Ivan de Souza Monteiro - CFO Leonardo Loyola - Head, IR

Saul Martinez - JPMorgan Carlos Macedo - Goldman Sachs Tito Labarta - Deutsche Bank Marcello Telles - Credit Suisse Boris Molina - Santander Carlos Gómez-López - HSBC Natalia Corfield - JPMorgan Gustavo Cambauva - BTG Pactual Nada Oulidi - Loomis Sayles Mario Pierry - Merrill Lynch

Good morning everyone and thank you for waiting. Welcome to Banco do Brasil Second Quarter 2014 Earnings Conference Call. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After this, there will be a question-and-answer session. At that time, further instructions will be given. (Operator Instructions) This event is also being broadcasted live via webcast in Banco do Brasil's Web site at www.bb.com.br/ir where the presentation is also available. Participants may view these slides in any order they wish. Before proceeding, let me mention that this presentation may include references and statements planned synergies, estimates projections and forward-looking strategy concerning Banco do Brasil, it's associated and affiliated companies and subsidiaries. These expectations are highly dependent on market conditions and on the performance of domestic and international markets, the Brazilian economy and banking system. Banco do Brasil is not responsible for updating any estimates in this presentation. With us today, we have Mr. Ivan de Souza Monteiro, CFO and Mr. Leonardo Loyola, Head of Investor Relations. Mr. Leonardo, you may now begin.

