Banco do Estado do Rio Grande do Sul SA
BOVESPA:BRSR6
Banco do Estado do Rio Grande do Sul SA
BOVESPA:BRSR6
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Good afternoon, ladies and gentlemen. Welcome to Banrisul's video conference to discuss the second quarter of 2024. This video conference is being recorded and replay can be accessed in our RI website right after this event.
So today's event will be divided into 3 parts. The first in which we'll listen to our President, Fernando De Lemos, to make a presentation with the main highlights and numbers of the quarter; then our Vice President and CFO, Mr. Gonzaga will talk about the performance and numbers of the bank throughout the second quarter. And then we'll finally have our traditional Q&A session, during which our analysts and investors will be able to interact with us here, Board of Directors.
So before we start, let me tell you that this presentation has simultaneous translation into English. If this is your preference, just click on the button at the bottom of your Zoom screen. If you wish to ask a question via audio, please press the reaction button and then click on raise your hand. If your question is answered, please leave the queue by clicking on the lower-hand button.
The presentation we'll make today is available for download in the chat on this platform and on our RI website, we'll soon make it available throughout our chat.
So now I'll give the floor to our President, to begin the presentation of our results. Please, Mr. President, you may proceed.
I'm sorry, guys. This microphone was off. I'm sorry. So good afternoon. It's a pleasure to welcome you all once again, back to our home because as you all know, we were out of our home after that environmental disaster that hit our state of [indiscernible], which affected our infrastructure, [indiscernible] and losses of lives. We spent over 6 days outside our head office, now we're back.
And let me tell you that the bank showed an incredible moment of resilience. We didn't have any moments of down systems or idle systems, even our branch that were affected, they were virtualized and kept providing 100% of their service.
As I told you, the head office was flooded, but we managed to work outside our head office with some of the operators working from home and other people working from provisional areas. Our data bank, our [ CPD 2 ] was transferred to another area. It was proved to be enough. We had never tested so in such a hard time before. So the bank and the bank's infrastructure showed resilience and showed how prepared it is materially and technically speaking. So the bank was 100% operational always.
And from then on, we started working on recovering Rio Grande do Sul and paying attention to our businesses. In the first moment, our analysts and all of us thought that the bank would be highly affected. But after a while, we realized our resistance was needed and we were -- we had our portfolio somewhat affected.
Mr. Gonzaga will share some figures with you. But what I can share with you right now is that Banrisul worked heavily to help Banrisul recovered. It remained strong and healthy and robust. I believe we got out of this disaster even stronger. We launched new projects, special credit, special loans for companies with over BRL 1 billion for the company's working capital. After that, BNDES, the Brazilian Development Bank, also provided some lines. We provided some of these lines. And we also had an [ SMEs ] operations with over BRL 250 million. So the bank has worked heavily to recover.
We are now waiting for the [ '24-'25 ] summer crop. We have launched our agricultural, our crop plant. So we are working heavily to help the state of [indiscernible] to recover and the bank has been -- has played a major role in this recovery.
We increased our basis of customers, especially in terms of companies. This is one of our focus. The Conta Unica, the single account product, was well received by companies, and we have been advancing. And Vero also expanded its work. We managed to reach important players for Vero and Banrisul, companies that started working with Vero and Banrisul. So this recovery is very safe, very strong.
You know how we work, how this Board of Directors usually works. We work more in a more conservative way, but we safely and constantly move forward in taking advantage of this leverage of Rio Grande do Sul economy because of infrastructure job sites and revamp and reconstruction in businesses, in stores, and many people need to buy appliances for their homes. And so together with our clients, with the companies, we've been working together to make a very good second semester for the bank but also for the society as a whole. The company as a whole because we are a state bank. We believe in the economy of the state, and we know how to do that. It will help rebuild Rio Grande do Sul based on different operation, different infrastructure, but safely, we work to provide support to Rio Grande do Sul with robust numbers and believing in Banrisul's ability to keep on growing.
In the second half of the year, we are going to launch new products, many of them based on the digital areas. So we reach other types of clients in our bank and we have already launched a nice campaign for the companies, and we hope to close the first semester very well with that. And we believe, as I said, in the recovery of our state, which is one of our main roles and our main concerns right now.
So now Gonzaga will share with you some of our figures so you can realize how strongly, we grew, especially in terms of company, in the treasury of the bank. The treasury had an expressive growth as we'll see soon, which make us feel confident to advance safely to help the state to recover.
So Mr. Gonzaga, the floor is yours, our Vice President and CFO.
Well, good afternoon, everyone. As our President said, we have worked with resilience after this disaster, this tragedy, this flood that affected the state of Rio Grande do Sul some months ago.
So in this first slide, this slide gives you an overview of what happened in our bank right after the floods the climate events that hit the state and what it meant for Banrisul.
Well, the total number of clients affected by this climate [ biometric ] event was -- the total number was 549,000 clients and 526,000 of them are individuals, with 23,000 companies. So 12% of individuals and 11% of companies were affected.
In terms of the [indiscernible], we had exposure of 5.9 billion affected by the climate event. So the clients -- the areas that were affected, they account for 10.9% of the portfolio. Rural was 1.9 billion; payroll [indiscernible]; companies, 1.4 billion; real estate, 0.5 billion; and other loans, other credits, 0.6 billion.
In terms of rural credits, rural loans, many municipalities were affected, but the crops had already been harvested. They were in the silos already. So less than 15% had loss in their crops.
In terms of payroll loans, all civil servants kept their jobs. We just elongated or expanded the payment, the dates for payments. We have some, of course, some default. We hope that this is under our provision.
