volume of accounts is gigantic, which shows our capacity of delivering value depending on the profile of the clients. So there is a one-size-fits-all. The benefit of integration is not only for the migrated clients but for the shareholders because the dedicated apps, we are -- we have a better experience than the Super App.

So when we integrated, we have -- when they are in a Super App, they have a hub of credit cards that is much better than what we have before. So now these clients are part of our ecosystem. They are part of the life cycle. They are part of allowing the client to understand the full bank and it's not mono bank and we have solutions for the client as they have needs so that this growth is done, obviously, naturally. We're very excited with the results and certainly an important growth of the individuals is servicing these clients better.

So first, we did the foundation of creating the guardrails, the foundation of how we're doing the artificial intelligence to interact with the clients. We have a responsibility and the institution, we cannot have the model with the -- without the protections. We have scalable models at the right price. And how can we take the results of the client in their own benefit, we have to individualize the experience, and we can do that having the -- taking into consideration the DNA of the client.

And here with the degree of privacy that the client wants, having a model, and without having the knowledge bases, well defined, we have the instructions and our policies and our culture. The agent at the end has to have the culture of the bank. And they need to have clear guardrails.

So how do we train these models so they can understand the clients and all the relationship with the bank? So AI without having a full bank in the past is not simple. You're not a one-stop-shop, and you cannot make decisions making the whole, you give partial recommendations and not the best ones. Two, you don't have the records of data that we have in segments that we were always relevant, investment, credit and so on. So that facilitates the understanding of the client in the cycle that they are. If they have assessment within what we have, when can we offer? What should we offer until we get to the transactional?

So you can have a transaction without involving the human. And that will clarify not only the doubts. It's AI for our labor, for our employees because it releases time. And sometimes the commercial teams, they have to answer a simpler question. The model is going to do that. It facilitates so that the people have 3 more times contact than before it has efficiency in the amount of clients in the account load of the teams, how many clients they have to service. And it improves the experience because you have a first-call resolution that is much better as the doubts are clarified.

So we're very excited. First bank to launch this with this level of completeness and this amount of data and the models will grow with the clients. We're very excited about the evolution and the command of the artificial intelligence, AI. It's a good position, and we are well positioned and saying that AI was always present in the bank and the brand itself. So now we're going to grow with the clients. It's going to be a game changer in the experience. And it takes the organization for a strategy that is AI first, which is very relevant for the future.

Now the last question Henrique Navarro, Santander.

Congratulations on the results. So the market has changed a lot. It's not normal to see Itaú, the revision of guidance. And the question is, the new guidance, even the breadth of the guidance somehow reflects this estimation for 2026. But in the quick way that the world is changing, what are the lines that are weaker in the guidance? If there is a mistake and an expectation of review, what are the lines that should be more at risk? And looking at '27, maybe you would agree that the changes that are necessary.

In January of this year, the sell side in the banks, we had an expectation of a good recovery of the cycle of credit in 2027. And as things are happening, it's not going to work out. So I wanted to hear if we should look at 2027 with the growth of credit that is softer, and we just have to push these banking fees that is weaker for 2027. So giving us some color at the end of 2026, 2027.

Thank you, Henrique, and thank you for the comments. Last question, but a lot of energy. When we look at the range, it tends to capture well what we imagine for the year. We have a guidance and we imagine that we are not going to need to review it, but we are pragmatic to review it whenever we have a better performance at the market. This is a good practice for transparency, so we can get to the number that we want.

We don't give geographies or a point because it wouldn't be a point, it's a range. When you say credit portfolio, it will grow reasonably. And we have 0.6 in the portfolio. It's on the basis of the last year.

And we have a selling of the portfolio that was done at the end of the day. BRL 10 billion that are automatic, but again, the portfolio works very well. Margin with the client, if we annualize what we have in the first semester is a challenge that we have for the next 2 quarters, certainly. Today, we are running close to the floor than the midterm, the midpoint because of the effects that I commented with the liabilities that are very solid. So it grows -- with the structured operations that has volatility and it might be a difference in the next quarter and the working capital that is very stable and growing, but it shouldn't grow at a very relevant way.

And the margin of assets is growing. I'm not concerned. But the margin delivers this. The cost of credit, you discussed I wanted to tell you that a bit to the left, a bit to the right, our best expectation is to be closer than to the midpoint of the guidance. So even though if we have these questions, oh, it's worsening at the margin, maybe there is something implicit. What we've seen in the wholesale that it's more challenging in terms of credit, but we've done the provisions. And the message that I wanted to make it very clear to you is that, first, we do the provisions and then we discuss the profit. It's not from the profit to the provision.

So if we have to come to a quarter that has a worse result because the provisions were worse and I will explain the reasons and we will explain this. So the discipline of having the provision balance, we don't forego. The balance has to be well provisioned. And we're now going to -- we're not going to be under provision, either in individuals or the retail or the wholesale. We're always going to have the discipline of doing the provisions.

Having said that, our best expectation is to close at the midpoint, close to the midpoint of the cost of credit. And the revenue of insurance, we did the adjustments. You see the results. We have a solid agenda as we've seen the level of mobilization high and the cost is very close to the bottom.

When we see the geographies, we have the full year forecast. All of that is giving me a level of bottom line. Bottom line is in line with the guidance, previous guidance. A bit to the left, a bit to the right, but I believe that the bottom line implicit one, if it had a variation, it's very small. So this is what we are seeing. For 2027, very early to say because, once again, this scenario is very dynamic. So we're going to start now with the discussion, we see the -- we do the discussions, but we are going to have a good budget for 2027 with a big -- we have the discipline of execution, and we're going to execute the best that we can, so we can share with you.

Thank you, Milton. Thank you, Gabriel. Thank you, everyone, that took part on our earnings calls. Now we close the Q&A session and our second quarter earnings call.

Now I'll give the floor to Milton.

Thank you, Gustavo. Thank you, Gabriel. Thank you very much for your participation, and we really like this relationship with the investors and with all the stakeholders. And we try to open as much as we can, the information at a higher level of transparency, predictability for any direction. If we have to adjust below, we have to adjust below. If it's up, up. Well, we try to avoid surprises. Solid quarter, in a very challenging scenario, delivering the results that we've delivered with the level of profitability and efficiency level. And transformation of the bank with credit indicators and the quality level that we delivered, it's not simple.

Really, this is the work of everyone, mobilization level and a lot of capacity, not only the competency of the teams, but the capacity of navigating the scenario and what brings us the scenario is the discipline of capital allocation creation, creation of value and long-term view. Discipline is key. Thank you very much. We'll see you briefly in other opportunities. And for the Itubers that are watching us, the result is for -- made by everyone. Thank you, and we'll see you soon.

Hello. Good morning, everyone. My name is Gustavo, and it is a pleasure to have you joining us for our first quarter 2026 earnings video conference. As always, Milton will walk you through our performance. And afterwards, we will have our traditional Q&A session in which analysts and investors will be able to interact directly with us. Before handing the floor over to Milton, I would like to share a few instructions to help you make the most of today's event. For those accessing the webcast through our website, there are 3 audio options available, the entire content in Portuguese, the entire content in English or the original audio. The first 2 options simultaneous translation. To select your preferred option, simply click on the flag icon located in the upper left corner of your screen. questions can also be submitted via WhatsApp.

Today's presentation is available for download on the [indiscernible] screen and as always, on our Investor Relations website. With that, I will now hand over to Milton, and we will reconvene later for the Q&A session. Milton, over to you.

Good morning, everyone. Welcome to another earnings release. We will now discuss the results for the first quarter of 2026. This is a very executive presentation with a strong focus on the numbers in order to leave ample time for our Q&A session at the end. The central point this quarter is that I will place somewhat greater emphasis on the credit quality of our portfolio. This is a topic of interest given tighter macroeconomic conditions, interest rates and the economy as a whole. Therefore, I believe it is worth taking an additional deep dive into this topic. By doing so, I believe we will be able to share with you much of the management approach that is guiding us here at Itau Unibanco. I will start with our traditional overview covering key indicators such as results, profitability, loan portfolio, noninterest expenses and delinquency.

Beginning with results, we delivered a very strong managerial result of BRL 12.3 billion in the first quarter, representing a 10% increase year-over-year. It is important to recall that exceptionally, this quarter did not include the additional dividend distribution we typically make. That distribution took place at the end of last year in the fourth quarter with BRL 20 billion distributed in dividends. If we were to normalize for this effect, net income would have been BRL 12.7 billion, which would be more comparable to the first quarters of previous years. This is the first adjustment I would like to highlight.

Moving on to profitability. We recorded ROE of 24.8% on a consolidated basis and 26.4% in Brazil. Therefore, we saw an expansion in profitability adjusted for 11.5% capital, which is the current industry average and the lower bound of our capital appetite, consolidated ROE reached 25.8% and ROE in Brazil reached 27.6%. These are very strong figures, and for comparability purposes, we believe these are the most appropriate metrics to consider.

Looking at the loan portfolio, despite a seasonally weaker quarter driven by fourth quarter dynamics, we were able to grow the portfolio by 1.2%. I'll provide more detail shortly, and we achieved solid year-over-year growth of 9%, excluding FX effects.

Turning to noninterest expenses. We saw a 5% decline compared to the fourth quarter and growth of nearly 5% versus the first quarter of 2025. This is fully aligned with the work we have been carrying out under our efficiency program and the targets that were set. Results are fully consistent with those objectives. When we look at delinquency, you may recall that the first quarter is always more pressured. It's a quarter in which household commitments increase, expenses are higher, and in addition, spending incurred in the fourth quarter is typically settled in the first quarter of the following year. Despite this, short-term delinquency indicators remain very well behaved. NPL 15 to 90 increased by 10 basis points during the quarter and declined by 10 basis points compared to last year. I'll provide further detail by portfolio shortly where this will become more evident.

Long-term delinquency remains absolutely stable, which reinforces the resilience and quality of our portfolio. I'll come back to this topic in more detail later.

Turning again to the loan portfolio. We would like to highlight growth in Brazil of 7.8% year-over-year and 0.3% quarter-over-quarter. When excluding FX effects, the portfolio as a whole grew 1.2% in the quarter. I would like to emphasize the quality and the dynamics through which we have been building this portfolio over time. First, we refer to the cards target clients portfolio. Target clients are those that under our portfolio management framework, we consider resilient across longer credit cycles. More than 90% of new originations today come from these clients. And as this dynamic continues, the existing portfolio is now approaching 80% target clients. This clearly reflects portfolio quality that is fully aligned with our strategy. From this perspective, MuniClass and Personnalite portfolios declined by only 0.5% in a quarter when the overall portfolio contracted by more than 2% and posted growth of 20% year-over-year. This reflects both the natural dynamics of this segment and our ability to cross-sell under the One Itau client model, which we successfully migrated into a full bank experience. The results are clearly shown here.

Moving on to payroll loans. We continue to emphasize private payroll lending, which grew 19% in the quarter and 63% year-over-year. As I've always mentioned, when this product was launched, the overall market was expected to grow, and it has grown meaningfully. At that time, we held approximately 30% market share in the former product, and I stated that our share would likely decline but within a much larger market. Therefore, we were able to grow, expand the market and be the market leader in private payroll loans after all these changes. We are growing with strong quality, targeting the right clients with appropriate pricing, adequate profitability and a long-term perspective.

In micro, small- and medium-sized enterprises, government-backed programs once again stood out, growing 4% in the quarter and 52% year-over-year. These programs also significantly support credit quality indicators. There is a mechanical effect on delinquency, which I'll explain shortly. But in cost of credit, these dynamics are very positive for margins and profitability in this segment as well.

Why am I showing average balances across portfolios? Because average balances are what truly matter for margin performance, not end-of-period balances. This breakdown is intended to help you understand how this picture connects to margin evolution on the next slide.

Average balances in the individuals portfolio increased 2.2% compared to the fourth quarter. In SMEs, growth was 4.6%; in corporate, 1.6%; and in Latin America, 3.6%. This framework will help explain part of the margin dynamics. There's a lot of information here, so I'll walk through it carefully. We begin with the fourth quarter of 2025, where margin totaled BRL 31.7 billion. The first adjustment we make is the exclusion of BRL 4 billion, corresponding to the return of shareholders' equity invested in the bank. In other words, this represents bank equity invested at interest rates, which we removed to arrive at what we call core margin. This brings margin to BRL 27.7 billion. The first major effect is average volume, which you saw on the previous slide. This is why the average balance breakdown was important as it shows how volume contributed approximately BRL 400 million to margin growth this quarter.

Next, we have product mix. We grew in products that are more favorable to margins, generating an additional BRL 500 million, reflecting dynamics across multiple portfolios. Next, spreads and liabilities margin were largely flat with a modest negative impact of BRL 100 million, not particularly relevant in the broader context. Calendar effects, however, were very significant with fewer business and calendar days affecting assets and liabilities differently, resulting in a meaningful reduction in margin. Therefore, calendar effects were one of the main headwinds to margin this quarter.

Finally, Latin America and other effects were largely flat with no material impact. As a result, core margin would have reached BRL 27.8 billion, representing growth of 0.3%, with the calendar effect being the main drag as core performance remains very positive.

Next, we calculated what working capital margin would have been had we not distributed dividends early in the fourth quarter of last year. This adjustment amounts to BRL 4.2 billion. With this normalization, margin would have reached BRL 32.1 billion, which is more comparable to the BRL 31.7 billion reported in fourth quarter '25. This would represent growth of 1.1% or BRL 400 million, considering all these effects. However, due to the early dividend distribution, margin was negatively impacted. Shareholders benefited, so it was positive from a shareholder perspective. For the company, however, the effect was a BRL 600 million reduction in margin, bringing net interest margin with clients to BRL 31.5 billion, which is the figure I mentioned earlier. As a result, margin declined by BRL 200 million compared to the fourth quarter. I believe this captures the key message. We had 2 main effects on margin this quarter, the early dividend payment and the calendar effect.

Core margin performance remains very strong with portfolio growth, increasing average balances and a favorable mix. Now translating these figures into margin metrics, as we typically do, on a consolidated basis, margin remained stable. When we look at risk-adjusted margin, which is how we monitor performance for management purposes, we see a modest decline of 10 basis points at the consolidated level. Adjusting for the BRL 600 million dividend impact working capital effect I mentioned earlier, consolidated risk-adjusted margin would have been flat. In Brazil, this line shows a decline of 20 basis points. Adjusting for the same dividend effect, the decline would be 10 basis points, which is immaterial overall.

Let us now move on to market margin. This was a quarter marked by significant volatility with many developments in both the local and global environments as you have been following. Therefore, every month, we reset the odometer for trading, positioning and risk as well as for the structural component of market margin. The most important message is that in Brazil, we delivered a solid performance this quarter despite all the challenges. Latin America also performed well. Brazil, in fact, performed better than in the previous quarter. The capital index hedge cost remains a headwind as it has historically due to interest rate differentials. In the first quarter, the negative impact totaled BRL 700 million. Even considering all these effects, we delivered a positive market margin result of BRL 800 million, demonstrating our consistency and ability to deliver results despite more challenging scenarios.

Moving on to commissions, fees and results from insurance. The main highlight is that this quarter clearly reflects seasonality. The fourth quarter is typically much stronger for several of these lines. Card issuance is a good example, therefore, we observed declines in the first quarter. In current account for individuals, we chose to disclose this line item to reinforce the clear directional trend the bank is becoming increasingly less dependent on these fees, redesigning packages and offering more benefits to clients. Our objective is to increase lifetime value and client centricity. Therefore, the direction is very clear, and you've been observing this over time. When we look at payments and collections, this was indeed a quarter affected by several factors. There are multiple explanations here, seasonality effects, mix, particularly on the collection side and repricing of funding within the receivables of the acquiring business. It is worth remembering that we've captured all these impacts within this line. Therefore, this reflects the complete payments and collections corporate flow.

The most important thing here is the client perspective. We are not managing the business through isolated lines, but rather with a strong focus on being the primary bank for our clients on long-term relationships and on customer lifetime value. As a result, some degree of volatility is, in fact, expected. A positive highlight was brokerage, which delivered a quarter somewhat stronger than the fourth quarter.

In Asset Management, this was a quarter without performance fees. As a reminder, under our approach, performance fees are typically recognized in the second and fourth quarters of the year. Therefore, we moved from a fourth quarter with performance fees to a first quarter without this revenue, which explains this effect on asset management results.

Finally, the main highlight is insurance, where we had already delivered a very strong previous quarter and we're able to sustain this performance with 17% growth year-over-year. As a result, services and insurance revenues increased 5.3% year-over-year. It's evident that a significant portion of these revenue lines is highly correlated with the level of economic activity, therefore, performance will depend very much on the dynamics ahead on how economic activity evolves, on capital markets conditions and on the investment banking environment overall. The same comment applies to the other lines as well.

I will now begin to go deeper into credit quality, starting with some information that I believe is highly relevant. Here, we show NPL performance. In short-term delinquency at the consolidated level, we observed an increase of 10 basis points, as I mentioned earlier, with Latin America remaining essentially flat, while in Brazil, there was an increase of 20 basis points. When we break down Brazil, the dynamics become much clearer. First, in individuals, we observed the seasonal first quarter effect. When we compare it with the historical series, excluding the first quarter short-term NPL from 2023 to 2024, this represents the lowest increase we have seen. While we are rounding this figure to 30 basis points on the slide, the actual increase was 23 basis points, meaning a smaller increase compared to other first quarters that share the same seasonal effect. Therefore, this is a first quarter that came fully in line with expectations and with very well-behaved short-term delinquency.

In SMEs, we see an increase that was already expected. I have been discussing this with you for quite some time, and I'll reinforce it again when we talk about over 90-day delinquency. This is a portfolio that experienced strong growth in guaranteed credit, especially government-backed loans. A relevant portion of this portfolio previously carried grace periods, which are now gradually ending. Today, less than 5% of the portfolio remains under a grace period. As a result, we'll mechanically start to observe delinquency from this client base, but always covered by government guarantees. Therefore, despite the observed increase, which was fully expected, delinquency levels remain significantly below those seen in prior years with expected losses and profitability fully in line with our expectations.

Moving to long-term delinquency. Both at the consolidated level and in Brazil and Latin America, indicators remain well behaved. In Brazil, Individual portfolios were stable during the quarter. In SMEs, we saw an increase of 10 basis points, and we expect that the indicator could still rise by an additional 10 to 20 basis points. Running close to 2.1% would be a reasonable level, which is still below where we were just a few quarters ago when this indicator was closer to 2.4%, already reflecting portfolio adjustments under Resolution 4966, which includes securities. I would like to remind you that these indicators already include securities consistent with the Resolution 4966 framework. No adjustments are being made here. Therefore, our expectation is for a mild and expected increase, which is mechanical in nature and does not raise any concern regarding cost of credit.

In large corporates, the indicator remains stable. These are data points that we do not typically disclose, but I believe it's worth taking the time to discuss them. As I mentioned earlier, target clients currently represent close to 80% of our outstanding portfolio and in the origination, they tend to be close to 100%. What I want to show you is how client indebtedness has evolved, excluding mortgage lending. This is because mortgage dynamics are somewhat different. That said, the footnote includes the calculation, including mortgages as well. In many cases, clients replace a more expensive rent with a mortgage installment. Mortgage lending is collateralized with solid loan-to-value ratios and down payments. So we believe the dynamics are different for this product.

Excluding mortgages, the indebtedness of our target clients starting from a base of 100 in December 2019, reached 105 in January 2026. When we look at the broader market data, including our own clients, this index reached 123 in January 2026. This highlights a very significant difference relative to the client base we have been working with, reflecting responsible credit, a credit cycle perspective, portfolio management and resilience. This is the client base on which we have built our reference portfolio.

The market in a broad sense, considering all other client segments, experienced a much stronger increase in indebtedness over the same period. When we analyze our total client base, and here, you can clearly see how relevant target clients are for us, the index moves from 100 to 106. In other words, the difference is not material. And when compared to the market, by definition, the index is the same. This demonstrates the predominance and relevance of target clients in our client base and in the way we operate. This is the first information to show good client quality from an indebtedness perspective.

Now let's move on to the breakdown of delinquency, and this is information we have never shared before. I felt it was important to present comparative series across selected products. Today, over 90-day delinquency in our personal loan portfolio stands at 5.1%. This reflects delinquency among our clients in this product. In the market, delinquency in personal loans stands at 9.3%. More important than the snapshot is the trend. From December 2019 through today, we reduced this delinquency indicator by 21% among our clients, whereas the market increased by 18% over the same period. We observed not only a meaningful difference in delinquency level, but also a clearly opposite trend. In credit cards, the logic is the same. We report 5.1% over 90-day NPLs, which is roughly half of what we observe in the market. Over the period, we reduced delinquency by 8% following the derisking process in the portfolio that we've discussed extensively, while the market increased delinquency in this segment by 56%. Once again, both the level and the trend are significantly different when we analyze the full picture.

In auto loans, our over 90-day delinquency stands at 3.5% compared to 6.2% in the market, while our indicator increased by 17%, market delinquency increased by 82% over the same period.

Finally, in private payroll lending, a portfolio where we've been growing meaningfully, we do not have a comparable long historical series due to changes in the product dynamics. Even so, we can show that our delinquency level has been running at 4.2% with pricing that is coherent, competitive and responsible for clients. By comparison, market delinquency in private payroll lending stands at 7.1%. This once again highlights the discipline of our risk management across the bank's balance sheet and how we operate across our individual portfolios.

Moving on to SMEs. We see information pointing in the same direction. The first metric is the share of guaranteed lending across portfolios. From December 2019 to March 2025, our guaranteed portfolio increased from 36% to 55%. Looking at the same period only for micro and small enterprises, guaranteed lending increased from 37% to 70%. On one hand, we look at SMEs as a whole, including middle market companies. On the other, we isolate micro and small enterprises. In this latter group, we see guaranteed lending growing from 37% to 70% in a client segment that is typically more volatile with higher failure rates. We have materially changed the profile of this portfolio by operating with significantly more collateral.

In large corporates, we also have an important message following the same logic of portfolio management, long-term perspective, capital allocation and risk management. First, the portfolio nearly doubled between December 2019 and March 2026. We effectively doubled the portfolio size, but what about client quality? First, we reduced concentration. The bank's 10 largest clients represented 20% of the portfolio in December 2019. And after doubling the portfolio, they represented 15% as of March 2026. We achieved growth in a much more granular way, avoiding concentration risk. Most importantly, we not only grew, but we grew with high quality. According to our internal investment-grade assessment framework, where we monitor, measure, manage and qualify corporate ratings, we achieved a substantial improvement in mix and quality, reaching nearly 80% of the portfolio in investment-grade credits. Across both individuals and corporate banking, including micro, small, medium and large companies, what we see is clear evidence of our management discipline. This reflects our view of an infinite game in which we must continuously build a sustainable and consistent portfolio that generates value, serves our clients well and does so with much lower volatility than we observe in the market.

Agribusiness is also a very important portfolio for us. There has been a great deal of discussion about the more challenging environment for the sector with pressure from commodity prices, foreign exchange, fertilizer costs, farmers operating with tighter margins, higher leverage and higher interest rates. So how have we built our agribusiness portfolio? Out of the total agribusiness portfolio, 31% is allocated to farmers. When we analyze this portfolio, nearly 80% of it is backed by strong collateral structures and robust legal instruments, which provide a high level of security in terms of credit quality and recovery potential. Our market share in agribusiness is estimated. There is no official market share data for agro lending. But based on the proxies we use, we estimate our market share at approximately 20%. We then applied the same market share estimation to all Chapter 11 cases observed in the market in order to assess our participation in those cases.

Despite holding an estimated 20% market share in agribusiness, we account for only about 4% of the total volume under Chapter 11. We highlight this 4% comprises products with strong collateral, and we can negotiate guarantees with clients much more effectively. As a result, our recovery rates and loss given default tend to be significantly lower given the way these portfolios have been structured. This once again reinforces the reliability and security of our portfolio.

Regarding the portfolio by stage, -- when we look at total coverage ratios and loan portfolios for Stages 2 and 3, we observe only small variations with no significant impact. In corporate, we do see somewhat greater volatility in coverage for Stage 2 and Stage 3 portfolios. And the primary reason for this is mechanical. Every time we remove a client from Stage 3 typically through write-off and the restructured portfolio is a good example, which I will show shortly or when a client with a very high level of provisions exits the balance sheet through write-off, that client usually carries higher coverage. Meanwhile, new clients entering these stages typically do so with lower coverage ratios. This explains why we see some volatility in coverage indicators for Stage 2 and Stage 3 portfolios, which is entirely related to portfolio dynamics. I would also like to remind you that we operate under an expected loss model. If we identify any sign of deterioration, we proactively build provisions. We do not manage our balance sheet through provisioning decisions.

At the core, our models are robust, accurate and reliable. Whenever there is an event or a forward-looking change in expectations or outlook, we typically recognize provisions accordingly, which reinforces overall portfolio quality.

As for the delinquency indicators that I showed you earlier, they also reinforce a message I have been making for quite some time, there has been no change in our write-off criteria. Although Resolution 4966 allows for some flexibility in extending write-off time frames, doing so actually worsens delinquency indicators as it keeps clients classified as over 90 days delinquent for longer than appropriate. Another consequence, particularly when you consider the incurred loss framework for provisioning is that you end up with lower provisions initially. This creates a temporary benefit in credit cost, but results in worse delinquency indicators. We did not change our criteria despite the additional flexibility granted by the regulator. Our view is that recovery expectations have not changed, therefore, we continue to apply write-off time lines based on our best estimate of recoverability, which is the same approach we used prior to the regulatory change coming into effect.

Turning to credit cost, which ultimately consolidates all these dynamics. We do observe a nominal increase, as previously noted. However, credit portfolio is expanding, and therefore, nominal credit costs are expected to increase. What truly matters is the annualized credit cost ratio over the portfolio, which has remained remarkably stable over the past several quarters. This stability reinforces all the points I have been making throughout the previous slides. When looking at the restructured portfolio, as you can observe from what I mentioned earlier, whenever a large client moves to write-off, that client typically carries a very high provisioning balance, which also affects these indicators. This effect is usually visible between the third and fourth quarters. Still, this portfolio continues to decline. Overall, restructured and renegotiated portfolios also declined further and are moving in the right direction. Most importantly, the ratio of renegotiated loans to total loans remains very well behaved. We do not expect significant nominal reductions to happen very quickly. This process unfolds over the cycle, but levels remain fully acceptable and appropriate for the bank's portfolio.

Now turning to expenses. I would like to highlight the main points. It's important to remember that the first quarter is always affected by seasonality. Even so, when we look at expenses in Brazil, we recorded a 5.6% reduction compared to the fourth quarter of last year. On a year-over-year basis, expenses increased by 5.2%. We maintain our commitment to reaching our efficiency targets. And if you want a reference, we continue to aim for the midpoint of our guidance, which implies annual expense growth of 3.5%. This is supported by a series of structural initiatives with a long-term perspective. This clearly reinforces what we have seen in previous quarters, a year-over-year downward trend driven by significant and structural changes across the bank.

This is the key message here. Our efficiency ratio reached 34.9% in Brazil, once again setting a record at our lowest level for this metric. If we adjust for the early dividend payment effect I mentioned at the beginning of the presentation, this figure would have been 34.4% in Brazil, representing a very significant improvement. Regardless of the adjustment, the reported figure is 34.9%. And for the first time, we have broken the barrier below 35%. The same trend is observed at the consolidated level. This is the efficiency ratio of a universal bank like Itau Unibanco operating across all segments and regions. We are the most international bank in Brazil. This clearly demonstrates our discipline in cost management and revenue generation, building business models that deliver adequate profitability and are sustainable over the long term.

Turning now to capital. We ended the fourth quarter with a CET1 ratio of 12.3% and AT1 capital of 1.5%. During the first quarter, we delivered strong results, generating 0.8% in capital. Capital consumption related to dividends, interest on capital and share buybacks amounted to 0.4%, while risk-weighted assets consumed 0.5%. We can therefore see that our core capital generation is sufficient to fund both capital uses and the growth of risk-weighted assets. We also show the impact of the 4-year phase-in currently in its second year related to operational risk and certain credit risk exposures, resulting in capital consumption of 0.3%.

I would also like to remind you that there is a phase-in also in its second year related to compliance with Resolution 4966. In Itau's case, there was 0 capital impact from this transition. We did not incur any capital cost from migrating to Resolution 4966 because we already operated with provisions for securities and expected loss provisions across all portfolios. Therefore, the regulatory change had no accounting impact on the bank's capital.

Finally, even after the significant dividend distribution in the fourth quarter, our objective was to start the first quarter with a CET1 ratio of 12%, which is the level we use as our reference for dividend distribution. This is above the Board-defined capital appetite floor of 11.5% and 12% is the level we consider appropriate for dividends. We also reached 1.4% in AT1. As a result, we ended the quarter with a very solid capital base despite all the impacts, allowing us to continue growing and paying a meaningful level of dividends with high profitability.

To conclude, I would like to promote our reports. We have made available our 2025 integrated annual report and our ESG report. This is an invitation for you to access these materials. They contain a significant amount of high-quality information that can address many questions directly. The level of detail is much greater than what we can share during earnings calls and Q&A sessions. So I encourage you to review these reports.

With that, I conclude the presentation of our first quarter 2026 results. As I mentioned at the beginning, this was a solid quarter with very strong profitability. Naturally, the environment requires attention, and we must remain highly disciplined in managing our credit portfolio, monitoring conditions on a daily basis. Most importantly, we have been able to continue expanding the bank, investing and advancing our digital and cultural transformation while maintaining a strong client-centric approach and delivering very solid and robust numbers, all in a sustainable manner. Consistency, lower volatility and execution discipline, especially capital allocation discipline, continue to be core to the bank's decision-making process. This is why we have been consistently able to deliver strong results. I would like to thank you all once again for your trust and for your time. I will now join Gustavo and Gabriel for our traditional Q&A session. Thank you very much once again and above all, for your support. See you shortly.

Welcome. We are right at the studio for the Q&A session. Before we start, we would like to remind you that this is a true language session. So we will answer the questions in the language that they are asked. [Operator Instructions] So first question in Thiago Batista from UBS.

Congratulations on the predictability of your results. very constant, very predictable. Question is about -- well, the focus of Itau Unibanco, the main banks is the one that is less exposed with the client with products, but I wanted to hear your initial impressions on the program, [indiscernible]. And also Rede, of course, there is the capture of payouts. What are the next steps at Rede as well?

Well, welcome once again. Thank you for asking your question. Let me start by [indiscernible], the program. [indiscernible] is a building. So the [indiscernible] and banks and the ministry worked with a debate since the first date to understand what are the conditions that we would be comfortable to find the best product, the best deadline, the best discount, everything within a reasonability that would make sense for the client, for the system, for the market. Of course, it's a program that is very concentrated in 5 minimum salaries, that's a range up until 2 years with a discount that is predefined and with a guarantee of SGO for the limited 50% [indiscernible], so to speak. So in our case, we are working actively -- since yesterday, we've been working. We are operating in the new program, but it's evident that you just mentioned, well, proportionately, the public of the market that is eligible for this program in regards to our portfolio is less relevant in the portfolio of the bank, proportionally speaking.

So without a shadow of a doubt, we are going to work in the best way possible. We're going to try to get the best offerings for the eligible clients. But in terms of materiality in the results, I wouldn't say that it's material given the size of the credit line and the recovery line of the bank, but we're going to try and service the clients well in the transitional process given the level of indebtedness, the interest rate, the delays. We think that working alongside with the sector is good to service these clients well. This is the first.

Well, about Rede, it's important to make sure that you understand that the integration that we've done in the past was well, let's succeed it was well done. The results are there. You can see. We fitted in the offering. We do not talk about Rede. We talk about receivables and payments, the integrated offering. We service the clients in their needs regardless of the product. The pricing is done the [indiscernible] client, not the product. In the past, several companies were listed in the sector, so everybody would work with the mono product and pricing. That doesn't make sense for Itau Unibanco for a long time. So it's another product, another offering to service well the needs of our clients.

in the market share. In fact, we've had the results of this quarter. It's an effect of the mix that is important. We had a higher volume of wholesale than retail. And what guides the market share is the big accounts. The retail has more profitability in the business, but the one that directs the market share 2/3 is the big accounts. So when you have big contracts that moves the needle naturally, the most important is that we are leaders in the sector for a long time. We are leaders in the market of the wholesale and also the retail markets. So that's the main message.

Now market share, that's not our objective. It's a consequence of our actions. If it's well resolved, if it's well fitted in the journey, we are servicing the clients well with a competitive value proposition, the share is a consequence. In the big accounts, we avoid that discussion of renting the market share because you can get it with aggressive pricing and below the exchange feed and the flag and you receive the market share, it's costly to carry it over. And we've seen that. In this quarter, specifically in the line of flows of payouts and receivables that we have in the revenues and services line, we had an effect, 2 main. The first was the mix that I just commented. Second, the structure of hedge that we use because we do the hedge of the anticipation that are done because most of them are automatic. So we will work the transfer and the liabilities through time and that generates volatility. It's not 100% perfect hedge. It's impossible. So any change in the interest rate structure is the main impact in this line.

And about the result of Rede, is still in the margin with the clients. So I would say that 97% of the -- 98% of the result is in the service line. In the next quarter, we are going to do the adjustment that is missing, which is bringing part of the result that is positive in this quarter. So we saw that all the result of really is an alliance of services and insurance, which would attenuate the numbers that you're seeing. But our strategy is best offering vision of the client, price at the client and vision of the payments and receivables amongst acquires, it plays an important role.

Well, let's go to the second question with Bernardo Guttmann from XP.

Congratulations on the results. So I wanted to understand the trajectory of the ROE of the bank. Itau delivered 25% of ROE recurring, very high threshold even in a seasonably weaker quarter. When you see that profitability, the natural question is how much -- how many levers do you still have to maintain or even expand this ROE through the year? In your opinion, the sustainability will come from margin of the client efficiency, mix of credit, revenues of services, capital. Is there any point that you think that the market is still not capturing well the capacity of Itau in keeping that ROI structurally above the system?

