Hello, good morning everyone. Welcome to our Second Quarter 2023 Earnings Video Conference. Thank you very much for your participation. In the opening part of the event, our President, Octavio will present the Bank's results. Then, we will have the question-and-answer session. The presentation and other materials are available for download on our Investor Relations' website. [Operator Instructions] The presentation will be in Portuguese with simultaneous interpretation into English. Audio language can be selected directly from the window you are watching. You can also choose audio always in Portuguese even when questions are asked in English. And now I'll turn the floor over to Octavio, who will begin our presentation of results. We'll meet again later in the Q&A section, see you soon.

Thank you, Firetti. Good day everyone. Thank you for joining us on our earnings video conference. We start our presentation with highlights for the period. Net income for the second quarter of 2023 was R$4.5 billion, a rise of 5.6% versus the previous quarter, within our expectations. As we've stated over the past few quarters, the recovery process will be gradual. Our Basel ratio posted a 34 bps boost in Tier 1 capital, even with the full constitution of IoC. Market NII improved even further and will continue to progress over the next half year and in 2024. Client NII, however, is impacted by the momentary lower origination and lower risk mix. The bank's performance is pressured by credit provisions expenses. On the other hand, we've been able to control NPLs with an improvement in the 15 to 90-day index as a result of the adjustments in credit policies that we have made over the last few quarters. New vintages demonstrate an improvement in quality, and this has allowed an initial resumption of origination, primarily in personal loans for middle-income individuals and a good pipeline in the wholesale bank for the second half. This resumption will continue over the coming quarters, expanding to other credit lines as well as to retail. The Insurance Group, again, saw a growth results in the income. We see strong momentum for the insurance business, contributing positively to the group's performance this year, with a counter-cyclical effect. We continue with our strategic and efficiency initiatives, the key ones being the reduction of the cost-to-serve in retail, strengthening our high-income operation and the bank's digital transformation. Our primary focus is on serving our 72 million clients even better, placing them at the center of everything we do. Our work, centered on providing excellent service to our…

We will begin the Q&A session we have Otavio and Casciano, our CFO. We also have the President of the Insurance group Ivan Contijo who connected through - by voice. You can ask questions in Portuguese or English. And the answer will always be in Portugese. You have an option for simultaneous interpreting of questions in English into Portuguese. The recording will be available on our Investor Relations website. With that shall we begin? The first question from Yuri Fernandes with JPMorgan.

Thank you, Firetti and Octavio. The first, please I'd like to understand the trajectory of credit provisions for 2024. I think it's clear what you mentioned in the presentation that it would be close to the top of the guidance. And there's a positive message in NPL. So I'd like to check if this is your opinion indeed. But my question is for 2024, there is an expected loss. So as you grow origination, my doubt is whether if the growth of your originations will not increase ALL or credit provision? So if we have a peak of NPL, I'd like to understand the bank's vision or opinion for the next year in terms of credit provision curve. And the second question regarding interest rate sensitivity. In the past, you would show sensitivity every 100 bps of Selic, would be R$ 1.4 billion. And I didn't see those this time. Do you still measure the sensitivity of a reduction in the Selic interest rates?

Yuri, thank you for the question. As regard to provisions, it is a fact, the loan book growth was smaller because of a need to adjust for delinquency. The delinquency curves that you observed, well, we broke it down month by month so as to have transparency of the NPL curve. So there's a reduction in 15 to 90 days delinquency. Over 90-day NPL, it seems we reached a peak because in recent months, it's been stable. It's not increasing. But still in July, we started having new loan originations. Of course, very cautiously, particularly for middle to high-income clients. That give us a good spread, a good margin. So we resumed these operations. We have pipeline in the wholesale bank, a very interesting pipeline for the second half of the year. And I believe that the country's economic conditions are signaling a good resumption in the second half and in 2024. Interest rates was reduced by half 0.5% by the Brazilian Central Bank. It seems to all of us that the drop in interest rates is a given, perhaps more than we and the market initially expected. We were expecting 0.25%. It seems that it's going to [indiscernible] some people talk about an even greater reduction. So the whole outlook seems to be more positive for the second half of 2023 and also for 2024. With all [indiscernible] that are in the pipeline, everything that is being talked about in Brazilian with a good outlook for the country, GDP growth, et cetera. Now of course, as we have new operations, we will need to provision for those. That's all correct, but lower provisions than the ones we have now linked to delinquency, particularly in the end of this cycle, Yuri. Because, as you know, from D to E, G to F, et cetera, this keeps on much greater. The percentages are a lot higher. So we see a reduction in credit provision that will happen -- that is happening given the final cycle those delinquency that we had, this will allow us to have new credit provisions for the new operations. So if we look at the credit provision in the quarter, it was R$ 12 billion, right, Firetti? R$ 12 billion. So we're talking about R$ 4 billion a month of credit provisions. Credit provisions, given delays, particularly the long delays where the percentages are higher. And therefore, we can ensure new operations with a much lower credit provision because we have better rating and better scores for these clients. So the percentage and the level of provision will be a lot smaller. As regard to your other question about NII sensitivity. If I'm not mistaken, R$ 900 million for every 100 points. This sensitivity is R$ 900 million.

