BBDO

Management Statement and Operational Highlights

• Transformation Plan: Launched ~2 years ago, focusing on 10 main topics with over 200 initiatives. Included diagnosis of Brazilian market, worldwide benchmarking, and plan to enhance competitiveness over 5 years.
• Digital Retail: 19 million fully digital clients, direct cost to serve reduced by 40x. Aim to reach ~40 million clients by 2026.
• Affluent Clients: Promoted upgrade to over 3.1 million clients, expanded Principal segment with new offices, focus on expanding share of wallet.
• SMEs: Market share growth, improved NPS, investment in digital model and 150 new branches in 2024.
• Technology: 22% increase in tech investments in 2025 compared to 2024. AI first strategy, focus on productivity, innovation, and time to market.
• Synergies/Innovations: Actions with Cielo, including Tap-on-phone, D+0 receivables discount, investment in Bradesco Financiamentos for commercial efficiency.

Guidance

• Recurring Net Income: Q4 2025 recurring net income BRL 6.5 billion, growing 20.6% y-o-y; full year 2025 BRL 24.7 billion, growing 26.1%. ROAE 15.2% in Q4 2025.
• Loan Portfolio: Grew to 11% in Dec 2025 from 9.6% in Sep 2025. Guidance for 2026 includes continued loan portfolio growth, with insurance operations exceeding guidance at 16.1%.
• Technology: Continued investment in technology expected to drive productivity and competitiveness, with ~3% of growth attributed to tech investments.

Segment Performance

• Digital Retail: 19 million fully digital clients with high BIA GenAI resolution, retaining 90% of digital retail calls. Direct cost to serve reduced by 40x. Aim to grow to approximately 40 million clients (account holders and non-account holders) by 2026.
• Affluent Clients (Principal and Prime): Promoted upgrade to over 3.1 million clients. Prime ended 2025 with 2.3 million clients. Plan to have over 4.7 million affluent clients and nearly 800,000 Principal clients by end of 2026, with expansion of offices.
• SMEs: Market leaders with 14.3% market share initially, gained to 16.6% by Sep 2025. NPS improved from 56 to 74. Over 5,000 managers, 2,100 service points. Focus on increasing penetration in SMEs up to BRL 300 million annual revenue.
• Credit/BU: Introduced credit view, pricing area, hired 250 professionals. Focus on risk-adjusted returns, portfolio management, and enhancing models for customer segments.
• Insurance: ROE 24.3%, growth in all lines, client base growing. Technical provisions up over 10% year-on-year.

Risks

• Macroeconomic Factors: Impact of elections and interest rate changes on business performance.
• Regulatory Changes: Resolution 4,966 affecting loan operations.
• Competition: Fierce competition in segments like SMEs and affluent clients, potentially affecting market share.

Question and Answer

• Q: About underlying business trends and NII guidance A: NII focused on secured products, mix, spread, and credit quality. Growth expected with focus on risk-adjusted returns.
• Q: About expenses and restructuring A: Expenses include technology investment, profit sharing, and footprint adjustments. Restructuring focuses on reviewing footprint and investing in transformation.
• Q: About capital outlook and CET1 A: CET1 expected to be around 11% in 2026, with capital discipline maintained and focus on absorbing portfolio growth and interest on equity.