Bank Bradesco Q3 2026 Earnings Call Transcript

Bank Bradesco (NYSE:BBDO) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://www.bradescori.com.br/en/videoconference-3q26/

Summary

Bank Bradesco reported a 10 billion reais capital increase, demonstrating strong shareholder support.

The loan portfolio grew by 11.1% year-over-year, with notable growth in large corporate loans at 14.8% and SMEs at 24.8%.

The company highlighted robust growth in fee income, insurance premiums, and vehicle and real estate loans.

There was an increase in non-performing loans (NPLs), with the over-90-day NPL ratio rising due to FGI and FGO guarantees, although the expected loss remains low due to good collateral.

Management noted that while the cost of risk is under pressure due to macroeconomic factors, the bank’s top line and market share are growing.

Bank Bradesco has been investing in technology and customer experience, with significant gains in productivity due to AI and new platforms.

The company remains optimistic about future growth across its revenue lines and expects NIM to increase in upcoming quarters.

Management is focused on maintaining efficiency and is actively managing operating expenses through strategic investments and technology upgrades.

Full Transcript

Marcelo Noronha (Chief Executive Officer)

Good day everyone. It is a pleasure to be here with you once again. I am Marcelo Noronha. I’m speaking directly from our studio in Cidade de Deus, our Bank Bradesco headquarters, to present our third quarter earnings results. But today I will start with a special thank you. Special thank you to all of our shareholders. We have just completed our capital increase of 10 billion reais. And what we saw is, in addition to our controlling holding, Kumbunis that took on the commitment.

So let’s move on. And I always talk about a cause and effect. It will be no different today. I would like to have the net income in the last slide. I spoke about this in the last quarter because we all speak about the cause and the effect. One cause is revenue generated by several line items of the balance sheet. And I’d like you to look at the complete release and you’ll see that we grew in NII, NIM and liabilities. Look at the complete earnings release and that contributes to NII.

We grew in fee income and also in the insurance group. There’s a baseline, but when we look at the premiums, we posted significant growth as well. So our loan portfolio totaled 1,150,000,000, growing 11.1% year over year and in the quarter growing 1.1% quarter on quarter. And the first conclusion is that we continue to have traction. But we have traction where we have risk appetite. If we look at the national financial system that has data published by the central bank, until August, the national financial system grew 9.2%. So if we exclude Bank Bradesco, that has a significant share in the national financial system, the market is growing even less in the quarter.

In August and July we would have about half a percent growth in the national financial system. But we grew less in individuals, 7.4%, and grew more in legal entities. Particularly large corporates are growing 14.8%. And I’m going to detail that. Our expanded loan portfolio on the slide, I bring you our NIM. Our NIM is explained here. If you look at the third quarter 2025 earnings release, you’re going to see this same slide, but with a huge difference.

When we looked at large corporates, we had minus a 3.5% growth. And in the second quarter it was also dropping. Here we had 341 billion; large corporates grew this year more than 50 billion. So how do we explain the individuals were growing more? 13.8 and SMEs with 24.8. This has been growing a lot. So the weighted distribution of our portfolio was different. If we take large corporates, if we exclude them and you can do any calculation, if you removed 50 billion, if you deduct 50 billion you get to a higher NIM.

But I’ll tell you, zero growth in large corporates — even if we had zero growth, our NIM would not be 9, it would be 9.3. So that is the explanation. This is the weighted average of NII generated by the portfolio. And you can see the traction that we have. But where do we have risk appetite? Let’s look at individuals. In payroll-deductible loans we continue to grow 7.4. Private payroll loans we accelerated after some other competitors and the market has been growing quite a lot. But we grew 102% year over year, 13.3% in the last quarter. And I’m going to talk about default in payroll loans and we can debate that. But in public payroll loans we’ve been growing and INSS we’ve been growing less. Actually we posted a decrease. And you know why?

For one basic reason. The market continued to operate with BPC and we stopped operating BPC since 2024. But we are going back to growing also with INSS. Payroll lines, vehicles, with our new platform, new technological platform providing a totally different experience to customers, a new operational and commercial circuit. And the result is we grew almost 27% and we are accelerating the top line where we have risk appetite, same for mortgages or real estate.

And we are growing 15.2%. For credit cards, this kind of portfolio is a more stressed portfolio. This is a relationship product. We are growing more in high income, but it is a product in which we have controlled risk appetite. And here personal loans we don’t have risk appetite. We are reducing the portfolio. And for rural loans, for individuals this is the effect of the baseline. But we can see a decrease of 2.2. Unlike the wholesale bank where we have companies with good ratings, good crops and we are growing quite well with guarantees for legal entities where we have more risk appetite, it’s growing in general 14.1% for companies.

And you see here FGI, FGO, 31% growth. We grew nonstop in 20, 24, 25 and 26. And here we have a lot more guarantees. This is collateralized assets, but it has other effects which I will explain in a moment. So moving on to show this risk appetite as I have been commenting, we see here working capital and without guarantees, unsecured SMEs dropping quarter on quarter, year on year. If you compare with September 25th, we dropped 11.4%. With guarantees, FGI, FGO, 31.5%. As I may, this means capital management, portfolio management. This is the choice we are making. And in rural loans, individuals and small and medium-sized enterprises in December dropping almost 6%.

