Good morning, ladies and gentlemen. Welcome to Itau Unibanco Holding Conference Call to discuss 2018 Fourth Quarter Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded and broadcasted live on the Investor Relations website at www.itau.com.br/investor-relations. A slide presentation is also available on this site. 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 that 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 Mr. Candido Bracher, President and CEO; Mr. Milton Maluhy Filho, Executive Vice President, CFO and CRO; Mr. Alexsandro Broedel, Group Executive Finance Director and Head of Investor Relations. First, Mr. Candido Bracher will comment on 2018 fourth quarter results. Afterwards, management will be available for a question-and-answer session. It is now my pleasure to turn the call over to Mr. Candido Bracher.

Hello, good morning to all, and thanks for participating in our fourth quarter and 2018 full year earnings conference call. Starting the presentation on Slide 2, here we show the main highlights of our performance for the quarter. Recurring net income was R$6.5 billion, which resulted in an ROE of 22.7% in Brazil and 21.8% in the consolidated figure. The results from Commissions, Fees and Insurance performed particularly well this quarter, growing 6.2% over the preceding period. This performance was mainly driven by our asset management and investment banking units. Our Financial Margin with Clients or NII also increased over the last quarter especially as a result of the growth of our individuals and SMEs credit portfolio. Despite this growth, our NPL ratio remains stable in the period. The increase in cost of credit this quarter was caused by higher impairment charges in corporate bonds. Expenses in the fourth quarter are usually higher than in the third quarter, especially as a result of the full impact of the annual collective agreement with the bank employees union and seasonally higher expenses related to commercial activities. In the fourth quarter, this increase was of 1.2%. Lastly, our individuals and SMEs portfolio increased 5.7% and 4.9% respectively in the quarter, continuing the same trends seen throughout 2018. On the other hand, the negative ForEx variation on our Latin American portfolio and the decrease in the corporate book led to the stability of the total credit portfolio seen in the quarter. Talking now about the full year 2018, on Page 4. Before we proceed with a deeper analysis of our performance during this year, it's worth to mention that the Brazilian economy performed somewhat differently than what we had expected at the beginning of the year. GDP growth is likely to stay at 1.3%…

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jason Mollin, Scotiabank.

[Technical Difficulty] forecast for loan growth. Obviously, you're forecasting improvement versus what was going on in 2018. But it is pretty impressive, because Itau Unibanco has been able to show very consistent returns on equity in the 20%-plus range to a very challenging period, things are getting better. How much better should things get? And are we on that path to seeing things much better and is that part of the guidance expectation? Is that things are that much better? Or I just think versus some of your peers we've seen somewhat more aggressive expectations for 2019 and I just wanted to get your perspective on what's in this outlook that you're forecasting. Thank you.

Good morning, Jason. I'm not sure I got the whole of your question, because you were cut in the beginning. But if I understand well, you are asking me to comment on our guidance, on our forecast for 2019, is that it?

Yes, what is the - what are the assumptions going into this expectation for GDP growth and your expectations for Itau Unibanco's operations? For instance, in terms of reforms, is pension reform going to get done. Is that part of this expectation for growth this year or is really that's not part of this expectation at all or it will be a 2020 event? What's going into this? You can provide some color to the background of what's going into this outlook.

Sure. The approval of the pension reform is definitely included in this expectation. When we expect - and I mean, this does not have so much an impact on growth for this year, which - I mean, our forecast is 2.5%, is under revision by our economic team now, may end between 2% and 2.5%. But the approval of the pension reform will not only warranty this growth, as will create a whole environment of optimism in the economy, which we think will boost demand for credit and investment. So, yes, this is a premise of these projections. You've seen them and we have grown total credit portfolio this year in 6.1% and we are expecting to grow between 8% and 11% for next year. One point which is very important is that the average balance of credit, the average portfolio is expected to grow significantly this year, which was not the case in 2018. In 2018, the average balance portfolio was lower than 2017. This is why this year we expect a significant improvement in the financial margin with clients. And a good part of this improvement is based on the fact that the average portfolio is going to be significantly higher. Another part of this improvement in the financial margin is due to the mix change. I mean, to the fact that the mix is moving from clients with lower PG to clients with higher PG, individuals and SMEs. This in turn has a fair many - it in one hand helps to boost financial margin with clients, on the other hand it also increases cost of credit and this is the explanation why we are forecasting a bit higher cost of credit this year. It's not only portfolio growth, but it's also the change in mix, but all this with a background of a growing economy and optimistic mood in financial markets as a result from a stable fiscal front as a consequence of the approval of the pension reform.

