Good morning, everyone, and welcome to the Conference Call to discuss our First Quarter 2023 Results. Thank you for your interest and participation. Our CEO, Octavio, will present Bradesco's results, and then we will have a Q&A session. [Operator Instructions] The presentation and other materials are available for download in our Investor Relations website. The presentation will be made in Portuguese with simultaneous interpretation to English. You can choose the audio of your choice on the platform. Now I turn the floor to Octavio who will begin the presentation of our earnings. We'll meet again in the Q&A session. Thank you very much. See you soon.

Thank you, Firetti. Good morning, everyone. Thank you for joining our videoconference to discuss our earnings of the first quarter 2023. In the first slide, we present some highlights. We posted a net profit of BRL 4.3 billion, a 10.6% ROE in the first quarter, in line with the expectations we indicated in the last earnings release and reflected in the guidance. Credit provisions are still high, however, within our indications. We saw positive progress in important lines such as insurance operations and market NII. This first quarter was marked by volatility in the markets, including discussions on interest and tax issues. However, the quarter ended better with a positive expectation brought on by the new tax and fiscal framework. As we mentioned previously, we see our second quarter performance still under pressure mainly due to credit provisions. We reinforce the message that we see our earnings evolving over 2023 with superior performance in the second half. We believe that our structural return has not changed significantly. Bradesco's management is focused on delivering returns compatible with what we have previously provided. But we do acknowledge that this is a recovery that will be gradual. Before we talk about our numbers, let's talk about strategy. There are a number of initiatives taking place simultaneously, such as in retail bank, high income, digital assets, IT and others. We've spoken at length about expanding our operations in high income; the purchase of Bradesco Bank, the Invest US, which is a partnership with BlackRock for the management of Investment funds abroad; the official opening of the new headquarters in Coral Gables that took place last week; the capital increase in Bradesco Bank now exceeding BRL 2 billion because we understand that this is fundamental, and we are allocating our efforts in this endeavor with…

We are back now with our CEO, Octavio. We also have the CEO of our Insurance Group, Ivan Gontijo. So we'll start now the Q&A session for analysts. Shall we begin, Octavio?

Yes. Let's put the show on the road.

Our first question comes from Eduardo Rosman with BTG.

My question is about the recovery of profitability. I think we can say that the worst part is behind us. I think that the bank has taken measures to improve profitability. But Octavio mentioned that this recovery should be gradual. So I'd like to know, maybe you could give us more color on this gradual recovery. The bank is taking little risk. It's focusing on perhaps higher-income clients. Maybe that can explain why this recovery will be gradual. I want to understand whether the bank is being positioned for a more difficult economic scenario ahead. Well, there are a lot of nuances there, but I'd like Octavio to explain how he sees this recovery, how long it would take. Could you quantify things a little bit?

Thank you very much for your question. Yes, indeed. Of course, we are somewhat cautious because of NPL that needs to be totally under control, and we already see positive signs, as you observed. But we have been reaffirming since the last quarter that, oh, yes, we have to worry and we have to be careful about delinquency. It should be present also in Q2, perhaps still in Q3. But all signs point to a very good recovery. The new vintages, the new cohorts have come with a better NPL level. And of course, we were more selective in credit, in loan granting. Of course, those worse-risk profile loans need more attention. But the good operations, the good clients with good credit ratings, well, we are giving them loans in an accelerated fashion. The highlight in Q1 is that there was a contraction. Legal entities did not ask for loans and also because the interest rates are somewhat higher. So people tend to be waiting to see what's going to happen in fiscal terms, the tax reform, the fiscal framework. So mid- to large corporation loan portfolio did not grow a lot in Q1. Coupled with that, the capital market in Q1 had very few deals happening. A lot of things did not end up happening. So we think that all economic agents are in the wait-and-see approach. And that's why we're talking about a gradual recovery. We built a first quarter within our expectations, and we mentioned that to you. In Q2, we'll try to do, and we're already doing it because in May, so -- we are in May. So we want to have a better Q2, build a better Q2 and recovering the earnings of the organization month-after-month to be able to deliver 2023 overall that is better than our initial expectations. I think that these are some of the challenges regarding gradual recovery. Now we have seen signs of a better GDP growth outlook for 2023, Eduardo. So even if this does not happen, even if the GDP does not grow as much as we would like, I believe that the bank is prepared. We have prepared for all the scenarios, and all of our lines are prepared. So even if the GDP grows more than expected or less than expected, the bank is well positioned to enjoy the good signs that we have. We did all the work in high income, as I mentioned. We did some work in retail banking, in investments, in other words, in all lines that make up the bank and also the insurance group that has posted an important result in Q1.

