Hello. Good day, everyone. Thank you for participating in our video conference call to discuss third quarter earnings results. It is a pleasure to have you on board. In the initial point of the event, Octavio will present the results of the bank. Then we are going to start the Q&A session. If you want to ask a question, you can send them via email or use WhatsApp in the address and phone number that you see on the screen. The presentation will be in Portuguese with simultaneously interpreting into English. And you can select the audio preference directly in the window that you're watching. I'd like to remind you that the presentation and other materials are available for download in our Investor Relations website. I now turn the floor to Octavio who will start presenting the results. I'll see you again momentarily in the Q&A session. See you later.

Thank you, Firetti. Good morning, everyone, and thank you for joining us on our earnings video conference call. We will start our presentation with the highlights slide with the main numbers of the third quarter. Then we will talk about some strategic initiatives that aim not only to control costs, but mainly the increase in revenue. And finally, we will talk about the quarter's numbers. So Bradesco had a net income of BRL4.6 billion, up 2.3% compared to the previous quarter. With operating income growing 5%. ROE was 11.3% in the quarter, still below the level we would see as appropriate. As you will see during the presentation, we have made progress on several key points, but we are fully aware of the challenges ahead. The portfolio of the book loan or the loan book grew 1% driven mainly by large corporates. Delinquency rates were down, which reflects an NPL creation, falling BRL1.6 billion and lower credit provision expenses by BRL1.1 billion. Our 90-day delinquency indicator improved by 10 bps with reduction in large corporate and individuals despite the portfolio shrinking, which has an important denominator effect on the ratio. In small- and mid-size enterprises, the indicator still grew. But we are now seeing an improvement in 15 to 90 day delinquency ratios and in the quality of the most recent credit vintages. Basel ratio Tier 1 rose 55 bps. Finally, the insurance group continued to show a good level of result, making a significant contribution to the bank's performance. I'd like to speak a little about BRADigital. We had an important addition in our innovation system, a new technology hub and innovation that we just implemented to more than 600 employees working at this hub in Helsinki with total connection with the universities, the academia, proximity of partnering companies,…

Hello, I am back now. And now joining me is aa Octavio and Cassiano. We also have the CEO of the insurance company. We will initiate now the Q&A session. Questions can be asked in either Portuguese or English. Answers will always be in Portuguese. And you can also resort to the simultaneous translation feature that you find in the platform. Our first question is from Renato Meloni from Autonomous. You may proceed, sir.

Good morning. It's nice to see you again and thank you for taking my questions. You had a very important de-risking of the book this quarter. I would just like to understand whether this already places the bank in a position where you can resume growth as soon as the market improves? And what does that mean in terms of client NII for next year and for the coming quarter? Thank you.

Hello, Renato, good morning. Good morning, everyone. It's a pleasure to be with you. Thank you for your question. Yeah, Renato, you're right, we had to make some adjustments to our loan portfolio due to the delinquency levels that we noticed, especially coming from small- and micro-size companies. But looking at the numbers, we may be sure that we already reached the peak of delinquency. And from now on, we will continue to grow. I mean, we never cease to operate. We continue to operate normally. But the fact is that we were trying to work with safer portfolios with lower delinquency levels and we are now looking at the growth of mortgage loans and payroll loans and rural loans. But the more riskier portfolios had to be put on hold for a while. And mainly also transactions involving small- and micro-sized companies. But we've already experienced some growth, which you could notice from the presentation. There was an important origination growth both in terms of individuals and also companies. Therefore, from now on, I mean growth has been resumed, is returning to normal levels, throughout the fourth quarter I think this should continue. And the same thing goes for the year 2024. It's also natural that as there hasn't been any strong growth in the loan portfolio, it was a very modest growth of our loan portfolio, and this is something that happened maybe across the board amongst all financial organizations. So client NII is a bit hurt and it takes a longer time to resume that margin. I mean, based on all the operations that we are generating. But as I was saying, we didn't stop to operate. We are still operating with clients with a better score, with a better risk profile. And this gives us a certain comfort in terms of the results. This will pick up with time. And in addition to that, there are also some other growth levers in terms of client NII. And it's important to mention the underwriting performance that we had this third quarter that has been performing well. It grew almost twice as much. Therefore the work we've been doing at Bradesco Asset is already showing some significant results, more than BRL770 billion of assets under management. And this is also posting positive results to our company in addition to Bradesco Financiamentos, Consorcio and the insurance company which remains an important lever. And it is certainly contributing to the results of the bank. All of these different levers as we move them, they are here to improve our final results in addition to all of our work in terms of cost control. Therefore the expectation going forward is to see the growth of this portfolio. Thank you.