So when we look at the guidance for the effective tax rate for Brazil of 32% to 34%, that's not assuming any material changes in the - I guess, that assumes the change in the social contribution, but no additional changes, no change in the tax deductibility of interest on capital or other changes in the corporate tax rate, is that correct?

Precisely, Jason.

Thank you very much.

You're welcome.

The next question comes from Jorg Friedemann, Citibank.

Thank you very much for the opportunity to make questions. I have two questions. The first, it came to me as a surprise because of credit guidance, understood the brief explanations about the mix change. But in the midpoint of the guidance, the cost of credit implies a growth of almost 14% versus 2018, which is not only more than the loan growth expected for the year, but also the top of the - financial margin with clients. We saw that NPL for the large corporate segment continues a bit volatile. So could you elaborate a bit further if there is any specific case that should be still - rise in provisions in 2019? And also if possible it would be interesting to get your sense about the evolution of impairments, discounts and coverage which is at very comfortable levels at 221%. This is the first question. And the second question, following the miss in terms of non-interest expenses in 2018, you came with this 5% to 8% OpEx growth guidance for 2019, which is above inflation even in the bottom of the range. From where this growth should primarily come in 2019? You commented about the merchant acquiring business impacting 2018, should it happen again this year or is there anything else such as IT investments, et cetera? Thank you very much.

Thank you, Jorg. Those are two very good questions. First then on the cost of credit, here, I mean, there is no specific case. There is nothing in the horizon that we see which is not already provisioned or accounted for. So it's - there is no surprise here. We think this is a natural evolution of the provisions due to portfolio growth in one hand and the mix in the balance of the portfolio in the other hand. So the portfolio growth, of course, I mean demands new provisions. And the fact that we are - our mix is evolving towards credit risks, individuals and SMEs, which have a higher probability of default. I mean, this comment according to our expected loss model that is what drives always our forecast. This is what drives, I mean, this growth in provisions. As to the outlook for impairments, discount and coverage, I continue to expect that coverage maybe lower although our forecast do not necessarily indicate that. But as I already said in previous calls, I mean, at these levels of coverage, I think, they are formally high. And they're justifiable in view of the many precautionary provisions that we made for corporate credits, which were severely affected in the recession of 2015, 2016. As the situation evolves, these credits should either default. And in this case, the coverage would fall, because the provision would be used to cover this credit or this should improve and the provision should be reversed and also the coverage would drop in this case. The same thing would account for impairments. I mean - in our case, I mean, impairments they behave just like credits, just like in an accounting terms it's different creditor credit bonds that we have against this company. We expect recovery rates and discount to stay flat so there's no major change this year. Moving now to noninterest expense. So this projection from 5% to 8%, the main cause for this is the growth in business in general. I mean, so there are many expenses that have tied to the level of business to the quantity of transactions. These are variable costs. And since we're expecting to grow significantly, costs should fall. Another important effect is the investments we have made throughout 2018, and that will bear the full weight on cost in 2019.

Perfect. This is very clear. Thank you very much.

You're welcome.

The next question comes from Carlos Macedo, Goldman Sachs.

