Good morning and thank you for waiting. Welcome to the conference call to discuss Banco Santander (Brasil) S.A. Results. Present here Mr. Angel Santodomingo, CFO; and Mr. André Parisi, 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, at www.santander.com.br/ri, 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 on 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 has 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. André Parisi. Please, Mr. Parisi, you may proceed. André Parisi: Good morning everyone. It’s my pleasure to welcome you once again our conference call. As a growth company, we had another strong quarter, which will be presented by our CFO, Mr. Angel Santodomingo. So, now I turn it over to him.

Thank you, André. Good morning, everyone. Thank you all you all for joining us this morning to discuss our 3Q 2020 earnings results. I hope you are all doing well. Given that it is one year since what Investor Day, added to what the society has gone through in this year, in 2020, we have included a first part in this quarter presentation in which we update our study. These will be followed by the traditional results presentation that I will share with you. So, I hope that you follow me through this first part of the presentation. Next slide, slide four, Santander's growth history in Brazil is based on a number of transformations. The last five years have been important for us to get to where we are today. In 2016, we started to transform our branch network, while establishing a strong and perennial culture. It also marked the beginning of our new consumer finance goods and services unit. We accelerated lending during a period when the market receded. Our [Indiscernible] turned out to be the right one. In 2017, we introduced the NPS, the Net Promoter Score because we figured it wasn't enough to change our culture in service, we needed to measure our customers' perception on the quality of our work. Since then, we have reaped positive results and we started appearing in performance rate rankings. Improving our operational efficiency, we managed to end 2018 with a return on equity of 20% a gain compared [ph] to market. Last year, we launched several platforms that are currently at the helm of the industries in which they operate, and yet again, we anticipated market trends as we reduce our exposure to uncollateralized lending as well as accelerated another efficiency program based on expectations of a more challenging 2020.…

Can you discuss the behavior of your reprogrammed portfolio as the grace periods are expiring?

Thank you, Mario. Well, I already gave him the presentation some of the numbers, let me go through them. First idea is that the portfolio has gone down BRL3 billion. So when we first presented this portfolio it was in July, as you remember, it was close to BRL50 billion, now is close to BRL46 billion or BRL47 billion. So, first, it's going down, clients are paying. The second idea is, I gave to you the early areas 5.1%. If -- remember, almost 75, three quarters of the portfolio are individuals, 25% are companies and SMEs. So the 5.1% compares quite possible is in line with the early areas that we have in the bank. If you see the individuals, as the areas in this quarter we were 4.6 close to the 5.1, but we have had a 6, or 5.2, or 5.7 just in the last 12 months. So the portfolio is behaving in a natural way. In fact, the BRL3 billion that we saw as a net going down has been concentrated in unsecured loans and individual so improving the risk profile of the portfolio. But let me give a little bit more details on the portfolio on top of what I mentioned in my speech. The NPL over 90 is below 1%. Okay. Remember that the bank has 2.1%. I repeat the NPL over 90 is below 1%. Obviously, the portfolio has to evolve, but by all means, the portfolio looks that it is performing even entirely to some extent better than expected. And this is why I mentioned that we do not expect further extraordinary provisions. André Parisi: Okay. Next question is from Otavio Tanganelli, Credit Suisse.

How comfortable is the bank that there will be no requirement of additional provisions in coming quarters, our current level of coverage enough?

Thank you, Otavio. Well, 307% coverage ratio looks conservative to us. As you will know, and I always have said with you, but for us coverage ratios and outcome, we do not get an objective in terms of we have to reach certain level or whatever. It's an outcome of how we classify our portfolios? How we rank them in terms of not only their regulatory needs, in terms of provisioning, but also according to our risk model. So it comes out to be about 300. I will say, it's quite a large number. But also it means that we are comfortable with the balance sheet strength that we have, which includes, by the way, the extraordinary provision that we made in second Q. I mentioned in my speech that we do not expect to make further extraordinary provisions. If you add what I mentioned with the renegotiating portfolio, the BRL46 billion, I gave all the details just in the previous question to the 300 plus coverage ratio to the fact that we provision these BRL3.2 billion extraordinary in the second Q, we provision another BRL3 billion in 4Q last year. I mean, I think that the strength of the balance sheet is there. We will have to wait. We will have to see. I mentioned the same thing in the second Q results that we will have to wait and see how everything evolves, the economic trend and momentum, et cetera. But we are comfortable answering to your question. We are comfortable both with the coverage and with the provision. So, returning to business as usual in terms of provision. André Parisi: Okay. Next question is from Victor Schabbel, Bradesco BBI. In the quarter, we still identified an increase in the renegotiated portfolio, while the provision expense has a red corrector as well, what best explains this behavior?