Second question from Thiago Batista with UBS.

Can you hear me?

Yes, Thiago, we can hear you well.

Well, I have a follow-up question to Rosman's question. We talked about ROE. And if -- with a focus on the insurance company, the ROE is 18%, if I'm not mistaken. How do you imagine the dynamics will be in terms of recovery for the insurance group? And in terms of asset quality provisions and looking at the short term, the dynamic of Q1 was slightly different. I had the impression that Q1 would be a lot heavier in provisions than the second one. When we look at Q1 numbers, they are very much in the middle of the range of our guidance. And it's below capital formation. So I'd like to understand the cost of risk of the bank for 2023. And also, I'd like to know about the profitability of the insurance group.

Thiago, okay. Ivan Gontijo, who's our CEO of the insurance group, will answer your question about the insurance company, and then I will address your question regarding provisions. Ivan Gontijo?

Thank you, Thiago, for the question. We see the insurance company in Q1 posting BRL 1.8 billion net income, BRL 25 billion in sales, up 13%, as highlighted by Octavio. And we're very comfortable with the result of our operations. Insurance operations, pension plans and savings bonds, they are all growing on both the guidance that we communicated of 12% and predictability for the future, which is what you asked about, is positive, which, of course, it will always depend on the economy of the country, the moment that the country is going through, the higher the job ability, the higher the GDP growth. In terms of the economy, of course, that will have a positive impact on the market of insurance, pension plans and savings bonds. We want to keep to the guidance in terms of ROE at 18%. This reflects our estimates, our forecasting. And I'd like to remind you that we do see some challenges in some segments, and we also envision challenges in the Brazilian economy. But we are confident that the insurance group will achieve its targets along 2023, always contributing with an incremental return that is requested from us by the bank.

Thank you, Ivan. Thiago, the insurance company is an important piece in the results of the bank. And the insurance company is behaving really well, is performing well, as Gontijo has mentioned. They have been posting constant growth and ROE that is important of 18%. In Q1, they made BRL 25 billion. I talked with Ivan that our goal is to have BRL 100 billion in revenues of insurance, premiums at the insurance company. And the fact that we have an insurance company that has all of its companies, Bradesco RE, Bradesco savings bonds, Bradesco private plans -- and you know that, Thiago. Although we have higher costs of service as we have in the insurance health, the insurance company, together with the team of the bank, we can all grow results, grow revenues of the insurance companies. So we always have very positive expectations regarding the insurance group. And then as regards the ALL that you mentioned regarding the volume of first half, second half, in Q1 over Q4 of 2022, what we can observe and quite clearly is that first, the volume of the loan portfolio grew less. Credit grew 5% year-over-year naturally because we kind of held back in those higher-risk loans. And of course, we had a lower need for provision. And legal entity credit grew less because of all of the factors that I mentioned with Rosman when he asked about this. Still, if you observe the overall percentage of ALL as a percentage of our total loan portfolio is 9.3%. So it is the highest index in our historical series of provisions vis-à-vis the loan portfolio that we have. So this level of provision -- of course, now we have 2 situations. We have BR GAAP, 2,682, which is the regulation in effect that we have to abide by, and the expected loss, IFRS 9, which will be in effect as of January 2025. So although it will only be mandatory as of January 2025, obviously, all of our modeling already looks and considers this kind of provision due to expected loss. Of course, we make adjustments between BR GAAP and IFRS so that they'll move in parallel, so that there will not be differences among the 2 or between the 2 unless there's a benefit in volume of provisions. So for these characteristics with operations, with a lower credit risk, a lower growth in the loan book and the provisions that have been made in the past, all of that explains the scenario that you mentioned.

Just one additional point mentioned by Octavio, we had a deceleration in credit origination in Q1. And in terms of reduction of provisions, we provision for expected loss. Deceleration in credit origination kind of explains this lower volume of provisions. And then as regards provisioning below the formation, it is related to the fact that we brought forward some provisions by expected loss. And in this moment of the cycle, we are naturally consuming these anticipated provisions. Next question, Domingos Falavina from JPMorgan.