Thanks. Good morning, gentlemen, Candido, Milton, Alexsandro. A couple of questions. First, just following up on Jason's question on loan growth. Last quarter, we talk - you talked about potential increasing the risk appetite for the bank. Does the guidance that you - the 8% to 11% in Brazil that you've reported, that you put out today contemplate higher risk appetite or that's something that could still happen and if it could still happen and hasn't happened, what could lead that to happen? Second question. IFRS 9 is coming. You put out, thankfully - thank you, on your spreadsheet in your website, the financial statements under IFRS 9. There is significantly more volatile that what you reported under Brazil GAAP, because I don't expect you to say exactly know the exact details, but is that something that we should expect once you move to IFRS 9? What's the bank looking to IFRS 9? Is that something that's going to drive a lot more volatility in your costs of risk, is it going to have lead to charges, I mean, just a little bit of color on for IFRS 9? Thanks.

Okay. Thank you, Carlos. As to the growth in total credit portfolio 8% to 11%, I mean, this reflects not as much this as more to shift in mix, towards more individuals and small and medium companies. I mean, this reflects that we are open for business in the bank, so I mean, all the credit portfolios are opened. And - I mean, we have appetite to grow the portfolio according to the demand we may have, as the adequate cost - the adequate price for risk. So this is - we're really, I mean, here completely open for new transactions. What reflects IFRS 9, I mean, we have already been accounting in IFRS 9 for some time. Our provisions are already adequate, the demands of this accounting method. And I think you were right, I mean, this method is more volatile. So - but it's the nature of the business. There's no avoiding that. I mean, our figures in IFRS 9 could be a bit more volatile in what concerns provisions. Alexsandro will answer.

Carlos, can you hear me?

Yes, I can hear you, Alexsandro.

Okay. Just to know that we already released our figures in IFRS 9 quarterly. So you can see from the past few quarters that our numbers in IFRS 9 are - is identical, almost identical those numbers in Brazilian GAAP. So we already incorporated the expected loss model of IFRS 9 into our Brazilian GAAP numbers. So as Candido mentioned, the main difference is the volatility in the numbers, but we already incorporated that on Brazilian GAAP.

Okay, thank you. Just going back currently to the question. You said, that your - the bank is open for business. And is that - just from what I understand where you're at today versus where you were before. Do you believe that the posture the bank has today is different than what it was, say, six months ago or 12 months ago?

I didn't understand your question. Could you repeat it?

Sure. Sorry. You said that the bank is open for business and what I understand is if there has been any shift in that posture compared to six months ago or maybe 12 months ago, if 12 - six months ago you consider the bank was also open for business.

Yes. We are more open for business than we were 12 months ago.

Okay. Perfect. Thank you guys.

The next question comes from Philip Finch, UBS.

Thank you for the presentation. I have two questions as well please. First, your guidance for fee growth is well below that for loan growth. So can you elaborate what challenges you're seeing in the fee business side and what measures you're taking to mitigate them? And the second question is really to ask about your plans to whether you kind of issue anymore 81 hybrid instruments this year. And if so, would it be reasonable to assume that additional dividends could also be paid in the year ahead? Thank you.

Thanks for the two very good questions. What concerns fees. I mean, yes, as a matter of fact, I mean the guidance 3% to 6% is significantly below the guidance for our financial margin with clients. The reason here is mainly the negative impact we expect from the acquiring business. We expect fees in the acquiring business to be lower in 2019 than they were in 2018. So they extract from the fee loss. And this is the single cost for this lower guidance in fees books. What concerns 81, we do not intent to make new issues of 81 in the short-term. We are at a level of around 1.1% of 81. The ceiling as you know is 1.5%. And we like to leave some room for devaluation of the currency, which - we don't want to have this expensive issuance not serving us in terms of capital needs. Having said that, we have just issued [R$3.50 billion in H1] [ph], which are not considered in this 13.5%, which we just announced, because they have not been recognized as capital yet by the Central Bank, so we did not consider them. And looking forward, again in next year, when we make the calculations again, to bring the capital back to 13.5%. This capital will be there and will increase the dividend payout.