Real estate had BRL 100 million -- around BRL 100 million indemnifications for people who had their houses affected, but we had the reinsurance application for 90% of this portfolio. So the loss was BRL 9 million only, 50% for the bank and 50% for the other partners. So [ 4.9% ] for the bank.
In individuals, most of them, they work in the public sector. They are civil servants. So their operations have full liquidity with a low level of default as expected. Next slide, please.
As the President said, the Conta Unica, Banrisul Conta Unica, which is a new product, we have even higher numbers now in August, so you can see the numbers there. The Pronampe, which is an [ SME ] support program, the state was BRL 230 million and the Federal Pronampe was BRL 146 million granted. And BNDES, the Brazilian Development Bank, provided over BRL 360 million granted by the federal government. And BRL 362 million were already provided by BNDES in terms of long-term investments, too.
In terms of postponed operations, this is important to mention because the market was a little somewhat concerned about that. We had BRL 2.2 billion in postponed installments, which accounted for 4.1% of the total portfolio. Payroll was 1% of the total portfolio and rural, 2.7% of the total portfolio.
We had some other installments in credit cards that were postponed. Most of them are already okay. They are performing normally, regularly for credit card clients. And also there was some installments of individuals, portfolios and payroll loans. We provided them with 3 to 4 months. They are all paying on time. No default rate, and in loans for the municipalities continue. So in individuals, our losses are nearly 0. And for rural credit, it's very safe, very safe credit, safe loans. There was insurance and guarantees, so very interesting credits.
Let's see how the federal programs go, and this is another type of idea we need to understand. This is our rural loans portfolio, one of our highlights. We have BRL 1.3 billion now and BRL 9.9 billion last year in June '23, a 23.8% in growth. We have emergency loan for the agro business, BRL 643 million for the reconstruction. In new products for rural producers, there will be a limit -- and there will be a limit of this account with the goal of having more profitability in this portfolio.
And also rural producers credit, CPR, which has been launched this month, with BRL 500 million in working capital. We'll see how it goes in the next quarters.
This is a product that the market knows about. But for us, this is new. For Banrisul, this is new. And we have 12.3% growth in crops, the highest in our -- this is our highest crop plan, 31% growth for the Banrisul crop plans. We grew [ 9 ] in '23, we grew 9.3%; in '23-'24, 11%; and for '24-'25, 12.2%, with high liquidity to make this loans available to our clients. We are very careful with this portfolio and the performance has been very good with low levels of default.
Next, please, our highlights. Net income, BRL 247.3 million, 9.2% increase in the year and 31.9% increase in the quarter. Managed to perform very well under the circumstances with good results in this past quarter from April to June.
Net interest income was BRL 1,613.9 million, 15.9% increase in the year and 5.1% in the quarter.
In administrative expenses, there was an increase of 5% in the year and 2.2% increase in the quarter.
In terms of service fees, they were BRL 584.6 million, increase of 9.7% in the year and 1% in the quarter. And later, we'll check the service portfolio, which is an important indicator.
Credit -- I'm sorry, loan portfolio BRL 54.7 billion, increase of 6.2% in the year, 1.6% increase in the quarter.
Total funding has a special highlight, it was exceptional with a 20% increase in the past year and 8.4% increase in the quarter. So considering the crisis, prices are never good, but Rio Grande do Sul, our clients see Banrisul as a safe place for their financial applications. And the Basel ratio was a very good ratio, 18.5%, 2.4 percentage points in the year and 0.8 percentage points in the quarter. And later, we'll talk more about the Basel ratio, segregating Tier 2 capital. Next, please.
In terms of profitability, the net income, as I said before, BRL 247 million in this quarter, BRL 187.6 million in the first quarter. So BRL 434.9 million in the first half of this year, compared to the first half of '23, it was BRL 439 million, almost the same, just a decrease of 1.1%.
According to the financial margin, the net interest income, we had BRL 187.6 million, credits, NII, 77.6%, it was very important for our loan recovery in the second semester. And loan loss provision also had a decrease with BRL 103.5 million. Administrative expenses, BRL 23.3 million, negative side. And BRL 96 million or BRL 98 million in other expenses plus taxes. Closing the second quarter of '24 with BRL 247.3 million.
Next, net interest income, very good, 19.2%, measuring the first half of '24 against the first half of '23. We had a second quarter, BRL 1,613 million and in the first quarter of '24 was BRL 1,536.3 million and the second was BRL 1,613.9 million. But what matters is this increase of 19.2%.
In the financial margin on profitable assets, 5.47%. There was a change in net interest income. Nice, very good. We thought in the beginning of the year that it was going to be -- it was going to be a little better. We thought it could have been better, but it was stabilized in [ 10, 50 ]
So the performance was not as expected. And considering the second quarter of '24, BRL 1,613.9 million. With individuals, BRL 48.3 million; companies, BRL 17 million; specialized, with a decrease of BRL 7.8 million; credit recovery, BRL 3 million; and treasury in BRL 23.1 million. So this is how the result is composed.
In terms of loan portfolio, the analyzed growth, considering the figures year-over-year, it was -- there was an increase of 6.2%, BRL 25 million in portfolio in the company, BRL 8.3 million in the commercial portfolio. There is a total credit portfolio of BRL 11.5 billion, BRL 3.2 billion in specialized credit like real state, rural and other BNDES lines. 75% of this is individuals, and the others, almost [ 24 point something ] percent are companies or commercial clients.
