Bernardo Rothe - Head, Investor Relations

Tito Labarta - Deutsche Bank Carlos Macedo - Goldman Sachs Thiago Bovolenta Batista - Itaú BBA Jorge Kuri - Morgan Stanley Jorg Friedemann - Citi Domingos Falavina - J.P. Morgan

Good morning, everyone, and thank you for waiting. Welcome to Banco do Brasil Third Quarter 2017 Earnings Conference Call. This event is being recorded. And all participants will be in a listen-only mode during the company presentation. After this, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions] This conference call is also being broadcasted live via webcast and through Banco do Brasil website, at www.bb.com.br/ir, where the presentation is also available. The replay of this conference call will be available through the phone number +5511-2188-0400, in English and Portuguese. To access the replay, you must ask the operator to listen to BB's conference call. Your identification will be required. Participants may view the 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 strategies concerning Banco do Brasil, its 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 estimate in this presentation. With us today we have Mr. Alberto Monteiro De Queiroz Netto, CFO; and Mr. Bernardo Rothe, Head of Investor Relations. Mr. Bernardo, you may now begin.

Good morning, everyone. Thank you for participating in our conference call. I would like to start the presentation in Page 4, where we have the strategic guidelines especially [ph] to review what has been driven us to improve the performance of the bank. So, the main guidelines are profitability, increased profitability, improve efficiency, control delinquency and improve the capital market of the bank through customer experience and the digital transformation. The highlights for the comparison between nine months of this year to nine months of last year were fee income at 9.9% growth; administrative expenses declining 2.7%, under control; cost to income ratio reaching 38.5%, the best ever ratio for Banco do Brasil in this year. In the next page we have the net income, a growth of 45.1%, to reach 7.872 in nine months 2017. The return on equity was 9.1% nine months last year, now it's 12.2%. In Slide 6, we have the earnings breakdown, where we show you how we built the adjusted net income in the accounted net income. Starting on the bottom with the adjusted net income, NII R$43.3 million, provisions reaching R$19.6 million, fee income R$19.2 million, personnel expenses R$14.1 million, total expenses of R$23.5 million to reach adjusted net income of R$7.87 million. Slide 7, we have the market ratios, earnings per share has been improving every quarter. We expect that should keep improving moving forward; dividend yield at 2.68%, price/earnings at 10.96 and price/book value of 1.04. Slide 8, the commercial funding, we're reaching R$572 billion, pretty much in line with the performance of the portfolio. Main highlight is the increase in savings deposits of 23.9% in comparison to the third quarter 2016. Slide 9 have the loan portfolio, the expanded view. It decreased 7.9% in 12 months and 2.7% in the quarter. The mix of the [indiscernible] portfolio, the loan portfolio has been changed where we see individuals and agribusiness gaining participation. Now companies are losing participation in the total loan portfolio. Slide 10, we have the disbursements considering - there you have $100 billion in first quarter 2016. As you can see, we have overall, an increase of 49% in disbursements in the third quarter 2017 in comparison to the third quarter 2016. It's the second-highest level of disbursements in the series. Now, we've been seeing increasing disbursements in our operations. Most of it came from individuals at worth of 100% in this compared with the third quarter 2016, while companies increased 25% and agribusiness has increased 39%. Slide 11, the individuals loan portfolio. We have the mortgage growing for individuals at 6.1%, market share of 7.8%; payroll grew 4.4%, market share of 21.6%. Also, it's good to point out that we have been growing faster through [retail education] [ph] years than of the types of clients that can payroll loans. Salary loans increased by 2% and auto loans 25.1%. Slide 12, loans to companies, expanded view, the reduction of 15.5% compared with 2016 and 3.4% compared to June 2017. Most of it came from the very small, small companies, 30.9% in 12 months' comparison, and 9.9%, almost 10%, in a quarter comparison. This is the portfolio that we are seeing an increasing disbursements, especially that are improving. But we expect the inflection point where we are going to start see the portfolio stop going down and start going up in the first quarter of next year. In Slide 13, Agribusiness, we have a growth of 5% in rural loans in a comparison to September 2016. We reached 60.1% market share. And then main highlight is increase in disbursement in the third quarter if you compare with the third quarter of last year. It gives you the first quarter of the new harvest, right, so it's a - the increase of 24.1% In Slide 14, we have the delinquency ratio of over 90 days. As we mentioned, before the peak of the delinquency, it was in the second quarter at 4.11, now we are at 3.94. We expect the stability in delinquency ratio in the second half, so we are believing on that and improvements really coming in next year as the [third quarter] [ph] starts to grow. On Slide 15, delinquency ratio by segment, where we had a decrease in companies to 6.7%, following individual leadership, 3.49%; and also, we include the agribusiness to 1.6%. Slide 16, provisions and coverage