Our next question is from Mario Pierry with Bank of America. Good morning, Mario. You may proceed

Good day. Thank you for the opportunity to ask questions. I'd like to focus a little on the guidance. You had provided a guidance in August. And you are below the guidance in several lines, particularly margin, fees, the loan growth and revenue. And I would like to understand why is it that you're below the guidance, particularly regarding credit? Do you have the perception that the problems are greater than what you thought in August and you had to make a more dramatic adjustment, and whether you're going to maintain your guidance for the rest of the year?

Hello, Mario. Thank you. Good morning. Indeed in some lines of the guidance, we are below the expectation. We are in perhaps in the low range of the guidance. But it was absolutely to make an adjustment in loan granting, particularly for small and midsize enterprises, Mario, because like I said, these are the loans that give us the best margins with best rates and you can add new services. So that became a little tighter for us to pursue the guidance. But we have an expectation also given the growth of loans in the recent quarter. The evolution of credit, as I mentioned, our expectation is to grow. We should target, I have to tell you, for the lower range of the guidance, but we are working on it. Well, credit, I think we can talk about this. We had to adjust the market NII, as we mentioned, and this was solved, it's water under the bridge. And this will be solved in 2024. We still have a large delinquency in SMEs and also for individuals. This bothered us. We had to make some necessary adjustments for that. And when we make these adjustments, we reduce the speed of loan granting. We had to slow down. We continue to operate, yes, but with companies with a better risk rating and better guarantees. But we kind of hold back those operations that have no guarantee and that offer a credit NII that is better. So that's an ongoing work that we do to maintain the loan book at a normal acceleration. Q4 should show a credit acceleration in all lines, for large corporates, individuals or even SMEs. So it was necessary, it was responsible on our part to make that adjustment, Mario, so that we could control delinquency. In the 90-day delinquency we could see a reduction. When we look at shorter delinquency, we can also see a reduction in all lines, significant reductions in the shorter term delinquency in all lines. And when the shorter delinquency will become an over 90-day pass due delinquency, the expectation is that this will improve. And this will improve all the interest rate curves. That is the word that we tried to do. Two days ago, we ended the month of October and we can see SME's delinquency reducing it. We posted a lower delinquency than in Q3. So our expectation is to continue to work hard to achieve at least the lower range of the guidance.

Octavio, if I may, I'd like to add to your answer. Mario, as we have been saying it's something important. Our RPS insurance expenses guidance and even AAL -- ALL on guidance will achieve the guidance. Like you said, we do have a challenge. And as Octavio mentioned, it is important for credit and client NII as a whole. And Octavio mentioned about this transition. When we adjusted the guidance in the end of the first half, we had a better expectation for SMEs, but this improvement came in October as Octavio mentioned. Then for SMEs, or SME is important for our margin. They had more items in our balance sheet such as insurance, revenues, fees, et cetera. So there's this movement. Perhaps it was somewhat more detached in Q3 compared to the guidance due to the SMEs. But all other lines overall are moving forward full, almost all of them full. And this is what we are pursuing to start 2024 in full speed in all lines to increase the credit NII in this new normal. We have to remember that we are starting with a smaller base, but our growth will be according to expectations in 2024. This is what we expect.