Okay. Thank you very much, very helpful.

Yeah, thank you.

Our next question comes from Eduardo Rosman, BTG Pactual.

Hi, good morning, everyone. I have two questions which are somewhat linked. I think the first one is on value creation and the second one is on kind of growth expectations and dividends. So starting with the first one, when we go to the Slide 6 of the presentation, we can see that the gap between the ROE and the cost of equity is very similar to 2014 levels. But if we take into account only the Brazilian operations, it's probably the best performance you have in quite a while, right? If we look into the gap between the ROE in Brazil and the Selic rate, I think that the gap is between 15% to 20%. So my question is do you think this is sustainable? What should we expect going forward? And then, my second question, which has kind of a link to this first one. I want to understand if it makes sense to grow faster, right, reinvest more your capital, even if at a lower ROE, if you think that the cost of capital will keep moving down, right? So my understanding here is that with the lower cost of equity, you could still generate the same value even with the low ROE, given that the risk will be lower, right. So, I want to understand if you think that makes sense to you. If it is that the way you look at the bank, that's the way you run the bank? And I'm asking that, because I'm trying to understand where your dividend payout can go, right? In 2018, you had like almost 90% payout, which is pretty high. It seems that you are getting closer to your quarter one target. So I want to understand as well what we should take into account when forecasting dividends. These are my questions. Thanks a lot.

Thank you, Eduardo, very good questions. Let me first start by saying that I have no payout target whatsoever. I mean, I have no orientation from the Board or from anyone about what the payout should be. The clear orientation is that level one capital should be 13.5% every year, and dividends in excess of this and capital in excess of this should be paid out as dividends after accounting for potential acquisitions or potential changes in regulatory situation that need to lend more capital or the normal growth of business. As of this we should distribute [that] [ph]. And you are right when you note that we have been enjoying a return on equity above 20% and the cost of capital has been reduced. When I look at the cost of capital in Brazil, I see that the cost of capital in Brazil is maybe 3%, 4% higher than it is for international banks, at least for American banks, these banks, at least from what we hear from sell-side analysts and from what our models indicate. So despite the fact that the interest rate is much higher, I mean, the cost of capital you think is already not so much higher than the cost of capital in developed markets. How much lower can our cost of capital will go and how much less can this difference be? I mean, if the cost of capital is 10% in the U.S., can it be 2% - can it be 12% in Brazil, especially considering that it's a long-term investment? So I say it's - to say that I think there is a limit to how low cost of capital can sink in this situation. So the increase in value creation, which is our main notes in how we establish our policies, is - will have to be made through growth in balance sheet and through our growth in nominal return of the bank in nominal profits. So I think that this all, I mean, puts in the direction of increasing the balance sheet of growing our business as long as we can do it above the cost of capital, significantly above cost of capital.

Okay, Candido, thank you. Thank you very much for your answers.

You're welcome.

The next question comes from Mario Pierry, Bank of America.

Good morning, everybody. Just a quick question on your operations outside of Brazil, Candido, as we look at your profitability, clearly you're delivering ROEs above 20% in Brazil and lower outside of Brazil. So if you can tell us first how satisfied are you with the results that you're showing outside of Brazil and if you can be specific about the countries. And what do you think, how long will it take for profitability in these other markets to start to improve and, hopefully, get to the levels that you should have in Brazil? Thank you.