ratio. The total coverage ratio of the bank reached to 152% and provisions were quite stable when compared to this year 2017, and that we had - we will forward some supplemental provision for each key FMG in each quarter. Slide 17, coverage ratio by segment: individuals, 171%; agribusiness, 161%; and companies, 137%. Slide 18, average risk at 6.01% at the end of September and that the concentration levels with AA to C at the end of the quarter was 91%. Slide 19, we have the provision expenses flow by - decided by the loan portfolio for 0.99%, that's the total, have reduced a little bit. And the total provision, total expenses in these provisions, reached R$6.2 billion in the quarter, [Eduardo] [ph] reduction and that this expected rationalization expenses moving forward, should keep - continue to happen. Slide 20, NPL formation, we have a good performance in this quarter. We mentioned from 1.07 to 0.73. The lowest the nominal value in NPL formation since the first quarter 2015 at 4.68. If we are - the part of the renegotiated loan portfolio that was renegotiated, over 90 days past due, its ratio would be 0.8 and in the nominal value 5.13, also the most nominal value since the first quarter of 2015. NPL formation by segment, in individuals is quite stable. Also, stable, the agribusiness with more reduction, and in companies we have a big reduction, a growth of 1.72 to 0.95. Slide 22, we have the renegotiated overdue loan portfolio. We highlight the continued increase in amortization net of interest, is principal plus interest less the interest that was capitalized in the periods of R$773 million. If you consider the payment and cash, it's over of R$1.2 billion in this quarter. The coverage of the total portfolio by provision is 48. We have an increase in the third quarter of 2016. The NPL is reduced to 24.6%. Any transformation in this portfolio also is behaving pretty well, decreasing every quarter, which reached 5.69% in this quarter. Slide 23, net interest income. Result recovery of write-off loans was 0.4% decrease in comparison to second quarter and 2.2% in the nine months comparison. That gives the average balance of the total portfolio be reduced by 6% in the periods. Spread by portfolio, individuals increased a little bit to 16.32%, also impacting the total loan operations, which has grown slightly to 7.42%. We also saw an increase in companies spread and the agribusiness reduced a little bit. Slide 25, net interest margin, 4.56%, a reduction of 14 bps, pretty much explained by the effect of the mix, where liquid assets increased participation in our total assets in relation to the loan portfolio, that represents a 4 bps in decrease in the NIM in this quarter. But also, the level of liquidity - the write-offs given the seasonality that we have, that usually the first quarter and third quarter we have lower recoveries than the second quarter and the fourth quarter, that reduction in relation to the second quarter if we raise 10 bps in the NIMs in this quarter. Moving to Slide 26, fee income. We have the main highlights here are: checking account fees, 11.3% growth; also, asset management fees, which is 26.6% growth. One other thing that we'd like to highlight as well, with performance of capital market to increase by 13% in fees collected in the nine months of 2017. And the construction still the main item in terms of percentage of growth, 32.6%. Slide 27, administrative expenses and cost to income ratio. We have a reduction of 2.7% mainly coming from personnel expenses. We have in fact, a small increase in administrative expenses in nine months. On the right side of the slide, we have how it's behaving in the number of employees and ratios in Banco do Brasil. We have now the breakdown between - of traditional branches and digital service. So, we can see traditional branches decrease by 13.1% that compares in 12 months' comparison, while the digital service increased by 51%. Slide 28, BIS ratio, capital ratio, 19.15%, very good growth in the capital ratio and the Common Equity Tier 1 reaching 10.04% that in comparison to our goal of 9.5% Minimum Common Equity Tier 1 fully loaded on beginning of January 2019. Basically, the improvements in capital ratios has come from increasing profitability, the inflation on profits and managing the other business. Slide 29, full application of Basel III rules. We have from the total ratio of 19.1% after the total application of the rules and the use of tax credits, to 18.6%. In the case of the product Tier 1, we go from 10% to 9.5%; 9.5% already in our floor for 2018. In Slide 30, we have the performance against the guidance. Adjusted net income at R$7.9 million for our guidance of R$9.5 million to R$12.5 million. NII minus 2.2%, it is minus 4 to 0. Provision expenses net recovery at R$16.2 million; fee income 9.9%, a little bit higher than the guidance of 6% to 9%; and administrative goes to minus 2.7%, in comparison to the bottom of the guidance range of minus 2.5%. We have little here and there in the growth of the loan portfolio, but here we expect these grow - the guidance for loan portfolio growth and by segment as well to be the guidance of studio [ph] in the year as we move to compare to the fourth quarter of 2016, that is our lower quarter. Finally, in the next slide, the invitation for your participation now, meeting with the investors and analysts, the Apimec in December 6 at 2:30 p.m. in Renaissance Hotel, São Paolo. That will be broadcast live through the Investor Relations website, so you can follow remotely as well. So, now, we can start the Q&A, please. You may proceed. Thank you.

