Banco Bradesco S.A. Q2 FY2024 earnings call

• Solid and safe profitability growth with loan portfolio mix and pricing. - Net NII driven by client NII growth and reduced loan loss provision expenses. - Expanded loan portfolio in all segments, including wholesale bank, SME, MSME, and individuals, growing in-line with market. - NPL improved in all segments and coverage ratio grew. - Operating expenses in line with expectations with disciplined footprint acceleration. - Insurance segment had strong performance with net income growth. - Transformation project progress with new app, GenAI integration, and Bradesco Expresso rollout with cost reduction and new investment opportunities. - Variable compensation plan for second half, more meritocratic.

The loan portfolio exceeded BRL912 billion with quarter-on-quarter growth. The wholesale bank saw a ~5% increase, MSMEs grew 10.12%, and individuals grew 5.7%. The insurance segment had net income of BRL2.2 billion, a 12.7% quarter-on-quarter growth, contributing 22% ROE. Card segment didn't grow as much. Loan portfolio mix showed similar growth in individuals (2.5%) and companies (2.5%) quarter-on-quarter.

• Implicit net income is superior to mid-guidance. - Q3 and Q4 expected to benefit from May-June efforts. - Second half expectations include starting new affluent segment, continued expansion of SMEs, and completion of Bradesco Expresso rollout. - Growth in client NII expected to continue quarter-after-quarter, with June growth in-line with market and benefits seen in Q3 and Q4. - Focus on pursuing indicators like NII growth and efficient operations.

• Macro-economic uncertainties, including potential impact on interest rates and exchange rate fluctuations affecting inflation and monetary policy. - These uncertainties could impact the bank's risk appetite and operations, requiring close monitoring and potential adjustments.

Q: About guidance and client NII, how does it relate to market NII and provisions?

A: Marcelo mentioned they improved expectations in outlook, with implicit net interest income higher, client NII growing quarter-after-quarter, and provisions moving with NII growth. Andre added about the levers to accelerate revenues in second half.

Q: How does the bank's risk appetite change with macroeconomic conditions?

A: Marcelo stated risk appetite is moderate, with feet on the ground, using models and mix pricing, monitoring macro landscape closely for potential adjustments.

Q: Impact of Rio Grande do Sul events on insurance business?

A: Ivan Gontijo said the impact was BRL165 million gross, BRL100 million net, fully provisioned in results, no further effect expected.

Q: Advancing in the top of the pyramid in individuals segment?

A: Marcelo said they're growing in high-income, mid-income, and lower-risk segments like payroll loans, with care for low-income and non-checking account holders.

Q: Measures to control liabilities and improve cost of deposits?

A: Cassiano mentioned commercial action, CRM work, data scientists' help, and focus on middle market with cash and commercial evolution, leading to better cost of funding.