Good morning, ladies and gentlemen, and thank you for waiting. We would like to welcome everyone to Banco Bradesco First Quarter 2017 Earnings Results Conference Call. This call is being broadcasted simultaneously through the Internet in the website, www.bradesco.com.br/ir. In that address, you can also find the presentation available for downloads. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Banco Bradesco management and known information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Banco Bradesco and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Carlos Firetti, Market Relations Director. You may proceed.

Good morning, everyone. Welcome to our conference call for discussing the first Q '17 results and also our strategy. We have today with us Mr. Alexandre Glüher, Executive Vice President and Investor Relations Officer; and Mr. Luiz Carlos Angelotti, Executive Director of Banco Bradesco. I turn now the presentation to Alexandre Glüher. Alexandre Glüher: Good morning, everyone. Thanks for joining our conference call today. We are discussing the main highlight of our results and later [indiscernible] will more details on the discussion. The first - into the discussion about the quarter, we would like to briefly talk about the Brazilian economy outlook, which we understand is currently experiencing an inflection point. There are clear signs that our economy is gaining momentum and have returned to growth in the first quarter. Our expectation is that the growth plan will continue to accelerate towards the second half of the year. Unemployment is reaching its peak and will probably start to reduce gradually later in the year. We are going through one of the more important and sustainable interest rate including charges as we've seen in Brazil, which should further consolidate our economic recovery. We believe that we are closed to conclude an important part of our reforms. In this context, we have a positive view for the future. Now regarding our results, this quarter, we have allotted the reduction in our delinquency ratio as a consequence of our actions to improve credit quality and also due to the natural dynamic of our loan book. We have been observed by recording low growth so far, mainly due to low credit demand. However, we have a relative improvement in credit origination for some portfolios in the individual segment. We believe the demand for loans will continue growing as the confidence rate in the economy…

Thank you, Alexandre. So going into more details in the presentation. We are in Slide 3, where we have the main adjustments in our net income to reach the adjusted net income. The main adjustments we make is the elimination as nonrecurrent of the goodwill amortization expense that amounted BRL 554 million in the quarter. Only remind me, we expect to amortize BRL 2.4 billion in 2017. In Slide 4, we have the main items of our P&L. Basically, net interest income presented a Q-on-Q drop of 0.3% this quarter. Focus is on the pro forma variations, minus 8.7% year-on-year. Basically, net NII was negatively impacted by NII from interests, especially the [indiscernible] portion, and also, the impairment of assets. We have impairment of BRL 420 million this quarter. And we will go into more details on the slides later in the presentation. The positive highlights of the quarter was allowance for loan losses expenses, which dropped 12% in the quarter and 27.3% year-on-year pro forma. We had good performance in terms of operating expenses. We reduced them 1.5% year-on-year - quarter-on-quarter. And we had a reduction of - sorry, we had the reduction of 7% in expenses quarter-on-quarter and reduced 2.8% year-on-year on a pro forma base. Our fees in the quarter dropped 1.5 and grew 2.9 year-on-year. We also will go into more details in the guidance. Our net income in the quarter grew 6%; and year-on-year, 13%. Our active expanded 4.1% in the quarter and 12% year-on-year. With that, our equity reached 18.3%, expanding from 17.6% in the previous quarter, while our return on assets remained at that 1.4%. In Slide 5, we have the breakdown of our earnings by segment. Insurance represented 30% of our earnings in the quarter; service revenues, 29%; and credit intermediation, 33%,…

[Operator Instructions] Our first question comes from Mr. Jorg Friedemann from Citi. You may proceed.

I have two questions. In the part of this call, you have mentioned that you believe that you should achieve the bottom of the guidance for net interest income. That implies during this presentation, a drop on a pro forma basis year-over-year. The new regulations of credit cards to which banks cannot maintain clients for the revolving lines for after 30 days became effective in April 1. Would it be reasonable to assume that to expand this more conservative guidance and that this pressure in that would already hit the numbers for the second quarter? And this is the first question. The second question, you mentioned also during this presentation, the strong performance on the operating expenses side. And you claimed that the good progression in the midst of your expenses was also related to the normal rationalization of branches. You closed 192 branches during this quarter. But I was looking into the historical figures. And with the reduction of branches in this quarter, actually, you have done more than you have originally done in each of the last 10 years. So is this really a normal rationalization? Is this related maybe to the HSBC integration? Or a digital strategy? I would like to have some more color, if you could. Thank you very much.

Thank you, Jorg. Regarding your first questions on the credit cards and the impact on margins, our guidance for NII already implied the impact of the new credit card regulation. Basically, we mentioned that probably, the tax will be around BRL500 million pretax for full year '17. So we expect that the new regulation bringing a negative effect historically in the second half. But it is already considered in this guidance. The pressure in the NII, as we mentioned, this quarter specifically is related to this calendar effect, or it is helped by this calendar effect. But we have been suffering the impact from volume. I think this really is one of the main impact we have in the NII. Regarding branches, you are right. We have been - we have done more this quarter. A part of this reduction was the migration for points of service or [Foreign Language] in Portuguese. It is, one, something we have been saying we would do. We have this performance that is basically is smaller. It perfectly serves some regions and we can replace some branches. It's low cost for this. But basically, we are really looking into details in our branch network. We always do this in an environment where we have all the trends on digitalization, et cetera. We may actually have room for changing habits, if they have room, if necessary, to do more adjustments like this.