Thanks. Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] Our first question comes from Mr. Tito Labarta from Deutsche Bank.

Hi, good morning and thanks for the call. My question, looking at your net interest income, you're not seeing much growth this year, which is expected. But maybe thinking into next year, do you think you can see any growth in net interest income? Will your loan growth pickup be enough to offset further margin pressure? And can that be offset by lower provisions such that, at the end of day, your profitability will continue to increase into next year? Thank you.

Okay. Thank you, Tito. Well, the net interest income, we should see that being - by the end of the year, between what we have now and the lower of the guidance, right? Next year, we don't seem to have any guidance for net interest income. But I can tell you that, it's not the main driver of growth and profitability. So, we should see profitability still improving next year, not in the same level as this year, but actually this at double-digit growth in profitability next year again. And the main driver is not going to be the NII. Still, the main driver of growth for Banco do Brasil will be the fee income, the control of expenses and the behavior of the provisionary expenses.

Okay. Thanks, Bernardo, that's helpful. Maybe just a follow-up question in terms of your capital, because you are already at the 9.5% Core Tier 1, which is your target for 2019. So, I mean, where do you think you could be by the end of the next year? And I know there are some moving parts. There was talks in the press of the hybrid capital, and potentially having to pay that. You announced the sale of Neoenergia, you're still looking at Patagonia. So where do you think your capital could be at by the end of next year now?

Tito, 9.5% is the floor. It's not our target. So, we should keep growing the collective one of the bank to be. Maybe not at the beginning of 2019, of course, but over time to be over - or between 11% to 12%. But that's frankly, that has to be decided by the Board of Directors. What we have as the decisions is the floor of 9.5% by beginning of 2019. As a floor, it was higher than that, but we did it. And we want to be, of course, as high as we can get, not too high of course not have excess capital. But we're going to keep working to improve profitability of the bank, keep retaining profits and managing RWA so we can grow the credit portfolio with a lower density. That will be helpful for our capital as well.

Okay, great. Thanks, Bernardo.

Our next question comes from Mr. Carlos Macedo from Goldman Sachs.

Thanks. Good morning, gentlemen. A couple of questions on your loan book individuals. A little bit stronger showing this quarter, part of it driven by loan purchases on the auto side. Just trying to get an understanding in there what motivated this - your organic loan, auto loan book was still weaker sequentially. Is that just because of the type or the location of the sale being the dealership rather than the branch? And what's been driving that? And generally speaking, the outlook for loan growth in individual book, which is 2% to 5% this year, how do you see that going forward into next year? Second question on the back of that, the NPL ratio on that specific loan book has gone up, whereas for peers, Itaú, Bradesco, Santander - Santander is a bit off cycle - but the other two has been coming down. And you can see from just general information for private sector banks, they're coming down as well. Could you give us an understanding of why that is? Is that because of the makeup of the book that you have longer duration loans, and therefore, to write them off takes more time, just trying to get an understanding of when to expect an inflection in that specific NPL ratio? Thanks.

Thank you, Macedo, for your question. In terms of growth, at the levels this is based in, even in the outlook, so loans have been increasing double-digit. But in terms of dynamic of the portfolio, right, we grow with demand. And we don't force demand, but demand is growing and there are –we see even growth - big growth in terms of our loans that are made through borrowable [ph] buyers. So, they are doing that inside the dealers. So, you have, with respect for the portfolio moving forward, but it is part of the behavior of the portfolio. We're chasing a lot of motivations and that portfolio which starts here again throughout the loans moving forward. So, there is no restriction what we do here, and in terms of what we did inorganically, it's part of our guidance, right? So, we guide only growth of the organic portfolio. So - but anyway, we have shuffled with both operating team. In spite of what we do differentiated by portfolios from time to time. So that happened this quarter, which is normal. Nothing against what we have done in the past. So, for individuals, growth next year should be, I would say, individuals and other business should grow more than the rest of our portfolio. That's what we want to do. So, we seek room for growth in individuals next year, but to be higher than the average of our total portfolio. In terms of delinquency in individuals, that's the part of the process of looking at a higher rate of return in the portfolio. Right, so delinquency was expected a lot, but if you look at the slippage [ph], if you ask, that's what we're having in the MD&A. You can see that the 2017 slippage [ph] is performing better than any other else before. So, the quality of the growth that you see in the individual's portfolio is better than in the past. We still have a [forming task, forming show want to] [ph] the growth that we have in renegotiated loans with individuals in the total portfolio, but in terms of the delinquency of this overall portfolio. So that once you start growing that much, looking forward, and there we are going to grow now with delinquency especially the end of next year is going to be better than the end of this year.

