Banco do Brasil S A : Transcript 2Q22
(marketscreener) Banco do Brasil - Investor Relations Conference Call - Transcript 2Q22 ... Good afternoon to those of you who are abroad, I imagine Europe in this part of the afternoon, at last, it is a very special day for Banco do Brasil to be able to announce its results, another record result for the bank, demonstrating the strength and consistency of the Banco do Brasil brand in the Brazilian market. Our customer base reached the level of 80.3 million customers, an increase of 6.6% compared to June last year, 26.3 million active customers on digital channels, an increase of 21.8%, 91% of the transactions carried out at the Bank in this half-year somehow occurred through these digital means. He can, through WhatsApp, join and consent that his data be exchanged from other financial institutions to Banco do Brasil, and we are also doing loan operations through this channel, and here is the big surprise for us: 74% of the operations done in this first test we did are from clients who have never taken credit with us. And here are two good news: we have the best NPS index, that is, all of this result achieved by Banco do Brasil has been somehow endorsed by our customers, who are indicating Banco do Brasil so that other customers can join, so the result had an increase of 8%, so we are very happy with this, it means that the strategy is being well conducted, it is on the one hand increasing our profitability, exploring more business, taking the right business to our customers, and on the other hand the customer somehow believes in Banco do Brasil.
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Welcome to our live event to discuss the 2Q22 results. Our event is bilingual and has simultaneous translation to English. To choose the language click on the button on the right corner of the screen and select the desired audio. To begin, our CEO Fausto Ribeiro and CFO Ricardo Forni will make a brief presentation of the performance and then we will have a Q&A session. We remind analysts that it will only be possible to ask questions through the webcast link. With us today are also Carlos Pecego, vice president wholesale, and Ana Paula Teixeira, CRO. Also with us today is Daniel Maria, director of finance and investor relations. I will now turn the floor over to CEO Fausto so that we can begin. Thank you Janaína, good morning to all of you shareholders, partners of the Banco do Brasil for many years. Good afternoon to those of you who are abroad, I imagine Europe in this part of the afternoon, at last, it is a very special day for Banco do Brasil to be able to announce its results, another record result for the bank, demonstrating the strength and consistency of the Banco do Brasil brand in the Brazilian market. I have a set of initial slides I'd like to show you and then I'll give the floor to Ricardo Forni, who will make a brief presentation, and then we'll open for questions and answers. I just warn you, and ask you not to ask too long questions because experience shows that we end up getting a little lost and losing the focus of the initial question, so if you can briefly ask one question at a time, I thank you. Well, gentlemen, we are presenting the 2Q result and consequently the 1H22 result, a result sustained by a robust loan portfolio of businesses, with quality, and we will talk a lot about this. We had a net income growth of 54.8% when compared to the previous year's 2Q, R$7.8 billion, and then
talking about the semester's result we had a result of R$14.4 billion with 44.9% growth. Over the last few quarters we have been accelerating more and more the dynamics of the bank, seeking to reduce the difference in our results with private peers, and you can see from the numbers that we reached an ROE of 20.6%, an extraordinary, consistent, sustainable work that we will demonstrate to you next. Anyway, we are back in the game, our profitability is compatible today with our peers, showing strength, determination. When you have focus, objectives, you can achieve extraordinary results, and in a portfolio that has positions that many of you consider defensive, and we are talking about consigned credit, agribusiness, finally, with default rates well below the market average. Well, let's talk a little bit. Well, we had an expanded loan portfolio reaching R$919.5 billion, also an increase of 19.9% compared to 1H21. The NPL ratio is still well behaved, despite a small increase - but this is part of the strategy to increase the bank's financial margin. The NPL ratio is around 2%. And our net interest income, what we were talking about back then, which is the great motto for us to achieve more significant results, we grew by 12.2%, reaching R$32.4 billion, and fee income, also gaining a greater dynamic within the organization, grew by 9.1%, reaching the amount of R$15.4 billion. On the other hand, administrative expenses continue to be well behaved, growing only 5.8%, and this significantly reflects our operational efficiency index of 33.2, a very well-behaved index. Anyway, these are the main numbers I want to bring you, now I will dedicate myself to talking about some of the highlights in terms of the bank's business and actions, and then Forni will go into more detail on each of these topics. Well, we have the goal of becoming more and more important in the lives of our customers. We call it partnership, we want a relationship with our clients that we call strategic partnership, with them being increasingly more relevant, and some actions that are highlighted in the year, in 1H22, we highlight here the crop plan. We have a thriving agriculture in Brazil. Brazil is a huge grain producer, a meat exporter, in short, Banco do Brasil is the partner, the biggest agribusiness partner of all times, contributing significantly today to the GDP. Today agribusiness represents almost 28% of our GDP, so there is nothing better than for us to also increase our strength and our support to the man in the field, and we have set aside a significant plan of R$200 billion for agribusiness for the 22-23 crop year in a huge effort by the Bank to seek several sources of financing, multiple so
that we could have a rate compatible with the client profile and with the needs of our farmers today. So today the equalizable resources in our lines represent a little less than 30%, so we have less and less dependence on equalizable resources and we do the exercise of marrying resources from different sources so that we can have a consistent plan, a profitable plan. We also had our Pronampe, which is the support to Brazilian micro and small companies. Again, Banco do Brasil has always been a safe harbor for Brazilian micro and small companies, we took the lead again in this issue and this program, with governmental resources, operated basically by banks, financial institutions - in the lead, Banco do Brasil and Caixa. We managed to disburse R$6.5 billion in a few days in this last tranche of the program and this contemplated 62,000 Brazilian companies, in short, micro and small companies that can somehow use these resources to pay salaries, to pay their invoices, to make investments. And since the beginning - going back a little more - of the COVID pandemic crisis in Brazil, Banco do Brasil has been an escape valve as an institution that has been significantly supporting Brazilian micro and small companies with security, with tranquility, seeking to offer credit to those companies that are actually able to make the payment. So we have used a lot of analytical intelligence, a lot of conversation and a lot of credit analysis, and that is why our indexes for micro and small companies is the best index in the market, well below peers. We usually say that the Banco do Brasil's support to Brazilian micro and small companies has helped save at least 3 million jobs in this country, it was fundamental for the economy to remain strong, for the economy to remain booming, preserving jobs, generating wealth and income in this country. Since the beginning of the pandemic we have made an estimate here of at least R$200 billion, a little more even, were invested in this relation to this segment. We also have the non-payroll individuals loan, which is part of our strategy to grow with products that present a more robust financial margin, more significant for the bank. We have today a portfolio that reached R$92.7 billion, 34.3% increase, we are talking here about salary loans, personal loans, credit cards, overdrafts. It is part of Banco do Brasil's strategy to increase its participation in non-payroll loans so that we can have a more significant NII and achieve increasingly consistent results - of course, with great care, a lot of technical analysis, with a credit model that is still very conservative, ensuring that we have security in every step we take within the organization.
