Good morning and thank you for waiting. Welcome to the conference call to discuss Banco Santander Brasil SA's results. Present here are Mr. Angel Santodomingo, Executive Vice President, Chief Financial Officer; and Mr. Luiz Felipe Taunay, Head of Investor Relations. All the participants will be on listen-only mode during the presentation. After which, we will begin the question-and-answer session when further instructions will be provided. [Operator Instructions] The live webcast of this call is available at Banco Santander's Investor Relations website, www.santander.com.br/ir, where the presentation is also available for download. We would like to inform that questions received via webcast will have answering priority. [Operator Instructions]. Before proceeding, we wish to clarify that forward-looking statements may be made during the conference call relating to the business outlook of Banco Santander Brasil, operating and financial projections, and targets based on the beliefs and assumptions of the Executive Board, as well as any information currently available. Such forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and hence, depend on circumstances that may or may not occur. Investors must be aware that general economic conditions, industry conditions and other operational factors may affect the future performance of Banco Santander Brasil, and may cause actual results to substantially differ from those in the forward-looking statements. I will now pass the word to Mr. Angel Santodomingo. Please Mr. Santodomingo, you may proceed.

Good morning everybody. Thank you for being present in our 1Q '16 results. I'm going to go through the presentation as always, and then we will open the floor for Q&A. The presentation will be divided in five main blocks. The first being key messages, specifically our strategic messages going forward. Then I will stop for one slide on results of Santander Group that are already known in public to the market and then we will go specifically to Brasil, into Santander Brasil going through the macroeconomic scenario, highlight and results and the four months of this 1Q. So going to the four main strategic messages in terms of customer orientation, it will be the first strategic pillar of the bank. We want to support our customers and businesses, so we continue to invest in our retail franchise, increasing customer satisfaction and reducing complaints, and these are tangible facts, it's not only position of the bank. In fact, this quarter we again remained above our peers in the central bank complaints ranking that is published as I said monthly. This is a result of our increased client linkage. Also one month ago, which is the first we launched our new position which clearly expresses our customer centric model through the sentence or through the question of what can we do for you today in Portuguese [ph] which is basically what we could do for clients being closer to them today, not just for tomorrow trying to offer this possible solution. And now we continue to build our multichannel platform to reach out with others and I must say that we already got to 5 million digital customers as we speak. Next slide, talking about the integrated -- we think are nicely and widely positioned through an integrated offer including wholesale…

[Operator Instructions]

So we start from -- to go through the questions that are received, many themes, we'll summarize the themes and try to put together, the questions that are related to same topic. So starting with loan portfolio, we received a question from Baronet [ph] asking how we see credit evolving 2016 and 2017 given the contraction that we saw in this quarter?

Okay, thank you. Well, as I mentioned in the presentation, we think apart from FOREX impact and kind of the non-like for like issues, it is through that we are seeing the macro economic scenario or situation or environment affecting the devaluation of the portfolios. We remained -- I mean this is the recycled one, but we remain with the idea that probably the Q-on-Q receiver in terms of economic indicators could turn to be positive sometime in 3Q against the 2Q or 4Q against 1Q. At some point we're seeing that the economy will bottom up. Another discussion is the size, the strength, and the timing of the way out. But we do think that we should assume to see that positive territory in the next quarters. If that is the case, we should also see reflection of that situation on volumes. So I would expect something like single-digit, low single-digit -- cost in single-digit for this year gaining a little bit of momentum for next year. It is what we have been saying more or less during the last, I don't know -- at least three, four, five quarters. So we haven't changed the message here. And we still think that if the economy behaves as I mentioned, we should have started to see that kind of behavior. Obviously, the confidence levels are going to be crucial in the discussion, and so the general momentum that the country could be involved during the next months will be kind of important to understand how the economy try to grow [ph].

Regarding NII, we received one question from Gelami Costa [ph]. We noted that price continue to evolve partially but the non-portfolio reduction caused contraction in the NII, credit related NII. Could you comment your expectations for NII in 2016, especially given the scenario that you have for 400 basis points?

Well, the first thing I have to say that what we include in the presentation is consensus number, and so we do see this leak going down by the end of the year, that we -- I think in time that we were one of the unique banks here in Brazil that had a clear call in terms of monetary easing by the end of the year when the consensus in the market was on the opposite side, we held almost 150 basis points of interest rate increases in the year. So we do think that this will go down by the end of the year. What will happen with NII? Well, I already elaborated in terms of volumes, what we are managing are prices in weeks. If you see the last long series of quarters, in general terms, we played with some -- but in general terms we have been able to offset the mix effect with price management. And on top of that I will also agree all phases still a low amount. I will also address the liability in NII. So I will be somehow positive of still with low amounts on the liability side. In terms of NII, obviously the volume impact will be there. I would say that in terms of NIM, we should be in positive territory. And the third component which is obviously the market components, that is -- this is one to estimate.