Okay. So, just going back to the first question, you will engage in purchases from [Voparaching] [ph] as required by the - as per your prior arrangement where you did purchase ad hoc depending on what the bank needed, correct?

Yes. We don't have to, but we buy from time to time when we think that's a good opportunity for the bank. We don't have to buy anything from [Voparaching] [ph]. But we always bought portfolio from time to time, where we think that's a good opportunity for Banco Do Brasil. And the price has been very good, so it is a decision that we make from time to time. It doesn't mean that we are not going to buy anymore. It doesn't mean that we are going to buy in the future. It depends on the decision that's made on case-by-case basis.

Okay. Perfect. Thanks for having.

And just so, to remember, it's not part of our guidance, right? Yes, [Voparaching] [ph] does not impact the guidance.

Of course, thanks.

Our next question comes from Mr. Thiago Batista from Itaú BBA.

Yeah, hi, guys. Hi, Bernardo. I just have two questions. The first one about, I know that you don't provide any formal guidance for earnings for next year. But can you comment about the bank's initial expectations? How much the earnings should expand next year and the main drivers of this possible expansion? Second point, about the hybrid instruments. We saw in the press at the beginning of this week, some discussion about the R$8.1 million in hybrid instruments. Can you comment how those instruments impact the business loans, if this is part of the calculation of the equalization of revenues? So, if there is any change in those instruments, how this should impact the other business loans or like the business - the revenues or the acquisition revenues of the other business loans?

Okay. Thank you, Thiago. Well, we think expansion in the earnings per share next year. As I mentioned, it can be double digits. It should be more than single digits. Not like what we have seen in this year, a very high growth in terms of earnings per share. But a few growth - a good growth and what - something that I mentioned in the previous call, I would say you can expect that the low of the guidance for net income next year should be close to the total performance of the bank of this year, right? That means a good growth in terms of earnings per share, given that 2018 feels a very difficult year. The main drivers should be fee income growing with inflation. We expect it being growing with the low inflation and cost optimization-execution [ph] throughout 2018. So, provision expenses are going to still reduce in relation to 2017. So that doesn't mean the drivers are not the NII, right. And here we'll have a very low interest rate, where credit is going to grow. But eventually, throughout the year, so potentially, it would impact by the end of the year. So main drivers of growth: fees, expenses, and the administrative expenses and provisions. And again, without using our guidance, we still don't have that four of the guidance, right? The lower level of the guidance should be closer to what we are waiting are going to deliver this year. And this year, of course, if you'll look at the performance, we are close to the lead of the guidance until the end of the year. About the hybrids, right? Okay, the discussions that are appearing in the newspapers, well, what did we - the accounting office, these underlying is, so far, we are not the object of the analysis, not even an interested party. So, one day, if they decide to analyze the [paper going through] [ph] as well, they have to start something. And then we are going to have a chance to show the differences or the characteristics of what we have. And how these fund is used to and so on. These hybrids, it isn't funny for agribusiness. So, it's part of the cost that we have to consider it, when the equalization for each hybrid [indiscernible]. So, we have several shortage of funding, right? So, savings, there are accounts, demand deposit accounts, LCAs, the hybrids and so on and so forth. So, we have to put all the costs together. Cost of funding towards the cost of doing business, the cost of risk. And we expect risk-adjusted return that the bank wants to have in the portfolio. All of that gives us how much it's going to cost to finance out of these individuals. And the government then had how much is going to be paid by producers and how much the government is going to pay for equalization. So, if there is a change in cost of the hybrid, that's going to impact the overall cost of financing agribusiness. That can mean increasing cost for the producer or increase in the expenses with equalization by the government. A part of this formula, how we calculate the equalization every year, that's in, by the way, public through the information that the Minister of Finance is in every beginning of a harvest period. So that's how it works.

Okay. Thanks a lot. And thanks a lot for the clarification, Bernardo.

Okay, thank you, Thiago.

Our next question comes from Mr. Jorge Kuri from Morgan Stanley.

