Earnings Call Transcript - BBD Q4 2025

Marcelo de Noronha, CEO

Good morning, everyone. I am Marcelo Noronha. I'm here live from Cidade de Deus, the headquarters of Bradesco for this earnings release presentation related to the fourth quarter of 2025. And why not say of the full year of 2025? Today is February 6, and my watch shows 10:31 a.m. I'll start with the presentation saying that all of this material has been released last night after the market closing, and I think you had access to it. I start with our recurring net income, BRL 6.5 billion, growing 20.6% year-on-year, and BRL 24.7 billion for the full year, 26.1% growth. However, with an ROAE of 15.2%, exceeding our cost of capital for the first time in this quarter. That's why we say that we will continue to grow our ROAE for the coming quarters and years to come. Here, I have all of the operating highlights. I'm not going to go over each one of them because I will certainly change a little bit today's presentation. I would like to bring you some elements related to our transformation plan that, in fact, was published February 7, 2024, so less than 2 years ago, it will be 2 years as of tomorrow. That's when we released the plan. I would just like to remind you of what we did back then. We started with a diagnosis at Banco Bradesco, the Brazilian market, and we also drew up a worldwide benchmark with all of the relevant aspects like technology. Out of the diagnosis, we drew up a plan knowing all of our strengths. The plan – the bank has several strengths, and the organization as a whole, for that matter. Back then, we said that we have 70 million clients. We also said that we were leaders in SMEs, SMEs understood as a segment defined by the Central Bank because every bank has its own format. These are companies that grow up to BRL 300 million a year. We also said that there was high penetration in the high-income segment. We certainly have the largest insurance group in Latin America, in addition to having a stake in many other companies. We said that we would work on our strength to create a new position with the clear goal to increase competitiveness in the short and long run. But it's important to remember that we put a deadline of up to 5 years; it wouldn't happen overnight. And it hasn't even been 2 years. When we presented the plan, we came up with this mandala with all the main topics, the 10 main items that were carefully looked at with more than 200 new initiatives. I will go over some of them. I will not talk about all of them; otherwise, we will be here for 2 hours, and you will be really tired. But our IR team and the transformation office, everybody is available to give you further clarification, especially those that want to talk to investors, to discuss some particular area of this mandala – and if you have additional questions, we are certainly at your disposal. So I'll briefly cover some of the most important highlights and then I'll go back to the core numbers, and we wrap up the presentation. So then after the presentation, we have the Q&A. Starting with digital retail, we haven't been bringing a lot of elements for you, but after this year-end period, we came up with 19 million clients fully digital. They are fully assisted through the digital channel with our BIA GenAI with a level of resolution, which is very high. So BIA is retaining 90% of all calls that come through digital retail, but it's also important to look at the engagement level. Our efficiency in this client life cycle allows us to – I mean, I'm not going to get into the details of every topic. But I would like to draw your attention to this item here down below. The direct cost to serve all of these clients in the digital platform was reduced by 40 times. This is an important number. What we envision for 2026 vis-a-vis our digital retail: first, we go from 19 million to approximately 40 million clients between account holders and non-account holders. Certainly, our objective, not only for 2026 but going forward, is to reduce the cost to serve and to continue growing our customer base. The second topic is affluent clients, and we are talking about principal and prime segments. We promoted an upgrade to more than 3.1 million clients with a new value proposition. At the same time, we introduced a new position in this segment of clients. Prime ended the year with 2.3 million clients. We trained 3,500 managers; we focused on that training. But notice the level of accuracy for the BIA team. Its accuracy was 93% at BIA customers, and then I go to Principal. You may recall that we launched Principal in November 2024, with 3 offices: one in Faria Lima, another one in Campinas, and the other one in Leblon in Rio. We started the expansion process. In fact, I invited sell-side and buy-side clients to look at our management model rather than just the business model. We are going through this phase in other segments. We launched a new segment in November of '24. By the end of last year, we had 62 offices and 36 municipalities, approximately 320,000 clients in this segment with this current level of NPS, a new value proposition. This created this new differential. What do we expect to see next year out of these 2 affluent segments? I mean, new upgrade with more than 1.5 million clients reaching 4.7 million clients. As for Principal, we will open almost 50 additional offices in Sao Paulo, reaching 70 municipalities, and we will have almost 800,000 clients by the end of the year. You might recall our target; it’s not something that we change overnight because this is a gradual build. We will expand our share of wallet, and this is what you see down below when it comes to the affluent segment. Next comes SMEs. We were market leaders; we had approximately 14.3% market share in SMEs of almost BRL 300 million a year. But notice what happened here. We've built a much more robust segment with a new digital model and a new value proposition, mostly digital and remote service and also companies and business segment. This is a segment where we introduced 150 new branches during 2024, and we changed the segmentation of the business segment. We delivered a new Internet Banking and a new app for companies. Looking at what happened to our NPS, these are numbers that were not disclosed before: we went from 56 to 74 points. Nothing happens by divine order; it happens because we work hard in the backdrop, and we execute based on the plan. I will draw your attention to say that we have more than 5,000 managers in this segment. We are present in 2,100 service points, and this adds value to clients. Regardless of having this level of evaluation metrics with a robust capacity to serve clients, they can't do self-service, and at the same time, have a very good experience. But I would like to draw your attention to something that I said at the beginning. We had 14.3% share; we are leaders in this market. But what happened up to September 2025? We gained market share. We reached 16.6% market share, and we continue on the right track in terms of this segment. Our purpose, not only for 2026 but for a more distant future, is to increase our penetration in these segments. We believe in this, as stated in the diagnosis, that in this segment of up to 300,000 a year of SMEs, it’s a segment that tends to increase its share in the financial system in the next coming years, up to BRL 300 million a year. I mean, payments and cash; I’m not going to get into many details, but Bradesco Global Solutions with global cash, our goal is to increase the share of wallet and customer centricity over time. I mean credit—we introduced a credit view. Of course, I will talk about cause and effect; things don’t happen by divine chance. We introduced the credit BU at the beginning of our plan, and we thinned this business unit. We introduced a portfolio management area. They are working on different client segments. They are also operating in the life portfolio, be it in Wholesale and Retail banks, Customer Finance, etc. Within this business unit, we also introduced a new pricing area to serve all segments and businesses; all the verticals I mentioned to you before, generating more risk-adjusted return, and this is a very important part of our strategy. When we put this together, I told Andre that we wouldn't get any lack of resources. There will be enough resources. To that end, we hired 250 professionals and gave them full technology support to enhance the models for all customer segments. We are managing the portfolios, looking at the timeline of credits and loans that are not only decided on prediction models, but mostly decided by human judgment, support all of it. The consequence is that this SME growth level is still the same we have with payroll loans. If we hadn’t put this together in the way it is, certainly, we wouldn’t be growing SMEs the way we’ve been growing today and the way we grew in 2025. What do we expect in terms of our objectives? The unit, together with the clients segment, we want more competitiveness in some lines and segments, growth with quality, and moreover, very strict risk-adjusted returns. We have also many other initiatives. Maybe there is one that will take longer to deliver, but our clear objective is not only to have back office and front office but moreover, having an end-to-end experience that really boosts our productivity. I mean, model culture, in addition to the area led by Silvana, which is people – they are contributing with upskilling, reskilling. Despite everything we are doing, including new variable compensation KPIs, etc., we conducted a new engagement survey, 84% engagement when compared to 74% postpaid in the 2024 survey. That’s why we are focused on keeping a very engaged team and fully committed to everything we want to do with the capacity to change as well and adjust. People are crucial, competent teams that can certainly deliver and change as we go to deliver more competitive goals in the short and long run. Organizational structure was the first thing I showed during the plan. We reduced layers, increased the span of control. We brought C-levels and Directors to different areas. I talked about the