Itaúsa S.A. (ITSA4) Earnings Call Transcript

[Audio Gap] We have simultaneous translation into English and sign language. [Operator Instructions]. I'd like to start inviting you who are here right now with us. After the success of the commemoration of the 50 years of Itaúsa, we've done at the headquarters, Itaúsa decided to open the space to increase the visitation to the shareholders. If you want to see and visit, it's very nice. Just scan the QR code on the screen and state your interest. We are waiting for you. Let's start with Panorama Itaúsa 2026. To open our event, I receive now Alfredo Setubal, CEO and Investor Relations Director. It's should be back here, Alfredo. It's been 7 years that we've been doing this together. And every time that Panorama arrives, I'm always happy. Thank you for the invitation.

Thank you, [ Julianna]. Good morning. It's a pleasure to have you here once again this year. You are part of our story, 7 years looking at all the changes and bringing the joy that you take on being a part of Panorama. It's great to have this opportunity to have an open and transparent discussion. We have a very nice agenda to explore today. To start, we're going to do a recap of [ Apine ] the association of the shareholders. Hello, analysts, [ NPI ] investors and all the audience of Panorama Itaúsa 2026, [indiscernible] VP of [ Apimec ] Brazil. I'm here to deliver the [indiscernible] for the commitment of transparency and the frequent contact with the shareholders [indiscernible]. Thank you for supporting the processes. People like you allow for building a more transparent strong and committed with quality market. Have a nice event.

Very nice to talk about transparency, Alfredo and everyone that is part of the trajectory of Itausa. How is that translated in the practice and the shareholders with the relationship with the shareholders?

Well, 26 years that we've done annually an event for our shareholders. And for our stakeholders, it's to show our investments accounts receivable for society Well, transparency and FX solidity is a value of Itaúsa. And we built that through the years with our shareholders. We have over 970,000 shareholders, individuals that spontaneously [indiscernible] the stock exchange and bought our shares, trusting our capacity for investment our ethics, our governance, big responsibility that we bear with these shareholders. This is about 1/3 of our capital base. It's extremely relevant, and we are very happy with this. And of course, we have all the responsibility. Yes, we feel that you have that responsibility that is strong as well as the commitment. It's important to see that energy that Itaúsa invests for Brazilians. When we talk about the relationship of the long term, that data shows the dimension of all this, that Itaúsa also gathers 970,000 individuals. It's an important number. It shows that we are not present in 90% of the cities. One in every 6 shareholders have Itaúsa in their portfolio. Behind these numbers, there are people with different stories and connections with Itaúsa. Now with this addition, we're going to hear a few of these shareholders that were here. I know it's a big responsibility. So we went to these people and asked what makes Itaúsa remain in their stories and what sustains this trust through time. [Presentation]

We see that is -- we become emotional. These are common people that came here and they are feel that they belong to the story. Belonging and profitability is important. Trust is important. You see that everyone reinforces the relevant pillars for the company. This is a group of people and we are open to everyone that wants to see our expose, it's very nice to receive the shareholders. We've done many things to be close to them through the social networks, events such as this live, events that repeat on YouTube. Today, we have this event, and I am certain that over the next weeks are going to have 300,000, 400,000 people that are going to watch this live here with us or recorded. So it's important to be close on site and the presence through the social networks that we cultivate a lot. We provide a lot of information, podcast, events, small ideas that are shared. This proximity is very important. And you see that the shareholders of Itaúsa, they discussed governance. Governance is the base of the holdings, decision-making process of the business and creating value on the long term as well. Those of us that know -- well, this very deeply, the Board -- the President of the Board, Raul Calfat, please take the stage. Welcome to [indiscernible]. Thank you for the invitation. Very good to be with you and with all of our shareholders and everyone that is watching. It's very nice to be close to talk to bring your questions. Please take part. I'm going to start by asking Raul. From that standpoint, of those that are in the Board as an independent member in which way Itaúsa strategy has been transformed over the years. If you can tell us about that. And why governance is decisive here?

