Summary of Banco do Brasil Investor Day Conference Company Overview - **Company**: Banco do Brasil - **Event**: Second edition of Investor Day in New York, 2024 - **Focus**: Discussing key drivers shaping Banco do Brasil's future and strategies for 2025 Key Industry Insights - **Agribusiness Portfolio**: Banco do Brasil has a significant agribusiness portfolio, with credit amounting to **R$405 billion**, expected to increase to **R$408 billion** soon [doc id='24'][doc id='25'] - **Credit Strategy**: The bank is focusing on selective disbursement and risk management, particularly in agribusiness, to mitigate defaults and enhance recovery [doc id='7'][doc id='25'] - **Economic Context**: The macroeconomic scenario in Brazil is challenging, with high interest rates impacting farmers' cash flow and increasing default rates [doc id='41'][doc id='72'] Core Strategies and Adjustments - **Resilience Framework**: Banco do Brasil is implementing a resilience framework to manage risks and improve credit quality, particularly in agribusiness [doc id='7'][doc id='49'] - **Digital Transformation**: The bank is investing in digital platforms to enhance customer satisfaction and operational efficiency, with **75,000 employees** undergoing training in digital acceleration [doc id='12'][doc id='13'] - **Cultural Change**: A shift in organizational culture towards agility and collaboration is emphasized, aiming for continuous learning and adaptation [doc id='11'][doc id='12'] Financial Performance and Projections - **Credit Portfolio Growth**: The bank's credit portfolio has expanded significantly, particularly in agribusiness, with provisions for potential defaults being closely monitored [doc id='34'][doc id='39'] - **Default Rates**: The bank is experiencing increased default rates, particularly in agribusiness, with **70% of clients in default** not having a history of non-compliance [doc id='43'][doc id='46'] - **Future Expectations**: The bank anticipates a recovery in the agribusiness sector, supported by favorable harvest forecasts and government initiatives [doc id='70'][doc id='72'] Risk Management and Recovery Plans - **Credit Risk Management**: Banco do Brasil is revisiting its credit matrix to reduce risk appetite and enhance collection processes [doc id='43'][doc id='44'] - **Government Collaboration**: The bank is working with government entities to facilitate credit operations and support farmers in financial distress [doc id='66'][doc id='67'] - **Sustainability Goals**: The bank is committed to sustainable practices, aiming to achieve **R$500 billion** in ESG-focused credit by 2030 [doc id='26'][doc id='27'] Additional Insights - **Technological Integration**: The bank is leveraging artificial intelligence for improved credit assessment and risk management [doc id='14'][doc id='51'] - **Client Engagement**: Banco do Brasil is enhancing its client relationship management through innovative digital channels, including WhatsApp, to improve service delivery [doc id='15'][doc id='22'] - **Training and Development**: Significant investments in employee training are being made to ensure staff are equipped to handle the evolving financial landscape [doc id='13'][doc id='28'] This summary encapsulates the key points discussed during the Banco do Brasil Investor Day, highlighting the company's strategies, challenges, and future outlook in the context of the Brazilian agribusiness sector and broader economic environment.

Financial Data and Key Metrics Changes - The company reported a total gross revenue of BRL 3.2 billion and net revenue of BRL 1.8 billion, reflecting a year-over-year growth of 3831% respectively [28] - The efficiency ratio improved to 48.8%, a 130 basis points improvement compared to the previous quarter [32] - The return on equity (ROE) reached 12.9%, excluding minority interest, marking a significant achievement for the company [32] Business Line Data and Key Metrics Changes - The total loans grew by 33% year-over-year, significantly outpacing the Brazilian market [22] - The Consumer Finance 2.0 portfolio, which includes PIX financing and buy now pay later, grew more than five times year-over-year, reaching BRL 920 million [15] - The insurance segment saw a 51% increase in active contracts, reaching nearly 8 million [17] Market Data and Key Metrics Changes - The company added 1 million new active clients for the fifth consecutive quarter, achieving a 57% activation rate [13] - Transactions made through PIX totaled BRL 315 billion in the first quarter, achieving an 8.2% market share [14] - The marketplace GMV grew by almost 30% year-over-year, reaching BRL 300 million [18] Company Strategy and Development Direction - The company is focused on sustainable products and a diversified revenue stream, positioning itself well in a rapidly changing banking industry [5][7] - The launch of new products like private payroll loans is seen as a significant opportunity for market share growth [15][16] - The company aims to continue expanding its product offerings and enhancing client engagement to solidify its market position [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in capturing market opportunities due to a secular shift towards digital banking services [6] - The company anticipates continued growth in loans, projecting a range of 25% to 30% for the year [56] - Management noted that the current economic environment, including inflation and interest rates, has not negatively impacted their growth strategy [58] Other Important Information - The company achieved nearly 4% market share of treasury direct balance, growing 80 basis points in one year [16] - The cost of risk improved to 4.6%, marking the best performance since 2022 [26] - The company is actively working on improving operational efficiency through technology and AI [76] Q&A Session Summary Question: Comments on the private payroll product and its impact - Management expressed excitement about the private payroll product, indicating it has significant market potential but noted no impact in the first quarter yet [41][44] Question: Expectations for NIM trajectory - Management explained that NIM growth is driven by improved credit mix and rising interest rates on loan portfolios, with expectations for continued expansion [45][48] Question: Loan growth expectations and impact of inflation - Management expects loan growth to accelerate, projecting 25% to 30% growth for the year, with no significant impact from inflation or interest rates [56] Question: Explanation for decrease in net ARPAK - The decrease in net ARPAK was attributed to seasonal factors affecting fees and the deferral of certain fees due to regulatory changes [61][64] Question: Outlook for efficiency ratio and expense growth - Management indicated that efficiency improvements will come from top-line growth outpacing expense growth, aiming for a long-term target of 30% efficiency by 2027 [72] Question: Asset quality and NPL levels - Management noted that the current NPL levels are influenced by product mix and expect further improvements as new products scale [90][91] Question: Increase in stage two formation for credit cards - The increase in stage two was attributed to regulatory requirements rather than a decline in asset quality, with no significant performance issues noted [97][98]