credit area more recently, but we also promoted inorganic growth. I’m not going to get into the details, but in the insurance company as well with the hospitals. What do we expect out of this organizational structure? To gain more efficiency and agility when it comes to decision-making. Technology. This is a chapter that I have been talking about all the time for investments in AI. For us, our culture is AI first. AI first and AI is not just GenAI; it's machine learning for our mathematical models, but also multi-agents that have been working with a number of initiatives on the slide. I spoke about BIA client with that level of retention using GenAI. We have the BIA Core, BIA Tech, and BIA Client, so on and so forth. What happened in these 2-year periods? We gained productivity. We reduced lead time, and the consequences were this that I mentioned before. With a base of 100 of delivery of apps for clients internally for review processes, and gaining productivity of regulatory points, we ended 2025 with 300. We grew our capacity by 3 times over—less than 2 years. That's when we started this whole move. We invested and we've invested in cybersecurity. We improved our second and third lines of defense for cyber, and we expect greater productivity gain. The more and more intensive GenAI use, but more competitiveness and innovation and time to market. I must mention some other things here because I'm going to get to the numbers in a minute, and we'll speak about guidance eventually. We invested last year, invested heavily in technology. Investment in technology grew in 2025 compared to 2024 by 22%. Looking at our guidance, which I will refer to in a minute of those about 8% of growth approximately; about 3% or slightly over 3% comes from the investments that we will continue to make. We will not give up on investing. I see technology as a big driver of our productivity and our ability to deliver a lot more to tech clients with hyper-personalization, which we have been doing, and during the Q&A, we can speak more about that. Synergies and Innovations. We had a number of actions with Cielo. Tap-on-phone, D+0 receivables discount all invented in our corporate app. In Bradesco Financiamentos, we also gained investment with new hiring—not just efficiency in the unit cost but commercial efficiency of Bradesco Financiamentos. Next steps: we expect well, with the next step to increase our share of wallet, increase growth, productivity, and innovation with different verticals in our organization. Now, speaking again about profitability to give you more numbers. I mentioned that before, and feel free because our team is ready to talk with you and explain this in much more detail. If we look at the net income, I always tell my team this should be the last slide and not the first because we speak about the cost and effect, and this is the effect. Effect of what? Effect of a plan that shows how our capacity is revealing and improving the strengths that we talked about, but strengths that were driven by actions of the plan. We have a growing number—8 quarters delivering always a little bit more, and step by step, we don't change this strategic plan overnight. You correct, of course. You correct the tactics, but there is a strategic continuity with execution discipline. This also called discipline; we are showing this with our team in the transformation office. Moving to total revenues, we are growing in all revenues: NII, we see here, the growth in NII and fee and commission income. When we remove the Cielo tender offer, the growth is 5.5%. Insurance investment plans of 16.1%, another robust quarter and growth expectation. Why is all the revenue growing? Again comes into effect; it’s not by divine providence. It's by increased penetration, credit trading traction in NII, a reduction of liabilities cost, better liability management, and so on and so forth with all the initiatives adopted. Looking at our loan portfolio, almost BRL 1.1 billion in December 2025, and the previous quarter, we were at BRL 9.6 billion, and now BRL 11 billion. The highlight goes to micro-small medium-sized companies growing 21.3%, and that's why we're gaining share. Looking at all the portfolios, we are growing in all of them. Why are we growing? We are growing because we have a client base. We've grown because we have high penetration in all client segments, and in the verticals we work with, when this is supported because we have an engaged team. A team that was supported by client management systems, GenAI, a better offering for clients. In a nutshell, it is a set of measures that we improved over this period. Looking at the portfolio and the loan quality indicators, they are all flat over 90-day NPLs totally easy. Over 15 days, if we look on the slide, it's absolutely flat. We structured our portfolio with BRL 10.5 billion in 2025. BRL 20.5 billion reduction of problematic assets. Look at our stages: Stage 3 dropping quarter-after-quarter, Stage 1 increasing quarter-after-quarter with the evolution of the secured portfolio. We are totally at ease with our loan portfolio and our ability to continue to originate even more, particularly with some levers. Net interest income up 14.9% and the client NII up 17.4%. Again, this is we see 17.4% growth; here, this hits the bottom line: BRL 4.8 billion to BRL 10.3 billion, growing 22.6%. Cost of risk is absolutely under control and quite market NII delivering our expectation—expectation of our treasury. Fee and commission income grew at the proportion that I mentioned before, but please note, I should highlight 3-card income, a 14.4% increase in high income, 25%. Construction management: there is a lot of traction growing 17.3%. Looking at loan operations, we have a lot of traction as well. Why is it not growing? Because part of it has been deferred because of the Resolution 4,966. Look at what happened with capital markets. A 29.2% increase full year '25 compared to full year '24. This was not divine providence again; this is investment. We changed the structure with Bruno's team and the whole team created the agribusiness segment. We changed our investment banking structure to broaden Bradesco's team to capture a lot more in DCM, M&A, and other line items such as project finance. The result is this level of growth. We have a DCM share that we had in 2022. We grew; we're doing well in the rankings, and we continue to grow. There are 2 offenders here that do not help these levers, which are checking account security, which normally in this market pull the results down. Overall, we are delivering and delivering well. Operating expenses, an 8.5% increase. I told you, and I will repeat it. Investments in technology. We grew 22% of technology investments in 2025 compared to 2024. We will continue to invest in technology. Break our expenses down into personnel and administrative, where we grew 5% in line with the average IPCA. POR is one of defect on expenses with our profit sharing patent; this would be 2.5%. We continue to reduce our footprint; we look at the complete period: 2,800 points, and if we exclude EloPar and Cielo as we have been doing in past quarters, growth of operating expenses would be 7.2%. In the Q&A, if you want, you can ask, and we can debate administrative expenses, but overall growth was negative. We have personal expenses with this variable that I mentioned, the profit-sharing program and investments in technology, in transformation. For example, the whole implementation of the 59 Principal offices—almost 50 more will be added next year, so we continue to invest in reviewing our footprint and focusing on the necessary investments in each of the departments to help us grow. Our Insurance growth, another strength of our organization: ROE 24.3%, but in the full year 22%, spoke about this already. We are growing in all lines with a lot of balance. Client base growing. I was checking this with Ivan earlier today. The result of insurance operations exceeded the guidance of 16.1% and growth in operating results, and not necessarily in financial results, with technical provisions of BRL 446 billion growing more than 10% year-on-year. Moving to the end of my presentation: when we look at this capital discipline, we have year-on-year growth, if we look at December 2024 compared to December 2025 in Tier 1, 12.4% to 13.2%, and the quarter there is a slight reduction of 20 basis points in common equity in Tier 1, but if we look at common equity, we also posted growth year-on-year up 0.7 percentage points, and this is something that I mentioned with all of you, with the sell-side and buy-side. I spoke about this that we have this under control. Lastly, guidance: well, we delivered at the top of the guidance impacting all items in the expanded loan portfolio we were growing 9.6% in September, and we ended up with 11%. Good, because of our traction and the ability to execute. We start 2026 with even more traction. Insurance operations 16.1% beyond the guidance, and we have the guidance for 2026 listed here. I am here, and I'm ready to discuss this with you, and now I will sit down with my colleagues Andre Carvalho, IR Officer, and Cassiano for us to start our Q&A. I would end my speech saying that we have heard comments since last night when we released the results; post the results, some positive comments regarding the 2025 numbers. I didn’t hear anyone saying bad things, negative things, but the expectations were much higher for our 2026 guidance. Our share between December 31, 2024, and today, Feb. 6, had increased 106%. Appreciated by 106% – so it is only natural, it's part of the game of sell-side, buy-side to have price adjustments. Not 29%; it's 27.5% at the middle of the guidance; it's up to you, but we will not lose sight of our horizon because the shares have to be adjusted by 5%. No problems. Can you imagine today with the level of conviction that we have, with the level of delivery that we have? I am super confident in our organization. I'm happy. I had the meeting yesterday with our leadership team; the level of engagement we have in our company. So Andre, over to you. Thank you very much for joining us in this call.