Super clear.

Thank you very much, and good luck for the results. Thank you, Yuri.

Next question from Bernardo Guttmann with XP.

Good morning. Thanks for taking my two questions. Number one, about portfolio growth. The starting point in the first quarter was low - close to the low part of the guidance. So you would need to accelerate a lot to get close to the top of 5%. So I'd like to understand how do you intend to accelerate this? Do you have a lower appetite and more risky lines? What about corporate? Does it remain challenging? So where will the growth come from? Specifically in what line items? And my second question has to do with the tax reform and the risks of the change. The proposals that have been discussed? And what is your base scenario, particularly regarding IOC? I'd like to have your opinion on this statement how you evaluate the risks?

Thank you, Bernardo, for the questions. Indeed, growth seems to be challenging. And we wanted to be transparent and fair with you. So it didn't sense to us to maintain a guidance of 6.5% to 9.5% with a 1.2% growth in our portfolio in the first six months, given the whole outlook, the whole context that we talked about. Nevertheless, we have observed and we have been seeing into new productions that we've been doing. Clearly, we've had portfolios with the best credit margins. We have 33 million account holders, as we mentioned, in addition to all the people who, one way or another, have a contact with the bank, more than 70 million people. So there is room for us to grow the book, particularly in those operations that are more profitable with the high spread. And thus, we can accept a little more challenge in delinquency. So in terms of individuals growth, will come from these portfolios. Consumer credit, payable deductible, real estate financing as much as possible. So that's for individuals. Now, for legal entities, micro and small companies, so the ones that are suffering the most, and that's where we have the biggest delinquency challenge as we showed in the slides. But still, we have good clients there that we can operate with good secured loans, with -- bringing forward the receivables. So there's room to grow these portfolios as well. And in the wholesale bank, because of our strategic planning, we have a pipeline of the operations for the second half of the year. And we have a very robust pipeline for second half pipeline -- or second half of the year for large corporates and legal entities. And we see more momentum in the operations. This was in July, it's recent. But in July,…

Very clear. Thank you very much Lazari. And good luck for the results.

Thank you, Bernardo.

So our next question, Tito Labarta, Goldman Sachs.

Hi. Good morning. Thank you for the call and taking my questions. A couple of questions, I guess. Maybe one starting on profitability. In the past, you've mentioned getting back to around 18% ROE, maybe sometime end of next year. Just help us think about that potential evolution. What would need to happen to get back to that 18% ROE, and you're thinking about some of the headwinds that you're facing at the bank. You've talked a little bit about loan growth and credit quality pictures. Do you think you'll be able to grow your loan book sufficiently enough asset quality improving up, particularly in in a scenario of lower rates where you can get back to that 18% ROE? Is it still feasible to think end of next year, or is it more of a longer-term target? So that will be my first question. And then my second question, thinking about the competitive dynamics. The lower income segment because of credit quality issues in anything else has suffered a bit more and now you're going more into higher income segments. If you can help talk a little bit about how you see the different competitive dynamics and your advantages in between both lower income. And as you shift a little bit more into higher income and some challenges that you could face here.