Thank you, Bernardo. Thank you for the question. Thank you for your initial words. Great to see you again. Well, the issue of the ROE, as we always mentioned, and I'm going to answer your question, but I'm going to do it with a disclaimer. We avoid giving guidance of ROE because there is a lot of variables at the end of the day that affect accountability -- accounting, sorry. We like to talk about value creation, and that depends on the cost of equity, the cost of capital. In our opinion, the cost of capital is 14.5%. That's the best information that we have in our models, and we look instruments -- perpetual instruments in the market. We have the modeling that is proprietary. So the spread between profitability and cost of equity, in fact, is where we are focusing. And all the incentives of the bank are placed in value creation.

So that's a relevant metric for management that brings discipline and long-term vision and always focus in the creation of value. In the guidance that we gave at the beginning of the year, there is a profitability above 20%, and we are delivering this ROE recurrently. So if you ask me, do I foresee any problems in regards to profitability? If we work with the operations that we have right now, no. We're still going to deliver a profitability that is important all throughout the next quarters. Of course, there's going to be some volatility because there is an amount of variables that compose the ROE of the bank. It's not just Brazil, Latin America, there is all the lines. But speaking of the guidance, the best answer that I can give you, we are comfortable with the guidance that is there. We reaffirm the guidance. But I think that the challenge is looking at the future, and we've seen with the service line with the insurance, they're very much connected with the activity. That's where we're going to see the biggest challenge at the end of the year because it depends on the activities of capital markets, it depends of TPV and credit cards, it depends on our capacity to continue to grow with insurance. And it seems that we're going to be growing the bottom line all years throughout the years, we doubled the insurance results.

There is a dynamic of activity that is going to be important in the future, the capital markets we see volumes amongst 30%, 40% weaker. A lot of people saw that in the past. So the dynamic in this line is that we're going to have to observe closer in the next quarters. In the margin with the client, you saw the effects that I highlighted. So the working days and not working days, we have the working capital. So the margin core grows, grows importantly, there is a guidance of portfolio that we are still comfortable with what was published. Cost of credit, which is also an important lever for the profitability, we reaffirm the guidance. So looking at everything else that we just published, we are still comfortable that we're going to try and deliver the results that are implicit in the guidance.

Of course, the challenges are big as you've seen, all the points that I just mentioned, but we are still very disciplined and focused to deliver the results. And I think the profitability long term depends on this variability of the cost of equity. If structurally the interest rate will drop in Brazil, assuming that the war ends, that the exchange rate is in the threshold that is current, that inflation succeeds and the Central Bank can do a relevant monetary adjustment that will open more activity will improve the COE. And it's not just the interest rate here in Brazil, it's the interest rate, the environment, institutional environment that makes the difference in the cost of equity and legal security. If we can work well with that, it's expected that part of that spread between the COI and the ROE will go to the clients. So we can be more competitive and the efficiency agenda is vital. So we can have more conditions to compete and more pricing power and maintain a part of that efficiency that goes to the clients. So that's not a conclusive answer, but an answer is that is general, and we are very comfortable with the profitability. We will deliver the profitability above 20% without giving any guidance with the ROE.

Okay. Let's go to the third question, Marcelo Mizrahi, BBI.

Question about delinquency. So the macro data that we've seen in the delinquency has been intensifying, and that slide that you just mentioned is great, so we can see the difference of how the bank is performing in regards to the market. But the market -- the bank doesn't run alone. So I would like to understand, looking at the perspectives of the year and the portfolio, you said that you're at ease with the guidance, but the dynamic of the beginning of the year, the first quarter in regards to the dynamics of the guidance, the quality of credit of the market itself, is it better? Is it worse than what Itau expected when you assembled the guidance? So the point from the standpoint of macro of delinquency, the issue worries enough so you can have more -- so you can be more cautious and have more difficulty getting to the guidance of the growth of credit. How do you see specifically delinquency of the natural persons in the beginning of the year?

And as -- well, we see that the numbers of the bank are doing well, but the growth of the portfolio in the next quarters.

So thank you, Marcelo, for the questions. Well, objectively speaking, the conditions from the [indiscernible] are worse than the beginning of the year. And objectively speaking, before we talk about the portfolio itself, macroeconomics are worse, specifically because of the geopolitical events. January, February were months that were very much aligned with the guidance and right at the beginning of February. And from then on, there is a war in the Middle East, volatility in the price of oil, more uncertainties in regards to inflation, in regards to the price of energy, transportation, all the issue of fertilizers in agricultural manufacturing chain, deceleration of global growth, which impacts Brazil naturally. There is a series of new factors that didn't exist at the beginning of the year when we did the guidance.

On the other side of the same coin is the discipline of doing the provisions competitively. So the cases that we provision throughout, these are cases that we know. And we've planned to have done advances and provisions depending, of course, on situations and new information, new situations throughout the year, number one. Number two, our portfolio, by definition, was built with a more resilient public to the cycles that we're seeing right now. Evidently, the interest rates with a restrictive interest rates, they generate effects in all segments. And as you said, we're not isolated from the world. We have a credit portfolio of BRL 1.5 trillion, BRL 1.3 trillion in Brazil. So it's evident that any worsening can have an impact in our portfolios.

Having said that, the portfolio was built in such a way that it is so resilient, so well managed from the standpoint of allocation segments, public sectors, volatility, clients that we understand that even so with this information, the best information that we have now, the guidance is reaffirmed. Our indications of delays are well behaved in the first quarter, which is a relevant indicator for the metro our individuals portfolio is important. Well, you talked about the opening of the short term, it gives you a good visibility on how we are doing and the performance. So we expect that with the expected loss is fundamental and the expected loss is impacted by the short delay delinquencies. In the first quarter, we had a better second quarter of the series. It wasn't better from 23 to 24 -- 23 basis points in what we say, a pressured quarter because of the commitments of the family at the beginning of the year. So our expectation is that the long delay, specifically in the individuals is stable throughout the year. We do not see much a reality 10 months, nothing too relevant.

In small SMEs, the portfolio is performing very well. The data given the characteristics that I just described, we expect that it can be 210, 190, something reasonable to imagine. We're not seeing a worsening that is not the mechanical effect of the government programs. And the big companies are events. So here is more difficult for you to foresee. We try to foresee as best as we can because we look at the balance sheet, we discuss with the companies. The management of provisions is super [indiscernible], but events take place. Rarely, the client leaves from Stage 1 to 3, rarely, it occurs, but it occurs. And we've seen in this quarter, it happened.

So the most important thing is to be tempestuous in doing the adequate provisions and migrations and having a solid balance so we can face the ways up ahead. So besides the DRE, which is looking at the results, the [indiscernible] account provisions and the balance is very well robust to face the challenges for the future. But the scenario from then to now is worse than at the beginning of the year. We are here with all the radars turned on and operating in the best way possible.

Now next question, Gustavo Schroden, Citibank.

Congratulations once again on the solid results and the predictability. I wanted to explore the growth of the credit portfolio in 2 specific products, Milton, the private consignado and payroll loan and SMEs that you're growing. So in our reading, there are 2 things -- 2 points that we would like to think. In the payroll loans, [indiscernible] the private, there is the creation of caps. Last week, we had a specific point about the cost effectiveness -- total cost effectiveness. So I wanted you to explore this issue. How do you foresee the issue of appetite in the private payroll loan and in the small, medium micro companies, the issue of the support to the government programs? We know that, that has helped in the delinquency in that sector. And even so, as you highlighted, we expect a worsening 10, 20 bps in the portfolio. Do you foresee sustainability in government programs another 1, 2 years? That would be my 2 questions about the 2 points on the credit portfolio.

Thank you, Gustavo. Great to see you again. Let me start by the order of your questions, the [indiscernible]. First point that we'd like to highlight way back when the product was launched, I had talked to investors. I talked in the call itself, I talked to investors of how the bank sees the evolution of the payroll loan CLT. First, Itau was a leader, 30% of the market. It was a market of BRL 40 billion. So we understood that there would be an expansion of that market. It would be natural that we will lose share through the cycles, but we would still be more relevant in the payroll loan private, not from the standpoint of share, but volume of the portfolio. In fact, that happened.

So when I look -- if you look at the records, we are the leaders of the payroll loan private with a large advantage in regards to the competition, and we assumed the market share today, which is above 20% with a portfolio of approximately BRL 20 billion, a portfolio of BRL 12 billion when the program was launched. So we had a growth of BRL 8 billion approximately of portfolio with important productions throughout the period. But the strategy since the inception was important for us to get here. First, be able to launch with the launch. So the cost of modernized platforms, technology, we had an advantage comparative of starting right at the beginning. It wasn't necessarily in this way for the system as a whole. Of course, that generates a comparative advantage, but that is not the main advantage. Historically, we always evaluate very well. We've had harsh learnings in the past and the company's portfolio as a whole, we had difficult cycles in the retail and wholesale and this logic and risk matrix, which is the risk of the companies with the risk of the private credit, this combination is very important to define what is the equity play, where we want to work and where our strategy is going to be built. And in this strategy that we designed the portfolio from then on.

Two important commentaries. Well, delinquency, I just talked about over [ 90 ] is substantially below what we observed in the market. Two, we have a strategy that is very focused in the clients that have bank account in the bank. We know them. We are the main one, and we can manage the risk management in a different way. Growth was given there. If you see the average rate practice, you can see that in the list of the banks, ours is second to last, second most cheapest rate that is offered to the bank, to the client. And 2 issues. First, focusing on the client, which is what we are defending. If this is the best product, I can service the client in the best way possible, and I can have the lowest price. Why am I not offering this product beforehand? That's the first decision that we've had. Second, if I can work with the level of guarantees that is a combination of the individuals and companies, I have to operate with competitive rates because delinquency is going to be lower and the value creation and return is going to be very adequate. Lastly, we have to understand the full offering of the client.

I don't see this product in an isolated way. I look at this product and I look at all the offering of credit that, that client has, all the products, so we can do a pricing and a risk management with the vision of the client. I do not ignore. Lastly, there is always a risk because if I don't do this with my good clients or the clients that we just define that we need to grow, all of the target ones somebody does it, I'm going to be subordinated. So we look at the total risk exposure, but we look at subordination that is very important.

So the issue of the cap, which is your question, the impact is relevant. Regardless, while being very transparent, we do not think there is adequate caps in credit operations. We know that, that produces something artificial. You remove products of the market. And this is a product that is more adequate for competitive prices. Having said that, for the mechanic of the cap that is established in our portfolio, so with the data that we operate with the lowest rates of the market, our rates -- average rates are below the average rates practiced by the market. There's going to be some convergence and it's going to be the calculation of one standard deviation. I think that, that calibration is going to be fundamental because the risk, we rather calibrate lower, getting the cap we work with the other products that removed other publics from the market, the INSS. And this is the more competitive credit. So I have that issue in regards to cap for our portfolio and the way that we are growing, we're very comfortable with the current conditions. That's one of the questions on the payroll loan.

The second question was SMEs. We talking about the government programs. The programs were very well successful. [indiscernible], FGI, ProCredit, and we were once again focusing on the client. If I need to service the client well, I need to get them to access -- give them access to more competitive products with the best prices so they can have capacity to prosper in the longer cycle. We are leaders in the availability of those government programs, all the clients and all the programs. This year -- last year, there was a return of the FGI because we proposed at the time for BNDES for the government a higher utilization of the first laws that were established, and we can do a leverage that is even bigger. The government is aware that we have opportunity, and we have a preponderant role in this decision [indiscernible] and others understand this dynamic, and they propose the relevant volumes for the FTI. We applied resources. The thermal efficient is lower, but however, recently with talks with the Ministry of Economy, they understood the difficulty of this program. They had an additional investment, BRL 2 billion within FTI that brings to the market another BRL 25 billion of lines. And this is the first of many that can happen throughout the year because of the programs -- government programs, the most efficient were [indiscernible] FTI.

With the information nowadays, we don't see any stoppage of [indiscernible]. We are going to keep sustainability. But at some point, they're going to have to do a translation of the portfolio, and it depends on the appetite of this government or the plans that are up ahead. So we are going to have to follow closely and it's difficult to see for the future, but at least for the current year and the next one, these programs are going to be relevant with this risk with the clients and delinquency and the mechanic delay that you commented, it has that effect of the 10, 20 bps. It doesn't generate that effect with the expected loss because the guarantees are very strong. So it doesn't affect the cost of credit.

Well, next question, Renato Meloni.

Congratulations on the resilience of the results. The scenario is difficult. I wanted to focus on the individuals portfolio. The additional information, I'm looking at the graph that you're seeing of leverage of individuals. What is your expectation within the cycle in terms of increased reduction, maintenance of this indicator, which is important? And I am thinking, given the focus that you are doing with the selected public, at what point do you get to a limitation of growth of these portfolios? And if you can also expand on your comment about the SMEs, thinking about the cycle, another 1, 2 years, these programs can sustain a similar level of growth, but when that extends or extinguishes? Do you think that the cycle of credit can be at a moment that is more prolific and even leveraging? Can you expand more on the universe of small companies that you are lending money?

Thank you, Renato. Good to see you. Thank you for your question. First, in the credit portfolios of the individuals, we still see the capacity of growth. We've grown 2 digits. We've managed to get into the clients that we wanted that we had the opportunity of growth, always getting into this logic of target clients, long-term view, we are very comfortable with the strength, the capacity of growing in this resilient public, number one.

Number two, I think that the migration that we've done of Itau brought opportunities that are target like 5 million clients. And there, we didn't have a full bank relationship with the clients. And we've seen a great deal of this growth that we've observed Unilass and mainly [indiscernible] from this public that didn't have -- had one product with us and now over 60% of the base has 3 products with the bank, which shows that we are starting to operate with the clients that are monoline. They didn't have a full bank experience, and now they have a full bank experience. And that is a lot of volume of clients and opportunities for us to continue to grow with and we are growing well in the market.

As part of our strategy, we are growing in the segments that we are giving focus. We've grown with our products and now let's talk about the vision of the payroll loan. The mix of funding, if you look how much do we have in the savings and the real estate the structure of funding growing with the prices, imagining that the full market practice is the same one, the marginal cost of capture gives more volume of the savings and less allocation in the map, it brings competitiveness in the price. So in the same price, our return is higher by definition, and that strengthens, obviously, the franchise and the relationship with the client.

We will naturally continue to operate with the product and we operate clean the payroll loan is an important lever, the real estate as well, some products that we've been cautious is vehicles, for example, we've seen volatility. We are servicing the clients and this is a more volatility segment. And the credit cards, regardless of the derisking that we've done, we've grown in a relevant way with a target public transitionality that is very relevant. So I see opportunities to be able to grow. I don't see any limitation. There is an additional fact that I'd like to state and the individuals, we see nominal reductions in the cost with an inflationary pressure that is enormous. So just with the time with the cost, it is an extraordinary result with all the pressure that we have with negotiations, the banking inflation, which is higher than the IPCA rate, even though with that, we've worked very strongly.

And why am I saying that? Because Itau Digital, which is where we work with the client where the digital service is preponderance, it starts to work with an efficiency level that is ever more competitive, and that generates options to work with publics that I couldn't service well because my efficiency level didn't allow me to assume additional losses. So as we evolve in this agenda, I can work with public that I didn't work before with the same appetite and competitiveness. So opportunity to grow in the private persons is enormous. We still see opportunities, and I am very happy with all the investments, refreshments and the strategic vision on individuals. We are working along with the plan, but this is a year that is important for the execution.

I'm very optimistic about our capacity to deliver and long-term view. And SMEs, which is the second point of your second question, it's very difficult to foresee where these programs end. The program is definitive. So we don't have that discussion of the commitment of resources. FGO depends on the appetite and the conditions of the market because if in 1 or 2 years, we have a situation where the small and medium are going to need support with the government programs, it doesn't matter. I know that they're going to understand the effectiveness of this program, the cost of allocation of the public resources. It's very difficult to say where and if these programs are going to decelerate. With the information that we have now, they're going to continue to exist in a relevant way because they've been very effective specifically for the SMEs. Well,

in the segment of the middle outside of that, we grow with less dependency on these programs. The participation in the portfolio is a fraction of SMEs and SMEs, we know that these programs are key for the growth with quality, competitive pricing, adequate deadlines for the needs of these clients and with risk portfolio that is well defended.

Well, now the next question, Daniel Vaz, Safra.

Congratulations on the resilience of the bank. Thank you for sharing new data on the credit. It's important to see a bit of your -- how you're working with the capital quality of credit. So I wanted to explore 2 things that we usually do not mention, which are vehicles and the payroll loan, INSS and vehicle loans. Vehicles, the hiring of the bank, they dropped 13% year-on-year. In the market, if you look at the level of bottom, the disbursement grew 25%. It's very big in terms of financial activity. So I wanted you to understand -- to make me understand better the vehicle loans is there any opportunity of attack? How do you want to position from now on? Or if the product has some gaps that you don't mind guidance, well, if you can explore the call?

Second, in the payroll loan, INSS, we had important changes with this rollout 1.0. Well, with the new margin of the payroll loan, at least 35.5%, which is 45% with credit cards now to 30% in 5 years when you're going to have the phase-in of this new regulation. But the credit card losing importance and does that open more space to play with more or less with this product in this new regulation?

Thank you Daniel. Thank you for the question. It's great to see you. Vehicles, as I commented very quickly in the last question, this is a segment that we work a lot. The bank was a leader in the past and with relevant volumes. In the past, we've had the portfolio of BRL 60 billion with nominal values. And if you mentioned the values today, over BRL 100 billion if we've just the correction of the revenue in the past. Well, this is a segment that is very volatile. So when you see the commitment compromise of the income of the families, we've seen restrictive interest rates, the financing of vehicles naturally becomes more risky. Second, recovery of the guarantees. There is a new legal framework, but there are still stages to be fulfilled, the legal proceedings. So it's not operating in full power under the best conditions thus far. So I always say that the vehicle is a real guarantee with wheels. So you need to find the vehicle and the recovery rate is not so high. So the market changed the dynamic of the prices in the past, what was the strength of the market was practicing high prices. We see a convergence in the prices and the spreads are very tight.

So at the end of the day, our logic for the value creation and capital allocation and risk management, we think that this is a business that is less promising, so to speak, from what we see in other businesses and that we see opportunities. Having said that, we want to service the clients very well, our client that has a good risk that wants to do the vehicle finance, we need to be present. We need to service the client with a one-stop shop and need to offer the client all the products that the bank has. Financing is one of them of vehicles. But getting the first or second place with a reseller, with a competitive market, assembly lines getting into the used banks, increasing the deadlines with the used vehicles, very strong competition. We rather lose share than lose money. So that's our strategy. In the end, to be very disciplined in the risk allocation, even though that produces the effects that you commented, reduction of share risk, and this is something that we're very comfortable because we think that the risk return relationship is not adequate, so we'd rather reduce the portfolio. That's the first point.

Second point about the INSS payroll loan. That decision was made with Desenrola. It's in the best interest of the families to try and get the level of commitment compromise of the income through time. It's a transition. These are new information 40 hours ago that we received this information. So we need to understand the impact in our portfolio. It's early to say because this is a transition that is long. You do it at the beginning, the reduction of the 45 to 40. You bring the 5 plus 5, the 10 to the credit card to the limit, but then you have the reduction of 2 percentage points in the year, getting to 30 in 5 years. So that the end game that you mentioned, let's try and understand how that can be and this is an opportunity because we do not operate with the payroll loan credit card. So the INSS is important for us. We practically just produce at Rede. We do not produce with the others because of the caps, the commissions, the balance -- financial balance is the return on capital was below than what it should be. We see players aggressive with the conditions is more focusing on generation of revenue than return of capital, and we are very disciplined in regards to that. And the caps have removed publics from the market.

So with the reduction structurally of the interest rates, it depends on the evolution of the reduction of the caps, we can maybe or not depending on the decision on the cap to bring new [indiscernible] for the market, and there is a review of the blockage of benefits the review of processes. We are working strongly with the clients to facilitate this process, and we managed to lead in terms of production, the INSS market through the network of the bank.

Next question. We have Mario Pierry from BofA.

Congratulations on the results. We understand that this scenario in Brazil, not just Brazil, but is of uncertainty. And it's interesting to say that the bank can see the thresholds that are stable. So the question is regarding the efficiency level. You showed in Brazil, there is an efficiency level of 35%. And you've seen -- I've seen that you reduced the number of branches in 15% in the last year. But the headcount just dropped 5%. So I'm thinking here, in terms of still being able to see improvements in the efficiency level, the bank should do a more -- should reduce more people, more employees. Do you see that? Or is there still a space to improve efficiency with operational improvements, reviews of contracts, et cetera? And so getting your perspective, what is the threshold that you can bring this efficiency level? And to have improvements should you have more focus in the reduction of personnel?

Thank you, Mario. Great to see you again. Thank you for the initial words. I always do the disclaimer that this efficiency level is really in the consolidated. So we need to look at the breakdown between wholesale and retail, wholesale with LatAm working with an efficiency level lower. So I would say, in the world of wholesale, to simplify, we run benchmark, global benchmark. We are first quartile, first 10 in efficiency level, without opportunity, we are very disciplined to understand the -- well, highlighted by artificial intelligence, how can we advance more. So this is a constant agenda.

In the retail, it's a game changer, the efficiency level. So every plan, I always say that even though the cost of the bank grows and let's get the middle point of the guidance this year, even though we grow 13.5% if we look in the inside, the thermal sensation between the several business is very different. So in the individuals, where it's important that we reduce the efficiency level, and we got to 40%. That was an important reduction quarter-on-quarter, 40% of the efficiency level. When I look at individuals, I can observe that, that's where we need.

Well, I'm talking about retail as a whole, 40% and then there is companies and individuals and individuals is where we need more competitiveness. So we see cost in this quarter. There is nominal reductions of costs in individuals, and this is very important news. And we still believe and there is important space to do the assessment, and this goes through a revision of value proposition, business model, Itau Digital, more focused, adjustment of footprint, 98% of our transactions are digital, 97%. The flow of visitation to the branches reduced from the pre-pandemic to now 70%. That's the reduction of the monthly visits to the branches. So it's where the client is going that we are analyzing. It's not simply making a decision of reduction of branches. How do we adjust our -- it is how adjusting our model to best service our clients and having a more digital service specifically with these products where the efficiency level makes all the difference in the service is fundamental, so we can open the options here.

So this review of the model is being done as we speak. It's natural that it happens. And this is highlighted by all the technologies and so on. So we should see an efficiency level of the retail dropping through time. We expect, obviously, the revenues are different than what is the cap with the interest rate with the -- and this is where we're going. And Gabriel has been the leader of this process with all the executive committee with all the areas dedicated so we can take that efficiency level to the place that it should be. Of course, the rest is a consequence of this strategy. What is the model if it's full digital, if there is a remote service, how do we service the high income, middle income? Every segment is going to have its position. In the last quarter, I brought you a slide that shows the segment that we are referenced inefficiency segments where we need to gain operational scalability. We are very excited with the advances, and this is where we're going to go with quality, with a digital structure that is ever more powerful, high NPS, the eNPS of the workers and higher thresholds. So absorbing the turnover with good quality, quality and the communication is fundamental so we can go through this bridge. And I'm very optimistic that we're going to get there very strongly on the other side.

Well, next question, Yuri Fernandes, JPMorgan.

Congratulations on the execution of the strategy. Let's go back to the point of ROE. The question is ROE against growth. We know that there is a growth. There is a choice to keep an ROE that is high. There is a reward. We've seen that in your lines. The bank has kept that ROE. You talked about the good capital allocation rationality. We -- so I wanted to ask you about the balance because when we see the most negative point on the quarter, well, the most negative point is the FIIs client. And the FIIs, they seem transitory. Checking account, it should be normalized or even the fee of issuing the credit cards, very pressured because of rewards. If you can comment, Milton, on how we should think about the bank in terms of ROE against the growth? Because to me, 2026 is a year of transition, different pressures of fees with an ROE that is very high, but at one point, the Itau with the cost of service can accelerate the growth. So I don't know if the ROE is going to decrease eventually and the bank is going to gain market share or gain market share in other products outside of the opportunities that we're discussing.

So generic question, structural, I wanted to hear from you to balance this high profitability against growth.

Thank you, Yuri. Great to see you. Thank you for the question. So our logic here is to grow. That is the dynamic of the bank. My objective is not having a smaller bank with more profitability, the combination of both on the long term is what we seek every day. Think that BRL 1.5 trillion in credit card portfolio of BRL 1.3 trillion in Brazil, we have testing and the capacity of testing and understanding how we're going to pilot our growth. And where are the opportunities in play. Even in the clusters that we close of risk, we still have a percentage open to test and be careful that we are not making a type 2 mistake, which is not approving a good credit because we think that from the standpoint of risk, it wouldn't be worth it. So we have testing happening as we speak in all the places of the bank.

Number two, profitability certainly is very relevant for us. And we haven't seen opportunities of growth that are not being used are not growing to increase the ROE. The cost of capital is there. You can see it. And we operate restriction of profitability is not that. What restricts the growth is risk. So that's the main factor specifically for credit to grow a portfolio is very quick when you open the credit. Then you spend 2, 3 years explaining the delays, paying the provisions and having to decelerate in a public that you want to decelerate and consuming the capital in an adequate way. That discipline is key, is a strong balance with discipline, balance that wants to grow, but wants to grow within the opportunities that we understand that are sustainable in long cycles. We do not see any restriction to growth.

So when we talk about the line of services of business and insurance, I commented, this is a line that what we've seen in activity, specifically the capital markets. There are challenges. Consumption will have its challenges. The TPV of credit cards in the quarter has a seasonability because the fourth quarter is very strong. It pushes for the exchange. The first quarter, there's an adjustment of seasonality. The indebted families are paying the Black Friday and Christmas. And you have a natural trend of less usage in the first quarter than the fourth quarter. This is important in the credit card.

On the other hand, the rewards, we still have the yearly payments. We are reducing them. Today, the rewards program costs more than what we had the results, and this is by design, this is a decision that we made many years. We're still going to go this. We're going to reduce clearly what we call the risky revenues that generate an attrition with the client and reduce the lifetime value. Because if I defend the tariffs, in the short term, this transition is soft, but in the long term, we're going to lose a client. So it doesn't make sense. We don't want to lose a client. We want to increase the time of relationship and being the main one for the client. We opened the credit card -- the checking account with the individuals to show the direction. I'm not discussing with the regulator the [indiscernible] of 339 tariffs. This is not the discussion debate is to find new ways of taking packages for our clients that generate value, that are perceived as value and not cost, doesn't generate attrition. So the packages that are being developed for all clients have this logic of taking. We buy in the wholesale, we deliver solutions, streaming, restaurants, a series of other benefits. And the advantage programs that we've been working for a long time, you end up rewarding the relationship with the client and the engagement on the long term.

So we're very comfortable with this growth and the rewards program that we have in all the segments, they have a good penetration with relevant results very well managed. So we can have an adequate balance. But those revenues of yearly tariffs and tariff on the checking account, individuals paying for the PIX in the companies. This is our tariffs that we are doing the transition for a long time. It's a negative force, but it brings an x amount of benefits on the long term, mainly the reciprocity and the relationship with the clients. So that's the service line.

Insurance, on the other hand, the penetration has grown over the last year. This year is not different. So whether it's life insurance or others integrated offerings for our clients, increasing the penetration, we've seen a lot of opportunities in other products that are not explored. So insurance is growth above 10%, 15% easy. Looking at the future, we still want to grow the result and the bottom line. And services depend on activity. The capital market is 34% weaker. Of course, they're going to affect this line. On the other hand, the advantage of being a full bank is that you have another complete portfolio that helps you manage these types of situation. You're not doing well in one line, but you have a better one with the margin with the client, but you have a cost of credit that is very adequate or you can get levers of cost where you can work with better efficiency. So this is where we're working with, but there are pressures that we need to deal with it.

Well, nice question. Eduardo Rosman from BTG Pactual.

I wanted to ask about artificial intelligence. Very difficult from us from the outside to be -- to see how tangible who's going to be the winners or losers. But in thesis, those that are doing a good digital transformation such as you should have a big advantage in the implementation of AI. So I wanted to ask Milton. Milton, what would you recommend for us, the analysts, what should we ask or observe for the executives and the numbers of the banks throughout time to have a good reading of who is moving ahead?

Great to see you, Rosman. Thank you for the questions. I read your report. Thank you for the points that were done. First, we didn't agree on this, but I'm going to use this question for marketing and the official launch. We -- in the next weeks, in the next days, we're going to launch the first acquiring machine, the orange one powered by AI with an AI integrated system in the machine, a conversation with the tenant. The first one powered by AI with NPS above 90, adoption above 90, so this can be a game changer in this world of payments. They are -- the inception is integrated AI, and it evolves for the conversational.

For a series of other points, and I tested it myself. I have a great appreciation of Rede because I was the CEO of Rede in the past. I talked to the machine, I tested it. I saw it. It's impressive how you simplify the experience of the salesmen, the tenant, the restaurant, and it facilitates the transaction. It's quicker. So I'm very excited about the launch. Briefly, you're going to have news, we're going to do the press release. So thank you for the question. Let me tell you what I think, what you need to get at the end of the day is get the results.

On our side, instead of being the race for the biggest number of models under production, this is not translated into concrete relevant structural results. I think that the organization of the bank has been given in terms of these are the levels of the organization, started with the executive committee. So the bank needed the clear definition of what are the players, the enablers, what are the levels of clients? How do we do this across? It doesn't matter that one area advances quickly if the other corporate areas do not work with the same speed. So we proposed ourselves to do Itau, the foundation of the intelligence of Itau in the bank. We assembled the guardrail -- internal guardrails so we can guarantee that we can take the model in the model, in the vision of the client without having hallucinations at the end of these models of AI, all the management to guarantee the adoption and knowledge of the bank was done, so more and more, the employees have access to information. And we define clearly what are the big projects and what are the most structuring and relevant for the bank.

It's impressive how the applications have brought results. From the standpoint of the customer experience, they asked me about NPS. I'm going to help with the answer. AI has a fundamental role in the digital strategy of the companies. It was born out of a limited scope, so we can do testing and evolve the solution. It's a relevant pillar of the company where we're going to leverage in a digital way a great part of the basis powered by AI, specialists in investment, we are launching where we are going to have access. I know that you don't have a checking account in Itau. I imagine that you have at BTG. I recommend that you open an account in Itau and you test it and then you're going to have your DNA fully analyzed and you have a conversational analysis with the bank. This is a game changer for the bank. You're not a transactional and you have a consultative hyper-personalized bank in all the areas going through finance, IR, analysis, legal, HR, all the areas powered by AI and several processes. So what you need to discuss with the banks and understand first is the result. This has to be translated into bigger efficiency, more capacity for the generation of top line, more productivity, naturally of the teams because you have the -- you bring solutions to the teams, and it's with not or. So it's a combination of the human with being able to provide more consultiveness with more quality, and it's going to make a difference.

And in the credit models, we've done with a partnership that is relevant, and we have an investment with a company that has created models for LDM, which are the large data models, not the large language models. And here, we work in relevant fronts, modeling of credit fraud is one of them. CRM is the other. So all of that will bring more productivity, more accuracy, more competitiveness, more efficiency. So that will be translated with numbers at the end of the day.

If I tell you everything that we are doing and the results are moving along, these are structuring or there are improvements that are less relevant. So in the medium to long term, the changes can be transformative. And we need to be able to communicate this to the market so you can make it tangible in what we are doing. And I mentioned a series of initiatives, the PIX with lots of game changers that are relevant being done at the bank. And I am certain that we will be able to show this with time. But really is a clear case of what we can do with artificial intelligence, changing the experience of payment with our clients.

We have Tito Labarta from Goldman Sachs.

Following up a little bit on Judy's question on growth, but looking at your guidance here, and I know you had some seasonality in the quarter and the payment of the dividend impacting particularly financial margin with clients and fees. But how do you -- your guidance 5% to 9% growth for the year. You're at the low end or a little bit below that on the fees, insurance, I know it was a bit more resilient. But how should we think about the rest of the year and your ability to deliver, say, maybe a bit above the low end of the guidance, particularly with some of the increased concerns on credit quality, and I appreciate the chart you gave. Certainly, you're in a much better position than the system. But just given those concerns, how do you think about your ability to perhaps accelerate growth through the year and maybe have these revenue trends be a little bit above that -- the lower end of that guidance.

Tito, good to see you. Thank you for joining us in the call. It's always a pleasure to have you here. So let me give you a little bit more details on the guidance. I think it's still the first quarter, but of course, we do have our forward look to make estimations in how should we end up the year. So we're still comfortable with the overall guidance. I think, in portfolio growth, we are comfortable even though we still have challenges ahead. So let's see how it works out in the coming quarters. Financial margin with clients, we think we've been delivering. It's possible for us to get to where we want due to the level of portfolio growth, spreads on the liability side as well, investments, we've been performing very well. Recent figures coming from the market, we've been gaining market share. So all in all, I think in financial margins, despite the event that we had only in the first quarter, and we had some calendar effects as well. I don't think we should have any issue.

Cost of credit, it's always -- I always knock on wood 3 times here just to be sure that we will be able to deliver. But with the information we have today, we are comfortable with the guidance in cost of credit. The only one that I see more on the lower end, it's on the service and results with insurance. This one I mentioned now a few times. I think this is more challenged for the year, okay?

On the insurance side, very positive. On the fees in general, the markets and the activity has not been as what we expected, especially in the DCM side, which is very relevant for us due to the level of market share we have. So we're still dominant in the market. We still have a relevant market share, but it's not related to our performance, but more related to the market performance. So this is an overall impact. And also, it's important to highlight, we have the performance fees on the asset management in a year with much more volatility as we have been seeing, this is more challenged as a challenge for the financial market with -- in the treasury side, but we've been able to deliver, although despite of the volatility we have in the asset management, the fee is relevant. Second quarter and fourth quarter, it will depend in our market performance. It will depend on the volatility. It will depend on geopolitics. It will depend on interest rates. So all the markets where we take position. So I think those are the lines where we have to keep an eye on.

TPV has to do with consumption, with the capability of the families to consume. And this will be relevant for the issuer. This will be relevant for the acquiring company. So it will depend on activity at the end of the day. So if you ask me, if I'm still confident with the guidance, the answer is yes. If we believe that we can achieve the level of profitability that we expected at the very beginning, yes. If we can achieve the bottom line that we are looking, and of course, the geography may change in lines, but we're still working hard to deliver the profit as we expected.

But the lines in terms of geography, I think the profit, the results coming from services and insurance, they will be much more to the lower end than the other ones. So this is the one that I think it's in risk. I'm not changing the guidance. If I have new information in the coming quarters, and we believe it's the time to make an assessment on adjustment in the guidance, as we always do, we'll be transparent and upfront if there's any change needed. But we feel comfortable with what we have here.

