Banco do Brasil S.A. (BBAS3) Earnings Call Transcript

[Foreign Language] Now to CRO, Felipe Prince; and agribusiness and Family Agriculture VP, Gilson Bittencourt. Now to initiate our live session, I would like to turn the floor over to Tarciana, our CEO.

Good morning, everyone, and thank you very much for joining us for another earnings conference call. Today's discussion builds on the transparency approach that has always guided us. We've been very good about the magnitude of the challenge we are facing. And even more so about our prompts in diagnosing the situation, and we're responding to with significant changes designed to build a future of profitability and growth. In recent days, as we prepared to release those results, I spoke a lot about clear direction, a term we use frequently where I'm from, and that really holds in better significance at this moment. The challenges aren't overcome by taking shortcuts, but through clear direction and hard work. And for this management team, direction means consistent strategy, execution and strengthened drivers of creation. For the second quarter, earnings totaled BRL 3.9 billion, up 13.9% quarter-over-quarter and a 3.3% increase year-to-date. Net interest income continues to grow totaling BRL 27.5 billion, supported by a credit mix offering a better risk-return ratio given the diversification of funding sources and the effective allocation of our liquidity. Fee income grew by nearly 5% with AUM and consortium standing at business that are gaining momentum precisely due to the complementarity nature of our conglomerate. Costs remain under control. And this involves ongoing efficiency efforts where we optimize operations while continuing to invest in what builds the future, meaning people and technology. Delinquency remained high during the quarter, particularly driven by the agricultural segment. Expected credit loss provisions saw a slight decrease in the quarter, representing our main drag on earnings. We've been actively implementing measures to improve credit delinquency management. And I will talk about these in more details below. CET1 remained strong, standing at 11.27% in June. Credit remains the biggest revenue driver. And when I talk about work, I am talking about a more resilient mix with better collateral and an improved collection process. The expanded loan portfolio was BRL 1.3 trillion in June, an year-over-year increase of 1.5%. And this growth is guided by a clear focus on discipline and appropriate risk-return ratio and the implementation of our resilience framework. In personal loans, we are striving for an increasingly balanced and sustainable portfolio composition. Payroll loans and Credito do trabalhador workers loan showed significant growth. And here, I would like to highlight greater risk mitigation in private payroll loans -- the use of FGTS funds and as collateral and the automatic reengagement of customers who changed jobs, the feature expected to be operational at the end of August, which will help control delinquency in this segment. In the Corporate segment, I highlight transactions with own guaranteed funds, which grew 32% year-over-year, with a share of portfolio growing from 25% to 36%. In Agribusiness, we continue to focus loan origination backed by more robust collateral. 70% of all disbursements under the '25, '26 harvest plan have already been secured by fiduciary sales. BRL 90 billion of this portfolio is backed by this type of collateral. In addition, we restructured our collection process a few months ago, and we are already reaping significant benefits. We have returned to a more appropriate level of loss recovery, which reached nearly BRL 2 billion in the quarter, a 51.4% increase when compared to the first quarter of the year. And in 2026 alone, we're already taking the legal measures to recover BRL 15.5 billion, a figure that already exceeds the total amount we handled in 2025. As part of this process, we have begun repossessing more than 130 rural properties. Foreclosure remains a strategic and selective measure as we always seek negotiation and settlement through commercial channels. In the agribusiness sector, we remain very close to farmers. And at the same time, we are engaging an increasingly sophisticated loan origination. And this proximity goes back a long way. We have nearly 600,000 farmer clients who have taken loans with us for more than 80% have been with us for over 10 years. We financed more than 200 crops, and we are present in 93% of the Brazilian municipalities. This extensive reach, combined with our in-depth knowledge of the sector in each client is a key advantage that will help us navigate through the cycle. And looking forward, we are announcing the 2027 harvest plan worth up to BRL 210 billion with the same commitment and proximity to those who are dedicated to Brazil's growth. On July 15, Provisional Measure 1,376 was published, introducing credit lines to renegotiate agricultural loans from farmers who incurred losses due to weather events or misses across 2 or more harvests between 2019 and 2025. Our potential portfolio eligible under the provisional measure totals up to BRL 100 billion, involving up to 113,000 customers, including both delinquent borrowers and those with performing loans that have been extended or renegotiated. The Midwest accounts for the largest share with 40% of the potential volume, followed by the Southeast with 24%. Corporate agriculture accounts for 2/3 of the loans for now, for about 30% and PRONAF program for the remainder. In terms of crops, the focus is primarily on soybean, corn and livestock. It's important to make it clear that loan approvals depend on the submission of appraisal reports and we follow our credit policy. Let's begin with delinquent loans and then move on to us. Our teams are engaged in a major campaign and new loans will become available as soon as the equalization ordinance is published, which is expected to occur in the coming days. With this initiative, we expect to return to on-time payment rates in the range of 90% in the coming months, thereby supporting the convergence of the cost of risk towards the guidance range. One of the most important strategies for BB is the enhancement of our high-value customer service model. This initiative drives diversification of revenue sources and increased business volume, supported by prehensive portfolio, high