Now regarding our asset quality. Basically, it was the same considering the first quarter, 3.5% company, 2% in the individuals, so it was 2.3%, with a coverage ratio of 206% in June, which is reasonable. A little below the previous quarter that ended in March, but it's within our calculations for this coverage ratio. And the provision and expenses of cost of risk, 2.5%. This is good if you consider the market in general. Our number is very good. It's conservative even considering the other players in the market. We're closing this with BRL 303.5 million. BRL 254 million in provision expenses, and the rest of written-off credits.
Next, administrative fee expenses, sorry, we had some losses. There was an increase -- I mean, the INSS advanced payment for the month of May, for example. It paid before -- it paid beforehand, it paid in May what was expected for June. So it increased our administrative expenses. There were some remodeling due to the climatic effect. We needed to replace some of the machinery. So there was 4.3% in personnel, the portfolio, the free market portfolio for the INSS loans. We had a partnership with a company called [ Ben ], that we have been administrating and to have a better profit in this portfolio.
And other administrative expenses that I mentioned is 6.4%. We renewed our contract with IBM, and there was an OpEx fee, an administrative fee that is higher because of the renewal, BRL 320 million. And there were some marketing expenses because we had to collaborate with the market. Considering the situation, you're going to [indiscernible] in May, as our President mentioned in the beginning. So it led to 6.4% increase in administrative expenses. But if you consider the general backdrop, it's 10.4% considering all the cuts the bank made. If you consider this in service fees, it's 10.4% in the positive side. There was a good performance in exchange operations and also operations with the Federal Bank. The market is very restricted in terms of service fees. Even so, we reached 10.4% in these expenses. And if you consider the income, [ 1B ], [ 163 ], we could perform a little better considering the expense of personnel with one -- we managed to detach these expenses considering the payroll of our staff, the bank staff.
Well, considering funding now. We measure this with the other players. If you consider our position in comparison to other players, our performance was excellent. This number shows a funding that is judicial deposits fund resources from the judiciary power, the admins -- they manage judicial funds. We manage this fund. There is a fee attached to this, which is reasonable. And in the liability, this is going to appear in the time deposits. So BRL 8 billion, BRL 6.2 billion in the fund and [ BRL 1.6 billion ] in the fund. So BRL 6.2 billion more. If we consider the 2 judicial deposits, we have BRL 8 billion and BRL 93 million, BRL 93.6 million. So it's [ 50% ] in terms of funding in the past year, which can account for the BRL 20 billion in the quarter from March to August. So the market sees Banrisul as a safe place for funding for the collection, the finding of funding.
And considering our customers, individuals that pay installments of payroll loans, they are not paying the installments now. They had a stop period or a grace period of 6 months. We can say that this helped the things in the sense, but funding increased both in [indiscernible] and in terms of company. Our funding is very diverse 62% in individuals, 64% in companies. Then we have large companies, 1.6% of others, very interesting funding breakdown. The top 100 clients, they account for 13% of the funding. The top 50 clients account for 11% of the clients and so on.
There is no problem if we lose the -- our main client because our client base is very diversified. So this is very important in terms of funding. If you consider the cost, we have a funding cost of 85.3% considering select interest rate. And in time deposits, it's 81%, 81.8%, with a very friendly cost, I would say. It's not cheap, I wouldn't say that, but it's a friendly cost, which then you can have a very attractive margin for our treasury. Next, please.
As I mentioned, in terms of capital in June, in June '23, it was 16.1%, now with 18.5%. We have a bigger appetite from companies in the market of Rio Grande do Sul, in terms of payroll loans, and there is a stability. And then we have these payroll loans, which are stable. So we are moving towards other clients, companies with digital products, Conta Unica products, very well designed products to work with companies, working capital, a very friendly format for companies to manage their cash flow on a daily basis.
So this 18.5%, this figure shows we have a credit loan appetite, so we can take some part of this Basel ratio, which is high. It would be good if the bank was more leveraged. But if we remove all the Tier 2, [indiscernible] issued abroad. In [ LLF ], if we consider these 2 applications, we still have a comfortable position with 15% in Basel ratio. So our Basel appetite would be 14.4%.
So this is our 2024 guidance. We understand, this is more adjusted. Total loan portfolio was restated to 3% to 8%. Cost of risk 2% to 3%. Our administrative expenses were also restated from 5% to 9%. We are always trying to -- we always try to do our homework, to trim our expenses, to deal with some extraordinary expenses in a good way. As I mentioned, we had some extraordinary expenses, such as [indiscernible] and other administrative expenses, but we will manage to be between 5% and 9%.
And in terms of net interest income, because of some occurrence such as credit cards and other, 100% -- [ tables ] and Selic also was not what we expected. Selic is 10.5%. So our net interest income was restated to move or to range from 18% to 23%. So this is our promise towards the market.
Now back to our President. And later, we'll be available to answer your questions.
Thank you, Gonzaga. It's very important to show the numbers to you, consolidated numbers, consolidated figures that make us feel that we have overcome the worst, the worst of the disaster that hit Banrisul. And as I mentioned before, the bank is working strongly in [ moving forward ] to keep on growing in the future. I firmly believe Rio Grande do Sul will recover with the help also of Banrisul.
And also based on new products, new technology products, mostly digital products for individuals and companies alike, we are advancing in this area. We feel safe to say that the bank is moving forward safely and we have this strong commitment towards the state because it's our interest to do so. And we believe in the growth of the state.
