Good morning, everyone. I'm Renato Lulia, the IR Officer for Itaú Unibanco. Thank you for taking part in our video conference to talk about the earnings for 2Q '22. This event is being held here from our studio headquarters in Faria Lima Avenue. So I'd like to give you some instructions so you can join the event. For those who are on the website, you have three options to hear. All content in Portuguese, all continent in English, or in original audience. For the first option, two options, we have simultaneous translation. So click on the flag on the top left hand corner of your screen, you can also submit your questions by WhatsApp. Just click on the icon on your screen if you're watching on the website, or send a message to the phone number 5511-9452-9674. So the information is also available for download on the hot side screen and on IR website. So now I'm going to hand over to Milton, who will give his presentation and I'll be back to moderate the Q&A session, Milton over to you.

Good morning, everyone. Welcome once again to our video conference for the earnings of 2Q '22. I'll give you information during some slides and then we'll go into our traditional chat during the Q&A with our investors. Thank you. So to begin, we have disclosed the results of BRL7.7 billion. That's the recurring managerial result increase of 4.3% quarter-over-quarter. We have consolidated ROE 28.8 but in Brazil, we're considering 21.6 which is strong return. In the credit portfolio, I'd like to highlight BRL1,084 billion, a growth of 5% and consolidated 5.5% in Brazil, I'll give you more flavor to that briefly. The annualized average margin achieved 8.4%, a growth of 0.5 percentage points in the quarter and 9.2% in Brazil growth of 0.3 percentage points. Our NPL considering over 90 days, 2.7 consolidated a growth of 0.1 percentage points and in Brazil 3% as well with a growth of 0.1 percentage points. And important figures, our efficiency index in the consolidated was 40.8%. In Brazil another quarter where we've achieved the best index of the series 38.7%. These are just some of the highlights, I'll give you more flavor about that in the next slides. About the credit portfolio for individuals, we have a growth of 7.2% mainly driven by credit cards that has an effect of consumption, actual increase in demand. And that's really driven the revenues for credit cards, which naturally impacts the portfolio. Personal credit growing 6.8%. The highlight in this case, in personal credit portfolio, we have consumer credit, overdraft and the composition but as it grows, the overdraft 8% growth and consumer credit 7.3%. So the main element that I'd like to highlight is that 80% of this growth in the quarter came from the Personnalité Uniclass segments. I'd like to remind you that we…

Now we're going to start the questions-and-answer session. You can send your question via WhatsApp at? There is some questions coming in already. Thiago from UBS.

Good morning and congratulations on these results they were wonderful. The question about the portfolio quality you told is performing better when we look at the quality indicators. And we see that its portfolio is growing strongly, especially this quarter. Can you talk a little about expectations about NPLs or the cycle, the cycle you expect? And if future growth and guidance is going to continue with Personnalité or what type of customer are you focusing on?

Thank you so much. Thanks for this question Thiago. Just to give you a bit of background on credit quality or loan qualities, you could see that our overdue indicators are quite consistent. There's always there wasn't - we didn't sell any active portfolios. We've been very disciplined in managing and renegotiation. You can see actually the numbers for these renegotiated portfolios that was just R$600 million. And the index, the ratio has dropped from 3.3% to 3.2%. So you can see the numbers aren't quite strong. Looking at portfolios, we have to make a few comments, it's quite important to look at this. First, we have made some significant adjustments in production. We've been doing this since the third or fourth quarter last year, when we noticed that were some variations. And we acted quickly. In response, I think actually two portfolios required some adjustments. The first was credit cards. So we saw that there were there were some necessary adjustments made. We cut production by 50% just to give you an idea. And there were also some cuts in vehicle production. We found that there were some variations there especially with ratings. So that was important to and we've been very active proactive, and we made some very important adjustments. We talked about GDP, but for credit, we have to look at nominal. We started the year off with higher inflation rates. So GDP nominal were quite - were much higher this has affected our portfolio growth in general. When we look at retail a few things, the first credit card that was most affected by inflation and consumption increase. So consumption, consumption was obviously a high impact and inflation obviously important. So R$120 million, and this R$1 billion is credit cards without interest rates. So that's a…

Thank you so much.