So back to Portuguese, Henrique Navarro, Santander.

My question is about delinquency. The market has been very worried about the cycles, and actually 2 questions. The first one, from what I can understand, correct me if I'm wrong, from what I understand, you are seeing the peak of delinquency coming maybe in the second and third quarter, we're going to see the peak of delinquency at Itau, and this number shouldn't be a number that is frightening. So maybe deterioration of another 20, 30 basis points in delinquency. So that's the first question.

If really we are close to the peak and the peak might come in the second and third quarter, and it's not a number that will fight to you. Second question, thank you for the information you just gave on Slide 8 was very useful for us. It's clear that Itau has an advantage in comparison to the sector. So my question is, where does this come from? The explanation can be the products, but even if we get the segmentation in products, it's still in the math of Itau that you're doing a good service in the management of risk. So my question is, where does these numbers come from the digital and the question of Rosman, is it AI, data lake, the way that you're managing that data lake? Is it really digital or AI? With an advancement in the AI becoming a commodity, do you foresee a risk of a competitor getting to you in this excellency? Or do you have more to gain with the evolution of AI because there's still a lot of things to be done in terms of improvement and image of that risk adjustment?

Thank you, Enrique. Great to see you. Well, about delinquency, I'm going to try with all the caveats that things can change. We are in a very dynamic market. I would say that my expectation for the delinquency rates for the next quarters are stability are very stable. I'm not even anticipating the peak. I am saying that we are structurally in thresholds of delay over 90 that I am confident and 10 basis points up or down stability, so delay over 90 with the private persons with the information that I have today in regards to stability. Of course, if changes come, if the challenge -- if the market is more challenging, but we're going to [indiscernible], but we are going to have stability with the private -- with the individuals. It's 5 plus 10 is very stable, given the thresholds, very much lower than the -- what the bank worked below in the past.

And the generation of top line has changed. So we cannot imagine that you're going to work with the same level of cost of credit that you operated in the past where you could extract more value. There were caps. There were other products. So there were those. So here, you have more dependency on the credit than you had in the past. So you need to deal with delays with lower thresholds to have the profitability level that is adequate, and we see the line adjusted to risk, combination of both. We grow the financial margin of -- net financial margin of [indiscernible]. We cannot deliver the top line and deliver with the cost of credit and then the return adjusted to the risk that is not adequate. This is a discipline. Where I still think that there's going to be an increase in a mechanical normalization, which is key, SMEs. The effect on the whole is not material for the bank. But in the line of SME, there can be another 10 or 20 bps. So I wouldn't even say that it's material, but to be precise, the best expectation is that it should run around 210 in the next 2 quarters.

Remembering that in the same mechanic and criteria, we ran at 240 not so long ago in the same logic. And when we published a delay over 90, we're not even bringing the vision below. SMEs, where you still have titles specifically in the middle, here is a delay that you're going to have in this portfolio. So why SMEs is going to work? Because a great deal of the government programs are not with the deadlines and the client has a payment, they cannot -- they may choose not to pay. But since there is a delay for the follow-up guarantees, which is 90 days for one, 180 for the other, there is a time delay. There is a delay, the provision not necessarily happens because you have a good guarantee and then you regularize the delay with an honor delay. So there is an accounting time mismatch that can produce this effect. And you might have a provision, but it results in a short cycle.

With the guarantees with the government, you can get this client with the adequate rating and it avoids you making provisions. So it's very important because you have guarantees of treasury, FGO, whatever the guarantee is. So I would say that looking up ahead, there is a stability in the delay indicators.

Now going back to the second question, how. The how doesn't have -- we don't have a silver bullet. There is a series of elements. First, the strategy that is well defined, a portfolio management that is well structured, discussed. Very important to give credit is not giving credit. The best thing that you can do for the client is not giving the credit because they don't have the conditions, they don't have the financial education necessary. There is an expansion in the credit in the market with the fintechs that was very relevant. A client had 1.4 credit cards now they have 6 because there is no annual fees. They get online and they can get credit cards as many as they get. When they have problems, they stop transactioning and they avoid to stop paying the bank where they have the salary. So being the main bank makes a difference. We have a relevance that is strong in the segments of middle to high income. We have clients that are target. So the definition of a target client not necessarily goes through income. It's not just income that discriminates. We also operate 10 million target clients and Itau Digital, which is the basis of the pyramid, the [indiscernible] segment, so we can see the profile of the client, what are the commissions of the client. We have target clients in all segments. We have on target in all segments. Income is not the sole factor for risk discrimination. A lot of modeling, a lot of testing, a lot of humility because credit makes you humble. Every day, you have feedback, creation of value capital allocation fundamental, so you can see if the decisions that you're making at the margin are creating value.

It's not just [indiscernible], it's the vision to see the corrections that are necessary, a lot of artificial intelligence that is applied. But still, it's a lot of hype. There is concrete benefits, but it's not so structuring as a whole. And we think that it's going to be more in the future. So there's relevant molecules for production with changes -- high changes with the performance of the models changing, but still under testing and some under production. The expectation is that there's going to be a relevant advance, but there is no silver bullet.

Franchising is important. Being the main one is very important for delinquency as well. And building a Brazilian portfolio, having the discipline to allocate the right clients for the right segment and having the discipline of not doing so. This is the importance. So that relationship of risk return, well balanced on the long term brings value, removes the volatility for the balance sheet and increase the value creation and brings consistency on the long term. So this is what we believe, and we continue.

We made mistakes in the past. We've learned with those. We commit new mistakes, we learn again. There's a lot of learning. And for that to work, all the modernization that we've done on the platform and data architecture was key. So you could have a data mesh architecture centralized at a modernization of platform, that was a game changer because today, this is -- the data is democratic in the bank. It's [indiscernible]. Everybody can use it quickly and you can react with the modernization of online platforms and doing the adjustments for management. And the human capital to conclude, I have to recognize having the right people, competent teams motivated, engaged with quality of management attitude and with a long-term view that is with the adequate incentives. So it goes through incentives. If you make a mistake with the incentives, you see that in the industry, this is where you lose the result in the long term. So having aligned incentives with the shareholders is fundamental.

Now for the final question of today, we have Carlos Gomez-Lopez from HSBC.

Two minor questions. The first one is about your tax rate, which is a little bit lower than the guidance that you have given us for the year. Typically, it is higher in the first quarter. So I wonder if there was any particular reason, or if you think that you may actually outperform in terms of your effective tax rate? And the second one is about the agricultural portfolio. You mentioned you have about a 20% market share. Have any of the support programs from the government, are they adequate to your portfolio? Is that something that you are using? And do you have a view about how that market is starting to evolve?

So Carlos, good to see you. Thank you for your question. So coming from the second one, no, there is -- those programs coming from the government, they are not specific for the agriculture. Of course, if there is any similarity with the clients that are eligible for the program, you might have a coincidence, but they are not designed to the agriculture. So this is the answer. But I think this is something that should be in government awareness that if there is something that could be developed for the agriculture market and business, this would be relevant for the market as a whole, but there is no discussions on that.

On the effective tax, I will ask Gabriel to go there. But we are still comfortable with the guidance, and you will see there is a specific effect in the first quarter, but you will see the effective tax rate converging throughout the year. So Gabriel, if you want to give more details?

Carlos, as Milton mentioned, we are very comfortable with the guidance that we have. If you think about the bank in terms of tax rate, effective tax rate, I think there are 2 main components to that. As you know, the first one and the major impact that we have is interest on capital. And if you remember, the interest on capital that we have on this trimester is larger than we had last year on the first quarter and also larger than we had on the fourth quarter of '25. And the second major impact that we have is the distribution of the results within the bank. So the geography among the different companies that we have, financial, nonfinancials. There are seasonalities around those 2 specific factors. If you take a look at what happened in the first quarter, exactly they lead to a lower effective tax rate, but they tend to normalize during the year and go according to the guidance that we have so far.

Well, with that, we will close the earnings call. Thank you, Milton. Thank you, Gabriel. Thank you, everyone, that took part. We're going to close our Q&A session and our video conference of '26. Now I'll give the floor to you, Milton, for the closing arguments.

Thank you, Gustavo. Thank you, Gabriel. It's always an honor to have you here in this meeting, in this results meeting. Well, it's a long term for debate. It's always enriching debate, enriching questions, always important to work with transparency and proximity to the investors. Challenges are there. Everybody has their feet on the ground. As I say, good results. They do not generate a future accommodation. This is what we discussed. It's an infinite game. We're never satisfied. We're always raising the bar every quarter. And we try to do the best for the client. And resources, agenda, the result will see this evolution on the long term. And we are happy with the results. Evidently, these are the challenges. I think that the macro, there is an election year. And Today, the news is piece, they change a lot. And the important thing is discipline. Looking outside, we have good competent people, competition that is competent in our work is to evolve every day. Thank you for your time. Thank you for your feedback. Next week, we have the conference in New York. We're going to be there with the biggest audience of a conference with the participation of CEOs in the history, another year that we're going to focus all the events of our conference, and we're going to have the group of sports. They're going to be New York in 1 year, keynote speakers that are spectacular and then the conference itself. I'm going to be myself there. I should see a great deal of the local investors and analysts who are going to be there to respond to your questions. See you next time.

[interpreted] Hello. Good morning, everyone. My name is Gustavo, and it is a pleasure to have you joining us for our first quarter 2026 earnings video conference. As always, Milton will walk you through our performance. And afterwards, we will have our traditional Q&A session in which analysts and investors will be able to interact directly with us.

Before handing the floor over to Milton, I would like to share a few instructions to help you make the most of today's event. [Operator Instructions] Today's presentation is available for download on the hot site screen and as always, on our Investor Relations website.

With that, I will now hand over to Milton, and we will reconvene later for the Q&A session. Milton, over to you.

[interpreted] Good morning, everyone. Welcome to another earnings release. We will now discuss the results for the first quarter of 2026. This is a very executive presentation with a strong focus on the numbers in order to leave ample time for our Q&A session at the end.

The central point this quarter is that I will place somewhat greater emphasis on the credit quality of our portfolio. This is a topic of interest given tighter macroeconomic conditions, interest rates and the economy as a whole. Therefore, I believe it is worth taking an additional deep dive into this topic. By doing so, I believe we will be able to share with you much of the management approach that is guiding us here at Itau Unibanco. I will start with our traditional overview covering key indicators such as results, profitability, loan portfolio, noninterest expenses and delinquency.

Beginning with results, we delivered a very strong managerial result of BRL 12.3 billion in the first quarter, representing a 10% increase year-over-year. It is important to recall that exceptionally, this quarter did not include the additional dividend distribution we typically make. That distribution took place at the end of last year in the fourth quarter with BRL 20 billion distributed in dividends. If we were to normalize for this effect, net income would have been BRL 12.7 billion, which would be more comparable to the first quarters of previous years. This is the first adjustment I would like to highlight.

Moving on to profitability. We recorded ROE of 24.8% on a consolidated basis and 26.4% in Brazil. Therefore, we saw an expansion in profitability adjusted for 11.5% capital, which is the current industry average and the lower bound of our capital appetite. Consolidated ROE reached 25.8% and ROE in Brazil reached 27.6%. These are very strong figures and for comparability purposes, we believe these are the most appropriate metrics to consider.

Looking at the loan portfolio, despite a seasonally weaker quarter driven by fourth quarter dynamics, we were able to grow the portfolio by 1.2%. I'll provide more detail shortly, and we achieved solid year-over-year growth of 9%, excluding FX effects.

Turning to noninterest expenses. We saw a 5% decline compared to the fourth quarter and growth of nearly 5% versus the first quarter of 2025. This is fully aligned with the work we have been carrying out under our efficiency program and the targets that were set. Results are fully consistent with those objectives.

When we look at delinquency, you may recall that the first quarter is always more pressured. It's a quarter in which household commitments increase, expenses are higher. And in addition, spending incurred in the fourth quarter is typically settled in the first quarter of the following year. Despite this, short-term delinquency indicators remain very well behaved. NPL 15 to 90 increased by 10 basis points during the quarter and declined by 10 basis points compared to last year. I'll provide further detail by portfolio shortly where this will become more evident. Long-term delinquency remains absolutely stable, which reinforces the resilience and quality of our portfolio. I'll come back to this topic in more detail later.

Turning again to the loan portfolio. We would like to highlight growth in Brazil of 7.8% year-over-year and 0.3% quarter-over-quarter. When excluding FX effects, the portfolio as a whole grew 1.2% in the quarter. I would like to emphasize the quality and the dynamics through which we have been building this portfolio over time. First, we refer to the cards target clients portfolio. Target clients are those that under our portfolio management framework, we consider resilient across longer credit cycles. More than 90% of new originations today come from these clients. And as this dynamic continues, the existing portfolio is now approaching 80% target clients.

This clearly reflects portfolio quality that is fully aligned with our strategy. From this perspective, UniClass and Personality portfolios declined by only 0.5% in a quarter when the overall portfolio contracted by more than 2% and posted growth of 20% year-over-year. This reflects both the natural dynamics of this segment and our ability to cross-sell under the One Itau client model, which we successfully migrated into a full bank experience, the results are clearly shown here.

Moving on to payroll loans. We continue to emphasize private payroll lending, which grew 19% in the quarter and 63% year-over-year. As I've always mentioned, when this product was launched, the overall market was expected to grow, and it has grown meaningfully. At that time, we held approximately 30% market share in the former product, and I stated that our share would likely decline but within a much larger market. Therefore, we were able to grow, expand the market and be the market leader in private payroll loans after all these changes. We are growing with strong quality, targeting the right clients with appropriate pricing, adequate profitability and a long-term perspective.

In micro, small- and medium-sized enterprises, government-backed programs once again stood out, growing 4% in the quarter and 52% year-over-year. These programs also significantly support credit quality indicators. There is a mechanical effect on delinquency, which I'll explain shortly. But in cost of credit, these dynamics are very positive for margins and profitability in this segment as well. Why am I showing average balances across portfolios?

Because average balances are what truly matter for margin performance, not end-of-period balances. This breakdown is intended to help you understand how this picture connects to margin evolution on the next slide. Average balances in the individuals portfolio increased 2.2% compared to the fourth quarter. In SMEs, growth was 4.6% in corporate, 1.6% and in Latin America, 3.6%. This framework will help explain part of the margin dynamics. There's a lot of information here, so I'll walk through it carefully.

We begin with the fourth quarter of 2025, where margin totaled BRL 31.7 billion. But the first adjustment we make is the exclusion of BRL 4 billion, corresponding to the return of shareholders' equity invested in the bank. In other words, this represents bank equity invested at interest rates, which we removed to arrive at what we call core margin. This brings margin to BRL 27.7 billion. The first major effect is average volume, which you saw on the previous slide. This is why the average balance breakdown was important as it shows how volume contributed approximately BRL 400 million to margin growth this quarter.

Next, we have product mix. We grew in products that are more favorable to margins, generating an additional BRL 500 million, reflecting dynamics across multiple portfolios. Next, spreads and liabilities margin were largely flat with a modest negative impact of BRL 100 million, not particularly relevant in the broader context. Calendar effects, however, were very significant with fewer business and calendar days affecting assets and liabilities differently, resulting in a meaningful reduction in margin. Therefore, calendar effects were one of the main headwinds to margin this quarter.

Finally, Latin America and other effects were largely flat with no material impact. As a result, core margin would have reached BRL 27.8 billion, representing growth of 0.3% with the calendar effect being the main drag as core performance remains very positive. Next, we calculated what working capital margin would have been had we not distributed dividends early in the fourth quarter of last year. This adjustment amounts to BRL 4.2 billion. With this normalization, margin would have reached BRL 32.1 billion, which is more comparable to the BRL 31.7 billion reported in fourth quarter '25. This would represent growth of 1.1% or BRL 400 million, considering all these effects.

However, due to the early dividend distribution, margin was negatively impacted. Shareholders benefited. So it was positive from a shareholder perspective. For the company, however, the effect was a BRL 600 million reduction in margin, bringing net interest margin with clients to BRL 31.5 billion, which is the figure I mentioned earlier. As a result, margin declined by BRL 200 million compared to the fourth quarter. I believe this captures the key message. We had 2 main effects on margin this quarter, the early dividend payment and the calendar effect. Core margin performance remains very strong with portfolio growth, increasing average balances and a favorable mix.

Now translating these figures into margin metrics, as we typically do, on a consolidated basis, margin remained stable. When we look at risk-adjusted margin, which is how we monitor performance for management purposes, we see a modest decline of 10 basis points at the consolidated level. Adjusting for the BRL 600 million dividend impact working capital effect I mentioned earlier, consolidated risk-adjusted margin would have been flat. In Brazil, this line shows a decline of 20 basis points. Adjusting for the same dividend effect, the decline would be 10 basis points, which is immaterial overall.

Let us now move on to market margin. This was a quarter marked by significant volatility with many developments in both the local and global environments as you have been following. Therefore, every month, we reset the odometer for trading, positioning and risk as well as for the structural component of market margin. The most important message is that in Brazil, we delivered a solid performance this quarter despite all the challenges. Latin America also performed well. Brazil, in fact, performed better than in the previous quarter.

The capital index hedge cost remains a headwind as it has historically due to interest rate differentials. In the first quarter, the negative impact totaled BRL 700 million. Even considering all these effects, we delivered a positive market margin result of BRL 800 million, demonstrating our consistency and ability to deliver results despite more challenging scenarios.

Moving on to commissions, fees and results from insurance. The main highlight is that this quarter clearly reflects seasonality. The fourth quarter is typically much stronger for several of these lines. Card issuance is a good example. Therefore, we observed declines in the first quarter. In current account for individuals, we chose to disclose this line item to reinforce the clear directional trend. The bank is becoming increasingly less dependent on these fees, redesigning packages and offering more benefits to clients. Our objective is to increase lifetime value and client centricity. Therefore, the direction is very clear, and you've been observing this over time.

When we look at payments and collections, this was indeed a quarter affected by several factors. There are multiple explanations here, seasonality effects, mix, particularly on the collection side and repricing of funding within the receivables of the acquiring business. It is worth remembering that we've captured all these impacts within this line. Therefore, this reflects the complete payments and collections corporate flow. The most important thing here is the client perspective. We are not managing the business through isolated lines, but rather with a strong focus on being the primary bank for our clients on long-term relationships and on customer lifetime value.

As a result, some degree of volatility is, in fact, expected. A positive highlight was brokerage, which delivered a quarter somewhat stronger than the fourth quarter. In Asset Management, this was a quarter without performance fees. As a reminder, under our approach, performance fees are typically recognized in the second and fourth quarters of the year. Therefore, we moved from a fourth quarter with performance fees to a first quarter without this revenue, which explains this effect on asset management results.

Finally, the main highlight is insurance, where we had already delivered a very strong previous quarter and we were able to sustain this performance with 17% growth year-over-year. As a result, services and insurance revenues increased 5.3% year-over-year. It's evident that a significant portion of these revenue lines is highly correlated with the level of economic activity, therefore, performance will depend very much on the dynamics ahead on how economic activity evolves, on capital markets conditions and on the investment banking environment overall. The same comment applies to the other lines as well.

I will now begin to go deeper into credit quality, starting with some information that I believe is highly relevant. Here, we show NPL performance. In short-term delinquency at the consolidated level, we observed an increase of 10 basis points, as I mentioned earlier, with Latin America remaining essentially flat, while in Brazil, there was an increase of 20 basis points. When we break down Brazil, the dynamics become much clearer. First, in individuals, we observed the seasonal first quarter effect. When we compare it with the historical series, excluding the first quarter short-term NPL from 2023 to 2024, this represents the lowest increase we have seen.

While we are rounding this figure to 30 basis points on the slide, the actual increase was 23 basis points, meaning a smaller increase compared to other first quarters that share the same seasonal effect. Therefore, this is a first quarter that came fully in line with expectations and with very well-behaved short-term delinquency.

In SMEs, we see an increase that was already expected. I have been discussing this with you for quite some time, and I'll reinforce it again when we talk about over 90-day delinquency. This is a portfolio that experienced strong growth in guaranteed credit, especially government-backed loans. A relevant portion of this portfolio previously carried grace periods. which are now gradually ending. Today, less than 5% of the portfolio remains under a grace period. As a result, we'll mechanically start to observe delinquency from this client base, but always covered by government guarantees. Therefore, despite the observed increase, which was fully expected, delinquency levels remain significantly below those seen in prior years with expected losses and profitability fully in line with our expectations.

Moving to long-term delinquency, both at the consolidated level and in Brazil and Latin America, indicators remain well behaved. In Brazil, Individual portfolios were stable during the quarter. In SMEs, we saw an increase of 10 basis points, and we expect that the indicator could still rise by an additional 10 to 20 basis points, running close to 2.1% would be a reasonable level, which is still below where we were just a few quarters ago when this indicator was closer to 2.4%, already reflecting portfolio adjustments under Resolution 4966, which includes securities.

I would like to remind you that these indicators already include securities consistent with the Resolution 4966 framework. No adjustments are being made here. Therefore, our expectation is for a mild and expected increase, which is mechanical in nature and does not raise any concern regarding cost of credit. In large corporates, the indicator remains stable. These are data points that we do not typically disclose, but I believe it's worth taking the time to discuss them.

As I mentioned earlier, target clients currently represent close to 80% of our outstanding portfolio and in the origination, they tend to be close to 100%. What I want to show you is how client indebtedness has evolved, excluding mortgage lending. This is because mortgage dynamics are somewhat different. That said, the footnote includes the calculation, including mortgages as well. In many cases, clients replace a more expensive rent with a mortgage installment. Mortgage lending is collateralized with solid loan-to-value ratios and down payments. So we believe the dynamics are different for this product.

Excluding mortgages, the indebtedness of our target clients starting from a base of 100 in December 2019, reached 105 in January 2026. When we look at the broader market data, including our own clients, this index reached 123 in January 2026. This highlights a very significant difference relative to the client base we have been working with, reflecting responsible credit, a credit cycle perspective, portfolio management and resilience. This is the client base on which we have built our reference portfolio. The market in a broad sense, considering all other client segments, experienced a much stronger increase in indebtedness over the same period.

When we analyze our total client base, and here, you can clearly see how relevant target clients are for us, the index moves from 100 to 106. In other words, the difference is not material. And when compared to the market, by definition, the index is the same. This demonstrates the predominance and relevance of target clients in our client base and in the way we operate. This is the first information to show good client quality from an indebtedness perspective.

Now let's move on to the breakdown of delinquency, and this is information we have never shared before. I felt it was important to present comparative series across selected products. Today, over 90-day delinquency in our personal loan portfolio stands at 5.1%. This reflects delinquency among our clients in this product. In the market, delinquency in personal loans stands at 9.3%. More important than the snapshot is the trend. From December 2019 through today, we reduced this delinquency indicator by 21% among our clients, whereas the market increased by 18% over the same period. We observed not only a meaningful difference in delinquency level, but also a clearly opposite trend.

In credit cards, the logic is the same. We report 5.1% over 90-day NPLs, which is roughly half of what we observe in the market. Over the period, we reduced delinquency by 8% following the derisking process in the portfolio that we've discussed extensively, while the market increased delinquency in this segment by 56%. Once again, both the level and the trend are significantly different when we analyze the full picture.

In auto loans, our over 90-day delinquency stands at 3.5% compared to 6.2% in the market, while our indicator increased by 17%, market delinquency increased by 82% over the same period. Finally, in private payroll lending, a portfolio where we've been growing meaningfully, we do not have a comparable long historical series due to changes in the product dynamics. Even so, we can show that our delinquency level has been running at 4.2% with pricing that is coherent, competitive and responsible for clients. By comparison, market delinquency in private payroll lending stands at 7.1%. This once again highlights the discipline of our risk management across the bank's balance sheet and how we operate across our individual portfolios.

Moving on to SMEs. We see information pointing in the same direction. The first metric is the share of guaranteed lending across portfolios. From December 2019 to March 2025, our guaranteed portfolio increased from 36% to 55%. Looking at the same period only for micro and small enterprises, guaranteed lending increased from 37% to 70%. On one hand, we look at SMEs as a whole, including middle market companies. On the other, we isolate micro and small enterprises. In this latter group, we see guaranteed lending growing from 37% to 70% in a client segment that is typically more volatile with higher failure rates. We have materially changed the profile of this portfolio by operating with significantly more collateral.

In large corporates, we also have an important message following the same logic of portfolio management, long-term perspective, capital allocation and risk management. First, the portfolio nearly doubled between December 2019 and March 2026. We effectively doubled the portfolio size, but what about client quality? First, we reduced concentration. The bank's 10 largest clients represented 20% of the portfolio in December 2019. And after doubling the portfolio, they represented 15% as of March 2026. We achieved growth in a much more granular way, avoiding concentration risk.

Most importantly, we not only grew, but we grew with high quality. According to our internal investment grade assessment framework, where we monitor, measure, manage and qualify corporate ratings, we achieved a substantial improvement in mix and quality, reaching nearly 80% of the portfolio in investment-grade credits. Across both individuals and corporate banking, including micro, small, medium and large companies, what we see is clear evidence of our management discipline. This reflects our view of an infinite game in which we must continuously build a sustainable and consistent portfolio that generates value, serves our clients well and does so with much lower volatility than we observe in the market.

Agribusiness is also a very important portfolio for us. There has been a great deal of discussion about the more challenging environment for the sector with pressure from commodity prices, foreign exchange, fertilizer costs, farmers operating with tighter margins, higher leverage and higher interest rates. So how have we built our agribusiness portfolio? Out of the total agribusiness portfolio, 31% is allocated to farmers. When we analyze this portfolio, nearly 80% of it is backed by strong collateral structures and robust legal instruments, which provide a high level of security in terms of credit quality and recovery potential.

Our market share in agribusiness is estimated. There is no official market share data for agro lending. But based on the proxies we use, we estimate our market share at approximately 20%. We then applied the same market share estimation to all Chapter 11 cases observed in the market in order to assess our participation in those cases. Despite holding an estimated 20% market share in agribusiness, we account for only about 4% of the total volume under Chapter 11. We highlight this 4% comprises products with strong collateral and we can negotiate guarantees with clients much more effectively.

As a result, our recovery rates and loss given default tend to be significantly lower given the way these portfolios have been structured. This once again reinforces the reliability and security of our portfolio. Regarding the portfolio by stage, when we look at total coverage ratios and loan portfolios for Stages 2 and 3, we observe only small variations with no significant impact.

In corporate, we do see somewhat greater volatility in coverage for Stage 2 and Stage 3 portfolios. And the primary reason for this is mechanical. Every time we remove a client from Stage 3, typically through write-off and the restructured portfolio is a good example, which I will show shortly or when a client with a very high level of provisions exits the balance sheet through write-off, that client usually carries higher coverage. Meanwhile, new clients entering these stages typically do so with lower coverage ratios. This explains why we see some volatility in coverage indicators for Stage 2 and Stage 3 portfolios, which is entirely related to portfolio dynamics.

I would also like to remind you that we operate under an expected loss model. If we identify any sign of deterioration, we proactively build provisions. We do not manage our balance sheet through provisioning decisions. At the core, our models are robust, accurate and reliable. Whenever there is an event or a forward-looking change in expectations or outlook, we typically recognize provisions accordingly, which reinforces overall portfolio quality.

As for the delinquency indicators that I showed you earlier, they also reinforce a message I have been making for quite some time. There has been no change in our write-off criteria. Although Resolution 4966 allows for some flexibility in extending write-off timeframes, doing so actually worsens delinquency indicators as it keeps clients classified as over 90 days delinquent for longer than appropriate. Another consequence, particularly when you consider the incurred loss framework for provisioning is that you end up with lower provisions initially. This creates a temporary benefit in credit cost but results in worse delinquency indicators.

We did not change our criteria. Despite the additional flexibility granted by the regulator, our view is that recovery expectations have not changed. Therefore, we continue to apply write-off time lines based on our best estimate of recoverability, which is the same approach we used prior to the regulatory change coming into effect.

Turning to credit cost, which ultimately consolidates all these dynamics, we do observe a nominal increase, as previously noted. However, credit portfolio is expanding, and therefore, nominal credit costs are expected to increase. What truly matters is the annualized credit cost ratio over the portfolio, which has remained remarkably stable over the past several quarters. This stability reinforces all the points I have been making throughout the previous slides.

When looking at the restructured portfolio, as you can observe from what I mentioned earlier, whenever a large client moves to write-off, that client typically carries a very high provisioning balance, which also affects these indicators. This effect is usually visible between the third and fourth quarters. Still, this portfolio continues to decline. Overall, restructured and renegotiated portfolios also declined further and are moving in the right direction. Most importantly, the ratio of renegotiated loans to total loans remains very well behaved. We do not expect significant nominal reductions to happen very quickly. This process unfolds over the cycle, but levels remain fully acceptable and appropriate for the bank's portfolio.

Now turning to expenses. I would like to highlight the main points. It's important to remember that the first quarter is always affected by seasonality. Even so, when we look at expenses in Brazil, we recorded a 5.6% reduction compared to the fourth quarter of last year. On a year-over-year basis, expenses increased by 5.2%. We maintain our commitment to reaching our efficiency targets. And if you want a reference, we continue to aim for the midpoint of our guidance, which implies annual expense growth of 3.5%. This is supported by a series of structural initiatives with a long-term perspective.

This clearly reinforces what we have seen in previous quarters, a year-over-year downward trend driven by significant and structural changes across the bank. This is the key message here. Our efficiency ratio reached 34.9% in Brazil, once again setting a record at our lowest level for this metric. If we adjust for the early dividend payment effect I mentioned at the beginning of the presentation, this figure would have been 34.4% in Brazil, representing a very significant improvement.

Regardless of the adjustment, the reported figure is 34.9%. And for the first time, we have broken the barrier below 35%. The same trend is observed at the consolidated level. This is the efficiency ratio of a universal bank like Itau Unibanco operating across all segments and regions. We are the most international bank in Brazil. This clearly demonstrates our discipline in cost management and revenue generation, building business models that deliver adequate profitability and are sustainable over the long term.

Turning now to capital. We ended the fourth quarter with a CET1 ratio of 12.3% and AT1 capital of 1.5%. During the first quarter, we delivered strong results, generating 0.8% in capital. Capital consumption related to dividends, interest on capital and share buybacks amounted to 0.4%, while risk-weighted assets consumed 0.5%. We can therefore see that our core capital generation is sufficient to fund both capital uses and the growth of risk-weighted assets. We also show the impact of the 4-year phase-in currently in its second year related to operational risk and certain credit risk exposures, resulting in capital consumption of 0.3%.

I would also like to remind you that there is a phase-in also in its second year related to compliance with Resolution 4966. In Itau's case, there was 0 capital impact from this transition. We did not incur any capital cost from migrating to Resolution 4966 because we already operated with provisions for securities and expected loss provisions across all portfolios. Therefore, the regulatory change had no accounting impact on the bank's capital.

Finally, even after the significant dividend distribution in the fourth quarter, our objective was to start the first quarter with a CET1 ratio of 12%, which is the level we use as our reference for dividend distribution. This is above the Board-defined capital appetite floor of 11.5% and 12% is the level we consider appropriate for dividends. We also reached 1.4% in AT1. As a result, we ended the quarter with a very solid capital base despite all the impacts, allowing us to continue growing and paying a meaningful level of dividends with high profitability.

To conclude, I would like to promote our reports. We have made available our 2025 integrated annual report and our ESG report. This is an invitation for you to access these materials. They contain a significant amount of high-quality information that can address many questions directly. The level of detail is much greater than what we can share during earnings calls and Q&A sessions. So I encourage you to review these reports.

With that, I conclude the presentation of our first quarter 2026 results. As I mentioned at the beginning, this was a solid quarter with very strong profitability. Naturally, the environment requires attention, and we must remain highly disciplined in managing our credit portfolio, monitoring conditions on a daily basis. Most importantly, we have been able to continue expanding the bank, investing and advancing our digital and cultural transformation while maintaining a strong client-centric approach and delivering very solid and robust numbers, all in a sustainable manner.

Consistency, lower volatility and execution discipline, especially capital allocation discipline, continue to be core to the bank's decision-making process. This is why we have been consistently able to deliver strong results. I would like to thank you all once again for your trust and for your time. I will now join Gustavo and Gabriel for our traditional Q&A session. Thank you very much once again and above all, for your support. See you shortly.

[interpreted] [Operator Instructions] So the first question is Thiago Batista from UBS.

[interpreted] Congratulations on the predictability of your results, very constant, very predictable. Question is about -- well, the focus of Itaú Unibanco, the main banks is the one that is less exposed with the client with products, but I wanted to hear your initial impressions on the program, Desenrola. And Rede. Of Course, there is the capture of payouts. What are the next steps at Rede as well?

[interpreted] Well, welcome once again. Thank you for asking your question. Let me start by Desenrola, the program. Desenrola is a building. So the Fedraban and banks and the Ministry worked with it right since the first day to understand what are the conditions that we would be comfortable. To find the best product, the best deadline, the best discount, everything within a reasonability that would make sense for the client, for the system, for the market. Of course, it's a program that is very concentrated in 5 minimum salaries. That's a range up until 2 years with a discount that is predefined and with a guarantee of FGO for the limited 50% of subloss, so to speak.

So in our case, we are working actively, since yesterday, we've been working. We are operating in the new program, but it's evident that you just mentioned, well, proportionately, the public of the market that is eligible for this program in regards to our portfolio is less relevant in the portfolio of the bank, proportionally speaking. So without a shadow of a doubt, we're going to work in the best way possible. We're going to try to get the best offerings for the eligible clients.

But in terms of materiality in the results, I wouldn't say that it's material given the size of the credit line and the recovery line of the bank, but we're going to try and service the clients well in this transitional process given the level of indebtedness, the interest rate, the delays, we think that working alongside with the sector is good to service these clients well. This is the first.

Well, about Rede, it's important to make sure that you understand that the integration that we've done in the past was well -- what succeeded, was well done. The results are there. You can see. We fitted in the offering. We do not talk about Rede. We talk about receivables and payments, the integrated offering. We service the clients in their needs regardless of the product. The pricing is on the vision client, not the product. In the past, several companies were listed in the sector. So everybody would work with a mono product and pricing. That doesn't make sense for Itaú Unibanco for a long time.