We preview a very hard second semester. We have a lot of hard work to do, but our people is resilient. We believe we will need to rebuild things in a different way. But even that opens new avenues of growth to our bank, including the reconstruction of Rio Grande do Sul infrastructure. The state government has been preparing a major project of reconstruction of roads, bridges, other types of infrastructure, all the rivers -- I mean the rivers that were affected, they need work to recover and recover this infrastructure around them, and we will be working alongside the government. The bank is prepared to do that and our technologies also are prepared to advance to move forward regarding this.
We have a very positive perspective for the second half of this year and for the next few years as well. Thank you very much. And now we open to our Q&A session.
Thank you, Mr. Gonzaga. Thank you, Mr. President. And now let's start our Q&A session.
So let's start with our first question. Please open the microphone to Eric Ito, Bradesco BBI.
I have 2 questions. I'd like to understand more about your net interest income and how this postponed programs have had an impact on your portfolio. I would like to understand a little better how the financial margin, the net interest income was injected. If we can expect a negative impact in the third quarter and the fourth quarter. And regarding the guidance, we increased 2% to 7% to 3% to 8%, right? But if you consider the previous quarter, it was real estate and rural. So what can we expect in terms of growth? Which mix do you expect to grow? The payroll loan has reached the ceiling, maybe you should devote your work more to companies? I would like to understand more of your perspective, please?
Well, regarding net interest income. On the contrary, the first half and the first quarter in the first half of the year, payroll loans, they were postponed and the incomes were all accrued for. So we performed this revenue, this earnings. There was a credit, a loan format that was postponed for [indiscernible], and the major mass of loans was postponed for 6 months.
So these loans, these credits were accrued for. And for the 4 month of loans, there was a small part of this portfolio that had no income, around BRL 500 million per month, [ BRL 25 million, 60 month, ] less than -- sorry, less than BRL 500,000 per month in income decrease. There was some lawsuits by some clients that were affected. And then we had some agreements with [ Procon ] and other judiciary branches.
Regarding rural loans, the operation was regular. Real estate, the same. Our provision was we made an additional provision of BRL 128.6 million that were additional to be in line with the average portfolio provision for [indiscernible] severance plan. We had a 2 month of credit cards that we postponed in May and in June. So there was an income reduction. And then we start collecting in July, and even in the first week of August for the accrual of this income. So there was an impact on the net interest income.
But the major thing was the credit card when we open the income, when the numbers were approved by the end of November. And in January, there was 100% of the credit card income. So it wasn't a strong reflection on the net interest income. We expected to have 9.5% in Selic interest rate, but it was not what happened. So there was a negative impact on our net interest income.
Now regarding credit portfolio, the loans portfolio, there were better performance in the real estate and rural loans. These loans -- I mean rural loans depend on government measures, if they are going to be postponed, which costs are being applied. So our horizon depends on the monetary council decided by the government. So we have a strong appetite on the Conta Unica product and digital products.
We have a very good appetite in the market, considering these products, we believe the market Rio Grande do Sul has [ 8 billion loans ] in loans and free loans, in credit. So our position is very timid, I would say, is very small in this portfolio.
So we could grow, it could double our size in the companies, in corporate clients. So we need to have a better prospection of companies. We've been training our staff, our network staff, our branches, our managers. We have a campaign or corporate client portfolio with operational liquidity, with very good liquidity. We believe -- we understand that we need to look for the clients and have a better performance for this portfolio. I understand that our net interest income can be better for companies this next semester.
And in the other portfolios, I expect them to be maintained or even grow. And as I said, we expect to have a better prospection to grow our portfolio, our corporate portfolio.
I just wanted to make a compliment regarding the normality of the business environment. In Gonzaga's presentation, we noticed that the loan recovery was almost the same considering the first and the second quarters, considering that during the floods, we didn't have any active collection. This shows the strength and resilience of the Rio Grande do Sul's economy.
So in the beginning of the flood, we didn't -- we weren't sure about that. But now, we know how resilient the economy is. So we believe we have better prospect -- a better prospect for the future.
Now next question, Ricardo Buchpiguel from BTG Pactual.
I have 2 questions. So the guidance we review for NII, it's an increase of NII for quarter of around 7%, considering the first quarter. As Selic interest rate is not going to [ go down ] until the end of the year, I would like to understand where do you expect this improvement in NII? So how do you see this improvement in NII for funding profitability? Or if you rely more on your mix of products?
And the second question is, I'd like to understand the level of provisioning for the [indiscernible] company loans, payroll loans, which are not affected by the floods.
Yes, you're right. The treasury will help a little in the margin in this net interest income, BRL 10 billion is the predefined figure, [indiscernible] of deposit. And we are realigning the interest rates. We were a little aggressive in INSS payroll loans, but we are going to be less aggressive for the individuals, we have what we call fidelity loan, which has a very good rate, very friendly rate.
The Conta Unica for rural loans. It has a good margin for the portfolio. There is space, there is room for a good rate with some space in terms of margin. Corporate clients have -- they have a good margin. So we are very optimistic considering our treasury liability mix. We are also composing in our treasury, BRL 2 billion in debentures from good companies in the market. We [ left ] that pure Selic treasury they used to have. Now we have almost [indiscernible] in treasury. We are performing [ 1,213 ]. So the cost of treasury and automatic CDB increase, what we have been composing in terms of loans and prefixed assets, maintaining CDI conditions or even for [ DI ], even if the government attaches a rate, it doesn't have any problem in the assets.
The balance of index operations in the liability versus index operations in pre-fixed operations, that is very well adjusted. There is no big margin right now in terms of our assets and liabilities. They are very well adjusted and they will become even better adjusted in the future, in the near future even -- I mean, Selic, the Selic won't have a big impact on that. We are very -- we have a very positive perspective on that.