Next question from Flavio Yoshida from Merrill Lynch.

Good morning, congratulations on the results very strong results good job. That's my question actually it's a follow-up question. Do you individual portfolio with Personnalité and Uniclass has been growing significantly. So this is individual customers and these are the lower risk customers, right? So that's okay. But if a high income customer is taking out a loan, the situation in terms of default is not as good or in terms of delinquency is not as good. So I'd like to actually know how you feel about this dynamic?

Thank you so much for this question, Flavio. Our outlook is one of caution. And we have to look at portfolio performance overall. If we break it down by segment, not just individuals, but Personnalité versus Uniclass, things have gone quite well. But in 2020 2021, there was a very drastic shift. And these customers amortized our debt, they stopped spending as much they ended up amortizing. And we also lost a bit of our fair share in that time. Now we're recovering our fair share. We're starting to penetrate and customers have been with the bank for over two years now. So they're well known customers as well as customers who had lower debt rates because of the amortization. And they're now recovering and returning to some of the lines. So Uniclass is a segment our customers who make more than BRL4000 per month. So they're a little more upscale. So this, again, we're talking about individuals who make more than BRL4000 per month. So this is no, this is no way to say, Oh, the situation is worsening. We're monitoring it. We actually don't see any severe alterations in terms of customer behavior with very similar to what we saw prior to the pandemic. But overdraft and credit cards are something we have to pay attention. Now if you look at the volumes were quite online with where we were pre-pandemic.

Next question from Citibank. Good morning, you're on mute.

Thank you very much and good morning. Milton you said that last year it was a lot more critical in this journey. Now we're coming back to normal. So this is very clear in your NIM, I think was 10 before prior to 2020. We're now at 8.4ish percent. So, we're expecting you expected to do around 10% or do you see some sort of mix with income? The other question is default or delinquency, even though NPL I don't know was much more significant in the past. And as the mix changes, this may increase. So the first question is, is that 10% is credible or not and for NPL creation, we do expect us to follow the same trends?

Great, thank you for the question. When we look at NIM in the past, we have to look at how the mix was in the past, they were a lot cleaner than they were in terms of - we had a higher retail than we had wholesale and the mix. Now, it's more guaranteed than it is before, which clearly affects our NIM. And wholesale has grown significantly. So there's more wholesale to retail in this period. So this naturally is going to impact us. The second big thing you mentioned is that there was a cap of overdraft for retail I think it was 8% before. So this is very important in terms of our returns and our numbers. Interest rate has helped us with the liabilities margin, and this affects the entire portfolio. So this is a much more negative impact and on the NIM. Other portfolios, including payroll loans, you've got more caps, so the interest rate has increased funding has increased in these caps. So this is also affected pushed against the margin. I don't expect this to go back down to the 10% NIM because of what I just mentioned. We do expect this to expand slightly, but just because I said there is the working capital effect which has been positive again, those R$400 million with the effect that I mentioned earlier. When I look at this performance, I think our levels are quite good, quite stable for at least the next two quarters. When we look at the portfolio mix, the overdue rates are okay. But again, we work with expected losses and not actual losses. So there's a certain effect from 2021 from 2022. But since we're working with expected loss, we look at the lifetime loss lifetime loss or lifetime overdue…

Thank you so much.

Thank you, Raphael.

.

Thank you so much for this opportunity. I want to talk about credit cards. You talked about transactions we know that credit cards have been used increasingly more for payments, bills. So the credit card has been growing in Brazil, but we look at loans actual loans or payments in installments, we see changes in turnover went from 6% to about 10% now. So one-time payment upfront payments, has jumped to 80%, 81% their EBITDA dropped 31%. When we look at credit cards and we look at all sorts of indicators? We see that Brazilians have been using their credit cards more, but when you look at the breakdown of how they use those credit cards I think there's higher amortization. What do we expect in terms of turnover and for NPL for individuals when you break it down? I know we have break it down, we break down by individuals versus company. But if you could perhaps breakdown even a little bit more, you talk about the use of credit, the use of loans, the use of installment payments for credit cards, you could talk a little bit about that. I'd appreciate it.