Well, BB Securities... sorry, we are once again the leader in foreign exchange in Brazil. When this administration took over we were in seventh place in exports, in export exchange. In our perception, it did not make much sense to remain in this position given that we are the leading bank in Brazilian agribusiness, 70% of the agribusiness production is exported. What else? We work a lot in agribusiness with large wholesale companies that also export their products and services abroad. So we calibrated our rates, started to see the business as a whole and not exclusively that operation, and we led the foreign exchange market again, we had, we reached a turnover of R$14.6 billion, an increase of 67.7% compared to the same period last year. And we announced earlier today that BB Securities in Miami is making a non-disclosure agreement, that is, a letter of intent with UBS abroad so that we can have a menu of options for our Private business, increasing the potential to generate business, in short, seeking more appropriate solutions for our clients abroad, and we believe that this partnership - which is not exclusive, we can add other partnerships over time - can contribute significantly to our ability to attract more clients in this Private segment. Well, in this saga, in this continuous process of improving the experience of our customers, we have been investing heavily in the digital issue by accelerating the process, the digital transformation of Banco do Brasil. We want a bank that is close, complete and available in its multiple channels, digital in practice, that we can start a digital process and finish this digital process, that is why we call it digital in practice. And here we have achieved some numbers for you. Our customer base reached the level of 80.3 million customers, an increase of 6.6% compared to June last year, 26.3 million active customers on digital channels, an increase of 21.8%, 91% of the transactions carried out at the Bank in this half-year somehow occurred through these digital means. This is an excellent number, it means that we are managing to get our customers to adhere to this digital process. Our virtual assistants exchange information with our customers and have reached this level of 31.3 million calls, an increase of 166%, and WhatsApp, this global tool that in Brazil today is essential for exchanging messages in society, has now become an instrument that we are using heavily to communicate with our customers and do business. And here are two examples: we were the first bank on WhatsApp to launch the option for the client to join the consent to exchange information in open finance, a totally digital process. He can, through WhatsApp, join and consent that his data be exchanged from other financial institutions to
Banco do Brasil, and we are also doing loan operations through this channel, and here is the big surprise for us: 74% of the operations done in this first test we did are from clients who have never taken credit with us. So this shows that it is an additional channel for us to somehow reach a public that has not been taking credit with the bank. And here are two good news: we have the best NPS index, that is, all of this result achieved by Banco do Brasil has been somehow endorsed by our customers, who are indicating Banco do Brasil so that other customers can join, so the result had an increase of 8%, so we are very happy with this, it means that the strategy is being well conducted, it is on the one hand increasing our profitability, exploring more business, taking the right business to our customers, and on the other hand the customer somehow believes in Banco do Brasil. Our ranking of complaints in the Central Bank is also the lowest level in history, which also confirms this perception of improvement in the quality of service. Well, BB is closer, and we are always thinking about rejuvenating our base. This is also a point that we have been working on a lot, trying to have a better positioning with the younger public - and here is some very important news: We have just made an agreement in the Venture Capital program with Yours Bank, an entity, a Brazilian startup, a fintech where we have exclusivity in this investment with an option to buy or increase our participation up front, but it is a startup that has a different approach, a way of interacting with customers more focused on financial intelligence, to develop the minds of young people in relation to having a more appropriate financial perception and focused on an audience between 14 and 18 years old, so it is the news that we presented this morning to journalists. It is an agreement we made, sacrament and we strongly believe in this partnership to rejuvenate our base and for us to be able to have these clients from a young age, from 14 years old, and to accompany them throughout their financial life. It is also worth mentioning the strong investment with solid and consistent campaigns with the university public, which is a public over 18 years old, we had a growth of 1.7 million university students who opened an account with us this semester... I'm sorry, in this semester, a 53% growth in relation to the December 21 base, finally showing that the Bank is concerned about rejuvenating its customer base so that we can have perenniality, sustainability of this company. We have also inserted ourselves in youth movements. We held a big event here in São Paulo called POV BB (which means Point of View). It is a young event, which has a different approach, but aims to interact with this public