Well, in terms of provision. We had an additional provision of BRL 128.6 million with payroll loans accruing a rate until November. This loan will be very adjusted in terms of provision. Companies' loans, we are working on them. We are working very hard to renegotiate and create a new profile. It's not about a new agreement, but create a new profile for this client, giving them a higher guarantee of liquidity in terms of interest, credit cards, payslips.
Our Director has a team to do this redefine the profile of this corporate clients we had. We've been renegotiating with these customers to provide the bank with safety regarding provision. We are in a very nice position with no surprise of [indiscernible], and we are very safe in terms of loans.
Okay. Just a follow-up regarding the migration, this change in the remuneration of our automatic [indiscernible], how much of this balance has been -- has migrated? And how do you still need to migrate?
Well, it was not about migration. It's a spontaneous funding. It's a product that is not destined to investment. It's a residual amount from current accounts. Clients spontaneously sign an agreement authorizing that residual balance to be debited. We do not migrate portfolio. Oh, [ pre and post ]. Our funding of BRL 58 billion was all post. And now it's BRL 47 billion in pre and BRL 10 billions in [indiscernible] index to CDI.
We estimate that by the end of the year, we'll have BRL 12 billion, BRL 13 billion in the pre-operations and maybe our goal is to reach [ BRL 50 billion ] in the post operations as well. We are very active in terms of funding. Our funding prices a little below Selic. Selic has 108.1% in the Selic margin in titles, in bonds, as you know. So we expect to have BRL 3 billion in [indiscernible] as of good quality in the interbank market. We can make some money, for sure.
Just to complement, we used to have BRL 15 billion for post CDB, automatic CDB, we have migrated. There is a residual amount this client remain in this operation for a long time. But what matters is that they have their money here and this money is well taken care of.
Now moving on, Mr. Olavo Arthuzo from UBS.
I have 2 questions. One, is the bank's coverage ratios, that is 206% in this quarter, one of the lowest levels since 2018 and considering the additional provision -- provisioning, considering the climatic events of [ 129 ]. So what can we expect from now on, considering this coverage ratio given that the guidance for provisions? If we make some simple calculations, it points to our reasonable stability in the second semester. So what do you expect -- how do you expect to operate this coverage ratio from now? And so the idea is to maintain it on this level? Or do you expect it to drop in NPL? Maybe in the near future, this can move this figure upwards?
And the second question is about the payroll loans agreements for state civil servants, which was established in 2016. The agreement was expected to be signed for 5 years, but it was signed for 10 years. Many was readjusted according to Selic. If I'm not mistaken, it's going to reach its maturity in 2026. But as I consider this topic to be of relevance, my question is, do you -- are you -- have you discussed with the government regarding the amount of this agreement, which was relevant for the bank back in 2016? I'm trying to understand how you're dealing this discussion for this next 12 months regarding this agreement.
So portfolio, I mean the loan quality, this index is not too volatile. And as companies have been stabilizing, so [indiscernible] are not so strong. Our expectation is to maintain this level maybe a little better, maybe a little higher, [ 210, 220 ], but not more than that. So maybe around maybe [ 220 ]. But according to our calculations, there's not a lot of volatility. So this will be the level we remain at. There's nothing else we can do in this term.
Our level of renegotiation, debt renegotiation levels for individuals and companies, there's always something that leads to an increase of this portfolio. But I don't see any problems regarding volatility. Maybe we'll go a little upwards, but not so much. So this number is given for the semester, I would say.
Well, regarding the state payroll, we have a very good relationship with the state treasury. And after I became the President, we streamlined this relationship even more with the state treasury. We rebuilt the payroll loans. We remodeled the payroll loans with the state.
According to our current view, there was a super -- there was a super indebtedness of this loans. So we put in some limits to margins in 35% and maximum 84 months because they used to have 150 months. This is not a payroll loan. This is more like a real estate loan. So we remodel that, streamline that. But regarding the portfolio and regarding this agreement with the state, we haven't started renegotiation.
Well, yes. We will need to renegotiate in terms of amount, in terms of land and months included. But we know that this portfolio will remain with Banrisul with proper levels. Given the relationship we have with the treasury, in the interest of the treasury because the treasury, the state treasury is the controller of the bank.
Just a little follow-up regarding the [ grace ] portfolio, maybe can you talk about the overall or the average credit in terms of, was it 6 months?
Yes, there was a residual of 4 months, but most of them had a grace period of 6 months. A very nice portfolio, same interest rate and fully -- with fully good payments, no default.
Now Antonio Ruette from Bank of America.
So I have 2 questions. They are related. So we mentioned that the total of the portfolio in the areas was around [ BRL 6 billion ]. Out of which you renegotiated [ 2.2 ] of them. So this difference of this BRL 4 billion. What about the R&D on the risk? Or if we could increase the renegotiation of this portfolio for the third quarter?
Another point regarding the renegotiations. If we put together the government programs and the guarantees provided, how much can you accumulate, can you approve if we put together the different programs to fight against a potential default ratio coming from this renegotiated portfolio? So I would like to understand how this loans are going to behave. And you mentioned that the Basel ratio is above the target. We have a surplus. And maybe we could be more ambitious in terms of the portfolio.
Well, I'd like to understand more of your focus. I understand that payroll loan somewhat at its limits -- at its limit, but what about the opportunities? You mentioned the reconstruction of the state infrastructure, more risky loans for individuals or companies. So what about this Basel ratio? How do you understand that?