Good morning, everyone, and thank your for joining our second quarter earnings conference call. I would like to start the presentation on Slide 3, where we show some highlights of Banco do Brasil's performance in the period. We posted an adjusted net income of R$3.0 billion in the second quarter of 2014. Net interest income grew 7.2% compared to the first half of 2013. Our loan portfolio in the Broad Concept grew 12.5% in 12 months reaching a total balance of R$718.8 billion. Our delinquency ratio remained the best in the banking industry closing the quarter at 1.99%. Moving on to Slide 4, we present some earnings highlights. NII grew by 6.4% year-on-year and 7.2% compared to the first half of 2013. Admin expenses hit 8.3% compared to the first half of 2013 converging to the guidance. Allowance for loan loses grew 2.9% compared to the first half of 2014. In 12 months, this figure increased by 8.4% staying under the 19.4% growth of the average classified loan portfolio. We posted an adjusted net income of R$5.4 billion in the first half of 2014 corresponding to an adjust return on equity of 15.3%. On Slide 5, we show our sources and uses where we call your attention to the agribusiness letters of credit and real estate letters of credit that together grew 122.3% in 12 months and also to corporate bonds repos which grew 106.5% in the same period. We highlight a 98.4% growth in debt instruments eligible for capital compared to the last quarter reaching a balance of R$16.3 billion in June 2014. Part of this increase is due to the last perpetual bond issue in June, recently authorized to compose Banco do Brasil's some supplementary capital – Tier-1 capital base. You can also – you can see that Banco do Brasil's loan portfolio represent 86.6% of the banks funding usage. Continuing to Slide 6, we displayed BB's net interest income performance. In the upper left-hand side graph you can see our global spread behavior reaching 4.1% in this quarter. On the right-hand side, we show the credit spread by segments that showed recovery in the three segments. In the second quarter of 2014, NII reached R$12.4 billion, 6.4% growth compared to the second quarter of 2013. Comparing the first half of 2013 and 2014, NII grew by 7.2% reaching R$24.2 billion. We highlight that 34.6% growth in treasury income due to the average Selic rate increase compared to the first half of 2013. On the next Slide, we have the evolution of the loan portfolio in the Broad Concept reaching R$718.8 billion in June 2014 representing 12.5% growth in 12 months. In 12 months, the individual portfolio grew 7.2% representing 24.1% of the total loan portfolio. The company's portfolio grew by 13.2% representing 46.7% of the total loan portfolio and the agribusiness portfolio grew 23.7% representing 21.9% of Banc do Brasil's total loan portfolio. Considering the classified loan portfolio BB's market share was 21.3% in June 2014. On Slide 8, we have the organic portfolio with individuals. In this field, we exclude the proportional consolidation of Banco Votorantim and the acquisition of portfolios of other banks. On these spaces, the portfolio grew 13.2% in 12 months and 3.9% in a quarter. The four lower risk lines payroll, salary loans, mortgage and auto loans represent together 76% of this portfolio against 75.3% in June 2013. On the upper graph of Slide 9, we can see that the payroll loan portfolio reached R$63.4 billion allowing BB to end the period with a 26.6% market share. If we consider the organic portfolio 88% of this portfolio is composed by customers who are civil servants, 7.95% relates to INSS retirees and 4.05% to private sector employees. We highlight BB's mortgage portfolio that close to the balance of R$32 billion by the end of June 2014, an increase of 84.5% in 12 months. For individuals that growth was 71.1% reaching R$23.5 billion. Finally, the bottom right-hand side graph shows the auto loans portfolio credit offered exclusively to our customers within our branch network. In June 2014, more than 82% of auto loans were taken by customers with relationship over 5 years with Banco do Brasil. Moving on the next Slide, we present the company's loan portfolio totaling over R$335 billion, representing 13.2% growth in 12 months highlighting the increase of 136.5% in mortgage and 20.6% in credit for investments. By the end of 2014, the estimate disbursement for investments, we reached R$8 billion and by the end of 2015, we estimate disbursement of an additional R$5.8 billion. On Slide 11, we present the breakdown of loan portfolio with companies by size. SME, medium and large companies, the SME portfolio ended June 2014 with a balance of R$101.1 billion up 7.6% year-on-year and the medium and large companies’ portfolio reaches 15.7% growth for the same period. In the upper right-hand side graph R$19.7 billion of the SME loan portfolio was covered by the Operations Guarantee Fund, the FGO. These amounts grew by 21% compared to June 2013, R$3.6 billion of this portfolio is covered by Fampe, an SME Guarantee Fund. In the bottom line graph, we see that 69.7% from the SME portfolio is contracted by client relationships of over five years with Banco do Brasil. On Slide 12, we can see our agribusiness loan portfolio that grew 4.8% in the quarter and 23.7% compared to June 2013. Remaining with the past delinquency ratio in BB's portfolio with a 0.56% ratio. As we can see from the chart, on the right-hand side, almost 64% of loan’s working capital for input purchase on the 2013/2014 crops are protected with insurance options offered to our customers. We ended 2013/2014 crop with a disbursement of R$76.3 billion, R$6.3 billion over the estimates for the period. The 2014/2015 crops started in July 2014 has an estimate of R$81.5 billion disbursement through June 2015. In the next Slide, we details BB's quality reach historically