Ladies and gentlemen, thank you for standing by. We inform you that this conference call aims exclusively to discuss the Earnings Results of Itau Unibanco Holding regarding the Fourth Quarter and Year 2012. At this time, all lines are in a listen-only mode. Later, there will be a question-and-answer session, and instructions to participate will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded and broadcast live on www.itau-unibanco.com/ir. A slide presentation is also available on this website. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Actual performance could differ materially from those anticipated in any forward-looking comments as a result of macroeconomic conditions, market risks and other factors. With us today in this conference call in Sao Paulo are Roberto Egydio Setubal, CEO; Alfredo Egydio Setubal, Executive Vice President and Investor Relations Officer; Caio Ibrahim David, Chief Financial Officer; and Rogério Calderón, Corporate Controller and Head of Investor Relations. First, Mr. Roberto Egydio Setubal will comment on the fourth quarter and year 2012 results. Afterwards, management will be available for a question-and-answer session. It’s now my pleasure to turn the call over to Mr. Setubal.

Hello. Good afternoon. Good morning for all of you. I’m excited to be here to speak about our results. I would like to start screen number two, with our highlights for the year. We had a recurring net income for the quarter of R$3.5 billion and for the year R$14 billion. ROE was 19.3% for the quarter and 19.4% for the year, and I will comment on this down the road. Assets exceed R$1 trillion overall. But overall I would say that we had a very challenging year 2012 was not an easy, we had reduction in rates, pressure on margins, delinquency increasing. I believe that we end up the year in good shape, because we were able to control delinquency as we will show you down the road in this presentation. We finished the year below the levels of December 2011 and I think this was a great achievement for the year. Margins are reducing and we have been managing the P&L of the Bank in order to adapt to this new environment. I think we are very successful in controlling expenses and this is needed also to deliver this result that we have. Provisions for loan losses are now on the way down in quarters with the NPL trends. So I think that we are ending the year in the much better shape than we started the year when NPLs and provisions were increasing. We announced over the year also our big investment in technology R$10.4 million. This will be invested over three-year period. This has to do with new data center that we already started to build 100 kilometers from Sao Paulo. We are also investing in new technologies and new systems, new architectures in order to compare with -- in order to be able to do…

(Operator Instructions) Our first question comes from Mr. Carlos Macedo with Goldman Sachs.

Good morning, Roberto. Good morning gentlemen, congratulations on the strong results, strong trends. Couple of questions, first, if you could give us some color on the loan growth expectations you set off for 2013, particularly in between the lines for what specific areas do you expect more growth for, of course, you have -- you’ve had weak growth on the order line and stronger growth on the mortgage line. Is -- are those trends expected to continue into 2013 for specific line and how that affects your mix and your margins as a result? The second question is with respect to expenses. The guidance you gave 4% to 6%, I was wondering how conservative you are because just looking at some of the trends for instance in personnel, average number of employees will be down. The severance expenses that you have in 2012 presumably will be down as well. Those were almost doubled in 2012 related to 2011. Could there be a positive surprise in expenses with expenses growing or being flat year-over-year? Is that a possibility or are you conservatively guiding four to six. Thanks.

In terms of expenses, the numbers that we are guiding you are the numbers that we believe that we have planned for achieving them and we are very confident that we can achieve. Having said that, I have value that we -- if you are working in order to reduce expenses. Although, I cannot give you any guidance today because I don’t have clear plans for new thing. But if you are able to find out new things, I may believe that we can do a lot of hard work for that because we have to do best, not only for the next year but also for 2015 and ‘16. So we are still working in new things that we have to improve to achieve this. So it is possible that we achieve this number in the lower band clearly and maybe a little bit below. It maybe possible though we don’t have any plans for that, I have to say. On the other hand, we don’t know exactly how the inflation, how the exchange rate, how the readjustment of salaries, the official readjustment. Just to give you an example, last year was above -- 2% above inflation, so if this is something that happens again this year, this will have a negative impact as well. The other question was about mix. We believe that on the second quarter of the year, we will have vehicles portfolio and the small company portfolio in effect to grow. So, we still have some hangs of this reduction in recent time. For the year, we believe that lower margin products will outgrow higher margin product. I’m talking about Consignado. I’m talking about credit mortgages. I’m talking about big company’s big operations. So those portfolios, in my view will outgrow other portfolio that has large market.

Okay. Thank you, Roberto.