Thank you. If I may ask a follow up question. What were the changes in the credit model that you have that would give you confidence to again start accelerating growth? Clearly I think there was a problem because delinquency was much higher than expected. But what were the internal changes that you promoted to contain the problem?

Well, Mario, we are a bank with a footprint all over Brazil. We are present in all states, in all municipalities of Brazil actually. And there are different situations in different municipalities in each one of these different cities where we have clients. Some are more impacted by a higher interest rate. Actually the whole country is impacted by a higher interest rate. Others are impacted by perhaps local issues. So the changes made were not just to the credit model. And I'm referring here to the mathematical model where we had some fine-tuning. But we had changes in our credit policy in terms of the appetite in which we operate, perhaps not operating with this client or operating with this client only if they can provide a guarantee of some sort. So there are a number of variables. I cannot really list them all here. But we basically had a more adequate adjustment in our risk appetite geographically speaking, also according to sector, so that we can -- we could have a greater accuracy in defining the models. It's hard to mention one variable or another, but the accuracy of the model now is very much directed to the right pricing, adequate guarantees, geo location so that we can be more correct with our model. In addition, we brought many of the operations. When we saw this detachment of the delinquency curve we brought many operations in to be analyzed in the traditional model. In other words, what is it that we need to adjust the model here and there, where do we need to adjust the model. And that's the work that we did to it, adjust the credit policy and the credit modeling. And this was solved.

And let me add to what Octavio said. And even the cohorts this year changed. We've been speaking about the cohorts. The cohorts already reflected these policies that Octavio mentioned. And the cohorts give us peace of mind that we are on the right track with the exception of SMEs that required more adjustment in Q3, improving in October. But the cohorts give us some peace of mind that now we have the policies coherent to the macroeconomic scenario that we are envisioning for the rest of the year and next year. Of course we have the high interest rates, we have to have the country growing again, credit origination again. And NPO creation is good news. When we had a reduction in almost BRL2 billion in the quarter. This was very important to show that the right things we did. And these were quite big, both in origination and in credit policy. All of that gives us comfort so that since July we've been improving. And as mentioned, in addition to all these specific points mentioned by Octavio, if there is one point where perhaps we went wrong was perhaps maintaining our risk appetite perhaps a little longer during the cycle. I think that perhaps it was the wrong timing to adjust our risk appetite. And we reflected a lot on that. We adapted our processes and reviewed our policies.

Thank you.

Thank you, Mario.

Our next question coming from Tito Labarta with Goldman Sachs. Tito, go ahead.

Hi, good morning. Thank you for taking my question. My question is your ability to improve profitability in sort of the current competitive environment, right? You've gotten a bit more cautious with lower -- in the lower-income segment and you also have digital competitors there with low cost to serve. And then now you're moving up to higher income. We incumbent competitors with historical advantages and other competitors with the strong investment platforms. So just want to think about how you will fit into this sort of new competitive environment. And when we look at the ROE, not on a consolidated basis, but your insurance ROE has been fairly healthy in the mid-20s banking ROE mid-single digits sort of at best. How do you think about the ROE of those two segments in particular? You know, ability to improve the banking ROE and then with insurance next year perhaps some headwinds with lower rates, will that insurance ROE kind of normalize a bit? So that could also be a little bit of a challenge. Thank you.

Thank you, Tito. And as regards profitability and the competitive environment, we are operating in growing on our growing lower income, difficulty to grant loans for this population and cost to serve. There are some important aspects to mention here. This ability of increasing the profitability of our clients in this competitive environment, I think that Bradesco has an important geographic footprint present in all municipalities of Brazil as I mentioned before. We have to adjust this, and we've been doing this. In the last two to three years we've been working to reduce our cost to serve in the different geographic distribution of our branches. In this presentation, you could observe the size of the adjustment we made in our headcount and also in our physical structures, the physical branches of the bank, rethinking the structure of the branches, their size, whether they should remain open or not in the different locations, vis-a-vis their ability to create results, the GDP of that region, that municipality, that city we are operating in. So these variables we are assessing. Obviously we are Brazilian bank. We have a responsibility with all of these municipalities. But today people have changed their habits. The way clients relate with the banks has changed. There are some digital banks that don't even have branches, but these are banks that are well-positioned in the market. So it is necessary, it is absolutely necessary, Tito, that we make adjustments, adjustments we've been making and will continue to make in 2024 like them. And we are working hard on this because it is important, the physical cost serve is quite high in our bank and we have to make adjustments. In January, Bradesco Digital will be fully implemented together with Next, so that we can serve these clients that…