achieve the better delinquency ratio that the banking industry as shown on the top graph. In June 2014, the NPL ratio was 1.99% while the industry presented a 3% ratio. Our current provision levels enable us to record a coverage ratio of 192.1% a much better ratio compared to the industry as posted on the bottom graph. On the Slide 14, we show the average risk of our loan portfolio evolution with a downward trend remaining below the industry. We ended June 2014, with a ratio of 3.57%, while the industry posted 4.78%. On the bottom left-hand side graph we see the write-offs of Banco do Brasil in 12 months compared to the average balance of the classified loan portfolio for the same period. We may see that BB presents a better performance compared to its main peers. The bottom right-hand side graph demonstrates the relationship between the amount of credits recovered and total amount of write-offs losses both accumulated in 12 months. Banco do Brasil has prioritized a recovery in cash. We present to you on Slide 15, BB's delinquency per segment breakdown. The portfolios have been stable compared to that observed in 2013 remaining at levels significantly lower than those reported by the industry. In a quarterly comparison, we see an improvement in individuals and agribusiness segments with a slight elevation in companies. On Slide 16, we see the NPL information index inline with the same period in 2013. Despite its increase in this quarter, it remains within the range of that in the last two years. On Slide 17, we can observe our credit provision expenses considering the average classified loan portfolio. On the first graph on the upper left-hand side, we have the ratio between provision expenses and the rolling portfolio on a 12 months view. By the end of June 2014, we reached a 2.76%. On the second graph, on the right-hand side, we see stability on the quarterly review. The bottom graph, we see the 12.9% growth of the loan portfolio between June 2013 and June 2014 has been concentrated in the balance risk, mainly between AA and C. On Slide 18, we present Banco Votorantim in this quarter confirming the progress in its restructuring process. The net income in June 2014 reached a total of R$140 billion, the third consecutive quarter of positive results. The bottom graphs we have information regarding the origination figures for light vehicles from Banco Votorantim, where we can observe a decrease of 0.3% on NPL days when compared to June 2013. On Slide 19, we address the asset quality of loans originated by Banco Votorantim. The top graph shows the provision expenses were we can see a decrease of 26.7% compared to the last quarter. The new vintage contracted after September 11, already occupy 77% of Banco Votorantim's managerial auto loans portfolio. On Slide 20, we show our performance in fees. In the first half of 2014, fee income reached R$11.9 billion growing 5.3% compared to the same period in 2013. Year-on-year, we highlight the 15.4% growth in card operations, 11.7% in insurance, pension and premium operations and 14% in fiduciary services. On the other hand, we had weaker activities in capital markets which negatively affected fee generation in this segment. On Slide 21, we display the organization chart of the main card business in which Banco do Brasil holds a direct or indirect equity interest. In June 2014, we have added Stelo and Livelo. Stelo introduced an Internet safe payment solution and Livelo agreed to offer a strong loyalty program to our clients bringing newer efficiency to the business. On Slide 22, we show information about cards business. The top graph we see an increase in Elo cards space issued by Banco do Brasil that grew from 5.6 million in 2013 to 7.2 million in June 2014 and the turnover that increased 78.7% year-on-year reaching a balance of R$6.1 billion. On the bottom left-hand side graph, we show the bottom line of BB's card business. This business has been showing a strong growth year-after-year. The card service income after-tax reached R$972 million in the first half of 2014, 31.7% growth year-on-year. The bottom right-hand side graph, we displayed a total cards turnover which grew by 19.2% in 12 months. On Slide 23, we can see the performance of our admin expenses, these expenses amounted to R$7.8 billion in the first half of 2014 corresponding to 8.3% increase year-on-year. I would like to draw your attention to the personnel expenses, quarter-on-quarter that drops 0.2%. Banco do Brasil continues to work hard on this line to hit the guidance estimate. On Slide 25, we cannot serve stability on our cost to income ratio throughout the presented quarters. On Slide 25, we show the BIS ratio of Banco do Brasil that ended June 2014 at 14.19% with a 10.13% Tier-1 ratio. This metric already considers the Basel III rules and if we consider this full implemented measured over June 2014, the estimated BIS ratio would reach 12.91% and the Tier-1 at 8.77%. Finally, on Slide 26, we closed this presentation with our guidance. Considering the results through the first half of 2014, some estimates where reviewed. We bet with the guidance regarding the adjusted return on equity reaching 15.3% as well as the net interest income that grew 7.2%. The annual estimate for those lines was reviewed. Adjusted return on equity between 14% and 17% and net interest income between 5% and 9%. Fee income was also reviewed growing by 5.3% in the second quarter. In regard to the credit portfolio, we observed the same behavior it means that agri portfolio was growing faster than the others while the individuals’ portfolio is growing slower. The company's portfolio performed slightly below the guidance range. Allowance for loan losses closed June at 2.8% ratio and admin expenses are converging to the guidance range. Thank you for you attention and let's now open the Q&A session.