Our next question comes from Mr. Mario Pierry with Deutsche Bank.

Hi. Thank you for taking my questions. Let me ask you two questions, Roberto, one is we have seen significant improvements in reduction in headcount of the bank, over the last roughly 12 months. We saw headcount fall by 7%. I was wondering, if you could give us any guidance in terms of should we expect this trend to continue, should we see an acceleration in headcount reductions, if you could just give us some more color specific to headcounts? And then second question is related to Redecard or your acquiring business, we saw a significant pick up in volumes this quarter. So, I was just wondering, if you could remind us of your strategy for Redecard, what you’re expecting for volume growth NBRs? That’d be great. Thank you.

In terms of headcount, we don’t have a goal to achieve in terms of reduction. We believe that we have more opportunities in terms of getting some logistics in order that we get some people with us. And we do not have a statistical investment. In terms of Redecard, we had a good quarter, good development. I have to tell you that all those -- we recovered some of the market share that we had lost in previous quarter for the year. We are -- this was a result much more of things and decisions that we’re taking even before the poor position of the bank. So I do not really would bring these improvements to the fact that we are already fully owning Redecard and those decisions we are taking before that. We have a new CEO there. We have a plan for Redecard. We are very excited with the opportunities of integrating more with the bank synergies, in terms of what we have in terms of opportunities with the small companies. This is an important relation with the small clients. We believe that Redecard is important part of this strategy because it creates opportunity to extend credit in a very solid way so this is important. We also believe that in addition on the other side in terms of payments opportunities, Redecard is an important asset, give us a lot of flexibility, give us a lot of power to negotiate with Visa and MasterCard and other brands that are in the roads. So we think we can -- we are stronger today to negotiate with those guys. So I think we already happy about the acquisition, the way things are developing and the kinds of deals that we can by integrating with the bank we can have.

Okay. That seems very good. Just if you could go back then to your answer, you’re not specifically looking for headcount reduction or that you don’t have a target where you’re looking to improve productivity? Can you just give us some examples or what type of plans you have in place, I think it has been long mentioned in Brazil that the banks federation share ATMs. I think with that, could you just give us an update on how can you achieve the productivity improvements?

We do not have and we are not announcing specific things. But I can tell you that -- the point that we are -- we do not have one single fewer bullets. So lower small things, everybody in the bank is working very hard in all the years of the bank improving the productivity. Everybody has this in their own goals -- future goals. So it’s a lot of things some are relevant, some others are not much relevant, but there are no single important thing. We are integrating. The cost is changing, process, a lot of small things.

Okay. Great. Thank you very much.

Our next question comes from Mr. Daniel Abut, Citi.

I have a couple of questions. One, on the capital situation, I know that you have explained the asset integration already start and the new level of capital that implies. You did say in your disclosure that if you apply the general new Basel III rules even what you understand will be treatment of your deferred tax assets, you should see still be above 10%. But what I wonder is within that above 10% what will be your situation vis-à-vis core capital because it appears to me that maybe on the core capital rate will be too tight depending on your growth plans. And I’m trying to get a sense to where business is at stable situation, sooner or later you may need capital. And depending, Roberto, to that question there I want to ask you about the sustainability of your ROE, now that you reach this low 19s level in the fourth quarter but it’s seems to me that from now on, particularly even the expected decline in provision that you are guiding, your earnings generation should start to improve. How will you feel about your ROE going forward? But again, that’s tied to whether you feel your current capital situation is sustainable or not?

Hello, Daniel. Thank you for the questions. I think we are not clear. I’m sorry for that. We are 10% up the level that we are talking about is the core capital. We are -- in terms of core capital, we’re above 10%. I think I was not clear when I mentioned that number. So, this is really something very profitable. In terms of ROE, clearly, the fact that we have reduced the equity. We will -- this has an impact in the ROE, just to give you the idea now. The ROE of last quarter would have been 17.7 instead of 19.4. So this is a clear improvement. But coming to the P&L itself, I would say that margins will be very important driver of this. How much ROE can -- and how much final net income we can get. It will be much more depending on the margin as a net income -- net interest income development. I think that some are starting today, you have to see how the year develops this.

Okay. Thank you, Roberto.

Our next question comes from Mr. [Glenn Miller] with Credit Suisse.