For us last year, Itaúsa evolved from a traditional holding to a portfolio management company. We are present in several sectors, sectors that have a growth and value generation for the shareholders. It's a portfolio that is based on infrastructure and goods-producing companies and you're going to realize that the infrastructure sector is very resilient. So it tends to provide more stability, but it requires more investment through the concession period and many times with a firm demand, which is very important. On the other hand, we also have companies that produce goods. Goods are a bit more volatile. And are subject to the oscillations of the companies -- of the economy. So they tend to not do well when the economy is not doing well and benefit when the economy is doing well. So it's a mix that is very successful. [ Governance ] at Itaúsa has a core role. It allows for long-term vision, discipline in capital allocation and continuous follow-up of the thesis of investment. We do that through the governance buys of the companies. We have 50% of the members of the Board that are independent. It's a board of 8 members for our shareholders that our controllers and for are independent. All the independent members coordinate the committees that help the Board. So it's important that you share as well with us. How is this strong governance? How does it work at the level of the Board? Reflecting on how it also work with the invested companies. Itaúsa is a minority investor. We have a shareholding agreement and through the shareholding agreement, they take part of the Board and also committees. What is important is that the objective of all this is to share experience, values and best practices. Experience has shown that many times, we end up going over this influence in regards to the original shareholding agreement. That happens because Itaúsa adds value. It's good to realize this and we do this with a lot of discipline, with rituals of management and monitoring the invested companies. We also advanced in sustainability. And now this agenda is part of the analysis of new investments and the dialogue with the invested companies. Usually, our company, our team [indiscernible] expiring the companies, and we do meetings that are monthly and theme-based with the investment companies. Whenever there is a relevant theme, whether if it's legislation, better fit environment, the Super El Nino, for example, whatever. We do a meeting. We call our invested companies, and we discuss and add synergies and best practices. And we've seen that this type of meeting is much valued because you share experience.

I imagine that the theme is full of interesting subjects. If you can tell us about what are the main advances recently in this management of portfolio model.

At a Board of directorship, we always stimulate a lot of initiatives. Let me mention one. and it's a mature idea, and it's well utilized. And it has to do with the analysis of risk and return of our portfolio. We analyze the impacts of every one of the invested companies on the ROI, and we analyze our impact in the risk of the portfolio. We plot that engraph in one axis. We have profitability. In the other, we have the risk, the impact of the risk. We get every company and then we calculate Itaúsa as having a central role in being the [ pounded ] resultant of all these risks and returns. This allows us to look with a lot of simplicity and quickness. If eventually a certain invested company, is bringing more risk or if it is compromising the returns. And at the same time, we also analyze our new investments, and we plot them on the graph before investing. We make a decision if we should move forward or not contemplating risk because usually, what companies do is an analysis of present value, but they do not contemplate the risks. So we do so with a lot of details. Many times, we get to the conclusion that the most important than doing a new investment in the company is to increase our capital in a company that we already take place because this increases the return and reduces the risk. It's a deep analysis, and it's been very useful besides. In the Board meeting meetings, we dedicated at least 50% of the time for the strategy. Each meeting the CEO of the investment companies that is invited, this occurs through the year before the meetings of the Board, at least a week, we have the committees meetings, the strategic committees these committees, we approach the company with which we're going to welcome the CEO. And therefore, we prepare the Board members, so they can have a quality discussion. So they get into the meeting not only to watch a presentation, but they are ready to focus on the issues that are important to Itaúsa. This has improved the quality of the discussions. Besides, we structure indicators that analyze the maturity of the investor companies, governance compliance, cybersecurity. So all of this brings better quality for the decisions that are done, always respecting the autonomy and helping to build more solid and competitive companies.

It's important that also you add something about governance. I think it's important the aspect Raul brought because it's an analysis risk return. Of course, Itaúsa also has a big concentration in [indiscernible] Banco and this is a big return for the bank. So what Raul shows is that our complementary investments are to decrease the risk of the concentration and at the same time, bring an adequate return for the shareholders and to that balance. We saw in that video these shareholders highlighting the trust in management of Itaúsa. Can you tell us what guides the company in the selection of new investments and how the portfolio has evolved?

This is very relevant. We have this risk-return balance. We take into consideration. Several aspects of the company said we want to invest, who are the partners? What is their capacity to manage [indiscernible] of the company to grow, how can the company invest the companies, see sustainability. For us, it's very important and governance. At governance, we help a lot of the companies because of our investments in companies that are not listed. So they are delayed in regards to the open companies to do the management of the governance, the committees and the transparency of the investments. This is very relevant, and we take into consideration when we think about the investment.

Another issue talking about invested values. Can you tell us what motivated the new investments done in this year at [ Aegea ] and Alpargatas?

Thinking what Raul just commented, in this turbulent scenario that Brazil lives with more or less, there's always an economic political external influence over this year, we've done an option to increase the investment in the companies that we take place and that we know that we trust. So we increased the participation at Aegea, and we purchased the shares of Alpargatas. We understood that it was underevaluated with the potential for the growth of revenue in Brazil, and we seized the window of opportunities because legislation changed and we have an additional space of participation, and we occupied that space and we bought shares. So we are trusting in this confusing environment here and abroad by investing in the companies that we know.