(Operator Instructions) Our first question comes from Saul Martinez of JPMorgan. Saul Martinez - JPMorgan: Thank you very much. Congratulations on the results. Two questions, first on your NIM evolution. In lending spread specifically, they have increased now for the last two quarters and it was especially pronounced on the consumer side this quarter 60 basis points. How much more room do you see for additional spread increases and what is that mean for your net interest income going forward, not only this year, I know you moved up your guidance, but is there some upside do you think in terms of NII for the rest of the year and for NIMs in 2015? Secondly, can you comment at all, or what would you be willing to share on the news yesterday about the STJ ruling on the Verao plan making it national in scope, is there anything that you could share with us on that beyond what you wrote in the release?

Thank you for your questions. Basically let me start from the second one, so there is – not much thing to add to what we released in our information to market yesterday basically all the information that we will like to provide to the market is there. There is no immediate impact and the bank will wait until the minutes from the court just to take action just to appeal either to STJ or to STF. Secondly, going to NIMs basically as we saw in the past, we saw that – while the Selic rate was increasing we were taking the hit on the funding side, so now; we have a more stable Selic rate. And on the other hand, we have been repricing those assets and so we start seeing spreads and NIMs going up. And we believe that it is a trend that we will continue throughout the year. Saul Martinez - JPMorgan: So you expect your net interest margin in spreads to continue rising at least for another couple of quarters? Hello?

Yes. You have to consider that now Selic rate is stable. And we are – you have to consider the mix effect as we have the mortgage portfolio and agri portfolio growing faster than the others which compensates on the other hand an increase in spreads. That's why so we believe that it will depend on how fast mortgage and agri will grow over time. Saul Martinez - JPMorgan: Okay. Fair enough. Thanks a lot.

Saul, we need to see the issue that we are renewing the portfolio – the loan portfolio. And we get a benefit from the new prices. When you combine – we need combined this with a different mix especially came from the mortgage portfolio and from the agri portfolio. Saul Martinez - JPMorgan: Right. It seems like this quarter for all the banks including yourselves the impact of repricing the back book has been very powerful. And just my question is more in along the lines of how much when you balance the mix on the one hand, the repricing on the other hand? Does the repricing have a bigger impact and does that mean that there is actually room for net interest margin to expand more than what we are expecting in the coming quarters?

The best that we can provide, who is the – change that with this on the guidance. That's the best information right now. Saul Martinez - JPMorgan: Okay.

Okay. Saul Martinez - JPMorgan: Fair enough, okay. Thank you.

Our next question comes from Carlos Macedo of Goldman Sachs. Carlos Macedo - Goldman Sachs: Good morning, gentlemen, I have a couple of questions. The first question is on your capital, we did see the common equity Tier-1 levels declining 40 basis points quarter-on-quarter, the privy markdown. You announced yesterday that you are going to negotiate with the central bank to get part of that the hybrid capital converted into common equity Tier-1, can you give us a little bit more color on that, what exact, how much exactly is being considered here, what's the timing, what will be the impact on your capital level. The second did see asset quality on the corporate side weaken a bit in the quarter offsetting the improvement on the individual side. Could you comment on that, is that – was that more driven by the SME portfolio, I know you have a guarantees but could you comment a little bit about the trends in asset quality in each of the portfolios will be great. Thank you.

Okay, Carlos. Transport portfolio are stable trend because that we built this portfolio based on credit lines stabilities better in terms of risk that's why we are very comfortable. And be resilient portfolio even though if you have a lot of volatility in the macro economic scenario in the future. The first one is about the capital. We are in discussions – we started discussions with the federal government about that we need to update about or to be compliance with the new regulations. We issue the hybrid instrument in 2012 and that we have now the new rules, the final rules for Basel III that's why we are trying to change a little bit. Just to be complex with the new regulations. We didn't provide – there is no number related to that but we have been – could be a positive for us because we are moving from level 1 to core capital that will be very positive for us and to improve the quality of our capital. Carlos Macedo - Goldman Sachs: Do you have any – can you disclose the amounts that we are negotiating with the central bank in terms that could move from Tier-1 to core capital?

Yes. The amount is R$8.1 billion and we will wait probably in the next 60, 90 days; we will conclude this process with the Federal Bank. Carlos Macedo - Goldman Sachs: Okay. How confident are you that you are going to be able to get this done, I mean cash economic has been able to convert a significant amount of these hybrid instruments and to common equity Tier-1, is this a similar process or is it something different?

It's a little different. But we are confident that we can build this solution between us and the federal. Carlos Macedo - Goldman Sachs: Okay. Thank you.

Thank you very much.