Hi. Hello everyone. Marcelo Telles, Credit Suisse, I have two questions. The first one regarding the extraordinary provisions for loan losses, I was wondering if you could tell us, I mean, what was the amount of the loan portfolios that was reclassified with the different risk ratings. And how much of that portfolio is actually related to the restructured portfolio? And my second question is more or like a broad question. I mean, we saw a very upbeat guidance on provisions for 2013, which kind of makes sense considering the improvement you clearly have been showing. But on the other hand, I mean, it seems that a very good chunk of that improvement is being offset by our expectation of NII decline because if we play with your guidance and we try to derive what sort of earnings we would be expecting and what sort of NII evolution. It looks like you would be expecting the NII to go down 5%, more or less 5% in 2013, but then you have decline maybe 13% in provisions, which will lead to a low single-digit increase in NII after provisions, right. But the net effect of that is that your earnings growth would still be around high single-digit, right. So do you think this trend can revert by taking about like 2014? You think you can resume growth in your NII from that point or you think that in 2014, you would still see relatively low resumption of NII growth after provisions? Thank you.

Okay. I’m starting with the last question. I recognize that we have some uncertainty in the margin development. We have been sharing this very clear with you. I would say that our -- we do expect it to be slightly positive in general although we see risks of going down depending on market conditions, growth of the economy and then of loans. But also we can have -- also have positive impact coming from less pressure in the marketplace. So there are some uncertainty. Hence this -- we would have to see over the years. We believe that our -- this is about three provisions okay. Part of the provision we’ve reduced and we expect that net interest income would be very close to our low level positive number in terms of overall growth for the year. But these are some strategy there. I totally agree that it can be slightly positive. It can be more positive or slightly, very slightly maybe negative but we probably are more in the positive side. In terms of provisions that we -- that the non-recurring numbers -- again, the provision that we classified as non-recurring were non-specific provisions for any specific client. It was much more review of models that shows that’s from many clients basically we tell you mostly small companies. We would be more precise in terms of expecting loss for giving the current situation of loan portfolio. We have more provisions over there, okay.

Thank you, Roberto. And just a follow-up on that question, do you expect more of this network provision going forward or this is as much you’re going to see in terms of these extraordinary provisions? Thank you.

We do not expect any new revision in models. I think we have learned a lot on models this year, as we all know here. We have made few mistakes. But now, I think that things are pretty much in good shape and we do not expect any review in terms of provisions. Just picking the opportunity to mention that on page three, we had -- although we have stated -- I’m coming back basically to the question of Daniel Abut about the total capital ratio moved to 10%. It’s wrong there. We’re talking really about core capital above 10%. I’m really sorry we have this mistake in our presentation. We will correct it on the slide. Thank you.

Thanks, Roberto.

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

Hi. Good morning everyone. Thanks for the opportunity. I have two questions. The first one is on your margins. Just wanted to clarify, you said net interest income growth of low single-digits. I mean I know it’s not an official guidance. Its not here on the last page of your presentation but you are providing a little bit of color. So I just wanted to make sure I understood. So what is your expectation for net interest income growth for 2013?

We are not really giving the guidance. We are just basically recognizing that similar strategy there. Numbers can be slightly positive, slightly negative, maybe more positive. But I mean, this is basically -- and this is clearly because we did not give you a clear guidance. There is no -- we accept that there are some uncertainties there, okay. Basically this is what we can really provide you, Jorge.

Thanks. So just to understand, so the uncertainties on margins, I mean, you have a loan portfolio guidance. So I’m assuming you know where you’re going to grow. You have a provision guidance which I’m assuming that you would know what the mix of the business is going to be. And you have a sleek forecast, which is, I think flat, sleek for the year. And just you understand that duration of your loan book and when this will expire and the front book, back book issue. You know what duration of your assets are and liability. So, just wanted to understand where the uncertainty is. What part of the margin story is the one that you don’t know today that drives you not to have a specific guidance because it seems to me that all of the pieces you know, I guess that you’d want to know, which part you don’t?

I don’t know two things, one is the volume. I mean, we have some uncertainty about the volume, some uncertainty about the growth of the economy. And this is an important uncertainty. The other comes from some uncertainty about pressures on the margins in the market. Today if we assume that which -- if we assume that they will reduce, we are more on the positive side, okay. If we assume that there will be more pressure on margins, we might be on the negative side. But basically, this is what we have, but the narrow difference in my view what could happen.