Thanks, Octavio. That’s very helpful. Just one quick follow up. On the insurance ROE, is it fair to assume that there could be some pressure from a lower rate environment? Or how do you think about ROE versus interest rates for insurance in particular?

Tito, Bradesco Insurance posted and is posting a significant results this year. This is not new. You know the insurance company really well. The insurance group has been posting recurring results for Bradesco. And this year in particular this happened. Of course there were benefits of the interest rate, of the portfolio being managed by the insurance group, with interest rates and the GPM, IPCA indicators. And that benefited even more the financial result of the insurance company. Although we do see declining interest rates by the Brazilian Central Bank, the insurance company will certainly end the year with more than BRL100 billion in revenue. So it's all about working the claims ratio. We have to continue to work with the assets we have in the insurance group, the pension plans, and in the private -- healthcare insurance for the insurance group. So will this be challenging for the insurance company? Yes, as it is for any company. But I understand that the insurance company has important assets, managerial ability. Ivan conducted a beautiful reorganization of the insurance company with an update of systems, systems to interact with clients. The digital platform of the insurance group is doing really well this year. To give you an idea, the insurance company will end with about 3 million items sold only over mobile. So there's this whole framework in the insurance group. We believe that despite the lower interest rates, GPM IPCA insurance group will continue to deliver significant and sustainable ROEs over time.

Thank you.

Thank you, Tito.

Our next question from Rafael Frade with Citibank. Good morning. You may proceed.

Good morning, everyone. I would like to revisit the topic of your NIM. You had a significant reduction in NIM in the quarter. And you also showed how much of each component accounted for that drop. When we look at the mix, it was quite relevant in the half year, in one year I think it represented about BRL1 million. In this half year alone BRL700 million. I want to know whether this was just due to SME or there is any other element that impacted the quarter's result. And how should we expect the recovery maybe in the fourth quarter? Maybe this has been a very significant drop this quarter and maybe we could see some relevant recovery at NIM or maybe this would be more gradual.

Thank you, Rafael. It's good to hear from you. Rafael, in fact you described our results in terms of the NII or NIM. There was reduction in on the average spread that came down to 9.1%. And as you put it quite well, this was mainly due to the mix. This reduction in business, in loans to SMEs is quite relevant in terms of putting together the spread. Just to give you an idea, throughout the year you may notice that there was a drop of almost BRL10 million in that portfolio. And this has a major impact in the overall result. But this matter has been solved. We have appetite to operate further. And you know that the formation of NII depends on your growth, therefore it doesn't happen in the immediate month after that or in the subsequent quarters. So the portfolio has to evolve so as to see any improvement in NII. And the mix of the portfolio had an impact, especially in terms of SMEs. But we already saw some growth in loans. We saw their numbers throughout this last quarter. And in October, there has been further progress. We have to make adjustments all the time. We have to have the adequate pricing for every type of product so that at that margin we can see a significant recovery. But this is a gradual process, Rafael. We look at this every month, every operation to see the recovery on that line. But we know that it is possible for us to recover it because these transactions at this level of clients, it's just natural that spreads are naturally better. So what we have to do now is resume these operations, but certainly with a good degree of caution. And also having in mind the size of loan that we are giving to these clients, but we don't want to lose them. And all of these loan transactions usually come with other products and services in terms of the client principality, in terms of collection, loans, credit cards. And all of that plays into having a more robust NII throughout the fourth quarter and also throughout 2024. Therefore we have just to go after the improvement of this financial of this NII or NIM.