It'd be interesting for us if you could share a little bit more about the evolution either of the NPL formation and delinquency or the data from now. And I apologize if I missed the comments that you may have made, but I think that the new formation was around BRL 12 billion. If you can explain a little bit more if it was spread out BRL 3 billion per quarter equally or if there was any improvement, any indication or if you can detail us the formation in April, that would be an indication for us. If you don't have about formation, you can just tell me about NPL 90 days, how temporary it is, that would give us an indication.

So throughout the quarter, we saw a slowdown of this formation. In terms of the evolution of the formation, we are probably maybe at the peak of formation this quarter. We're going to see whether it will be confirmed. It will still remain high in the second quarter. And we expect the beginning of a reduction in NPL formation as of the third quarter, but we'll have to see the actual trends.

What we actually see when we look at the new vintages or cohorts, what's been happening at least on maybe 3 and 4 -- and when I talk about new cohorts, I'm talking about August, July through October of last year, when we look at the delinquency NPL condition, but now we see very positive signs of a much more controlled NPL. And I said in my presentation that the new vintages, the new categories show that 95% are formed by clients who have better ratings. So that already gives us good indication of how it should behave over time or throughout the year of 2023. But it's natural, and we've been saying it, that this first quarter, NPL would still be a little high. In the second quarter as well, we've been telling you that it would also be a little bit higher. But this movement of the ratings that decrease over time as credit becomes stressed, we see that already happening. It's normal that it should happen. And that's why there's more consumption of the allowance, as Firetti mentioned. So it's almost intuitive and natural. At a time of a more positive cycle, you set aside more allowance so that at a time of a more restrictive scenario, you can consume those provisions. But as I said, I don't know if you were listening yet, but we have 9.3 of total provisions for the total credit loan portfolio. So if you consider the coverage level of our portfolio, excluding those operations that are 100% provisioned for, considering base 1, all of the provision with the portfolio with credit for more than 90 days is at 58% coverage. So we see, first, a very adequate level of provision, and the NPL has been improving. We haven't closed April yet, but it is already better than March was, than February was and so on.

Next question, Tito Labarta from Goldman Sachs.

Can you hear me?

Yes.

Yes.

I guess my question is on revenues, right? And we saw your net interest income down in the quarter, pressure particularly on the client NII. You're slowing down loan growth, right, some pressure on spreads as well. How do you think about your ability to deliver on the revenue guidance, both, I guess, on the net interest income and then fees as well? But on the net interest income also, the client NII looks a bit weaker, partly offset by market NII, which seems to be doing a little bit better than expected, although still negative. If you could just help us think about those dynamics in the current environment with still high rates, slowing loan growth, and what does that mean for both the client NII and the market NII from here? And then so the fees, I mean I know there's some seasonality, but most lines were down in the quarter. Do you think this 2% growth is what we should expect? Anything that you can do there to improve that fee income growth from here?

So Tito, about the loan portfolio that was better, you're right, there was an increase of 5.4%, but as I said, mostly due to the caution that we had with those clients with the worse credit profile -- credit risk profile. But it's -- we see the growth that we're getting in the personal loan and real estate financing, even in payroll deductible loans that ended up growing less because it was impacted by that issue that we had or the cap of the interest rate. We were almost for 2 weeks unable to operate, but all of those portfolios have been growing well. Where we saw lower growth, that was an involution of 4.5%, was operations with larger corporates or medium-sized companies mostly due to the lack of demand maybe because they were standing by and waiting before they start taking loans again. Large corporate basically making or taking loans for the moment working capital mainly, but credit operations for longer terms, for investment or for other purposes that have a longer maturity, even due to the interest rate of nearly 14%, there's a sense from the companies that it's time to wait a little. The tax framework was already disclosed by Haddad. There's good expectations for the tax reform. It seems that the good signs that we're starting to see in terms of inflation in the country as well, maybe the profits have not yet reached the desired level, but we can already see a sign or an indication of improvement. Even the statement of the Central Bank for the last Copom meeting already mentioned a scenario that doesn't show as much pressure for interest rate increase. So the scenario seems to be improving, and everybody seems to be standing by before growing. We have a portfolio in…

Just in addition about net income, NII, one of the good news that we had this quarter was the improvement of market NII. As we said, this has been following a trend of gradual recovery. It's improved this quarter. We believe it will continue improving over the next quarters, possibly closing the year at a positive point even in the second half of the year, as a whole being positive. So in terms of driver for total margin, for total NII, that's the base of our guidance. The dynamic of the NII and the market NII is very important.