All right. Thanks. And then the second question is just also clarification. Your guidance of provisions of R$19 billion to R$22 billion that assumes that your coverage ratio remain stable throughout the year. And I ask this, because we did see a big depletion of your coverage ratio in 2011, 2012 from almost 180 to 150. So, you can do R$19 million or R$22 billion in provisions without taking out the coverage. Is that the thinking or it includes maybe taking the coverage ratio down to closer to 120, 130?

No. Our guidance assumes that we will keep the same policy that we have today for making the provisions. And we would say that the trends of delinquency positive series will lead to increase the coverage ratio, because we will have lower level of delinquency assets with the same policy of provisions. So, I would assume that I don’t have the numbers here, but my math would imply an improvement in the coverage ratio.

All right. Thank you very much.

Our next question comes from Mr. Jorg Friedemann with Merrill Lynch.

Thank you for the opportunity. First on the expectations that you have for 2013, I know that in the non-recurring events, the screen that you have in your presentation that you realized the remaining after-tax benefits on the increasing the social contribution rate and just wondering where do you expect the effective tax rate there to go over 2013? Thank you.

Could you please repeat the question, Jorg?

Sure. Just that you realized the positive tax benefits on the increasing the social contribution rate over the first quarter and I just like to understand how you expect these effective tax rate to evolve during 2013?

Hi Jorg, this is Caio. How are you?

I’m okay.

So it’s pretty much -- our effective rate will be around 32% to 34%. If you consider that we have the benefits coming from payments of the difference and GDP, so that’s pretty much what we are considering right now in terms of forecast for 2013.

Okay. I asked that because this implies an increase of about 4% to 6% compared to what we have posted into 2012, is this correct?

Yeah. Something like this, especially because we considered the social contribution benefits in 2012 as a non-recurring event. So that’s why we believe that we’re going to increase a little bit this effective tax rate in 2013 based on that.

The total 6% your recovery have focused that are already 34. Okay, just remember that. So don’t have a clear number here to give you. But remember that on Redecard, for instance, is 4% in real estate, 4% with no difference. So we have things in other situation that won’t change. So the full effect will not be 6%.

Sure. Perfect, Roberto. And taking the opportunity to ask a more broad question, I know that the relevance for the countries in Itau’s balance sheet continues to increase overtime. So just wondering how much you believe those other countries could contribute to the banks total loans in the next couple of years? And whether this could be an additional source of net income generation in your view. You bought, for instance, its retail operations in Chile, I think about 15 to 18 months ago. And just if it continues to develop potentially that has been from non-core region. So would you consider opportunities in the Caribbean and in Mexico if those become available? Thank you.

Well, I think that we have to basically -- I think your question is much more related to the local loans that we do in local markets, Argentina, Chile, Uruguay and Paraguay. And not necessarily loans that are booked out of Brazil, which we do with Brazilian clients, for instance. Well, today we can see in our balance sheet. We have like R$29 billion in that number. It has grown I’m not sure how much this year adjusting for the exchange rate. But it has been growing much more than the local numbers. I think that -- those numbers would be closer to 15% to 20% and not like the local numbers we have 9%. So we have much higher levels of growth in those markets. And I believe it will continue given the fact of those markets, we did not have to adjust any kind of risk appetite. So we have -- we are stable in terms of growing and we have been growing models in that. And those economies in general are outgrowing Brazilian economy. So we expect them to outgrow the Brazilian portfolio by a larger amount. Although, they still represent a smaller amount in our balance sheet. I believe that any major change in terms of really becoming a meaningful aspect of our revenue would come only after major acquisition. The current numbers are still below 10% of our loan portfolio. So, we should not expect a major meaningful impact in our balance sheet in the short-term. And we do not have any plan relating to any major acquisition. I don’t think there is any possibility of this. Currently, there is no important asset being offered or being negotiated in the market place. So for the time being, I don’t think this would be a relevant thing. But I have to say that we are in the position of interest of investing in other Latin American countries.

Perfect. Thank you, Roberto.

Our next question comes from Mr. Saul Martinez with J.P. Morgan.

Hi, guys. Good afternoon. My question is really just -- it’s a follow-on lot of the earlier question, but it’s just a -- it’s a more broad question I suppose about risk appetite. Roberto, you mentioned that you believe that SMEs and auto loan should start to grow in the second-half. You’ve also mentioned a lot of uncertainty in your expectations for net interest income. And you’ve clearly been in a risk-off mode for a while and perhaps that’s the right strategy. It’s been good for asset quality. It’s been bad obviously for your net interest income evolution. But what needs to happen either in the macro environment for you to start to grow your higher margin products at a more elevated rate, is it a macro or do you need to see better macroeconomic growth condition? Do you still feel uncomfortable with the leverage levels of consumers, what is it that would cause you to start to take a more risk-on type of mindset since obviously that is really a big part of what will get net interest income growing again?