But for large corporates growing more than 40%. Clean personal loans — I just mentioned that. In credit card, again we are growing. But we are growing in high income segments. Private payroll loans 102%, 13.3%. In the public we have a huge portfolio, almost 60 billion, growing 11.1% year over year. And vehicles 27%. And real estate for individuals and legal entities 2.8% and 2.9%. Another interesting point to highlight and compare in terms of our portfolio: rural individuals in December 25, our over-90 NPL was 3.9%. We ended August, to compare with the National Financial System, 3.1; the market 6.6% increasing to 9.7%. Private payroll loans, Bank Bradesco in December 25, 4.9%. In August, again to compare with the National Financial System, 5.4%. But look at the market: 5.5% increasing to 10.6%. INSS 1.7%, 1.8% in August; market 1.9 and 2.2.

And when we get global private payroll loans, INSS and public and private, of course we increased in December 2025 from 2.7 to 2.8 and the market 2.8 to 3.8. But you just have to look at the sequence of disclosure by the central bank. They disclosed a series from January to August. And if you look at it attentively, in the last month the level of NPL grew again to 5%. So if Bank Bradesco has a lower level of delinquency, it means that there are some players — not everyone, but some players — in the market that are posting greater NPL than we have.

So our portfolio is under control. But we are also affected by the macroeconomic scenario. We gained market share in the national financial system until August, 1%. And the highlight goes to earmarked loans. And we highlight FGI, FGO, 20% compared to 12.9%. And we have non-earmarked loans where we have much lower risk appetite than the market. And we showed this in the last quarter. And we are managing this like this. FGI and FGO — the claim, the guaranteed claim usage exercise — is influencing more and more. So it goes to level two, it influences level three to a greater extent, and the expected loss is lower than a clean personal loan, for example.

It is totally different. And if we don’t understand this dynamic, we don’t really understand what’s happening with the portfolio. So you see over here, our over-90-day non-performing loan, it was 4.1 increasing to 4.6. When I look at the quarter, it was 4.3 increasing to 4.6. Where is this coming from? It’s coming from FGI and FGO — FGI and FGO guarantees. But the expected loss here is lower because we have very good guarantees. So half of the growth is coming from here. But this dynamic didn’t happen only this quarter, it happened before that. And it starts influencing the asset quality.

The John Deere bank that has seasonality in this period from May to now, almost 10 bps. So these two portfolios explain the variation of our over-90-day NPL. Now let’s look at some of the things here. When I look at SMEs, we have 4.9 which is the effect of FGI, FGO guarantees. It influences the main curves and we have the service. And here we have the effect of stages 1, 2 and 3. We have write-off of course, but it’s not a write-off of FGI portfolio. So when we exclude the John Deere bank, we are kind of flat. But we have an effect in stage three of FGI and FGO guarantees. So you see this dynamic. If we don’t understand this dynamic, we cannot really pinpoint what’s happening with the portfolio.

One more detail, this is Bank Bradesco’s portfolio. In August this index of the national financial system was 5%. So if we look at December, today we grew 4.5. And I’m showing you where exactly we’re growing. But when we look at the national financial system, from January to September it grew 0.8. Which means that if we exclude Bank Bradesco, which has an important share in the national financial system, we’ll see that the national financial system has NPL which is higher than 5%.

Because we are pulling the delinquency of the national financial system down. Our coverage of guarantees — I’ve been showing you this. We look at individuals, 72% secured loans for individuals and the restructured portfolio totally under control. When we look at the level of coverage of stage three with FGI and FGO that accounted for a more substantial portion, we see the level of drop in coverage. When we split and separate the portfolio, our coverage is 105%.

So sometimes we debate things, but we don’t understand the dynamic of the portfolio. Now about revenues, all of the revenue lines, as I said at the beginning — assets, liabilities, fees and commissions, the insurance group — the weighted average is 8.4%. But our total NII was up by 14% and 2.4% in the quarter, meaning to say that we still have very strong traction. We grow where we want to grow. Please look at the entire release and look at all of the liabilities and the growth we posted. We posted 4% growth, meaning that we are growing in every line.

I mean fee and commission income. Look at the quarter’s performance. It’s interesting to notice, especially when I break the numbers down. When you look at credit operations, we deferred according to 4,966. That’s why this will continue to grow. And we see, you know, solid growth going forward. In the insurance business, the same thing. If we look at the insurance premium, you will also see growth. Now moving forward, look at our NII, the effect of NIM that I mentioned before. So here we grew 10.1, but the effect of NIM is right here, because if you look at the wholesale bank portfolio, this will be 9.3. And if we were still in the same situation we had in the third quarter of 2025, this would be 9.3 or 9.4. Well, certainly, I mean the NII net of provisions is almost flat, but it comes from the fact that there was an increase in the cost of credit.