Tito, you're quite right, and I fully understand your question, of course, we're not delivering the results we wished to deliver and as you would expect, but we have a very well-defined path for us to gradually resume seeking those results. I think a series of factors contribute to this belief to this work that we do to go back to having the results we had in the past. I think the market ALM issue is absolutely solved in the third quarter already with positive results low but already positive and not negative as we had in 2022. And for 2024, the scenario is quite positive in terms of market ALM. As for credit, as you saw in the answering earlier, we already have better control of delinquency that happened due to a series of factors, economic factors and situational issues, the type of clients that we have, the profile of clients that are Bradesco clients and that combined to much better expectation that we see for the second half of the year and for 2024 as well. Regarding what the Brazilian economy can be, we opened 2023 with economists talking about a GDP growth of 0.8%. And now we're talking about maybe 2.2% of GDP increase for 2023. And this will certainly carry a tail into 2024. '24 already indicates to have a better scenario interest rate, it's low, yes, of course, it's from 325 [ph] is small, but it's the beginning of a reduction. And the reduction of interest rate seems to be already a given the drop on the liquid [ph] rate is already agreed in a percentage that is higher than we expected from 25 bps to 50 bps, even higher maybe, so that also gives us very good expectations for the future. For what's going…

Well Tito, if I can add, in lower income, it's important to mention as you said in the presentation as well. Next, the work that we did with bring this to the bank. It's a synergy. We have 2 strong brands next and Bradesco for this digital native clients and starting their banking journal journey, and that also contributes to access and competitiveness in the lower income market. So the strategy is along with all the others that Otavio mentioned in our high-income vertical and our repositioning that's focused on this customer-centric and principality, and that's very important. In Bradesco alone, we opened 15,000 accounts on mobile every day. So every day, we're talking here about 300,000 accounts. And next is no different. On next, we opened 4,000 accounts per day. 4 million, 5 million clients that we have that are active on next that was incorporated into Bradesco, and it does not have any more all the costs it did, and it now becomes an expression for our heavy digital user clients to have a digital bank to call theirs even if they don't have -- if they don't like this group, particularly, they have a digital bank available with all products and services that Bradesco can offer. But with that face, with the feel, the journey, that is of max. In addition to the digital bank that is a completely separate thing with very important partnerships. They work with partnerships and credit cards, payment accounts, and they have a partnership with Uber. There's more than 1 million clients that are Uber partners, Uber drivers, who already have digital account. So, this scenario shows you a little bit of our activities on low income as well.

Thank you.

Our next question Daniel Vaz, Credit Suisse. Daniel, you may go ahead, please.

Daniel, can you hear us?

Sorry, my microphone was muted. Thank you for that. So good morning Octavio everyone. Thank you for this opportunity. I'd like to talk a little bit about asset quality. We saw here in the presentation that the new vintages already take 53% of the loan portfolio and individual concessions are already 58%. And we can say that there is a level of a portfolio with a new risk profile, but NPL creation is stable at higher levels. So loss when we look at what was expected on IFRS for the portfolio increased. So I'd like to understand from you how to read these integrators correctly vis-a-vis expectation of portfolio increase. Is it possible to increase the portfolio without these indicators rising or at least remaining stable? What would be the new mix or new risk profile, or if you must make any additional correction on originations so that these indicators drop, considering the portfolio increase you're aiming for next year. I'd like to explore this with you. And if you can help us read this correctly?

Hello Daniel. Good morning. Thank you for your question. It's a pleasure to have you hear with us. Indeed you're right, but that's what I said. At the end of this cycle, when you carry over more provision, that skipping of ladders when it goes from 10 to 30 to 50 to 70 to 100, the provision volume end up higher here, although the credit provision volume for new operations is not as high because they are operations that come at a better rating your score. So that balances our capacity to continue to grow, increasing our credit and accelerating as we expect and want to accelerate without having an increase on credit provision expenses. We're running at 3.5 to 4 per month, but a majority of this are the operations of the older vintages that are closing their formation cycle in BR GAAP, now unexpected losses, that's the concepts that we use, and that's why in every presentation, we show this to you, and this will be enforced now in 2025 -- in January '25. So we're always looking at that and showing it to you through the expected loss concept because that's how we're able to better see it. So a better origination of a better portfolio with clients with better ratings and scores as you already mentioned, already gives us a good dimension of the work that we're seeking to do to increase our credit portfolio. And on the other hand, it also benefits those operations to have bigger spreads. That means that can take a little bit more of delinquency, but on the other hand, bring credit - higher credit revenues. So, I think this balance that we're trying to achieve and implement over the second half of the year and 2024 will allow us to get the portfolio to the credit portfolio to grow because there will be a demand for credit. This seems pretty certain with the reduction of interest rates and increase on the GDP and employment going down will allow us to grow our loan portfolio without increasing or maybe even reducing the credit provision expenses that we see for the year 2023 because it is still carrying over expenses with delinquency provisions of ALL. It's also worth mentioning that NPL formation has already given clear indications of stability in the last quarter. We believe it will begin to drop the formation also goes through this negotiation process and renegotiation with the client that also delays the natural flow from those older vintages that have already given some indication of deterioration. So I believe this cycle is slowing. We believe that soon, we'll be able to get better news information as well.