Thank you so much, Gustavo, I thank you for that question. When we look further down the road this, transactional credit card portfolios were quite high in 2020, 2021, there was a lower revenue because spending, because spending was lower and amortization was higher. This was a very - this meant a very significant decrease in the portfolio. When we look at the profitability for retail, you see a very significant drop in the ability to take out loans, get credits or use credit cards. We don't think that we don't think that this was sustainable over the long-term. So what we've seen now is an, increase in prevention much higher than what we saw prior to the pandemic consumption is increasing, expenses are up there is the inflationary effect. So again, higher bills, higher payment, higher bills, lower payments. When we look at the entire portfolio BRL126 billion 80% is non-interest, 20% interest, 10% is rotational and the rest is in installments. Regulatory has changed - you can no longer have it paid. You have to - payments are to incur interest after 30 days. So this is a dynamic that we started to see last year, this is nothing atypical. And again, our levels were quite low before. So what we're trying to do is bring this up to normal levels. But this portfolio is a very important very big portfolio, you can see retail, it's about a third of our portfolio of our credit card portfolio. And this is a port, multichannel distribution portfolio. We've got bank, this is a very strong channel performance has been wonderful. And we have a great relationship with the individuals and retail store owners. This has been a little more difficult channel because loans are higher. But you also have the…

Thank you, Milton.

Thank you, Gustavo.

Because we have with us Tito Labarta from Goldman Sachs.

Hello, Tito thanks for joining us today.

Hi, good morning, Renato and Milton, thanks for the call and taking my questions. If I could follow-up a little bit more on the financial margin you know both - first and the financial margin with clients' right that you I think benefited from two aspects with higher interest rates. And the shift in loan mix rates potentially close to peaking maybe another small increase, but probably close to the peak maybe started to come down next year fell posting a little bit. How that could potentially impact their financial margin with clients can that still go up because of mix or and how dependent is in - on the movement in rates? And then the other part of that is on the market NII right that's been fairly weak, I think because of the higher rates if rates begin to stabilize how do you see that market NII can evolve from here? Thank you.

Yes, sure, sure, sure Tito, thank you very much for a question. While talking about the financial margin with clients I was saying in a previous question that we believe that we should stabilize this 8.4 around these in the next two quarters, we may be see 10, 15 basis points in the coming quarter. So we believe of course, we do have the impact of the interest rate as we can see in the chart above. But in the other hand, as you can see, the most relevant impact comes from the core business of the bank. So you can see the volumes very strong, you have impact in the spreads, but much more on the interest rate on the liability side on investment from our clients. And we don't see in the short-term movement in the interest rates, you're right, we believe we are very close to the peak 13.75% we may have 25 basis points is not our base case. But we believe and will depend in many issues, especially the fiscal discussions that we should have by the coming year. So to understand where should, the interest rate start to reduce whenever it happens, of course, we may see an impact the same way around, as we are seeing here. And the same way when we saw that huge reduction, massive reduction on the interest rate in the previous quarter. So it's difficult to say now when, should it be stabilize by this year, I still believe that around 8.4%, 8.5% on a consolidated basis sounds reasonable. Let's see for next year, what level of interest rate won't be our mix, our capability of growing in some specific portfolio so this is the way we are approaching that. Talking on the financial margin with the market,…

Thanks Tito. Thanks Milton. Next question came from WhatsApp from Natalia Corfield from JPMorgan. I'll read it to you. It's about Itaú Unibanco bonds. And considering the close to 6.6 to 81, the perpetual if executed would not be economic considering the market scenario. So how do you see the possibility of calling if it's not feasible?