So submit your questions, it's always good. Here, we have the interest of many shareholders. The question of [indiscernible]. [indiscernible] the criteria that are going to guide a new movements of capital allocation?

As Raul Calfat said, we are multidisciplinary in the capital allocation. We are not a private equity fund that has the mandatory, they have to do investments in a few companies. We have the flexibility of investing or investing or disinvesting. This brings a lot of tranquility to do the investments that make sense. Since 2017, when we started the process of the active management of the portfolio, we concentrated a portfolio that is very good in regards to the risk and return in solid companies, leading companies that have a manager specialized, and they have knowledge of that sector. So we look for this package. It's not easy to find in regards to the return because of the risk of Brazil is high. But in this period, we've done choices that were very good. We believe that in the next cycle, we can have opportunities to do new investments that add value and do not increase the risk of return of the companies. Raul, we're going to close our block. We're going to continue with the event. If you can add a final message.

I wanted to reinforce this point brought by Alfredo. We've gone through moments in the economy, with a growth that is low with a high interest rate that limits the possibilities of investments with the appropriate return. Even so, we are prepared. The scenario changes. So we have a mapping of different sectors that we are interested in, and we've had advanced conversations, several players of the market. Should the scenario change the interest rates change substantially, Itaúsa will be ready to act. Meanwhile, let's reinforce the positions in the companies that we are working with.

Now let's continue with other guests. And they're going to help me in a short while. Let me continue. Amongst the impressions that the shareholders shared with us at the beginning of the company, the beginning of the program, one of the main attributes is solidity. Solidity appears in the transparency of the decisions, discipline to invest, follow-up of the portfolio and the capacity to generate value. And it's about how the solidity is translated in the investment management that we're going to discuss and we are going to have a conversation with [ Federico Pascavis], Director of Investors and Portfolio Management; and Priscilla Grecco, CFO of Itau. Welcome. I've been working with us for many years. Great to be with you. Let's talk about active management. Let's start with [ Federico ] and how we do the active management of the portfolio over the years. [indiscernible]. Over the years, as Alfredo said, the role of the holding in our working model has evolved. We had a reformulation and expansion of the portfolio phase. We focused in the best way to support the creation of value within the business model of Itaúsa and the investment model of Itaúsa. As you know, it is based in investments that are minority participations with governance and a strong working with boards and committees. In that sense, it's important that we have representatives that are well prepared. And we focus the energies of Itaúsa to support the representatives. We have here an analysis of the company, of the industry, the competition. And we want to transform that into applied intelligence that can be used by the Board members. We consolidate that intelligence within a portal that is available 24/7 and this levers our work, and it's a feedback loop of interaction between the representatives of Itaúsa. This model has improved the way that we work at Itaúsa and we ended up transforming every employee into a vector of value creation of the portfolio. In a more objective way, besides the holding, now we all have our responsibilities and to our expertise area to support the portfolio and this model has a few internal virtuals that are important to support a periodical meaning of portfolio with the leadership of Itaúsa, a quarterly report that have the function of aligning the Board and the subsidiaries. And we have a guide for value creation that is validated by the Board and is a guide for our representatives. In the end, this is a way that we can connect the financial operational strategies, sustainability into model of value creation for our representatives. Priscilla, from the standpoint in financial, the results that already reflect this cycle of active management and discipline capital allocation.