Thank you.

Next question from Rafael Frade with Citi Group. Frade, go ahead.

I have two questions. One, building on the comment made by Firetti regarding renegotiation. I don't know, maybe I overlooked this in the previous quarter. But I believe that you negotiated very little in portfolios, there were less than 90 days past due. But in this quarter, you mentioned almost 50% of the renegotiation came in the portfolio of less than 90 days past due. So I'd like to know when did this change happen? And please elaborate on the rationale for this change. How do you see this renegotiation that is somewhat earlier? And the second question regarding the insurance operation, you posted a relevant improvement in the operation this quarter and in the guidance for the year. But I also noticed the reversal of provisions, specifically in the line item, other provisions in life and pensions. So I'd like to know if this help explain the improvement. I'd like to understand this reduction in provisions. And if this helps explain the improvement in the yearly guidance. And perhaps how this will be in 2024, because you're not going to have this kind of reversal.

Thank you, Rafael. Good morning. Thank you for joining us. Well, Rafael, regarding the NPL that Firetti mentioned, we have always worked with the negotiation with clients. Comparatively, can I recover? How much can they recover in the past due portfolio? Is it best to sell this portfolio because they can get a bit of price for it. But you will remember that given the interest rates and the interest rates are higher and the portfolios became more difficult because the prices were no longer attractive. This indeed happened, and we did not sell a lot of portfolios because even make businesses, because we would get a better price if we renegotiated. And in credit recovery, you know, you can bring more money in and have better results. So indeed, we focus more on renegotiations collecting from clients, particularly on that are not very much past due. Because when it's long past due, we can renegotiate easier, more easily. So the fact that we are now selling the portfolios because the prices were not attractive. And all along, we said that we would make a comparison between the advantages of selling the portfolio and what I can collect internally. So this is a business that has to be profitable or also this will make sense. And so, we are focused more on recovering the loans from our clients, and this is what led to us effect the you yourself mentioned. In addition to improving the modeling, productive modeling to understand and identify the patients that have more ability to pay. And so, we can recover their loan, and this is about NPL. Regarding the insurance company, Ivan Gontijo, the CEO of the Insurance Group is here. Ivan would you like to comment on Rafael question?

Of course. Thank you. Rafael, thank you for the question. And based on your question, you mentioned the improvement of our guidance, and the robust balance sheet of the insurance group. Before addressing directly your question, I would like to highlight based on what you said about sustainable growth. Better revenue that is noteworthy, given the point integrated work of co-management among the companies and the several departments of the insurance group. We are market leaders in insurance, pension plans and capitalization bonds. To better results of our operations, very robust sales, 51 billion be around in the first half, a better claims ratio, better mix of products with new products, more tailored to the regions, better processes, aiming to serve our clients better and particularly an improvement of our fundamental Focusing on the people also of the insurance group. So to your question in the technical provision line item that you mentioned. Well, these are for in addition to the specific contract reserves to face the future commitments of the insurance group, always considering the economic assumption and the actuarial assumption reflecting the best estimate for the portfolios. To give you an idea, the behavior of IGPM influences this line item that you mentioned, this line item of provision. In fact, we always form our provisions based on the best market practices and particularly considering IFRS 17 and the standards in effect Bradesco Seguros or the Insurance Group was established about 40 years ago, and we are always focused on the sustainability of the business and aiming to better serve power clients and the perennial behavior of the insurance operation. So about to draw your attention to the fact that in the end of July, the insurance group posted BRL340 billion of provisions. So this gives us a lot of comfort. And it gives us peace of mind to continue in the past that this organization decided to start about 40 years ago, and that will continue.

Thank you, Ivan.

Thank you, Frade. Next question by Mario Pierry with Bank of America. Mario, please go ahead.