But now look at our total NII, or NII net of provisions, you know, still growing about 5% with the growth of gross margin and almost 1 billion reais right here. And I’ve been saying this to you for quite some time, that our treasury is constantly operating in a recurring fashion. Okay, I have my client desk, and when do we zero out the positions? During trading. So the dynamics, it’s quite robust. We also introduced other verticals like the energy desk being one of them.

And we have ALM here too. So the expectation here is quite positive. But there is pressure on the cost of credit, yes, in some specific portfolios, as I said — personal loans, something in credit card and agribusiness, credit to individuals, and FGI and FGO — because there are some secured operations you’re not going to lose down the road, but it follows its own dynamics. But now when we look at fee income revenue, and I draw your attention to the growth, we know that checking account and collection are detractors of growth, meaning it’s not growing any further.

But then when we look at custody and brokerage services and our IB (investment banking), look at the level of growth. I even posted this 9‑month percentage 15.6. But then we have 23.8 for… But now, looking on the left‑hand side of the chart, our brand posted significant growth, gaining market share via WAM assets under management. And also our consortium is very resilient. We have the largest consortium company in the country. This is very resilient growth. Now, card income — it’s interesting to notice the resilience of the portfolio because this portfolio does not only contemplate the issuance side, because there is a whole myriad of other things.

And the best quarter is the fourth quarter rather than this one, the third quarter, the one we are looking at. And certainly now we have the insurance group resilient — ROE 22%. And this level of growth of net income. Now look at insurance premiums and revenues from insurance premiums — it’s been growing through the entire period. There is some traction in internal distribution through the bank’s channels — customer channels and internal distribution.

And particularly Bradesco Saúde was a big highlight. The result of insurance operations shows here, the highlight being the operating result, which is even more important than the financial result, and with technical provisions of almost 480 billion, growing year over year. And if you look at the entire release, I mean the ratio is quite good and very well balanced when it comes to our insurance business. Now moving forward, operating expenses — some sell‑side colleagues, they always ask about when we are going to reduce expenses. We are constantly investing. We continue to invest over and over again, and even then we posted good growth year over year. Look at how much we grew. Then there was a collective bargaining agreement, and then we see the effects of that collective agreement. If you look at the entire release, you certainly find many different lines — admin expenses, transportation — and they are decreasing.

I mean the numbers, the growth is negative year over year. But now processing expenses — that grows because we are increasing our activities. So therefore what I’m saying is that we are doing everything we need to do to pursue our strategy, pursue our transformation. And our interest on capital is also growing. We continue to review our footprint all the time. Now BIS ratio — CET1 was 12.1%; Level 1 13.7 with capital increase. So, meaning that we are very solid to continue to invest.

So I would like to thank shareholders for their trust. I mean the IOC that we pay. This is my one‑before‑last slide because I want to conclude my presentation soon. I would just like to highlight a few things. I will now run over the summary of our transformation because in February we will then talk about what happened in the fourth quarter. But starting with technology, we had productivity gains with Gen AI. And then we have that tool called Bridge.

Last quarter I think we had 500 cases. Now that number grew to be over a thousand. And we said that, when we look backwards, in 2020 our delivery capacity in terms of technology achieved 300. I mean it grew three times. And now we are saying that it will grow four times — fourfold. Meaning I’m not growing or increasing the number of personnel, but rather this is productivity. So this is a breakdown of the numbers. Now when we look at customer experience, our BIA — she’s been around for 10 years. Well, of course we work with AI. Obviously the technological base of BIA involves Gen AI, is conversational, and it also performs transactions.

Look at the level of interactions of BIA. It is part of Meu Bradesco platform. And you also see that there are new things coming along the way. So we will have new things coming in our Bradesco platform about BIA so as to provide better experience to the bank’s clients and also corporate and SMEs. And now to finalize this slide, I have some important deliveries. Principal was a very important initiative. When it comes to high income, Principal has been very successful. We gained share of wallet in the cohorts that already migrated. In September we had 93 offices with more than, you know, 500,000 clients, and we will have more so in December. Therefore we are just delivering to the expectations in our transformation journey. It will still evolve, but just think about the amount of investments — we are investing in the team, training, new offices, positioning, and so on and so forth.

Prime — by the end of December we have 4.7 million clients. And we will see a good upside when it comes to relationship changes in the management model. And our digital wholesale — the same thing applies. So we achieved more than 45 million clients. So when it comes to February, for our next earnings presentation, I’ll bring more information. So I will conclude by saying that our net income is resilient. We will continue to grow. We will grow liabilities, we will grow fee and commissions, and we will grow our loan portfolio where we do have a risk appetite regardless of the macro landscape. And we can only do that because we have commercial traction. I mean operating expenses — needless to say, we are gaining efficiency. Obviously there will always be the baseline challenge, but the fact is that things are happening and we remain expediting our transformation.

But I would like to highlight that our transformation project is moving at full speed. Look at all of the deliveries — and that’s not an easy thing — and to put 45 million on digital wholesale. We are now concluding the delivery of our Principal. I think it’s going to be three years. It’s not just three years since we disclosed our plan. That will be in February, when we will then have our results presentation for the fourth quarter. So thank you again for your patience, for joining us.