Our next question comes from Tito Labarta of Deutsche Bank. Tito Labarta - Deutsche Bank: Hi, good morning. Thanks for the call. Couple of questions also – just looking in terms of your loan growth has slowed down quite a bit over the last year. So just want to get a sense, I mean you are still growing above the private sector banks. How do you see your loan growth evolving particularly you can continue growing sort of lower risk segments? And then just side to that then following up in terms of asset quality, I mean your asset quality has been pretty stable for over a year already. Just given the economy and your growth, at what point do you think the asset quality sort of begins to turn and maybe you start to see some further deterioration there? Thank you.

There is an important difference between our portfolio and the portfolio from the private fees that is agriculture, the first one. And the second is the mortgage, if you get the loan growth to get the growth in this portfolio; it's above the average of our portfolio as a whole. We are pretty confident about this able to transport the delinquency ratio in Banco do Brasil because of the contribution especially for the individual portfolio because this portfolio is based on what we call the best fed line for us in terms of the delinquency ratio favorable business, salary loans, auto loans and mortgage. That's why we are pretty confident about this credit. And this range that's a stable trend. Tito Labarta - Deutsche Bank: Okay. And then just in terms of your growth, I know you have the sort of the guidance for the year, but if you think maybe looking into 2015, how much – how comfortable or what kind of growth do you think you can kind of continue to deliver on your loans?

The outlook for GDP growth is better if you compare the outlook for 2014. We are linked with the real economy in Brazil. If you get a better result came from the economy as a whole probably the bank will be able to capture this benefit on the loan portfolio. But, we need to wait until we have – we know that – there is a lot of volatility right now because of the problems – geopolitical problems. But, we are really confident that this portfolio is very resilient even if you have this huge volatility in the macro economic conditions. Tito Labarta - Deutsche Bank: All right. Thank you very much.

Thank you.

Our next question comes from Marcello Telles of Credit Suisse. Marcello Telles - Credit Suisse: Hello, good afternoon gentlemen. Thanks for your time. I have two questions. The first one is more or less specific question, regarding the hybrid instruments, sorry to ask the question, no matter, I know there have been many. But, do you plan or do you intent to see to be able to capitalize the interest of these instruments instead of given that they are going to be part of a common equity that you won that the interest expenses you might have to let them flow through the P&L. And you can book that in your equity directly. That's the first question. And the second question, if you think about the – your capital plan going forward, right, do you see a room for like a sale of loan portfolios down the road, I mean, what prevents you from pursuing that route in terms of try to seek in non-diluted ways to boost your capital base, of course, this R$8 billion is positive on the hybrid side but maybe something portfolio could also help boost the capital base on the Basel III scenario looking three years from now?

That is so common in Brazil to have the secondary markets for loans, you know that. But there is no restriction from the bank to do that. If you have a strong or boost secondary market for that but I believe that you need to wait until this market get more and more, how can I say that, with special prices it's very difficult to price the loan like this. It's very common in the United States and Europe as you know. But, it's a little different in Brazil. But, there is no risk ratio as to do that and in my opinion could be healthy for the financial system as a whole to do this type of business with the market especially with the assets some of the management comp and insurance comp and things like that. And Leo will talk about the hybrid.

Hey, Marcello, as we are under negotiation still with the Minister of Finance, so we prefer not to comment as we don't have a final structure. So we will communicate to the market at the right time and the right structure going forward.

But Marcello, it's a positive trend for that. Marcello Telles - Credit Suisse: Okay. Thank you.

Thank you very much.

Our next question comes from Mr. Boris Molina of Santander. Boris Molina - Santander: Yes. I had a question regarding your additional Tier-1, you already have an existing stock of around I don't know how much around R$22 billion and there are two types of hybrids, right, under different plans. Basically structures what are the conversational or the way that they absorb losses is a growing concern if it any commercial into equity or is it like down some principal. And would you foresee that be conversion of these two common equity Tier-1 would be through write downs or share conversions, could you just clarify a little bit how we should be thinking about the potential. We are interested in time to find out what is the fully diluted earnings of the bank assuming conversion of these instruments?