Okay, can I start. Well, Antonio. We need to distinguish between 2 analysis. The first analysis was the exposure of credits for clients that were affected, BRL 5.9 billion, around 10% of the total portfolio, right? Not all of them were contemplated by the postponed measures. So the bank launched several postponement measures. It was [indiscernible] in installments and the total portfolio were affected in 4.1%. Out of the payroll loans, we contemplated according to the loan, 4 months, 4 installments or 6 installments.
So these are -- they are separated analysis. They are somewhat connected, but they are separated analysis, I would say.
What [ Nathan ] just said, well, we had this for installments for some, which gives a level profitability, BRL 500,000 per month. No interest rates for these for installments. For this bank, it's a residual amount. The press discussed that, the trade unions discussed that, but it's part of the scenario. We are used to that. 99% of the [ bus ] does not affect us, I would say.
And in terms of additional or postponed installments, it's good because they do pay their installments and you are growing our portfolio. So there was also [ 2.7 ] in rural postponed for everybody postponed for everybody, postponed for the whole state until August 15, until tomorrow. And we are going to expect for the new rule, the new ordinance.
The crop loss was very little in terms of percentage, considering the size of the crops Rio Grande do Sul saw in rice, in other products, the amount or the percentage that was lost is very low because most of the crops had already been harvested. So this is what matters to us for those who plant and have their crops.
Regarding portfolios default ratio. I'd like to understand more your understanding.
Our credit appetite for individuals is the same. We always have a motivational campaign to refine portfolios, to increase the rates of this portfolio for the INSS. There is room for improvement for growth. In the future, we are going to buy some of the INSS portfolio. This is a very good product with excellent margin. This is an excellent portfolio in terms of -- there is a very low default risk attached to it.
In the rural portfolio, we were going to renew the portfolio. The portfolio is highly qualified. The same applies to real estate portfolio. So they are directed portfolios and free assets, INSS and state payroll and private loans, all of our portfolios are very good.
We do not have a lot of loans for vehicles, only in consortium. This is very low for vehicles, for vehicle loans. We do work with vehicle consortiums, but we do not have direct vehicle portfolio.
But for corporate portfolios, companies portfolios, this is one we want to make grow on base. One of our major issues is to have good quality portfolio, a good quality corporate portfolio. And in terms of business ratio, we want to have a little lower leverage. So to have a result that is in the same -- that is aligned.
Now regarding loan appetite for the companies. In terms of portfolio growth, we have companies with receivables, guarantees. Increase our bases, we are working strongly to increase our bases. We are working with a consulting firm to remodel our risk calculations, our cost of risk calculations focused on increasing the basis and distributing loans and credit for more clients. So we want to grow, we want to grow with safety and with quality and operations liquidity.
In terms of the companies, we are working hard, checking the models, looking for new opportunities and potentialities that are in the market that we haven't covered yet. So we have a great expectation that we have proper goals, and we have good estimates. We estimate good growth for the second half of this year.
Now another question, Eduardo Nishio from [ Genial Investments ].
Now my question regards growth, the growth of the company. I would like to understand more about the guidance that you showed now. Given that the loan appetite in the second semester, we'll have an acceleration. You have a super funding. If you look at your balance, this is super strong. Basel ratio is very strong, too. So couldn't you accelerate even more? Accelerate loans even more? I know there are some lines that are facing some different setbacks. So the guidance almost didn't change, just 1 percentage point of difference. So could you approach the issues? What the Conta Unica products and digital accounts can bring you in terms of portfolio quality? What about these digital initiatives? What should we pay attention to in the second semester regarding this digital initiative?
And then the second question has more to do with the impact and the quality of the portfolio. I just want to understand a little better. Out of this BRL 5.9 billion that were met, only BRL 2.2 billion were postponed, right? 40% of the portfolio. So I'd like to understand more, whether this is performing well according to the accounting rules? And what about the profile of the portfolio that is being renegotiated or is undergoing change? Could you talk about this new profile of this portfolio, the remainder of the portfolio?
They're going to answer him. Just let me talk about the exposure, the BRL 5.9 billion. They refer to the total of credit, total of loans over 548,000 clients that were mapped using [indiscernible] Institute of Geography and Statistics Data. I mean this 548,000 clients, they were affected. So the postponement of BRL 2.2 billion in terms of loans installments, they are within this recovery plan with a series of initiatives for several portfolio loans to give better -- to give -- to help our clients who were affected by the flood. So they are not -- these are not directed associations.
Okay. So if you want to talk about the Conta Unica and digital accounts.
Regarding digital discount in Conta Unica, our growth projection or estimate is about 20% to 30% for the company's portfolio balance. We are performing with numbers that indicate to us that we're going to reach this. We have made some internal activities. We underwent some activities and some campaigns and we also have promoted incentives and commercial incentives to first recover the collection portfolio that we have lost with time. Many of payment slips in collection, payment of clients were lost, and we made an effort to bring this collection service back. We remodeled them, it's fully digital now. And we also have a partnership with a company that provides services. We can validate the invoices and the slips, the payment slips.
So it's very safe for us in terms of liquidity. The Conta Unica is our main product because Conta Unica attracts the possibility of several types of guarantees, real estate, CDBs, our bonds, credit card. So we launched now. We have launched and we could incorporate the [ picks ], guarantee. So the receiving flow of companies that transit through the bank. We use this flow as a guarantee for Conta Unica. And we have a very good expectation, and we estimate and we are convinced that we will have a very good performance in companies around BRL 3 billion growth in our portfolio.