Thank you, Rafael. Our next question is from Daniel Vaz from Safra. You may proceed, Daniel.

Thank you, Firetti. Good morning, Octavio and Cassiano. Thank you for taking my question. You already talked a lot about SMEs, but in fact this is a segment that is worth elaborating a bit more because usually there is volatility, but the margins are usually higher. And in 2020 and 2021 with the [indiscernible] recovery of credit is not so easy. You have to know how to operate in this universe of small and micro-size companies. And I think that NPL hasn't yet gone back to normal. Do you think that this is more related to a movement in the industry? Do you see other sectors with worse delinquency or some that have better delinquency numbers? How do you see the health of clients and how difficult it is to collect? And what is the behavior of the new vintages and what do you expect going forward to 2024?

Well, thank you, Daniel. Good morning and thank you for the question. In fact, this segment of small and micro-size companies, it's a good segment, but it's very complex to work with it. I mean, this is not a simple task, but we see that the industry has even higher delinquency depending on the segment and depending on the focus of every financial organization, or whether it's more located in the southeast or spread around the country. It's not very simple to operate in this segment. And this segment is also affected, as you well know, by the economic cycle, higher interest rates, issues related to growth. These companies face difficulties during the pandemic. Some recovered better than others. And some others even ceased to exist. And so this industry, as you put it yourself, it's a complex industry to work with. It's difficult for us to develop some work with them. That's why we are always very cautious. And that's why we are taking a very close look to small and micro-size companies. The managers are closer to the companies. Regional managers are being more selective as well. I don't see any specific industry being more or less affected. But when I look at mid-size companies that we call, that are with corporate one, we see stable NPL, delinquency is stable, and companies that gross more than BRL30 million. So in these cases delinquency is more stable with no concern going forward. I think the cause for concern is with SMEs. Average-size companies, no concern. We will just do business as usual. And the focus indeed is more with small and micro-size companies without leaving aside individuals. That's always a very sensitive issue in terms of the loan book and the impact of interest rates, especially if you look at some portfolios like personal loans and credit cards. Therefore, when you add all of these factors together, you can then see our capacity to increase our loan grants. But we are becoming more stringent in terms of keeping the controls in place, but we are very certain that delinquency is under control.

Thank you, Daniel. Our next question is from Thiago Batista with UBS. Go ahead, Thiago. Thiago?

Can you hear me now?

Yes.

Sorry my mic was muted. My question is a follow up to Tito's question regarding the profitability of your retail business. When we look at the ROE in the last 2 to 3 quarters, about 11%, 12% in the consolidated number, insurance, 25. So doing a simplistic calculation, we think that the ROE of the banking business is between 5 and 10. We see other players in the wholesale having an ROE of 20% plus. So in the best-case scenario, your ROE would be zero. Other banks have done there, for example, mentioned that they lose money in low-income retail. And I'd like to understand from you what is availability of the retail business, particularly with a focus on low-income. Can you really have a return or not?

Thank you, Thiago, for the question. Actually it's a very good observation you made. When we work at the segments in the financial industry, the financial sector and in the bank, the profitability of the wholesale bank is doing quite well, above the cost of capital, the profitability of the high income bank here including Prime private, also doing well, above cost of capital. The insurance company, we don't even say it, you observed it yourself. But we have a challenge in retail bank. You see retail here at Bradesco or any other bank historically retail was always a segment providing good results. But this segment went through some processes, some challenges over time. Regulatory challenges, the fact that people are opening checking accounts with no tariffs, the cost to open a bank or branch, having a brick and mortar branch in a certain place in a certain city or region. So we face additional challenges in retail. But it is a very big volume of people. When we looked two years ago, the segment was given results ROE above the cost of capital. But we entered a phase, a cycle of very fast increase in interest rates. Social benefits provided by the pandemic ended, those government aids, and people got more indebted. And, Thiago, this is very common, you have probably observed this, low-income people today now have two, three, four, five, six credit cards in their wallet because it's very easy for them to have access to credit, either opening checking accounts in mobile phones or asking for a card digitally. They don't even have to go to a brick and mortar branch and speak to a manager to get a card. So it became very easy for them to get credit. And this is a determining factor…

Thank you, Thiago. Our next question comes from Bernardo Guttmann with XP. Bernardo, go ahead.