Welcome, everyone. I'm [indiscernible]. Complementing the models of active management, Fred, it's a unique model. We've done a lot of benchmarking to create this model, and that ended up being a big reference for the market. It's very interesting for the follow-up of portfolio. Let's talk about results. We went through a cycle that was very intense, big investments. A lot of investments over the decade. We got each of 5 different assets. We ended up leaving of 2 that we've had that brought complexity very big for the company and this demanded all of these changes, the way that we work, the management virtuals and follow-up. The result of this has been ever more evident. We've reported results that are very solid, consistent in a double-digit growth year-on-year. profitability and return of our net assets in the 19%, very attractive. And it reflects the quality of our portfolio, the consistency, how we manage the company. We also, with all of this growth in this quality is translated into good dividends. Itaús is a big payment payer of dividends. We closed with a dividend yield at around 15%. It was the third best dividend yield among all the companies listed at B3 and the first semester, a yield of 10%. So we've managed a robust growth of our results, delivering dividends in a consistent, attractive way. And all of that has been translated into a valuation of our share above the market benchmarks. We've been very consistent through the periods. If we analyze the different periods, we've shown that to the market. Itaúsa is differentiating itself and always delivering returns much above the benchmarks of the market. We compare to CDI. It's very difficult to meet it. Itaúsa has been doing that consistently. I [indiscernible] this one, valuation of dollar at the FX. All the benchmarks, Itaúsa performing much higher. This new portfolio that we built over the decade also brings results. We're growing results when we compare the growth of result, how much that growth is impacted in the results of that so we realized that the growth is more accelerated even more than the growth that we have from [ Italie Bacon], which is a more mature asset. This new portfolio contributing with dividends. Last year, we had a flow of BRL 1 billion, very important year-on-year. Another important point that reflects the trust. We talked about trust of our shareholders with Alfredo, with Raul, we saw our share evaluating in an extraordinary way and a discount of our share, the fair value of our portfolio, reducing from 26%. It was the threshold that we opened year to 17%, 18%. I remember you discussing this. This indicator, we follow it. And we -- it reflects a lot of the trust of the shareholders at Itaúsa, our capacity, our quality of our portfolio. It's an indicator that we follow dearly, and it makes sense to response of the market and all of that effort of how we follow the portfolio. How do we create more value? And another point is that we follow Fred and the entirety of the team, you do the value creation effectively of all the returns of these investments. This return of the investments is around 16% on year. The internal rate of return, which is relevant and showing the assertiveness of our capital allocation process, very few companies that can do our capital allocation to get expressive returns, so above the main market benchmarks. I think the results are very good. They are evident, and we have improved our capacity to extract value of our new portfolio. in this environment that is ever more challenging. It's also interesting for us to understand in which way it is integrates the dimensions of risk and return to the decisions of capital allocation. Fred, can you tell us a little bit more?

On the lines of evolution and working model of it Itaúsa and how we support our representatives, we've evolved in the analysis of the risk and return in the qualitative analysis. We have the return of the portfolio, very healthy threshold when we are analyzing the risk of the portfolio as a whole of each company and the portfolio in general. To do so, we created a series of tools. We do simulations of impacts of the macroeconomical variables, specific of every investor company and how they are evolving in a retrospective risk. We see risk as volatility of the companies. And after now they said, we do the comparable companies. We saw what was the volatility in the business plans that generate our analysis of return. And we can do a vision of prospective vision of return with risk helping our capacity for the rebalancing and investment. This tool has a simulation of [ Monte Carlo ] to see the scenarios of combinations of macro-specific evaluating that at the individual level and consolidated. This tool allows us for a better decision-making and even with new allocations. So if there is a new opportunity of investment, we see the impact in the combined risk for the portfolio. The objective is building the portfolio, not only in companies that can go through different economic cycles, generating consistent results, but also bringing a risk vision that is adequate to the risk that is being generated. We've got great results. It's important to hear from Priscilla how Itaúsa utilizes governance to highlight the creation of value in the companies of the portfolio. Governance is the base of all. We've discussed how governance has evolved and to help us to highlight the value creation of all of these investments that we've done, we have a Strategy Committee of new business. We gather monthly. Today, we have an independent member [indiscernible] that has amongst his attributions follow all of our portfolio, the thesis of investment. All the decisions for the capital allocation go through this committee. We do monitoring of our investor companies, and we define the strategic priority of Itaúsa. To committee that is very hands-on and has been led by this independent member. There's other members at [indiscernible], and they brought new ideas, so we can advance in a way that we generate the business. Another point that is important is that we have active listening in our investment companies. I commented that we have representatives in every one of our invested companies, working at the Board, in the committees that service this and this helps us to exercise influence in the correct direction aligned with what we have for the business plan of the project. What is relevant for the creation of value for each of these investments. In an evolution of this process over the last years was the indication of executives of it on myself, [ Fred, Maria Fernanda], Directors, they take part in a more active way and this helps us to have a more ever closer follow-up in exercising influence in the correct direction and also bringing more depth to the discussions that we have in our investor companies. Another important theme that helps complement what Fred has worked is the theme forms with the specialists in our invested companies bringing specialists of Itaúsa that we gather from time to time to discuss trends, innovations in the areas where we work discussing regulatory changes, how they impact our invested companies discussing the tax reform many times. It's a lot of issues. So it's a way that we can influence our investor companies so they can take on better market practices because we have different maturity levels at the investment companies. It's a way that we contributed a lot, and we have highlighted Certainly, our influence and our capacity to extract value from these investments. Very nice here, Fred and Priscilla makes it very clear directive management of the portfolio goes beyond the choice of the investments. It's continuous follow-up of the thesis, integrated review of risk return discipline at the capital allocation and working at governance. Thank you. It's always wonderful to have your contributions. And now at Itaúsa, investing means being closer to the companies of the portfolio to follow on the evolution and contributing for the value creation in the long term, always respecting the autonomy of every business. That's why we here, and we're going to always hear those that are in front of these companies. Now the CEOs of the invested companies are part to talk about the business, the strategies and the business perspective of each business. Let's start with [indiscernible]. Alfredo Setubal and myself were received [indiscernible].