So the renegotiated portfolio, if you could talk more about that, please?
What happened regarding our loan portfolio. We did the renegotiated, what we did was we gave 4 to 6 installments for our clients. We postponed the maturity date. But agreements and the contracts, they remain with the same maturity date. What we did was to reprofile them considering this grace period. Some of them pay interest rates, some others don't. For those who pay the interest rates, this interest will be incorporated in future installments.
Well, the provision kept the previous rating. The previous rating, the rating that were -- that was used before the flooding. We were very conservative in terms of increasing the rating for clients. The bank has been very conservative to not have an impact on its balance.
What about the size of the portfolio?
Today, the portfolio, the renegotiated portfolio is around BRL 2 billion.
Now another question , Pedro Leduc from Itau BBA.
Congratulations for the Banrisul's work and the role it has played after this climatic event. And congratulations on your figures.
The bank is getting closer [indiscernible] corporate customers, with helping customers access government lines, government programs, more liquidity, so the customers can invest more and use more of their credit card.
So I would like to understand more in the medium term and long term, what about the [indiscernible] to reposition itself to gain more market share considering this connection or heightened connection we discussed?
This is our key initiative. We have a market share in corporate portfolio. In the commercial side, that is below the Banrisul's ability. We can have a better penetration in this market, 12%. You know that Rio Grande do Sul has BRL 85 billion of commercial credit in corporate credit with free credit in its [indiscernible]. This what we have done to regain the position that we had. We used to have 25% of this market in the past.
So we are working very hard to look for these companies and corporate clients to increase our market share, focus on companies. We are also looking to reinforce INSS payroll loan, regain our share because we have lost 11 points in shares in the past 5 years.
We have lost 11%. We used to have 60% of the INSS payroll loans, and now we have 49%. So we are going to focus on these 2 points, the INSS loans and the companies. Our shares is based on funding, but we want to look for better fundings and look for these credits. And we are going to push our goals in retail and also market goals, and we've been working towards that, to have a very good presence on the market, to keep our presence in the market and grow it even more.
Now another question from Carlos Gomez-Lopez from HSBC.
I have 2 questions. First, could you confirm the goal of Basel ratio? We have a lower Basel ratio. There's an excess. You mentioned [ 14.5 ] as the goal. Is this all Tier 1? Or do you include Tier 2 as well?
And the second question is the impact of [ INSS ] in deferred taxes. How can these affect the results and the capital of the bank in the future?
Well, regarding the Basel ratio, our [ epitope ], our design is 14.1%, 14.5% in Tier 1. But if we recovered to external fundings of BRL 300 million and $300 million in external funding, then it moves to 15%. So there is some room for -- some room to grow. But maybe we are going to look for Tier 2 capital.
In January '26, there is an external funding that is going to reach its maturity date. And there is another one in [ ILF ] in 2026 of a national funding project. So we are going to analyze the market in 2025 to check how to deal with that.
And the second question will be answered by [indiscernible].
Now regarding the [indiscernible], do not expect significant impact on the bank. And we have published -- we have made the full [indiscernible] publication. So no major impact that make a difference. We've been working hard to put these standards in our line of production, our figures. From January 2025 on, we will follow this vision proposed by standard [ 49 66 ], and we expect that the Federal Bank will change its status. They are discussing new rules and standards, but we do not expect them to impact our activity so much.
And Carlos, just to mention something in our dividend policies, we have a preestablished goal of 400 basis points. So it starts with [indiscernible] for dividend policies -- for the dividends policy.
And a follow-up. For the Basel ratio, as you said, there are 2 funding that you could recover. But could accelerate the dividends to reach 14.5%?
Right now, we do not have this drive. We do not have this appetite. But in 2026, there is the Tier 2 operation maturity date. Time flies, we know. But throughout 2025, we will analyze this situation.
Two final questions here. Yuri Fernandes from JPMorgan.
Let me explore the case of Vero. If you look at your figures, the -- it's growing 10%. And there is an accounting rectification here. But in the semester, Vero, we see the opening of [indiscernible]. Can you talk more about that in terms of fees and revenues for Vero. Do you see any impact? In the first moment, I would like to understand how [indiscernible] is being accepted in the state? If you have some delay? If you have -- how [indiscernible] is dealing with that?
And another question on payroll loans, in terms of recovering INSS market share. Who is your competition? Which bank? I remember [indiscernible] was a player that was a competitor of yours. So what are your competitors? And which will be your strategies? Changing products, changing prices? How to recover this INSS payroll loans market?
Well, the strategy is to be smarter than and the competitors. And well, what do you think? Well, the strategy is -- I mean, that's a very difficult market. It's a commodity. We lost some of this market and the -- there was some losses related to portability. It's part of the game, but there is room for improvement, for recovery, especially among retirees. We have a very good basis of clients and very good relationship with this retiree clients. If you look at their loans, the payroll loans outside Banrisul, if we bring them back to Banrisul, bring them into Banrisul, we will recover this market share. So we need to look for this older clients, for this old clients of ours and checking how they are approaching this audience, these clients. They get their INSS payments from Banrisul, so it will not be that difficult to prospect them and make them come to Banrisul with their INSS payroll loans.
Regarding the second question on Vero, I would say that we've been expecting this month. We will launch a pilot test. The first company that will test the Vero product. I mean, there is a contract. We are -- the pilot test. This is [indiscernible] maybe later, there will be [indiscernible] or another carrier. And the idea of our contract is that we will contract them so that our card goes through their controls. That's okay. That's the rule set by the Central Bank. Only [ BCR ] network of service [ BCR ] and only debit, they didn't want to work with [indiscernible] operations. And we are working to retain these clients with campaigns of Vero.