Good morning, folks. Thank you for the opportunity. I have two questions. Number one. Looking at the new guidance of expansion. it is implicit that expenses will remain flat in the second half compared to the first half. So any new measures taken by the bank to contain expenses? Where do you see this improvement in the guidance? Second question, I'd like you to elaborate, because you mentioned that you're going to be issuing credit cards for Amazon, and I'd like to understand the economics of this project. If the credit risk is on you. And if you could elaborate on that, it would be very appreciated? Thank you.

Good morning, Mario. Thank you for the first question. Well, the second question, I won't be able to elaborate a lot, but I'll tell you whatever I can. Regarding the guidance of expenses, I would like Cassiano to speak a little bit about this and then I'll add if necessary.

Thank you, Mario, for the question. Good morning. Well, the guidance of expenses, let's remember what we have been systematically reporting to the market, and it’s a strong cost control of the organization, and this continues. Expense lines, both administrative expenses and personnel expenses, well, that's all under control because of the work that we've been doing. This has to do with our cost to serve so that we can have a good control of expenses, even considering our collective agreement in September, still, we have expenses under control. Operating expenses, in other words that are making some difference, but in the second half, they are coming down to the normal range. So we are convinced that when we change the guidance, we are right in the middle of the guidance. And we'll know that our expenses are always under control. We don't see a lot of variation. We understand that we are on the right path of maintaining expenses flat or stable in the second half of the year.

Yes. And Mario, let me add to what Cassiano said. Of course, we are continuously making adjustments in our network of branches. You will see that it's not that we closed down branches, but we changed the branches. Either we merged some that were very physically close or we turned a conventional branch that has a lot more costs, guards, security, guards, revolving doors, et cetera we turned them into a branch that has a lot less fixed costs and fixed expenses. Since last year, this work has been starting. In 2021, 2022, we started doing that. In 2023, in the second half, there's about 100 or 150 branches that will be transformed. We will continue on that path. There is also the progress of Bradesco Expresso with 41,000 points. So we can ensure our presence in the cities, but it's all based on variable costs. So we don't have that problem of cost increase. If we have a cost increase, it's because we have a much higher additional revenue flowing in. So this gives us a lot of comfort, a lot of peace of mind to adapt the expense guidance and to say that our expense should be in the middle, in the mid-range of the guidance. And as for the Amazon card, Mario, you will forgive me, but we cannot say anything. But what I can tell you is that the credit risk is our risk, but with total autonomy of Bradesco. Now the other aspects of the business, you will forgive me, but this will be launched on August 8th with the presence of the Amazon board and our Bradesco people as well. The launch will be on August 8th. And during that event, more details will be disclosed. I shouldn't be talking more about that. On the 8th, we'll be able to speak more about this. They will present all the economics. And if you want a meeting, [Rocha], the VP of cards, can meet with you, can give you all of the information as long or as soon as we have disclosed the business with Amazon, which is our partner in this business. They are wonderful partner. This is a wonderful partnership. We're very happy to have them as partners in Brazil for the issuance of cards. And other than that, I cannot disclose any more. Thank you very much.

Thank you, Mario, for your questions. Next from Juan Recalde from Scotiabank. Okay. So we'll go to the next question. And then, if Juan reconnects, we'll go back to him. Next question, Thiago Batista, UBS. Thiago, please go ahead.

Hello, guys. I have two questions. The first about [Dizingrola]. There's been one month of the program. I'd like to understand a little bit of the impact of this second phase of Dizingrola will have on Bradesco, if it's going to lead to a drop of NBL, or if you can give us a view of the impact you expect to see both in the bank and overall? And my second question, also in terms of regulation, in July we had that change. And the risk factor, the bank has already improved since the fourth quarter of last year. But how do you see the impact of this capital regulation change? How much can it add, 50 BPFs, 100? What is the magnitude, if you can give us, after this new regulation?

