Good morning, ladies and gentlemen, and thank you for waiting. We would like to welcome everyone to Bradesco Second Quarter 2021 Earnings Conference Call. This call is being broadcasted simultaneously through the Internet in the Investor Relations website, bradescori.com.br/en. In that address, you can also find the presentation available for download. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Banco Bradesco's management and on 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'll turn the conference over to Mr. Carlos Firetti, Business Controller and Market Relations Director.

Hi, everyone. Welcome to our conference call for discussions of our second quarter 2021 results. We have today with us here in our headquarters, our CEO, Octavio de Lazari, Jr.; our Executive Vice President; André Cano; our Executive Director and IRO, Leandro Miranda; our CFO, Oswaldo Fernandes; the Bradesco Seguros CEO, Ivan Gontijo; and Banco Next Chief Executive Officer, Renato Ejnisman. Now I turn the floor to Leandro.

Thank you, Firetti. Good morning, everyone. Thank you for your interest and for joining us on our second Q earnings call. This quarter, we saw a new surge at the moment, which unfortunately affected a significant number of residents. However, there was also a great acceleration in vaccinations, which is the only real solution for the COVID-19. The current pace is good, and it shall accelerate even further. Over the coming months, this should help Brazil achieve the benefit seen in the countries of more advanced vaccination phase. We see continued recovery on the current economic theories even with this fight in COVID case in the beginning of the year and especially now with vaccinations ramping up. We foresee a growth of 5.2% of the Brazilian economy in 2021. For unemployment, it's rapidly rising, supporting loan growth and keeping delinquency ratios at historically low levels. Fiscal risks have decreased with the growth, leading to a positive surprise in debt-to-EBITDA ratio, and thereby, it may be an appreciation of the real. On Page 3, we begin a discussion on our numbers. Our income in the quarter was BRL 6.3 billion, with the accumulated return reaching 18.2% over 6 months. The loan portfolio expanded 3% in comparison to the previous quarter and about 10% year-on-year. The Tier 1 ratio reached 14.1%, an increase of 0.5 bps Q-on-Q and 1.6 bps year-over-year, which indicates a very comfortable capital level. So far, this year, we have already distributed BRL 6 billion in the form of interest on shareholders' equity. This brought our payout to 52%. We feel that our second quarter results had a good level, driven by a robust performance in banking activity. The insurance income was adversely impacted by the increase in health and life insurance claims due to the impact from…

[Operator Instructions] Our first question is coming from Mario Pierry of Bank of America.

I have 2 questions. First, related to your insurance operations and especially in your guidance for the year. Basically from the last year, you basically were guiding for results from insurance of about BRL 10 billion in 2021, which means an average rate of only BRL 2.6 billion in the third and fourth quarter. But when we look back over the last 4 quarters, your results in insurance were averaging almost BRL 3.1 billion, even there's you already included the expenses related to COVID in the first quarter. So I was wondering, why do you expect your run rate to remain below the last 4 quarters, especially considering a higher rate generation to be positive for your financial results. So that's my first question. Second question is related to your operating expenses. You are very close to the top of the guidance here, expenses of 4%. However, we see significant headwinds in the second half of the year, especially related to salary negotiations. Talk a little bit about where things are in regards to annual salary renegotiations and how can you offset these headwinds in the second half of the year, especially you already closed about 1,000 branches, which is almost 25% of the branch network. Is there more room to reduce branches? Or the efficiency needs to then turn somewhere else?

Okay. I'm going to ask Michael to read -- to help me repeat your questions if I'm not able to answer all of it [indiscernible] because the sound was not that clear. As far as the insurance, the first question is related to the guidance for insurance, right? So basically, in the way we see the big aspects, and therefore, we shall have better quarters from now on, especially in the fourth quarter, as we continue to grow in terms of premiums that our revenues and especially in light the number of debt has also gotten source parts. We expect that this will come more in line with the previous years. But of course, this time will come gradually, and it also depends on movement of mutation here, how it's going to evolve in terms of vaccination. Regarding to the operating expenses, these rates contemplates over the employees of personnel adjustment that we shall have in the second semester. We believe that we are going to continue to reduce expenses overall despite of this increase in salaries. Because basically, as of what was spoken out earlier, we continue to close branches, and we continue to transform those branches into point of sales or business units. We continue to reduce our administrative expenses as well. So we understand that we are going to be able to keep the lower part of the balance.

Okay. Sorry about the quality of the sound. It's a little bit hard to hear as well. But so just to go back on insurance, right? If I look at your first quarter results, the insurance had like BRL 3.1 billion. And we already have very elevated costs related to COVID. So -- but if we think about it, your financial results should improve. Anything, if your COVID expenses remain elevated in line with the first quarter numbers, I was just wondering why we shouldn't able to average BRL 3 billion per quarter in the second half of the year.

Yes, Mario, basically, we are assuming in the guidance that we continue in the path to normalization in the second half. For sure, we have to go disclaimer that, as you know, there is a lot of uncertainties on how it's going to progress. But our view is this path to normalization, the third quarter is going to be better than the third quarter that probably got a lot of the cost of claims that came from the peak, but it's still not a normal quarter because there are 2 costs that should be impacting it. We expect a gradual convergence of the inflation index that impacted the results, so reducing the negative impact in our financial results, but that's also something that we are cautious on forecast. So I think you should take our guidance as one that takes a view of that we are going to a normalization but not a total normalization from the beginning of the third quarter. It's something that will happen with some graduality.

Okay. And just to follow up on the insurance also. Our ability to increase prices going forward for premiums and for your plans, how do you think about that going into next year?

Well, I think we are going to have a couple of benefits there. The first one is that with the improvement of the economy, pretty much companies have Bradesco's ability of a premium plan for their employees. So we have seen that we have a very high correlation in sales of our plans as the economy is getting better. That's the first one. The second one is that we have the plan that really affects the customers. So the plan that you have seen here hardly ever would be accepted in other insurance companies. That's the reason why more and more people are buying the plan from us, so it's another of incentive in the clients. And therefore, we shall be keeping on the increase in revenues. But of course, the market is going to depend on the price. There is no way that we can circumvent that, but the quality is being well appreciated by the markets. In addition, we are presenting a very important growth through digital channels in the first half alone. We have a little bit more than a million insurance items that were acquired digitally. We see that trend continue. Also, as we -- on the point that we see the perception of value of insurance for customers increasing, given the uncertainty we have seen and the risks perceived during the COVID crisis. So we see a solid demand for life insurance as we understand health insurance. We have a premium plan. So I think even if the economy has not really fully recovered, this -- the kind of premium growth we are experiencing already starting to show an encouraging trend.

Yes, it's entirely easy to see how the digital channels are improving the sales [indiscernible] in there. And we are using digital channels, not only the bank but in all of our platforms. Agora is going to start to sell also, to offer insurance products to our clients. So more and more, we are attracting the different pools of clients that we have in order to have a base of more than 7 million clients for digital channels, but from different platforms. So we can see the best from them.

Okay. Thank you, everyone, for being with us. Thank you very much, everyone, for making the time to be with us. Have a great day.

That does conclude Bradesco's conference call for today. Thank you very much for your participation. Have a great day.