Andre Carvalho, IR Officer

Good morning, everyone. Thank you, Marcelo and Cassiano. I would like to let you know that Ivan Gontijo, CEO of our Insurance company, is joining us remotely. To start the Q&A session, I would like to present 3 alternatives for questions.

Pedro Leduc, Analyst

Good morning, everyone. Thank you for the presentation and congratulations on this wonderful year in your trajectory. My question is related to how you see the underlying business trends? We could look at the NII guidance, less LLP. I mean I think you're going to grow low 2-digits, slightly above the portfolio. I just want to understand what's behind it when we think about NII in isolation or LLP; I think these 2 things have to talk to one another, but to understand what is part of it, so that I will have a good idea of your views about mix, spread, credit quality; as you know, the year is just beginning.

Marcelo de Noronha, CEO

Okay. Pedro, I will start; Cassiano will start as well. It's good to see you again, Pedro. Our NII remains focused on our standard. We changed our mix for 2025. Secured products remain our main lever. Obviously, the quality of our credit BU allows us to work in any credit line secured and unsecured; we're very, very comfortable with the quality of our portfolio and the way we are operating it. The average rate should be maintained until the end of the year, and our LLP should grow in line with our operational. These are the main drivers of our NII, and we will maintain it with a very high degree of engagement.

Cassiano Scarpelli, CFO

I have a few things to add. It's important to say and highlight what you just said. Portfolio mix, spread level, always focusing on risk-adjusted return. This is the goal, and I also talked about pricing. The pricing area instantiates that point. I mean, we have some very important levers that go through different segments like payroll loans in all of its lines; I'm talking about public and INSS and private. We have approximately slightly above 14% market share. I would like to remind you that we have the lowest market share on the private side. We see a lot of opportunities, and we already saw this level of growth. I would like to add that we are placing our hiring offering; it's 24/7. This is hyper-customized with microseconds that go and come and already respond, giving us a response about the risk of the borrower, the company and pricing, which is adjusted to risk; it's risk-adjusted pricing. Therefore, I'm saying that we will grow in payroll loans. We see a lot of traction coming from the clients. INSS has its own challenges, market challenges; it's not all ours, but in previous quarters, year-over-year, we were growing 5%. This past quarter, we grew 6.8%. Payroll loan, SME; we are still growing, and we will continue to grow in lines with secure lines backed by receivables, be it direct receivables or some lien, etc. We will grow with auto for companies and individuals. We are very optimistic in terms of future growth with the credit quality that is absolutely under control. I do not see any deviations. We are not concerned with that because certainly, you know that we did our homework, when it comes to portfolio management and our modeling team.