Regarding asset quality, we have received six questions. And they are from Philip Finch [ph] from UBS, [indiscernible]. So starting with the more general questions, given the current scenario of the outlook, how the bank proceeds delinquency going forward? And more specifically, do you -- regarding -- for corporates, given that we saw an uptick in earlier considered in previous quarter, that was partially regularized this quarter. How do we see the outlook for corporates going forward, Sergio?

Okay, thank you. With regards to credit quality which is one of the main issues currently in Brazil. I would like first to -- what I mentioned in the presentation, I would like first to repeat the Air force at Santander Brasil has landed in the last 3/4 years. I mean, this has been -- it is clear we have been doing the -- this has been clearly reflected in our ratios. We have done a strong convergence towards this and we not only converged towards this but we remained clearly in a comfortable levels in logic terms. So -- and this is not kind of -- this is not magic, this is obviously the reflection of knowing the client behavior, understanding the morals, increasing diversification, improving kind of exposure, etcetera. So -- and this is -- again, this is not our bank job, this is a job that has been done by the redeployment and the full operation I would say during the last 2-3 years. So I can check that. How do we see quality going forward, obviously deteriorating. I would say, as I mentioned obviously in the presentation, marginally and a specifically controlled but obviously reflecting the situation that we have to bear in the economy. If U.S. made by -- I mean, trying to differentiate the behavior between different segment, I would say that also this is not the case today in terms of NPL ratios. I will say that the normal trends should be that the retail side should perform worse, in relative terms compared to corporates etcetera because as the crisis, continues to be present, the capacity of surviving by the retail side is obviously lower and that should be reflected. Specifically speaking, of 15 to 90 days, I would say a couple of…

And later it came a question from Philip Salami [ph], Morgan Stanley. The question regards Brazil. As a shareholder, can you share any details on the outlook of this business and if Santander has the right provision to launch and investments made?

A quicker one. We don't speak about clients and we don't speak about levels of provision and we've been -- the only thing I can say, this is not with regards to whoever we are speaking is that the criteria that Santander Brasil applies in terms of provision is absolutely conservative, and I repeat, absolutely conservative.

And lastly, regarding asset quality, there was a question whether there was any sale of portfolio because it's not -- and I'm going to transfer, there was a small sale of BRL21 million. So it had no major impact on any matrix or in terms of delinquency or gains or impact on the P&L. So now moving topics, we are going to -- there is a question regarding order operating expenses from Carlos from Banco Brasil. The other operating expenses Rial, 49% quarter-on-quarter, and year-on-year. What exactly impacted this line and what can be expected for the coming quarters?

Okay, thank you Carlos. This line is kind of volatility share. So analyzing very sorts and stages in terms of Q-on-Q or year-on-year etcetera at times is little bit difficult. What do we have there, we have all kind of things. I mean we have from adjustments from variations from the liability, from monetary adjustments from the liability side, some expenses and technical costs in terms of some judicial things. We have said FX expenses which is the positive. So the concept of orders as you can imagine and as we have shown in the past is quite volatile. It's really too difficult to estimate, a bit difficult to see our trendy line there, given the -- as I said Q-on-Q and the concepts, because you have a full list of concepts, we think on that line. Now moving to tax rate, effective tax rate. We received questions from Philip Sinch [ph], UBS; Lucas, Credit Suisse; Chitto [ph], Duestche Bank. The question is, what is the outlook for the second tax rate and if we can share some color on the volatility of the effective tax rate overtime. I'm going to answer this one. So if we see in the quarter, hold on just a second, yes, the effective tax rate in the quarter was 10.9%, and last year effective tax rate was 13.6%. In 2014 it was also in the same neighborhood. So the effective tax rate that we had in this quarter is not that different from the effective tax rate that we had overall last year. If one looks at the behavior of tax rate last year, effectively, there was major swings among the quarters because there are events like payment of interim capital that tends to make those links on the quarter-on-quarter solution. When we manage this, we are looking to the yearly figures and as we indicated in the last quarter call, we indicated that we expect the effective tax rate for 2015 to hover around between 16% and 20%.

We received one question from -- asset quality question from Philip Perigo [ph], MetLife. Can you give us some color on the level of credit renegotiation, NPLs and provision on this portfolio.

Probably I think in the quarter report, that have been what the bank has been doing in the last full series of quarter, I think it's absolutely flat if I'm not mistaken. So there is not really strong variations here. We continue to obviously to do an important effort as I mentioned before in the 15 to 90 days period in which we think that -- and we have said this in the last quarter. We think that there is clear opportunity for the bank to be closer with the clients. This does not mean anything more than what I'm saying, just analyzing, making our lease department active in terms of what is the health of our clients, financially speaking, and with that in mind we try to find solutions. And this has been like I'm saying for a long time. So there is no strong variations. The numbers you have -- as I mentioned in the quarterly report and we will continue the same in the same way. I would say that in general, Santander Brasil Group, has proven to be very capable in these territory. As you know the group has gone through different crisis in different market in the last 10 to 15 years and the capacity in terms of recoveries etcetera is already a proven fact. So we are doing the same thing here which means that we optimize our position and knowledge with the clients to avoid future impacts.