value-added services and a highly specialized team. To date, 12% of our branch employees focus on high-value customers. The loan portfolio for this segment grew by 4%. Assets under management, meanwhile, grew by 12% in the segment where relationship and trust are key differentiators. Altus Liv cardholders increased their spending by 15%. And card revenue from this segment grew at twice the rate seen in other segments. We are optimizing this network with a 22% expansion of steel -- we invested in our branches this quarter, bringing the bank closer to those seeking specialized advice and sophisticated investment solutions. We aim to increase our high-value customer base by 25% by 2030. By June, we have already reached 1/5 of this target with a 4.3% increase. We had already been warning about the strain on household income and the impact of a high Selic rate, especially for those with lower financial resilience. We acted in line with this assessment. In total, we renegotiated BRL 31 billion in debt renegotiation. In the Novo Desenrola loan, we exceeded BRL 12 billion, notably serving more than 440,000 individuals and 40,000 businesses. But more than just renegotiating debt, we helped people get back on their feet through financial education and awareness. At the same time, we continue to take advantage of new opportunities with diversification and risk mitigation. A good example is the urban mobility operations through BB, more Brazil, we've already reached BRL 1.4 billion in new hires, representing a 40% increase over the June ballast of the auto portfolio originated by the bank. We've served nearly 13,000 drivers in more than 100 municipalities contributing to fleet renewal with above sustainability. And in line with our digital strategy, we partnered with Uber to offer cashback to drivers who finance their vehicles to us based on their consistent on-time payments. We are a bank that never stops transforming itself. And I want to start with always -- with what -- people. Every significant change at Banco do Brazil starts with our people, the true agents of this transformation. BB is highest through competitive exams. And that's why we invest so much in the helm of paying the best talents. That's why we continuously train our teams, preparing them for an organization that is increasingly tech-driven, dynamic and agent based. Artificial intelligence is central to our business transformation agenda. This requires leadership and commitment. It's not about doing more with technology, but rather about using technology to unlock people's potential. It doesn't reduce human presence. It fosters even greater closeness. This half year alone, we expanded our base of analytical AI models by 28% and bringing the total to over 2,300. But the statistic I'm most proud of, it isn't about machines. It's about people. It's our own employees who create the bank's AI engines. This half year, the number of agents they developed tripled, reaching nearly 15,000. When people and technology come together, the results are clear. AI in loan renegotiation generated 6x more conversions. And we've already freed up nearly 1.5 million hours of work. In our digital expansion, we've achieve nearly 70% of the progress projected for 2026 in agile channels and environments. And this closely translates into customer experience. 34% of our network already provides specialized service, 100% of customers have access to human digital assistance on the BB app. We now have 35 million active customers on digital channels and 47% of them are heavy users. It's from this closeness that the best business opportunities arise, and it is this closeness that it will always set Banco do Brazil apart. The integration of physical and digital channels embodies our channel strategy. We are taking another important step with the launch of the 5.0 app, which we discussed at our BB Day and we'll launch at February 1 pack in a few weeks. It was designed based on listening to our customers to make the digital experience simpler, more modern and more effective. We are launching a truly customizable app. The experience will adapt to each customer and each one will have the freedom to organize and customize the app in a way that makes more sense for their daily lives. And I would like to highlight the brand new BB section, which has a social media feel like and creates a familiar environment for users using the same intuitive format as the apps they use every day. Among the key advances, I would like to highlight the embedded artificial intelligence, conversational journey supported by an integrated assistant and performance improvements. When we talked about the strength of Banco do Brasil, we're talking about a conglomerate that goes far beyond banking. At BB Day, we showcased our galaxy. It comprises more than 80 companies, which expand our ability to serve customers. The companies in the conglomerate contribute on average 52% of our earnings. It is a distribution strength of our branches that give scale to our company's businesses. And this presence expands beyond Brazil's borders. We operate in 80 countries, expanding the reach of our operations and connecting our customers to different markets and opportunities. The United States, BB Americas already has a real estate loan portfolio or a mortgage portfolio of over $2 billion. In the first 6 months of 2026, new account openings grew by 3.5%. We are also present in Japan with nearly 100,000 visits. And this serves as our hub for operations in Asia. In Europe, we are making headway in our business. In April, we launched BB Portugal's digital account. Since then, the number of accounts has grown by 12%, 51% of investment transactions are now conducted digitally. All of that demonstrates BB's ability to combine a broad network or specialized business lines and international reach to get closer and closer to our customers. I will conclude by returning to what really matters at bank with Banco do Brasil -- doesn't survive for 270 years by chance. It endures and in times of need, it knows how to return to its basics, a skilled workforce, responsible decision making and hard work. And that's why today's Banco do Brasil is more resilient, more disciplined, more digital and better prepared to seize opportunities ahead because cycles come and go. Fundamentals remain, and it is with this compass that we move forward. Thank you very much.