Andre Carvalho, IR Officer

The next question is from Mario Pierry with Bank of America.

Mario Pierry, Analyst

Congratulations on your results. We understand that a lot has been done in the first 2 years, but you still have a lot more to do going forward. But what you have already demonstrated is that you are on the right track. Right. I have 2 questions. You had an additional expense of BRL 700 million. You spent that to restructure the structure suggested for 2026; this is almost twice as much in terms of provisions you posted last year. Could you please highlight where these restructuring will focus more? Whether it has to do with the number of branches? We understand that we are getting a lot of questions from our clients. Your guidance says that you will grow expenses by 8% at the top you said it's 3% relates to investments in technology. This also means that the rest of the bank will grow, or is growing 5%, in line with inflation. Just like you said, you already reduced 2,800 points in the past 2 years. How come expenses are not growing below inflation? That's why the consensus, I was hoping for a number close to BRL 20 million rather than BRL 27.5 million; we thought that the bank's core expense should be growing below inflation?

Marcelo de Noronha, CEO

Well, thank you for your questions. If you look at our admin expenses, and if you look at some of the lines in our full publication, you will see okay, third-party services, maintenance, conservation, lease, all of these lines were down and transportation, transportation of currency. What are the detractors here? I'm just summarizing; there are some that are very positive. But technology, I mean, it grew 22%. When we look at it, it will continue to grow. We will continue to invest to increase our competitiveness. Second, I mean, profit sharing; we increased profit, and we paid out more. The third detractor: I'm not going to refer to small lines. We had some changes on the advertising side. We found 3 good opportunities at the end of the year, and we decided to invest like when we launched Principal. When we did the coverage at the airports, it’s out of what we expect us to do at that time. Thirdly, there are other expenses that go through some lawsuits; we have a very good provision coverage. We’ve been working a lot based on these root causes. When you work in that root cause, you do not expand the incoming, but that is coming down with time. I believe that these lines will be below 27%, 28%. What you look at when you see expenses or other expenses in addition to expenses with technology. Talking about investments in restructuring, I would tell you that, first of all, we continue to review the footprint. We were doing less than—less than what we would do in 2025, so we will do more than we did last year. We will open, as I said before, about 50 offices earmarked for Principal. We are also refurbishing some physical stores with private, meaning that we continue to invest in this transformation, making footprint adjustments, increasing our capacity to invest more and reduce cost to serve, in Retail and Digital. Our cost is 40 times lower.

Cassiano Scarpelli, CFO

Thank you for your question. There is one more thing I would like to add in addition to the 3% you mentioned in terms of technology investment. 5% is only related to human resources. Well, that's important to remember; in addition to profit shares, you will see that our expenses are very much under control. There is one more thing; because you said that was twice as what it was last year. If you look at 2024, it's very close to the number that we posted in 2024. Maybe the difference is about BRL 100 million, 40% higher on average or greater than average. There is another point related to efficiency. Our efficiency ratio was down by 2.2%, from 2.2% to 50%. Our ambition is to reach 40% by 2028, meaning that the trend is downward in 2026, and this drop will be even more accentuated in '27 '28, when the top line grows a lot; it's just natural that some OpEx will see growth with OpEx. Our top line growth will be almost 10% in 2026. Also, as you increase transactional, certainly the variable cost is different, even with scale.

Andre Carvalho, IR Officer

Next question is from Gustavo Schroden with Citi.

Gustavo Schroden, Analyst

Congratulations on resuming ROAE starting from 10% to 12% now over 15%. I would like to think a little about the investment cycle, more specifically and linking with operating efficiency and efficiency ratio. Marcelo, you're very clearly showing, and I heard an interview you gave, when you said that you won't stop investing, but the focus is to maintain competitiveness. Is that your thinking about the future of the bank in a sustained fashion? I would like to understand, what part of the cycle would you say the bank is in, particularly in terms of technology investments or investments in new products or segments? Should we start thinking about the benefits coming from operating leverage, operating efficiency, and reducing efficiency ratio, thinking that in 2026 revenue should continue to support the step-by-step ROAE improvement, so that in '27, we start seeing the benefits of operating efficiencies?

Marcelo de Noronha, CEO

Gustavo, I would say that we are in the middle of the cycle. We are not at the end of the cycle. If you look at our plan – we spoke about stretching this until 2028. Along that period, some things are quick wins; you capture the benefits in the short term. Other things we invest in, and you’re going to reap the fruits later. We'll continue to invest in the whole renovation of the bank. Look at some U.S. banks and Asian banks and what they have been seeing; in September, I was in Asia; I had an opportunity to talk with CEOs of other Asian organizations and to speak with peers of that region. Everyone is investing again in AI first. We see opportunities to improve efficiency to gain competitiveness in our relationship with our clients. I will not stop investing. We want to improve our infrastructure, our architecture constantly in terms of technology. Efficiency doesn't come only because we're going to invest less – I'm going to give you my opinion. In the opinion of all world banks, I don't see anyone stopping investing in technology. Technology will require growing constant investment over time. That's my opinion. But we're going to gain in other lines. For example, loss expenses, areas where we are going to have a reduction not only in 2026. We must have efficiency gains; we will have these efficiency gains – but this will be driven to the top line. Gustavo, you can ask me, if I don't deliver the top line, but I want to deliver the top line. Increased penetration, continue to grow and deliver ROAEs even better than what we currently have. My colleague yesterday said an airplane will never fly backwards. We are not going to fly backwards. It was 15.2% in this quarter, and we expect it to increase; if we can deliver more and more, which was the case of the loan book in the past quarter, we will do it.