Well, in fact, if you see numbers in terms of provisioning and recoveries, provisioning -- gross provisioning is -- has returned to similar levels to the pre-extraordinary provisioning in second Q. And as I mentioned also in my speech recoveries are performing positively. I think, recoveries are a basic part of the business, and we have developed a lot that area. You have to have a lot of intelligence there. It is not just call calling, it has a lot much more than that. We have a specific teams working there. I spoke about emDia, which is an a specific -- subsidiary or unit, but we also have a specific teams in each of our areas, which are working on recoveries. So, if you are a lot with the specific effort that we tend to do in the 60 to 90 days, but also in the early -- also in the pre-early, you have to deliver -- you have to develop -- sorry -- you have to develop these kinds of intelligence, so that it really works. Let me put I guess a very good example. Loop, in Troca+Troco, the two things we have somehow knew in the Auto finance business. Loop is a park and sell subsidiary, that we have 50% participation along with Gestão de Pátios. Loop is helping the recoveries in terms of selling cars in a secure place, which is a place where you park the car, or you recover it and you put it there to sell. Troca+Troco is something that we have started in July. This is that you have a car financed, you start to go through difficulties and you can go to one of our 50,000 dealers that we have agreed with them to do it. You go there. You deliver your car. And you go out with another car obviously of lower stand end with money, because of the difference. This has been a total success. We are doing more than 3,000 cars per month in this and it's just three months old, because it's a way of recovering also. It's a way of recovering in partnership with our car dealers. So, these kind of experiences that are happening all across the bank with intelligence being close to the client, being capable of understanding the situation and giving solutions, not only trying to recover the cars in the old way manner are being successful. So that -- this is helping, obviously, it is clearly helping on the production side and will continue to do André Parisi: Okay. Next question is from Jorg Friedemann, Citi.

The bank is currently the vast capitalized among the Brazilian large banks with a CT-1 at 12.3%. How should we face your dividend policy and recurring dividend payout?

Well, I mean, you're right. We are about 12% core equity Tier 1. We announced yesterday an interest on capital dividend that will consume around 20 basis points. So we are speaking there roughly 12.1% before generation of profit in October. We have several variables here. First, as you know, we are limited this year to 25% leverage. So that's given. And we are adjusting our interest on capital or dividend payments to that maximum level established by the Central Bank here in Brazil. Now, these expires in December, after that, we will continue to manage the capital in the same way we have done in the past, which means reasonable levels of capital and we have always say it around 12%, we have been in 11 point -- I think it was 11.4% or 11.5%, we have been in 12.6%. So around these levels, I think that levels so far as I said 11.5%, 12% et cetera are levels that for the current Brazil are more than enough or are quite correct in terms of maintaining a capital ratio. And the other variable is clear is return on equity to end up in risk weighted assets growth, to end up in a payout. So we will adjust that payout. The general kind of thinking in the past has been that as you see we have return on equities about 20%. We have risk weighted assets growth around the 10%. It can be 12%, it can be 8% depending on the moment that we around there, which leads us to an around 50% payout. But it's not written in stone given that the main point will be how much do we want to grow, in terms of risk weighted assets in the future, I don't want to put in risk growth -- future growth because of any decision in a moment of time. But having enough capital to fund that risk weighted asset growth in the future will be our main kind of way of acting here. André Parisi: Okay. Next question is from Marcos Assumpção with Itaú BBA. Marcos Assumpção: What's the outlook for fee income in 2021? How does PIX Central Bank platform affect the line in the short term?