Thiago, hello. It's a pleasure to have you here. About Dizingrola, the operations are of low amount. We're talking about the second phase, Thiago, where the person still has to negotiate directly with their creditor, either the bank or the store, whatever it is. So what we've seen is that there has been an increase in renegotiation operations of that, which we already had, around 8% to 9%, the daily volume of renegotiation. That's the first 12, 13 days since it started. In this first phase, there was an exclusion of 620,000 default accounts of up to BRL100, now for the client to normally pay for their operations so that they don't go back into the status. But the amounts are low, so it's not going to really affect NPL that much, because these are operations that have already been written off. It doesn't really change anything so much at this first moment and in this scenario. But what we can see, Thiago, the people that we were trying to reach in order to collect, it was impossible and we couldn't. With Dizingrola, at least they went there and clicked on the website. They showed up to try to see the conditions they have, and then we were able to renegotiate or get something back. But it's small, it doesn't really change NPL that much. As for Capital Basel, as I said, we have been improving, this quarter is a little bit better, and now we have this new legislation that started in July from the central bank, and the impact will be from 0.20 to 0.30, so 0.20 to 0.30 BPS, and it was implemented on July 1st. So the initial impact is that it will be from 0.20 to 0.30 BPS.

Thank you, Tiago. Let's go back then to Juan Recalde from Scotiabank.

Hi, can you hear me now?

Yes.

Perfect. Okay, apologies for that. And thank you for the opportunity to ask questions. My question is related to the fees and commissions. I see you reiterated the guidance of a growth of 2% to 6%, but in the first half the change was, year-on-year, the change was negative 0.5%. So I was wondering if you can talk about what will drive the stronger fee income in the second half, whether it's going to be card income, asset management, checking accounts, or any comment on that would be helpful?

So, Juan, we're below the guidance in terms of fees, and this is a business that really struggles with regulation, governmental decisions, the central bank's decisions. There's some asymmetry in that sense. And sometimes a lot of dissemination on social media for fees to be cancelled because there's the essential package by the central bank. So there's always a lot of offenders for us to grow. In order to grow in fees, there's no other way other than growing in volume, increasing client base, strongly increase the bank's client base, and that's what we've been doing. I mentioned briefly about the grow in accounts open on mobile, even the accounts on Macs, there's 4,000 accounts per day. And in all these cases, seeking to generate benefits for the client, so that they see that the fee is not just an expense that they have, but that the fee will bring them additional benefits. So they pay the fee, for example, to have a subscription of a streaming channel or maybe Disney Channel, or Disney Plus rather, and some partnerships that we're making to make this fee more attractive for the client, so that they can perceive not only the work behind and the quality of the services provided by the bank, but also additional benefits to our clients so that we can retain them, and that's a good point. The fiscal asset has been doing a good job increasing their portfolio and the assets managed there with new funds, with performance rates, with administration fees due to the reduction of interest rates in the past. Administration fees went down, but once interest rates went up, administration fees did not increase and they won't increase, so you need to work with other funds that include a performance fee, because that's how…

No. we still have a very long list of questions, so there's much responsible. Please limit yourselves to just one question. Next question from Eduardo Rosman with PTG.

Hello, good morning. Actually, I'd like to ask a follow-up question regarding the insurance company. I'd read the results. It was very solid. It surprised positively everyone. We were expecting weaker results, albeit with some improvements. It was not 100% clear to me, because there was a big difference quarter-on-quarter. In that leap, is it the new bottom line level for the insurance group looking forward? Or could we expect more improvement? I just would like to have a clearer notion regarding that?

Ivan, can you answer Eduardo's question? Just to confirm your previous answer regarding additional provisions, as you mentioned, and then I will add something.

Thank you, Octavio, and thank you, Eduardo, for the question. Your question, unlike Rafael's question, is more geared to the future, and I would like to say that we changed our guidance from 21% to 25%, but we did it under a lot of thought, and this is based on the fact that in the first half, we achieved the mark of 21.5%. It couldn't be different for the second half, particularly if we consider the improvement in the commercialization part. We made some changes in the commercial department of the insurance group in the beginning of this year, and this has started showing excellent fruit in the first half of the year, and our earnings clearly show that. BRL51 billion, as I mentioned, but actually in the second half, we expect to reap the effects and the fruits of this commercial operation. We will be working on the bank insurance in a differentiated fashion. And we believe that in the second half, we're going to reap even more fruit, in addition to the increment of the commercial channel. That now, we'll work together with the network channel, but separately also with the strategy that we developed. This will happen in the ecosystem of each company. This was implemented in the first half, and again, we can see the positive effects, and it will continue. This project, which we call Project to BRAVO, bringing the multi-channel to the inside of the companies, driving improvement in performance. And we'll make performance improve even further in the second half of the year. So businesses will evolve, given the sales to companies. Looking, we are taking -- we're considering a higher NII, and it's continued in the second half. We will maintain the loss ratio, the claims ratio, at this level, or even lower. And all of these are positive effects, together with the product mix and extension of the margin. All of that gives us comfort. And now I address your question. This gives us comfort to increase the guidance, and it gives us the hope that we will achieve definitely, but for sure, even better results in the second half. I'm not sure I answered your question.