So it's another product, another offering to service well the needs of our clients. In the market share, in fact, we've had the results of the quarter. It's an effect of the mix that is important. We had a higher volume of wholesale than retail. And what guides the market share is the big accounts. The retail has more profitability in the business, but the one that directs the market share 2/3 is the big accounts. So when you have big contracts that moves the needle naturally.

The most important news is that we are leaders in the sector for a long time. We are leaders in the market of the wholesale and also the retail markets. So that's the main message. Now market share, that's not our objective. It's a consequence of our actions. If it's well resolved, if it's well fitted in the journey, we are servicing the clients well with a competitive value proposition, the share is a consequence. In the big accounts, we avoid that discussion of renting the market share because you can get it with aggressive pricing below the exchange feed and the flag, you receive that market share, it's costly to carry it over and we've seen that.

In this quarter, specifically in the line of flows of payouts and receivables that we have in the revenues and services line, we had an effect, 2 main. The first was the mix that I just commented. Second, the structure of hedge that we use because we do the hedge of the anticipations that are done because most of them are automatic. So we will work the transfer and the liabilities through time and that generates volatility. It's not a 100% perfect hedge. It's impossible. So any change in the interest rate structure is the main impact in this line.

And part of the result of Rede is still in the margin with the clients. So I would say that 97% of the -- 98% of the result is in the service line. In the next quarter, we are going to do the adjustment that is missing, which is bringing part of the result that is positive in this quarter. So we -- so that all the result of Rede is in the lines of services and insurance, which would attenuate the numbers that you're seeing. But our strategy is best offering, vision of the client, price of the client and vision of the payments and receivables amongst acquireants, it plays an important role.

[interpreted] Well, let's go to the second question with Bernardo Guttmann from XP.

[interpreted] Congratulations on the results. So I wanted to understand the trajectory of the ROE of the bank. Itaú delivered 25% of ROE recurring, very high threshold even in a seasonably weaker quarter. When you see that profitability, the natural question is how much -- how many levers do you still have to maintain or even expand this ROE through the year? In your opinion, the sustainability will come from margin of the client efficiency, mix of credit, revenues of services, capital. Is there any point that you think that the market is still not capturing well the capacity of Itaú in keeping that ROI structurally above the system?

[interpreted] Thank you, Bernardo. Thank you for the question. Thank you for your initial words. Great to see you again. Well, the issue of the ROE, as we always mentioned, and I'm going to answer your question, but I'm going to do it with a disclaimer. We avoid giving guidance of ROE because there is a lot of variables at the end of the day that affect accountability -- accounting, sorry. We like to talk about value creation, and that depends on the cost of equity, the cost of capital. In our opinion, the cost of capital is 14.5%. That's the best information that we have in our models, and we look instruments, perpetual instruments in the market. We have the modeling that is proprietary. So the spread between profitability and cost of equity, in fact, is where we are focusing.

And all the incentives of the bank are placed in value creation. So that's a relevant metric for management. That brings discipline, long-term vision and always focus in the creation of value. In the guidance that we gave at the beginning of the year, there is a profitability above 20%, and we are delivering this ROE recurrently. So if you ask me, do I foresee any problems in regards to profitability? If we work with the operations that we have right now, no. We're still going to deliver a profitability that is important all throughout the next quarters.

Of course, there's going to be some volatility because there is an X amount of variables that compose the ROE of the bank. It's not just Brazil, Latin America. There is all the lines. But speaking of the guidance, the best answer that I can give you, we are comfortable with the guidance that is there. We reaffirm the guidance. But I think that the challenge is looking at the future, and we've seen with the service line, with the insurance, they're very much connected with the activity. That's where we're going to see the biggest challenge at the end of the year because it depends on the activities of capital markets. It depends of TPV and credit cards. It depends on our capacity to continue to grow with insurance. And it seems that we're going to be growing the bottom line all years, throughout the years, we doubled the insurance results.

There's a dynamic of activities that is going to be important in the future. The capital markets we see volumes amongst 30%, 40% weaker. A lot of people saw that in the past. So the dynamic in this line is that we're going to have to observe closer in the next quarters. In the margin with the client, you saw the effects that I highlighted. So the working days and not working days, we have the working capital. So the margin core grows, grows importantly. There is a guidance of portfolio that we are still comfortable with what was published.

Cost of credit, which is also an important lever for the profitability, we reaffirm the guidance. So looking at everything else that we just published, we are still comfortable that we're going to try and deliver the results that are implicit in the guidance. Of course, the challenges are big. As you've seen, all the points that I've just mentioned, but we are still very disciplined and focused to deliver the results. And I think the profitability long term depends on this variability of the cost of equity.

If structurally the interest rate will drop in Brazil, assuming that the war ends, that the exchange rate is in the threshold that is current, that inflation secedes and the Central Bank can do a relevant monetary adjustment that will open more activity will improve the COE. And it's not just the interest rate here in Brazil. It's the interest rate, the environment, institutional environment that makes the price and the cost of equity and legal security. If we can work well with that, it's expected that part of that spread between the COE and the ROE will go to the clients.

So we can be more competitive and the efficiency agenda is vital, so we can have more conditions to compete and more pricing power and maintain a part of that efficiency that goes to the clients. So that's not a conclusive answer, but an answer that is general, and we are very comfortable with the profitability. We will deliver the profitability above 20% without giving any guidance with the ROE.

[interpreted] Okay. Let's go to the third question, Marcelo Mizrahi, BBI.

[interpreted] Question about delinquency. So the macro data that we've seen, the delinquency has been intensifying. And that slide that you just mentioned is great, so we can see the difference of how the bank is performing in regards to the market. But the market -- the bank doesn't run alone. So I wanted to understand, looking at the perspectives of the year and the portfolio, you said that you're at ease with the guidance, but the dynamic of the beginning of the year, the first quarter in regards to the dynamic of the guidance, the quality of credit of the market itself, is it better?

Is it worse than what Itau expected when you assembled the guidance? So the point from the standpoint of macro of delinquency, the issue worries enough so you can have more -- so you can be more cautious and have more difficulty getting to the guidance of the growth of credit? How do you see specifically delinquency of the natural presence in the beginning of the year? And as -- well, we see that the numbers of the bank are doing well, but the growth of the portfolio in the next quarters.

[interpreted] So thank you, Marcelo, for the questions. Well, objectively speaking, the conditions from the past scenario are worse in the beginning of the year. And objectively speaking, before we talk about the portfolio itself, macroeconomics are worse, specifically because of the geopolitical events. January, February were months that were very much aligned with the guidance and right at the beginning of February. And from then on, there is a war in the Middle East, volatility in the price of oil, more uncertainties in regards to inflation in regards to the price of energy, transportation, all the issue of fertilizers in agricultural manufacturing chain, deceleration of global growth, which impacts Brazil naturally. There is a series of new factors that didn't exist at the beginning of the year when we did the guidance.

On the other side of the same coin is the discipline. of doing the provisions [indiscernible]. So of the cases that we provision throughout time, these are cases that we know. And we've planned to have done advances and provisions depending, of course, on situations and new information, new situations throughout the year, number one. Number two, our portfolio, by definition, was built with a more resilient public to the cycles that we're seeing right now. Evidently, the interest rates with the restrictive interest rates, they generate effects in all segments. And as you said, we're not isolated from the world.

We have a credit portfolio of BRL 1.5 trillion, BRL 1.3 trillion in Brazil. So it's evident that any worsening can have an impact in our portfolios. Having said that, the portfolio was built in such a way that is so resilient, so well managed from the standpoint of allocation segments, public sectors, volatility, clients that we understand that even so with this information, the best information that we have now, the guidance is reaffirmed. Our indications of delays are well behaved in the first quarter, which is a relevant indicator for the natural prices or individuals portfolio is important.

Well, you talked about the opening of the short term. It gives you a good visibility on how we are doing and the performance. So we expect that with the expected loss is fundamental and the expected loss is impacted by the short delays, delinquencies. In the first quarter, we had a better second quarter of the series. It wasn't better from '23 to '24. 23 basis points in what we say, a pressured quarter because of the commitments of the family at the beginning of the year. So our expectation is that the long delay, specifically in the individuals is stable throughout the year. We do not see materiality in 10 months, nothing too relevant.

In small SMEs, the portfolio is performing very well. The data given the characteristics that I just described, we expect that it can be 210, 190, something reasonable to imagine. We're not seeing a worsening that is not the mechanical effect of the government programs and the big companies are events. So here it is more difficult for you to foresee. We try to foresee as best as we can because we look at the balance sheets, we discuss with the companies, the management of provisions is super [indiscernible], but events take place. Rarely, the client leaves from Stage 1 to 3, rarely, it occurs, but it occurs.

And we've seen in this quarter, it happened. So the most important thing is to be tempestuous in doing the adequate provisions and migrations and having a solid balance so we can face the ways up ahead. So besides the DRE, which is looking at the results, the patrimony accounts provisions and the balance is very well robust to face the challenges for the future. But the scenario from then to now is worse than at the beginning of the year. We are here with all the raters turned on and operating in the best way possible.

[interpreted] Now next question, Gustavo Schroden, Citibank.

[interpreted] Congratulations once again on the solid results and the predictability. I wanted to explore the growth of the credit portfolio in 2 specific products, Milton. The private Consignado and payroll loan and SMEs that you're growing. So in our reading, there are 2 things -- 2 points that we would like to think. In the payroll loan Consignado, the private, there is the creation of caps. Last week, we had a specific point about the cost effectiveness, total cost effectiveness.

So I wanted you to explore this issue. How do you foresee the issue of appetite in the private payroll loan and in the small, medium micro companies the issue of the support to the government programs? We know that, that has helped in the delinquency in that sector. And even so, as you highlighted, we expect a worsening 10, 20 bps in the portfolio. Do you foresee sustainability in the government programs another 1, 2 years? That would be my 2 questions about the 2 points on the credit portfolio.

[interpreted] Thank you, Gustavo. Great to see you again. Let me start by the order of your questions, the payroll loan. First point that we'd like to highlight in way back when the product was launched, I had talks to investors. I talked in the call itself, I talked to investors of how the bank sees the evolution of the payroll loan CLT. First, it was a leader, 30% of the market. It was a market of BRL 40 billion. So we understood that there would be an expansion of that market. It would be natural that we will lose share through the cycles, but we would still be more relevant in the payroll loan private, not from the standpoint of share, but volume of the portfolio.

In fact, that happened. So when I look -- if you look at the records, we are the leaders of the payroll loan private with a large advantage in regards to the competition, and we assumed the market share today, which is above 20% with a portfolio of approximately BRL 20 billion, a portfolio of BRL 12 billion when the program was launched. So we had a growth of BRL 8 billion approximately of portfolio with important productions throughout the period. But the strategy since the inception was important for us to get here.

First, be able to launch with the launch. So the cost of modernized platforms, technology, we had an advantage comparative of starting right at the beginning. It wasn't necessarily in this way for the system as a whole. Of course, that generates a comparative advantage, but that is not the main advantage. Historically, we always evaluate very well. We've had harsh learnings in the past and the company's portfolio as a whole, we had difficult cycles in the retail and wholesale and this logic and risk matrix, which is the risk of the companies with the risk of the private. This combination is very important to define what is the equity play, where we want to work and where our strategy is going to be built. And in this strategy that we designed the portfolio from then on.

Two important commentaries. Well, delinquency, I just talked about over 90. It's substantially below what we observed in the market. Two, we have a strategy that is very focused in the clients that have bank account in the bank. We know them. We are the main one, and we can manage the risk management in a different way. growth was given there. If you see the average rates practiced, you can see that in the list of the banks, ours is the second to last, second cheapest rate that is offered to the bank, to the clients, and 2 issues.

First, focusing on the client, which is what we are defending. If this is the best product, I can service the client in the best way possible, and I can have the lowest price, why am I not offering this product beforehand? That's the first decision that we've had. Second, if I can work with a level of guarantees that is a combination of the individuals and companies, I have to operate with competitive rates because delinquency is going to be lower and the value creation and return is going to be very adequate.

Lastly, we have to understand the full offering of the client. I don't see this product in an isolated way. I look at this product and I look at all the offering of credit that, that client has, all the products, so we can do a pricing and a risk management with the vision of the client. I do not ignore. Lastly, there is always a risk because if I don't do this with my good clients or the clients that we just define that we need to grow, all of the target ones somebody does it, I'm going to be subordinate. So we look at the total risk exposure, but we look at subordination that is very important.

So the issue of the cap, which is your question, the impact is relevant, regardless, while being very transparent, we do not think there is adequate caps in credit operations. We know that, that produces something a efficient. You remove products of the market. And this is a product that is more adequate for competitive prices. Having said that, for the mechanic of the cap that is established in our portfolio, so with the data that we operate with the lowest rates of the market, our rates -- average rates are below the average rates practiced by the market. There's going to be some convergence.

There's going to be the calculation of one standard deviation. I think that, that calibration is going to be fundamental because of risk, we rather calibrate lower, getting the cap as we work with the other products that removed other publics from the market, the INSS. And this is the more competitive credit. So I have that issue in regards to cap for our portfolio in the way that we are growing, we're very comfortable with the current conditions. That's one of the question on the payroll loan.

The second question was SMEs. We're talking about the government programs. The programs were very well successful. Pon, FGI, ProCredit, and we were once again focusing on the client. If I need to service the client well, I need to get them to access -- give them access to more competitive products with the best prices so they can have capacity to prosper in the longer cycle. We are leaders, the availability of those government programs, all the clients and all the programs.

This year, last year, there was a return of the FGI because we proposed at the time for BNDES for the government, a higher utilization of the first laws that were established, and we can do a leverage that is even bigger. The government is aware that we have opportunity, and we have a preponderant role in the academy and others understand this dynamic, and they proposed the relevant volumes for the FGI.

We applied resources. The sensation is lower, but however, recently with talks with the Ministry of Economy, they understood the difficulty of this program. They had an additional investment, BRL 2 billion within FGI that brings to the market another BRL 25 billion of lines. And this is the first of many that can happen throughout the year because of the programs, government programs, the most efficient were Pon and FGI. With the information nowadays, we don't see any stoppage, abrupt one. We are going to keep sustainability. But at some point, they're going to have to do a transition of the portfolio, and it depends on the appetite of this government or the plans that are up ahead.

So we are going to have to follow closely and it's difficult to see for the future, but at least for the current year and the next one, these programs are going to be relevant with the progress with the clients and delinquency. And the mechanic delay that you commented, it has that effect of the 10, 20 bps. It doesn't generate that effect with the expected loss because the guarantees are very strong. So it doesn't affect the cost of credit.

[interpreted] Well, next question. Renato Meloni, Bernstein.

[interpreted] Congratulations on the resilience of the results. The scenario is difficult. I wanted to focus on the individuals portfolio. The additional information, I'm looking at the graph that you're seeing of leverage of individuals. What is your expectation within the cycle in terms of increase reduction, maintenance of this indicator, which is important. And I am thinking given the focus that you are doing with the selected public, at one point do you get to a limitation of growth of these portfolios?

And if you can also expand on your comment about the SMEs, thinking about the cycle, another 1, 2 years, these programs can sustain a similar level of growth. But when that extends or extinguishes, do you think that the cycle of credit can be at a moment that is more prolific and even leveraging? Can you expand more on the universe of small companies that you are lending money?

[interpreted] Thank you, Renato. Good to see you. Thank you for your question. First, in the credit portfolios of the individuals, we still see the capacity of growth. We've grown 2 digits. We've managed to get into the clients that we wanted that we had the opportunity of growth, always getting into this logic of target clients, long-term view, we are very comfortable with the strength, the capacity of growing in this Brazilian public, number one.

Number two, I think that the migration that we've done of One Itaú brought opportunities that are 5 million clients. And there, we didn't have a full bank relationship with the clients. And we've seen a great deal of this growth that we've observed Uniclass and mainly Ponat from this public that didn't have, had product with us and now over 60% of the base has 3 products with the bank, which shows that we are starting to operate with the clients that are monoline. They didn't have a full bank experience, and now they have a full bank experience.

And that is a lot of volume of clients and opportunities for us to continue to grow with and we are growing well in the market is part of our strategy. We are growing in the segments that we are giving focus. We've grown with our products and now let's talk about the vision of the payroll loan, the mix of funding. If you look how much do we have in the savings and the real estate, the structure of funding growing with the prices. Imagining that the full market practice is the same one, the marginal cost of capture gives more volume of the savings and less allocation in the map, it brings competitiveness in the price.

So in the same price, our return is higher by definition, and that strengthens, obviously, the franchise and the relationship with the client. We will naturally continue to operate with the products that we operate clean. The payroll loan is an important lever, the real estate as well, some products that -- we've been cautious in vehicles, for example, we've seen volatility. We are servicing the clients, and this is a more volatility segment.

And the credit cards, regardless of the derisking that we've done, we've grown in a relevant way with a target public transitionality that is very relevant. So I see opportunities to be able to grow. I don't see any limitation. There is an additional fact that I'd like to say at the individuals, we see nominal reductions in cost with an inflationary pressure that is enormous. So just with time with the cost is an extraordinary result with all the pressure that we had with negotiations, the banking inflation, which is higher than the IPCA rate, even though with that, we've worked very strongly. And why am I saying that?

Because Itaú Digital, which is where we work with the client, where the digital service is preponderant, it starts to work with an efficiency level that is ever more competitive, and that generates options to work with publics that I couldn't serve as well because my efficiency level didn't allow me to assume additional losses. So as we evolve in this agenda, I can work with publics that I didn't work before with the same appetite and competitiveness. So opportunity to grow in the private persons is enormous. We still see opportunities, and I am very happy with all the investments, refreshments and the strategic vision on individuals.

We are working along with the plan, but this is a year that is important for the execution. I am very optimistic about our capacity to deliver a long-term view. And SMEs, which is the second point of your second question, it's very difficult to foresee where these programs end. The program is definitive. So we don't have that discussion of the commitment of resources. FGO depends on the appetite and the conditions of the market because if in 1 or 2 years, we have a situation where the small and medium are going to need support with the government programs. It doesn't matter.

I know that they're going to understand the effectiveness of the program, the cost of allocation of the public resources. It's very difficult to say where and if these programs are going to decelerate. With the information that we have now, they're going to continue to exist in a relevant way. because they've been very effective, specifically for the SMEs. Well, in the segment of the middle outside of that, we grow with less dependency on these programs. The participation in the portfolio is a fraction of SMEs and SMEs. We know that these programs are key for the growth with quality, competitive pricing, adequate deadlines for the needs of these clients and with risk portfolio that is well defended.

[interpreted] Well, now the next question, Daniel Vaz, Safra.

[interpreted] Congratulations on the resilience of the bank. Thank you for sharing new data on the credit. It's important to see a bit of your -- how you're working with the capital quality of credit. So I wanted to explore 2 things that we usually do not mention, which are vehicles and the payroll loan, INSS and vehicle loans. Vehicles, the hiring of the bank, they dropped 13% year-on-year. So the market, if you look at the level of, the disbursement grew 25%. It's very big in terms of financial activity.

So I wanted you to understand -- to make me understand better the vehicle loans, is there any opportunity of attack? How do you want to position from now on? Or if the product has some gaps that you don't mind guidance? Well, if you can explore the call. Second, in the payroll loan, INSS, we had important changes with this rollout 1.0. Well, with the new margin of the payroll loan, at least 35.5%, which is 45% with credit cards now to 30% in 5 years, when you're going to have the phase-in of this new regulation. But the credit card losing importance and does that open more space to play with more or less with this product in this new regulation?

[interpreted] Thank you, Daniel. Thank you for the question. It's great to see you. Vehicles, as I commented very quickly in the last question, this is a segment that we work a lot. The bank was a leader in the past and with relevant volumes. In the past, we've had the portfolio of BRL 60 billion with nominal values. And if you mention the values today, over BRL 100 billion, if we've just did the correction of the revenue in the past. Well, this is a segment that is very volatile. So when you see the commitment compromise of the income of the families, we've seen restrictive interest rates, the financing of vehicles naturally becomes more risky.

Second, recovery of the guarantees. There is a new legal framework, but there are still stages to be fulfilled the legal proceedings. So it's not operating in full power under the best conditions thus far. So I always say that the vehicle is a real guarantee with wheels. So you need to find the vehicle and the recovery rate is not so high. So the market -- secondary, it changed the dynamic of the prices. In the past, what was the strength the market was practicing high prices. We see a convergence in the prices and the spreads are very tight. So at the end of the day, our logic for the value creation and capital allocation and risk management, we think that this is a business that is less promising, so to speak, from what we see in other businesses and that we see opportunities.

Having said that, we want to service the clients very well, our client that has a good risk that wants to do the vehicle finance, we need to be present. We need to service the client with a one-stop shop and need to offer the client all the products that the bank has. Financing is one of them of vehicles. But getting the first or second place with a reseller with a competitive market, assembly lines getting into the use, banks, increasing the deadlines with the used vehicles, very strong competition. We rather lose share than lose money. So that's our strategy.

In the end, to be very disciplined in the risk allocation, even though that produces the effects that you commented, reduction of share risk and this is something that we're very comfortable because we think that the risk return relationship is not adequate, so we'd rather reduce the portfolio. That's the first point. Second point about the INSS payroll loan. That decision was made with Desenrola. It's in the best interest of the families to try and get the level of commitment compromise of the income through time. It's a transition. These are new information 40 hours ago that we received this information, but we need to understand the impact in our portfolio.

It's early to say because this is a transition that is long. You do it at the beginning, the reduction of the 45 to 40. You bring the 5 plus 5, the 10 to the credit card to the limit, but then you have the reduction of 2 percentage points in the year, getting to 30% in 5 years. So that's the end game that you mentioned. Let's try and understand how that can be. And this is an opportunity because we do not operate with the payroll loan, credit cards. So the INSS is important for us. We practically just produce at Rede. We do not produce with the others because of the caps, the commissions, the balance -- financial balance.

If the return on capital was below than what it should be, we see players aggressive with the conditions is more focusing on generation of revenue than return of capital, and we are very disciplined in regards to that. And the caps have removed publics from the market. So with the reduction structurally of the interest rates, it depends on the evolution of the reduction of the caps, we can maybe or not depending on the decision on the cap to bring new publics for the market, and there is a review of the blockage of benefits, the review of processes. We are working strongly with the clients to facilitate this process, and we managed to lead in terms of production, the I&SS market through the network of the bank.

[interpreted] Next question, we have Mario Pierry from BofA.

[interpreted] Congratulations on the results. We understand that this scenario in Brazil, not just Brazil, but is of uncertainty. And it's interesting to say that the bank can see the thresholds that are stable. So the question is regarding the efficiency level. You showed in Brazil, there is an efficiency level of 35%. And you've seen -- I've seen that you reduced the number of branches in 15% in the last year, but the headcount just dropped 5%. So I'm thinking here in terms of still being able to see improvements in the efficiency level the bank should do a more -- should reduce more people and more employees. Do you see that? Or is there still a space to improve efficiency with operational improvements, reviews of contracts, et cetera. So getting your perspective, what is the threshold that you can bring this efficiency level and to have improvement should you have more focus in the reduction of personnel?

[interpreted] Thank you, Mario. Great to see you again. Thank you for the initial words. I always do the disclaimer that this efficiency level is really in the consolidated. So we need to look at the breakdown between wholesale and retail, wholesale with LatAm working with an efficiency level lower. So I would say, in the world of wholesale, to simplify, we run benchmark, global benchmark. We are first quartile, first 10 in efficiency level. without opportunity, we are very disciplined to understand the -- well, highlighted by artificial intelligence, how can we advance more. So this is a constant agenda. And the retail is a game changer, the efficiency level.

So every plan, I always say that even though the cost of the bank grows and let's at the middle point of the guidance this year, even though we grew 13.5%, if we look at the inside, the thermal sensation between the several business is very different. So in the individuals where it's important that we reduce the efficiency level, and we got to 40%. There was an important reduction quarter-on-quarter, 40% of the efficiency level. When I look at individuals, I can observe that that's where we need.

Well, I'm talking about retail as a whole, 40% and then there is companies and individuals and individuals is where we need more competitiveness. So we see cost in this quarter. There is nominal reductions of costs in individuals, and this is very important news. And we still believe and there is important space to do the assessments. And this goes through a revision of value proposition, business model, Itaú more focused, adjustment of footprint, 98% of our transactions are digital, 97% the flow of visitation to the branches reduced from the pre-pandemic to now 70%. That's the reduction of the monthly visits to the branches.

So it's where the client is going that we are analyzing. It's not simply making a decision of reduction of branches. How do we adjust our -- it is how adjusting our model to best service our clients and having a more digital service, specifically with these publics where the efficiency level makes all the difference in the service is fundamental, so we can open the options here. So this review of the model is being done as we speak. It's natural that it happens. And this is highlighted by all the technologies and so on.

So we should see an efficiency level of the retail dropping through time, we expect, obviously, the revenues are different than what the is a cap with the interest rate with the -- and this is where we're going. And Gabriel has been the leader of this process with all the executive committee, with all the areas dedicated so we can take that efficiency level to the place that it should be. Of course, the rest is a consequence of this strategy. What is the model, if it's full digital, if there is a remote service, how do we service the high income, middle income?

Every segment is going to have its position. In the last quarter, I brought you a slide that shows the segment that we are referenced in efficiency segments where we need to gain operational scalability. We are very excited with the advances, and this is where we're going to go with quality, with a digital structure that is ever more powerful, high NPS, the eNPS of the workers and higher thresholds. So absorbing the turnover with good quality, quality and the communication is fundamental so we can go through this bridge. And I'm very optimistic that we are going to get there very strongly on the other side.

[interpreted] Well, next question, Yuri Fernandes, JPMorgan.

[interpreted] Congratulations on the execution of the strategy. Let's go back to the point of ROE. The question is ROE against growth. We know that there is a growth. There is a choice to keep an ROE that is high. There is a reward, we've seen that in your lines. The bank has kept that ROE. We talked about the good capital allocation rationality. We -- so I wanted to ask you about the balance because when we see the most negative point on the quarter, well, the most negative point is the FIIs lines. And the FIIs, they seem transitory, checking account, it should be normalized or even the fee of issuing the credit cards, very pressured because of rewards.

So if you can comment, Milton, on how we should think about the bank in terms of ROE against the growth? Because to me, 2026 is a year of transition, different pressures of fees with an ROE that is very high, but at one point, the Itaú with the cost of service can accelerate the growth. So I don't know if the ROE is going to decrease eventually and the bank is going to get -- gain market share or gain market share in other products outside of the opportunities that we're discussing. So generic question, structural. I wanted to hear from you to balance this high profitability against growth.

[interpreted] Thank you, Yuri. Great to see you. Thank you for the question. So our logic here is to grow. That is the dynamic of the bank. My objective is not having a smaller bank with more profitability. The combination of both on the long term is what we seek every day. I think that BRL 1.5 trillion in credit card, portfolio of BRL 1.3 trillion in Brazil, we have testing and the capacity of testing and understanding how we're going to pilot our growth, and what are the opportunities in lay. Even in the cluster that we close of risk, we still have a percentage open to test and be careful that we are not making a type 2 mistake, which is not approving a good credit because we think that from the standpoint of risk, it wouldn't be worth it.

So we have testing happening as we speak in all the places of the bank. Number two, profitability certainly is very relevant for us. And we haven't seen opportunities of growth that are not being used are not growing to increase the ROE. The cost of capital is there. You can see it. And we operate restriction of profitability is not that. What restricts the growth is risk. So that's the main factor specifically for credit. to grow a portfolio is very quick when you open the credit. Then you spend 2, 3 years explaining the delays, paying the provisions and having to decelerate in the product public that you want to decelerate and consuming the capital in an adequate way.

That discipline is key is a strong balance with discipline, balance that wants to grow, but wants to grow within the opportunities that we understand that are sustainable in long cycles. We do not see any restriction to growth. So when we talk about the line of services business and insurance, I commented, this is a line that what we've seen in activity, specifically the capital markets. There are challenges. Consumption will have its challenges. The TPV of credit cards in the quarter has a seasonability because the fourth quarter is very strong. it pushes for the exchange.

The first quarter, there's an adjustment of seasonality. The indebted families are paying the Black Friday and Christmas. And you have a natural trend of less usage in the first quarter than the fourth quarter. This is important in the credit card. On the other hand, the rewards we still have the yearly payments. We are reducing them. Today, the rewards program costs more than what we had the results. And this is by design. This is a decision that we made many years. We're still going to go with this.

We're going to reduce clearly what we call the risky revenues that generate an attrition with the client and reduce the lifetime value because if I defend these tariffs, in the short term, this transition is soft, but in the long term, I'm going to lose a client. So doesn't make sense. We don't want to lose a client. We want to increase the time of relationship and being the main ones with the client. We open the credit card, the checking account with the individuals to show the direction.

I'm not discussing with the regulator, the resignification of three 39 tariffs. This is not the discussion. The debate is to find new ways of taking packages for our clients that generate value that are perceived as value and not cost, doesn't generate attrition. So the packages that are being developed for all clients have this logic of taking. We buy in the wholesale, we deliver solutions, streaming, restaurants, a series of other benefits. And the advantage programs that we've been working for a long time, you end up rewarding the relationship with the client and the engagement on the long term.

So we're very comfortable with this growth and the rewards program that we have in all the segments, they have a good penetration with relevant results very well managed. So we can have an adequate balance. But those revenues of yearly tariffs and tariff on the checking account, individuals paying for the PIX in the companies. This is our tariffs that we are doing the transition for a long time. It's a negative force, but it brings an x amount of benefits on the long term, mainly the reciprocity and the relationship with the clients. So that's the service line.

Insurance, on the other hand, the penetration has grown over the last year. This year is not different. So whether if it's life insurance or others integrated offerings for our clients, increasing the penetration, we've seen a lot of opportunities in other publics that are not explored. So insurance is growth above 10%, 15% easy. Looking at the future, we still want to grow the result in the bottom line. And services depend on activity. The capital markets 34% weaker. Of course, they're going to affect this line.

On the other hand, the advantage of being a full bank is that you have another complete portfolio that helps you manage these types of situation. You're not doing well in one line, but you have a better one with the margin with the client, but you have a cost of credit that is very adequate or you can get levers of cost where you can work with better efficiency. So this is where we're working with, but there are pressures and we need to deal with it.

[interpreted] well, next question. Eduardo Rosman from BTG Pactual.

[interpreted] I wanted to ask about artificial intelligence. Very difficult from us from the outside to be -- to see how tangible who's going to be the winners or losers. But in thesis, those that are doing a good digital transformation such as you should have a big advantage in the implementation of AI. So I wanted to ask Milton. Milton, what would you recommend for us, the analysts? What should we ask or observe for the executives and the numbers of the banks throughout time to have a good reading of who is moving ahead?

[interpreted] Great to see you, Rosman. Thank you for the questions. I read your report. Thank you for the points that were done first. We didn't agree on this, but I'm going to use this question for marketing and the official launch. We, in the next weeks, in the next days, we're going to launch the first acquired machine, the orange one powered by AI with an AI integrated system in the machine, a conversation with the tenant, the first one powered by AI with NPS above 90, adoption above 90. So this can be a game changer in this world of payments.

They are -- the inception is integrated AI, and it evolves for the conversational. For a series of other points, and I tested it myself. I have a great appreciation of Rede because I was the CEO of Red Car in the past. I talked to the machine, I tested it. I saw it. It's impressive how you simplify the experience of the salesmen. The tenant, the restaurant, and it facilitates the transaction. It's quicker. So I'm very excited about the launch. Briefly, you're going to have news, we're going to do the press release. So thank you for the question.

Let me tell you what I think. What you need to get at the end of the day is get the results. On our side, instead of being the race for the biggest number of models under production, this is not translated into concrete relevant structural results. I think that the organization of the bank has been given in terms of these are the levels of the organization started with the executive committee. So the bank needed the clear definition of what are the layers, the enablers, what are the levels of clients? How do we do this across?

It doesn't matter that one area advances quickly if the other corporate areas do not work with the same speed. So we proposed ourselves to do Itau, the foundation of the intelligence of Itau in the bank. We assembled the guardrail, internal guardrails so we can guarantee that we can take the model, in the model, in the vision of the client without having hallucinations at the end with these models of AI, all the management to guarantee the adoption and knowledge of the bank was done.

So more and more, the employees have access to information. And we define clearly what are the big projects and what are the most structuring and relevant for the bank. It's impressive how the applications have brought results. From the standpoint of the customer experience, they asked me about EMPS. I'm going to help with the answer. As a fundamental role in the digital strategy of the companies, it was born out of a limited scope, so we can do testing and evolve the solution. It's a relevant pillar of the companies where we're going to leverage in a digital way, a great part of the basis, powered by AI, specialists in investment, we are launching where we are going to have access.

I know that you don't have a checking account in Itau. I imagine that you have it at BTG, I recommend that you open an account in Itaú and you test it and then you're going to have your DNA fully analyzed and you have a conversational analysis with the bank. This is a game changer for the bank. You're not a transactional and you have a consultative hyper-personalized bank in all the areas, going through finance, IR, analysis, legal, HR, all the areas powered by AI and several processes. So what you need to discuss with the banks and understand first is the result.

This has to be translated into bigger efficiency, more capacity for the generation of top line, more productivity naturally of the teams because you have the -- you bring solutions to the teams, and it's with not or. So it's a combination of the human with being able to provide more consultiveness with more quality and it's going to make a difference. And in the credit models, we've done with a partnership that is relevant, and we have an investment with a company that has created models for LDM, which are the large data models, not the large language models.

And here, we work in relevant fronts, modeling of credit fraud is one of them. CRM is the other. So all of that will bring more productivity, more accuracy, more competitiveness, more efficiency. So that will be translated with numbers at the end of the day. If I tell you everything that we are doing and the results are moving along, these are structuring or there are improvements that are less relevant. So in the medium to long term, the changes can be transformative. And we need to be able to communicate this to the market so you can make it tangible in what we are doing.

And I mentioned a series of initiatives, the PIX with WhatsApp, but there are game changers that are relevant being done at the bank. And I am certain that we will be able to show this with time. But really is a clear case of what we can do with artificial intelligence changing the experience of payment with our clients.

Now we switch to English as we have Tito from Goldman Sachs with us.