I mean, we have always said and this is why I dedicated on the strategic side, I dedicated 2 or 3 slides to the active client growth or linked client growth. This is key and this is little vital for you to understand our growth. We have continuously increased number of linked of active clients. We are in 27 million now. We were almost half of that 5 years ago. We are growing above 100,000 clients per month. I mean, the intention here is to create that income, that inflow of active clients and at the same time, making our current clients obviously more linked. And this is what will drive fees, which is basically transactionality. If you see in the quarter, all concepts in Q on Q, all concepts are growing nicely. You have -- I don't know cards over -- are around 18%, you have asset management picking up again at 16%, around lending operations more than 20% or even securities more than 60% for a total of 16% Q on Q, which is pure transactionality and this comes from our linked clients. So variable to follow linked clients. Second point on the PIX side, we are just starting next say November 16, is when the PIX starts to be live, if I may say like that. As you have seen, we have created using the PIX system from the Central Bank, our own trademark is x, which is the commercial number for that PIX system. And we will offer it to our clients we are already offering it to register et cetera, we will see impacts. Obviously, they will say but also, clients will be again more linked and more active with the bank. So both trends will probably tend to offset. But I mean, I cannot give you a number now because it's really too early. André Parisi: Next question is from Thiago Batista, UBS.

Santander Brasil has not reduced it's over hedge, at least not the equity abroad. Can you comment on the future dynamics of the over hedge?

Yeah. Thank you, Thiago. Well, I always said no, I mean, we have the position that we have. We have a new regulation running and being applicable for the end of the year and for next year in which that situation will be reverted. And we will adjust to that situation. This is a no -- obviously no doubt about it. Up to that point, we have reached levels in which we thought and we think are the appropriate levels for these banks. So you're right, this is the situation. André Parisi: Next question is from Gustavo [Indiscernible], Goldman Sachs.

Some of your private peers are indicating that expense can decline in nominal terms. Is this possible for Santander as well? What should we expect in terms of operating expenses and efficiency ratio in 2021?

Well, here we have always said, I mean our -- if I may say like that our fire is against inflation as a headline, but the real one is a continuous efficiency effort as a bank. As you know, we are the most efficient bank today, considering second Q results, obviously, we will see with third Q, but we have maintained more or less the same efficiency levels are on 36%, 37% or below 37%. Remember -- I mean, remember last year, both in the Investor Day and throughout the current -- the quarterly results, underlying that we were going into another round of cost efficiency without obviously knowing anything about the COVID et cetera. This is something that is on our DNA, I mean, this is something that the bank has proved during the last years. I have spoken with you a long time, a lot of times around industrializing processes, time to market, et cetera. And we continue to do so. And we will continue to do so. We still think there is a space. And we think that the bank has a still capacity of making processes leaner, of making quicker time to market. I spoke about the mortgages. Mortgages are 50% quicker time to market now that they were 12 months ago, or 18 months ago. And this is just another improvement in efficiency. I always say with you also knowing the unit cost, Getnet is the lower unit cost for operation in the market and this is something we started 3 years ago 4 years ago. This is not, you do not do that in a quarter. So, trying to answer your question. Yes, there are more space. We will continue with that focus and we will try to continue to maintain very attractive or even better, we will see levels of efficiency. That will also depend obviously on the operative leverage of the P&L referring to the growth of revenues, but we will try to keep that leverage quite open or the jaws of revenues and costs quite open, so that it is reflected on the efficiency ratio. André Parisi: The next question is from Tito Labarta, Goldman Sachs.

Spreads have been declining, do you think there will continue to be pressure on spreads or are the -- or they are near the bottom?

As you look at the spread discussion and the mix discussion, not here as I mentioned in the NII presentation. On the spread side, we have seen these and depending on the quarter, depending on the segment, probably the situation -- and we have also seen sorry, the regulation impacts that I have mentioned in previous clauses. I think that this is something that each of the banks have to try to maintain in the future, but we will have pressure, we will have pressure. And this can be offset through several ways, through a limited volume in terms of that dilute salary, the return on risk weighted assets. But adding what I said before fees, and clearly controlling costs and the cost of risk, as we have done in the past. But I mean, it's a little bit of a general question, a general answer, but depends on the product, depends -- you have products in which we are clearly stable. We have position in the market in some areas in which we lead the market. And we have spread clearly above our peers and we maintain that position. Because all the offer, all the services that are being offered are there and are being received. So I mean, tell you from mix [ph], but I would say that speaking of NIM, on the asset side, some pressure will be there. Yes. André Parisi: Next question is from our Carlos Gomez-Lopez, HSBC.