And, Rosman, let me just add to what Ivan said. The sales, the revenue of Insurance Group will be greater than 100 billion. And this is the result of the work that Insurance Group has been doing, led by Ivan. And that's an important reduction in the claims ratio. And we know that every percentage point of reduction in claims ratio is fundamental. There was a positive impact. The GPM was negative, and the increase in sales. To give you an idea. Ivan did a work for the development of digital journeys, and this year, we'll have more than 2 million items sent in mobile devices, just of insurance. So, of course, our wish, and we will work to continue to maintain this kind of revenue for the coming years. In the insurance company, because of this growth, and because of the independence of each one of the verticals of the Insurance Group, as mentioned by Ivan. Thank you, Rosman.

And if you'll allow me, Octavio and Rosman, the fundamentals of the Insurance Group, if you'll look at our balance sheet, it give us comfort to have a very objective perspective look of the future, very positive outlook for the future. Thank you.

Thank you, Rosman. Next question From Arnon Shirazi with Santander. Arnon? Go ahead. Arnon, are you there? We do not hear you. Okay. So, let's move to the next. Renato Meloni from Autonomous. Unfortunately, the sound is not audible. We apologize. We apologize, but Renato Meloni's sound is not audible. I'm sorry, Renato. We could not hear you at all. Your voice was very metallic. Renato, are you there? Okay, let's go to Pedro Leduc, and we'll come back to Renato later, okay? Next question from Pedro Leduc with Itaú.

Thank you, Firetti. Good morning, everyone. A quick question regarding the guidance review for NII. 7 to 11, now 6 to 10. And since this guidance was disclosed, the CDI curve moved in a favorable position regarding market NII. And still, this total line was reviewed down. I think it has to do with the portfolio. So, what do you expect regarding client NII? Because it seems that considering a drop in CDI, still, you revised this down. It seems that there was a deterioration in client NIMS for the coming quarters. Is this a fair statement? And how will this evolve for 2024?

Okay, Pedro, thank you for the question. As we have been saying, the market NII, yes, it has that constant gradual growth towards the second half. And the main offender for a change in the guidance continues to be the loan book. We were stumbling. To hold back loans in the first half. We reviewed all of our policies. And now, in June, July, and August, this is changing. We understand that we can accelerate, but not as it was before. It would now be feasible. We recognize that the loan book was lost in the previous guidance. The market portfolio is recovering. The market NII is helping us in this indicator. But it is not enough for us to reach the total of that first guidance. So, credit is still at an important level. We are now opening short-term portfolios, loans for individuals. We have a higher spread. And we can hold a lower credit provision. So, this is what we are doing. We are doing it, but cautiously and gradually. But this mixed market improvement, and when we entered the balance sheet, that interest rate reduction was not guaranteed. But this is coming. And an interesting prospective cycle is coming up, particularly for 2024. But undoubtedly, credit and credit granting will guide us in the NII guidance. The market NII, as Cassiano mentioned, tends to recover. I think this is a given improvement in the second half of the year. And hopefully, we will enter the positive level in the second half, slightly positive, perhaps even in the next quarter. And it will continue to gradually improve along 2024. And I think that the resumption of the loan book, as Cassiano mentioned, will be the biggest driver looking forward.

Excellent, thank you.

So now, we will go back to Arnon Shirazi from Santander. Arnon, can you hear me? So, Arnon, still not connected. We will turn to Renato Meloni from Autonomous. Renato, can you hear us?

Good morning. Is it better now?

Yes, much better.

Excellent, I apologize. I'd like to talk about your view. When you talk about the recovery for the coming quarters. If you look at Selic rate for next year with the offer of 9%, can we talk at a level of 18%? Especially the competitive view that's very different from the past?