Natalia, that's a really important question. We've been talking a lot about that we've had a lot of market demand. So the vision is, in fact, that call comes through at the end of the year, and another one at the beginning of next year, two very relevant operations almost USD3 million in the total issuance. We believe that when we do a simple update of the reset for the coupon of those bonds with the new issuance, we're talking about a difference of over 250 bps. And that's very material. So first of all, there's a fiduciary duty and economic duties. So calling paying over 250 basis points and the new call doesn't seem reasonable. When the time comes, we'll make the decision and will disclose that to the market. But in fact the takeaway is, if it was, if it were a small award that made sense, even though the liability management would be a bit more expensive, we would consider it but under these conditions. When the time comes, we will look at the exclusively economic perspective, if the premium is that big, if it's higher than that, we'll consider the macro scenario. But looking at the market today, it's difficult to say that we would call - under those conditions. And it's not about capital at a second time, but the Brazilian Central Bank also has to approve and one of the requirements for Brazilian Central Bank approval is in addition to show that you have sufficient capital. And we do you have to prove that a new issuance is more economically feasible than the current operation. Obviously, the Central Bank will work with ranges reasonability. That's valid, but the differences are very significant. So even before submitting that to the regulator, we would probably not call if the conditions were similar to what we see right now.

Thank you, Milton. Let's go back to the screen now we have a question from .

Good morning, good morning, everyone Milton, Renato, thank you for taking my question. I have a question about your ROE sustainability. Given that you said it's not hard to get an ROE of 20%, but maintain it at 20%. And if it's higher, you can run at a higher profitability. So looking at 2023 do you see a small increase or even an improvement to your ROE, for the upcoming years given that this like rate will be higher?

Hi Michelle, thank you for your question. First part of the answer is when we look at the data even the guidance that we just review there's an ROE of approximately 20%. So we still believe. And we've been able to run at that level of profitability, we had a recovery across last year. So it would be reasonable to believe, for the next quarters, even though we don't give guidance of ROE, it's implicit. And that's how we did it, showing what the ROE would be close to. In the interest rates, we have good results. Well, actually, there were three major effects from interest rates, the banks working capital, the liabilities and this overhead strategy given the arbitration of the local coupon with the external coupon. So overhead, we don't have that anymore, and the liabilities we're capturing now. And when you look at the compensation of working capital vis-Ã -vis the interest rates, you see that the effective rate of the working capital to the select rate is there. Because we hedged working capital and the liabilities and we do that in points across the curve, when you have a sudden increase of the rate, you can't capture that at once it comes in quarter by quarter. And we went through a very important reduction in the interest rate where the working capital rate goes down slower, not so sudden. So the effective rate of working capital should go up in the upcoming quarters as you roll over the hedging and you capture the increase in the interest rates the bad side of interest rates. And we don't advocate for a high interest rate scenario. We want something stable because you're driving delinquency. We talk a lot about individuals in a world where the spreads to the…

Thank you, Milton. Thank you, Michelle. Yuri, good to see you, welcome thank you.

Hi thank you. Thanks, everyone. Congrats on the quarter results. I wanted to ask Milton, you've said along your presentation that you feel that it is prudent to be cautious and you talked about cautious environment. And I'm just trying to understand what that means in the context of the balance sheet growth that you're seeing and the guidance that you have, right. I mean, you're guiding for growth that could be up to close to 18% year-on-year? Your consumer book grew 7% quarter-on-quarter that annualizes as you know, high double-digit rates, particularly riskier products, like credit cards are growing at almost 40% annualized rate this quarter. And so I'm trying to understand that cautious commentary versus the velocity at which you plan to continue to grow the business. And, and I'm just wondering if, you know, evidently, there's risks out there, and the world is not a great place today? And then those races have to be calibrated, but it just doesn't feel that you're particularly cautious with the level of growth that you're seeing. And so, again, just want to understand, what does that mean? I mean, does that mean that we're going to see a big deceleration going forward, and sort of like we've seen the best or you may think, hey, there are some risks out there, but we feel comfortable and the environment is supportive for us to continue to grow at this space.