Is the acquisition of Toro fully reflected in this quarter results. Are there any deferred payments to consider? What additional investments or integration charts does the business require?

No. Toro is not reflected in this quarterly results. We signed and we will be hopefully making the closing before year end, depending on regulatory approvals and the normal processes that these type of operations require. This is an operation we announced it in which we thought Toro management and stakeholders also fall in the same direction that the -- putting together with we had a lot of sense in terms of thinking of the Brazil we are going to live in the next years. We are very positive about the operation and how these provokes, the positioning of the bank in this type of platforms. And we will -- probably I will say that you will see the integration of Toro in between fourth Q and first Q, I don't know as I said depending on the regulatory approvals, okay. André Parisi: Next question is from Domingos Falavina, JPMorgan.

Getnet were up 30% year-on-year, but card revenues were slightly down, what drove it MDR, interchange or prepayment spread?

Well, first, on the acquiring side on the Getnet. Getnet is strongly improving markets volumes, transactions et cetera that has to do with several parts of its business, I would say basically, the three parts in which that income is coming from. Performance in October continues to be absolutely strong. We are very positive that -- the subsidiary get net will increase the 15%, I mentioned of market share in terms of activity. We are strongly moving on the e-commerce side, I mentioned in my in my speech, the growth that we are seeing in terms of tenfold et cetera, on the e-commerce side. And I mentioned with you know, in the last years, in the last quarters, the net has been invested in trying to kind of increase or open a little bit the wide range of services that we have been -- that we have been offering. On the cost side, the discussion is different. On the cost side, the year-on-year evolution is strong being impacted in between all the things but it's strongly impacted by the second Q. Remember that in that Q, we suffered everybody's suffered very low level of transactionality. So you have a negative number on the 12 month above 10% and at 17% or 18% increase on the first -- on the Q-on-Q in first Q against second Q. So the trend is positive, I mentioned also digital transactions et cetera. We are seen already strong productivity both from current accounts and non-current accounts, both on the digital side and on the non-digital side. So I think that the trend will continue in the positivity, a little bit of our -- of pull through moment in the second Q, okay, on top of other things volatility et cetera. André Parisi: Thank you very much for your questions to the webcast platform. Now we are going to open the receive questions via phone calls. Okay, so let's just start.

The Q&A section via telephone is open now. One question per participant only. [Operator Instructions] Our first question comes from Mr. Marcelo Telles from Credit Suisse.

Hi. Hello, everyone. Thanks for the time. I have two questions. The first one with regards to your NII evolution going forward and we've seen you know your NIM NII under pressure this quarter both on the client side and on the treasury side. How should we think about you know your NII evolution from here on? Should expect -- do you expect to grow more or less in tandem with your loan portfolio? Or -- are they any headwinds that may lead that to grow at a slower pace? And the other question is on the -- on your operating expense line, and you had a nice decline, in the other operating expenses, I was wondering, if you could tell us, how sustainable that -- that lower -- the new lower level of other operating expenses is going forward? Thank you.

Okay. Thank you, Marcelo. On the NII already -- I already elaborate a little bit on the previous question on the spreadsheet. Let me see here, I mean, you can surpass now on the -- on the asset side, I mentioned you have a mix of kind of more movements in the body movements. On the mix, we are seeing more collateralized activity in the last two quarters, which means that you end up with an NII net of risk better, but within our gross NII with pressure in terms of NIM that you were asking. So the full picture is net of risk. This is very important for you to -- to understand. We have other products by regulation. For example, the overdraft that that suffered and that started last January, if you remember. So, for the time being that continues to have the same effect on the -- on our 12 month rollover basis. And on the -- moving more to the corporates and large corporates et cetera, what you have seen is longer duration in generic terms. Volumes, as you saw on the quarter relatively stable. So if I wrap it all up, what I will say is NII given volume in what I mentioned to you, should maintain positive trends NIM on the asset side, should we somewhere there, okay. On the liability side, we are seeing a strong growth that is due to volume, but also due to the spread and the funding costs that I mentioned. We are strongly reducing, [indiscernible], I remember to you just some quarters or a year ago, year and a half ago, we had more than BRL65 billion [indiscernible] today, we have BRL17 billion, I wouldn't be surprised, if we go below BRL10 billion next year. Okay. And that…

Our next question comes from Mr. Jorge Kuri from Morgan Stanley.