And now I will join my colleagues, Andrea Carvalho, our head of RI, and Carvalho, CTO. Well, they are the ones who answer all the questions now. Okay, so I think I said it all. So now over to you.

OPERATOR

Thank you, Marcelo. Hello, Cassiano. Good day, everyone. I’d like to remind you that Carlos Marinelli at Bank Bradesco are joining us remotely. If you want to send questions, you can ask questions in Portuguese or English. Send your questions to the email investidoresco.combr, or you can use WhatsApp 11 974-438-238, pointing your camera to the QR code. First question from Daniel Vas with Safra. Daniel,

Daniel Vas (Analyst at Banco Safra)

Hello, Andre Noronha, Cassiano. Congrats on the results and on the improvement on the efficiency agenda. I’d like to ask a question about NIM because you explained the effect of the large corporate portfolio that had an impact on the NIM while individuals decelerated. And I wonder, would this be a trend to be repeated in the next quarters? If you have a portfolio with a longer duration for large corporates so you can distribute the TVM if the need arises.

But I don’t see great appetite to grow in retail lines that have a perception to be that they are more risky. So the question is, if you have a NIM that continues to decrease with the mix effect, when will your cost of risk start offsetting the effect of the NIM so that you would have a risk-adjusted NIM? Thank you.

Andrea

Thank you, Daniel. Well, the answer is, believe it or not, in the past we had long-duration portfolios in the wholesale bank. But the portfolio in the wholesale bank today, we’re doing business with 60 days. It’s a portfolio that is very fast. And a long-duration portfolio is much more in retail with payroll loans and real estate loans, mortgage, and FGI and FGO, they also have long duration. So it’s a different dynamic. So here’s what I can tell you. We will continue, like I said, we will continue to grow our NIM. And this is coming from several lines. No concern about that. If the wholesale bank impacts NIM but increases a lot more than NIM, it’s better to have a NIM of 9.3 and lose revenue here, or is it better to have more gross revenue with a NIM of 8.9, 8.8? It really depends on the moment. I just wanted to show you this, in fact, because in the second quarter and third quarter of last year the wholesale bank had negative growth.

It is possible we’ll get to Q4 and we’ll settle these short-duration portfolios and not rebuild them again, and we would have the effect in the two subsequent months. The NIM can increase again and we can have a slightly different mix. But what matters is the top line. The top line is the result of the bank and the top line is growing, all of it. The cost of risk that you asked about, it is a fact, but it’s not a privilege of Bank Bradesco. This is a market effect. I showed you the over-90-day NPL. Look at the central bank data for August: 5%, and I showed you our September number at Bank Bradesco: 4.6. And I said that a good part of that comes from FGI/FGO guarantees. So if we exclude Bank Bradesco in the weighted average, the percentage of the national financial system will grow for players?

No, but some players are under pressure. The market is more pressured for over-90 days. The cost of risk is more under pressure for the whole system. But here at Bank Bradesco we continue to follow our script, our defined strategy and the commercial traction, and improving it in the top line, growing all lines of revenue, and will continue to grow. And I’m sure that in the fourth quarter we’ll see a higher NIM as well. But the cost of risk, well, that will depend on what will happen.

But my feeling is we have a macroeconomic environment in which the level of committed disposable income of individuals has increased. The real interest rate is astronomical, and that impacts the companies. So it’s a macroeconomic environment that impacts everyone. We expect that this environment will improve. It doesn’t change overnight in 2027, but perhaps more towards the end of 2027 and 2028. But thank you, Daniel, for the question.

Cassiano Scarpelli (Diretor Vice-Presidente)

Two quick comments here. What we see in wholesale is that the risk-adjusted return of the wholesale bank is high and it is increasing. So more business in wholesale adds value to our organization. And secondly, operations with large corporates pull revenues in other areas, for example service and treasury revenue and market NII. So the more we do in the wholesale, the more business we get in market NII and in services.

Marcelo Noronha (Chief Executive Officer)

Absolutely, you’re right, Andrea. And also in investment banking origination in the corporate space, segments and all of the segments we have there.

OPERATOR

Perfect. Next question from Anna Lee Rios of Santander. Your microphone is muted. No, it’s not. Well, we cannot hear you. Can you hear me? Now, we’ll get to the next question while we figure out what’s happening with your microphone. Pedro Leduc with Itaú BBA. Pedro, thank you.

Pedro Leduc (Analyst at Itaú BBA)

Andre Noronha, Cassiano, good day everyone. Thank you for the question. My question is about LLP. We spoke little about the macro environment which is impacting everyone. So in retail, will this require some cost adjustments? We see auto loans, for example, growing a large, and in wholesale where the LLP remains at the same level even with all the court reorganizations that we have been seeing. Perhaps you’ll need some reinforcement for those provisions.

So it’s a question on cost of risk. If you could give us some color on general trends, I would appreciate it.

Andrea

Pedro, thank you. It’s always a pleasure to have you on board. With rollovers of other loans, excellent. We’re doing really well here, competing really well in this market. We planned to go into this market strong and very consistently, and we’re operating where we want to be with a credit policy which is very well defined and based on our models. We gained competitiveness in customer experience, in deal experience of our managers across the board.