Great. If I could, just one follow-up just to understand on the net interest income because the other pressure we saw there was on the funding mix, right? The demand deposit is down quite a bit in the quarter. Time deposit is kind of flattish. I mean we're seeing this kind of globally where people are shifting to higher-yielding-type funding. Do you think that continues to pressure your net interest margin also? And how long before that can begin to stabilize? Or anything that you can do there to boost those demand deposits from here?

So Tito, the population really did need to consume the savings that they had, that we see a drop, not only in Bradesco but in all financial institutions. I think that total deposits is also a reflection of the growth of the country's GDP, the volume of business, the volume of money circulating. And people are also trying to protect themselves by making other investments, especially to make the most of an interest rate that we have of 14%. So it's a migration even from investment funds, not fixed income but from multi-market funds to these operations of fixed income because they're paying high with the interest rates at 14%, even with an expectation that economic agents may have in mind that this interest rate may go down. So they're making the most of this moment of a higher interest rate.

Our next question comes from Rafael Frade with Citibank.

I have two questions. One is a follow-up question regarding NII. Just want to understand, you're making a move towards lower-risk clients. One of the effects of that is an eventual reduction of NIM. There was a slight reduction in this quarter. And I'd like to understand, how do you see this looking forward? Are we getting close to stability? Or should we expect another marginal drop in NIM? And I think Octavio spoke about origination of clients in the last 12 months with rating A, 95% credit rating. You have an interesting table on Page 15 of the release that shows the evolution of rating for clients originated in the last 12 months. And there was a big improvement vis-à-vis Q2 2022, but then it kind of flattened out perhaps above the previous levels. So we've had a great improvement. That will translate into results, but we don't see additional improvements. Perhaps this is the new level. I just want to understand that table.

Well, Frade, yes, it is a little bit of what you said. We were more selective in higher-risk operations. In other words, operations with no collaterals, consumer credit, operations with limits that are made available in the mobile app. In other words, operations that are going on in the app. But then you get to a cap because we have to acknowledge that we operate in the Brazilian market, in Brazil, and Bradesco reflects the Brazilian population and the economic agents. So we can have an improvement because we've reduced the acceptance of those loans that have a higher risk because the population, Frade, I mean we have to acknowledge that the Brazilian population has more debt now. On one hand, it is easier now to have checking accounts in 1 to 5 banks. So clients now don't have to go to a bank branch. They can open a checking account over an app in 4 to 5 minutes with just a few clicks. It's a very attractive journey, we understand that, but it makes things easier. In Brazil -- in Bradesco, we opened 12,000 checking accounts every day in the mobile channel. So that makes it very easy, but it's also easier for the clients to get credit. Using their credit cards, it doesn't matter the limit, if they have BRL 100, BRL 500, but it's easy for them to get credit in 1, 2, 5, 6 digital banks. The whole context made it easier for people to get more credit and to have more debt. So there are these two aspects. So we reached a cap in terms of what was possible to select clients with a better credit rating. Of course, we need to operate, continue to operate with lower-risk clients. We've been accelerating our loan book.…

Next question from Henrique Navarro with Santander.

Kind of a follow-up question to Tito's question that to me was not very clear. You're talking about portfolio growth and NII growth were negative in the quarter, materially below the guidance. So my question is, when you released the guidance, was this kind of performance expected? Will these 2 numbers eventually convert directly to the bottom of the guidance range? Or should we consider that there is a real risk of guidance review in the second half of the year?

No, no. You're correct in what you said, Henrique. The portfolio growth, as I said in the presentation, has a trend to convert to the guidance. And we are working on it, converting not only towards the bottom of the guidance but at least in the middle of the guidance, the middle of the range. You said this is something that we already had in mind because we knew that Q4 of '22 and, consequently, Q1 of '23 because of delinquency would have an impact on credit. It was in our mind. We knew. We expected this to happen. Our expectation is that things would be a little better in Q1 in terms of growth in operations of corporates, which did not happen for a number of factors that we talked about. Even in the capital market, we could see a very weak performance. But we understand that given the expectations that we have observed and also the expected GDP growth communicated by the Brazilian Central Bank recently, all of that is favorable for us to post a greater growth of the loan book in 2023. So yes, we had it in mind that Q1 would not be that good because of the restrictions that we adopted in credit granting. And our expectation is to seek the middle of the guidance or the top of the guidance range.