Following up a little bit on Yuri's question on growth, but looking at your guidance here, and I know you had some seasonality in the quarter and the payment of the dividend impacting particularly financial margin with clients and fees. But how do you -- your guidance 5% to 9% growth for the year. You're at the low end or a little bit below that on the fees, insurance, I know it was a bit more resilient. But how should we think about the rest of the year and your ability to deliver, say, maybe a bit above the low end of the guidance, particularly with some of the increased concerns on credit quality? And I appreciate the chart you gave. Certainly, you're in a much better position than the system. But just given those concerns, how do you think about your ability to perhaps accelerate growth through the year and maybe have these revenue trends be a little bit above that -- the lower end of that guidance?

Yes. Tito, good to see you. Thank you for joining us in the call. It's always a pleasure to have you here. So let me give you a little bit more details on the guidance. I think it's still the first quarter. But of course, we do have our forward look to make estimations in how should we end up the year. So we're still comfortable with the overall guidance. I think in portfolio growth, we are comfortable even though we still have challenges ahead. So let's see how it works out in the coming quarters.

Financial margin with clients, we think we've been delivering. It's possible for us to get to where we want due to the level of portfolio growth, spreads on the liability side as well, investments, we've been performing very well. Recent figures coming from the market, we've been gaining market share. So all in all, I think in financial margins, despite the event that we had only in the first quarter, and we had some calendar effects as well. I don't think we should have any issue.

Cost of credit, it's always -- I always knock on wood 3 times here just to be sure that we will be able to deliver. But with the information we have today, we are comfortable with the guidance in cost of credit. The only one that I see more on the lower end, it's on the service and results with insurance. This one I mentioned now a few times. I think this is more challenged for the year, okay?

On the insurance side, very positive. On the fees in general, the market and the activity has not been as what we expected, especially on the DCM side, which is very relevant for us due to the level of market share we have. So we're still dominant in the market. We still have a relevant market share, but it's not related to our performance, but more related to the market performance. So this is an overall impact.

And also, it's important to highlight, we have the performance fees on the asset management in a year with much more volatility as we have been seeing, this is more challenged as is challenge for the financial market with -- in the treasury side, but we've been able to deliver, although despite of the volatility we have. In the asset management, the fee is relevant. Second quarter and fourth quarter, it will depend in our market performance. It will depend on the volatility. It will depend on geopolitics, it will depend on interest rates. So all the markets where we take position.

So I think those are the lines where we have to keep an eye on. TPV has to do with consumption, with the capability of the families to consume. And this will be relevant for the issuer. This will be relevant for the acquiring company. So it will depend on activity at the end of the day. So if you ask me, if I'm still confident with the guidance, the answer is yes. If we believe that we can achieve the level of profitability that we expected at the very beginning, yes. If we can achieve the bottom line that we are looking and of course, the geography may change in lines, but we're still working hard to deliver the profit as we expected. But the lines in terms of geography, I think the profit, the results coming from services and insurance, they will be much more to the lower end than the other ones.

So this is the one that I think it's in risk. I'm not changing the guidance. If I have new information in the coming quarters, and we believe it's the time to make an assessment or adjustment in the guidance, as we always do, we'll be transparent and upfront if there's any change needed, but we're still comfortable with what we have here.

[interpreted] Back to Portuguese. Henrique Navarro, Santander.

[interpreted] My question is about delinquency. The market has been very worried about the cycles and actually 2 questions. The first one, from what I can understand, correct me if I'm wrong, from what I understand, you are seeing the peak of delinquency coming maybe in the second and third quarter. We're going to see the peak of delinquency at Itau and this number shouldn't be a number that is frightening. So maybe deterioration of another 20, 30 basis points in delinquency. So that's the first question. If really we are close to the peak and the peak might come in the second and third quarter, and it's not a number that it will fight you.

Second question, thank you for the information you just gave on Slide 8 was very useful for us. It's clear that Itaú has an advantage in comparison to the sector. So my question is, where does this come from? The explanation can be the products, but even if we get the segmentation of products, it's still in the math of Itaú that you're doing a good service in the management of risk. So my question is, where does these numbers come from? The digital and the question of Rosman, is it AI, data lake, the way that you're managing that data lake? Is it really digital or AI with an advancement in the AI becoming a commodity, do you foresee a risk of a competitor getting to you in this excellency? Or do you have more to gain with the evolution of AI because there's still a lot of things to be done in terms of improvement and image of that risk adjustment?

[interpreted] Thank you, Henrique. Great to see you. Well, about delinquency, I'm going to try with all the caveats that things can change. We are in a very dynamic market. I would say that my expectation for the delinquency rates for the next quarters are stability are very stable. I'm not even anticipating the peak. I am saying that we are structurally in thresholds of delay over 90 that I am confident and 10 basis points up or down stability. So delay over 90 with the private persons with the information that I have today in regards to stability.

Of course, if changes come, if the challenge -- if the market is more challenging, but we're going to war. But we are going to have stability with the private with individuals. It's 5 plus 10 is very stable, given the thresholds, very much lower than the -- what the bank worked below in the past. And the generation of top line has changed. So we cannot imagine that you're going to work with the same level of cost of credit that you operated in the past where you could extract more value. There were caps. There were other products. So there were those.

So here, you have more dependency on the credit than you have in the past. So you need to deal with delays with lower thresholds to have the profitability level that is adequate, and we see the line adjusted to risk. Combination of both. We grow the financial margin of -- net financial margin of PDD. We cannot deliver the top line and deliver with the cost of credit and then the return adjusted to the risk that is not adequate. This is a discipline where I still think that there's going to be an increase in a mechanical normalization, which is key SMEs. The effect on the whole is not material for the bank.

But in the line of SME, there can be another 10 or 20 bps. So I wouldn't even say that it's material, but to be precise, the best expectation is that it should run around 210 in the next 2 quarters. Remembering that in the same mechanic and criteria, we ran at 240 not so long ago in the same logic. And when we published a delay over 90 we're not even bringing the vision below. SMEs, where you still have titles specifically in the middle, here is a delay that you're going to have in this portfolio. So why SMEs is going to work?

Because a great deal of the government programs are not with the deadlines and the client has a payment, they cannot -- they may choose not to pay. But since there is a delay for the call of guarantees, which is 90 days for one, 180 for the other, there is a time delay. There is a delay, the provision not necessarily happens because you have a good guarantee and then you regularize the delay with an honor delay. So there is an accounting time mismatch that can produce this effect. And you might have a provision, but it results in a short cycle.

With the guarantees with the government, you can get this client with the adequate rating. and it avoids you making provisions. So very important because you have guarantees of treasury FTO, whatever the guarantee is. So I would say that looking up ahead, there is a stability in the delay indicators. Now going back to the second question, how? The how doesn't have -- we don't have a silver bullet. There is a series of elements. First, the strategy that is well defined, a portfolio management that is well structured, discussed. very important to give credit is not giving credit. The best thing that you can do for the client is not giving the credit because they don't have the conditions, they don't have the financial education necessary.

There is an expansion in the credit in the market with the fintechs that was very relevant. A client had 1.4 credit cards. Now they have 6 because there is no annual fees. They get online and they can get credit cards as many as they get. When they have problems, they stop transactioning and they avoid to stop paying the bank where they have the salary. So being the main bank makes a difference. We have a relevance that is strong in the segments of middle to high income. We have clients that are target.

So the definition of a target client not necessarily goes through income. It's not just income that discriminates. We also operate 10 million target clients and Itaú Digital, which is the basis of the pyramid, the massified segment, so we can see the profile of the client, what are the commissions of the client. We have target clients in all segments. We have done target in all segments. Income is not the sole factor for risk discrimination. A lot of modeling, a lot of testing, a lot of humility because credit makes you humble. Every day, you have feedbacks, creation of value capital allocation fundamental.

So you can see if the decisions that you're making at the margin are creating value. It's not just -- it's the vision to see the corrections that are necessary, a lot of artificial intelligence that is applied. But still, it's a lot of hype in that aspect. There is concrete benefits, but it's not so structuring as a whole. And we think that it's going to be more in the future. So there's relevant molecules for production with changes -- high changes with the performance of the models changing, but still under testing and some under production. The expectation is that there's going to be a relevant advance, but there is no silver bullet.

Franchising is important. Being the main one is very important for delinquency as well. And building a resilient portfolio, having the discipline to allocate the right clients for the right segment and having the discipline of not doing so. This is the important. So that relationship of risk return well balanced on the long term brings value, removes the volatility for the balance sheet and increases the value creation and brings consistency on the long term. So this is what we believe, and we continue. We made mistakes in the past. We've learned with those. We commit new mistakes, we learn again. There is a lot of learning. And for that work, all the modernization that we've done on the platform and data architecture was key.

So we could have a data match architecture, centralized a modernization of platform, that was a game changer because today, this is -- the data is democratic in the bank. It's tempestuous. Everybody can use it quickly and you can react with the modernization of online platforms and doing the adjustments for management. And the human capital to conclude, I have to recognize having the right people, competent teams motivated, engaged with quality of management attitude and with a long-term view that is with the adequate incentives.

So it goes through incentives. If you make a mistake with the incentives, you see that in the industry, this is where you lose the result in the long term. So having aligned incentives with the shareholders is fundamental.

[interpreted] now for the final question of today, we have Carlos Gomez-Lopez from HSBC. Carlos, we cannot hear you. You're on mute.

Two minor questions. The first one is about your tax rate, which is a little bit lower than the guidance that you have given us for the year. Typically, it is higher in the first quarter. So I wonder if there was any particular reason or if you think that you may actually outperform in terms of your effective tax rate? And the second one is about the agricultural portfolio. You mentioned you have about a 20% market share. Have any of the support programs from the government. Are they adequate to your portfolio? Is that something that you are using? And do you have a view about how that market is starting to evolve?

So Carlos, good to see you. Thank you for your question. So coming from the second one, no, there is -- those programs coming from the government, they are not specific for the agriculture. Of course, if there is any similarity with the clients that are eligible for the program, you might have a coincidence, but they are not designed to the agriculture. So this is the answer. But I think this is something that should be in government awareness that if there is something that could be developed for the agriculture market and business, this would be relevant for the market as a whole, but there is no discussions on that.

On the effective tax, I will ask Gabriel to go there, but we are still comfortable with the guidance, and you will see there is specific effects in the first quarter, but you will see the effective tax rate converging throughout the year. So Gabriel, if you want to give more details?

As Milton mentioned, we are very comfortable with the guidance that we have. If you think about the bank in terms of tax rate, effective tax rate, I think there are 2 main components to that. As you know, the first one and the major impact that we have is interest on capital. And if you remember, the interest on capital that we have on this trimester is larger than we had last year on the first quarter and also larger than we had on the fourth quarter of '25.

And the second major impact that we have is the distribution of the results within the bank. So the geography among the different companies that we have financial nonfinancials. There are seasonalities around those 2 specific factors. If you take a look at what happened in the first quarter, exactly they lead to a lower effective tax rate, but they tend to normalize during the year and go according to the guidance that we have so far.

[interpreted] well, with that, we will close the earnings call. Thank you, Milton. Thank you, Gabriel. Thank you, everyone, that took part. We're going to close our Q&A session and our video conference of '26. Now I'll give the floor to you, Milton, for the closing arguments.

[interpreted] Thank you, Gustavo. Thank you, Gabriel. It's always an honor to have you here in this meeting in this results meeting. Well, it's a long time for debate. It's always enriching debate, enriching questions, always important to work with transparency and proximity to the investors. Challenges are there. Everybody has their feet on the ground, as I say, good results. They do not generate a future accommodation. This is what we discussed. It's an infinite game. We're never satisfied. We're always raising the bar every quarter. And we try to do the best for the client.

And resources, agenda, the result will see this evolution on the long term. And we are happy with the results. Evidently, these are the challenges. I think that the macro, there is an election year. And today, the news is piece, they change a lot. And the important thing is discipline, looking outside, we have good competent people, competition that is competent and our work is to evolve every day.

Thank you for your time. Thank you for your feedback. Next week, we have the conference in New York. We're going to be there with the biggest audience of a conference with the participation of CEOs in the history. Another year that we're going to focus all the events of our conference, and we're going to have the group of sports. They're going to be New York in 1 year, keynote speakers that are spectacular and then the conference itself. I'm going to be myself there. I should see a great deal of the local investors and analysts. We're going to be there to respond to questions. See you next time.

[Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Hello. Good morning, everyone. My name is Gustavo and it is a pleasure to have you joining us for our fourth quarter 2025 earnings video conference. As always, Milton will walk you through our performance and afterwards, we will have our traditional Q&A session in which analysts and investors will be able to interact directly with us.

Before handing the floor over to Milton, I would like to share a few instructions to help you make the most of today's event. For those accessing the webcast through our website, there are 3 audio options available, the entire content in Portuguese, the entire content in English or the original audio. The first 2 options offer simultaneous translation. To select your preferred option, simply click on the flag icon located in the upper left corner of your screen. Questions can also be submitted via WhatsApp to the number displayed at the bottom of the screen. Today's presentation is available for download on the hot side screen and as always, on our Investor Relations website. With that, I will now hand over to Milton, and we will reconvene later for the Q&A session. Milton, over to you.

[Interpreted] Good morning. Welcome to another earnings release. Today, we will review the results for the fourth quarter of 2025. I will also discuss our outlook for the coming year and provide guidance for 2026. In addition, I will share an overview of our journey so far, highlighting our progress over recent years and the key achievements in 2025 to provide greater transparency into our agenda at the bank, though not exhaustively. Let me begin by revisiting our history. First, reinforcing the pillars that have guided us and proven essential to our management model. Client centricity remains our top priority and the central focus of the entire organization. Delivering on this commitment has required a comprehensive cultural and digital transformation within the bank over the past years.

While this is an ongoing process, the advancements have been highly significant. Our risk management culture is a distinct competitive advantage. We maintain a long-term perspective and the ability to thoroughly assess all risks to which the conglomerate is exposed daily. Risk management is fully integrated across all business areas and is not solely the responsibility of the risk division which is why I emphasize this pillar as a competitive differentiator. Capital allocation is another key area of focus in our management and daily decision-making models as well as in our remuneration structures. We maintain strict capital allocation discipline, choosing the right place to allocate capital at the right price and with appropriate returns, always with a client-focused forward-looking perspective, which is fundamental.

The modernization of our technology platform and data architecture has been a critical enabler of all our achievements. We have made years of substantial investment and transformational changes in our platforms including the modernization and simplification of our legacy systems, which notably are now scheduled for decommissioning. Therefore, we remain highly optimistic about the potential of this agenda, particularly with the ongoing review of our data architecture we have developed a much more centralized architecture with a single source of information for the entire bank, democratize data across the organization and a cloud-based data mesh. This evolution has significantly enhanced our capacity to apply artificial intelligence to our business from launching new products and improving client interaction to process optimization and productivity gains. This transformation has been instrumental in achieving these improvements.

And last but not least, let's touch on strategic cost management and efficiency. This is not about cost for cost's sake. Efficiency is a core guiding principle across the bank. We have been able to invest significantly in this transformation while delivering strong results and profitability with revenue growth outpacing cost increases over the years as reflected in our efficiency ratio. With all these investments made in technology, platforms and digitalization of the organization, we have entered a critical phase of scalability. Operational scale is now essential, especially for certain business lines, which I will detail shortly. How does this translate into results? Our loan portfolio grew by 40% during this period, a significant increase. During this process, we also carried out a relevant derisking of certain portfolios that did not deliver adequate returns according to our portfolio management framework which is one of the core disciplines within our risk management culture and capital allocation pillar. This relevant derisking protected us from several million in potential losses and from a deterioration of key delinquency indicators. It also left our portfolio significantly stronger and better positioned with higher quality to support future growth.

In terms of numbers, we saw a notable expansion in ROE rising from 19.3% in 2021 to 23.4%, a substantial increase in the period. Our efficiency ratio improved from 44% to 38.8%, representing a significant reduction as well. During this period, we distributed BRL 105 billion in cash dividends equating to a payout ratio of 57.9% in the period. In other words, we generated strong value creation and profitability maintaining discipline in cost and efficiency management, which translated into significant returns for our shareholders. And how do we measure value creation within the bank? Here we can see a 2021 snapshot. The bank delivered net income of BRL 26.9 billion, generating value based on our models and the cost of capital in line with market methodologies of BRL 9.3 billion. In 2025, we reached consolidated net income of BRL 46.8 billion with value creation of BRL 18.5 billion, twice the value created over the period and double what we delivered in 2021. This represents very strong growth with quality, sustainability and consistency and above all, with a high level of discipline and value creation.

This slide contains a lot of information, but my goal is to provide an overview of our 2025 performance. I will now delve into a few highlights. Starting with stakeholder satisfaction. The first metric reflects how we are evaluated by our employees across the bank. We achieved an E&PS of 83 points very close to historical highs, which demonstrates the significant progress we have made internally in terms of workplace environment, culture, entrepreneurship and our ability to attract and retain talent, creating a truly productive environment. It is within this environment that we are naturally able to take care of our clients. In 2025, we achieved an all-time high consolidated NPS with record levels in the middle and high-income segments, 2 segments that are highly relevant to the bank and remain central to our strategy. For our investors, we did not present this information through valuation multiples, share price performance or stock evolution over the period. We always maintain a very long-term perspective.

The bank's total shareholder return over the past 5 years has been outstanding, demonstrating our ability to deliver value and an investor recognition that said, we chose to highlight this performance through the Extel survey, where we were ranked as leaders across all categories for the second consecutive year. I am very pleased and would like to once again thank our investors for their trust and recognition. Our sense of responsibility and dedication only continues to grow. From a technology standpoint, we achieved a significant reduction in incidence as a result of our modernization agenda. Incidents were reduced by 99%, which is a very relevant achievement given the size and complexity of our architecture, our platforms and our operations across multiple businesses. One theme that I consider central to this modernization is speed. It is our ability to deliver value to our clients with much greater agility and responsiveness.

As a result, our delivery speed increased by 2,600%, representing a truly transformational shift. When we analyze scalability, a topic we have discussed extensively, we achieved a 45% reduction in our unit transaction cost demonstrating that we have indeed been able to carry out this transformation with high-quality depth and very consistent results. In Retail Banking, both individual and business. We delivered numerous initiatives throughout 2025, making it a highly significant year. I will highlight a few. First, we migrated 15 million clients to the super app with a primary focus on client experience as evidenced by an NPS of 80 points. From now on, we will have a full banking relationship with these clients. In terms of speed, we increased our delivery pace by 4 to 5x developing new products, addressing client pain points and achieving high adoption and activation rates. The transaction volumes on these new features are substantial, including pigs on WhatsApp, powered by AI, Piggybank, Cofins, limit transfers and collateralized cards, among others, a robust suite of offerings for our clients.

The modernization of our platform enabled us to participate quickly in the new private sector payroll loan program. If you look at the data from inception to now, we have regained leadership in this area. We had already led in the previous private sector payroll loan model and have now returned to leadership in production over this period. We maintained our leadership in portfolio size with significant growth, quality and a long-term perspective. We also saw a notable increase in digital adoption among our clients. Our investments in technology, cultural and digital transformation and best-in-class client service have naturally optimized our footprint. In insurance, a segment where we have long recognized the need to catch up. We ended 2025 with a 130% increase in recurring results, more than doubling our outcomes in the period. Encouragingly, we continue to see strong prospects ahead with insurance now an integral part of our value proposition for both individual and business clients.

In the Corporate segment, I would like to highlight the BRL 1 trillion in transaction volume reached in acquiring. As a result, we have secured market leadership in credit, which we had already achieved, maintained leadership in acquiring with discipline, focus, new technologies and products and in payment and collection flow. This underscores the importance of our client-centric approach in corporate retail banking. We launched Itau MPS, a 100% AI-powered platform with tremendous future potential as part of our value delivery and business model for corporate and retail. In Wholesale Banking, I would also like to highlight a few lines. We are ranked first in fixed income issuance and distribution a highly competitive market that many of our large and midsized clients have increasingly accessed over the past few years. We closed the year with 26% market share and BRL 124 billion in originated transactions. Continuing in wholesale, as discussed extensively at Itau day, we created the infrastructure and energy segment with specialized focus and structure given the robust investment pipeline. We achieved leadership in Eco Invest Brasil, a very important program and recorded the highest fundraising among banks, already enabling BRL 12 billion in investments.

We had yet another year in which we took the lead at BNDES and in the rankings for foreign exchange, derivatives and supplier risk. Once again, we stood out in credit in structuring transactions in capital markets and in supporting our clients' day-to-day needs. We also achieved leadership for the second consecutive year in something extremely important in research, the institutional investor or Extel Brazil for 2 years in a row and in Extel LATAM, in which we were the winner for the first time. It's a great source of pride to see the work our teams have been doing once again covering our publicly listed clients with deep discipline and thoroughness. Turning to Wealth Management Services, WMS, I'd like to highlight 2 areas. First, in the Trillion world, we have reached BRL 4.1 trillion in assets under management and administration. This is the volume the bank currently has under management and administration.

Regarding the open platform, a topic often discussed the bank operates by offering clients a highly diversified range of products. We grew 15% in the fourth quarter, reaching BRL 422 billion which shows that it's possible to grow with quality, with strong curation, with discipline, with security and naturally maintaining a robust system with a very client-centric approach. I believe the numbers speak for themselves. We also saw significant growth in revenue from our retail brokerage business, an area previously identified as a gap with a threefold increase over the period. Now I will address the fourth quarter results covering profitability, loan portfolio, net interest margin with clients, commissions, fees and results from insurance and conclude with the efficiency ratio. For ease of visualization, let's zoom in on the results. We posted net income of BRL 12.3 billion, a robust result for the fourth quarter representing growth of 3.7% over the previous quarter and 13.2% year-over-year. maintaining a very strong level of profitability.

On a consolidated basis, ROE reached 24.4% and in Brazil, 26.0%, adjusted for 11.5% capital. Our current industry average and capital appetite, as defined by the Board, consolidated profitability was 25.4% and in Brazil, 27.3%. This is perhaps the most comparable number for interpreting our performance in the Brazilian operation with growth and expansion across all dimensions. How did we build this? Our loan portfolio grew significantly with 6.3% compared to September 2025 and 6% compared to December 2024. I will talk about the year-end guidance shortly. We reached a loan portfolio of BRL 1,490.8 billion. Excluding the effects of foreign currency variation, quarterly growth would have been 4.5%, and annual growth would have been 7.3%. This is because our portfolio is influenced both by the operations of our banking units outside Brazil, which affect balances through currency fluctuations and by portfolios originated in Brazil that also contain foreign currency components.

Net interest margin with clients also delivered very solid results with 1.5% growth over the previous quarter and 8.6% year-over-year, a strong performance for a bank of our size and profitability. For services and insurance, it was also an excellent quarter with 5.9% growth over the prior quarter and 9.1% year-over-year, totaling BRL 15.6 billion in high-quality solid results. We reached our best ever efficiency ratio levels at 38.9% on a consolidated basis and 36.9% in Brazil. We are seeing improvement across all dimensions with continuous progress in our efficiency ratio, which is also consistent with the initial slide I presented to you. Now focusing on the loan portfolio, there is a lot of information, so I will highlight what I consider most relevant. First, this is a seasonally strong quarter due to year-end purchases, which typically boost the card portfolio. up 8% this quarter. Importantly, and this also explains the margin on the next slide. The transactor portfolio typically tends to grow more this quarter due to a very simple reason: higher purchase volumes, whether paid in full or in installments, resulting in 4.3% growth.

The finance portfolio grew 1.6% in the quarter. Both segments posted strong year-over-year growth. In payroll loans, the portfolio grew by 4%. The main highlight was private payroll loans with 27.5% growth in the quarter and 36% year-over-year. This growth has led to us achieving market leadership in private payroll loans in Brazil with high-quality profitability, and a very well-executed model supported by an outstanding onboarding experience. The next highlight is mortgage lending, and we recognize the importance of this lever for long-term client relationships. We reached approximately BRL 142 billion in mortgage portfolio, the largest among private banks. We surpassed 50% market share in mortgage origination with over BRL 33 billion originated in 2025, continuing a strong growth trend. Origination grew 9% year-over-year, and the portfolio expanded 12.8% in the period. Moving to SMEs. We also saw strong growth this quarter. Breaking it down, middle market companies grew 12% and small companies grew 6.4%. And government facilities, which allow us to offer clients competitive rates and suitable terms grew 10%.

Annual growth rates were also robust for both small companies and government facilities.

Let me now move on to margins. As mentioned earlier, given the mix you've seen, we have a meaningful growth component coming from corporate lending. However, in retail, the mix is also an important driver of margins. There was significant growth in the transactor portfolio typical for this quarter as well as in mortgage and private payroll loans which are secure products that, while very important for long-term profitability and portfolio quality have only a minor impact on the annualized margin in the short term. In summary, we grew by BRL 13 billion in 2025 versus 2024. In the fourth quarter versus the third [indiscernible] the increase was BRL 500 million or 1.5%. The main driver was volume, supported by strong portfolio growth. The mix I just described has a slight negative impact on margins. Spreads and liabilities margins remained strong, particularly on the liability side. There were also smaller effects from calendar wholesale bank structured operations in Latin America. Overall, it was a solid growth quarter.

Moving on to NIM, there was a slight decrease in the quarter from 9% to 8.9% and 6.2% to 6.1% risk-adjusted. In Brazil, NIM declined from 9.8% to 9.7% and 6.7% to 6.6% risk-adjusted. This is mainly explained by the mix between corporate and retail, and within retail, the product mix with more significant growth in certain segments during the quarter. This is the breakdown view as we see it. And this is the annualized margin view I was just discussing with you fully within very appropriate levels. Now regarding NII with the market, I want to highlight that this decline was already anticipated. The guidance itself already implied a slightly lower market margin. We saw a very strong performance in Brazil, but it's worth noting that prior quarters were also very strong. Still performance remained solid. Latin America saw a slightly weaker result due to capital index hedge costs, consistent with what we observed in prior quarters. I believe our annual reporting is very clear. If you look at the difference in performance, it is not in the top line. Brazil performed slightly below 2024, while Latin America was somewhat better.

However, in terms of composition, the margin was very similar. The main variance is the capital index hedge costs, which increased due to the interest rate differential in the hedge. The main takeaway is that we are very comfortable with our hedging strategy as it enables strong capital management with high predictability and consistent dividend payouts over time. This approach has reduced volatility in our capital ratio, and we review and discuss this policy every 6 months. Now let's move on to commissions, fees and results from insurance I will emphasize what I consider most relevant. I talked earlier about payments and collections. We posted a 5% improvement in the quarter with a very strong transacted volume of BRL 301 billion an impressive figure, reflecting growth of 16.8% in the quarter and 22.8% year-over-year. In Asset Management, we recorded 14.2% growth making this a particularly strong quarter, also benefiting from performance fees. As previously mentioned, we reached BRL 4.1 trillion in assets under management and administration. I would like to highlight our record net inflows in 2025 totaling BRL 156 billion, an increase of 49%. Once again, this demonstrates our credibility, ability to deliver value, long-term vision and most importantly, the trust we build daily with our clients.

In Advisory Services and Brokerage, we had a strong quarter with growth of 17.1%. We remain market share leaders and as previously mentioned, with BRL 124 billion in originated volume. Year-over-year, there was a decline as 2024 was a record year for advisory and brokerage results, especially in corporate debt. Nevertheless, we outperformed our initial expectations for market volumes this year. Insurance, pension plans and premium bonds results grew 1.9% in the quarter and 17% year-over-year. The most important message is that our earned premiums continue to grow 13% year-over-year. Recurring earnings rose by more than 20% this year. Following several years of significant growth, resulting in a cumulative increase of 130% from 2021 to date. Now let's take a closer look at asset quality. Starting with short-term delinquencies. There are a few points to note. As anticipated in the previous quarter, we had a specific case within corporate, a well-known and widely reported case that moved into short-term delinquency. Our expectation was that it would be removed from the balance sheet sold and restructured by year-end which is exactly what happened. This explains the spike in September and the decline in December. Without this event, the indicator would have remained flat.

When looking at total Brazil and Latin America, Indicators remain well behaved. In Brazil, 2 effects are noteworthy. First, in individuals where we reached the lowest delinquency rate in our history, demonstrating that our portfolio management over the years has yielded important results with portfolio growth, value creation and a highly sustainable portfolio. The corporate effect is also evident here Short-term delinquency peaked at 1% in September and dropped to 0.03% in December as the specific corporate client I mentioned was removed from the balance sheet in the fourth quarter reinforcing information previously shared. Regarding long-term delinquency, there are no major developments. The message is that delinquencies are very well controlled as well as in Latin America, resulting in solid outcomes. Across portfolios, individual delinquency stands at 3.6%, which is historically stable. For SMEs, there was a slight increase in line with what I had previously anticipated particularly driven by the rollout of government-backed products with grace periods. We expect these delays to normalize over time as grace periods end. These are well collateralized portfolios. So while delinquencies occur, they do not significantly impact losses or portfolio results.

In terms of long-term delinquency for corporate, we make a caveat because we actually had a sale. Without considering this sale, it would have been an increase of 0.9 percentage points, which indicates a certain stability. It is worth noting that this is not an indicator we like to monitor, especially for large companies. Regarding Stage 2 and Stage 3 exposures, there are no major developments except for a decline in the Stage 3 portfolio, especially in corporates. This is exactly related to the exit of the specific corporate client I referred to earlier. Once the exposure is sold, it exits Stage 3 driving this effect. You can also observe a slight decline in coverage as this was a corporate client with a high level of provisions consistent with its risk profile. This credit leaves the portfolio with a higher coverage level than the remaining balance, which explains the slight decline in coverage. I would say these are the only 2 highlights, and ultimately, they both refer to the same case. Turning now to credit costs. We have recorded BRL 9.4 billion in credit costs, representing 2.6% of the portfolio, an absolutely stable ratio, if you look at the historical series, on a year-over-year basis, there was a nominal increase, which is expected given the significant portfolio growth during the period. This is why we always prefer to look at the credit cost to portfolio ratio which is at a very healthy 2.6%.

When looking at the restructured portfolio, the key highlight is that the specific case I mentioned earlier was classified as restructured, as you can see here. This nominal decline is primarily explained by that event, which is also why the percentage of the total portfolio has declined. This is the main takeaway for this section. Now turning to expenses. The first specific point is that while costs typically tend to be higher in this quarter, they remained very disciplined with just 0.5% growth in Brazil which demonstrates the direction and trend. This will be evident in forward-looking guidance. For the year, expenses grew 7.6% in Brazil and 7.5% overall, which is perfectly in line with the midpoint of our guidance, demonstrating our discipline and predictability. Much of this year-over-year cost increase stems from our capacity to absorb relevant investments made as well as higher volumes combined with lower unit costs. However, this is an operation that is generating more business and higher volumes with our clients which results in variable costs. Naturally, the bank's profitability also impacts costs due to compensation models.

We always see an effect in this regard, which is healthy given the level of profitability and results the bank has been delivering. Now regarding the efficiency ratio, it is worthwhile to look back at the historical series starting from 2019, both consolidated and in Brazil. there has been a substantial reduction over the period, reaching 36.9% in Brazil, the lowest in the cities. This demonstrates our commitment to client-centric care, strategic investments, results generation, increased productivity, organizational efficiency and a strong focus on operational scale. This remains a central topic for us. I would like to share some new information with you and as we classify it on a base 100, given the sensitivity of the data, we have broken down our business into different views. As I often state, Itau Unibanco is a diversified business portfolio. It is a very large wholesale bank and a very large retail bank. It is a major player in the region and the most international bank in Brazil. We have significant regional operations with 18% of our assets and 8% of our results coming from outside Brazil. This highlights the diversification of our portfolio which is concentrated in investment-grade countries in South America.

On this slide, we have outlined what we consider benchmark segments, whether in wholesale, retail or those areas where we believe we have already achieved a global standard of efficiency. Naturally, opportunities remain, and we are constantly monitoring them, especially in this new era of artificial intelligence and emerging technologies where there is always room to optimize further. However, if you look at this 100 base chart from 2024 to the present, you will see the business in segments that have successfully maintained their efficiency ratios. For Latin America, the curve is heavily influenced by foreign exchange effects. So I will set this aside for a moment, although it naturally impacts the consolidated figures. On a consolidated basis, using a base 100 view, we can see our efficiency ratio moving from 100 to 98 -- the key is that our most significant progress in efficiency is occurring within the scalable segments, specifically retail, both for individuals and SMEs, where technology, value proposition, scalability and productivity are fundamental. Long term, this is what will differentiate our ability to better serve our clients and expand to new client groups that given our current cost structure and efficiency ratio. We would otherwise have less capacity to absorb credit losses from.

As you can see, I am already sharing an insight for 2026. We started from a base of 100 in 2024 and reached 94 in 2026. Our ambition is to continue improving this trend. Therefore, much of the investment in the transformation carried out in previous years is what allows us to accelerate scalability moving forward. It is a robust digital offering, a powerful platform and an optimization of the business and service models and a strong value proposition. We are very optimistic, not only with the evolution of these elements, but also with the prospects. Regarding capital, at the end of the day, all the results and discipline I've mentioned translate into strong capital performance. In the first block, we have the pro forma for December 2024 where we achieved a CET1 ratio of 12.3%. Net income generated 3.3% in the period. There was 0.8% capital consumption from risk-weighted assets. Regarding dividends and interest on equity, there was 2.5% capital consumption. We also had a positive 0.2% capital variance from new AT1 issuances, primarily in the domestic market. These factors led us to reach a CET1 ratio of 12.3% and AT1 of 1.5% as of December 2025. It is important to note that in the first quarter of 2026, we already have some regulatory events that are consuming part of this capital surplus. This was all factored into our planning when we decided to proceed with the early distribution of additional dividends, which we typically pay in March, but executed at the end of 2025.

Regarding interest on owned capital and dividends, we distributed BRL 9.7 billion in paid and provisioned IOC and BRL 24 billion in additional dividends and interest on owned capital, resulting in a total payout of BRL 33.7 billion in 2025, representing a payout ratio of 72%. This is a strong distribution, which is only possible due to high-quality and robust capital generation. Our focus is to maximize the profitability of the business. But when we determine that there is excess capital beyond our expected opportunities for deployment and returns, our objective is to distribute it to shareholders. Now I will present the accountability regarding the guidance. I won't go into detail line by line. But visually, we came very close to the midpoint in almost all guidance lines throughout the year. The loan portfolio grew by 6%, while financial margin with clients increased by 12.1%. Our financial margin with the market reached BRL 3.3 billion. Credit cost was BRL 36.6 billion, and commissions and fees and results from insurance operations grew 6.3% and Noninterest expenses increased 7.5%, in line with our budget and the effective tax rate was 29.7%. This demonstrates not only our predictability but also our control over key levers.