So rollovers good? They’re good. Very good. So what’s putting pressure: FGI and FGO, they do put pressure on cost and over-90-day NPL, a clean portfolio. And we are now feeling the effect on credit cards where we have over-90-day in bill of customers, and I spoke about this in the last call. We have that from clients of 2019, 2020, and sometimes in clients with payroll loans. So the scenario for individuals was, in general terms, but we do have a portfolio of older clients who have been with us and now they started delaying payment, and of course we speak with them and we negotiate with them.

We don’t want to have them in delinquency, in default, but we have a higher risk in those clean lines. But we have been growing the portfolio in collateralized loans. So we are going to see this effect of FGO and FGI until the day that we have a curve inflection. But we haven’t gotten there yet. We are growing 31% in these portfolios with more than 20% market share in 2026 in this market. There are three banks competing strongly here for these loans.

And I see the cost of risk a little bit more under pressure, like I said, and over-90-day NPL a little bit more under pressure. But these are specific loans. I’m talking about rural loans, individuals and SMEs, and I’m talking about personal loans, a little bit of credit card, and another loan with good coverage. FGI and FGO guarantees other. And we are never getting well. And we are growing in all line items. So I see the top line paying the bill, and in wholesale LLP remains flat and stable.

And you also asked about—oh good, Cassiano, you reminded me—you asked about the court reorganizations. I haven’t got the statistics here, but we are monitoring that. In the past quarter I showed you this number. We are not participating in many court reorganizations. We’re below the market regarding that. And in the next quarter I will bring you some numbers regarding that. Thank you very much for your question, Pedro.

OPERATOR

Thank you, Pedro. Next question. So let’s go back with Anna from Santander.

Anna Lee Rios (Analyst at Santander)

Hi. I think now you can hear me. Great. Good morning, and thank you for taking my question and thank you for your patience with my microphone. I think you made it very clear that part of that NPL increase came from lines that were collateralized by the government. So along these lines, can you probably tell me the magnitude of that impact for this quarter? And based on the cohorts, do you have any estimate of how much NPL could still grow in these lines in the coming year?

Marcelo Noronha (Chief Executive Officer)

Well, thank you. I’ll ask Andrea to answer part of the question.

Andrea

But I told you that we grew 30 basis points. Half of that came from FGI and FGO. But I mean, the composition is growing. I mean, FGI and FGO is already among the five best portfolios of the entire portfolio—individuals and corporates. So it’s just natural that as long as we are growing, this will increasingly impact over-90 NPL. I mean, the cost of credit is lower when compared to other lines, but even then it has its own impact because you have the 4,966 that you have to comply with.

Therefore, it continues to influence until the time when we have an inflection of the curve. So in theory you may say, okay, the year is over. The curve has been—like if the cure period is up to 180, 185 days—so probably in the second quarter or in the third quarter, you would see the decline of the curve. The curve will go down. It’s just a matter of time. And this is what is impacting it the most. The second most important, when it comes to over-90 NPL, has to do with the John Deere bank, almost 10 bps. And this has its own seasonality. We are familiar with that topic because if you were to look at the other portfolios in general, the weighted average is very minimal and it is not enough to cause a major impact. I mean, the only thing is the over-90 for SMEs. That’s where we see the influence—working capital impacted by FGI/FGO, especially in the fourth quarter, especially due to the recent origination in these lines.

Yeah, over 90% of origination with 31% growth year over year, and we are still very tractioned. Thank you.

OPERATOR

And next question from Guilherme Crispin with J.P. Morgan. Crispin.

Guilherme Crispin (Analyst at J.P. Morgan)

Good morning. Thank you, Andrea. Thank you, Noronha and Cassiano. My question is more like an updating in terms of interest rates. It’s very difficult for us because this exposure is very dynamic, not only due to hedging, but the insurance company gained more momentum in your results in the past few years. And I also want to know what is part of your income statement or not because the 4,966—most securities were to be carried over to maturity. So what is your best estimate and what is the bank’s sensitivity to any interest rate variations?

Cassiano Scarpelli (Diretor Vice-Presidente)

Guilherme, thank you for your question or comment. As we’ve been saying, our sensitivity is on pillar three, I would say. But as you said, it’s quite dynamic. Our Treasury Department has been working a lot, especially this year, and we had lots of opportunities which—indeed, this is a very specific picture of the month because there was the closing of a certain quarter. But the most important thing is that we see the evolution of our strategies, especially with ALM.

And everything has to do with the market account. You look at the market, everything has to go through that. But the client desk when it comes to the treasury desk, all of the other trade flow, the energy desk, all of those things are part of the market structure. Since we are running around 900 to 1 million BRL, I would say that it floats quite a lot. Therefore we have interesting strategies that can allow us to minimize or either maximize the move. We posted some interesting transactions this year and certainly, the lower the risk, the better it is. And certainly this will also benefit the market. And I say hello to Yuri. Yuri is very provocative. I like his provocation, so all the best.

OPERATOR

Next question from Antonio Hoefi with Bank of America.