And I think it is important to mention that when we speak about NII, our guidance is for total NII. Market NII performed a little better than expected with this gradual improvement trend. So considering the total NII guidance in addition to this dynamic that Octavio explained so well, the dynamic of market NII seems to be contributing as well. Next question, Mario Pierry, Bank of America. Okay. We'll move to Pedro first then, and then we'll go back to Mario, okay? So we'll continue with Pedro Leduc, Itaú BBA.

In the ALL and portfolio that we communicate, I'd like to conciliate a little bit more the messages that you told us and the moving pieces of these two sides of the guidance. On one hand, you're saying you're seeing loan cohorts already performing better, and that's why you had the confidence to reduce coverage and so on. But on the other hand, the portfolio was very slow, and you said yourself that NPL formation in the second quarter is still high. If we follow the same pace of ALL and NPL formation in the second quarter, the coverage will drop even further. It's below 100%. And if the portfolio accelerates to meet the guidance, it should attract more ALL because of the model, the expected model. So I'm having a hard time conciliate the scenario where the portfolio increase is getting into the guidance and ALL remains in the guidance without the greater drop on coverage. I'd like your help to put these pieces together, the loan portfolio growing without dragging ALL further. And whatever you have in terms of ALL vis-à-vis coverage to the end of the year, that would be good.

Look, whenever we look at the provisions or ALL, I'd like to comment that quickly with you, we're looking at it within expected losses in IFRS 9, on one side, where you have the provisions, considering everything that could happen to your loan portfolio, observing the concept of expected loss. But what we've done over time in a more positive cycle, we started to make additional provisions or extraordinary provisions, those provisions that we make. And at the time that the cycle is not quite as positive, when it becomes more challenging, you start to consume part of those provisions but always observing this movement of expected loss. Of course, we also expect an increase in our loan book, and we're working to increase it. It increased 5%. Our guidance is from 7% to 11%. So there's still some ways to go for us to be able to meet it if we took the middle of the guidance, for example. As a reference, this is only an example, but an increase of around 9% of loans, it's not that far from 5.4% that we grew now. And of course, that increase should occur through operations that have a better rating level, a better credit score and therefore require less ALL. And when you put that into the model of expected losses, you have a lower consumption of ALL because of the improvement of the assets you're working with, because you have guarantees associated to that operation. So it seems to me that this balance is quite adequate, an increase -- a quality increase in portfolio with a smaller need for provision. So it doesn't seem that the fact of we increasing credit could somehow consume such a level of the allowance that would lead our provisions to decrease more drastically.…

Is Mario back? Okay. We'll turn back to Mario Pierry. Can you hear us now?

Yes. Can you all hear me?

Yes, we can hear you.

I apologize for the technical problems. I have 3 quick questions. First, Octavio, you asked about -- or actually, you said that market NII should be positive in the second half of the year. I'd like to understand a little bit the visibility that you have about market NII. Does this depend on the interest curve? Or if there's a Selic rate decrease before, could that have a more positive impact on market NII? So I'd like to understand, in your mind, with what you can see considering what you said that market NII would improve in the second half of the year. Second question about delinquency. You said we're close to the peak, but you still expected to be worse in the second quarter and maybe the third. So it's going to take us 6 months to see the peak of NPL. What are the lines that concern you the most within NPL? We saw a worsening on individuals' NPLs. So if you can detail other products, which products are getting worse NPL? Nobody asked yet, but the other question is about the tax rate, to pay the tax rate closer to 10%. I understand that was the IoC benefit. But the soft guidance you released in the beginning of the year had a tax rate of 16% to 20%. I'd like to understand whether the guidance still stands from 16% to 20%.