Okay, thank you, Jorge. Good to see you again. Well, first of all of course, whatever we produced and all the growth we had in the portfolio that we posted in this quarter of course, we are comfortable with that otherwise we wouldn't be growing the portfolio the way we did. And I was, as I was saying before, we are doing that in the most affluent segments. So they are performing very well, in terms of credit and we have to have good perspective looking ahead. When I say cautious is because we are always cautious. We are always looking understanding the scenario understanding what, are the challenges we may see ahead. And when we look two quarters ahead and 12 months ahead, we don't have all the answers no one has. So we are cautious because in the short-term we've been seeing as we are posting here, the delinquency measured by the NPL over 90 days, has been growing every single quarter since the third quarter of last year. This is completely the way we expect it to be. You might remember in the third quarter of last year, and I was saying to the market, when we hit it, hit the low, I will say that we would see gradual normalization of our delinquency ratios. And it's exactly what's happening. So when I say cautious is because we are seeing the delinquency going up. And we have been acting our portfolio the way we should. So we've been reducing strongly the production in the credit card portfolio, we are reducing strongly the production in the auto loans. So we've been very effective and very fast moving fast to make the adjustments that we need. So my point is, whenever you see a gradual normalization of the delinquency…

Thank you that's very clear. If you don't mind I think one of the points in your results that have been under appreciated and no one has asked this on the expense side, you've done a great job at managing expenses well below inflation well overall revenue growth. And I'm just wondering, how much of - and this is not this year, you've won this for the last few years? How much more is there for you to continue to maximize, minimize expenses maximize efficiency over the next few years? Have we seen the past years, you could potentially start to see an uptick in growth or three years out, we should continue to see you improving on a year-on-year basis? Thank you.

No, thank you very much. In fact, we are very focused on that. Of course, when we see 38.7 efficiency ratio for Brazil, it's the best quarter ever, the best the best index that we had, if you look to a long series. Whatever you look at, but we have the two effects, here, we are having a very strong top line growth that benefits the ratio. And we are also having a very strong efficiency program. As you can see, showing that we grew only 0.9% year-on-year, looking this semester, it's irrelevant when you compare to the level of inflation we are facing in the market. So we are confident, I'm sure many of our guys of the bank are watching here, our conversation now. So I can tell you that we still have a lot of room to reduce costs is to be very disciplined. And to keep on this agenda, there is a lot of opportunities here. We are not there yet. We will depend on the dynamic on the top line, of course, to see where we can stabilize the ratio, but I can tell you from the cost perspective, we still have a room to improve. This is the message for everyone. And also on the investment side, we are investing a lot in technology and investing in new business. So all the growth we had in terms of costs has to do with investing in the future of the bank. So this is very relevant. We are not doing a short term agenda, guaranteeing the profitability of the bank for the coming quarters. And I'm not looking for the whole period. We are looking for a long-term agenda. This is the way we manage the bank. We have a very strong shareholder view. This is the way we are doing our investments here. Thank you.

Thank you.

Thanks for Jorge, thanks Milton. This investor Portuguese we've got Daniel Vaz from Credit Suisse.

Thank you very much and congratulations for the results. How are the liabilities last half of the year we've seen a little bit of growth on top of liabilities when we look at the ratio. You said that this drops a little bit? So I wanted to understand is how you've grown fundings for bonds and other instruments and what about in strategic investment for funding? Thank you.

First, we have gained market share in investments, both in terms of private and in terms of retail. And we've been working in our ecosystems, significant investments in Aeon 110 offices working. We hope to hit 120 branches by the end of the year, nearly BRL500 billion under custody management, which is dedicated consulting. So we've been operating very strongly in investments we are - no longer working with net resources. We're working net-net, net-net banking has been really expanding quarter-on-quarter. Our strategy is very clear. And I think your question is very significant. When we say we have been working in consultancy, that's the best thing for many years now that's the best thing. We can take them out of a multimarket account with it's add higher administrative rates and bring them over to bonds or other instruments. It's much better its better but instruments for them. It's better for their suitability we understand what their risk profile is. So with, this high interest rates, there was a migration from higher risk to lower risk products. So there were some funds that were multimarket and they have moved over to fixed markets. So we've got a great we've got LCLI, IEG, we've got all sorts of different instruments and products available they're very consistent, consistent returns just specifically for retail. For financial instruments, we also use this institutionally for funding. Sometimes we're the first asset. And we have a great liquidity management, LCs is quite high because of flight to call during the crisis, and there's high demand for credit loans. So the request for loans and credit has increased. So we've been using cash. But again, we're working within margins above regulations, and we're very comfortable, our investment strategy and our model has been stable. So early, it's…

Thank you. Thank you.