Antonio Hoefi (Analyst at Bank of America)

Good day. Thank you very much for your time. I’d like to focus on the regulatory aspect to continue Anahi’s question. When we look at FGI and FGO, they have been the main contributor of growth to SMEs and the market is discussing a potential reduction of this volume for next year. If that is the case, how would Bradesco react? Would you expect a reduction in growth, a replacement for other unsecured loans for SMEs or would you look for other collateralized loans for SMEs?

How would you act when these funds play a lesser role and still on the regulatory side, anything that you expect for individuals in terms of macro prudentials, an anticyclical measure, any such things?

Marcelo Noronha (Chief Executive Officer)

Thank you for your question. Well, I’ll be very objective to answer your question. Number one, if we cannot work with FGI and FGO, which I think is one of the best government programs we have seen, because it does benefit the micro, small and medium-sized enterprises with longer-duration loan facilities and with much lower interest rates and with a grace period. So independently from the government. If I were the government, I would maintain that because that’s a fund, everything you recover goes back to the fund.

So you recycle the resources. Of course, some effect on the primary level, there’s a challenge there. But if there are no such resources, you can rest assured that we are here managing a huge organization and we have many revenue streams. And you see the relationship with these companies is growing. And this portfolio has a long duration, it’s not settled overnight. So it involves relationship. And of course those good clients who pay well and have other receivables, we will continue operating with them. For certain riskier clients, it might not be worth it.

But the fact is if we lose any revenue stream, we will look for alternatives and other revenue streams. But if we have that kind of headwind, it’s not just for us, it will be headwind for everyone in the market. And as for macroprudential measures for individuals, we haven’t got those measures yet. If I tell you anything about it, it’s merely speculation, but I don’t really believe or expect any hard measure coming from the central bank. But that’s my personal perception regarding that. Did you have anything to add? Okay, thank you very much, Antonio.

OPERATOR

Next question from Beatrice Sheni with UBS.

Beatrice Sheni (Analyst at UBS)

Hello everyone. Good morning. Noronha, Cassiano, Andre, thank you for taking my question. On our end, we have a question regarding efficiency. I think that OPEX was a very positive point this quarter. There were some one-off events and Noronha mentioned in the presentation. But just to check, looking forward, do you still expect improvement in efficiency and which would be the main drivers for this improvement in efficiency to continue?

Marcelo Noronha (Chief Executive Officer)

Thank you, Beatrice. I’ll let the guy responsible for the transformation office answer your question because we have a number of projects there. Cassiano.

Cassiano Scarpelli (Diretor Vice-Presidente)

Hello, Beatrice. Thank you for the question. We didn’t have any one-off events. This is an ongoing process. We have been working on 2024, so this has translated into structural improvements and the footprint is one. So we are getting to a more residual level because we’re getting close to the optimal adjustment in what we expect to have in terms of service network, branches and offices. And we’re doing strong work on procurement. We are revisiting all the major general contracts for the organization and this has resulted in great efficiency.

And thirdly, contracts and technology licenses. We are using more agents, we are using AI and more than that, we are improving all of the bank’s processing capability because that benefits all our batch processing and our online efficiency. And this in turn means efficiency. Not all of it is captured. We are still expecting about 40 points of efficiency. And this will be the mix. Efficiency, productivity. We’re getting to the end of the footprint adjustment and of course looking at the best technologies at a reduced cost.

This is what we’re expecting for the next two to three years. Thank you, Beatrice.

OPERATOR

Next question from Gustavus Schroeder with Citi.

Gustavus Schroeder (Analyst at Citi)

Hello. Good morning. Good morning. Marcelo, Cassiano, Andrea, thank you for your time. My question has to do with services, more specifically in regards to investment banking. The bank has been very strong in originations, especially DCM. I mean, this year is quite weak, but in that DCM line and even different from what we see from other peers. I would just like to understand the strategy behind it and where you believe Bank Bradesco has managed to distinguish itself in presenting a different dynamics vis-à-vis the market and whether there is any possibility, depending on the volume of originations, if we have a possible drop in interest rates, whether we should expect some positive results if interest rates continue to decline.

Marcelo Noronha (Chief Executive Officer)

Gustavo, it’s always a pleasure to talk to you, but I’ll tell you the following. What is happening with investment banking has to do with our management. The team did some excellent work. Bruno is heading that, but Tutti is working on the DCM side. DCM is quite sluggish. But what we are seeing is, depending on what happens in the market, we may see a leap in DCM. We are not saying that, okay, I want to be a leader. That’s not our target, Gustavo.

The strategy is to be close to our clients. We are becoming much more assertive. Our team is much better prepared. We are originating more with all of our corporate segments. All we want is our fair share. That’s what we usually say. I see that people are working quite well. Global and Agora also posted relevant growth and we continue to originate more and more. In regards to a drop in interest rates, what I have to tell you is, not necessarily you have specific gains here because of that, but what we are doing today, and that I think it was a question asked by Vas at the beginning when we talked about the wholesale bank, because the duration is much lower when compared to the past. We have short transactions in terms of receivables from suppliers. And we are also operating in what we call origination for distribution portfolio, OPB.