Good morning. Thank you for taking my question. I have one question regarding credit quality. This reduced delinquency perhaps as the big positive highlight for the quarter. But it's still high. On the other hand, the coverage ratio posted another quarterly reduction, getting to a low historical level. So my question is, what is the space you see ahead of you to reduce provisions even with a lower NPL? If you, perhaps will have to rebalance that equation. And if you will allow me, is there any ideal value that you pursue in terms of coverage ratio?

Thank you, Bernardo. Indeed the coverage ratio is reduced to 155 now. Credit with 100% covered to the ratios at 240. It was a small reduction, but it is only natural, Bernardo, that at the end of a cycle of slightly higher delinquency that will consume provisions. Actually we provision exactly to use when we go through a different or tighter credit cycle in the company or in the country. And this is exactly what happened. At the moment that we resume our portfolio growth and improvement in the margin, it is only natural that the coverage percentage will be adjusted and will be increased. There's no magical number for us. I will say okay at this percentage, we cannot be below that magical number. No, with our provisions or according to what we expect because IFRS will kick in, in 2025. So we are very comfortable with the level of provisions. We have BRL59 billion, almost BRL60 billion in provisions, an excellent percentage of provisions for those operations that are 100% provisioned for, adequate provisioning above 90 days, delinquency rates dropping not as much as we would have liked. But when we observe short-term delinquency, these rates are falling in a robust fashion. And of course that will have a reflection in 90-day NPL. So everything that we are observing points to good direction, we don't have a magic number, a target to give you. There should be no more or no increase in ALL. The ALL, we have, there is a provision that we have, gives us confidence that we have the correct coverage for the portfolio that we have today. And this reflects the growth of the loan book. We are going to see an increase in the loan book. This will bring an increase in ALL. It's good ALL because it's good operations that are coming in. But with the IFRS, this aspect will change, which is the expected loss. It is with this model that we are working to define the provisions that we can make, to increase or even reduce ALL.

And one specific comment, we are one of the few banks that are treating specific clients as delinquency. If it went for this effect and the additional part of credit that is considered delinquent in Q3, if it weren't for that, the coverage ratio would have stayed stable. And the point that Octavio mentioned regarding the origination of new loans, this is what is going to lead to an improvement in the coverage ratio as we originate new loans that are performing well with no delinquency, we'll rebuild the coverage ratio during the cycle.

Thank you. It’s clear. Thank you very much.

Our next question is from Eduardo Rosman with BTG. Good morning, Rosman, you may proceed.

Good morning. Good morning, everyone. I have two questions. My first question is about dividend payout. The bank has maintained a very high dividend payout close to 70%. But assuming that the bank intends to expedite growth next year and profitability is still below anticipated levels. I mean you're not building a lot of new capital. So what could we expect in terms of the payout next year? This would be my first question. I would just like to understand these payout dynamics or whether you wouldn't be worth it to do some buyback. And the second question is about cost of capital. We've been talking a lot about cost of capital. I think one of your competitors usually publishes how much they believe their cost of capital is. So in your view, what is Bradesco cost of capital today, considering the dynamics of interest rates going forward?

Thank you. In terms of dividend payout, this year we already provisioned for that. And I think the buyback is an important alternative, so much so that we just renewed our buyback program. That was just about a week ago. So that could be a good alternative. Even considering the value of the shares. So that buyback program is ready and renewed when the time comes. And for next year, even with lower results in comparison to what we would like to have, we will certainly try to remunerate our shareholders with a reasonable and adequate payout. Therefore, as I was saying, it does make sense to resort to buyback. In terms of cost of capital, maybe Firetti, you can say something.