Looking ahead to 2026, and we will have more time to discuss this during our Q&A session, I would like to add a very important comment. As previously said, we expected to make some reclassifications across line items in our management reporting model as presented in the MD&A. We conducted a review to ensure that the way we disclose our results is an accurate reflection of how we manage the bank. As a result, there were some delayed adjustments that we wanted to implement, and we waited until the end to make those changes. There is no right or wrong here, this simply represents the most accurate depiction of what we do and how we manage the organization. You will see that at the end of the day, the bottom line remains unchanged with recurring managerial net income of BRL 46.8 billion in 2025. In other words, there are no changes to the total result. The variations are purely between line items. And of course, the Investor Relations team remains fully available to walk you through the details and provide further clarification.

I will try to explain this in a simplified way. what we refer to here as the main reclassifications account for roughly 90% of the adjusted amounts. Let me give you a practical example. Historically, card network fees related to issuing and acquiring was split between noninterest expenses and a deduction from banking product revenues. We are now reclassifying all card-related expenses, both issuing and acquiring from noninterest expenses to commissions and fees. As a result, you can see a positive impact on expenses while this helps explain part of the negative effect observed on commissions and fees, that is 1 example. Another example is the discount of receivables financial margin. As we have mentioned in previous earnings calls, part of [ Rady's ] results was previously allocated in commissions and part in financial margin with clients. Within financial margin with clients, there were 2 components. Discount of receivables financial margin and the cost of funding of automatic discount of receivables, Flex, both were previously classified under financial margin with clients. We are now reclassifying everything related to rate to the commissions, fees and results from insurance line. This also helps explain part of what you are seeing here, namely an increased NII with clients as the flex cost of funding, which was previously recorded in that line is now reflected as a reduction within commissions, fees and results from insurance.

A third example involves discounts on debt of up to 90 days overdue. These were previously recorded in NII with clients. We believe it is more appropriate to reclassify them into cost of credit as they are effectively credit discounts and we explicitly disclose discounts granted within the cost of credit line. This helps explain part of the positive impact of BRL 2.8 billion in financial margin with clients, which is offset by a negative impact of BRL 1.5 billion in cost of credit. With this reclassification, total cost of credit would move from EUR 36.6 billion to BRL 38.1 billion. The key point is that going forward, we will refer exclusively to these reclassified results. Another adjustment relates to Avenue over which we now have control. Avenue is, therefore, consolidated into our P&L lines, as shown in this column. This has a positive impact on NII with clients, no impact on cost of credit and affects other P&L lines where it previously did not. As Avenue was accounted for using the equity method through 2025 and will be fully consolidated from 2026 onwards. The central message here is that our guidance looking forward already incorporates all these reclassifications, which we believe is the most appropriate way to present our numbers, our results, and how we manage the bank. All future comparisons will be made against 2025 figures adjusted for these reclassifications.

Turning to the macroeconomic scenario. This slide reflects the assumptions we've used. We recognize that the environment is highly dynamic, but these are the inputs applied in our projections and guidance analysis for 2026. We assumed GDP growth of 1.9%, a year-end SELIC rate of 12.75% and with an expected rate cut starting in March, inflation measured by IPCA converging towards 4%, unemployment remaining low but increasing slightly from 5.4% to 5.7% the exchange rate moving from BRL 5.47 to BRL 5.50. Again, these are the assumptions underlying our planning and guidance for 2026. With that, I will conclude by walking you through the 2026 guidance. First, total credit portfolio growth is expected to range between 5.5% and 9.5%. We highlight that growth in Brazil is expected to be higher between 6.5% and 10.5% as Latin America weighs on consolidated growth. All other lines are presented on a consolidated basis. We expect net interest income with clients to grow between 5% and 9% and market NII between BRL 2.5 billion and BRL 5.5 billion. Cost of credit is expected to range between EUR 38.5 billion and BRL 43.5 billion. Commissions, fees and insurance are expected to grow between 5% and 9%.

Regarding noninterest expenses, it is worth recalling that growth in the fourth quarter of 2025 was just 0.5% quarter-over-quarter. You can see that there is also a meaningful convergence in 2026 with expected growth between 1.5% and 5.5% with the midpoint below projected inflation, bearing in mind that banking inflation typically runs above IPCA clearly demonstrates our ability to capture the benefits of everything that has been implemented over the past few years. We expect the effective tax rate to range between 29.5% and 32.5%. This is our current view for 2026. Naturally, as the year progresses and more information becomes available, we will update and adjust if needed. But this reflects the best information available at this time. With that, I'll conclude. This was a slightly longer presentation than usual, as we covered our historical journey, the full year performance, quarterly results and concluded with a clearer view of our 2026 guidance.

For me, this closes a year of very solid high-quality results. Beyond the headline numbers, it is critical to look at the quality of the balance sheet. Across all lines, we have very adequate provisions, disciplined capital allocation, meaningful value creation over the period and ROE of 27.3% in Brazil. I believe this clearly reflects all the effort behind this journey, combined with an efficiency agenda that is advancing at a very strong pace. This is evident in everything I have just shared with you, including our guidance and also in the positive outlook we see looking ahead. Of course, this is a year where we expect some volatility. However, our risk management culture, a very healthy portfolio operating at historically low cost of credit levels and a highly provisioned balance sheet allow us to capture opportunities as they arise, whether to grow more aggressively or if needed, to manage the portfolio more defensively. In summary, I believe we delivered an outstanding year. Everyone here is very proud of the work accomplished yet fully aware of the challenges ahead. Past results do not guarantee future performance. Therefore, we remain humble, disciplined and focused but above all, passionate and energetic about our work at the bank. That concludes my remarks. I will now join Gustavo in the studio for our traditional Q&A session. Once again, thank you not only for your time, but for the trust you have placed in the bank over the years, whether as clients, investors or employees. Thank you very much.

[Interpreted] We're back to our studio with Milton and Gabriel for the Q&A. Now before we start, we would like to let you know that we are going to answer the questions in the language they're asked in English and Portuguese. If you need support, we have the platform for the options in Portuguese, English or the original audio. You can also submit your questions via Whatsapp. First question from Thiago Batista, UBS.

[Interpreted] Congratulations on the results. Once again, a strong result that Itau is delivering. I'm going to get 2 topics in 1 question. One is profitability of the bank and the other capital a few years ago. We couldn't imagine that the ROI was 24%, 25% or doubt is this level recurring. Can we imagine that is going to remain at this threshold all throughout the years. And now the leverage of the bank. A few years ago, maybe -- the target was 13.5 Tier 1, which is not different from the 11.5%, 12% of core capital. But since then, -- we've seen a few issues. Overhead is over new to the hedge of the capital abroad. So the capacity of capital is reduced. Can you keep this ROI of 24%, 25%? And can we imagine a reduction or an increase of leverage over time, to keep this ROI at 24, 25.

[Interpreted] We are very happy with the deliverables and the optimistic with the for the future -- now about profitability. Maybe the best information. As you know, we don't give guidance of ROI in the long term. For the guidance of this year, we have a profitability in thresholds, very close to what we observed in -- if you've seen the midpoint of the guidance, we should grow close to what was the growth of 25% against 24% and delivering a bottom line that is very solid with a profitability that is very strong. I don't foresee today any reason why we shouldn't have a vision of the ROI in this threshold that is implicit in the guidance, of course, the year and the events are dynamic. For us, the most important thing is always the spread over the cost of capital. And we should get into a cycle of reduction of interest rates.

Let's see how the premium of risk for the COE for Brazil is behaving throughout the year. But as we have a reduction of interest rates throughout time, the spread over is kept not necessarily at the level of ROI, but we have a long way ahead to see about the leverage of the bank. The point is interesting. You are right. The overhead brought some volatility to the capital index. But we still have some volatility in the portfolios with the foreign currency. That's how we implemented the policy of the hedge of the index that is working very well, and there is a cost of opportunity, of course. Also, we have a predictability that is very important for the prospective management of the bank or for the distribution of dividends. What happens when we define the appetite at 11.5%? It was 12 the appetite. We reduced 11.5%. That was approved by the Board. But we are the Board for the distribution of dividends, we work with a buffer of 50 basis points. That 0.5% is what gives us security tranquility so we can grow with strength, seize the opportunities that appear. [indiscernible] the risk of invading the appetite and doing a contingency recomposition of the capital index and losing opportunities thereafter.

So having a strong balance, well capitalized, we think it's a competitive advantage. And the scenarios change and can change quickly. We've seen that in a [indiscernible] so to have a solid capital basis importer. Our biggest restriction now to do a review of leverage we've discussed -- we discussed with a lot of frequency or the rating agencies. What we do not want is to work with the more leverage and losing a rating, which is important. Even though today, we have foreign capture that is lower than the past, having an international rating that is relevant is what brings opportunities for the cost of capture so we can be very competitive. That's a restriction that is active. We're always debating this. Looking at the different scenarios of [indiscernible] balance, and this is a year that can have more volatility due to the scenario of the elections, uncertainties that are up ahead. It shouldn't be this year. We're going to do this discussion of reviewing the leverage, but this is a theme that is present in our debate -- ways have talks with the agencies to try and understand how can that impact our regions. This is a constant theme in our agenda. I don't think that this debate will advance in 2026. But depending on the perspectives, we can eventually do a review of the level of leverage, certainly, this is a discussion that we're going to take to the Board at the opportune moment.

[Interpreted] We'll get the floor to Bernardo.

Congratulations on the result. It's impressive. The level of profitability that the bank is delivering ROI 27% or so. And we need to explore those levers, levers in the future, trying to zoom on that level of efficiency. Looking at the guidance of expenses not colligated to interest rates. It seems that there are low expenses, considering that 2026, there is negative items that are temporary with the adjustments in the infrastructure. So it'll be correctly reading is that 26 will capture a relevant change in the cost base, allowing the bank to get into '27 with a structure that is more clean, more efficient creating the for a driver for operational leverage up ahead. That's the question.

Good to see you again. Thank you for your initial words. The answer is yes. Yes. We are capturing and gathering the fruits of our labor of the previous years, a lot of investment in technology. A lot of focus of increase in productivity, digitalization of the platforms of the bank, the experience of the clients. reviewing the business models, the model of service. The way of servicing the client in a never more digital way. That slide that I just showed you, separated what was the segments that were the reference in reference and those that we can scale. And that's where we get most of the efficiencies that we will capture over the next years. We finished with the production of 94 at the end '26. There is a certain assumption for the guidance for the year.

But looking ahead, we are certain we are certain that this is the past. Efficiency out throughout the game, operational efficiency, but it's not big force operational efficiency. An adjustment of infrastructure reduction without any strategy, no. It's a deep review of everything that we are investing throughout the years, most important than that. All this reduction in adjustment running below the IPCA rate. It's banking inflation because there is an increase in payroll, real, there's other expenses is higher than the IPCA. But all that growth that you see projected 3.5 or the midpoint of the guidance for '26, there is also important volumes for investment. We're investing long term. We are still investing in our business. We are still investing in our platforms, of course, prioritizing the most relevant. Looking long term, focusing in value creation. This capacity of generating top line capacity of absorbing the investments, doing a deep transformation of the organization. And now a period of deliverables that is consistent allows us to open ourselves to more investments and expense. We're expanding those investments.

We did investments in several businesses, and we will continue with a long-term view without doing -- without selling out the future. We want to grow sustainably, we want to seek more productivity, more efficiency and more operational scalability, the [indiscernible] year -- is leading this strong in the bank. This is not a front from the finance. He is the leader, but this is a multidisciplinary front. All businesses are involved. Everyone with their own challenges. One with the thresholds that are more efficient than others, but I'm very optimistic that we got into a journey that is very deep of adjustments and scalability.

Next question. Renato Meloni, autonomous.

[Interpreted] I wanted to expand on the previous question. on the ROI I think it's natural that now we get into a moment of reduction of capital -- cost of capital in Brazil, ROI drops. And as you said, the generation of value is important. So we need to understand more on the long term, what are the levers that you foresee for the expansion of the generation of value. Are we at a reasonable level? You've discussed the efficiency. But I remember a comment in the past that as you implement the efficiency part of this is given to the client. So maybe other ideas that can generate more value.

And if you allow me, just a clarification of the guidance here that if we look at the growth of the financial margin and the growth of the portfolio, that implies into a reduction in the line. But I imagine that here, you also have the effect of the anticipation of the dividend. So if you can comment very quickly on the evolution of the line sensitivity to the interest rates and how that will go throughout the year.

[Interpreted] Thank you, Renato. Great point. Thank you for being in our call. I think that the levers are throughout the business, they're spread out through the capacity of growing the portfolio with quality, the management of this portfolio has been done for many years, the discipline of capital allocation. This is the name of the game. Growing, generating operations below the cost of capital will being dilutive, will destroy value in the long term. This is the discipline that generates profitability that is necessary through the cycle, always with this long-term view. All the part of the efficiency and cost is very important. But as you know, keep down is the binomial cost and expenses -- cost of revenue, sorry. So we've deepened the very consistently with our portfolios. We're doing the deep dive into being the main engager of -- with the customers. This is the main threshold in our history.

We're growing 2 digits in some portfolios. So there is a series of levers. Of course, cost is one, but always with this logic of efficiency, looking at our capacity of generating top line of growth and working with the cost of productivity. So we can have offerings that are more lean, more digital, better experiences for our clients and simplifying the value proposition and simplifying the bank of course, with all this transformation. A part of this technological modernization, we are talking about the decommissioning of legacy systems in a few years. This is going to be a big difference once we operate in a more variable cost basis, in a more simplified internally way and speed of delivery in technology. I show 2,000% of growth. Now today, we can develop a product and bring a solution for the market 5x faster. So the capacity of throughput of delivering value chain with a very strong threshold. And we will continue to follow up on the opportunities, cost of equity.

Every month, we're looking at the internal methodology. The market cost of capital, the buy side, sell side. And so we have our COPI in meeting monthly. So we define what is the COE of the banking this affects the capacity of pricing. And as you said, I don't believe in a static world that you do the world -- the work of efficiency and reduces, but the revenue is always the same. In the end it's scale so you can generate more value, more portfolio. And you can have the returns through the cross-sell and the reduction of the relationship, but a part of this efficiency has to go to the price. This is what's going to transform ourselves into our platform that is ever more competitive. We're very competitive. From the cost of funding perspective, and we're going to be more competitive in the unit cost. Our unit cost has reduced 45% in this period, and we see space for reductions. Volumes growth, cost -- unit cost is dropping. This is the name of the game.

Now on the margin, I went in to do a reinforcement. Let me give you some numbers. If we consider the delta dividend that is paid 25% against 24% and the anticipation that was done all throughout the next month, in December of last year, this generates for ourselves about BRL 1.5 billion less margin through '26. So if the question is Milton, I have the portfolio growing with the midpoint and 7.5% and the margin of clients is growing 7%. What is the reason of the margin growing a bit below? If we do this adjustment, the margin would be growing 8.1% in the year. So the margin comparable normalized is what we are going to observe really throughout the year, but the comparable margin for understanding the dynamic of the generation of value of the bank is comparing 8.1 billion with a portfolio that is pending on growth, 7.5%. These are comparable basis. Certainly, this effect allows us to explain a potential adjustment. That is not so relevant, but we have adjustments in the [ NIM ] in the consolidated and also in the net cost of credit and [indiscernible] . So this is important, and it's 110 basis points. When we look at the effect in the financial margin with the decline in the year, which is not little, and it shows that the core, the organic growth is coming at an adequate rhythm with an adequate risk with mix and generating value for that for the shareholder.

[Interpreted] Next question Yuri, JPMorgan.

[Interpreted] Congratulations on your results. NPI's quality of credit lines accelerating short-term deliverables that are good for the middle too long term. So I wanted to come to focus on the -- how are these deliverables in the small- and medium-sized companies should change the profitability back. When we look at the volume, I think it was a very strong quarter, really grows above 20%, which is 2x the industry. We also see the portfolio growing -- looking at Itau, it's about 3%. So we have a share in the portfolio. Of course, it's not comparable. We don't have all the expanded portfolio, but we see that in payments and volume of credit. It prices didn't even start. It's being implemented. So it should bear fruit. The question is, given that the SMEs and investors days previous ones, they had ROIs above 30, 35 very profitable segment. How does this impact? Going back to the question of my peers, how does it impact the ROE? We should have SME gaining more traction, we should see the ROE of retail growing more -- it's not maybe there is -- no, maybe there is a question of price competition because it seems that this could be a lever of profitability for you.

[Interpreted] Thank you, Juri. Great to see you -- thank you for your time and thank you for the initial board. segment for us as we publish it, we have micro, small and medium. So we mix what we call the BBJ, which is the companies and the middle market, which is managed by IT. [indiscernible] is some of both businesses that are here. When we add the business model and the profitability then we break down the BU PJ within the retail and the middle market and the structure of the wholesale. But in the -- we block them together. We had an extraordinary result in the company's whether if it's middle market or the retail companies and these are very -- this is the work that has been done for many years, a reorganization review deep one of the strategy.

Moreover, the portfolio management, I think that we managed to seize the opportunities, and we knew how to grow with the clients always in the long-term view and more so, the discipline of capital allocation. We see a market that is very erratic in the pricing in that segment. We always try to do an analysis of how much our return if we had been operating in a few operations that are very in some of these segments. And these are returns in operations with funding without funding to be below our cost of capital, considering our model, which is very efficient. So here is discipline, discipline of management of being the main one for the client. [indiscernible] have been that overview of flow. So that integration of ready with the bank was fundamental. So we could in fact, having an integrated vision of the flow. If we see the level of acquirers in the market, it's just a fraction of the flow of payments and receivables in the system as a whole. So the share of flow is more important than the market share of acquirers. And how do we deliver an integrated value proposition for the clients, being the main one is the name of the game. So we've grown with quality. Now we operate in a level of profitability that is very high in this segment. And what I want to say is that we have the expectation of incrementing the bottom line. And this is what we expect for '26 and not an expansion of profitability in the segment given the level of profitability that we already have today, which is above the threshold that you commented a little bit before -- this is for the BU companies and also the middle marketing. We've done strategic reviews that are constant. We've done another one this year in the companies and the individuals. And we also have a solid plan and I'm very optimistic for the future for the delivery of value and execution of these plans. [indiscernible] has a role that is ever more protagonist in the strategy of DBU companies. So we've tested the new technology very carefully, learning with the clients powered by AI, but the advances are incredible. The amount of products that we have in the platform, it's more a full bank focused on the needs of the companies. Smaller ones, the digital needs. It doesn't -- it's no use taking all of the products. You need to understand the pain of your clients that you need to solve and how do you interact in a more efficient way.

So the platform has a more relevant role within the strategy so we can deliver better the base of clients that is within the bank that is -- well, and besides the clients that we've seized all for the bank and in a more efficient way, in a more digital way with a better experience. So this is the path of the platform work in the platform has a relevant work in this sense. So I don't see an expansion in the return in the retail. I think that we've done a catch-up that is very important since the 3rd quarter of 2022 that I told you. I was very uncomfortable with the level of profitability, and we've seen a cycle of expenses in PDD that is more strong. Looking up ahead, we've done an important catch up 10 percentage points in the profitability of the retail in a sustainable way. So there is no business performing. Well, or a business performing below the cost of capital. All the businesses are creating value and operating above the cost of capital. And with good perspectives looking ahead. It's a balance of the portfolio. Therefore, I don't see necessarily an expansion of [indiscernible] because of this, but an increase that is consistent of the franchise of the results of these segments.

Thank you, I'm going to English as we have Tito Rabota from Goldman Sachs.

Milton, my question is on the competitive environment. I mean, if you look over the last 10 years, competitive environment has evolved quite a bit in Brazil. I think it's still evolving. We've seen a lot of your incumbent peers having to adapt their business models, a lot of fintechs that have become very strong. today. And you've been able to do that very well, right? I mean, just looking at your profitability, as you just said, every business is operating above the cost of capital. So in that concept, so what worries you? Is could be from incumbent peers adapting a lot of the more coming after the high-income segments, where you're very strong in -- is it the fintechs?

Is there any segments that you sort of maybe worry about more than others? I mean, you talked about you're already a leader in private payroll. It's a new segment. So what kind of worries you about this new competitive environment? And what are you maybe also most excited about? Where do you see the opportunities from here to continue to be able to deliver these results? And where would the risk be?

[Interpreted] Thank you, Tito. Good to see you. Thank you for your compliments. We are very proud and thank you for coming to our call. I will tell you, first of all, that we have a huge and normal respect for all our competitors. But as you know, we are a huge portfolio of businesses. So we have in the wholesale many business where we compete with the incumbent banks but also compete with the new, I would say, competition. So depending on what segment you are looking at, the competition changed and changed a lot. So our capability to understand client needs to understand our competitors to be humble, to look outside all the time and understand that we might have people doing better things that we are. And we can do better, and we have to leapfrog and go forward. Has been able to transform the organization in the past years. So I don't see in any segment today, any difficulty of competing even though we know the first half years competition is coming from all around the place.

So again, huge respect. I think we have enormous competition in Brazil, good competition. Everybody is doing their homework, everybody trying to get -- to do better what they already do -- and we have to do better and fast. So I think this is what we've been doing in the past years. So I see a few levers that take us to this place. First of all, human capital. We do believe that we have a very, very good people inside the organization, people that has passion for what they do. We have a very strong culture that put us in a competitive advantage in our view. We have this capability of capital allocation that is very, very important, this discipline of looking always for the long term, the capability of the investment all around. So as we're not looking for the next quarter, we are looking for the next 10 years, we do huge investments throughout all our businesses and all the modernization we've done in our platform. The data architecture, the way we approach clients today, all the AI power that we've been releasing in our businesses, not only internally, but also externally, has been putting us in a very, I would say, competitive spot. So this is how we look today.

I think in the individuals, just to give you an example, we've gone through a huge strategy revision this year of 2025. We are in the execution mode. We did a relevant change in the structure in the retail operation as a whole. Also, the SMEs has been going through a relevant change in looking forward. What brought us here not necessarily will take us for the next years. So is this capability of looking ahead all the time and putting the bar very high to get to great achievements. So I think what takes my what worries with everything. So I am paranoid here with competition with the macro with the level of service we deliver to our clients. This is what drives us. And I think we have the capability and again, human capital, good talent, great culture and great capability of execution, I think, are levers that can take us further. We have to keep an eye on the macro, of course, due to the size of the bank, the macro mix price, of course. We have to take a look at risk. And I think we have a very, very strong culture, risk culture. So everybody from first line to third line, are 100% focused on managing risk.

We have a unique, I would say, very great risk area with very good, great and risk people helping all the businesses, looking productive and perspective and where are the levers, what are the risks and how we make decisions on a daily basis based on that. So I think this is a little bit of what we've been doing here. And this is where we have been putting our effort in the organization.

[Interpreted] Going back to Portuguese. Started with [indiscernible] The floor is yours.

[Interpreted] A follow-up on the question of Tito more specifically, I remember the 2 segments specifically, are massified. And recently, INSS, which is [indiscernible] security Brazil, and Milton commented that the cost of service that is lower would be ideal to be able to accept the level of delinquency that is higher in the mass fit and in the INSS social security compensating the interest rates after the changes in the cap. We see the efficiency level that is very low, 36% in Brazil. all the effort that the bank has done, our adjustments in the infrastructure. So Milton, I wanted to be more specific in those 2 segments. How is the appetite is our appetite? Is there profitability? I wanted to hear from you specifically on those 2 segments.

[Interpreted] First and foremost didn't -- we tend to simplify when we talk about the massified. And the name that I've used and it's in the presentation is segments that are more scalable of medium to high income where the operational scalability makes a difference. That is important. This is the focus, delivering a value proposition that is more competitive for our clients. With that, we can create the capacity to improve and advance in our efficiency level. work with a series of clients in all the segments, which is low or high income. And these are clients that are resilient through the cycle. So not necessarily is that the client has a lower income that they're not resilient. No. You just see the ones that are retired with the social security INSS connecting with your question. It's has lower income, but it's very resilient on the long cycle. And this is for the entirety of the portfolio.

So our capacity to look at the data, look at the client, understanding their capacity, facing the obligations in a long cycle it's regardless of the income sometimes. Inevitably, when you are more competitive from the efficiency level, your capacity of absorption of losses increases and the review of appetite is constant. So every time that we do an operation with the -- and we look at the cost, whether it's marginal cost absolute cost in the segment, the more efficient you are, the higher will be the capacity of absorption of losses. The more inefficient you are, the less space, you have to absorb losses and generate a result and remunerate the capital that is allocated in the activity. So the direction that we've gone is operational scale, very maximum efficiency. Digital full so we can service those clients better. It's servicing better decline better. And here, there is a theme of you having a full digital offer for the client, but you need to have a full bank to be able to service the client in the best way possible.

And I think that we have today a portfolio that is incredible, the migration that we've done of the [indiscernible] 15 million clients. It's not that we took 5 million clients, and we improved the experience of the app for the current clients. We migrated 5 million clients that didn't have any experience and not a relationship that was sold back by the migrate them to a new platform. And we improved a lot the platform, all of the clients that already used Superapp. So it's a best of both world. We improved a lot what we brought because we brought functionalities of the mono apps that were more advanced for the super app. And we improved the experience of the existing clients, and we migrated 5 million clients. And these clients are distributed in several segments. We have clients that are migrated that are target clients of personality Uniclass, Itau branches, and we've managed to convert them, importantly, increasing engagement. And it's a full digital service.

Remember that right, when we published the results last year, we did talk with investors. They asked me about Consignado CLT. Well, you have a branch structure going to be competitive well. We don't lose subsidies or cross cost. If my channel of hiring is digital, microsignal I am as efficient as any player in the industry. So this is the way that we've grown in the payroll loan Consignado. And our cost of service that is very low. So it's 100% digital channel. So we don't do cross cost between segments and the entry path of the client. The INSS 2 important natures. First, in this cycle, we had the highest volume of hiring in the market. But the market decreased a lot, and it didn't decrease because of the cap. The main effect recently of the INSS has to do with the blocking of the benefits and all the work that the ministry and the President of the INSS is doing because of the fraud, because of all the problems that they found, they created a mechanism so that the client reconfirms and will get once again. So that made the volume of payments benefits decrease of the payroll loans as well.

Given the volumes that we produced recently, we've released this volume of hiring, much more focused in the internal channel. We've done an important exit in the external channel because the cap of interest rate makes price the commissions for the corresponding banks doesn't make sense. So the return on those operations are below the cost of capital. So therefore, we privileged 75% of our subcontracting is done with the banking channels, which are digital or physical. So 2 points with the reduction of the interest rates that we should see up ahead, this will open for the space of new publics and the INSS, we can penetrate in public that were left outside, and it's a lot of money because of the cap, they were left outside. And the second effect is the capacity of reconfirming the benefits. And going back to a certain normality. This will make the volume of demand also increase.

[Interpreted] Next question Mario, Bank of America.

[Interpreted] Good morning, everyone. Congratulations on the result, not only on this quarter but also throughout the next 5 years. Since you assumed the bank talk over the bank. One of the big advantages of the bank is all that modernization that you've discussed on the platform, investments in technology. I think it's very interesting, your slide showing the cost of technology is growing 18% over the last 12 months. It represents 20% of your expenses. So how should we think Milton from now on? How much more investment is necessary? How do you think in investments in technology now looking to the future, the percentage of revenue and the investments that you need to do, they need to come from improving processes, more investments for improving the efficiency or also investments that help you growing.

How do you see this mix of investments, the value -- and the question that wasn't done in the call is if you can just do well, when you talk about the growth of the portfolio that you expect for the '26 if you can specify for us per segment, what you are expecting of growth?

[Interpreted] Thank you, Mario. It's great to see you. Thank you for your initial words. We're very flattered with your Board. Now let me tell you, the investment of the bank is something that we always discuss deeply to ensure that we are investing in the right place with the adequate return and three, also the capacity of the absorption of the investments on the long term because if they're created it and they generate value, they should be positive throughout the year and our capacity to project -- so we always have our back testing and we always look at the investments that were done in the previous cycles, and we see in the investment office investment. So we see the returns of premises are okay. We always check what changed, why the result is coming worse or better.

We always look at the 2 sides of the same coin, and we always recalibrate in our sensitivity for the decision-making process. This is a central point. In technology, we continue to do investments in the same threshold. There is a reduction in investment in technology. On the contrary, it's a mechanical natural growth. We've done an adjustment today. A great deal of our cost is connected to our talents to our human capital. This has changed throughout the years. Today, the cost of headcount is higher than it was in the past. And if you look at our mix throughout the years, we changed a lot. A few years ago, we had 7% of our employees were in technology. Now we have over 20% today. That shows how the mix is adjusting throughout the time. Investing more in platform communities, more technology, more in the experience of the client and naturally the mix is adjusting. So that's number one.

Number two. And here, I have to focus on one point. The capacity of absorption of investment is important because of the discipline in activation, we are very careful when we activate an investment in the bank, which is an intangible that is amortized. So we are always careful with the funnel of activation, we would like to say that maybe we activate half what I could at element activate through the accounting rules. And why that? Because we have the discipline of letting a log path through OpEx because sell the future and sell out the future. And this is an account that once you hire if demand comes long term. And we only activate projects that have benefits effectively. If it's a regulatory change, operational risk or a change in the platform that doesn't bring clear benefits.

We're not going to activate it because of the discipline of mismatching the benefits that, that platform of the investment is going to have with the we expect -- so they walk in parallel. Secondly, the deadline of activation. We do not activate more than 5 years because we have difficulty in looking at the of the lifetime of a platform on the system longer than 5 years. Every time you increase the activation, deadline, you're hiring a problem for the future, knowing that the lifespan of the platform is the last that years. So you have a new cycle of reinvestment in the platform and didn't finish paying the investment of the previous platform. So you pile up. This is the higher cost that is given through time. So we really pay attention to that. And the investment is not just in technology. So we look at the investment in business expansion, the expansion of sales force, expansion or creation of new business models or new products. So we are always all at all times looking at that and the rhythm of investment is always in the same threshold. We are looking at the investment.

In regards to the revenues, to see what we are investing, we see how we can project that activation and amortization throughout the years, how is that behaving with the company. So all of that management is done [indiscernible] in an important way. Your second comment depends on the opportunities. It's very difficult to tell you now if we're going to invest more here or there, but I'm going to tell you that the Investment in the maintenance of platform, it has been reduced and maintenance has been reduced because of the modernization that we've done in the platform A great deal of the investment to develop new products, new futures for our clients they will absorb the demands on the big company. In the other portfolios, we've had a growth that is very consistent of SMEs. We've seen consistent growth in the middle market. We've seen consistent in the individuals, very well distributed in the business line. So I would like to say that there is a big concentration. All of them are growing in a very adequate rhythm for 2026, but always in the logical target. Long term, portfolio vision, resilience and above all, the right price generating value for the bank and the shareholder.

Switching back to English as we have Jorge with us from Morgan Stanley.

Hi, everyone. Thank you. Thanks for the opportunity and congrats on the great numbers, 27% return on equity, quite impressive. I wanted to ask about and just bear with me for a second because this may be a long question given that you need to provide the backdrop. But I wanted to ask about your 2026 credit growth guidance, which is somewhat underwhelming. And I guess let me explain why. This time last year, when you provided the guidance for 2025, the macro backdrop was more challenging. You expect that's a leak rate to rise from 12.25% to 5.75%, which is obviously negative for credit demand and supply unemployment was expected to increase to 6%. I believe that was on your guidance.

And nonetheless, you guided to credit growth of 4.5% to 8.5% and you ultimately deliver right around the midpoint of that range. So fast forward to today and the macro outlook you're assuming for this year appears to be more constructive. You expect policy rates to fall from 15% to 12.7%, which should improve affordability and support credit demand. Unemployment is expected to remain below the level that you assumed last year. And the economy is still growing at a nice 2% clip despite this better macro backdrop, your credit growth guidance is only marginally higher than last year's guidance. You're at 5.5% to 9.5%, 1 percentage point higher than both the low and the high end of the range. Milton, you talked about significant improvements in how you run your consumer and SME platforms that were executed during 2025, which one would expect would allow you to grow faster especially given the consumer and SME is a really big part of your own book. Payroll loans, which is also a really important product. We're notably bad in 2025, growing only 1% for all of the reasons you mentioned.

Now with folding grades, this is a product that is highly sensitive to rates, you're now pushing aggressively on the seller. So it just feels that, that could be significantly higher. So again, why the relatively conservative guidance? Is it competition intensifying? Is it making it harder for you to defend share? Are you losing share? Are you really cautious about the political cycle and you're going to be sort of kind of pause until October? Or what other things are being driving that? Any color would be really helpful.

[Interpreted] Thank you, Jorge. Good to see you. And I understand perfectly where you're coming from your question. So let me try to be clear to give you a better answer. Not so long. But I will try to be very treating my view. I think -- I hope you're right. And I hope we find out room opportunity to have a better result and a better growth in 2026. But when we do our planning, we have to look forward and see if what are the uncertainties? The macro area has this view, but we know this is an election year in Brazil. Election brings volatility. So when the macro tries to give us the figures, they understand that everything is the same. So you don't see there an input of a in that macro perspective. And this is what we'll be facing in Brazil. So how will the investor react in the election process, what will be the economic plans of the candidates. What will happen with the investment of Brazil in the long term? What will happen with the fact if it brings more volatility?

If the inflation goes up for any reason due to the FX and also due to the food price, will the Central Bank be able to cut rates and to get you to 12.75% by the year-end. If we need to stay longer with rates, it's not what we believe. What this will impact our portfolio for wholesale, what this will impact the portfolio for SMEs. How will the activity that we are seeing a downturn in activity, even though the GDP will grow 1.9% in our projection, how expansion is to be this GDP. What is the quality of this growth? Is this going to be more on the fiscal stimulus or will be more productivity? What are the level of investments that we are seeing in Brazil? I'm not saying about portfolio investment, infrastructure investment, long-term investments, many companies waiting to make decisions, understanding what will happen in the election year. So I wouldn't say it's a defensive guidance, but it's a realist guidance due to the level of uncertainty we see in 2026. I hope you're right. I hope everything goes is smooth. But a good thing of that is our capability to react and to come back and say, "Look, we made a mistake or we have new information, and we believe we can do better. We will do it.