[Operator Instructions] We will now start our Q&A session. The questions can be raised in Portuguese and English. I will ask analysts to ask only one question. [Operator Instructions] I would like to invite Eric ito from Bradesco.

With regards to provisions, I understand that a good part of our expectation of improvements, and I believe there will be an improvement until the end of the year. And this is explained by the improvement in agri business. But I see that there was already an indicator a bit contaminated by agri business and also with a greater availability. We also see a delay in individual loans. So if you could maybe talk about PDD until the end of the year and how much you have that will improve the agro and also you have also individual loans on a credit card double pressure. If you could maybe help us understand and give a better view of what is happening. This would help us a lot. .

Good morning, Eric. Thank you for your question and your presence. It's a pleasure to see you here with us. This dynamic, we hope that there will be a relevant improvement in the agri portfolio due to the Ordinance -- 1,376 Ordinance. So we have now available for our clients a tool that will promote this renegotiation, and we will improve the conditions for clients in general, and this will bring an impact in our individual relationship with our rural producers. So these are renegotiations that we will prioritize operations with better in turn. We will also link this to -- and transforming also our mortgages through a lien and also a full analysis, which will bring about an implement of our LLD and the segment of individual loans. So the trade-off when you look into this. When you look into an eligible portfolio, the renegotiating BRL 136 billion, and the impacts that will comply with the relationship with our personal loans, this will allow us to converge for the second half of the year within the guidance interval. And we will cover some additional need we might have with regards to our individual loans portfolio. We had already forecasted this worsening in the performance of this portfolio. We had, as we said, as said in the last quarter, we have a component of expected losses that we had anticipated already at this moment and now, what we need to deliver is this the final effort of improving the environment in the agro business portfolio which will bring along this reflection into our individual or personal portfolio. So all these moving parts, which come for agro business is above the eventual needs of provisioning that we'll have to do in our other portfolios, which will certainly channel our guidance or the performance of our LLD in the guidance interval.