Hi, good morning, everyone. Could I go back to the issue of provisions and asset quality. I get it that you feel pretty comfortable with the amount of provisions that you've made and the coverage ratio? If we look at your return ratio, relative to your peers, you're at 6% the average over the large cap banks Brazil is around 8%. If we look at your coverage ratio adjusted by the renegotiated loans which require provisions. It's actually below 100%, you're at 80%, your peers are around 120%. So I understand that balance sheets are different and you don't have to be at the same level of your peers. But certainly, you look low relative to them justifiable or not? Maybe a way for us to understand your thinking behind the provisions that you have is to get what you're expected. NPL will be on the renegotiated portfolio? So you're creating conditions based on expected losses. Would you share with us what is that NPL that you expect on your renegotiated loans what do you think the NPLs are going to peak relative to where we are today? And whether or not that is what explaining your level of provisions today? Thank you.

Yeah. Thank you, Jorge. Well, my first reaction to all what mention is that, obviously, portfolios are not the same one, I mean, I share with you the collateralize part of our individual portfolio, or the type of growth that we have had in the SME segment, given the government programs, et cetera. I gave all the details during my presentation. So comparing these type of little bit general ratios, I think these sometimes the kind of the mix and the portfolio details that are behind it. Speaking specifically of these BRL46 billion that we have as the moratorium renegotiated portfolio, I think, I mentioned, we have below 1% NPL ratio over 90 days, with 5.1% in the earlier arrears, I am not going to repeat all the numbers. This obviously should evolve. But I mean, you are speaking, we save more than 50% of the retail part with guarantees, 83% of the clients just choose the 60 days didn't go to the 90 days and they started to pay. So, you have other banks that went to the 120 days, we just went to 60 days and only 17% of the above portfolio of the clients went to 90 days. So we are already as we speak today with our portfolio that this kind of performing in a -- in a in another way we are not a still in a period in which you have clients that are not paying or are under moratorium, et cetera, that already kind of passed some time ago. So it will increase at 1% NPL ratio 90 days NPL ratio. So your question it will increase it in the next month, probably yes. But they still we are such good levels -- and here I mentioned to you that that is why we think that no additional extraordinary provisions will be needed. We have the BRL3.2 billion that we made in a second Q that are at our disposal, that are disposal to be used. So, I mean, whatever you use, whatever ratio you want to use, we feel that we are comfortable, including what you mentioned, the 300 plus coverage revision. I think elaborated sufficiently in response.

Our next question comes from Mr. Thiago Batista from UBS.

Hi, guys. Good morning. I have one question about the government programs. It's not wrong that originated about BRL10 billion more or less of those programs in this quarter to the SME segment. Can you talk a bit on, how those programs are impacting the bank's margins and cost risk? So I believe that the margin of the government is much, much smaller. Probably, the capital required is also smaller, so if you can talk a little bit to the main dynamics on how those programs are impacting the bank?

Yes, Thiago, thank you. Good question. I mean, yes, you're right. It's around BRL10 billion a little bit more than BRL10 billion. Yes, in the three name programs FGI, [indiscernible] CGPE, the adding of the three, you have different conditions, I'm not going to elaborate too much, because it's already too much detail. But you're right. They tend to have lower spread and lower costs of risk in depending on which you tend to free some capital. The most aggressive one is the last one I mentioned. The CGPE, and the other one had different amounts of impact of capital. The end -- at the end of it is that you tend to have a nice spread little risk reasonable. And in some cases, you free some capital being the most aggressive one -- the one I said to you the last one. The answer is yes.

Thank you. The Q&A section is over. And I hand it over to Mr. Angel Santodomingo for his closing remarks.

No. Thank you all. Thank you all for this especially a little bit longer presentation than normal. I hope you found it useful in terms of the update considering the Investor Day 12 months ago. We are open for additional questions that you may have, both at our Investor Relations team and myself. And thank you again for being there, looking forward for next -- for next quarter. Thank you.

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