The next question comes from Jason would you I'm never sure what you are going to ask your questions in Portuguese, in English, in Spanish or we have a mix of the three. So I'll let you decide which one you want to take. But thanks for joining us today Jason.

Hi, thank you for the opportunity to ask questions. Congrats on the strong results. In particular in Brazil's current economic context economists, as per consensus for the Central Bank focus or expect real GDP to grow 0.4% now and 2023 down from I don't know 0.5% just a few weeks ago, interest rates are expected to remain high now with the weak staying in about the 11% range at the end of 2023 And we have a presidential election? I mean, you've addressed a lot of my issues, but I thought maybe you could give us your views on where it's only been go ways in the current economic and banking sector cycle. You've talked a bit about where you see loan growth going and caution et cetera. Maybe you could share where you see similarities and differences versus historical cycles with high rates and low economic growth and Brazil's fiscal challenges that might be helpful? And as a secondary part of that question in the current cycle it is interesting, and I appreciate the disclosure of it those hedging strategy on the capital index. You showed that you spent R$500 million for the second quarter after R$400 million in the first maybe if you can give us your views on how you see that working currently and going forward? Thank you.

Okay, Jason, nice to see you again. Thank you for your question. So talking about this scenario, I think it's difficult to compare when we look back, I think we still have a few challenges looking forward. First of - all is you're right when you see the focus, you are seeing these growth coming from 0.4% our macroeconomics has 0.2% figure for 2023. So it's not that different. It's even though it's half of the focus it's still on a very low ratio so that's a challenge for 2023. And especially due to the level of interest rates, we don't believe that we've been facing all the effects of the interest rate hike that we've been observing in the past month. So looking forward, we believe that it's going to have a slowdown, the impact on the economy side we might see commodities coming to a lower level due to the war, Russia/Ukrainian war. But also we expect that the GDP in us coming from 2% this year, maybe 1% next year. In Europe, coming from 2.5% coming to 0.7% next year so Mario has this mathematics that says that when the global GDP falls around 1% we feel about 1% in our GDP as well. The good side of that is that on China, we might see a recovery coming from this year to next year. So you won't see on the economic map - the World Index, you won't see that made major impact, but you are seeing this in U.S. in Europe and in South America. You still have huge challenges in many of the countries we are going through inflationary process worldwide, this is not a phenomenon of Brazil. So our view is that the interest rate depending on the fiscal policy, that we will…

Thanks Milton, thanks, Jason.

Thank you.

We will go next Portuguese. We got Domingos from JPMorgan.

Good morning. Hello, Milton. I liked Jessica's question. I'm looking at Bloomberg, saying the CEO is a little more cautious with inflationary increase. But we're looking at the portfolio it grew 8% quarter-on-quarter for credit cards. For revolving credit that grew at 86% year-on-year. And so the revolving part one over 120% year-on-year now 20% this past quarter so I've got lots of questions ways to ask this. For these interest earning assets or perhaps if you could talk about these a little bit more? Jessica makes sense to be so cautious with the 8% growth quarter-on-quarter and these are customers who didn't pay on bill date this they didn't pay when it was due. So they're already overdue. They're already paying in installments. So I decided to tie this in growth what makes sense, what makes sense in terms of caution. And then in terms of wholesale, I don't remember the number 30 plus percent, but wholesale did out retail right in your portfolio?

