Banco Bradesco S.A. American Depositary Shares (Each representing one Common Share, no par value) 2026 Q2 Earnings Call

Good morning everyone, thank you so much for joining us again. We are here once again to speak about our earnings results, especially for the second quarter of 2026. We are talking to you straight from our studios at Cidade de Deus. Now it's 10:31 A.M., August 6th. We are here live and alive and kicking. If I even say this, probably the young generation doesn't even know what it is. We are here broadcasting live from Cidade de Deus. I'm here to present our results. As you've seen from yesterday's publication, we reached BRL 7.1 billion net income in the second quarter and 16.2% growth year-on-year, 3.5% quarter-over-quarter, with ROAE of 16.2%, higher than what the market expected, because the market expected that we would reach 16% ROAE in the last quarter of this year. Here I bring a summary of our presentation.

I'm not going to elaborate on any of those topics. Loan portfolio is growing with more guarantees with a very good risk-adjusted return. In the past two months, our IR department has been talking to investors, they are asking us about what is happening to the macro landscape and the credit landscape. I will talk about our standing vis-à-vis revenue, also we will talk about our accelerated transformation project. I'll talk to you about cause and effect. This is what I always do. What is behind this result, and why are we growing our loan portfolio? We posted growth of 11.6% year-over-year, even more than quarter-over-quarter. The portfolio reached BRL 1.137 billion, and even KEGA, we posted 11.7% growth. Why is that? Well, that's explained because we have high penetration commercial traction.

We have a very good and well-equipped commercial team with a lot of intelligence behind it. Also we have digital channels. I'll talk about the FGO. We were the first bank to provide a very seamless FGO experience, this is happening throughout the organization, I'll go through all of that through my comments. The cause is commercial traction in all business segments, in all business lines, no exception. This culminates in the growth of our loan portfolio. Further on, I'll talk about the other items or end line items in our revenue. SMEs posted 16.1% year-over-year, despite the baseline of the same period of last year. This is a big highlight. Large corporates grew 12.7% year-over-year, I'll elaborate on large companies further on. Individuals, 8.4% growth year-over-year. That means that we are growing in different lines and in all aspects that we wanted to grow.

We are also growing in customers with good ratings, with good credit modeling, and adequate policies in every segment we operate. I'd like you to remember one number, because SME grew 5.1% quarter-over-quarter. This portfolio year-on-year grew BRL 37 billion. Let's bear that number in mind, because we will talk about it later on. I have some other figures for you here, because they are in tune with what I said before. Where do we want to grow? Okay, earmarked credit, mostly FGO, FGI, mortgage, including the Plano Empresário. We grew 21.4% when compared to 12.7% in the market. When I look at non-earmarked, we grew slightly lower than the financial system.

We have the other unsecured lines that we don't have a lot of risk appetite. We grew more in corporate because we have more secure lines when it comes to corporate. We are well tractioned in the payroll-deductible loan, we are also very comfortable in direct credit to consumer. See here, corporate, we grew 14.7% versus 7.9%, which was the market growth. We are growing in the lines that we want to grow, we are focusing our teams and our digital channels to these particular lines. Let's zoom in to our expanded loan portfolio. All of them have risk-adjusted return periodically assessed by myself included. Last week we looked at two other portfolios. We are constantly looking at that and we make fine-tuning and make adjustments. We are not saying that we will look at this or that.

We are leaders in some areas, the main focus is to look at risk-adjusted return. Here I'm referring to the wholesale bank with this level of growth. Where did we grow in the wholesale banking? We will talk about the agribusiness area, we were leaders in fixed income origination, also securities, part of our securities go to OPD portfolio, which is origination for distribution. We'll distribute something to the market, we go into the secondary market because you optimize capital or you optimize profits. That's why I say that wholesale portfolio has its ups and downs. It can go up, it goes down. Here we grew in the rural area or agribusiness with M&A opportunities in very specific lines.

I would say that there are two operations that we did, one in agribusiness, which was an M&A with an AAA client, another client with very good ratings, with extreme liquidity. In these two transactions alone, we were able to post BRL 6 billion in the wholesale bank. We grew a lot in the plano empresarial or entrepreneurial plan. We grew in different segments in the wholesale bank and also SME. This is a line that is posting considerable growth. We will also focus on the individual segment. Where else? We are the largest funders of aviation leasing. We have 64% market share. Everything that was done in this first quarter in terms of aircraft that were financed to companies and also wealth management is right here, 64%.