I don’t think that -- I believe that there is the opportunity in that segment, is not the thing as it was 10 years ago. 10 years ago, Brazil basically started to develop their consumer in the credit market, and we had very high level of growth during this period. Price have increased the level indebtedness of them. So, I think that today the opportunity with this market has been pretty much reduced in terms of growth. It is still rolling, but much more slowly than it use to do in the past. So we don’t foresee this as a major opportunity of growth for us. We believe that opportunities will be larger for growth in other markets like mortgages and payroll loans and things like that with lower level margins, although much, much lower levels in the coming quarters.

Do you see SMEs as a growth opportunity anymore?

I see SMEs as a growth opportunity? Yeah, I do. Although, I think that the margins in that segment also will be much more controlled. I think we will have to use much more collateralized types of loans like Redecard loans for instance, we can use collaterals regarding for loans for the lowing small companies. So, I think that segment we have probably more opportunities than in the consumer segment that has to adjust the risk profile.

Okay. Great. Thank you very much.

Our next question comes from Mr. Maclovio Pina with Morningstar Equity Research.

Hi. Good morning. And thank you for taking my call and also thank you for slide 10. I think it’s pretty useful. And also following up a little bit on the net interest margin questions before, I’m just curious if you can give us a little bit of color in what you’ve seen in the development of client names for loan so far this year. Can you give us a little bit of a taste of how they’ve been better or worse than the average 4Q ‘12?

The trend is the same. We probably - we lose some margins in terms of -- we will gain volumes and compared to strategy it’s just excellent. We’re still going to gain more volumes. And if you do this at the end of next year the same shot, I would say that we will see growth in one of those volumes, some loss because of credit mix. We won’t have ready cut. I think we would stay pretty much stable. And there is some uncertainty around the last I think would be the margin. Okay. If you have some stable margins of what we’re doing today, what we are underwriting today then probably we would have a positive evolution of net interest income.

Okay. But essentially the trend remains as in 4Q. Great. Thank you very much.

Our next question comes from Mr. Marcelo Henriques with BTG Pactual.

Hi. Thank you for taking my questions. I have two questions. One is just to clarify that the backgrounds scenario for the credit growth this year, which the guidance says it’s between 11% and 14%. Some of your competitors are saying, private ones are saying that they do kind of foresee that the public banks will decelerate the aggressiveness during 2013. I’m just wondering if -- and sorry if I missed out during the presentation, but I’m wondering if you consider that as part of your, as part of your assumption for credit growth for 2013?

Last year, we grew 9%, so we are accelerating our growth to a higher level. And this level will depend only on existing growth of the economy and the situation overall in the market. But we will have growth definitely.

Okay. Because, I was just wondering how this would play out. I mean, looking how the economy is going, and it’s still on a ramp up phase. And the fact that the new credit being originating in the system, it depends too much on public banks for, I don’t know, like 70%. So from a cut down perspective, it seems hard at least when the economy is going to ramp up phase, it was all down and in fact that even the economy improves, why would they stop anyway, because it’s just a better lumpy environment, so do not have a purpose to stop. And from a bottom-line perspective, for the public banks, I mean, since they seem to decrease very much interest spreads and tariffs if they do not compress any volumes. They are really - so we’re even more proud that we are going to see, so I’m just wondering that at least if this could compromise your ability to reaccelerate growth in 2013 and to such an extent that you do not choose to take more risks again as you have been more in the risk-off mode recently?

Yeah. I mean, we won’t change our risk appetite. We are very confident that it will pay-off at the end of the day. It will bring the price returns for the capital that we are using to make the loans. I believe that this year of 2013, we will see a much smaller difference between public and private bank.