Our cost of capital is very similar to what the analysts calculate, something ranging between 14% and 15%.

I just have another follow-up question now. Thinking about next year, do you think that the payout would be along the same levels? Do you think that you will remain having this high payout to have an additional benefit because I think this also has an impact on the tax rate?

Okay. If the benefit remains, continues, I think so. We would probably try to use it and then have the full benefit because this would serve our shareholders well. But there are still some steps that are necessary until we see what will happen. There was an important change in terms of interest on capital that was being discussed at the Senate level. And that was an important adjustment that happened because with that shareholders will be more comfortable. But regardless of what may happen, our intention is always to make full use of interest on capital. I understand that the minimum would be 30% according to the bylaws, right?

Yes. Thank you.

Our next question is from Yuri Fernandes with JPMorgan. Good morning, Yuri. The floor is yours.

Good morning, Firetti. Good morning, Octavio. I have a question related to your NII. Looking at liabilities, on the liability side, things were performing well. I mean you had good funding in the quarter. But don't you think this was a pushback in your margin? I mean, demand deposits were down. Savings deposits also down in this scenario of high interest rates. But I just want to look at that liability line, whether this does not affect NII. And in terms of SME, you're constantly talking about this mix that the company is working at that very closely, but there was a drop of 1% when NII was down by 5%. So the mix of SMI is very, very tight. Could you share with us something related to that segment of companies below BRL30 million? And I think that the mix of SMI should be a little bit different.

Hi, Yuri. Good morning. It's a pleasure to have you here with us. Thank you for your question. In fact, I mean, if you look at the market as a whole, Yuri, the funding cost of the incumbent banks, I mean, our funding cost increased due to the competition coming from new platforms, smaller banks and other things. There are a series of factors that at the end benefited some. And in other instances, it increased the funding cost even because today it's very easy for our clients to choose where they want to invest their money. And this increases our funding cost. But anyhow, the reduction in savings account or even demand deposits, it's quite natural. Given the current situation of people, I mean, savings deposits are dropping, not only at Bradesco but in any other incumbent bank, this drop in savings deposits is across the board, maybe also because people are now choosing to invest in other instruments rather than savings account. And also because families need to use that money because of high interest rates, inflation issues. This is a cyclical phenomenon and it's very hard to avoid it. And demand deposits is pretty much along the same lines. Demand deposits were kind of inflated due to many government programs and benefits that the government offered. That's why I talked a lot about principality, the share of wallet of our clients. We talked a lot about that during the presentation. Because in fact this is a challenge that we face every single day when we go to work. We have to work the centrality of the client, the share of wallet because that allows us to improve the liability margin. We made important investments to make that possible. I talked to you about wealth management, more than…

When we look at our SME portfolio, approximately two-thirds of that portfolio are clients below BRL50 million. And this particular portfolio is a bit compensated by the midsized company portfolio.

That is very clear. I just have one last follow-up. Funding, Octavio. How much is it today? I don't know whether you can break it down. I mean, average funding or CDI.

I think all of the incumbent banks struggle with it. There was a worsening of the numbers. Well, we do not release specific numbers. Our comments are more generic. But clearly there was an increase in funding cost. Part of it due -- if you look at the movements in our portfolio, part of that has to do with a more focused work using some investment experts at first. They looked at funding that were there in demand deposits. These are investment funds. So that had some minor adjustments. This is probably something that is behind some of the moves.

Thank you. Thank you very much.

Thank you, Yuri. Next question from Anahy Rios with Santander.

Good morning. Thank you for taking my question. My question goes back to the guidance. But speaking more about fees, you were somewhat distant from the guidance. I'd like to understand which fee lines will drive growth so that you can meet the guidance in Q4.