So you put something in our books and then it gets out. So the wholesale bank is circulating its book. That’s why it can go up 10% in one quarter and down 10% in the next quarter. And depending on the fluctuation, that exited OPB is one you find a secondary, and Gustavo, you’re very familiar with that. There is a premium for you to leave that distribution in that window. I would have two things to say, Gustavo. First of all, the percentage of firm offering that we had to execute was lower when compared to our peers in 2026. And secondly, in terms of DCM, the new thing is origination for middle market, for mid-sized companies. I think this is quite important. Thank you Gustavo. All the best.

OPERATOR

Next question from Matteo’s Guimara with exposure. Over to you, Matthias.

Matteo’s Guimara (Analyst)

Good morning. Andrea, Noronha, Cassiano, thank you for taking my question. My question is about market NII. I think this was another very strong market. In nine months you were able to deliver what we were expecting for the full year. So how do you see this line going forward? Do you believe that this current level should be more recurring, a more recurring level? And how do you see that going forward?

Andrea

Well, I hope so. So again, this has to do with our good management. And, as I said before, our treasury is operating quite well. The team is excellent, is very well prepared and there is a recurrency with wholesale bank, with the middle bracket and companies as well. So we are offering different alternatives to companies and that impacts trading. The Energy Desk. My expectation is positive for this quarter and we will continue posting this recurrency in our treasury.

I can just add to what I said in previous answers. Our treasury is well organized and well in place and I think we will post similar numbers in the fourth quarter. It will be around 3 billion this year. And treasury has a very suitable strategy. We have all it takes to see things happening. I mean lower interest rates, no matter what, is always very good to the organization as a whole and our treasury, of course. And I think 2027 will be a very promising year.

It will be a very good year. Maybe in 2027 we will come with more robust numbers for you. I mean, to reinstate what Cassiano said. I already talked about our total NII, you know, market NII, client NII. I mean assets, liabilities. I’m very, I mean, I have very good expectations for next quarter, including market NII.

OPERATOR

Next question from Eduardo Rossman with BTG Pactual.

Eduardo Rossman (Analyst at BTG Pactual)

Hi, good morning everyone. Thank you for the opportunity. I’d like you to give us an update on the transformation of the retail bank. What do you think has worked well, what has been more challenging since you designed the plan.

Marcelo Noronha (Chief Executive Officer)

Thank you, Rossman. Thank you for participating. It’s always a pleasure to have you here with us. Cassiano, over to you because you’re responsible for the transformation office. Start answering the question and I, myself, and Andre will add comments.

Cassiano Scarpelli (Diretor Vice-Presidente)

Good. Rossman. I think the first challenge was when we started the base of transformation mentioned along 2024, 25. Those were the foundation for us to bring clients who would go to branches to digital service with BIA, online chat and some resources. For 80 years we told our clients to go talk to the managers of the branches and now they started talking with a remote agent. And this was an important foundation in the first two years. The challenge for this year specifically was to actually migrate remote. We have 45 million clients already migrated and that helps the other side of the transformation, which is the footprint. Forty-five million clients being served remotely, that’s very important. More than 15 million interactions, and in 90% of the cases BIA answers the questions. Only 10 to 12% of the contacts will be migrated to a human agent.

This was an area that involved a lot of manual processes at the branches. Now everything is 100% digital and there are two main challenges now: engaging, and we’ve been doing this really well. We have been opening checking accounts that are more and more profitable. And that’s very important. That’s the first big positive. Clients are much more engaged, using the bank a lot more, and of course working to have the bank primacy of those clients who didn’t really go to the branches, but they had our app and they prefer our bank.

And now we’re offering them the best proposition for these clients. And that is the challenge. We have to make the clients more profitable; once the cost is right, now we have to increase their profitability. And we have to continue to have a more assertive opening and much healthier opening of checking accounts for the bank.

Marcelo Noronha (Chief Executive Officer)

Now here’s what I can add, Rossman. If you look at the entire retail, we grew our client base also in this quarter. So our people is working on engagement to grow, as Cassiano mentioned, and then working on the life cycle of the clients. But in the retail bank we have Digital Retail plus Prime. I won’t repeat what Cassiano said about Digital Retail, but for Prime, the Prime segment, Prime was the big giver of clients and managers for the Principal segment.

So we made an effort, training, etc. So people made an effort to migrate clients and the last migration will happen now this quarter, and the process will be complete in December. So next year it’s the year of Prime. And in the segments of Business 1 and Business 2, which we are improving, we are also changing the management model for the Prime segment. We ended the quarter with 4.5 million clients and we’ll end the year with around 4.6 million. And we are going to have a value proposition which is different and now segment-focused on what they need to do. A different account loading, a different front end that was implemented, a platform that is completely different.

And we’ll see Prime taking off because some clients and managers had to be transferred to Principal. Some clients were migrated to Digital Retail. So Prime was a big giver of people, clients and structure. And now that we are ending the deployment of Principal, that’s when we are going to have a leap for Prime. And that was the side effect of adjusting Digital Retail and high income, which is Principal. And Prime was in the middle of this, but it continues to work and to deliver results and it will take off more and more.