About your first question on market NII, that's exactly it. Market NII will improve. The first quarter was a lot better than the last quarter of last year. If you look at the book -- if you can have a look or maybe our guys can send it to you later, but it was 800 in last quarter of the year. It was 300 now, so -- in the first quarter. So it is improving quarter-on-quarter. So our visibility is very clear, very transparent that this will improve irrespective of what happens to the Selic rate. Of course, that movement to bring down interest rates, the Selic rates may make this scenario even better. But it will be a marginal improvement because we did what we had to do. So what we're going to see quarter-on-quarter will be an improvement on market NII. In the last quarter, it will be positive. That is regardless of what happens with the interest rates today. Of course, as I said, if the Selic interest rates goes down -- interest rate goes down, it improves, but it's a marginal improvement. As for NPL, let me make this very clear. We told you two quarters back that NPL would remain high in the first quarter and in the second quarter of this year. The third quarter, our expectation is that this will already be controlled. So first and second quarters for sure. And then of course, we expect to have greater control. And then on the third quarter, we expect it to be at a stable level. That's what we're seeking, that's what we're working for, and that's what the signs tell us. You talked about the worsening of the delinquency. The lines that brought more NPL issues were the lines of credit cards, credit…

Yes, Mario, what's implied in the 16% to 20% is that we really do expect to get better results in the second half of the year, as we have been saying. And therefore, the benefit of the IoC that remains somewhat fixed makes up for less in terms of taxes. So that brings the tax rate up. That's the dynamic. Next question by Daniel Vaz with Credit Suisse.

My question, well, I'd like to insist on portfolio growth. We heard that write-offs accelerated a little. It was [for 500]. It dropped a little. So we need a little bit more -- unfortunately, we're having the sound chopped. So I'd like to understand, you have less appetite in more aggressive -- the graph on base, the 100 of credit approval in retail in a more difficult scenario, in corporate. Where will the growth be coming from, in what lines so we can achieve the guidance?

In the last quarter call, we talked about this, and growth was expected in more collateralized lines. Credit card in retail also grew.

So what are the priorities in terms of portfolio growth? And will you have to accelerate loan granting?

Well, loan book growth, we spoke a little about this. The write-off has been greater than origination, as you mentioned. But if you observe, personal credit growth is 6%, rural loans 7%, 8%. Mortgage is performing better. So I believe that for the year 2023, we are going to have better growth of these credit lines, personal credit, collateralized personal credit or the rural loan portfolio that should grow. We are taking part in all agricultural trade shows. So if we get just a trade show that is happening as we speak, every show, the business volume, we already have business contracted at the fair 3 times more than in last year's agri show. So I think the rural alone is an important growth portfolio. So we've been seeing growth for corporates in the business plan and for end consumer, for individuals. Obviously, the interest rates did get in the way a little, but Brazilians end up paying installments -- or it has, but they do get mortgages to buy their own home. So that is expected to grow. Foreign exchange deals and operations should have a better dynamic now starting in Q2, Q3, Q4. Particularly Q2 should post a better growth dynamic considering the dollar rate that we currently see. And for corporate, the corporate line will grow. So micro and small enterprises have been suffering more, Daniel. It is true, but there are good companies out there in the market. So just one detail here, story to tell you. A month ago, we visited all capital cities of Brazil where we have our regional offices of the bank, 17 capital cities. So we visited them in 9 business days. So we visited and met with the whole managers of the bank, conveying to them the same message, criteria, preserving credit quality, that we need to give loans to good clients but that we cannot stop operating. We need to operate without a good pricing, credit operations without a good pricing. And that was the message for the whole team, not only for the retail bank but for the whole sale team as well. So I think that in essence, to answer your question, I think that the main lines that are expected to grow more where we can have better growth would be personal credit line because it has pricing to withstand a perhaps higher delinquency. Credit cards, easy, higher spending by higher-income clients, real estate operations, mortgages, rural loans and exchange. And of course, these portfolios will take us to a growth that is close to 2 digits. One technical aspect about your question, the increase in write-offs is also related to the fact that we did not sell portfolios in Q1. The write-off have been a little lower because part of what would be excluded via write-off was excluded via sale. It's not that the level changed so much. There is also this aspect that explains this difference.

Next question, Renato Meloni of Autonomous.

I just want to speak a little about growth. The acceleration expectation comes from a less restricted policy of credit or does it come from market recovery? That's my first question. And I'm looking at Slide 17 of the presentation. And there was a big increase in delinquency, 15- to 90-day NPL of large corporates even excluding Americanas. So could you give us some color on what led to that?