As far as I understood, so you are talking about the average we have right now. So they are not convertibles into shares basically the way that it is in its indenture. So if something goes wrong, so we have the write-down not the converse. In terms of the new hybrids what we have is, as an instrument that if we come to a final agreement with the manager of finance, so we will have an instrument that we add – will be added in core equity, Tier-1. Now, this instrument it is R$8.1 billion that maybe added and you have to consider as well that 20% of this instrument has already been phased out. So it's been reduced by having an agreement with the government. So we are aware another 20% into the additional Tier-1 capital. Boris Molina - Santander: Okay, wonderful. And my second question is, are you working in sort of plan to reduce the volatility on your capital from the fund mark-to-market, is there a plan to increase the specification of the portfolio or is there a way that you can slowly take this asset off your balance sheet because it's a pre-volatize, it's going to continue to hurt your capital ratios going forward?

Boris, sorry, the quality of the line here is not that good. If you don't mind to repeat your question would help. Boris Molina - Santander: Yes, sorry. Is it better?

Much better. Thank you. Boris Molina - Santander: Okay. Sorry for that. My question is regarding the market risk that hurt your capital ratios are you considering any measures to either increase the level of diversification in your portfolio or a mechanism to put this off your balance sheet in order to avoid this volatility over time?

Unfortunate, it's very difficult to protect from this high volatility that you mentioned before. There is no market in Brazil because you have a biggest exposure on the equity side especially concentrating – good name, very good name, company is in Brazil. But, we are suffering this type of volatility. We have important recover especially in the last 45 days, if you do the same calculation right now could be much different but again, there is no way at this moment to protect this type of volatility in our balance sheet unfortunately. Boris Molina - Santander: Okay. Thank you.

You are welcome.

Our next question comes from Mr. Maria Santiago of Santander. Carlos Gómez-López - HSBC: Hi. This is actually Carlos calling from HSBC. I'm sorry to come back to the hybrid capital. But, so that we understand, you have three series of perpetual bonds, when two of them are already in your capital one, and it's the third one, and you would try to make it compliant. So two questions, number one, why do you have to – the conversation with Ministry of Finance, I mean, your regulator they said in the press release side with – you are running through it or not, is there any fiscal issue or additional features in the bond that we are not aware of that both make the Ministry of Finance, the one decided. Second, so you want to include it in core equity Tier-1, now, this is not equity, so should we understand that the four Brazilian regulatory process, these booth we consider equity but I would imagine when you compare notes with international banks, this will be part of your Tier-1 but not your CET-1? Thank you.

Thank you for your question. Basically we – it's not under – it's a good starting point just to understand is, the instrument. It is – there are 16 requirements under the resolution 4192 and one of them is just to considered as C equity Tier-1 exactly international standards not something regarding the Brazilian regulation, the first thing. The second thing, it is – as we are still under negotiations with the LTN, the National Treasury, we prefer not to comment and go into the details about this instrument as we may change. But, we estimate that between 60 to 90 days we will have more details and we are going to come to the market with more details. But one thing that you to – good starting point maybe take a little resolution 4192, just to see how the 16 points that the instrument as to agree with just to be in compliance with this resolution. Carlos Gómez-López - HSBC: Okay. All right. But the answer is that you consider part of your core equity in accordance with Brazilian.

Not Brazilian but international standards. Again, I mean as we come to the end of this process by having a final agreement with National LTN, the National Treasury, we will add R$8.1 billion which is the total amount of this instrument to core equity Tier-1. And bear in mind that we have already reduced this instrument in 20%; we will add another 20% of this instrument to the capital. Carlos Gómez-López - HSBC: Okay. And given the lost absorption is not drawn, is treated depending on your level of core equity Tier-1 and therefore by adding it, you will be going away from that minimum of I believe 25% for core equity Tier-1 before the lost absorption is triggered, is that correct? So this would apply to that?

Yes. So the trigger is five and one-eight as the trigger for the instruments under the new regime of Basel III. Carlos Gómez-López - HSBC: Okay. Thank you so much.

You are welcome.

Our next question comes from Natalia Corfield of JPMorgan. Natalia Corfield - JPMorgan: Hi. Good morning. Thank you for the question. Sorry to touch on the hybrid capital again. Just a follow-up here. You are saying that you are going to conclude the negotiations with the federal government in 60 to 90 days. But I understand that you also have to have an approval from the central bank. So if that's correct, how long more would that take?