Thank you for the question, Mario. So just so to have this more clear, our biggest operation outside of Brazil is Chile, by far. Then we have - Chile also has Columbia, which is a smaller operation. And we have Paraguay and Uruguay, which are large operations for the size of the country, but are not large operations when compared to Brazil and Argentina which is a small operation. These are our operations outside of Brazil. Another thing I would draw your attention to is that in Chile specifically and also in some countries in Latin America, we consider the cost of capital to be below the Brazilian cost of capital. So we are prepared to have a return on equity there, which is lower than in Brazil. To comment on each country, first, Argentina is very small. We are improving there. It used to be a - we used to lose money in the [Viteyo] [ph] market there. And now we are making some money, a little money. But it's really very small to count. In Uruguay, we have a mature operation, stable market share, the highest profitability in the country. I see it improving, but I don't see anything transformational happening in Uruguay. I see us keeping the good position in the market we have there and improving marginally with a lot of effort. Paraguay is a more dynamic economy than Uruguay. I mean, it has been growing over 4% every year. And we have in Paraguay in the last quarter we see we have an ROE of 24%. So it's a profitable operation. I think there we can really - still we move a lot. And then Chile, you ask how satisfied am I. And I think that we have made a significant change in Chile. I mean, the results, we have just reported our profit for the Chilean operation and for the Chilean bank. And it was $320 million compared to $80 million a year before. So I think that the bank has been really turned around there and we are happy with that. But since I have here by my side Milton Maluhy, who used to be the CEO of the Chilean operation until a month ago, I'll ask him to, not to say how satisfied he is, but to give you a bit more of color in the Chilean situation.

Okay. Hi, Mario. Just to go through a little bit about Itaú CorpBanca, the local team will make this conference call in the next few weeks, so then we can go through the managerial numbers. Something that can we do here is telling you about the increasing profitability that we had locally. I think we did a very good year in Chile moving toward a 13% return percent, return on equity, on tangible equity, what I think for the Chilean banks, of course, the second block of banks after the two major banks that we have there, it's all significantly improved. On the other hand, we still have the challenging Columbia. As we've had anticipated, we were looking for a breakeven for 2018 and we achieved, so it's still not what we expect. We would like to have the profitability, of course, in this operation, and it should impact positively Chile in the coming years. So we are very positive about Chile. I think we consolidated the merge in Chile. In Columbia, we still have to consolidate the profitability of the bank, but I think we are in the right direction. We have discussed and reorganized our value proposition in both countries. And we are satisfied and positive about the coming years.

Okay, that's clear. Let me ask then a follow-up question then related to your appetite for acquisitions outside of Brazil. You had said in the past that the high tax is a phase in Brazil made it unlikely that you could pursue other acquisitions. However, if we're talking about a tax reform in Brazil and we do see a lower tax rate, would that change your views for future expansion outside of the country?

No doubt, it would, Mario. So this would imply, for instance, in Chile, reducing the tax rate from 40 to 27. So it really makes a difference when you make calculations on the value of businesses.

All right. Thank you.

Thank you.

[Operator Instructions] The next question comes from Jorge Kuri, Morgan Stanley.

Good morning, everyone. I calculated that the midpoint of your guidance range, net income growth of 11%, part of it due to the lower taxes at the operating income level, and getting to around 7% earnings growth. So I wanted to ask you, how would you characterize that 7% relative to what you think you could do over the long-term. Are we halfway of the recovery? Is it almost there? How do you think on a fully recovered economy your earnings growth should trend over time? And again, how is this compared to that? That's my first question. Second is if you can be a bit more specific about the guidance on the commissions and fees, which you said is low, because of the acquiring business. What do you expect ex-acquiring? If you can help us with that, what's happening to the asset management business, investment banking business and all of the rest of your fee products? I - granted that the level of disruption that we're seeing there, it's not as significant as in the acquiring business, but just wanted to see what trends you're seeing there. Thank you.