Okay. And on the -- also on the credit growth and just for me to understand and actually related to the provisions. And of course there have been an improvement in Q4, although if you consider the credit sale that you did and the write-offs. I mean, despite improvement, maybe it’s not as significant as its appeared in the numbers, but it did improve and you’re being pretty bullish on 2013 guidance from loan loss provisions. But I’m just wondering if this decline in loan loss provisions, is it just more related to the fact that you were in a risk of mode in the past, let’s say, 18 months or if you really seeing an improvement in credit quality out there. And if that so and again, I wonder if why you cannot grow more if the public banks are less aggressive? I mean, it is better and if they didn’t do -- let say, they didn’t take too much risk, why shouldn’t you increase your credit growth even more this year. And just especially on the individual side. I mean, the scenario not really has changed this much in 2013. I think people are still employing. They are still making realized increases, and the fact that they are still leveraged despite the fact it is low or high, but they are still leveraged at least above historical average. So why would -- I’m just trying to understand if this decrease in loan loss provision is rebound from the fact that you have been not -- basically not lending or you see actually structural improvement in asset quality in the system in Brazil that’s why you see that?

Well, first of all we are talking about our numbers. I’m not talking about Sergio’s number, the system number we are talking about our numbers. Talking about our numbers, we are very confident that and then we have shown other numbers here and maybe we can look for many sides and all of them lead to one conclusion. The improvement in the asset quality is very clear. I don’t think that this is a silly question. I’m not sure about the numbers in the system because I don’t know what the banks have in their assets. But for these numbers, they do not show the same kind of improvement that we have seen here in Itau. And basically the reason is because we have been much more careful in the last quarter. I think this is the result of our efforts. It’s something very, very clear. So, I think that at this point in time I think that we have a -- we are very confident that quality of assets is improving. I can explain why our volume will not grow maybe as much as you would expect. Basically for one single reason, if you divide our current portfolio in two types of clients. I assume that one type of client is the client that I’m -- according to my current risk appetite and the other one is a remaining book of clients -- type of loans that I would not renovate anymore as long as I can -- we have the loan fully paid. So, I have -- still today a portion of assets of loans, debt we under the current level of risk appetite. We will not have brokerage. So, I have to finish that level. When you take into account basically the level of loans that I have in my book today that have the risk appetite that I’m talking about, the one I have in bookings. And we see the growth that we are expecting for the future. This growth is above 15%. Did I make myself clear?

Yeah. It’s very clear. And on the -- of course I can follow-up with you guys offline, but I think the question, the main question that I have for 2013 improvement in your numbers which I know that’s your numbers is that and maybe it is more related to the fact that you been on the risk of loan and then you have seen improving your asset quality. But once you start growing again and if that is the case right, and if the credit quality of the system has not changed, so you basically have a choice to take margin risks again. So, I’m basically talking much more about 2014, maybe end of 2013. So making more -- taking more risk again because the moving environment of this system has not changed dramatically. So that’s why I was trying to relating a loan loss provision and that will build for you to actually to grow more on a structural basis, not being only in 2013. But I don’t want you to compare in the quarter and you can follow-up on that?

Yeah. Now just a comment, Rogério can give you more details on that. But again, we have number from the recent vintage that we have in booking in the last six months, right, a much, much better than in terms of delinquency. Much, much better than the ones that we were booking before. So, all signs that we have in any angle that you can see shows the same kind of trends and conclusions.

Okay. Thank you. Thank you very much.

Thank you.

Excuse me. Our next question comes from Mr. Eduardo Nishio with Brasil Plural.

Hi. Thank you for taking my question. My question relates to delinquency and competition. Delinquency in Brazil is nicely depicted in your institutional presentation is much higher than other countries, right. And all banks seems to be moving to lower return products, actually includes risk in their balance sheet. My first question relates to this change in mix. Is only the mix that will decrease the risk profile? Is any other initiatives you are trying to implement, not only you but industry to decrease the risk profile, but not only that probably and to try to improve profitability of the next vintages? And my second question is related to that. Since all banks are moving towards the same products, basically payrolls and mortgage loans. It’s already impacting prices. How can we avoid the same mistakes that happened in 2010, when all banks were trying to get into SMEs and other segments, right? Is there any risks you see in the short-term in margins for those segments? Thank you.

Okay. Starting with your last question. Currently, I don’t see any risk or any problems in the things that we have put. By the way, as I mentioned before, the twinkles that we have been seeing recently is the best, probably more than four, five years. So we don’t see any major problem coming from that side. How can we assure you that we have to keep this? We can keep this for longer time in terms of system? I think it’s a matter of discipline. I think banks, when they cut their hands they build less and they go back home. We do a lot of homework. We go back in a more disciplined either way. I think that in 2010 then the boom of the economy, the boom of the market made the banks a little bit flex. So let’s assume now we are much more back to the basics and doing things that are the right things to do for banking. And what was your other question, Eduardo?