Anahy, good morning and thank you for joining us. All I know of fee income, it's improving quarter-on-quarter and quarter-by-quarter. This quarter we are still slightly below the guidance that we provided, but we have an expectation to increase this fee income line due to a number of aspects which I believe are important. We are having a substantial improvement as we showed you. In the wholesale bank, in underwriting operations, you saw the amount that grew, the percentage that grew. We have quite a good pipeline for Q4 and also for 2024 of these operations. We have a good expectation that companies will be renewing their debenture operations, the ones they have in the market and new operations that we're also doing. It is a natural movement by companies. They'll wait for a better market moment. The cost is still high, but operations are maturing and the companies will need to adjust. So there is a good outlook for the fees related to underwriting. There's a good expectation that is materializing regarding fees in Asset, in Bradesco Aset and now at Tivio, our new asset, that we have more geared to structured product performance. And there's good expectation there. Also a good expectation in Bradesco Financiamentos. Again, the loan lines are growing and also our loan book is improving. So it's again operating in a normal range. These are just some of the aspects, but I believe that there are a number of lines. Even the insurance company, the Bradesco consortium. So there are a number of companies, many businesses of the bank that will bring improvement to the fee income line item.

It is clear. Thank you very much.

Thank you, Anahy. Very well. We are going to have our last question by Pedro Leduc with Itau BBA. Pedro, good morning. Go ahead.

Thank you, Firetti. Two quick questions. First, robust growth in the other business lines, if you could elaborate on that. Greater share in the crop plan. And my second question, going quickly back to SMEs, Firetti mentioned the concentration in small enterprises. Do you see acquiring as an important tool for you to have best cost to serve and to better manage delinquency in this segment? Is this well-oiled or would you have room for improvement?

Pedro, good morning. Thank you for joining us. Well, Pedro, you know this really well. You've been following us for many, many years. And agri, the agribusiness was always a flagship for Brazil. Also given the origin of our bank, 80 years ago, Bradesco grew following the growth of the agribusiness of Brazil, particularly in the countryside of Sao Paulo in the north of Parana state. So we were always focused on agribusiness. Among the private banks we are leaders in agribusiness. And if you get BNDES, we are also leaders in disbursements for agribusiness operations via BNDES. And agribusiness is a part of the Brazilian economy, which is an excellent growth driver for the Brazilian economy, not just today, it has been so for some years now. So more and more, we are giving special attention to the agribusiness industry in Brazil, particularly given the increase in the agricultural frontier. There in the Midwest, they are expanding. They are growing the Amazon biome and other Brazilian biome [indiscernible] and competition is moving fast now because agribusiness is not a small business. Agribusiness is a big, big business in Brazil with the volume of resources which is huge. So we specialized our team. We had 955 branches that were trained specifically, the whole team of these branches was trained in the last three to four years to serve our agribusiness clients in any of their needs, for their position of machinery, for planting their crops, in talking with agronomist engineers. So 955 specialized bank branches all over Brazil. And we have all of the agricultural regions being served by specialized people to serve the needs of agribusiness clients. In addition, we have a constant presence in all the main agricultural trade shows in Brazil. This year, the business volume that…

Thank you very much. Excellent.

With this, we conclude the Q&A session. All the questions that have not been answered will then be answered by our IR team. Before I turn the floor back to Octavio, I would like to remind you that in our Investor Relations website you will also find this presentation and all of the material related to this earnings release call in addition to other information. Octavio. Thank you. And let's move to your final remarks.

Thank you. Thank you, Cassiano. Thank you, Firetti. Thank you very much to the entire team that helped us put this together. Thank you so much for joining us. Thank you for your time. I think we talked about several aspects related to the P&L of the bank. There are still some challenges. And you're very precise in terms of your diagnosis. We will improve. We will make important improvements. And I hope I was able to clarify your issues. But in case you still have any pending issues in mind, please get in touch with us, get in touch with anyone from our team because we really want to clarify any issue that is still pending. Thank you so much for your attention and for your kindness to join us today. I wish you a very, very good weekend. Thank you.