This is a very strong work. Naturally customers want to -- maybe they want to use their [indiscernible] cards in another network. This will change the operational modality of Vero at debit right now. Later, if they want to work with installments and credit operations, there is a higher [ MDR ] for the commercial institution or store. And we expect that we will not lose the clients. The clients that are at Banrisul, this is the most important thing, if the Banrisul client may decide to go to another bank, but the market is open for a while now. We know that a Vero client have their money wherever they want, even [indiscernible] clients can have their money or whatever they want. This is an open market already.
Vero, we are starting working with Vero in [indiscernible] because of electronic invoice. The state of [indiscernible] works with that, and we have almost all of our agents who work with control [indiscernible]. They are linked to Vero, so Vero is prepared to work with Brazilian customers all over Brazil. We will start in [indiscernible] then in other cities like [indiscernible] cities in the state of [indiscernible]. We are going to rent the machines, the POS. And if the states come with a POS such as this is great. We are ready to work with that. [indiscernible].
Vero grew so much with the first digital invoice, digital receipt, several restaurants use Vero. Vero had a very good upgrade in the turnover based on this because stores need to provide customers with a digital receipt. Now we have links and we have [indiscernible]. So we are ready.
[indiscernible], there is no loss of clients in terms of POS. They can migrate to another bank. It is a threat, but we are ready to deal with that. Vero's results are doing well. Our margin is better than the margin of the market. We have always had a good margin.
Liquidity, I mean, the net interest income of Banrisul is one of the highest in Brazil. The net interest income, I'm talking about.
So the take home message here would be to be a little more active in managing clients in terms of portability, and [indiscernible]. It's basically that, that debit operations right now.
Yes. For now, the market is not showing appetite towards credits. And installments, for installment services, we are going to launch a campaign for [indiscernible] now.
Regarding [indiscernible], we are performing some adjustments to make it more friendly. We are modernizing [indiscernible]. We are exchanging -- I mean, we are changing the credit and the debit cards for [ NFC ], which is a new technology, very good technology. And regarding the installments, products, we are going to make it more attractive for the public. We are going to make -- to launch some campaigns to look for more clients in all the bank's clients. They live by [indiscernible] is active or has been active for the past 40 years in the market. And we are focusing our work. So it becomes a debit card that is trusted for customers, for clients and the clients want to use and picks a debit card directly working with NFC.
Yes, [indiscernible] coincidentally was created by me in [indiscernible] when I was Director of the bank. So I have a special connection with this product with [indiscernible].
Last question, Natalia Corfield from JPMorgan.
So again, I would like to understand the grace period portfolio, BRL 2.2 billion in grace period. Most of them are based on 6 installments, 10% of this portfolio was not accrued ahead in terms of interest rates, right? I'd like to confirm whether this and this is right, this is correct.
And whether which line are this BRL 2.2 billion, which lines are this BRL 2.2 billion connected to? And which is the portfolio they are connected to?
Well, Nathan has already mentioned that BRL 5.9 billion is the portfolio considering all the customers, all the clients affected by the climatic event.
However, the portfolio with 6-month installments are only the clients' [ PMTs ]. And the total of [ PMTs ] portfolio is BRL 2.2 billion. Out of this BRL 2.2 billion, BRL 1 billion is our PMTs, 6 PMTs and 4 PMTs, that is some BRL 1 billion. If you can imagine a 60-month agreement we had 6 postponed installments. Same numbers of PMTs and the same 60 installments. So the total is 66 months, 60 original installments plus 6 installments. In the 6 installments, the client will pay the interest rate corresponding to the installment they had.
For example, if they had BRL 100 to pay, they will pay BRL 110. There is a small percentage of this portfolio of clients who had 4 installments that were postponed. If we consider 60 months, it would be 64 months. But in this 4 additional month, they will not pay interest rate. So this will impact the operation of BRL 25 million, BRL 500,000 in income reduction. This is the income reduction in our portfolio. BRL 500,000.
In rural portfolio, it was only postponed until August 15, tomorrow. And the government, they will tell us what to do with these rural producers, with these farmers, whether they renegotiate. There are class demanding debts. There will be BRL 16,000. If they decide to pay now, they [indiscernible] postpone the debt and if the clients don't want to pay the interest rate, they will pay the bank and the bank will pay the new cost.
That is another part of this BRL 2.2 billion, [ BRL 1.4 billion ] of companies, we also provided them with some postponements, but they are paying regular interest rates. And out of this BRL 1.4 billion, there is a portfolio that is more problematic, BRL 400 million. We estimate there can be losses regarding its profile, let's say. But we know about that. We have provisions for that. And so for the time being, after the floods, we can see that the floods haven't affected the banking equity as a whole.
I understand. And this portfolio, is it within the renegotiation effort?
No, no, it's not. There's no renegotiation actually. What happened was a postponement of this payment. There is no concept of renegotiation. So the portfolio was postponed for individuals and for companies in the rural. And for the individuals, it's only payroll loans, most of them. They are civil servants, most of them. So in 2 months in credit cards, they are back to regular life, normal life and so there is no -- not high risk attached to it. They are back to regular turnover after the first week of August, according to each client's credit card day, anniversary day.
So just to close our event today. In case you have any other questions or comments, our RI team will approach these comments, and our analysts and investors will get an answer, okay? Thank you for your participation. Take care and see you next quarter. Our team is available for future interactions. Thank you very much and enjoy your day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]