Well, the growth of the loan book -- well, the credit market is growing because economy of the country is doing better, because the GDP growth expectation is higher. Economic agents, companies, businesspeople, entrepreneurs, they are all more prone to take on a little more risk because they envision a better outlook looking forward. Of course, if the economic situation improves as we expect to happen given the fiscal framework, the tax reform and the possible reduction of interest rates, all of that would help and would drive the loan book to improve as well. But regardless of that, regardless of economic growth that we expect to happen -- because it is important, it's good for all companies and for all Brazilians and also for us in particular. But regardless of that, we do see room for greater growth for our portfolios because we made a decision, because we are cautious of reducing credit granting so that we could control delinquency better because delinquency is happening in lower-income groups and SMEs. So regardless of the economic scenario, our risk appetite, for those operations that have spread, that interest rates that can cover a possible loss, will be adjusted over time. So that's point number one. Point number two that you raised regarding that increase in 15- to 90-day NPL, that's the specific case of the retail bank clients, of corporates. That was this indicator. So it's a specific case. There was that case that we talked about in Q4 that we provisioned 100% for, and there was another case now in Q1, but that is a case that was 100% provisioned for. And it is a case that was already in the bank, and it came in through a specific dynamic of maturity. They renegotiated. And of course, this matured, it is 100% provisioned for, but of course, it does have an impact on delinquency because the renegotiation matured.

Next question, Gilberto Garcia, Barclays.

I had a follow up question on your -- the trends, particularly in credit cards. I understand it’s very difficult to hit the brakes hard and stop growing in the segments that you are trying to be emphasized. But you also sounded very optimistic when you were talking about the opportunity in the higher income segment. So my question is, will the stronger growth in higher income, allow you to continue to grow sequentially in credit cards. And whether this will lead to an improvement in the financial margin or only in the financial margin adjusted for risk?

Thank you for your question. Gilberto, the trend -- let's understand this. The ecosystem of credit cards in Brazil is amazing. 40% of deals or transactions that the Brazilian people make of consumption is through credit cards. It's even higher than in the United States. United States, I think it's 38%. In Brazil, it's 40%. So 40% of the Brazilian population also has their credit cards in hand. And credit cards move 21% of the Brazilian GDP. It's something close to BRL 2 trillion. So the credit card industry, the credit card ecosystem in Brazil is very important, very intensive with multiple players. So credit cards.

And just to add, credit cards, as I said before, also made people to get more indebted because they were able to get a credit card either with their banks or digital banks, because of how easy it is for them to open a checking account through mobile banking, as I said earlier. So yes, we did step on the brakes. We decreased loan or credit concessions to lower-income people. Not only Bradesco, but if you look at the industry, due to the level of indebtedness of the Brazilian population that it really did reach historical levels, everybody started to hold back on loan concession or long granting for this lower-income population, either by not giving them credit cards or working with very lower limits than what we usually work with due to the indebtedness level of the population. But there's a share of the population with the medium income or high income that we did to consume a lot on credit cards, have a much higher spending level on credit cards, which result in fees and exchange rates that help in the formation of results but also on client NII, it forms the NII -- the NIM rather with the clients. This work on the higher income and this availability with the high levels of higher income, with the volumes, it is a strategy. It's part of the bank. It's something we are adopting. I'm sure that it will result or bring a difference in the NII but already risk-adjusted. So there is also an appetite for growth on credit cards for that population of a higher income level. And this population also brings a very strong benefit in fees especially. Yes, I said, there's higher fees involved as well.

Next question, Carlos Gomez, HSBC.

I have two questions. The first one is on capital. You finished the quarter with 11.1% CET1. Has your goal for capital level changed given the current uncertainty in the world and what we have seen in other markets? And the second one is more in the medium term. What do you expect for growth for the business, for credit for 2014, '15, '16, for the coming years?

So in terms of the capital goals, Carlos, we didn't have any significant difference or change. We have a very comfortable capital base. We believe that our capital will continue to grow throughout the year with the interest and interest rate. And after this moment, especially in the second half where the results will get better, this also tends to bring benefits in terms of capital through earnings retention. So I don't think there's been any significant change in terms of our capital objective. We see capital evolution as a continuous process that comes from the bank's operations and our profitability and accumulation of profits. As for our growth objectives for coming years, we believe that after this phase wherein we're strongly focused on controlling NPL, we will go back to a more important credit origination. We have a strong focus on retail, as Octavio said. So we believe that this segment has important opportunities for growth after this more delicate moment of the cycle. So we see Bradesco as a player who will be growing together with the market's growth or even growing more than the market at some points whenever we're comfortable.