Our next question is from Daniel Vaz from Safra.

Maybe a follow-up to Eric's question. In the Ordinance 1,376. Considering the size of the portfolio, we wish to fit within these ordinance. You mentioned the program, we could maybe say that Banco do Brasil could have 50% of this program, it makes sense when we consider the size of the pool within the bank. But I would like to hear from you, what is the size that you expect within this program? And maybe a second part of our question would be if this will be enough for you to solve any issues. And if there is any chance of having initial capital because we see all the other banks in parallel if you have maybe an increase in equity with the movement of an insurance company that they were able to have tangible assets. And this has allowed them to recover the common equity. And maybe in 2027, this could enter into an environment where we see many economists talking about a possible recession. We have also worsening in the consumption. So we have to -- but try to understand if only through this ordinance, you would be able to say, well, I don't have a capital issue here. I don't have an equity issue here because we see that there was a deterioration of portfolios in the personal portfolios. But I want to know if this ordinance is enough considering the size of the possible issue in the future.

Well, Daniel, thank you. I would start here, but it's a very broad question. And this is the management for the bank in general. And maybe this is under our responsibility. So now specifically considering for this specific ordinance 1,376. And considering the transparency, we all always have with the market. We brought -- potential public. This is exactly the public that we will perform in this ordinance. Well, I believe is actually broader than the one that we will focus on. But our idea here is to bring you a greater transparency. So what we brought to you is what would be the possible size of within the Agro portfolio, which is eligible in this process that is already very well designed in terms of prioritization. And Bittencourt might also add to what I have to say to attack this specific audience. So this would be the first point. But we do not expect only an improvement in this environment -- in this agro business environment because of the ordinance, it will be natural that if the so-called safra plan or the crop plan and the uncertainties that were surrounding this issue of renegotiation that we would revisit the rates of timely payments in around 20%. So this whole set of measures that we have considered and we have worked and tested all our hypotheses and also forecasted in our performance expectation, we believe that this is what we will execute according with the specific LLD guidance within the proposed interval. And I will pass the floor to Bittencourt. With regards to the issue regarding our specific clients and what is our expectation within the program, and then we will close maybe with the whole idea of our equity.

Daniel. I will start with what was read by Prince. This ordinance will limit a certain public. And this will also help us in the support of payment for those who do not comply or not potential. Of this BRL 100 billion, we included all the 13 or 14, many of these producers have contracts that go beyond to the limits that are included in that ordinance. So they could be included in the negotiation in the 1,376, but not all this value of BRL 100 billion will be included within this controlled rate. Part of it would be a delayed of free rates. Within the public that we do understand that will be potentially within the ordinance, it come to the bags, -- of course, not all producers are under this process or had losses or will be able to prove their loan losses. Not all the producers, which delay within their timely payments will come searching for renegotiation. Many of these contracts already have controlled rates. So this is why our initial focus will be mainly on the default or delaying payment producer. We have maybe 36 default payments, and this will be our main focus, followed by those who have delayed payments with 3 rates that will therefore fit within the percentage of losses and the credit limits established. So this will be the centric public we wish to go for. All of them will be included. No, our implication is within controlled rates where with something of around BRL 30 billion, which already brings about a significant impact with regards to the default operations in the back.