So basically Natalia thank you for your question. But, when we say 60 to 90 days, we are considering the whole process. Natalia Corfield - JPMorgan: All right. So that's much shorter than Caxia then because I think theirs took almost six months?

I don't know how long Caxia look to have a final agreement with them. But, based on the instrument that we are negotiating with them, this is the best estimate that we can provide right now. Natalia Corfield - JPMorgan: All right, thank you.

You are welcome.

Our next question comes from Mr. Gustavo Cambauva of BTG Pactual. Gustavo Cambauva - BTG Pactual: Hi, everyone. I have a question on LCAs and LCIs. This has been one of the fastest growing sources of funding for a bank. And there is an article on paper today mentioning that these instruments might lose the tax exemptions that they have. My question is how likely do you believe that is and what would be the potential impact for Banco do Brasil, if that actually materializes?

We don't have any additional information today but it seems that – it's not going to happen. But, again, it's something that we will unlike to say much because so it's an article in a newspaper, it might be right or wrong but the thing is we have to have more information over time just to make a better assumption on this item. Gustavo Cambauva - BTG Pactual: Do you see any potential if the tax exemptions don't exists any more?

I wouldn't take that assumption really so we have to – again, it's an article in a newspaper. So we would like to comment and to make assumptions based on a newspaper article. Gustavo Cambauva - BTG Pactual: Okay. Thank you.

Our next question comes from Ms. Nada Oulidi of (indiscernible). Nada Oulidi - Loomis Sayles: Hi, good morning. This is Nada Oulidi from Loomis Sayles. Thank you very much for the presentation and congratulations on the good results. I have a couple of questions if I may. The first one is related to the capitalization and C Tier-1 and if you could provide some on the impact of the new rule – the new macro prudential rule reducing the risk-weighted asset on payroll and consumer loan? As well as the inclusion of the hybrid and their Basel III and the combined impact of these – or any other impact and your best estimates for – from an equity Tier-1 ratio once we take these to impact into account? My second question is, related to the recent transaction with Banco Votorantim on payroll loans and if you could please provide some color on the rationale for such transaction and how you see the impact on both Banco do Brasil and Banco Votorantim? Thank you.

Thank you very much. I will start with the second question. We see that as very positive for us and for Banco Votorantim because we work together to – especially Votorantim, especially talking about the correspondence banks. Correspondence banks are very important for the business especially the payroll business outside the branches of the bank. That's why we are combining that knowledge that we have here in Banco do Brasil and inside of Banco Votorantim just to be more competitive in this type of market. Leo will respond for the first question.

Yes. So basically in terms of capital, what we have – the measures from the macro type prudential measures they are positive to the bank. It's very hard to say right now. I mean in terms of figures how much it will increase our capital, but the thing is, it is no doubt that we are talking about good measures that will help to boost our capital base.

The same is for the hybrid if we finalize this process. We expect to finalize in the next 60 or 90 days, between 60 and 90 days. But, in the end of this process we are able to conclude this to be positive for the Tier-1. Nada Oulidi - Loomis Sayles: And where do you see – what is your best estimate for C Tier-1 is hypothetically those measures are – are those included the hybrids are included. Right now, the C Tier-1, 7.5, so where do you see C Tier-1 if those hybrids are into it?

Basically I mean, it's positive, but, I mean at the right time – again, as we are still under negotiations we prefer not to come out with a figure. We will wait and see and we will come to the market with more information over time. Nada Oulidi - Loomis Sayles: Thank you.

You are welcome.

Our next question comes from Mr. Mario Pierry of Merrill Lynch. Mario Pierry - Merrill Lynch: Okay. Good morning everybody. Thank you for taking my question. Let me ask you two questions, first one is related to your – to the growth in your individual loan book clearly it has disappointed and you reduced your guidance. I want to understand here, is the reason for the disappointment is because of weaker market conditions or because of more aggressive pricing by you which led to the slowdown landing. And then sting was in the individual loan books. You have shown that mortgages have been growing at about 70% pace; it now represents 17% of your loan book. How much bigger can this portfolio get, and what makes this so profitable in growing so fast in the segment. Also in the individual loans, if you could comment as well why was there a decline in your loans with salaries or your salary loans on year-over-year basis, if this is a segment then you want to continue growing? And then I will ask a second question as well.