It’s related to the mix. Is there any other way to improve profitability or to decrease risk aside from changing mix?

I think the right question here is the risk assessment. I think as long as we have the right risk assessment and then we’re able to price. We can make a lot of money out of very low risk assets or higher risk assets. As long as you price correctly and you assess correctly the result, there is not really -- I don’t think the idea that high-risk assets are more profitable than lower risk assets. I don’t think that this is true. It’s a matter of really understanding exactly the kind of risks that you are talking about them and how to price it.

Great. Thank you.

Excuse me. Our next question comes from Mr. Amit Mehta with PIMCO.

Hi. Yeah. I’m sorry. I might be reiterating a question asked earlier. But can you just -- I mean can you just give us some color on the net interest margin? I mean what scenario are you assuming for your kind of guidance, which I understand to be kind of flat to slightly up pre-provision? And also then what dynamics concern you that could obviously derail that?

Good. Basically we assume that we will have the same risk appetite throughout the year, okay, which is what we plan to do. And there is some uncertainty given the fact that volumes might float a little bit, and also what would be the kind of pressure stemming from the marketplace that we might have. So this brings me some uncertainty in terms of what would be the net interest income for...

And just coming back to the point made by some of our analysts in terms of every bank kind of moving into the same segments, does that make you maybe a bit more sanguine about certain high risk segments that they maybe getting prices better?

Again, it’s a matter of really what you are doing. It’s a matter of doing the right risk assessments for the assets that you are underwriting. Again, we are tracking this very closely, and we are very comfortable with the level of delinquency that we are booking are launching today.

Okay. And sorry, can I just pull-up one last question. Can you just give me an update on your payout ratio in light of this slower loan growth and where your capital position is? I mean, your payout ratio has been around 25% to 30% and what do you expect going forward from here?

Okay. Usually the way we incorporate it, there has to be some recurrence on how the -- what is the growth of last on net dividend for enhanced effect. We are basically floating our payout ratio between 30% and 35% of the recurrence, the net dividend to the recurrence net income and we do not plan to change that.

So despite slow rates of growth, you don’t think you have capacity to raise your payout ratio?

We believe that we will be able to use the capital in a profitable way.

Thank you very much.

Excuse me. Our next question comes from Mr. Victor Galliano with HSBC.

Hi, guys. My main questions have been asked. But just couple of follow-ups here. Just clarification on the guidance you’ve given for provision for loan losses. This, I assume is gross provision, so the full recoveries, am I right in thinking that? Rogério Calderón: Yeah. You are right. It is gross.

Okay. Okay. And also one other thing on the CapEx you are talking about, IT the R$10.3 billion over the next two years. Is this all going to be capitalized? Is any of this going to be expensed through the P&L, and is that factored into your non-interest expense guidance of 46%? Rogério Calderón: It is CapEx, long-term investment CapEx.

Okay. So, none of it’s going to be expensed. Rogério Calderón: No.

Okay. Thank you.

Our next question comes from Ms. Natalia Corfield with Deutsche Bank.

Good morning, all. Thanks for the questions. It’s about your JV with BMG. If you could give us some more color on how it’s evolving? You had our initial guidance of R$12 billion at the end of the first two years of maximum assets in current. And also how you expect your payrolls lending portfolios to grow in 2013? Thank you.

The partnership is going very well. We are already piloting contracts now in January. We have been booking and formalizing all the agreements with all the payrolls that BMG used to have. We are also formalizing all the agreements and the passing of the rating component. So things are pretty much in line to have the full operation in the second quarter of this year, probably March already we will be almost fully operational and probably fully operational in the second quarter. Volumes, today that we are originating in BMG, which would be basically the distribution for the new enterprise and improve the level that we expected when we announced with you.

Okay. And then, are you expecting the JV to be across the board in 2013 or is the JV going to have a loss?

Probably a small loss or a small -- pretty much close to break-even, not meaningful at all.

Okay. Thank you.

This concludes today’s question-and-answer session. Mr. Setubal, at this time you may proceed with your closing statements.

Okay. Thank you for all of you who are still there. Long hours here, was a pleasure to be with you and try to solve some of your doubts. And I’d just like to finish by saying that we believe that we’ll have a strong year this year, although through challenging environments. Thank you all and see you next time.

This concludes our Itau Unibanco Holding earnings conference call for today. Thank you very much for your participation. You may now disconnect.