If I could add to this, maybe talk about the default and capital growth, we are -- have an adjusted equity, as we said. And for 2027, you see that some -- you said that some accounts are considering with the recession, but we consider, of course, with slower growth but not a recession. But we also have to take into consideration, we are beginning a process of reduction of our interest rates. We already have reductions, and we're expecting yet another cut, many economists who are thinking about 13.75%. And this whole phenomenon we are witnessing happening exactly in the worsening for personal loans. Part of it is contaminated by the rural loans and ordinance 1,376 will allow us to reduce the impact on our financials flows for the producers through this ordinance, but there was also a very specific issue, especially with the PFD PFE clients. And therefore, we held back, we had a new program of installments, automatical installment of these bills, of these payments but we closed the slide because we saw there was an excess leveraging. And the environment is now a bit more restrictive. So we are very conservative, so to speak. We are making the necessary adjustments. And we have the lowest unemployment rate in the history of Brazil. So we believe that this is a matter of time for these default being reduced in time. And we also have government programs which also supported us to improve financial situation of personal loans. Many of these individuals were leveraged and others that had to do with the -- unfortunately, the bets or the online betting systems. So we believe that to 2027, since we are focusing our growth on the payroll loans and private loans, we believe that we will bring things back to the portfolio performance and to the levels we had before. So you see that this is something very focused and the adjustments we made with adjusted risk for this portfolio. And considering the other indicators, we continue with our results working very well. Our results are very positive. We have a growing margin. We have had also some -- we have been very careful with our credit mix. And also our fee income has been growing also. And we maintained our forecast of our guidance with operational efficiency. We have the best efficiency rates in the market, and we continue to support the syndicator. And as we already said, we reduced our losses and we have been working in the sense and I get everything at a day will in a more structured manner contribute to our common equity. Okay, Daniel. So at the end, First of all, we have a strategy of individuals, and we were always very clear saying that we want to leverage the portfolio to boost profitability. It came, but the risks were higher, but there is no problem because we are making the necessary adjustments to channel that in more secured lines while preserving profitability. I mean risk-adjusted profitability. SMEs, we are leader again in the process in terms of settlement guaranteed funds. We were engaged in the derisking movements, as we mentioned to you before, but this quarter, we resume our leadership position in terms of credit lines earmarked to small and midsized companies. So this is work in progress. Obviously, with our LLP level, this impacts our capital, certainly. But when we look at the longer term, demand at NIM is making all the necessary measures to preserve the sustainability of the capital so that the capital is enough to support our activity, support the growth that we want to deliver. Therefore, we are making adjustments to our portfolio. We are channeling the loan loss provision numbers into the guidance. And at the same time, we will then generate more capital organically that can then be the process. I mean, we are also taking inorganic measures. You saw that we revisited our hybrid instrument. We were supposed to return BRL 1 billion in life. We renegotiated, we returned BRL 100 million. The schedule is expanded with one big installment at the end of '25. And if we will certainly take other measures. But for the coming years, we have this very well designed curve with all the measures in place to help us maintain a very robust and sustainable capital margin so much so we can extract more business out of the organization.

Our next question comes from Renato Meloni with Autonomous.

I would like to continue that conversation on common equity, your organic generation capacity is limited. So I would just like to understand what time line you anticipate a recovery even though you have enough committee, it does not accommodate a deterioration of the scenario. So among all of the other inorganic initiatives to generate capital, but looking at like dividend reduction, divestments or anything else that is on the table right now.

Renato, please explain to me why you say that is not accommodating because in our estimates, we will continue to be in the range of 11% CET1. So what are you saying that my capital generation is not -- does not accommodate that. I know that we are -- we can buy the volume of provisions, but we are -- we have some organic capital gain. We are still at the level of minimum payout by law. I just want to understand your concern when -- where do you see the problem.

Okay. According to my estimates, I believe that the bank will reach the guidance this year, assuming an improvement next year. I mean the CET1 might not change that much. I've heard comments from peers and from other economists that say that there is a chance of further deterioration of the economy next year, and so this will lead to higher NPLs. And because you need, I mean, a continuous improvement so that you'll see Tier 1 will remain at the current level. If this does not occur, capital may go down, common equity should go down. And in terms of agribusiness, some people are also referring to the El Nino risks throughout the rest of the year, and this could be another relevant factor.