We have no more questions that we received from the web. Now we can go to the questions from the phone please.

[Operator Instructions] Our first question comes from Rafael Reggie [ph].

Hi, good morning all. I have two questions. The questions relates to tech, in the quarter I understand that you use some license in there. How much more do you use to have and if you intend to use this throughout the quarters or maybe concentrating in specific quarter? And second, I would like to get a sense how relevant was the impact of the change in risk rates, if this was something relevant or not, if you can give any color on this, it would be great.

Thank you, Rafael. So the amount of DTAs that are off balance equals BRL1.2 billion as of March 16. How this is going to be used overtime, it will depend on the conditions. Regarding your second question, Rial will handle.

Well, I would say that you have kind of security of mark-to-market but that goes through capital. In general terms, our portfolio -- as we are totally stable so we have not been active given the market volatility and the situation of the financial markets in general terms. And obviously we do have our sensitivity but I would say that here probably more important instant is what I mentioned in the presentation is our price policies, our evolution and how we are pricing our products and services. In terms of sensitivity, I think we have said in the past, it's 100 basis points decrease/increase in part, around BRL400 million or €100 million. But as I said, we have been absolutely or fairly non-dynamic at all in this quarter.

Just a follow-up in the last question. It puts you in a lot of delay. The results came, the other line on your NII was higher than this first quarter. What would really put numbers through -- is it first quarter number? Is it fourth quarter something in between?

Thank you. I have mentioned this in the past. The market component if I remember well in fourth quarter results, I was mentioning that we were having a quite a good quarter in terms of market. If you see, historically speaking, the range is in between -- if I take the outliers. We consider this quarter a positive one in terms of market dynamics [ph]. Do we see this as a maximum? Or are we going to see reaching those levels again? I wouldn't say so. It depends a lot on margin on all the activities that we have for our own markets in terms of treasury, in terms of all our departments in the wholesale/banking et cetera, and we have had quite positive first quarter results in that sense and we continue to perform absolutely positively in the second quarter. So, difficult to say, difficult to estimate. You're right, this is quite a good quarter in that sense, but I wouldn't say that it's to do at all.

Okay. That's about it. Thank you.

[Operator instructions] Our next question comes from Mr. Domingo [ph] from JPMorgan.

Hi. Good morning, all, congratulations on the results. I felt some of the trends. My question is just so that we understand. I understand that the line of it is highly volatile, but how should we think about this lining versus rates? So in example, we did see a significant rate reduction. If we look at the curve three or five year over the last three months, how much of those results would have benefited from this rate cost and how should we think going forward on the move of the one-year or five-year rates and these lines?

Domingo, I don't know if you are referring to the offers in the NII, or the offers in the cost?

In NII, I'm sorry. Within NII. I understand there were some [ph] in the NII.

Okay. Thank you for your comment. I already know why you're here. It has not only to do with the specific selling movements or pure movements on that percent. It has to do a lot with our activity on what I mentioned before -- treasury et cetera. In that sense as I mentioned, our wholesale, there is absolutely well-positioned. I remember that we are first players in Forex along with first in advisory aid with this etcetera and that means this type of performance in that line of -- I don't like to leave others because these are specifically basically markets et cetera, but this has to do guardedly with that. I mentioned my thoughts, it's a good quarter. Can we repeat it? I hope so. I will try to repeat it, yes. We mentioned a good second quarter in that sense, but I will leave it specifically to that ability, lines, et cetera, more or less depending on what happens and trust the bank benefits more or less. But difficult for us in general sense, if I said to put myself in your place, I would analyze what has been the historic evolution. I mentioned already the ranges and then see how we all perform at those levels.

I'm sorry. I didn't mean like for you to forget. I asked if the interest rate curve shift upward or downwards has a directing take on that line.

Felipe, you want to follow?

Yes. Domingo, you have the trading books which are the wholesale traders that I have mentioned and then of course they trade as well the interest rate markets. Right? But it's not a structural thing -- one day they can be long, the other day they can be short. So it doesn't mean that structurally speaking, you have a fine here. They vary a lot their positions over time. It's also to give any sort of sensitivity or any sort of direction.

That's why I was mentioning though that at the end of the day, the activity of these guys that affect and that have that kind of input, I wouldn't link guardedly if X basis points et cetera because it has to do with that.

Okay, understood. Thank you.

Thank you. The Q&A session is over and I wish to hand over to Mr. Angel Santodomingo for his closing remarks.

Well, I think that's it -- another quarter. I would like to stress that we continue to deliver. We do not want to excel. We want you to endure your position in the next Q so the idea is recurrence is continue to deliver. We are increasing little by little and we are going to the direction that we are expected. We want to deliver what we have said to the market and we strive to do it. So thank you for your presence here and I look forward to seeing you in the next quarter.

Banco Santander Brasil's conference call has come to an end. We thank you for your participation. Have a nice day.