Great to have you here, another Panorama. It's a great opportunity that [indiscernible] brings a general panorama. [indiscernible] details and the shareholders they take part please continue to contribute and bring the interesting issues to you. Itaúsa, [indiscernible] another issue that Itaúsa has delivered profitability, capital generation and quality of credit even in this environment of high interest rates and more volatility. So [ Milton], what differentiates the bank in its capacity to go through challenging cycles preserving this combination of results?

Thank you. It's always great to be here. First of all, there are a few pillars that are very important and are part of our culture. First, we have an enormous risk management discipline. We have a continuous outlook for this scenario, always looking on the long term not gating yourself by the competition. We always have our own convictions. And we have to do a management of every risk. So we do credit risk. We do market risk, operational risk. These are the risks that we do every day. This long-term view, along with the discussion with Alfredo and Raul for the creation of value and capital allocation is fundamental for a financial institution such as ours. We have to look at the long term at every decision that we make. That's the first aspect. Secondly, an institution that is focused on clients, everything that we do, we do thinking of the client. Many times, not giving credit at a situation is the best that you can do. Because you have to understand the level of indebtedness, how are they doing? How do we help them for credit lines that are more competitive so they can repay on the long term. And also be careful because a credit that is poorly given is not bad for the client, the society and the bank. This discipline is important for the cycles. The aspect that is very important diversification. It's a very diverse portfolio. We work at the wholesale big companies and retail with the individuals, going through SMEs and all the segments of the economy. This gives you a portfolio because you can be balanced and that allows you to do an active risk management at the moment that the sector is not doing well at a segment, it can be compensated by another segment. It's a portfolio overview, very relevant and it's a management of portfolio through the cycles and the businesses. I think this discipline is key in line with technological transformation, management, risk management with data. We have to understand the individual client. All of that added to a cultural transformation and we've had the consistency for the creation of value and creation of results and having the clients with a high satisfaction level. This has worked well. Itaúsa has had a performance better than the system as a whole. We believe that this is due to the models, the client. Well, Fred, I see a few explanations. 6 quarters, and I'm talking about the second quarter. [Foreign Language] and the not so good experiences is what makes you improve your model, so you can have a highlighted performance. People are asking about delinquency. It's important at the moment. So a question that was submitted to us of Antonio Gabriel. In the [indiscernible], how do you foresee the evolution of delinquency in this context? Can you give us a context? The scenario of interest rates that are very high, higher compromising of income. And as you said, [ Milton ], we've managed to expand the portfolio and still with the best indicators for the quality of [indiscernible]. Well, this question is important because, first of all, a disclaimer that have done in all the opportunities I have, there is a mistake that the financial institutions like high interest rates. This is not a correct affirmation by something extremely simple. We pay the interest rates on deposits, and we charge a spread on the loan. So the revenue is the difference of the rates of the loan and the capture the higher the interest rates, the higher the rate for the company or the individual, the higher the interest rates, the higher the payment and the higher payment there higher difficulty, higher the level of delinquency. So the banks like to work with the interest rates below 2 digits where that allows you to naturally push the economy productivity generation of company generation of jobs and other capacity has the capacity of paying more. And what we're living now is a moment of challenges. First, the high-level compromise in the companies. We follow the indicators of the market, the delays above 90 days quarter after quarter going to thresholds that are very high. Our portfolio has done very well. When you exclude with our proprietary data, we see that it's going higher than what is published. This level of interest rates is very restrictive, whether from the standpoint of financial expenses, all the uncertainties, they make the company's shorten their loans and they don't do relevant investments on the long term. This is the scenario that we've lived. The work of the Central Bank is to keep the inflation at the adequate threshold because inflation for families is the worst rate that they have because they lose purchasing power. In this scenario, we have to follow up. The market has reacted. The exchange rate is lower the inflation is going downwards. This accelerates the cuts from the Central Bank. And then we have a benign scenario for credit. But it's still early on to say. I remember that Alfredo told me many times, people think that the banks like high interest rates. Maybe in the past, when the credit portfolio was much smaller, but not today. And I wanted to ask Milton. You talk about AI in the financial sector is important. How is the bank positioning? What are the perspectives of using more, using less? Well, Alfredo over the last year since we started, we always use artificial intelligence. In the past, it was machine learning. To processes, I had a lot of repetition. You train the machine. Generative AI changed the way that we work -- we've had, over the last year's modernization of the platform of the bank. And this was a key decision for the institution. We are at the end of the cycle and for competitiveness servicing the clients, we've done the modernization that is necessary. We also did the modernization and the centralization of data information of our clients, and we made access democratic with the care and controls. We invested 2 years in what we say the foundation of AI. What is that? For me to get a more to interact with the client. I need to take care that this model respects the rules of the bank, the knowledge, policies. So we spent 2 years building the guardrails to avoid that the model hallucinate, so it doesn't generate a problem. We are the first bank to make this tool external. We started with the PIX transactional solution. Then the investment specialist, we launched a digital bank based on AI for small companies. And last but not least, we could do all the construction of a model that you take to the client, then the name is the artificial intelligence Itau. So how -- what are the investments you recommend? All of that integrated, we are working with 3 million clients, and we are going to service 100% of the base of the clients. What is nice in this model? That you stop being a transactional bank and you start being a conversational bank. When you are a transactional bank, you need -- the client needs to understand how the processes work they need to learn the route. When you go to a conversational bank is how the client wants to be serviced. The bank adapts, you give with tax voice or touch to interact with the bank in a different way. We are the first bank to be disruptive because we've done the modernization. The investment in data, and we link the foundation for the artificial intelligence and the long-term view. So 100% of the clients should be serviced Other banks can do this? Sure. What is our advantage? First, our history of the clients. You cannot replicate that. The behavior [ Julian ] in the bank, you cannot replicate. Second, we are a full bank servicing the client in all the needs of the products, day-to-day credit, real estate financing. This allows us to offer to the client what is the best for them. When you don't have all the products, you tend to offer what you have, but now what is best. Since we have all the clients, we can offer the best. Several advantages that I see and the know-how that we acquired in credits, investments activities, training our model. So they have the culture of Itau. It would be interesting if you can detail the strategy of construction of deeper credit portfolios.