Andre Carvalho, IR Officer

Next question from Daniel Vaz with Safra.

Daniel Vaz, Analyst

Congratulations on the results and the delivery since the beginning of the strategic plan. I think it's—we can see how dedicated the management is in readapting the bank and improving the whole quality of the portfolio while still growing. My question is focused on Cielo. Cielo is a strategic asset of yours. You're talking about integrating Cielo, particularly in SMEs, integrating Cielo even more; it's already partially integrated. But in terms of TPV, Cielo had a big difference compared to the network. Perhaps we're thinking about those big accounts, not SMEs. This is an important difference in trajectory. I would like to hear from you what is the strategy for the large accounts? Perhaps there’s a loss of profitability, and you don't want to change that. In SMEs, you advanced a lot also in terms of governmental programs, and that's important liquidity for the system. But the Cielo part in terms of strategy, the strategy is not so clear to me in 2026, '27. I'd like to understand what is the integration stage we’re at.

Cassiano Scarpelli, CFO

Well, thank you, Daniel, for the questions. Cielo has also been undergoing a process of transformation, which is rather significant. Over there, we created separate teams for the 2 partners. Today, we have a connection at different sites with the Wholesale and Corporate Retail segments. We worked with them in a plan so that we'll be a lot more connected in a verticalized way. Talking about cash and talking about affiliation, more than having a segregated company where I would originate something, and they would work with it. No, they have to improve logistics; they did. They delivered tap-on-phone; they did; they had to deliver a whole new pricing system for D-0; they did. They needed to deliver a connection to our app; we delivered it together. All of that is done. You're correct. I think that there were 2 or 3 cases; I don’t remember, 2 or 3 of large accounts, and the similar team went to the limit and took it to the limit. They decided to give up the TPV, which was important rather than losing profitability. We see an ability to grow and grow a lot because we are very accelerated and tractioned in SMEs, and we reduced the attrition with our distribution channels. This is an army of more than 5,000 managers in addition to all of the digital offerings we have. We are going to move forward; you can rest assured of that. We are not going to throw away money with margins that are effectively very reduced. Regarding SMEs, we are growing—not only in government clients; our expectation is to continue to grow. With a very similar number we had in 2025. Indeed, we haven't got that final number, okay, Daniel, the final number regarding government or total government programs. But we have an estimate; our estimate is that we had 26% or 25% to 26% market share. We were the bank that operated the most government clients last year. We have an initial estimate, our estimate, not market estimate, but let's wait for official data; that’s kind of that level. We have good traction, but we can do all that because of the kind of structuring we have in the SME segment and also because of our technology deliveries, our ability to hire through our digital channels, the whole modeling of the Credit BU portfolio management. We are not granting credit just because we have government guarantee. We have a lot of criteria, and it's always about RAR, risk-adjusted return. We have a program to price each one of these government programs. We have a lot of traction. We ended the year with high traction, and we believe that we will continue to deliver good results. Marcelo?

Marcelo de Noronha, CEO

This is one of the important pillars of technology this year. We created our app for business with a totally different technology embedded into it. This is a very important reinforcement for this. Yes, we're migrating 500,000 clients to this new experience that Cassiano just mentioned. So that's another important information. We are increasing our competitiveness with Cielo being integrated.

Andre Carvalho, IR Officer

Next question from Yuri Fernandes with JPMorgan.

Yuri Fernandes, Analyst

I mean, your long-term view—I know sometimes it's not easy to invest in the future, but you are delivering improvements gradually. Congratulations for it. I mean, my question is about capital. CET1 is very close to 11%. I think this quarter was 11.2%. But for 2026, there might be some challenges; some prudential adjustments going forward, 49.66% operating risk. Can you please elaborate a little bit about the capital outlook, whether CET1 should remain at 11%? Or maybe it will be slightly lower and you would just gradually increase it? In addition to that prudential adjustment, my other question has to do with your portfolio growth. You posted a very positive growth message, and like you said, the bank is well tractioned. But this 9.5% growth in the portfolio with retained profit, the retained profits in the middle of the guidance also might imply some capital consumption. Will it remain at 11% or go slightly above? If you can tell me something else about CET1, I would appreciate it.

Cassiano Scarpelli, CFO

Thank you. You were constantly provoking us about this topic, and I really enjoy your provocation. So thank you again for joining us today. I would like Andre to start answering your question, and then I will follow through.

Andre Carvalho, IR Officer

Thank you, Yuri. In terms of CET1 of around 11%, that's what we expect to have throughout 2026. We are here talking about loan book growing at 9.5%, and we look at full CET1 of 9.2% in the first quarter going up vis-a-vis what it was in 2025. So interest on equity that was BRL 14.5 billion last year will go up this year above BRL 15 million. Our capital absorbs that portfolio growth increase in interest on equity. Here, we also have DTA, like you said. CET1, it’s around 11%. In the first quarter of the year, we know that we have the regulatory measures, operating risk, the Resolution 4,966 issue. Everything has been computed whenever we mentioned CET of around 11% for this year. There might be some fluctuations, but it will be around the 11% number; this is important.

Cassiano Scarpelli, CFO

Yuri, I want to emphasize that we anticipate seeing this. Two years ago, we mentioned our strong discipline regarding capital. Each year, we assess our DTA and tax credit outlook over ten years, meaning we're continuously monitoring that. We also consider all opportunities, as you mentioned. Consequently, we are always looking at this. Previously, we indicated we would have adequate capital. Just observe our allocation in our loan portfolios and the turnover of the wholesale bank; everything we are doing is very strategic and coordinated. I believe we can surprise you more than anything else in terms of our common equity. Our net income will increase, and so will our return. The challenge represented by 14.67 is greater for some banks than for others. It pertains to a ten-year period, but there is a critical point in 2026, 2027, and 2028, which are the most challenging years. After that, the outlook may change, so we are very confident in our plans and the capital allocation we are executing. Thank you for your questions.