Well, thank you for giving me a better context. In our base scenario, our view is slightly different. As I said before, we are assuming a 1% GDP growth next year. And then about the El Nino issue, I think Jose can give you more details about that. But in our view, we will continue to deliver organic growth with improvements as 1,376 provisional measures allows us to reduce the average risk of that portfolio. I mean everybody knows that what is in fact hurting the CET is the agribusiness portfolio. And -- but at the same time, we are tractioning other businesses from our conglomerate to help cushion that if you -- I mean, considering that in provisions, we had BRL 37 billion. And at the same time, we are giving back BRL 7 billion in profits. I mean, I know we should be able we wanted to deliver more to our investors. I mean, ROE is still low, but I believe that we will go through this meteor that has hit us. But it's part of our structure to generate results. But eventually, if we encounter a more pessimistic scenario because of El Nino or because of the worsening in the Brazilian economy, increasing unemployment. And so this would be a more negative outlook starting in 2027. And I would like to remind you that Banco do Brasil has a very bold asset structure that allows us to see where we can get further improvements, be it through RWA improvements or generating results that can probably create -- add more inorganic growth to support our capital structure and preserve our capital structure. It's important also to say that we are now concluding all of the processes related to the adjustment to this new measure. Part of this capital was used to comply with prudential adjustments. I mean it's the regulating body demanding from the bank. So it takes some time for us to get everything in place. If it were not for the agribusiness portfolio, maybe we would be in a totally different situation, but everything is according to plan, and we know what variables to move to improve that CET1 going forward. But for 2027, this is not the reading we have. We are not anticipating any capital constraint going forward towards 2027.

Our next question is from Bernardo Guttmann with XP.

My question is about private payroll loans and also individuals guidance. I mean the individual portfolio was up about 4% in the last 12 months when vis-a-vis the guidance that was in the range of 6% to 10%. And private payroll loan which was an important driver picked up and expanded in the quarter. And at the same time, delinquency in that same line was up. Was there any adjustment in terms of your risk appetite for this portfolio? And what sustains the maintenance of the individuals portfolio guidance with this new level.

In the case of private payroll loans, we grew and was a very positive opportunity for the bank because we have extended experience in public payroll loans. And throughout the year, we are developing a -- there are many new measures that will certainly contribute to the reduction of this NPL. And once the NPL is down, we will be able to grow again. And I would say that the 2 main elements are now being deployed. One was just introduced now and allowing us to link FGTS as a collateral, and it started in June. With that, we will be able to have a more effective guarantees, especially in cases where there are some firings or dismissals. And then in that case, the borrower will cease to pay both in terms of regular contributions to FGTS and also related to job termination penalties. And maybe one of the most important measure is the possibility to move that to the new job, meaning portability, this delinquency in most cases, it's not due to the fact that the employee lost the job and it is still unemployed. I mean unemployment is low, but the turnover is very high. So when an individual lose, the old job, it moves to the new job. The debt is not carried over. There is some time until that happens. It takes some time. So starting at the end of this month, the process will be automatic. So let's say, I leave my job because I was either fired or I chose to leave. The discount will be calculated within the margin. And then the new loan will be debited to the new account. And with this restructuring, we will be able to get things at an acceptable level, considering that turnover. And then we will be able to deliver up to the guidance while at the same time, we will grow in this portfolio that, in our view, it's very positive to the bank. And if you allow me to add something else, we grew over 127% in that line, starting from scratch. Now we are #2. Number 1 is Itau. We have BRL 15 million in our banks. So growth rates is just naturally come down. But as we said our focus will still remain payroll loans, both public and private. And what Gilson said relates pretty much to the data privacy system that is currently being adjusted. And there was -- in delinquency. I mean, sometimes, the borrower cannot afford to pay for the installments. But in this case, the situation is different because once the payroll loan migrates to the new employer, so the payments will be resumed normally. And there are also other credit lines like mortgage secured loans, mortgage secured loans will be our focus in the second half of the year. Also, auto finance. As I said, we grew almost 50% in terms of our disbursement in our portfolio in July alone with the new lines of BB muove. And so I think this process will continue for another 60 days. So the auto portfolio may even reach twice the volume we had in the past. So these are all new opportunities that allow us to be more confident that we will deliver to expectations in terms of individual loans. So more secured lines and less risky lines. And this corroborates to the improvement in that portfolio.