Yes. Carlos, capital, as we had said, ended up growing now in this quarter. There's no target, there's no guidance for that, but our expectation is for generation of results, of profits, even the bank zone operation, as we showed you in the presentation. So it's the continuity of maintaining capital level at a robust point, as we have always maintained at the organization. And the bank's growth, Irrespective of this moment of being at a more unfavorable point of the cycle in terms of delinquency, this is something that is addressed by the bank's risk department, the bank's loan department, but it points managers, bankers -- our relationship managers at the end have that clear purpose. They have that clear purpose for continuous growth, either in the bank or product services, at our insurance products as well that have been growing soundly, either in terms of the loan book growth or results generation, they all have a target, a budget, an NPL to meet in the year '23, '24, '25. So this view -- the strategic plan of the corporation, not only the bank but the corporation itself, with all the companies of the Bradesco conglomerate, have this goal and this very clear plan to continue to grow with quality, with profitability but with a clear purpose of continuous growth.

Yes. But do you mean growth of 8%, 10%, 12%, 15%? What's the realistic objective for Brazil in the coming years?

Any growth of any company is very much linked to the ability of the country to grow. The more the cash grows, the more the Brazilian GDP grows, the more companies will grow. So it's kind of hard to give you a number, Carlos, that yes, we're going to grow 4%, 5%, 10%. It's hard to do it. We'll grow what is possible to grow with quality, with profitability. But it really depends on those scenarios, not just in Brazil but also globally so that we can grow safely and delivering results to our shareholders and always maintaining the robustness and health of the bank's balance sheet. It's hard to give you a number at this point, and I think that it depends on a number of factors.

We are moving now to our last question by Eduardo Nishio with Brasil Plural.

I also have two questions. First -- well, they're both related to the bank's performance in this cycle. We had a slightly worse performance than your peers. So starting with market NII that drove a lot of revenues in the past, in this cycle, it was a detractor. In your evaluation, do you think you need to redraft your ALM strategy for the next cycles? Are you thinking of something different to avoid this kind of volatility in your results? Second question, regarding the quality of assets. You have a large exposure to individuals and lower-income segments. I don't think that this should change in the positioning of the bank. So I'd like to know from you, do you consider any of the strategy to try to quickly anticipate and identify these cycles? And perhaps since I have the mic, the changes that you're making in retail, is this related to this exposure to low income and individuals? You are reformulating perhaps your digital platforms. And the change in the profile of clients, do you see a correlation between these changes that you're implementing and a better positioning in individuals?

Indeed, the market NII this year -- last year and this year, just in the beginning, it was worse. But we also have to remember that in the last 7 years, the market net interest income has been very good for Bradesco better than our peers. Now of course, a very abrupt change that happened in Brazil, the interest rates increasing very quickly in a very short period of time, of course, that ended up impacting us. But this has been corrected. Obviously, we are a big bank in funding, in retail operations. So we have -- actually, we have to capture more clients for demand deposits, for savings, for funds, in all capturing lines so that in a moment of high interest rate cycle, we can have a more adequate balance. If I don't gain a lot in market NII, I can make more in fee income given the interest rate differential between what I invest and what I put out in the market. So it is always important to grow your capturing levels. So if I should say that we changed the ALM strategy in the bank, no, we did not change, it is more conservative, with the only different factor being a high increase in interest rates that cannot be expected by any economic agents. We cannot imagine that interest rates would grow as powerfully and as quickly as it did. But it's part of economic cycles. It's part of managing the treasury of a bank like Bradesco. And like I said, in prior years, the strategy is always winning strategies. So I think that the bank's strategy, the ALM strategy is preserved so that we can enjoy the moments. And as regards exposure to low income, you said it yourself, Nishio. We are a retail bank.…

Very well then, thank you very much to all. We are now closing the Q&A session. Questions that were not answered during this call will be answered by our Investor Relations team. I'd like to remind you that the release is available in our Investor Relations website. Octavio, your final remarks.

I'd just like to thank all of you for being here with us participating in this earnings conference or videoconference call. It's always a pleasure to be able to talk more and in more detail about the bank to you. Certainly, now the IR area will start to schedule meetings that we're going to have closer to you. We remain available. But in any case, our Investor Relations department is available to all of you to take any doubts, to provide additional information. I wish you all a great day, a great weekend. And thank you very much for your attention.