Andre Carvalho, IR Officer

Next question from Santander Bank.

Unknown Analyst, Analyst

I would just like to revisit the payroll loan. I think you said something about it, but if you could elaborate a bit more about your appetite and expectations for payroll loans, more specifically private payroll loans? I know that on the public side, you gained some important and relevant market share.

Cassiano Scarpelli, CFO

We are very, very well positioned to grow and gain market; of course, that depends on the competition, but I think we are well positioned to gain market share. We gain market share on the public side; INSS involves a lot of market discussions and things related to the management of INSS when it comes to payroll loans. But we are also very well positioned with INSS. On the private side, we tend to increase our share. As I said, we deploy models that are highly competitive 24/7. We are growing. We've seen that in the past quarter of 2025, the last quarter of last year, and we will see the same thing happening throughout the year. Therefore, I'm very optimistic in terms of everything that we are doing to grow and to gain share.

Andre Carvalho, IR Officer

Next question from Renato Meloni with Autonomous.

Renato Meloni, Analyst

I'd like to second my colleagues and congratulate you on the deliveries since the plan was announced. I think that the results show the whole work that was done. Over the year, you showed a lot of ROE expansion. But when we look at the guidance at the mid-range, ROE similar to that of Q4. So I'd like to understand, do you expect 2026 as to be a year of accommodation of settling? Or the uncertainty regarding the elections made you more conservative in the guidance? Now moving to 2027. If we have this scenario of accommodation, I think that in 2027, we bring ROEs to more reasonable levels. What would be the levers in revenue to increase profitability?

Marcelo de Noronha, CEO

Renato, thank you for the question. I'd say that I don't see a year of settling for us. I think it's part of our plan. Again, we will improve step by step because we'll continue to invest to increase competitiveness. I don't want to be repetitive, but this is our mantra. We focus on this all the time. Regarding the ROE, again, it's kind of an internal joke. Yesterday, we were laughing about this. An aircraft will not fly backwards. So there's no chance that we'll do less than 15%, 20%. Actually, Andre, you might witness and Cassiano as well, I said a year ago, I'm more optimistic. I'm more pointing to the upper range of the guidance than focusing on the lower band of the guidance. Of course, this year, I'm a little more optimistic. What we actually saw, Renato, is that the market somehow started bringing the expectation of our net income to BRL 30 billion, BRL 31 billion. The role of IR is to correct the course. You don't have a 30%, 40% leap year-on-year because we continue to invest in our transformation. Remember that. I see a higher and growing ROE. Indeed, you mentioned the macroeconomic aspect. It is true; we should have a little more volatility in the second half because of the elections; that is only natural. But I am optimistic regarding what we are doing and our ability to compete in terms of the expectation of our economists; we’ll have GDP growth and a balanced unemployment rate. We have a lot of opportunities for growth. With the interest rate cuts, they happen a little faster; this will help some companies regarding their costs, if they are a little bit more leveraged. The macroeconomic environment does have an influence on all players in the market. But I see us with a lot of opportunities to grow the ROE. If we can deliver superior absolute results, just like the loan book that grew 11% when in September, it was growing 9.6%, we will do it. We’re not wasting time; we’re not wasting space or losing space. Please remember what I explained here, Renato. We are well aligned, increasing penetration. I spoke about the Principal segment, SMEs, Corporates doing well, the Insurance company; they are delivering a lot. There are several verticals. Earlier today in the press conference, Ivan spoke about the continuity of growth in pension plans, active distribution there. I see 2026 with optimism. I think that there is some structural issue in Brazil in terms of the fiscal aspect and the public debt. If we're able to look at the public debt regardless of the presidential candidate, if we improve that for 2027, '28, we'll improve the market expectations. You asked about the levers to increase profitability.

Cassiano Scarpelli, CFO

Renato, I can say that it's almost everything, credit. We're growing with the right drivers. We're not operating in the higher-risk segments for credit card, mid-income, and high-income. In lower income, our risk appetite is lower. Credit is a big driver. Liability management; the liability management we've been doing and the growth that we've posted. We posted a lot of growth. Fee and commission income, the main levers and the detractor; so that's another line. The insurance group again. In other areas, payments; our consortium business at full speed, the ability for auto loans in our own channels and external channels, and so on and so forth. I see a lot of opportunity because our organization is diversified. We have different revenue sources at different moments. This year, we will review the channels, and this will increase cross-selling a lot. We spoke about Bradesco Expresso, distributing a lot more consortium operations, insurance, payroll deductible loans, but also Bradesco Financiamentos selling more insurance. We have a number of opportunities for cross-selling. Our business app that we'll have Cielo will soon have insurance, dental insurance. This is all part of operating leverage for us.

Andre Carvalho, IR Officer

Next question from Thiago Batista with UBS.

Thiago Bovolenta Batista, Analyst

My question has to do with what you just mentioned, good performance of the insurance group. In recent years, the share of the insurance group was about 20%. It got to almost 50% in 2023, and it was dropping. But in recent quarters, it became relevant again. I think that in consolidated income, a much higher percentage came from the insurance group. This is due to an ROE of 18% post that. But in the sister banks too a bit under pressure. So 2 topics: 1 is the relevance when I think about the midterm in 5 years' time: how much of the results should come from the insurance group? The 2nd is, is the power of the organization hurting the consumption of DTAs of the bank? In 2026, will DTAs start dropping or not?