Tell us more about how you build these portfolios and therefore, face more volatility. Well, for many years, we've decided the results of today our decisions of the past. So when they ask me on the long term, the long term of yesterday is short term today, and these are decisions that are made through the cycle. We decided after the crisis of '15, '16, in the segment of big companies to develop a technology for portfolio management in the bank. This doesn't mean not servicing the public A or B. We work with a resilient client through the cycle. While we imagine that client with that level of engagement with the bank. And how are they going to behave, and we have a pass. Well, this is something dynamic that we do every day. And we define how we build the portfolio, guarantee, non-guarantee, how do we service with the -- we talk about the vision of clients in the system. [ Consignado CLT], comparing to the personal credit, it's more competitive. And we decided to substitute the offering to the employees to offer this before offering others and now we are the leaders of this segment. And even with the segment and the market growing, we are still leaders. This is a product that has lower rates, but it has lower delinquency, if done in the right way. We see our appetite. What are the volatility of the portfolio? What is the concentration -- and this long-term vision has less changes in the balance, which is important because it brings predictability for the investors. Of course, the scenario we have [ BRL 1.2 trillion ] of the credit portfolio that is very relevant with 6 quarters with a stable -- we have the quality of our teams. They're doing the models and they do the management. It's a concession of credit well done, doing monitoring of the client through the time and the capacity of that is adequate delivering the digital channels. This combination has let us have a portfolio with less volatility.

Well, Milton, we are getting towards the end of the block with you. Thank you for the transparency and showing how the bank works. But looking ahead, Itau is always working with a higher return level than the other banks in the system. How do you see the capacity of the bank of keeping this profitability, high -- how is this growth of revenues, improving the efficiency, the technology? How do you see this package working? So the retail continues to be -- remember that he's a shareholder, and they're doing the projections. Well, it's part.