Mario, let me just start from the first one, so just given you a figure, if you could see in our MD&A, you can see that in regards of the total acquired portfolio you see that we – basically the amounts – and the table 37 taking the figure of total acquired portfolio back in 2013, it was R$20.4 billion. Going forward to June 2014, this figure was R$17.6 billion. When we were presenting during the press conference yesterday there was a very good slide that showed – was showing that this is a balance figure. But, just taking the flow, you can see that we bought in the same period roughly 48% less portfolio than – in the recent – in the past period of time. Basically what's going on, so we have a consolidation in the market, we have less available portfolios to be acquired by Banco do Brasil, this is the main, I mean source of this downward trend that we have seen. Just taking the organic individual portfolio as a measure, it grew, if I'm not mistaking 13.3% which is a good measure just to see – I mean just to take out this acquisition effect from the portfolio as a whole. If you don't mind to ask your second question again, would help. Mario Pierry - Merrill Lynch: Sure. What's in the topic – when we look at your mortgage portfolio has grown 70% and it represents 17% of your individual loan book, why you so comfortable growing so aggressively in mortgages, what do you see in the market, and how much bigger do you think this portfolio can get? And also if you could discuss why you are salary loans, they actually decline on a year-over-year basis and I think this is one of the segments that you want to continue growing more aggressively.

Yes. Basically, I mean just the salary loan is much more related to seasonality's and just going to mortgage market, you have to consider that we were delayed as entrants in this markets. So we are – as a latest entrant so we are still wrapping up the portfolio. But, and this is the portfolio point of view. Macro-economically speaking so you have to consider that we have a very low mortgage to GDP levels in Brazil that's why I mean, economically speaking so it tends to keep growing not only us but I mean the system as a whole, this is a kind of portfolio that tend to grow over time, more rapidly than the others. Mario Pierry - Merrill Lynch: Okay. Let me ask you then a second question related to your fees. Fee income as also disappointed and primarily when we look at the slide that you provided it's clearly because of two lines, right? Was the account fees as well as loan fees and if you could give us any idea, if there is room for you to increasing your tariffs, which could help your income growth in the future?

The first one was not so good for the capital market and they stress for the fee as a whole is to diversify the source of the fee that's why you provide a lot of information about the insurance business of the bank, the car business of the bank, especially that was the first time that we provided information. We are pretty confident for the trend. And unfortunately, we need to reduce the guidance for 2014, but for 2015 we are pretty confident about the good trend of this income inside the bank expanding the customer base of the bank not to do or to charge the same customer base. We have a positive trend especially talking about the agreements with the Post Office that's why we are pretty confident about the performance for 2015. But, unfortunately it's not time to provide guidance for 2015. It's only a trend. But, it's a positive trend. Mario Pierry - Merrill Lynch: Okay. So if you could discuss a little bit of then about your Post Office agreement, how successful has that been so for you, how is it coming along with regards to your expectations?

We are in discussions with the Post Office during the business plan now that we are able to provide all the product and service through the branch to the – all the Post Office points spread all over Brazil, it's 7100 new points that we are adding to the branch network of Banco do Brasil. That's why it's pretty good to have this alternative. It's pretty good to have more chain as to distribute product and service. But, we are – it's you and the process to build this business plan between us and the Post Office. But, we are pretty optimistic about this partnership. Mario Pierry - Merrill Lynch: All right. Thank you.

Thank you very much.

This concludes today's question-and-answer session. I would like to invite Mr. Leonardo Loyola to proceed with his closing statements. Please go ahead sir.

Thank you very much for participating in the conference call of Banco do Brasil. Have a nice day. Thank you.

That does conclude Banco do Brasil conference call for today. As a reminder, the material used in this conference call is available on the Banco do Brasil Investor Relations Web site. Thank you very much for your participation. And have a nice day. You may now disconnect.