Thank you so much for that question. So we'll go back Portuguese now very good questions. Our credit card portfolio is highly related to consumption and transactions. So quarter-on-quarter, this grew 11% that was a growth of 11%. This shows that consumption is now up. And we've got different types of consumption according to our different customer bases. What's our basic consumption what's excessive consumption. So we basically any sort of low income, middle income, high income customers look like? So all everyone across the board has been spending more. We've been working with low pension. If you look back at 2020/2021 there was high amortization especially in 2021 for revolving credit, so there was high amortization because of the dynamics of lower expending higher liquidity in the system, all of the support all of the help for - because of COVID. So there was a real important decrease in prevention, but its risk to return when we talk about credit cards. So again the rates are higher. So we can work with risk a little bit higher risk for this type of product there is no cap. There's margin, there's manipulation but we also have a certain point where we don't want to accept risk, because if you hit it too high or risk, obviously, it doesn't matter what percentage you get, because we're going to have to cut the customer off, right, they're going to be completely overdue or default. If you look at the portfolio volume, over R$120 million and we're talking about 6%, 7% of the funding for revolving. We would expect this pretension to increase. Now, but the levels are still very adequate. They're just right they are very similar to what we saw in previous quarters. But it is a more volatile portfolio, and…

Thank you, Milton. Thank you.

We have Henrique Navarro from Santander. Good morning.

Good morning, thank you for giving me this opportunity to ask questions and congratulations on your results. About the acquirers, it read they have very strong results. I remember that three years ago, even inside Itaú that in the future acquirers would be a call center, a very profitable call center. The results are very good. So my question is, did you change the dynamics with the acquirers? So we saw CLO as well with good results. Is that linked to scenario where acquirers connected two big banks have a competitive edge or because of new entrants? Could you give us some more flavor of the quality of the results of that, how should we look at that going forward?

Great, Henrique. Thank you once again for your question. It's great to see you here. So the ready business and for people sat in this chair for a while in the past, when you look at long series, I was actually looking at this a couple of days ago, in the past, we had R$3 billion in profit with Ready, that was the order of magnitude. When you look at what happened from then until now the market changed, there's a lot of competitors out there, the prices have dropped materially, the MDRs as well, and the take rates as well. So there was a huge change in the competitive environment, things really changed in the world of acquirers. So the market in the past, the external channel was highly relevant, not the bank channel. And now, customers want an integrated offer. They want to talk about receivables and payments, they don't want to talk just about MDR. Just about the terminal, even though they still discuss that, they want quality service, they want price. We know that MDR has a significant impact to retailers costs and the companies that take credit cards, so the market really changed. So what we did was, first of all to focus on the more profitable segments. And I remember this in the past, there was a huge fight about market share that that was synonymous to results. But it's not because two-thirds of the market share in the acquirers market comes from the big customers where prices are tight and negative contribution margin sometimes. So we gave up on that negative contribution margin, unless that relationship with that customer makes sense. So we look at the customer with an integrated view different than we looked at them in the past and not an…

Perfect, Milton. Thank you.

Next question we have with us from Bank of America. Hello, Nicholas. Good to see you.

Hi, Renato and Milton, thanks for the chance to ask questions. I have a follow-up on the prior question about the perpetual bonds. So you said clearly, under current market conditions, it doesn't make sense for you to issue a new perpetual bond in international market. My question is, if you would consider calling the perpetual bond in December, losing temporarily that capital the R$1.25 million, and waiting for market conditions to improve to issue a new perp or also potentially if you consider issuing a new perp in the domestic market and refinancing some of that international perp into the domestic market? Thanks very much.

Thank you, thank you, Nicola for your question. Good to see you. Thank you very much. To be very clear here, we don't have a capital constraint. So the decision has nothing, it's not relevant the discussion on capital here. So we still have room, we have the additional Tier 1 of the bank consuming 1.5. So we are on the regulatory cap. So we don't imagine to take this risk and mismatch because at the end of the day, if I exercise the call, not being effective, economic wise to the bank, and then waiting for a new window of opportunity. We're taking a market risk if we do that. So and it doesn't make sense on the economic perspective again to exercise a call, if the reset will give you a premium, a new issuing will give you 250 basis point is spread over all of what we have nowadays. So the answer is no. We will make the decision whenever is possible, but taking in consideration that if in economic view, we should exercise the call. This is our fiduciary obligation. We will exercise the call if we don't have to exercise the call due to economic perspective, we won't exercise the call. So due to the current market level that we are seeing now. And we if we had to make this decision today, we wouldn't exercise the call. I think this is the best way to give you this answer. Talking about the local market, we've been active, we have an important amount of local debt in the local market. And we are always analyzing. So when I say there is a huge spread, I'm not looking only on the international market because we may be able to access local pockets at decent conditions. But we do the same calculation. If this new liability doing locally if it's better than the perpetual, of course, we would exercise the call and issue a local, so we don't have a preference if it's other offshore or onshore. Our preference is to make the most relevant economic decision. We take other things in consideration, but this is the core element on the decision we make. So we will look to the local market as we always learn, but it's not so deep as we see the offer market for this type of instrument but we are looking to the local market as well.