If you look for last year guidance, which we had BRL 44.8 billion implied in our bottom line, if you could do that for the midpoint of all the metrics, we were able to deliver BRL 2 billion more throughout the year. And we changed the guidance in the coming quarters. We did that for financial margin with clients. We did that for financial margin with the market. We did that for the income tax. So we made the adjustments. So if there is an opportunity, don't be so focused on the guidance, we'll be able to come back and say we are doing better. So in the first quarter, we have the first quarter results. and prospectively speaking, what we are seeing in Brazil. So our capability to react is very fast either way. And if things go out for any reason, we're going to react fast as well in a defensive mode. And I think our portfolio, we don't have any capital restriction. We don't have any liquidity restriction. We don't have any NPL restriction. We don't have any profitability restriction. So we're going to be agile. We're going to react if necessary.

So look more in our capability to deliver in the long term and how able how we've been able to react in cycles going in a different direction. So this is the most important thing. The capabilities that we have to react, the execution capabilities that we have inside the organization and the capability to look prospectively. Imagine if we decide to grow twice the portfolio as we are seeing today, anything go wrong and if the macro changes, if the election for some reason, the market doesn't react well. And if the inflation goes up and they need to keep the rate at a higher level, the portfolio is there. So I cannot be providing a huge growth and then looking back and say, I think we should have done in a different path. So this is the discipline that we have. It's always looking for the long term. If there is an opportunity, if we can deliver more, we will do it. And don't forget that the rate -- also the reduction of rates have impact in our balance sheet in one side, but have benefits in the other side. So you always make that point how sensitive we are for the CDI in Brazil when we always come back and show the slide showing that we are less sensitive that market believes. I don't think you believe that anymore. You've been seeing us through the cycle, but we have hedges in our portfolio.

And this is the way we're going to be facing 2026, realistic, kind of cautious looking ahead, what's going to come in terms of the election scenario. And if there is an opportunity to speed up, we're going to speed up. If there's an opportunity to deliver more, we will deliver more.

[Interpreted] Going back to Portuguese. Marcelo Mizrahi, Banco Brandesco.

[Interpreted] Congratulations on the results. Excellent results. guidance is very transparent. Now my question has to do wanted to understand with the scenario of uncertainty. About the delinquency I wanted you to bring your vision on the delinquency of individuals and the companies different dynamics, of course, as you said, capital markets have been -- has impacted the company, and we have the programs of the government. How do you see the impact of the potential reduction of the programs in this year, and the bank has grown strongly and the SMEs. This is the point. And in the individuals, we also have the reform, the reduction of the tax, also the that the payroll has brought to the bank has dropped the individuals, the payroll loan and for individuals is strong.

So I wanted to get a diagnostics on -- what do you think about the delinquency '26? I understand that we can have different years between the first quarter and second quarter, but any that you can share with us will be very useful.

[Interpreted] Thank you for your initial words. About delinquency. I would like to say that -- we don't see any material changes in the indicators of delinquency for tenth first quarter is more cyclically seasonally there is an increase of delinquency because of all the commitments toward the beginning of the year. That ends up pulling up the delinquency at the beginning, that cycle, we do not expect a very relevant change from what we have observed in previous cycles, we have month, we are practically in February already. So we see a behaved cycle. We see a few portfolios. Specifically in the cats of industry that we see the delays that are more pressured -- and we see the delays that are more pressured whether if it's in the individuals or the SMEs, the short delays or controls the portfolio, there is no deviation.

What we have in the SMEs, and we've discussed that is what I call the normalization of the effect of the governmental. So there is the period of payment now and that pressures the delays on the short term, but not the cost of credit as the portfolios are well insured and the cost of credit is well behaved. So I would say no concern with the scenario for '26, Evidently, the scenario is dynamic. If the interest rates, they don't do the adjustments that we expect the pressure on the companies and the individuals will be higher, so you can expect a higher delinquency, we see a good quality for the generation of of employment, there is a decrease of the employment. There is an increase of investment in labor-intensive sectors. So the liquidity that you commented on the assumption of the taxes, it brings more -- well, the inflation of services is very resilient because of this, the commitment of the compromise of income is very high even though the salaries are growing to the compromise of salaries is a big issue and the delays that have been published in the market short term or there has been reasonable increases in several products and portfolio, and our portfolio has performed differently from the data.

So when you exclude our delinquency and all the products, we have a behavior that is very different. Now it's important to reinforce that a part of this increase in the long term has to do with the change in the [ 446 ] and a lot of institutions have increased the criteria for the write-offs, which pressures the delay because it takes longer to clean in the portfolio, but it alleviates the cost of credit in an important way. We decided to back to work with the best expectation for recovery even though with the flexibility that for gives to the bank to adjust the write-off for longer deadlines, we maintain the same deadline since the first day. So there isn't any change in any portfolio, any delays on the write-off because you have the number and then you are not doing the provision for expected loss you start to do the provision for the incurred loss because the capacity of the models of anticipating the real capacity of reacquiring the credit. So the best proxy for this is to go back 3 quarters in the past and looking at the level of NPL creation that we have in comparing that with the write-offs that are here, and this is a direct correlation 1:1.

When you look at the breakdown of correlation, 70% of what it was, 60% of what it was of the creation, 3 quarters down the line, there is a change of policy of write-off and the an increasing of the line, benefiting on the short term, but the math is there. It's higher. So these are controlled indicators, the portfolio of the company, the provisioning is very adequate. We always look the review, name my name, but events happen, especially in big companies. Events that were captured by the model, sometimes in events that sometimes because of something that we don't control. Frauds, for example, we've seen in the past. We have to look at the attend with a lot of attention because the wholesale is less statistics and more than and we don't foresee anything. And if we see any case, we provision adequately and we have a balance with the level of provision that is very adequate. Looking at the strength of our provisions and the coverage of all the segments, it's something very important. Something important is that we are not going to stop being the provision for delivering the result in the quarter. The provision is a decision is management of the balance -- and we're always going to do the provision in the future if the ROI drops, then we explained. But the provision is in front of the profitability always. So we're never going to leave the wholesale or retail sub provision should deliver a better result.

We are switching back to English again as we have Carlos Gomez Lopez from HSBC with us.

I'm on the many good numbers you have said to us perhaps on that investment in the most is the 50% market share in real estate financing among the private banks. Where do you see that market going? And why do you think you have such a presence there that the other banks are not replicated and then the other question, you're a big consumer of software and IT services. We have seen a big reaction in the market to going into this space and that has affected the stocks. As the consumer of these services, have you seen a change in pricing when you're discussing with the providers in the last few months?

[Interpreted] Thank you, Carlos. Good to see you. Thank you for your compliment. First of all, on the real estate side mortgage business, I would say, we have the biggest saving account deposits in Brazil after cash economic federal. So looking to the private sector, we have the biggest saving account figures will allow us to be more competitive on the mortgage side as well. So this is one. Second, everybody has put in the market, 100% of our saving accounts with the obligation that we have to provide the 65% plus the demand deposit that we have to live in the Central Bank. And this year, there is this change. They are releasing 5% more of these demand deposits that we live in the Central Bank would provide us more liquidity.

I think our capability to serve our clients in a very competitive way due to this liquidity structure or funding structure that we have has been able to put us in a different spot in terms of providing credit. So if you took any company in Brazil, any bank, and you compare the rate we offer to our clients. And if we have the same rates to our client. I can tell you that the level of return that we have is different from the market because we need less funding from the treasury than other competitors that have more portfolio that they have in terms of saving accounts. So that structurally very relevant. Of course, the products that we have, the experience journey that we have with our clients is not only price-oriented I think we've been able to invest a lot in the real estate mortgage journey with our clients and also this long-term view, knowing that the real estate, the mortgage, it's a very important product when we look to is stickiness looking to our clients in the long term. So I think this is the capabilities that we have, and we've been able to deploy relevant amount of mortgage in the market for that reason.

We have the biggest portfolio, we're always taking cash economic of federal on the site in Banco do Brasil, they don't have a saving account for mortgage. They do that for agriculture. So it's a different business. So I think this is, I would say, the main reason. Talking about our relationship with the tech providers, I think we're going to be seeing a lot of volatility in the market. Many people saying there is -- it's not a bubble. When you look to the technology itself, the capability of scaling that throughout the globe, a lot of investments going to that, and this has been very accretive for the GDP growth, especially in the U.S. But the question is who will be the champions in the long term? Because as any other industry, you won't have many champions. You have a few but everybody is doing massive investments. So the concern that the market has more on the equity side has to do, am I investing in the champion who will be here in 5 years more, who won't be here in 5 years more. And as the prices has gone up very, very strongly recently, we'll be seeing a lot of volatility in the industry.

As a client, we've been able to do very good negotiations with all the providers. We have relationship with many of them before all this AI phenomenon that we are seeing. So that means that those providers, they look to us and try to do to be very competitive due to the level of scale that we have, the capabilities that we have to buy in relevant amount. But of course, if you go to the GPR and all the processors that we have to use, then we have to pay market price and it's expensive for everybody, not only for us. So what we try to do is to do big negotiations, long-term negotiations. This is the same for cloud. We have long-term contracts with our providers and more the contracts, good long-term relationship with them, trying to understand Itau through the cycle, what needs we have how should we measure and negotiate the contract in the long term. So we are not seeing a huge amount of increasing price. I think the prices has been, of course, due to the level of price that we see today, be competitive, it's not putting us additional pressure in our costs.

[Interpreted] Daniel Vaz.

[Interpreted] I just wanted to do a follow-up on the previous question. On the government lines, we've seen -- it's very interesting. The delinquency and the increase in the delays. But it's very -- it's not clear in our perception if the FTI can support this production and rollout for 2026. So if you can comment if you see that we need for the size of the production of the fund would you need capitalization of the fund of the -- this year and it's very clear the effect for the cost efficiency. But in business, there is a certain difficulty in making tangible the potential of growth for the revenues. The bank has always done a lot of benchmarking globally. It could -- and why didn't you? I want to hear it from you. Do you foresee a clear opportunity in businesses and the potential of revenues coming from [indiscernible] and all those technologies?

[Interpreted] If we look at the program as a whole, I think that there is a better allocation of the governmental programs with better results than ours. This is for the ramp for the FTI, the BNDES has an important role. It's the manager of the program. So the allocation of public money, the returns are really impressive because we can get to companies, smaller ones, companies that would have more difficulty in capturing resources under those conditions, especially in the deadlines that we can offer. So I'm enthusiast of the program because it's a great application of the public resources with great results. If we do a retrospect in the last years, the amount of credit that was released in the market, how many clients were benefited. How many people finance the increase in jobs and investments that were done, productivity, the program is a winner. What happened is at the end of -- the last quarter of '24, we understood that the level of leverage of those sureties guarantees that were done in the FI were low. So we could bring to the market additional resources, which were -- they call it pocket change, but Itau took that proposition should be in yes, we had a conversation and with them and we had an opportunity of returning to the system, an important level of resources without getting new resources in the FI fund.

And the BNDES did the analysis, they agreed, and we could without bringing -- we brought BRL 100 billion more for resources for these systems. During the last quarter of '24, if you see the production of the market, you will see that we applied an important volume of resources of FGI to '25, the market as a whole, also not all, but some banks applied some resources in the FI. Now for the budget is a certain maintenance of what was the organic of the last years. But without that change, the pocket change that return, which is BRL 100 billion. So the phenomenon the sensation of having less resources because of that because the leverage that was done with the top-up generated additional resources. We've discussed with the Ministry and government of economy to give visibility for the allocation of public resources, I don't think that we have a better program than this. There are discussions that are happening. I don't know if we are going to have an appetite for an additional, but I would like to say, maybe yes, maybe no. No, this is a more definitive organic program, so we're going to see a growth normal of Pranab and FTI will depend on this decision that the government has to take of resource allocation. And as you said, we would need an additional for the fund, so we can produce volume that is similar to what was produced over the last 15 months. So we are depending on this decision that is very important. Second point about AI. This is an agenda that is here to stay. We want to be on the vanguard of this movement is a great modernization and the review of data architecture. Having done that, has placed it in a differentiated threshold, so we can advance in a new era.

We believe that when we talk about AI, without price in the background, having all the knowledge that we have in several journeys, several products and several businesses, you cannot train your models beyond the commoditized models. It's a very junior standpoint of training. So our capacity of training and doing this at [indiscernible] and getting great results, training our models with our way of doing things without the experience that we have embarked. So this organization of the database of the tokens in the big models, and we are using that in an architecture that is making the data democratic and enriching the basis makes us find incredible opportunities in other dimensions of efficiency, modeling, experience, customer experience, process, internal processes and productivity. So we've seen advances that are relevant. And from the standpoint of the overview of the client, the [indiscernible] platform that I just commented, it's powered by AI, 100%. So benefit comes because I can engage clients with an efficiency level that is higher. So that will bring me opportunity to have more risk appetite because I can accept more losses. This is value generation for the bank, and it can be more competitive due to the other offerings of the market. And that allows me to gain market gain efficiency and gain more clients.

So this increase my principality with the client without needing to scale the sales force because the cost of service of these new B2C, more specialized models, it stands from through people costs through goes to cost of service that you cannot offer for all clients. These models are very scalable. So I can service the client in an investment world in a very simple way, and I can increase the engagement with the bank, generating top line, reducing churn, improving the relationship with the client on the long term. So we see the PIX through the [indiscernible] transaction very efficient, cheap platform. This increases the principality of the client because the transaction with you and now they're using other products, other businesses and then you are the main bank. So every solution comes from a different angle, but we also believe of generation of top line, not only in the generation and bottom line as you generate more -- you are more efficient to service your clients.

[Interpreted] Thank you, everyone, to part of our conference call. We finish our Q&A session and our fourth quarter of [indiscernible] I will give the floor to Milton to close the session.

[Interpreted] Thank you, Gustavo. Thank you, Gabi. Thank you, everyone for being here for your questions. I finished the initial presentation of the slides, been talking about disciplined focus and humility. So I would like to always bring these issues. I think that there is an additional element, which is being serious. And we know the importance of building business models that are sustainable. And we can get the interest of the system of the client in front of -- well, before interest of the bank. Even though we see in a market a phenomenon, it doesn't happen in that way. It's sometimes the interest of the company in front of the interest of the system. And we need to be leaders by example.

Therefore, we need to do the right thing, do the sustainable thing because there is no way the right way of doing the wrong thing. So this is what we believe. So there is no responsibility that is higher than of any institution of looking at their processes or their clients and the system and thinking about what are the effects that we're going to generate. I think that this is the primary responsibility of any financial institution. And we cannot subcontract that. It's not the fault of the [indiscernible] it's no one's fault. Our responsibility is that and we have the capacity installed, the technical teams that can understand and evaluate the data. And we don't need an auditor or a regulator to tell us if it's right or wrong. So this is what we see. I am very excited even though this is a more challenging year because of the uncertainties and the election.

I am very excited with the moment of the bank, and we closed a cycle of deliverables that are robust with consistency and quality and the results and looking into the future, I think that we have everything to a solid year of quality. Of course, we have all the execution that is done throughout the year. But I am certain that if the conditions are there, we will deliver with a lot of quality and a lot of wisdom without selling out the future, but without anticipating the future as well. So this is the discipline of capital allocation and creation of value that agenda of efficiency is very important. So we can go through another second, which are the next that are up ahead. So I would like to thank you for your participation and your support, your trust and your deposit in the institution and tell you that everyone is here. We're ready to work with a lot of focus, with a lot of strength in a work environment that is incredible. With the transformation that we've gone through the years that has produced incredible results, and we are very optimistic of what we can do for the future. Thank you very much. Will see you shortly. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Hello. Good morning, everyone. My name is Gustavo, and it is a pleasure to have you joining us for our Third Quarter of 2025 Earnings Video Conference. As always, Milton will walk you through our performance. [Operator Instructions]

Before handing over to Milton, I would like to share a few instructions to help you make the most of today's event. For those accessing this video conference via our website, there are three audio options available on your screen. The entire content in Portuguese, the entire content in English or the original audio. The first two options offer simultaneous translation to select your preferred option, simply click on the flag icon in the upper left corner of your screen. Questions can also be submitted via WhatsApp to the number displayed on your screen. Today's presentation is available for download on the hot site and as always, on our Investor Relations website.

With that, I'll now hand over to Milton, and I'll see you again shortly for the Q&A session. Milton, over to you.

[Interpreted] Good morning, everyone. Welcome. It is a pleasure to be here with you once again to present our third quarter 2025 results. Thank you, Gustavo. In a moment, I will join Gustavo and Gabriel for our Q&A session.

The objective of this presentation, as always, is to share with you an executive and objective overview so that we have quality time for discussion afterwards. I believe it is important to have a Q&A session with adequate time and depth.

Let's move on to the numbers. I will begin with the main highlights. I will cover results, ROE, capital, services and insurance, the loan portfolio and long-term delinquency. The first highlight is that we closed the quarter with very strong net income BRL 11.9 billion, representing growth of 3.2% compared to the second quarter of 2025 and 11.3% compared to the third quarter of 2024.

Therefore, we continue to expand our bottom line. Just as important as the bottom line is profitability. On a consolidated basis, our ROE reached 23.3%, and in Brazil, ROE was 24.2%. So we posted a profitability expansion compared to the previous quarter. But what I always like to emphasize, and we include this in the footnotes for you is the capital adjustment. As you saw on the first slide, in terms of capital, we closed the quarter at 13.5% of CET1. Adjusting the capital for our Board's approved risk appetite or to the CET1 level we have seen in the market, we are running at 25.4% ROE on a consolidated basis and in Brazil at 26.7% for the period. This is a very strong profitability level, reaching almost 27% of ROE in Brazil.

How did we achieve this result? First, capital showed significant expansion in the quarter with growth of 40 basis points. Compared to September 2024, we saw a slight decrease, but it is important to remember that we had a relevant additional dividend distribution this year.

Moving on to services and insurance. This was a very solid and strong quarter for this line, which grew by 4.0% in the quarter and 7.1% year-over-year. Regarding the loan portfolio, we closed the quarter at BRL 1.4 trillion, a growth of 0.9% compared to June and a 6.4% growth year-over-year. Excluding the FX impact, the portfolio grew by 1.7% in the quarter and 7.5% year-over-year.

Another highlight is delinquency. We have been able to grow the loan portfolio with high-quality credit and with very well controlled delinquency levels. Here, I am highlighting long-term delinquency, but you will see that the portfolio remains very well behaved in any credit indicators such as cost of credit, stages, coverage, short- and long-term delinquency.

I would like to highlight the growth in our loan book. Let me start by focusing on the individual segment. We grew by 1.0% quarter-over-quarter and 6.5% year-over-year. And in this table, we present a breakdown of the segment.

I would like to highlight mortgage loans, which grew by 2.0% in the quarter and 15.2% year-over-year. In the first nine months of this year, we originated BRL 24 billion in mortgage loans, a 24% year-over-year increase.

Our market share among private banks is 47% in this product, which is highly relevant for client relationships and for our long-term vision. Structurally, we have a higher savings balance among private banks, which also allows us to deliver long-term value to our clients. Regarding the quality of the individuals portfolio growth, focusing first on credit cards, we grew by 4.3% in the quarter. The consolidated growth was 0.8%, but when we look at the mid- and high-income segments, we posted a significant growth of nearly 24% year-over-year.

In personal loans, we posted a 1.4% growth, but it is important to break down this line. It is composed of consumer credit, which grew by 3.1% in the quarter and 9.6% year-over-year, revolving credit, which grew by 5% in the quarter and 15% year-over-year and refinancing credit, which is a portfolio we aim to reduce, which declined by 3.4% in the quarter and 12.4% year-over-year. This shows that beyond simply looking at aggregate performance, it is important to analyze the breakdown within each line we disclose.

In payroll loans, the highlight is the strong growth in private sector, up by 9.5% in the quarter and also up by 9.5% year-over-year. The public sector portfolio posted a slight decrease, and for INSS beneficiaries, which are the retirees, the main effect comes from the interest rate cap implemented some time ago. We are currently facing our highest funding costs, which has led us to reduce origination in some channels, especially through banking correspondents. Today, most of our production is already being done through our own channels, and we have stopped operating in some segments due to low spreads and low returns.

Moving to the SMEs loan portfolio. It was up by 1.1% in the quarter and 7.5% year-over-year. In Brazil, the portfolio grew by 1.2% in the quarter and 7.8% year-over-year, and the total portfolio grew by 6.4% year-over-year. Here, we present the breakdown, excluding the FX impact. For SMEs, growth would have been 8% year-over-year. For large companies, nearly 10%; and in Latin America, 4.5%. The total portfolio grew by 6.4% year-over-year and would have grown by 7.5% excluding the FX impact. The highlight in SMEs is the government programs, which posted a growth of 10.9% in the quarter, a very solid result. When we look at the year-over-year performance, growth was over 110%.

I would like to emphasize that this is a portfolio that is growing significantly, but with high quality. We have been originating through these lines with shorter grace periods of under 12 months. While we have seen the market originating with longer grace periods closer to 24 months. Therefore, there is a difference in approach. But again, each organization or each bank has its own strategy. I'm only highlighting how we have been doing business.

Moving on to margins. I will focus first on NII with clients. I would like to draw your attention to the fact that considering the effect of working capital, the NII grew by 0.5% in the quarter or BRL 200 million. Average volume, product mix and spreads had very minor effects. Additionally, there was a calendar effect. We know that this quarter had more calendar and working days with five additional working days and one extra calendar day, which impacts liabilities and assets differently in the way we disclose the managerial results.

In the Latin America and others line, we consider wholesale bank structured operations and this is where we always expect some volatility.

I would like to highlight that the previous quarter was very strong in terms of margin. We had already mentioned that it was an exceptional quarter, so it is natural that we see a smaller effect of these structured operations when comparing quarter-over-quarter. It is important to emphasize that in the year-over-year comparison, which is perhaps the best indicator to analyze our ability to generate NII with clients, we posted robust growth of 13.4%.

Moving on to NIM. First, on a consolidated basis, we see a slight decrease. Nothing to be concerned about. NIM is very much in line with what we posted in the first quarter of 2025. As I mentioned, the previous quarter was exceptional. The risk-adjusted NIM also performed this way. The risk-adjusted NIM was still higher than in the first quarter, but slightly lower than in the second quarter with a minor variation.

For the annualized average margin in Brazil, this effect is even clearer. We posted significant NIM growth in Brazil 9.5%, 9.3%, 9.8% and 10% in 2Q '25, which was when I emphasized that it had been an exceptional quarter. Now we have returned to a very high level of 9.8%, exactly the same NIM as in the first quarter of 2025. The risk-adjusted NIM reached 6.7%, which is even better than the NIM posted in the first quarter of 2025, but showing a slight decrease quarter-over-quarter. This demonstrates the strength and quality of our NII with clients.

Now regarding NII with the market, although the numbers may appear very stable, we know this is the hardest line to estimate in our budget exercise given the inherent volatility behind these figures. What did we highlight at the beginning of the year. First, we provided guidance indicating that NII with the market would be between BRL 1 billion and BRL 3 billion for the year.

The main effect, as I mentioned previously, is that the capital index hedge costs would increase throughout the quarters. This was the only number we could be more certain about when we disclose the 2025 guidance. And it is evident when we look at the accumulated results. We delivered BRL 3.5 billion in market NII for the first nine months of 2024, and the capital index hedge cost was of BRL 900 million in the first nine months of 2025. Market NII was BRL 2.7 billion, down from BRL 3.5 billion, but the main effect was the cost for hedging the capital index, which doubled in the period.

So in fact, we have performed very well. Our NII with the market is very strong, very stable with a high alpha generation and a very accurate transfer price that avoids transfers between NII with clients and with the market. Our disclosures have been very transparent. And in respect with that, I will mention an update in our 2025 guidance. The only line that we will adjust is NII with the market for obvious reasons, it is a mechanical adjustment, a small one, I will address this at the end of this presentation.

Moving on to commissions, fees and results from insurance. I would like to make a few highlights. The first one is in the payments and collections revenues, which grew by 3.7% in the quarter and 8.0% compared to the third quarter of 2024. For the 9-month period, growth was 6.1%. What is the main highlight. We no longer refer to Rede as a separate acquiring business or company as Rede is fully integrated into our operations. Nevertheless, we believe it is important to highlight the total transaction volume, which reached BRL 258 billion, an important increase of 6.6% in the quarter. This demonstrates our ability to integrate businesses and focus on client profitability. The total transaction volume grew by 12.8% year-over-year.

Another highlight is the revenue from advisory services and brokerage, which posted a significant growth of 33.7% in the quarter, but a decline when comparing the accumulated results for the 9-month period. I remind you that last year was by far our best year in DCM, so there is a market volume effect. Our market share demonstrates that we continue to present a very solid performance. We are leaders in fixed income origination and distribution with a 25% market share. In other words, 1/4 of the market passes through the bank, and we have originated BRL 91 billion over the 9-month period.

Another very relevant highlight is what we have been able to achieve year after year in our insurance business, we posted sound growth of 5.7% quarter-over-quarter and 17.8% year-over-year. Results for the first 9 months were up by 17.1%. This growth is well distributed between earned premiums, which were up by 14% and the recurring result up by 17.3%. This performance has been very important for the bank's value creation for expanding profitability and for generating value across all our business channels. I am deeply pleased and satisfied with the evolution of our insurance business.

Now regarding asset quality, I will be objective in my remarks because as you will see in the credit indicators, the level of stability in our portfolio is truly impressive. Short-term delinquency is very well controlled. I will focus on these figures when discussing large corporate performance in the next slide.

Actually, to make it easier for you, let me zoom in on this information. In Brazil for short-term delinquency, you can see that the 15 to 90 days NPL for individuals remained absolutely stable as did it for the SMEs portfolio. There was an increase in this indicator for large corporates, but this is a specific case of a client that has been in stage 3 for many quarters with more than adequate provisions. And we felt that it was time to let it move into delinquency and follow the regular flow. That is why I always say, I do not like to track this indicator for large corporates. It has no correlation to either the cost of credit or the balance sheet effects.

You will see that it has no impact on stage coverage, on migration between stages nor on the cost of credit. So it is only a representation of a client that was already properly provisioned in Stage 3 and moved into delinquency, there is no cause for concern here. Again, this is a specific client. For long-term delinquency, which does not have this impact, you will note that there is great stability in the NPL indicators for Brazil, for Latin America and considering all regions.

When we break down the Brazilian operation by individuals, SMEs and large corporate, we also see great stability. We have been able to grow with high quality within our strategy, maintaining a portfolio with a truly impressive level of provision and high quality. We have followed the asset quality indicators released for each industry. And when we compare our performance for each product against the industry figures, we note that we have performed much better than the market in terms of delinquency. In fact, in several products, we have seen significant increases in long-term delinquency, while NPL in our portfolio remains very stable.

We do not usually disclose our delinquency rate breakdown by product, but I can assure you that in addition to being at a much lower level than has been reported by industry, we continue to operate with great stability, while we have seen delinquency accelerate in the industry especially the long-term delinquency. Once again, I emphasize our long-term vision, our capital allocation at the right price and our daily and active risk management, and I believe the results speak for themselves.

Moving on to the stages. I will go straight to the portfolio and coverage in Stage 2, where you will note the remarkable stability. Any volatility, given the size of our portfolio does not generate or produce any material impact. Therefore, everything is within expectations with no points of concern and the same applies to Stage 3.

If you look at both the portfolio in Stage 3 and the coverage in stage 3, you will also see only very marginal variations. It is clear that this flow is dynamic because we do not migrate exposures to stages based solely on delinquency. Delinquency is one variable. As I showed you, when we disclosed the implementation of Resolution 4966, if you add up the nonperforming portfolios overdue by more than 90 days and compare it to the portfolios in the stages, the numbers are quite different because we look at prospective risk.

In this way, migrations due to asset quality deterioration are adjusted well before the client actually becomes delinquent. This is the case for large corporates, for example, as I mentioned earlier, regarding this specific client that has been in Stage 3 for many quarters with a performing loan. So I believe that this proactive and forward-looking dynamic is very important when managing our balance sheet. Our performance reflects this.

Now I will briefly address 2 topics, the renegotiated portfolio and the cost of credit. I will first comment on the renegotiated portfolio. If you look at the credit-only portfolio, it continues to decline in what we call the renegotiated portfolio. We break down what refers to the restructured portfolio and what refers to the renegotiated portfolio.

But the most important thing is that the ratio of the renegotiated portfolio over the loan book continues to fall. In other words, the nominal value is declining even though the loan book is growing. I believe that at some point, we will reach an inflection, and we may even see the nominal values rise. That's why it's important to analyze the ratio to compare nominal values over the portfolio that has been growing over all these quarters.

On the right-hand side, we present the figures considering 4966 resolution, which considers credit and securities. The story is the same. The amounts are higher because in this view, we include securities, but we also see nominal declines over the period. And the ratio also shows a very healthy performance, even better than in the credit only view. This shows the high quality and strength of our portfolio.

The cost of credit has been flat. We have been delivering a very consistent cost of credit. And in relative terms, we also have a very solid result. When we look at the figures for the nine months despite the increase from BRL 25.9 billion to BRL 27.2 billion, the ratio fell from 2.7% to 2.6%. Even though we see industry indicators deteriorating, our portfolios have been performing very well. I believe that risk management is our competitive advantage, and it's something we strongly believe in.

Changing gears to OpEx. We posted an increase in non-interest expenses in Brazil of 4.5% in the quarter. Remember that this is a quarter that historically is pressured by the union agreement and wage raises. We also have a volume effect with the operation performing very well. So this is what we call good cholesterol, especially when we talk about volumes. The first nine months year-over-year growth in Brazil was 8.5% and 8.9% on a consolidated basis, including Latin America.

All of this is absolutely in line with our expectations, which is the most important thing. It was what we expected with the significant investments being made in the operation with a strong focus on top line generation. And all of this is ultimately reflected in the efficiency ratio. It is not just about cost for the sake of cost. At the beginning of next year, I will share with you a very transparent view on costs for the future.

But the most important thing is to look at the trend. We closed the efficiency ratio for this 9-month period at 36.9% in Brazil and a 38.8% on a consolidated basis. I remind you, this is the lowest ratio in the industry when compared to Universal Bank's peers. In the calculation of this ratio, we include all the bank's expenses and do not leave any negative effects out of the indicators so that the number is very consistent and transparent for the market. So I believe this is a very relevant performance. If we look at the figures from 2019 to 2025, the path has been very healthy for the bank's operational leverage and efficiency.

Next, let's talk about capital. First, just to clarify, we started the quarter at CET1 of 13.1%. As we can see, profit generation in the quarter was very strong with a positive contribution to capital of 80 basis points. As I mentioned, we are running with a profitability level of nearly 27% in Brazil. Interest on capital provision and IOC maximization results in a payout slightly above 30% and leads to a capital consumption of about 40 basis points. This is already included in the ratio.

Next, we see risk-weighted assets consumes 20 basis points. And finally, we have other prudential and equity adjustments that are practically flat. All in all, CET1 moved from 13.1% to 13.5% in the quarter. We had AT1 to the CET1, and we reached a Tier 1 capital ratio of 14.8% in September 2025. It's interesting to note that we no longer have any perpetual instruments issued in foreign currency. In other words, 100% of our AT1 instruments are issued in Brazilian reals at a much more competitive cost. So this liability management we carried out was very important for the bank's capital management.

Finally, as I have already mentioned, the only line to be updated in the 2025 guidance is market NII. It is a minor adjustment. We originally expected between BRL 1 billion and BRL 3 billion for this line, and that was our best expectation. It is great that we performed better than we expected. And given that we only have a couple of months account for, we are updating our market NII expectation and narrowing the range. Thus, our best expectation for market NII is between BRL 3 billion and BRL 3.5 billion.

So this table consolidates 2025 guidance, except for the market NII, every other line has been reaffirmed, which demonstrates our ability to consistently predict results for the year and share them with you at the beginning of the year. Of course, volatility is expected throughout the year. In the loan book, we have the FX impact. So this is always something difficult to project. But the fact is that we have very solid discipline and transparency and a high degree of predictability, I believe the most important thing is to have predictive capacity to be able to forecast and manage with a long-term vision.

With that, I will conclude my presentation. I would like to thank you once again for your participation. Now I will join Gustavo and Gabriel for the Q&A session. This was another solid and consistent quarter with very high profitability and strong results. Most importantly, behind these numbers, is all the transformation the bank has been undergoing for many years.

We are at a very advanced stage, both in digital and cultural transformation and above all, as a universal organization. I believe the strength of Itau Unibanco is being this universal bank, striving to be a leader in every segment in which we operate, and we have managed to be leaders in several of them, as I always say, we have a very balanced portfolio with solid and consistent results in both wholesale and retail businesses, which have been decisive for value creation.

And most importantly, we are a 100% client-centric organization. All of our NPS and quality indicators have advanced materially. At the end of the day, the result is a consequence of a solid, strong franchise with our client-centric and long-term vision. We do not make decisions to maximize in the short term nor do we grow the portfolio at the wrong price. We must maintain strong discipline in capital allocation and returns. And naturally, the results come in the long run. That is what I wanted to share with you.

I will now join the others for the Q&A session. See you shortly.

[Interpreted] Thank you for the presentation, Milton. Now we have also Gabriel with us to start the Q&A. Well, let's remind you, this is a two-language session. We're going to answer the questions in the language that they are asked. Should you need any support with the translation, please, choose your audio -- preferred audio, English or Portuguese. Where you can submit the questions via WhatsApp.

With that, let's go to the first question. Bernardo Guttmann from XP.

[Interpreted] Congratulations on the results. We're getting close to the end of the year. The bank should get into that phase of the discussing -- discussion of the scenario for 2026 and the scenario macro is mixed. The activity is firm, but with the high interest rates and the credit market that is more selective.

I wanted to understand how that context affects your strategic decisions for the bank for next year, specifically in the growth of portfolio, efficiency and capital allocation. Itau gets at a turning point of the cycle with discipline and profitability but maybe now the challenge is to balance, to grow in an efficient way and calibrated way in an environment that still demands caution. How would you do this balance today?

[Interpreted] Thank you, Bernardo. Thank you for your participation in our call. Let me start by saying by having a strong discipline of not anticipating the guidance for 2026 because we are building the numbers in an advanced phase, I would say, but there are still some stages that we need to do. Directionally speaking, we have found opportunities to grow.