Cassiano Scarpelli, CFO

Thank you, Thiago. The insurance group is not getting in the way in terms of consumption of DTAs, and that is important to mention. What we have been saying in terms of DTAs is that this is a year when we will try to neutralize the nominal portion. We'll see a reduction of DTAs in 2027, '28, and this is part of our plan stretching until 2028, as Marcelo mentioned. That is super important. I think we’ve had the best allocation possible in managing the cost of capital, and it has to do with the tax credit. The second part of the question? A comment to make periodically; the insurance group also pays dividends to the controlling shareholder. We declare it and repay it; you see the insurance group is a strength for us and not the other way around. It is diversified; it is the biggest insurance group in Latin America. We have huge traction in the bank's channels to distribute insurance, but we also have external distribution of insurance, reaching out to other clients, which were not necessarily reached out by our internal channels. We don’t hope that the insurance group will do less; we want them to do more. We have an expectation of growing even more. This is what we are seeing. The bank is investing a lot; we're investing in technology—22% in 2025 over 2024. The bank is investing in technology, and sometimes we capture the value considering BF consortium and so on, and so forth. Over time, we should have 2/3 from the bank, 1/3 from the Insurance group. This means the Insurance group will grow a lot more and have a bigger share; I’m happy. I want to deliver more, and this is our expectation. We are very pleased with the results there and with the other related companies. You will see that we will be taking off in our ROE and absolute profit.

Andre Carvalho, IR Officer

Next question from Matheus Guimaraes with XP.

Matheus Guimarães, Analyst

Congrats on the results. I would like to revisit the SME topic. I think Andre talked about market share, and that was relevant information. Historically, this has been the bank's strength in SMEs. But we've seen some competitors, even new banks talking about SME. Of course, the concept of SME varies in terms of the size of the company. But what would we expect for 2026 in that portfolio? This is a very relevant portfolio for you in terms of growth and even in terms of growth going forward.

Cassiano Scarpelli, CFO

Matheus, thank you for your question. We are very pleased with our position. In reinstating our position, I must say that I've been working directly with Jose; Jose is the VP in charge of that area, but I've been working with all of my colleagues; Marcelo, the entire corporate team or company team, and also wholesale bank with Bruno, etc., and the middle market team. First of all, we always look at what places the Central Bank in terms of assets from companies up to BRL 300 million a year; this allows us to draw a comparison. Competition in this area is very fierce; we always knew that, but our distribution strength is very important. We delivered a lot in digital channels; we hire government progress through digital channels. The journey is very efficient, and we continue to invest. If there is a place to put money, it is precisely in SME, micro, small, and midsized companies. The levers continue to be government lines, but we also provide funding to company vehicles and other investments that have even sounder guarantees, prepayments to suppliers, all of that. This is part of our journey. When you look at the digital need with the new Internet app, I mean, a new app when we are migrating over 500,000 clients, the retention rate has been enormous, and great growth opportunity; the commercial team in the back office is supported by GenAI and new tools. We've just deployed Salesforce back in 2024 for the company segment. Now, we are expanding it with the entire business segment and the previous platform we had so we can manage this whole set of things much better with more than 5,000 managers in 21 points of sales. I am very, very pleased with the results; look at the level of market share we have and see all that we were able to deliver in terms of our loan portfolio. That was not by chance but rather because we implemented in new tools, new segmentation, new tools to our clients, new experiences, certainly with business unit models and products that are much more suitable. With SMEs, Matheus, we not only reduce the risk but also increase penetration; this is what we have to do. AI is here to help us; there are things that involve a lot of machine learning, and other things involve Gen AI. Things we do to manage our portfolio, some predictive default models, engagement to grow, this means the client life cycle of a client totally connected to our analytics via CRM, which has also been revisited. Therefore, we are sticking to our position. I mean going from 16.6% to 17% or 16.4%, that’s not what changes the game. We have to continue to grow and, at the same time, reach our fair share of everything that is important to us. I’m very much aware of our potential and the growth that we can post for either corporate and individuals.

Andre Carvalho, IR Officer

Next question from Carlos Gomez-Lopez. Now I'll turn into English.

Carlos Gomez-Lopez, Analyst

Congratulations on your second year of-under the new management. I had 2 very brief questions. The first one is about the absence of cockroaches, as you call them, bad corporate cases. We haven't had any this quarter? In your guidance for the next year, do you expect corporate defaults to stay where they are? Or do you incorporate some deterioration? The second is, could you comment on what tax rate you expect for next year?

Cassiano Scarpelli, CFO

Carlos, the answer is no for the first question.

Andre Carvalho, IR Officer

But Andre, you can just start answering on the tax rate, and then I can add if necessary.

Cassiano Scarpelli, CFO

Okay. The tax rate that we are working with is between 16% and 21% and 18.5% or 19% to calculate fixed net income. Why is it that the tax rate was 20% in 2025, and it dropped a little bit? First of all, because we anticipate higher payment of interest on equity; like I said, BRL 14.5 billion in 2025, so I'm saying between BRL 15 billion and BRL 16 billion in 2026. Certainly, this is a number that depends on interest on equity to be announced by the government; it's not a fixed number; this is just the best estimate, but we anticipate growth in IOE so that we take more advantage of the embedded benefit. Secondly, as Marcelo said, part of our investments brings about competitive gains, and like consortium; we've been highlighting that almost every quarter, we could also talk about auto financing that had posted a good performance in the past 3 months. We have several examples, even with BBI. All of the companies are posting very strong performance, and this helps reduce the tax rate. That doesn't mean that this is operational weakness. On the contrary, this is distributed well. And this year, in particular, the tax rate will drop a bit depending on the company; the rate is different. The insurance business has a lower tax rate; I think this is the answer. We have no concerns when it comes to the wholesale bank; so thank you, Carlos.

Andre Carvalho, IR Officer

Next question comes from Tito Labarta from Goldman Sachs.

Tito Labarta, Analyst

You may have just answered it, but just wanted to make sure, right, because on the—if we do ROE on a pretax basis, it's actually been a little bit more stable throughout the year, right? On the guidance, our tax rate will be a little bit lower. Just because of the tax benefits you have, I think as your profitability generation improves, I would expect that tax rate to go up. I think you mentioned the insurance tax rate is a bit lower. Just to understand, in terms of the underlying sort of earnings potential of the business: do you think that keeps improving? Do you think this tax rate sort of remains low because of the tax benefits that you do have? Just to kind of think about excluding the tax rate, the ROE of the business and how you see that continuing to evolve?