Thanks, Milton. Thanks, Nicholas.

Last question, Milton. We have Marcelo Telles from Credit Suisse. Good morning, Marcelo.

Hi, good morning. Thank you, Milton and Renato for taking my question, this is the last question. So thank you for your patience. Actually, I have two questions. They're pretty much related to each other. It's not actually about the bottom line. We talked a lot about that. But I'd like to hear your opinion, Milton, about the Brazilian Central Bank initiative of the digital BRL. Is there a concern in the bank that where that would increase the risk of financial intermediation. So upfront deposits, I'd like to hear your opinion on that. And the second point at Itaú Digital, and the tokenization area. Could you talk about that objective there, there are some opportunity in cost reduction there. How are you getting ready for 3.0, DeFi, I would like to hear about that?

Okay, great Marcelo. Great question to end this day, two different questions than what we've heard so far. So first about the CBDC. Obviously, we've been following that closely. The Brazilian Central Bank has been talking to the market and talking about their objectives, I think it's still early to say. But in our opinion, we don't believe that the regulator would like to generate a systemic risk, I don't think that they want to capture the deposits and take the banks out of it. That's a huge systemic risk. That's not their agenda. Their agenda is about trying out new technologies and understanding what kind of movement that would lead to even actual money, even the system that has decreased money in circulation, actual money. So it's about understanding what they're talking about, and the solution for that type of thing. It's still in the initial stages and pilot program. But I don't ever, I don't believe that was the regulators idea to take the banks out of the equation. So that's not a concern, but we do have to monitor understand how that will be done, how it would be operated. What bank, what role will the banks play is that collateral? Will we have each one of us, each of the banks have their own coin, will it be stable or not or currency, excuse me. So but I'd like to say again, that we don't see a systemic risk in that, at least as far as everything that we've heard from the regulator. That's not what they want, what the Brazilian Central Bank wants, they don't want to generate a systemic risk. So we're very comfortable in that, the size of the opportunity to be determined and how we're going to operate TBD, so it's hard…

Thank you, Milton. Thank you, Telles. Milton, we have a number of questions from WhatsApp asking about delinquency costs and the avenues acquisition since we have no further time, the IR team will answer everyone directly. So this is the end of the Q&A session. Before you leave, once again, we'd like to invite you to Itaú Day 2022 that will be held on September 1st, nine to noon BRT time, we'll have the Co-Chairs of the Board of Directors, and also all the members of the Executive Committee. As Milton mentioned, this year, we will talk about customer centricity, and looking at that at many different angles. So we hope you can join us on September 1. See you then. Thank you, Milton. Thank you, everyone. Thank you.

I'd like to thank everyone for participating. Once again, it's always a pleasure to talk to you all and share this information about all the different themes and consistency. Always with transparency in our disclosures and the quality that we offer the market, we always answer the questions. You might not like the answer, but we always answer whenever you ask us your questions. So once again, I'd like to invite you once again to be with us on Itaú Day to talk about the bank, it's half, it would not be what it is today without all its shareholders and the trust that we receive from all of you. So we'd really like to share with you our agenda. And it's also a way to give the visibility of the rest of us of our Executive Committee because nobody does anything alone. We always work towards our customers interests. And you'll see a lot of that on Itaú Day. Thank you once again for participating. We'll see you in specific meetings and the next call. Thank you.