We have to Tito Labarta from Goldman Sachs.

Following up a bit on, I guess, provision levels and the potential recovery because you can see a scenario where you reached the top end of the provision guidance with modestly lower provisions in the second half of the year. But a couple of questions on that. And thanks for disclosing the santola renegotiation. Was there any benefit on the provisions this quarter from this enroll? Was there any offset to get to the bottom line on that? And then thinking about the recovery into next year, can provisions continue to decline in 2027, just given some of the concerns on the macro level, right, individual NPLs going up, I expect certainly some recovery from where you are today. But just to think about 2027 is also going to be a challenging year, at least from a macro perspective. And we think ROE, we're running in the high single digits. Any visibility on how quickly that can improve given some of the concerns about macro for 2027?

Thanks for the question, Tito. I think the biggest challenge we have for this year is effectively around the provisional measure 1,376. It will depend on how many clients join this restructuring program. And this is our biggest challenge, and we will look forward on achieving the volumes we want to restructure. And once we achieve that, we believe that 427 on we will be able to account a lower cost of risk. We know that at op risk is above 5% is on average due to this increasing default in the ag book. So as long as we focus on growing less riskier loans in the individuals book, we are able to restructure the rural portfolio under this provisional measure. And we will seek 427 on to reduce the cost of risk below the 5-ish level, we would be aiming at a 3.5% average cost of risk for the full portfolio. On average, our peers, they are working on that level of cost of risk, but this is something that it will depend on how '27 unfolds, okay? But basically, that's what is in our mind regarding reducing the risk of the whole outflow.

Just can I ask just one quick follow-up on that. Would that come with a lower coverage ratio because that's been one of the concerns, right? We've seen coverage come down a little bit. Do you need to consume a little bit more coverage to get to those levels? Or do you think coverage can increase next year?

No, we don't work with the assumption of reducing coverage ratio. We will try to balance that in order to guarantee a sound coverage for the real loan book. Ultimately, we believe that as long as we perform well on restructuring the program under this provisional measure, okay, we will be able bring a normal performance for the whole loan book. And this will become clear by the end of this year, okay?

I'm sorry, just the Central Bank impact, any color on that? .

Sorry? I couldn't.

In terms of impact on provisions, Tito, it's not material, neither in delinquency as well.

It's a nice program, Tito, for our clients and the development of our individual loans portfolio. But in terms of provision, there's no impact.

Our next question comes from Gustavo Schroden from Citibank.

I have 2 follow-ups. First, to help us understand how the provisional measure will help us effectively deal with the LLP for the second quarter since you seem to be very confident. We have maybe BRL 100 billion in terms of addressable amount as you have presented. And Gilson also stated that of this BRL 100 billion, around BRL 30 billion, if I understood correctly, it will be renegotiated. So how can we consider the whole mechanics of this BRL 30 billion going through the bottom line and the earnings and reducing our LLP for the second quarter, is it will be a reversions? Is it a reduction of credit indicators that the bank would not need to do in terms of the provision that it is currently doing. So this is important because we could have a better understanding in order to maintain the confidence in the guidance. I guess we have -- we're talking about big figures here, and it will be maybe worthwhile go into detail. Another issue that I would like more explanation. We have had many questions in terms of increase of the NPLs for credit cards. We had an NPL of 90 days of 7.1% to 14.6% for the quarter. So that's a large increase. And I do understand that a part of this is related to the rural loans. So could you maybe give me a breakdown of this increase. How much is it worsening, mass worsening that you actually refer to? And how much is related to rurals. And if in this recovery plan, through the provisional measure 1,376, if the rural part that is included in the credit card will be included in the renegotiation efforts.