Thank you for your question, Renato. So, Renato, we understand at this moment of the reduction of ROE that occurred is a situational aspect, not structural. So, of course, that the change in the market and changing people's consumption habits has a structural aspect that the bank needs to adapt to. And that's what we've been doing since the pandemic. And I remembered in the last meeting that we had in the last meeting, that before the pandemic, every day the bank would make 1 million authentications at the teller. And now it's 90,000. So, we went from 1 million every day to 100,000, to 90,000 authentications at the teller. So, there's a change in the market in terms of relationship with the customers, and people's consuming habits that influence how they consume products and services that requires you to make structural changes that are essential, as I said. The change in the types of our branches, the reduction in size, the adoption of business units for advisory and service to our clients, no longer a branch for back office service or account payment or bill payment. Many processes that we've been developing in the bank with negative, or as you saw last week, some negotiations we have with some partners with quantum computing. The structural change we had on Next that is no longer an expense line, or rather a strong investment line, but bringing it into the bank so that it can bring the expense close to zero and make the most of all the synergies between Next and Bradesco, preserving for the clients, especially lower income or heavy user clients or younger clients, to have an option of having a digital bank for themselves through Next, which has a different visual look than Bradesco, the way that…

Thank you, Renato. And now we will turn to Carlos Gomez from HSBC.

Hello. Thank you very much for taking my question. I wanted to ask about the tax rate, it was particularly low this quarter, 8%. What do you expect for the rest of the year and what should we expect as a normalized tax rate, without any changes to interest on capital, of course?

So, Carlos, the tax rate is at a very low level due to the fact that the earnings level is lower, so the effect of the IOC leap this rate to be at a lower level. In addition, as you have been seeing, there is also greater participation of the insurance company in the total of the bank's results. The insurance company has a lower rate. So, based on all that, we would say that a reasonable range for tax rates would be from 10% to 14%.

So, looking forward, as the results increase and you take on the maintenance of the structure we have today with IOC, the IOC tax shield will cut less from the tax. So the tax rate will normally increase. So, I'd say that when we go back to the levels of ROE that we had in the past, our rate will also go back to the levels we had in the past.

Thank you. Well, now we have a question by Nicolas Rivea with Bank of America. Nicolas, go ahead.

Thank you very much for the chance to ask questions. I have a question on your 81 capital. So, I see about R$14 billion of 81 capital on the balance sheet. I understand this has all been raised in the domestic market. So, I wanted to ask what are the important call dates for this 81 capital? And what's your plan if you plan to refinance this as well in the local market? I do not recall any local 81 issuance this year after the American as an event. And then, in general, how do you see your funding needs, your dollar funding needs? I think historically you have shown a preference more to issue locally rather than issue in dollars and hedge back to Reais. But if you can give us your updated thoughts in terms of dollar funding needs? Thank you very much.

Thank you, Nicolas. Well, as regards debt in capital Tier 1 capital instruments, we have about 1.5%, which is our limit. To us, it is the efficiency limit We do not need to have any additional issuances. We have an opportunity to issue the whole 81 in the local m Market here, at cost and with a structure that we consider to be very adequate in VRL, which to us brings a lot of efficiency in terms of not requiring hedge. So we do not have any big event coming up. So this limit has been used and we will maintain these issuances here in the local market. We do not see any room for new issuances, particularly in the International market via 81. Now, as for debt instruments, dollar funding needs, I will turn the floor to Cassiano, because he knows a lot about this.

Thank you, Nicolas. At the international level at this point, we don't see the right conditions. Again, it all depends on market conditions. We still have a high CDS and the interest rates abroad. When we compare local and international issuance, local issuance, considering the high SELIC rate, is still better than international conditions. But we look at this every single day. So if we see an opportunity that will benefit us with international funding, we will consider that. But right now, the local conditions are better.

Thank you, Nicolas. And with that, we are ending the Q&A session. Questions that were not answered during this call will be answered by our investor relations team. Before I turn the floor to Octavio for his final statements, I would like to remind you that in our IR website, you will find this presentation as well as all of the material related to our earnings release. Thank you for the presentation and have the floor.

Thank you, Firetti. Thank you, Cassiano. And thank all of you in particular for joining us, for your participation and attention. I hope that we have answered all of your questions. I would like to thank also Gontijo who joined us online. And hopefully, we have answered all of your questions. But if you have any pending questions, if you need more detail on any topic whatsoever, please get in touch with us, Firetti, and our whole IR team and investor will be available to speak with you. Thank you very much for your attention. Enjoy your weekend and have a great rest of day.