Cassiano Scarpelli, CFO

Tito. Regarding the operational results of the group, the operational results of the group before taxes grew 27% in 2025, very strong. Secondly, looking at 2026, the answer is no. Yes, we will post strong operational result growth. It’s not about a weaker operational and a lower tax rate. It is all well distributed with Insurance, very strong consortium, very strong Bradesco Financiamentos, very strong. It's a big group with several companies. When we consolidate it all, we see a small reduction of the income tax rate. Let me stress this Tito. We spoke about this in the other question. The insurance group has a smaller tax rate. If you go to other affiliates as well, for example, in payments, it's the same thing. We consolidate it all. Occasionally, at the end of a period, there are some fiscal aspects, a certain law here and there. For example, insurance group benefited from that in the past quarter. They benefited from one law that affected the tax rate. So this is kind of what explains it, nothing different, as Andre mentioned.

Andre Carvalho, IR Officer

Next question from Eduardo Nishio with Genial.

Eduardo Nishio, Analyst

Still no sound. Let's move on and the question comes from Andrew Geraghty from Morgan Stanley.

Andrew Geraghty, Analyst

Congratulations on the great results. I know you have discussed at some length credit growth and some expectations for payroll loans, secured loans. I was hoping you could maybe elaborate a bit more on each of the different segments and how they fit into the loan portfolio guidance of 8.5% to 10.5%, where you're expecting better growth, maybe where you're expecting some weaker growth, and where there could be some upside by segment, if possible.

Cassiano Scarpelli, CFO

Actually, as Marcelo mentioned, we start 2026 stronger than we started 2025. We had a positive surprise in credit in Q4 2025. We start the year already with a lot of traction. What do we see in terms of trends? Very strong SMEs followed by individuals and then wholesale, wholesale competing with capital market funding. As Marcelo mentioned, sometimes very high tickets making a difference. In Q4, positive difference for us; that doesn't happen all the time. The expectation, the prospects for the segments would be this: SMEs, individuals, wholesale. We have traction across all fronts, and we are ready to capture all opportunities. There are some different situations when we speak about the affluent segment. In Principal, we have relationship products such as investments, the credit card with a value proposition that is unique for these clients, totally different experiences for these clients. The same goes for Prime, which is different than the relationship for INSS retirees. For that audience, we offer deductible loans. When we get to Prime and Principal, mortgages. We have these mixes of products that sustain in these segments. In terms of companies, legal entities, we have a huge mix of products growing in small and medium-sized enterprises in different lines, by the way, increasing our penetration there. With the wholesale bank, we are recycling the portfolio; what we call OBD book origination for distribution, which is when the capital market spread was very crushed. We can compromise risk-adjusted return; we don't work looking at that. It is better to distribute than effectively keeping it in our books. We have a set of fees, which are also important for us, in different lines of business. There's also cash management; it is a super important platform for small and medium-sized enterprises as well as for the wholesale. We have a new technology platform which, over the year, will bring us important improvements. This is another key point to improve profitability.

Andre Carvalho, IR Officer

Let's see if Nishio is back. We still cannot hear you. Not yet. Maybe if you remove your headset, it might be better. We are receiving a question about mass income. Okay. Tell me a little bit about the mass income portfolio?

Cassiano Scarpelli, CFO

If you need any more information, I can add. Mass income is probably one of the major transformations of our banking cycle since the beginning of our track record, our history. I think we are bringing some good news. I think Marcelo mentioned it quite well; 90 million clients are already fully digital in the mass retail with a totally different value proposition. It's much easier to operate. They use BIA GenAI; there is a specialist who can help with a customized sale, which changes the paradigm of having an individual physically present in a branch. The second relevant aspect is engagement: our capacity to serve that client with Gen AI tools and integration tools that are essential to boost sales. I think this has been a major evolution. We anticipate BRL 45 million, so throughout the year, we will be fully digital. This will be our mass retail bank. This is a very important aspect. Today, February 6, we already have 25 million digital clients because every week, the numbers are growing with zero resistance, zero friction with clients. This has been a very pleasing experience, very good experience. Behind all that, it's supported by a very good technological platform for individuals. This will encompass all the individuals. I think we've been telling you about that in the past quarters, and this will certainly help us decrease cost to serve, which has been significantly reduced, and this has an important correlation to our footprint adjustment.

Andre Carvalho, IR Officer

Well, Nishio, thank you very much for joining us. I know you had that problem with the sound, but thank you. We are always available to talk to you and also to welcome you here at the bank. The same thing goes for our IR team. I think Cassiano gave you a good backdrop. You saw more than BRL 40 million at the end of '26, starting with BRL 19 million, but engagement is increasing and improving, and we are able to reduce direct cost to serve by 40-fold. We are very committed to what we are doing. Some people look at the physical space in the physical world, and we are testing different models all the time with our Bradesco Expresso, so that we can address these topics. This is a challenge. In fact, I said that I went to Asia last September. I heard comments from some banks; they have the same challenges we have when it comes to footprint adjustments, cost to serve, and consumer. Therefore, an issue, we are sticking to our plan, and we will bring this year and in particular, in the second half, more information about this digital retail. Thank you. Thank you, Nishio. With that, we conclude the Q&A session. Questions that couldn't be answered right now will be answered by our IR team. Before I turn the floor to Marcelo to his final comments, I must say that this presentation and the full material of this release is available on our IR website.

Marcelo de Noronha, CEO

Thank you, Andre. Thank you, Cassiano. I extend this thanks to all of our team who helped us in this video conference. Thank you to our audience for your interest and for the time that you spent with us. It's what I said—I mean, this is the summary of our transformation; 8 quarters in a row, delivering good numbers with the focus that I said, without losing sight of the plan that we set up for ourselves step by step, but delivering improved ROE and improved absolute net income with a very engaged team, with clients, and with the Bradesco team. Thank you once again. Our team is entirely available to give you more details, not only about this earnings presentation but also about our transformation program. Thank you all very much, and thank you for joining us.