Look, I think that the discipline for the value creation is what will keep us with this level of profitability in regards to the cost of capital. I always do this comment. Cost of capital of any country is interest rates, institutional environment and legal surety. These 3 components make the capital cost of a country to very varying the cost of capital you can work with a different profitability than the current. With the delta is the creation of value that we mentioned. Is the ROE versus the -- we have a low bias but we still deliver capacity of creating value for the shareholder, growing with a lot of discipline and a lot of capacity for capital allocation and taking care with access. If the market is making access, then we see our convictions on the long term. And we are expanding the businesses and we want to have a portfolio that is far more profitable. When we talk about quality of credit, when we think about the -- well, we wanted to -- for you to discuss the choice of the clients. How is this way of relationship, what is behind the strategy? Well, it's a good strategy, well defined. All the businesses have good strategies with a planning that is annual, always looking on the long term. And we do the corrections that are necessary -- it's very dynamic. Of course, we define the limits. We have governance. It's a good appetite for risk, and we work within these limits that are defined. We have to define well the strategy, how you're going to service the resilient clients always with a long-term view. We need to be efficient, the more efficient that you are, the best capacity of delivering competitive prices. We need to be simple you need to have a good usability of good experience, digital, and you need to be obsessed by data.

And these are the pillars that are for the long term, and then we train the models, the people, the capacity you're here with the with the data of the market. And if you can tell us about sustainability, which is important, how does it get into this strategy?

I've said that sustainability cannot be separated from the institution. This is an agenda that has to permeate the organization. Sustainability is business. So how do we want to go with an economy with less carbon, clean energy? We approved up to BRL 1 trillion of lines for clients that are doing that. We've done the 600 with a capital credit. We want to deliver [ 1 trillion ] up to 2030, our foundations [ Institution Banco ] and others are important pillars. We have a governance that is separated, but it's something that we're very proud. Governance, we discuss very little. But governance is fundamental. So we can have well, the transparency with the investor. This is sustainability. We talk to the investors we discuss with the client -- we tell our story we tell our trajectory. All of that is within the pillar of transparency and governance. It's sustainable from the standpoint of environment and being the bank of the transition of the bank of [indiscernible]. We didn't go up any of the objectives that we set. Even though in the world, we've seen that this is a bit -- we are very firm and this is part of the organization of the company. We've been at the Dow Jones sustainability since the end of the '90s. So we are -- we're an institution that has sustainability as a part of our values. And the Board, our Committee of Sustainability this remains in the agenda of the Board with a lot of vigor. We're now moving backwards. We are firm with the agenda and the values of the bank. I knew you would like to complement that because it's something that is very important. Ever more companies that are not dedicated to this are going to pay a price in the future. And in the end, in today's there is something that we discuss very little. And for us, it's very important, which is trust. We want to create that relationship of trust. And if that the people have the relationship and they trust the organization not only by solidity and the capacity of generating value on the long term, but by the safety and the ethics. This is an attribute that should be automatic for any organization. And more and more, we've highlighted this as a relevant pillar of our culture and our values. Ethics is non-negotiable.

Everything I mentioned, which is what people want. I would like to thank [ Milton ] always thank you for being with us. Alfredo, thank you for staying with us. And now that the clock is ticking, I'd like to thank Milton. He has been working with diligence in the [indiscernible] has been 6 years. Congratulations [indiscernible] result of everyone. Before we continue, I'd like to remind you, we continue to submit the comments and the chat in the platforms with a hashtag Panorama Itaúsa 2026 is very important so we can see the themes that are interesting to you and we can seize the opportunities. Now we are going to receive companies of the portfolio of Itausa that work at the essential infrastructure sector. And we're going to have the conversation with [indiscernible]. He will receive with -- here with us, [ Miguel ] at the CEO of [indiscernible]; and [indiscernible], the CEO of [indiscernible] and Raul, thank you for coming back. It's a fundamental sector for Itaúsa. Good morning. So let's talk about -- let me start with [indiscernible], saying how you [indiscernible] see the issue, there is even a question that is arriving along those lines, the shareholders, that is the following. Well, recently, [indiscernible] has gone through a few accounting adjustments. I led you the delay of the publication of the financial demonstrations and later, they have an action plan that involves several initiatives. So I wanted you to start by telling us what is the context of this plan? What are the advances that are expected.

Great to be with you. Once again, Well, the company has been going through a process of growth. Using the expansion of the infrastructure projects in a very accelerated way. Well, the company has found at the beginning of the year is an opportunity of taking all the control of processes and governance to the threshold of the growth. So the company has been investing in a set of programs so we can train all the support structure of governance of controls so we can ensure predictability. So we can guarantee that we can support the company to continue to generate value for the shareholders in this maturing journey. Important processes in this point have made us revisit the capital allocation in a more specific way so we can anticipate value, making the best choices and anticipating the choice by maturing the operational costs, especially in the ramp-up, generating and strengthening that engine of the recovery of the company.