Thanks for the question, Jorge. Listen, your first question is difficult. I mean, how do I see earnings growth going forward beyond 2019. But I am seeing things under the assumption that the pension reform be approved, which means saying that we will stabilize the relation net public debt over GDP. If this is the case, then we should be able to remain with a low inflation for a longer period of time. Interest rates could even be lower than they are. And I think that Brazil, which is our main market, would see sustainable growth well above this 2.5 figure, which we forecast for this year. With this in our review, I think that the levels of - the level of earnings growth that we are seeing this year is pretty sustainable and could even be increased. I think, it's a very positive scenario for the country. I mean, I think the idea that you have a stable, low interest in Brazil can make a very significant change in economic behavior - in the behavior of economic actors in general. Of course, it could also bring more competition. It would bring a reduction in some specific margins, so all the things that happen on a virtuous cycle is in place. But I see this as very positive for our business. Without mentioning the efficiency gains which will come from technology advanced, I mean, we are ready - I mean, implied in our guidance for this year, we are already improving our efficiency and almost 1% despite the increase above inflation in costs. And I think, we couldn't prove it even more with all the investments which we are making in technology. Now coming to your second question. I think that if we don't take into consideration the drop in fees from the acquiring business, we could be at least one point above the range, which we have given you from 3% to 6%.

All right. Thanks for your answer.

Thank you.

Our next question comes from Marcelo Telles, Credit Suisse.

Hello, gentlemen. Thanks for the time Candido, Milton and Alexsandro. I have a couple of questions. The first one, I was wondering if you could give a little more clarity regarding your NII growth assumption for 2019. And when we look at both altogether around the margin targets and the treasury margin, you're growing almost 10% or you expect to grow an almost 10% your NII at the midpoint of your guidance. And if you look at the fourth quarter, and we look at the carry into 2019, we're talking about roughly 2% growth, right. So compared to some of your peers, you do seem to have a much more optimistic expectation regarding NII growth. So what do you see there? I mean, I - do you consider any potential pressure on credit spreads? Or you think you really don't see that happening anymore since you have adjusted your portfolio already? And are you seeing any potential gains on your funding side as well? So if you could explore that number, which I think to me, it did surprise on the upside that would be great. And my other question is with regards to your excess return. I know there are some questions already related to that, right? But currently, your excess return is quite high compared to some of the previous levels. And you - and despite all the competition and potential pressure and credit spreads, you feel confident that you can maintain that sort of excess return, at least like in the short to medium term? Is that a fair assessment?

Thank you for your questions, Marcelo. First, on NII. You mentioned optimism. I - as I said in our - all our guidance here is based upon the approval of the pension reform and a scenario in which the Brazilian economy grows between 2% or 2.5% this year. So this prefaces in all the items of our forecast. This is the optimistic part, if you will. The rest, there's more mathematics than optimism. So in financial margin with clients, the main explanation for the growth in financial margin with clients is a technical fact, which is the fact that the balance, the average balance in 2019 will be significantly higher than it was in 2018, which was - if you compare to the first quarter of 2018 and so on, this was not the case in the previous year. In the previous year, we have grown the concessions in credits very vigorously, but it took us a long time to replace the credits which were paid. And so there was no growth in average portfolio in 2018 over 2017. And we expect a significant growth in average portfolio this year. This explains more than 50% - much more than 50% of the change in margin, and it also applies with the volumes. They also refer to the volumes and liabilities, not only in assets. Despite that, there is this effect of mix and of moving from credits with a lower probability of default to credits with a higher probability of default, but with a higher margin. As I mentioned before, I mean, the - we are paying the price for the excellent growth in our cost of credit line that grows according to the cost of this change in mix. But - and so in the net interest line of…

That's very helpful, Candido. Thank you very much.

Thank you, Marcelo.

The next question comes from Domingos Falavina, J.P. Morgan.

Thank you, Candido, Alexsandro, Milton, and then teams there Itau as well for taking the question. Mine is just more regarding the expense side. I noticed when we compare to peers a little bit more of our investment project, I guess, going on in Itau, and I'm just wondering, which lines exactly do you intend like - or are you assuming branch expansion? Is this more like on which products line? Is it more IP-driven by cost? Just to understand a little bit more what Itau has in mind as far as where to deploy the expenses.

If I understood your question, you're asking about our costs, right? So that means…

Yes.