But now we are focused on that only; we don’t have to work with the other segments of clients given the whole initiatives that we implemented during this period.

OPERATOR

Thank you, Rossman. Next question from Eduardo Nishio with Genial.

Eduardo Nishio (Analyst at Genial)

Hello, good morning, Andre, Noronha, Cassiano. I have two questions. The first, we are in the eve of a very important moment for Brazil and this weekend. And I’d like to understand from you what would the bank be like? How would the lines behave if there is an accelerated reduction in the cyclic interest rates? And how do you see the bank navigating in a lower interest environment? My second question is to understand more the film, the movie, than the snapshot. We see client NII increasing 1.5, but NII net of provisions dropping. So we have the effect of having a secured portfolio and we have some companies in the agribusiness going into stage three. And there’s also the cure that comes later after FGI and FGO. So how do you see NII evolving in the coming quarters and whether it is possible to say when we are going to have an inflection point in NII net of provisions?

Marcelo Noronha (Chief Executive Officer)

Thank you, Nishio, for your questions and for your participation. Cassiano spoke about it. A declining interest rate is positive for the organization in general terms. So that’s the first answer for you. The second answer is in terms of NII. I see our client NII coming from loans and liabilities, and market NII growing. Now NII net of provisions, as you mentioned, was under pressure given the cost of risk. And we have to have the possibility to pay, to foot that bill.

And the cost of risk over 90 days will be under pressure for a while. This is not our privilege only. Actually our privilege is lower than that of the national financial system. But there will be an impact on the Brazilian market. And like I said during the presentation, over-90-day NPL disclosed by the Central Bank from January to August grew 0.8. It’s not so little. Ours grew 0.5, but ours grew concentrated in the FGI and FGO portfolio and with the John Deere bank.

And this is different. It’s a difference when you look at the portfolios: there’s a higher cost of risk, a higher over-90-day NPL. But again, look at our top line. Our top line is good, will continue to grow. And I believe in this. I believe that we are going to deliver market and client NII that will be higher in Q4 26, but low interest rates are positive and positive for the whole macroeconomic environment in Brazil. Because today the real interest rate is very high, talk about almost 10%, and lower interest rates drive the economy, drive our clients. Our clients pay more and better.

And it removes costs from the companies. So companies free capital to invest. For companies that are more indebted, small and medium-sized enterprises or large corporates, they suffer more. And low interest rates impact the cost of risk. But this doesn’t happen fast. It really depends on the economy. We’re not going to get that bulk of people who have a higher committed disposable income and change that profile overnight. It’s a cycle. And in terms of NII net of provisions, we have a guidance 42 to 48 billion in the year. So we are in the lower range and the performance is within expected. And Andre is correct in what he’s saying, but when I look at the NII, I have a slightly better expectation for Q4 as regards our guidance. But let’s wait and see.

OPERATOR

Next question from Renato Meloni with Autonomous.

Renato Meloni (Analyst at Autonomous)

Good morning. It’s very good to see you. And I would like to still talk about client NII risk-adjusted. You know, client NII, you still have risk appetite in segments with lower spread. The cost of risk is reasonable. So it will be reasonable to think that the margin will continue to be pressured going forward. What do you see happening throughout next year that will allow you to grow more, and what will be the inflection point of the margin?

Marcelo Noronha (Chief Executive Officer)

Thank you again for joining us. It’s always a pleasure to talk to you. I think you were referring to the NII net of provisions. I mean, the internal cost is a bit more under pressure. But look, we are growing in portfolios that not only bring a very high RA, but they also present a very inviting margin with a good duration. And an example of that is public and private payroll loans. This is a portfolio that, if you look at it, I mean, 110 billion, we still have a lot of room to grow more.

Secondly, I am showing you that when it comes to rolling out the vehicle portfolio, I mean, we chose where to operate. I will clearly say that if we only look at new light vehicles, the RAR is very low, the margin is very low. But we positioned ourselves in such a way that we can capture more margin here, with almost 27% growth. That means that all of this will contribute to our next year’s margin by December. We have a very important carryover. Portfolios that already have a margin that can be, you know, carried over towards 2027.

Also, I mean, we are growing the numbers. Look at the entire release and the margins are important and the funding, credit is stable and funding, I mean, primacy, especially among individuals, individual clients.

OPERATOR

Well, thank you, Renato. We now conclude our Q&A session. The questions that were not answered will be certainly answered by our IR team. So before I turn the floor over to Marcelo to conclude our meeting, I would like to remind you all that on our IR website you will find this presentation and also all of the material pertaining to this quarter.

Marcelo Noronha (Chief Executive Officer)

First of all, I would like to thank Cassiano and Andre for joining us, and in particular I would like to thank all the participants of this call. I would like to thank the shareholders that approved our capital raise, all of the investors from buy side and sell side. Thank you for being with us, and moreover our clients that joined us during this release presentation. But I cannot forget to mention all of our employees, Marinelli and Nay, who are also here.

So we will soon see you again to talk about the results for the fourth quarter of 2026. I wish you all a great weekend and thanks for joining.

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