We are leaders when it comes to aircraft leasing, particularly among those clients that have a very well-positioned and collateralized risk management. I go back to wholesale and SME. I'm talking about individuals plus SMEs in the expanded loan portfolio. This is the level of growth we posted. Here we are talking about origination. Origination, the average monthly origination in these lines for wholesale and SME, the average origination quarter-on-quarter was mostly in FGI and FGO and also mortgage and also on the business side. In the other products where the risk appetite is lower, there was a decline in average origination by 7.7%. We move on to help you understand all of our tactic and strategic moves. Let's look at the mix of our loan portfolio, FGI and FGO origination.

There is a lot of competition in this area by all incumbent banks. We were number one in market share with 21.6% market share. The same thing goes for the entire year of 2025. In the quarter, our origination was up 52.7% in the second quarter when compared to the first quarter of 2026. Now let's take a look at retail and SME, the last available data by the Central Bank for those clients that earn up to BRL 2 million a year. This is something we said since the Unsettled Plan, we saw new growth superseding 70% of market share, and our FGI/FGO portfolio grew 64.5% year-over-year. This is an extremely secure portfolio by both fronts. There are five lines of FGI and FGO, and we operating all of them.

Now, later on I'll talk about the effects of NPL over 90 and cost of risk. Credit card, you notice that the bulk of the growth is in high income with lower appetite in smaller income. We are being very cautious here, we might bear in mind that we still have clients that have lower income, they pay on time, they are payroll clients, they are clients from our partnerships. These lower incomes, they're losing share in the portfolio in the past 30 months, they're still there. Now if we look at credit card delinquencies, this delay comes from old cohorts. About 80% comes from cohorts from 2019, and most of the time are clients that have their payroll with us, and they were in dire straits, or they lost their jobs, or they faced some difficulties.

This doesn't apply to newer cohorts. There is something else here because this is a relationship product. We want and we are choosing the right clients with the right ratings, with a very assertive credit policy. Every time we look at credit card, we are looking at cost of risk and provisions, eight times more than what we used to do in the past. Now let's go down to the next line, vehicles. We recorded growth of 26.8% year-over-year. We were leaders in one or other quadrants of vehicles, heavy vehicles, light vehicles, and semi-new or used vehicles. We were not leaders in new heavy vehicles because the risk-adjusted return here is lower.

Last year I told you that we will start operating in the vehicle segments because we saw some opportunities in some segments and we thought that we could post growth. We completely changed our operating circuit. We changed the platform. We added machine learning, AI behind pricing, risk modeling, credit policy, and also pricing for clients and dealers. With that, customer experience changed completely. We delivered different experiences for dealers and clients. With that, we were able to increase our share. When I talk about semi-new vehicles or used vehicles, I'm not talking about 20-year-old vehicles or heavy vehicles. I'm talking about vehicles that are five to six years old, depending on the ratings of our clients. We gain share where we have higher risk-adjusted return. If you look at the motorcycle market, our appetite is more moderate.

There are other banks that operate in that line segment. This also means that when we grow this portfolio, on average, we say that we get 1% provision, cost of risk according to the 4966. The client that is delinquent, there is always someone that is paying late. Right at start, we have 12% on top of the balance of that client in terms of cost of risk. That's why I like to explain that dynamics, because it's easier for you to understand what it means by over 90 and cost of risk. Payroll loan was up by 9.3%. If you were curious enough to look at the full year of 2025, you would see that in some quarters we were growing at the pace of 5%. That means that we expanded our growth. Where did we grow the most? Well, private. Year-over-year, we grew 88% in public.

We continue to grow public payroll loan. We are the largest private bank when it comes to public payroll loan and private payroll loan. We are just behind two banks that are government banks. Delinquency on payroll loans, I think it's important to say, because this shows what we are doing in terms of portfolio management. Risk-adjusted return and risk control, in fact. When we look at payroll loan in general, the delinquency of the market is 3.3%, and ours is 2.5%. When we only look at the private segment, and this has made the news and the headlines, the market without Bradesco has an over 90 delinquency of 8.9%, whereas ours is 4.7%. Now moving on, I'll talk about agribusiness. It grew almost 25% year-over-year. Look where it's stretching. In the wholesale bank, I mentioned one M&A event with a large client, and this is where wholesale bank increases with guarantees, secured AA and AAA clients.