Well, Raul, this theme, we as a Board member of Aegea. If you can comment in which way governance has worked out this theme?

Governance is following up very close, and we've had a lot of quickness with the measures. Many times, not questioning it was done by the auditor. And immediately, we hired a series of consultancy companies, and we are implementing the measures with a lot of speed. So I wanted to show the trust of Itausa in what has been done. And the [ GIC], we've done recently to increases of capital, therefore, establishing the indices that are more comfortable for indebtedness because the company has a plan in the concessions that we've won. And we have investments that are done for a long time, long term. We want to ensure the surety that we can capture all the value that was planned at the beginning. And I would like to highlight these points that [indiscernible] said, the company has a management that is really is a differentiation within the sector in general. And we've had -- we managed to implement and execute everything that is requested of the concessions even beforehand so now there is the utilities, landmark that establish said until 2033, 90% of the waste has to be treated and 90% of the water has to be potable water. Of course, that generates obligations but establishes a demand that is established. So there is a demand. What the companies want is to have a demand. Regardless of the scenario, the demand exists. So the perspectives are very good. Demand is key and it's basic development. These are the levers. It's always nice to hear about this commitment. [ Motiva ] also goes through a transformation that is important. Over the last years, there were changes in strategy and the way that we allocate capital as well. Can you bring us more on what were the pillars more important pillars, the main pillars of this evolution? How can you balance the growth through new concessions with the generation of value in the current assets?

Thank you for the invitation. Raul, it's an honor to be here. At the moment, it's very symbolic because we just communicated and closed the selling of our platform of airports, it was one of the strategic levers that within a strategy of simplification, we had 40 assets. Now we have 18 assets concentrated in land transport. So roadways -- these are the models to focus on transportation that we are concentrated and that lead allowed us to do a simplification of the organization. Now we have a simple condensated organization more concentrated with our main competencies. And as you said, focus in an agency the value creation at -- we have strategic portfolios, and we also have opportunities for expansion. We've doubled what is our commitment of investment. So we have over BRL 60 billion of investments that we have to deliver, and this is double of what we had 3 years ago. So now we are in a phase of expansion and now in a phase with the high-quality assets and execution phase. So in that way, we can focus the main levers of creation of value. And you can see that it coexist opportunities of investing within the current assets, we have a couple of dozen BRL 20 billion of potential investment in our assets in our portfolio, and we have the opportunity even larger of assets that are outside. But now the focus is to execute the BRL 65 billion that we have in our commitment. Consolidating the strategy for value creation. This is associated to decrease in our organization. We had 18,000 employees. Now we have 15,000. We are now decreasing our infrastructure, more compact, more efficient and a portfolio that doesn't have assets that destroy value. We had a few assets that we removed from the portfolio. So the portfolio of premium AAA, so very quality assets and this is our strategy at the moment. We can discuss what we're doing in the technology with the efficiency, the quality of service and the efficiency. Let me give the floor to [indiscernible]. And besides the governance agenda, another theme in the macro context is the current capital structure of [indiscernible]. How are you doing in this journey of deleveraging and reworking the capital structure for the company? What can we expect in the next steps?

When governance works with administration and they discuss the priorities and this big plan started to be implemented, a few elements are important in this trajectory. So the closing of the first semester already gave a lion mark of the result of that prioritization. So we closed delevering leverage in June at the end of the first semester with 3.87% of leveraging below 4x which is our main covenant in a gradual expansion of the security margin and increasing the productivity and the performance of the company. big markers, the EBITDA of the first semester versus the previous one, have a highlight of 55%. The internal demand connected with the best capital allocation with the search for the anticipation of the efficiency of the operational costs makes the machine of the internal asset generated results. So it will contribute for this increase of the security margin through the quarters. The additional investment that Itaúsa and [indiscernible] did in this first semester of BRL 3.3 billion with the confirmation of trust, as Raul said, supported the company in accelerating ever more this increase not only by the signal of availability but by the adjustment the increase of the balance effectively. While the measures of choice and selection of capital allocation and selection of performance are guaranteeing that this engine of the cash generation is working and the company is changing for the Category A and strengthening the governance. So we have an opening of capital. But the discussion is having the company prepared. Having this level of maturity so we can support and unlock all the possible value within this portfolio.

Raul, whenever you want to talk, well, I'm going to bringing you something about the efficiency. Since we've discussed, well, [ Miguel and Radomes]. [ Miguel ] talked about efficiency and innovation, including the use of artificial intelligence that has had an important pillar in the long term with [indiscernible]. So if you can tell us how are the companies using the tools to transform the operations?