I think that regardless of the scenario, the scenario, as you said, it has its challenges. The challenges are more because of the uncertainty, because -- and not so much the uncertainty. We -- it's difficult to have absolute conviction in an uncertain scenario. So a few elements that are important. First, opportunities. They exist. We will continue to strengthen our franchises in all the segments that we want to grow with quality in a long-term vision with the portfolio management.

Our capacity of reaction today, it's much larger than it was before. So we're going to get into 2026. I can guarantee that with a balance that is extremely robust, very well provisioned and with strength and capacity, a solid capital base and with an inertia that is very favorable, that really helps.

So our capacity to react regardless of the scenario, whether if it's an adverse scenario or a scenario that is more positive is enormous. This is important. This is key because evidently in the past, with a legacy system, you made a few credit decisions and risks, and that took some time to get into production, given the times of implementation.

With all the modernization of the bank, the decisions are daily and the implementation is immediate. So every decision for -- is done in the day. We don't have to wait 24 hours for a decision, a reaction. The guidance will be based on the best information available at the moment that I present the guidance for you.

And evidently, the guidance is not written in stone. We need to give a great predictability for the market. We could be very predictable through the market and showing a lot of consistency in the guidance with the discipline of execution that I judge very well. And the guidance is the best information of the guidance at the time of the publication.

And depending with the year and with more challenges, the reactions can be different than what was planned. And we will let you know as soon as the information is available. And we've discussed this with the Itau Day. We are rethinking the businesses up ahead. Businesses with a maturity level, with great maturity, but it's the strength of the all that gives us a lot of strength to quality -- to grow with quality and capital discipline, bringing good returns to the shareholders.

[Interpreted] Now we go to the second question that comes from Renato Meloni from Autonomous.

[Interpreted] Congratulations on the results. And I would like to talk about the segment of these small companies, specifically in the line government. So I wanted to understand, how do you see the trajectory? Can you grow at the same level, or are you going to see some limitations whether if it's government risk? And how do you see the trajectory of the NPLs as these are expiring?

[Interpreted] Very good, Renato. Thank you for the opportunity. Thank you for being with us. Thank you for the report. All of us spent many, many hours reading our reports last night. So we are very firm in the wholesale companies, in the retail. So we have an important rhythm of growth with the governmental programs.

We've grown with a lot of quality, good capital allocation and management choosing the right client and the right way of growing within a value proposition that is unified. So we could assume a role of leadership that is important since the inception of these programs. And we've learned to manage these programs in an intelligent way. It's important. Of course, it depends on the program.

And we've heard a lot about the perennity of the program. It has a role that is very important, specifically in those clients of small size, and we have the budget discussions, is it going to exist in the way that it was. Well, there was the exchanges as we call it in the market. We seized the first loss because we had more space to leverage and then returned about BRL 100 billion to the market.

So it's a process that is very important. And now it will depend a lot from the standpoint of the government with the allocation of resources and the lines, these are the most efficient allocation, and it generates leverage. And the multiplicator on the first loss is a high level -- expected level of clients in this program. So our operation, we need to have a capacity of growing with the segment, always delivering the same product for the client, and it's a governmental product.

We are going to see -- we're going to provide services for the client, the government and also the cross-sell, the flow generating a good profitability level over the last years. We discussed this, and we see space for growth, looking up ahead, growing once again without letting go of the discipline of the capital allocation, the value creation and also doing this at the right time and the right price.

We still see good opportunities in the retail. And what I bring that is relevant, our relevance, our gen AI 100% powered platform, and we've gone through a process that is important. By the evolution of this platform, we need to have a preponderant role in our strategy. So we saw that this is an avenue of growth.

We also were an important process of evolution of the platform, low earnings, improving having an impeccable experience. We are reaching a good maturity level in this platform. It has a new role in the strategy of the retail. So we can service the clients 100% digital in a very efficacious -- efficiently with mature models that has evolved with these clients. It will have a role that is preponderant in the retail from now on, and we're going to talk about the evolutions all throughout the next quarters.

[Interpreted] Now we go to the third question. We have Gustavo Schroden from Citi.

[Interpreted] Congratulations on the results and the consistency, it's impressive. I wanted to hear from you about the client margin. Let's just call it an accommodation vis-a-vis the dynamic that has happened. We had some effects of spreads that contributed negatively. There is also the issue of Latin America.

I wanted to understand if -- that's the level of mean with the -- that it's reasonable with the client that we're going to work from now on? Or do you think that there is an issue that is specific for the third quarter to interrupt that trajectory of growth and maybe reaching stability. I wanted to understand the margin expanded so much. We've discussed a few points last year. Someone to understand is there anything else more that we should get in terms of expansion, or do we get to a level that is more stable with the client?

[Interpreted] Well, great to see you, Gustavo. And I'm going to give you two results -- two answers. First is in regards to the mean of this quarter. It's important to highlight a few issues. In the last quarter, you remember that we discussed that we have a strong NIM, very good expansion.

The NIM itself has also a balance that is very important when we look at the effect of the second quarter to the third quarter, from the first to the second. So this big jump, so to speak, it has some explanations when we look at the third quarter. The first is that in the past quarter, there was an increase -- important increase in the financing in the world of credit cards, and that generates a seasonality that is more of a conflict of a calendar than anything else.

There was the effect that was favorable towards NIM and the NII of the last quarter. So there is a second aspect given the level of profitability that we have today and the level of margin that we've reached, we have the expansion level. We realized that a few operations are more apparent. The volatility is more perceived. So in the last quarter, we anticipated a few results of the wholesale structured operations that would have happened in the third and fourth quarter, and that happened to -- that broaden into this threshold.

There was an acceleration of the previous NIM that would have been softer if it happened this quarter. So there is a caps issue as well. The caps are important, specifically in two portfolios, the INSS portfolio and the [indiscernible], the check. And given -- and the credit card, also the interest rate is higher. The liabilities are higher. This generates an effect in the caps operation.

So you pressure the margin when that happened. And there is a fourth effect, and this is the last one, which is the Flex one. Flex is the way that we anticipate in a way, and we discussed that in the margins with the client, there is the results of [ RAV, ] the Rede and the Flex. The result of [ MDR. ] And the anticipation without the cost of funding will be with the revenue with services.

In the past there is a certain logic because we separated this way, but these operations were so relevant right at the beginning of the year, I'm going to bring you a few reviews of how we demonstrate to you in the MD&A, the managerial, the results, we're going to do a few changes. I'm going to be giving you a few very transparently how are the changes, and how is that compared with the year of 2025, adjusted, so you don't lose the comparability base. The Flex with the increase of the cost of funding.

And with the increase of the penetration -- cost of penetration of the product, they generated a negative effect in the margin for this quarter. And this is a structural that is worth; first, how do I see this? We need to see the annual base. This is the best way of looking at the NII and the NIM evolution of the bank. We did a review upwards with a margin with clients at the beginning of the year, then we changed the guidance. Now our best expectation is to work close to the center of the guidance until the end of the year.

So that means an expansion in the fourth quarter, so we can work close to the center of the guidance. That means that from the center of the guidance, I'm discussing a 12.5% growth, maybe a little less. It really depends on the performance on the fourth quarter. Still early to discuss, but it's something that we can expect. You can imagine that we are growing with the portfolios that are growing and the thresholds that we are growing, expanding our margin and over 12% simplifying year-on-year.

You can have a good idea of the strength of the growth of the margin and looking at the relatives, the NIM, which is the simple point of your question, we imagine a certain stability from now on. We did an expansion that is important. And the NIM growth, the NIM that I really like to follow up is the adjusted NIM to the risk. Generating NIM is not difficult, depending on the quality that you grow with, product that your grow and the mix that you grow.

But a great deal of this growth you return with PDD. So that's why we have a good expansion throughout this quarter. The adjustment of the quarter was 10 basis points in Brazil. The last quarter was outside of the curve. We have a natural trend now, and we should work with this level of margin, specifically adjusted to the risk looking up ahead. So this is a structural of the bank and working to expand the NII as we grow the bank, the portfolios, the businesses and with a balanced portfolio.

And with a drop in the interest rates, we always bring that slide that we show that our sensitivity to the CDI is much less than some analysts think. So in the end, we have a structural drop of the interest rates, our capacity of balancing and growing in the other lines that balance from the interest rate rebalances the game.

So we have the expansion in next year without one interest, anticipate the guidance, we're going to see the NII all throughout the year, expanding but for a NIM that is more stable with the volatility within what is reasonable. So it's not a straight line. There is some volatility expected, but within a threshold that is expected with what we've observed.

[Interpreted] Now the question of Marcelo Mizrahi from Bradesco BBI.

[Interpreted] Congratulations on the results, very solid. I guess the question goes along the way of capital. An organic generation of capital very positive in the quarter with an equity 13.5%. So the question of last year, the threshold that the bank was after the profit sharing was 12.3%.

When we look at the perspective of growth from now on, and we have the other challenges, I wanted you to discuss, and you always discussed that threshold of 11.5% and 12%, which would be the level that you're feeling comfortable, keeping that threshold. How it would be this threshold now that will the NIM of the bank that we will keep after the dividend distribution payout.

[Interpreted] So thank you, Marcelo. Thank you for the opportunity. Thank you for the initial words. Now the central point of the capital is to reinforce a few points for you. First, our policy for the profit sharing, the payout didn't change. So we are faithful to our policy.

Of course, there is some subjectivity because there's a lot of analysis that we do before the decision-making process of how much dividend will be distributed. Of course, we only reinforcing. We work with the risk appetite at the threshold at the level of the Board with the appetite of not working with less than 11.5% with CET1. This is what is define at the Board of the bank. We, from the Board, we work with the buffer of half a percent.

So we will go to 12% because we never want to work close to the minimum because in those situations, you are at risk of losing good opportunities of growing, investing, making decisions that at that time can consume capital in a more accelerated way, regardless of the capacity that is very strong of the bank of generating capital.

So if you look and we discussed in the presentation, in this quarter, we got 0.8 of CET1 before the provision of the repurchasing of shares and the profit sharing. So what do I see up ahead? Our objective is not retaining the excess of capital, but I -- we don't have an objective of dividends. We have an objective of capital allocation. With the discipline of allocation, the expectation of creation of value and making decisions on the long term, always strengthening and always growing the organization.

So we are looking at the future. We are seeing what is budget, our capacity of growth, the credit risk, the market risk, the operational risk and reminding you that at the beginning of this year, we have the phase-in of operational risk, Basel III and credit risk in a few operations that are structured in the wholesale world.

So we got the first quarter paying 45 bps of capital because of regulatory issues, changes. There's another three years, the phase-in is 2028. There's three installments without interest rates of paying these effects. And of course, we take that into consideration for the plan.

So we look at the capacity of growth, capacity of capital allocation in a profitable way, the capacity of absorbing the regulatory effects, whether -- whatever they are. And within this projection, we do the capital that is exceeding and then we will take a proposal for the Board of Directors and the Board of Directors will deliberate on the distribution of the dividends. But as I told you, this is not a dividend that is extraordinary.

It's a dividend that is additional as this has been our recurring policy over the last years, and we don't see any reason to do any changes in that policy in the way that it's designed today. And new effect, the market will be informed through the communication protocols, and we follow down the line, the Brazilian CCPM protocol, so we are compliant with the publication on the dividends and comments that we are compliant with all the marketing publishing norms.

[Interpreted] Next question, Eduardo Rosman.

[Interpreted] In the Investor Day, you discussed that you want to improve the efficiency of the bank. Well, in a material way, the whole -- the retail, you're going to forego a few revenues to grow more. So I wanted to know the opinion of Milton, do you think that this movement is a defense or attack movement?

[Interpreted] Hi, Rosman. Great to see you. Thank you for the wonderful words. I read your report. Thank you for the quality and depth of the report that you just published yesterday. Let me tell you. At the beginning of the year, I discussed this at the presentation, and I wouldn't bring you a clear vision of how our efficiency level is composed because we tend to oversimplify the vision of cost of DNDJ of the bank, of the expenses that do not stem from interest rates.

So we simplify when we try to do comparisons with other players that are more specific in specific segments. So first, the bank is a portfolio of businesses that is very relevant. So every one with the level of maturity at a different industry level, some with strong investments, other with an efficiency agenda that is deeper and so on. So it's important to understand the whole. So because of a number, we do not make precipitous conclusions. But our responsibility is to demonstrate this to you.

In the way that we publish, we break down the retail wholesale bank. You can see in the MD&A, that vision for the best breakdown is there, but we need to be more precise showing you the strategic way up ahead. Gabriel has been the leader of an important work of efficiency in the bank. And efficiency is something that we need to do every day. It's not a responsibility neither of the area of Gabriel in an isolated way or the commitment of a specific area.

No, everybody in their own circumstances, everybody in the bank has to look every day and seek the efficiency level, the evolution that we've had throughout the time shows our discipline with the generation of top line and the control of costs, so that this will be evolving, and we have a better leverage. In in the [ massified, ] it seems that is more attack than defense because it's not high income, but in the high income, you have an efficiency level that is higher than what we observed in the bank as a whole.

But in an operation that has a cost of service that is different because the cost of serving the mid- to high range clients is different than the platform that is 100% digital. The model of service can evolve, we understand that. So it's the remote, the on-site, Andre was discussing at Itau Day, a bit about evolution.

And we want to get most of the clients remotely maybe over the next few years, and we're going to continue to do this with a lot of emphasis. So Itau Day was the idea of telling you what are the refreshers, how we are reviewing strategically the businesses looking ahead in the natural persons and the companies.

So I can tell you that we are in the execution model. We started the execution of these projects that are very important for the future of the bank. And I am certain that this will generate a lot of value. Not only because of the capacity of growing our portfolios, but we will go through our leverage that is more efficient for the segments where the cost of service is determined for the sustainability of the business model.

So we see the basis of the pyramid in the segments that are more massified. But if we don't work with an efficiency level that is very low, to do this, we cannot do this in the brute force. You need to do this with a lot of intelligence. You need to have their armamentarium, the technological platform structure so you can service your clients with a lot of efficiency in these segments.

Consequence naturally is to go to an operational leverage with the cost of service that is much lower. Therefore, you need to be more competitive, specifically in the capacity of absorbing the cost of credit. When you have a high efficiency level, efficiency index, your margin post cost is very low to absorb their losses in a segment that tends to be more volatile.

Evidently, we will renounce a few segments when we do these decisions and specifically those that are not resilient in cycles that are more acute, but still there is a high -- a big important opportunity. Itau branches, as we call it, [indiscernible] had an evolution in the results that is very important. And we've managed to converge this vision of top line and cost to have an operation that is more efficient.

And if throughout the time, we need to self disrupt a few things that we've done thus far and forego some revenue to accelerate the evolution of cost but increasing the lifetime value of the clients committedly and serving the clients with the right value proposition, we will do so. And this is the execution model that I mentioned. So at the beginning of the year, I will be able to give you some more color on that.

[Interpreted] Next question, we have Daniel Vaz from Safra Bank.

[Interpreted] So a follow-up on the question of massified and the capital and dividends. The year, if we consider the generation of capital in the fourth quarter and the adjustments that are based in January 1st of operational risk [ 4.99, ] it should be close to the 13.5 threshold of now Tier 1.

We're going to the end of the year, and there are a few companies listed -- that are listed on the taxation of dividends, there is the discussions of the shareholder of anticipating the payout. So you can do a timing -- anticipating the timing and the excess capital can be serviced better.

Given your excellence in the profitability and consequently, the generation of the capital of the bank, it's the only thing that will generate a debate. So how do you think about this issue? Could it be -- make sense to anticipate the statement for the Brazilian IRS effort and to seize this opportunity.

[Interpreted] Well, thank you, Daniel. And thank you for the comments. Great to see you. In fact, you discussed the point that we know, and we've been following this discussion of the legislative taxation changes, the payout changes or issues being discussed, we are following very closely.

And of course, we have a fiduciary profile that we see the changes in regulatory context changes. We will see the evolution should we have any relevant new facts, certainly, we will do our analysis, we will make our decisions, and we will inform the market as soon as the decision is made by the Board of Directors of the bank. Let's follow this closely. The policy of dividends still there -- is still here.

We will fulfill our fiduciary duties. And if there is any changes in the natural course of what we are used to doing because of any new facts, we will take it to the Board, and we will deliberate and once it's celebrated, we will communicate to the market. We will follow very closely the regulatory evolution of the legislative changes.

[Interpreted] Now the next question Yuri Fernandes, JPMorgan.

[Interpreted] Congratulations on the results. I want to ask you about the growth of retail and getting into the Investor Day, seem you discussed there that you expected that the retail portfolio can double over the next 5 years.

And we see a growth that is timid 1% quarter-on-quarter, but it's timid growth that has a lot of nuances. If we look at -- in the class, personal credit cards are growing well, some segments of consumer finance that are growing well and some lines such as INSS kind of weaker. So Milton, when should we see an acceleration in the portfolio of retail. I know it's not immediate. There is the issue of doubling, but we're not going to see the portfolio that get into what is implied. So if you can comment on growth for retail, that would be great.

[Interpreted] Great to see you once again. Thank you for the question. We still are firm. Our purpose and ambition in retail and individuals and the companies, well, I told you that is an aspiration, it's not a guidance. It's an aspiration that is present.

The ambition of growing, we have a lot of opportunities for growth, specifically for the more resilient publics where we have the growth in quality. That's why we opened the numbers of Uniclass and Personnalite Digital so you can have a vision of how we grew strongly in the high income.

The derisking in the portfolios that are less resilient, a great deal of it was concluded and now what we have is more of a dynamic that is natural of making choices. Where do we grow and where do we reduce? This is of the nature of credit itself.

You are choosing credit, you are choosing where you're going to grow with quality and which segment do you see more concerns or signs of warning that you can reduce. In the aggregate, there are still opportunities for growth in the retail, both individuals and companies.

We will translate that into numbers once we bring to the guidance and you all could be up ahead. We are very excited with the acquisition. It's evident that there is a scenario of more uncertainties next year. We're never going to get the ambition aspiration before a good risk management and capital allocation.

So we have a tradition of good navigation, sailing through turbulent waters if they come up. And our portfolio has never been so resilient to face all the challenges. So once the opportunities are clear, and we understand that they are, we're going to grow with quality in these segments.

There are lot of spaces to be occupied, there are lot of spaces to be occupied. All the migration of One Itau brings relationships that are closer to the clients that before, we only had a superficial relationship. All that dynamic shows the size of the opportunity.

So I am optimistic really, I followed very closely the evolution of the individuals and the companies in retail. I'm very excited about the future. I think that here, we have results that are important and that will be harvested in all dimensions in time.

But I'd rather deliver than overpromise. I am optimistic. There is a risk of execution. There are circumstances, there is a macro scenario. let's follow how we evolve with the interest rates, inflation, unemployment rates, everything influences the decision-making process for risk.

An important information. So if everything is constant, probably we would have worked with the cost of credit that was lower than the cost of credit that we're going to close the year. Throughout the year, and it's natural with our model, you see the indicators of [ PB and LGB ] of your clients, but you have a forward looking for the macro scenario.

This is part of our models for credit concession. And we are recalibrating these models through the year. So it brings more provisioning in regards to what is imagined over the beginning of the year.

And we reinforced specific cases where we thought that it would make sense. So we were never so well provisioned, delivering possibly the center of the guidance, our best expectation with the cost of credit.

So we will deliver indicators of credit with a lot of quality, reinforcing the provisions as the models are -- as a forward-looking specifically for the macro is adjusted, and we're going to turn the year ready to occupy the space that we need to occupy.

So it's exciting what's up ahead. And again, it's a race, it's not a 100-meter dash, it's a marathon. So don't wait for a figure of 15.8% if you've done the math for 2030. This is not what we're discussing, but the trend is very positive.

[Interpreted] Now the next question, Eduardo Nishio, Genial.

[Interpreted] Congratulations on the results. I have a follow-up of Rosman in regards to efficiency in the massified. The mass that after the neobanks, it became a segment that is very challenging.

So I wanted to understand what motivated Itau to get into this segment in a more aggressive way now in the tech mode. Was it the younger target audience? What do you see that is different now from a few years back that saying no to that segment was more obvious?

And now also continuing, the efficiency. As you said, you have the smallest level of the banks. Can you improve that level? You're getting into a journey of cost cutting, so to speak. Can you get to a level of 30%, how long it would take? And how does that discuss -- how can you work with the massified journey that is challenging?

[Interpreted] Thank you for the initial words. Great to see you once again. Look, I'm going to try and rephrase your question because I think it needs context. We never renounced effectively a segment of low income. We always found mechanisms to service these clients in different formats from what we see today.

In the past, how do we service this products through the partnerships with the retailers. We've grown because here, there is a value proposition that is adequate with a cost of service that is adequate and a risk that is palatable to be assumed and sustainable throughout time.

We have a volume that is relevant of clients that are considered massified, specifically when you recalibrate the incomes within our portfolio, it's millions and millions of clients that are serviced by the bank, but could be better serviced, whether from the standpoint of experience in the digital channels with the super app or credit.

So we service these clients. We have a relationship with these clients. When we stratify by income, I always say that there are clients that are massified that are target for the bank because they are stable, they are resilient in cycles.

There are several profiles of our personas and its public that are very resilient, and these are clients that we really focus. The retirees, for example, of INSS, have lower incomes, but it's a very stable product or public for the long term.

Our INSS portfolio is one of the biggest one in the market. This is one example. And it shows that there was a process of digitalization that was relevant of the clients through the years. And the new technology allows to service these clients in a different way with things that we couldn't do in the past now.

And now the scalability is not given by the volume and the capacity of processing of the mainframes, is given more by having a high-tech technology that has a cost of service that is very low.

So if that evolves and many of these clients were digitalized, there is a way of servicing these clients differently in a more sustainable way because if I advance in the efficiency level and I improve it, my space for absorbing the losses of credit is increasing.

So I can service clients that are not target because the targets are very well. Even the targets I can increase my exposure and then on target with time given the cost of service they're going to be target.

So these are clients that can be a relationship of the bank, and I have a universe of being serviced larger as I can service better with a better experience, more fluid and a cost of service that is much lower, the clients that are massified, the lower income public.

So this is our vision. And to do so, you need to advance. You need to have the digital transformation since we invested a long time with the platformization of the bank, creation of technological modules, the super app that is an embryo of it all.

Now we have the way of servicing these clients in a very efficient way with leverage -- operational leverage that is different. And your firepower, your capacity of competing in price changes. When we see the client in a digital channel with a product that is 100% digitalized, I bring the cost of everything ready for this specific. I am competitive, and I service the clients through the financing companies.

And I think that we can have a more full bank relationship with these banks than mono product. And now I have a full bank to deliver, but in a different way, totally digital, cost of service much lower and much more scalable in the long term. And this is our vision of the segment. There is a job to be done.

We're going to increase our efficiency level of retail. Of course, the efficiency level of the bank depends on the capacity of growth of top line that binomial of revenue and cost we still see good opportunities in a direction there's still space for us to evolve.

But most importantly than looking at the whole is looking at the parts. There are segments where we are benchmark -- global benchmark for the efficiency level. For the payroll loans, it's already -- we have an efficiency level that is first year.

Are we saying that this is -- no, this is not enough. This is not it. We're going to advance more in other segments than we are going to advance in the whole. The relative of the specifics are going to be much higher than the whole because of the contributions of all the segments.

For the next question, we are going to switch to English as we have Carlos Gomez-Lopez from HSBC.

Thank you, as always, for the consistency in the results. You make our work very easy. I have a question about taxes. So we have a situation in which because of the high IOC, many of the banks are reporting very low effective tax rates. Actually, Itau is the honorable exception.

On top of that, we're going to have the accelerated amortization of the deferred tax assets starting next year. Are you concerned that at some point, there could be a public policy reaction and try to increase even more the taxation that the banks have in order to increase the cash revenues that they can get from the banking sector?

Thank you, Carlos. Good to see you. I will start with -- thank you for the compliments. Thank you. We take that very seriously.

Well, I'll first start talking about your second aspect of your question, which is if we expect to have any change or any increase in taxations for the banks. No, we don't.

Of course, there is an important discussion today if there is some asymmetries, fiscal asymmetries between banks and companies that do exactly the same thing. So if there is any change, for payment institutions, we have hedge. If there is for financial companies, nonbanking financial companies, we have our vehicles.

So on a marginal basis, we might see if there is any change in regulation, but not in a very consolidated basis due to the level of taxes that we pay today. So we don't expect any major change. We might see smaller changes, but in aggregated view, we won't see a relevant impact in our corporate tax rate. We don't expect that for two reasons.

First of all, it's the segment in Brazil that mostly have the most relevant corporate tax. And when we compare ourselves to any other economy around the globe, you will see that Brazil, it's different from the other ones, and we have 45% of corporate taxes, and it's very relevant.

The government knows that. And I heard the Minister of Finance saying more than once that he knows that the level of taxation of the industry is very high. So I don't expect major changes.

But talking about the tax, the effective rate, let me -- jump in, Gabriel, if you can talk a little bit about our figures, I think it would be nice to share.

Carlos, thank you for your question. As Milton mentioned, the effective tax rate that we had at the beginning of the year, and we mentioned that was around 31.5%, and we mentioned that it would converge to the guidance that we have for the year. That's the expectation that you have.

As you mentioned, the major effect towards the marginal rate that we have in Brazil of 45% to the effective tax rate that we see, it's the interest on capital and also some geographies of how the result is among all the different companies that we have. Those are the two major effects. But at the end of the day, we are going through the guidance that we had before, and we are converging to that.

[Interpreted] Next question, we have Antonio Ruette from Bank of America.

[Interpreted] Congratulations on the predictability. I wanted to explore a theme that we've discussed with the acquiring business. It was very important because of the pressure of the NIM. So what I want to ask you is we see the volumes growing in double digits. It certainly is above any player indicating market share that is increasing sequentially for some time.

So what I wanted to understand is what are the main drivers? Where are you growing? What are the segments? And how -- more important, how can you earn this market share in acquiring? Do you have an influence of [ ITAUX ]? Or is it too soon to tell?

[Interpreted] Antonio, great to see you. You discussed a point that is very relevant, consistency. The predictability for us has a big value in the way that we see the future, we project our results, and we try to control the levers.

Discussing acquiring business. I mean the result of this was an integration that was very well done in our company business. We closed the capital of Rede in 2012. 13 years later, it's longer than the integration, we can see the results of an operation that is very integrated in the bank.

There is a specific segment? No. We've grown in the wholesale and the retail, we see share in both. What is the strategy? The strategy is the bundle to be able to service the client in the best way possible, not with a vision product, but with a flow, payment and receivable and Rede is part of the value proposition.

And for us to stop seeing Rede as an independent business or a specific product where the price has to be done isolatedly. Now regardless of this comment, we are very disciplined to look at the vision of the client and to take care of not renting market share.

As you know, I was the CEO of Rede 2013, '14, '15, and we know that a great deal of the invoicing that really moves the point of the share is concentrated in the big client. So it's not difficult to be more aggressive in the pricing, pricing below your minimum price of exchange.

And then you have a marginal cost that is negative and then renting market share, that's not sustainable because in the first renewal of the contract, you're going to have to review the price and the market share goes away. Market share, we're very disciplined in price allocation of risk.

It's not a business. Well, it depends on the segment. You have risk of chargeback higher, lower. We evaluate the business models. Certainly, we take part on the chains that are sustainable. So we have a strong discipline.

All the PL we're selling, it is important for the management of our business. And we've managed with a value proposition and quality of service, speed of service, speed of SLA that we have with the clients -- we service a great deal of the clients in these. We have quicker credit card machines, higher approval rates.

And when we look at the ecosystem of credit cards, we understand the flow of receivables of the client with a lot of speed, so we can do a value proposition that transcends the machine. So it's a set of things. It's a relationship manager that has training to discuss any issue, including Rede with property in the past that was restricted to specialists with as time goes by, everybody can talk about this.

And this gives you scalability and capacity of servicing your client better and the journey and the experience has an important role. We see important evolutions in the NPS because it's not an issue just of being competitive. The prices are variable.

But what the tenant needs is selling, selling quickly, selling with quality. When there is a problem receiving the credit card machine at the speed that they need to not lose invoicing, half an hour without invoicing is much more costly than an increment in the rate.

So they are willing to pay for the right price if they understand that they have the adequate level of service, and this is the work that the legal team has worked with the Rede. The [ Ms ] has an integrated tap and phone with a solution for the smaller but it doesn't really move the needle in terms of invoicing.

Regardless of the high engagement of their clients with the product and the high volume of invoicing, it's still very relevant and it's not relevant for the invoicing or market share. But certainly, it will be an important lever for the repositioning of the company's BU that platform that is completely integrated.

[Interpreted] And now the last question, Henrique Navarro, Santander.

[Interpreted] Congratulations on the results. [ 23% of ROE ] is brilliant. My question is about the soft guidance for 2030. We've discussed this, very strong numbers, and to deliver Itau should start now next year.

So my question is, how is your mind for the year '26? You mentioned that Itau will deliver something 7%, 8% of growth of portfolio. Do you see a possibility of that growth of portfolio being double considering a credit cycle that is better? How is your mind for 2026?

[Interpreted] Henrique, thank you for the initial words. We're very, very happy with the profitability level. Given the capital base of the bank, this has an important effect. We are very happy. We closed with the ROI in Brazil and this is very comparable that we see in the industry as a whole. So we are very excited.

But once again, we have all the challenges up ahead. A lot of humility, foot on the ground, the past result is not a guarantee of the future. And these cannot generate a future accommodation. So this is our motto in the bank.

About 2026, I'm going to do a few remarks that are important. And our responsibility is to communicate this better. I'm not transferring this responsibility to anybody. It's mine above all. So what we discussed in Itau Day is more aspirational than soft guidance.

It's important to do this, to record this because every conversation that we're going to have, everybody is going to look at doubling the portfolio in 2030. So every time that you do a strategic review of the business, regardless of the business, you have an ambition.

You set the bar and you say, if everything goes perfectly as I would love to and the price to perfection happens, I'm going to get to this. Can we do it? The levers exist, yes. But it depends on a plethora of circumstances, the capacity of execution of plan, value proposition change, everything has to be perfect. So that's the first point, the first statement.

The second statement is telling you the following. We're still not going to anticipate the growth in portfolio, but specifically in a year such as 2026 with uncertainties, I can guarantee that we're not going to show you a portfolio that is growing 15%, which is the double of what we should grow.

This is important to register exactly. We need to see the breakdown of the segments, and these can change. Imagine a year such as 2026 with a lot of uncertainty, election, you can have more volatility. The Central Bank can start the cycle of adjustments of monetary policy, but it depends on circumstances that are outside of the Central Bank.

It depends on the fiscal -- on the expansion of expenditure, of the perception of risk of Brazil, the cost of capital at the end of the day of Brazil. So there are an X amount of variables depending on the external scenario, many variables that are very difficult. I'm not even saying that it's going to be scenario A or B.

I'm just going to say that the uncertainty for '26 is higher than it was the uncertainty for '25. It's a normal point for every country that goes through an election process such as the next one. So that means do not wait for the guidance of a growth of 15%, do not do the math of the CAGR of 15.8% to get the [ 50% ].

One, I can tell you is that the strategy is fitting in. Two, we are very trusting in our capacity for generation of value. In the retail, the plan is on track, no route deviations.

Next year is an inflection point. We're going to get the low-hanging fruit, buy everything that we've seen, but it's us in our circumstances. We're going to do this with safety, baby steps. So this is a long-term plan. If we get to the future, and we do not double the portfolio because the circumstances didn't allow us, we're not going to suffer.

Of course, we would love to do that, but we're going to guide the ship with the information that we have and the momentum for management is solid, and we're not going to forgo on very relevant issues such as risk management, capital allocation. We're not going to -- we're going to use these instruments, which are paramount for the way that we pilot the bank.

But directionally, it will evolve. The results are starting to be perceived, and I can see that we're going to have -- I'm certain that we're going to share a nice story with you. And I'm generating an expectation, do not expect 15% of the growth of portfolio. Otherwise, you're going to get frustrated. We're never going to overpromise and we're never going to bring numbers that are beyond our capacity, no. The central point, I go back to my answer of the first question.

If there is an opportunity of next year, showing that it's a benign scenario where is risk on, then we will accelerate with speed because our capacity of reaction, capital balance, liquidity business models and the team highly balanced our capacity of turning the key is instantaneous.

We do not take more than 24 hours to make a decision and implement them in the bank. This is very important. And this will make a difference more and more from now on.

[Interpreted] Thank you, Navarro, and thank you to all of you that took part of our earnings. Well, we finish the Q&A and our conference call of the third quarter of 2025. Thank you very much. Thank you, Milton. Thank you, Gabriel. And I'll give the floor to Milton to close the session.

[Interpreted] Thank you. I would like to thank you for your presence. Thank you to my friend, Gabriel, CFO of the bank; Gustavo, the IR Director. It's a privilege to have you with me in this discussion with the market.

And to tell you that we are very satisfied with the evolution and maybe going back to the original point. At the beginning of the call, I will tell you at the end of my presentation that the numbers at the end of the day, they are a consequence of a work that is done with a lot of dedication, a lot of energy, with a lot of capacity and a deep knowledge of our operations of business with a lot of will to continue to grow and evolve, but above all, with a lot of humility.

So we are certain that the results are solid, that the return is strong, but we are aware of the challenges up ahead. And in no way I want you to have a feeling that we are getting complacent. In the bank, we always every day want to do the best thing.

And we want to ensure the clients and have the obsession by the client, getting into this era of the hyper personalization that is perfect to make decisions that were important in the past and that are being very assertive in the result in regards to the results that are being delivered.

Our capacity of competing in every niche, in every market, in every segment was never so strong, and we are very excited with the opportunities in the future. Foot on the ground, capital allocation, creation of value efficiency, the execution model that is constant and above all, a long-term view.

We will never let the future go, taking short-term decisions so that the results of the next quarter are a bit better than the expectation, no. We think that corrections need to be structural. We do not want -- the action doesn't -- the action -- the shares go up with the consistency and quality.

So thank you very much for your role, the investors, analysts that bring feedback, that talk to us every day and that ask difficult questions. You have the provocations and that makes us improve. We don't know everything, it's in our culture.

So thank you once again, and I hope that we have the next quarter. See you next time.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]