Okay. Just a quick follow-up on that and I know that answer for that. You still have, I think, the biggest branch network in the country. So you just integrated a very big bank with a strong capital [indiscernible] you have some in South and in the U.S. So would it be reasonable to assume that ahead of this rationalization, you could continue doing additional closure during the coming quarters and capturing additional synergies with HSBC on top of it? Thank you.

It's a performance. We haven't closed a, typically, branches from our edition. Most of what we have done in this quarter is basically look into Bradesco's own network. And we will, we always do that. And you're right. Now, we have a bigger branch network. We have all these changes and these changes in terms of habits of banking customers. We have the new digital strategy, and we will be constantly looking into that. And also, whenever necessary and whenever it makes sense, switching from full branch to point of service, that really is a very good tool for continued servicing our clients, having a presence at lower cost fund.

Our next question is coming from Olavo Arthuzo of Santander. You may proceed

I would like to talk about the asset quality of the bank. Your delinquencies accelerated in this quarter in the individual segment. Why in the others, you sell? And in looking at the previous years for the same period, there is a movement for this quarter has shown to be a little different. So could you please describe to us a little about the behavior of this based on the effects of unemployment to persist around the semester? Thank you.

Thank you, Olavo, for your question. I'm not really sure what you mean about being different. We see this increase in the 15 to 90 days delinquents as smaller than last year. Basically, we also see, and we look to our internal data on interest. The data is doing well. It's been performing better than the current delinquents. So there's no - nothing that we see different in the early delinquent. Actually, what I just mentioned on the behavior of the business, et cetera is what is behind our yield asset. There's room for continuing improvement in delinquents.

Okay. And you guys feel comfortable with the scenario of increasing [indiscernible] rates to the - during the semester?

We are comfortable that this seems to be the trend for the rest of the year.

Our next question is coming from Mario Pierry of Bank of America. You may proceed

Two questions as well. First one, it's related to asset quality. It's clear, right, looking at your presentation that you feel very comfortable, the asset quality, especially in the SME and individual segments. However, large corporates still seems to be lumpy. I would like to hear from you, what is your outlook for large corporates? Do you think we could still see other cases, specific cases throughout the year? Or do you think that the NPLs for large corporates should start to come down as well as the year progresses? Related to asset quality, right, if we - in your lines of provision charges this quarter, we'll get to a number of BRL 19.4 billion below your guidance. I was just wondering why not change your guidance for provision charges? And then the final question is related to - you made some statements in the beginning of the presentation saying that the economy is at an inflection point. You show that you are well capitalized. Just wondering, when does the risk appetite for lending return? What are you waiting for before you get more aggressive in lending? One of your competitors is already more aggressive in the market. I was just wondering what is it going to take for you to become - to increase your appetite for lending again. Thank you.

Mario, regarding large corporates, basically, we don't see other cases like this. This was kind of almost like a very special case in the sense that we already had full provisions for it since the end of '16. And for specific contract reasons, it only migrated to default in October and now to 90 days delinquent. So we don't see things like this anymore. Basically, most of the credits we have for each bank, different provisions in the sense how they are positioned in the client and far from the provisions of our - each client. They are positioned here in [indiscernible]. So we, most likely, don't see a case like this repeating in the year. Regarding our guidance, you are right. Our guidance, as Alexandre mentioned, looks conservative. We - not only don't revise our guidance before the middle of the year. And we think, it is conservative, but we prefer not now - really not changed. Let's see the evolution in the coming quarters. In terms of risk appetite, we haven't changed much our risk appetite. For sure, we have made some changes in the models. In some lines, we are requiring more collateral than during the past. But we were observing the past two days, our approval rates in many portfolios. And actually, we did not reduce much the approval rate. In some specific lines, we had slight improvements more recently. But looking historically, it's not really a big reduction in the approval rate. What we had is a reduction of the number of quotations, the reduction in demand. Clients are actually reducing their lower confidence, our volume in less credit. We believe that - we know that we are already seeing the improvement, the origination in some lines, especially for individuals. We think individuals probably is going to be the first one to have demand improving even more. The portfolio is not - actually, it's not dropping. It's still flattish and probably will return to growth. But the real improvement in growth will come as the economy improves, as the unemployment peaks, as the land increased. We don't think there's much we can do just to really become more - originate more from our side. We really need more and better demand.

Okay, so it's clear, the problem then is more on the demand side rather than the supply. If we can go back to this specific large corporate without mentioning the names, can you just tell us in what segments of the economy it was related to?

Yes, we are not disclosing that. It is - but as I said, it's a company that is already fully provisioned for a long time.

Okay. And then you're right about in second quarter?

Second quarter.

Our next question is coming from Domingos Falavina of JPMorgan. You may proceed.

Just on loan growth, what if sort of shrinking a little bit, I guess, the [indiscernible] the previous question, but loan loss provision is running low versus guidance. And it seems loan growth is also a little bit shy of the tracking for the year. So do you expect a bit more like rebounding in the second Q, third Q, just to get a sense on loan growth reasoning?

Thank you, Domingos, for the question. As I said, we have seen already some increase in origination for the individual segment. And we believe that second half as the bond continues to improve, we'll be better. So we think growth can return in the second half. Our guidance, since the beginning, [indiscernible] we expected more to the bottom of the guidance, the 1%. So we think this [indiscernible] or around it, it's still feasible.

Excuse me, ladies and gentlemen, since there are no further questions, I would like to invite the speakers for the closing remarks. Alexandre Glüher: We would like to thank you for the participation and questions. Luiz and I are available for additional questions as necessary whenever you want. Thank you and have a good day.

That does conclude the Banco Bradesco's audio conference for today. Thank you very much for your participation. Have a good day.