The most important part of the cost increase is tied to volumes. And these are variable costs, which vary as the volume of transactions increases. There are different types of costs. But this is the main thing. So since portfolio is increasing 8% to 11%, since the financial margin is increasing 9.5% to 12.5%. I mean, this all drives an increase in noninterest expenses higher than inflation. Besides that, there were two types of investments last year, which were made throughout the year, and that this year, we will bear the full impact of this course. And these were mainly hiring people. Hiring people to distribute the acquiring products, and this is what led us to stabilize our market share in the acquiring business last year. And this year, we'll bear the full cost of this new hires. And in our projects in the insurance activity, while we are distributing third-party insurance, so we also hire insurance specialists, who are now sitting in our branches, I mean, in many of our branches. So I'd say these are the three main items of the cost increase. Important to mention that despite this cost increase, our efficiency index grew by almost 1% according to our guidance.

Very clear, Candido. Thank you very much.

You're welcome.

The next question comes from Natalia Corfield, JPMorgan.

Thank you for the question. And I have actually one question on issuance. And I apologize if it had already been asked, because I joined the call little bit later. I'm curious to know about your views on the international capital markets. And this is because you placed a local 81 very recently, I think at the beginning of January at a very good price. And importantly, it was well below the levels where your 81s are trading internationally. So I'm wondering if this means that you guys are not planning to accept the international capital markets in 2019, if you're going to be focused on the local markets given the liquidity that you have there. It's like if you could give color on that, I would appreciate. Thank you.

Thank you for your question, Natalia. Yes, as a matter of fact, I mean, we are very satisfied with the issue we made earlier, our R$3 billion NII in the local markets. I mean, we have identified a pocket of demand, a significant pocket of demand in the local market. And an opportunity to do this seems to still have some room to issue 81. This room is now much smaller. I mean, we have 1.1% of 81 issued. As you know, the ceiling is 1.5%. But we have to account to leave some room for currency devaluation. Since a part - a significant part of our 81 is denominated in dollars, if there is a currency devaluation it will grow in percent or terms. And we do not want to run the risk of having idle 81, because it's a product too expensive to have it idle in our book. So I'm not foreseeing going to the market in the near future, we are not needing it. And I think it will be sometime before we tap the markets again. I mean, we are in very comfortable levels of capital currently.

Right. So in terms of 81 I understand that you already accomplished what you want. But what about other types of issuance, like even a senior? Would the international market be a consideration or not at all because you can have it very cheaply in the local market?

No, I wouldn't say that. I would say, I mean, we are always looking at the markets. And if there is a good opportunity of tapping international markets and if we see demand for our paper international and then we see demand for the credit in Latin American there's no reason why we wouldn't do it.

Right. But in terms of like pricing, nowadays, it's - which one is better for you, internationally or local?

Still local markets still look better for us.

All right, okay. Thank you very much. That is my question.

Thanks, Natalia.

The next question comes from Nicolas Riva, Bank of America.

Yeah, thank you very much, Candido, for taking my question. Just one on capital, so we saw an important drop in the level of Common Equity Tier 1 after the additional dividends and interest on capital. Now, it's 12.5%. I believe that in the past you have said that your target was around 12% for the CET1. If you can confirm if that's still the case and therefore, we could assume that you're basically done in terms of dealing back interest capital? Thanks.

I'm not sure I understood your question. But if I think I understood it, I mean, our - I mean, we want to have 13.5% of level one capital, out of which as much as possible of 81, so up to 1.5% of 81 and at least 12% in core capital. This is, I mean, what our risk appetite expresses, expressed by our Board indicates. And so, yearly, we come back to this level as we are coming back now to the level of 13.5%.

Okay, thanks, Candido.

You're welcome.

[Operator Instructions] This concludes today's question-and-answer session. Mr. Candido Bracher, at this time, you may proceed with your closing statements.

Okay. So thanks, everybody, for participating and for the very good questions. And then, we look forward to the next calls, when we expect to materialize the guidance which we provided now. Thank you.

That does conclude our Itau Unibanco Holding Earnings Conference for today. Thank you very much for your participation. You may now disconnect.