Hi, good morning, everyone. Two questions, if I may. The first one is on your third quarter numbers. And operating profits were down 8% quarter-on-quarter. Your net income grew because you had very low tax rate. I'm just trying to understand how should we think about this 8% contraction in operating profit over the next two, three quarters? What was extraordinary this quarter that will allow you to grow your operating profit going forward? What is it that you're expecting to reverse that you saw this quarter? And then my second question is on your effective tax rate. What should be the expectation for effective tax rate going forward? Thank you.

Thank you, Kuri, for your question. First, this quarter, we had an increase in provisions for legal, right, mostly labor that we book in this quarter. So that's why it's higher than what we had in the second quarter. And that will end up impacting the earnings before taxes. That's pretty much what happened [indiscernible]. Moving forward, provisions over time should be decreasing even for our labor. And we don't see that happening next year. It should be lower than what we are seeing now. This includes the financial opting, [ph] more than 10,000 people left the bank. And we are doing something really now to cover that. But fourth quarter may be higher, at high level. It's still at high level, not exactly higher than the third quarter, but it's still at a high level. But throughout 2018, that should be more normalized again. So, there's pretty much the type of expense, but we are anticipating future expenses doing provisions now and taken care of some potential problems and instead of letting that happen in the future. So, it's under control, part of the process of restructuring the bank. In relation to the tax rate, and by the way, we expect that the increase in net income quarter-after-quarter gradually, as we've been doing that this year. So, next quarter should be a little bit better than the - the net income should be a little bit better than this quarter, and moving through 2018, that gradual improvement should come as well. In terms of tax rates, we had two interesting things happened in this year, right? The tax rates in the previous quarter was higher than the soft guidance that we've been using through you guys and at this quarter it was lower. But if you look at the tax rate for the full nine months, they are pretty much aligned with our soft guidance. Just remember, the soft guidance is earnings before taxes less the X income, right, the X income is tax-free. So, if you take that out of the earnings before taxes, the tax rate should be - the effective tax rate should be between 30% to 35%. And then we are, in five years, with soft guidance, if you look at the nine-month perspective. We are higher than 35% in the previous quarter. We are lower than 30% in this quarter; nine months we'll find the guidance, the soft guidance and are looking forward for the full year, which should be between 30% to 35%.

Thank you. That's clear.

Our next question comes from Mr. Jorg Friedemann from Citibank.

Yeah, thank you very much for the opportunity. I also have two questions. The first one, with regards to the stabilization of cost of risk, I'd like to understand when you think that you're going to be able to stabilize the levels of cost of risk back to the normalized level that you had years ago. For instance, by 2013, 2014 provisions per average assets were growing - were running below 3%. They achieved more than 4% last year, running more or less at 4% this year. So how long do you think it will take for you to come back to these levels in light of what you have already of visibility since the integration [ph] points towards the fact that the worst is behind? And whether you think that this will allow already next year to see net interest margin adjusted by risk expanding? This is the first question. And my second question. You mentioned several times about the optimization of your risk-weighted assets and the efforts that you're doing to improve your capital levels. Of course, in addition to that as already asked in this call, you have opportunities to do some asset divestitures. And I would also add that on top of those points, you could have maybe some contribution coming from Previ, which, actually, according to my forecast, could be adding a bit of capital as well in the coming quarter. So altogether my point is at what level of capital would the bank become comfortable enough to think even about not working anymore with the minimum dividend requirements? What is the level of core tier one that beyond the 9.5% target would make management comfortable not only for unit growth but even about being a bit more flexible about payout? Thank you.

Thank you, Jorg, for your question. We are looking ahead in terms of capital, managing our capital position. As profits that are going to grow, so we are going to repay more profits, generate more capital. We have good growth to happen next year. But few lines of credit that marching in terms of our capitals, so they are priority for capital reform. We should keep growing the capital base. And over time, whether we can get to this - the problem that we have excess capital and then we should decide how to deploy capital. That decision has to be made when the problem comes. It's too soon to talk about how to deploy. So, the ways of deploying capital, one of them is to increase payout again. But that's a decision that the board has to take when that cycle probably comes. Right now, we are in a capital conservation mode. So, we are going to keep building capital all the time. The decision that we have at this point in time is to have a floor of 9.5% by beginning of 2018, right? We don't have a decision on the board on any other level, but I would say, my point of view that it should be between 11%, 12%, makes sense. But it's something that the board has to decide and when the decision is made, we can share with you, guys. In terms of cost of risk, we see the cost of risk normalizing over time. And it's going to take one, three years to do that. I would say, by the end of 2018 we should have a cost of risk that's more in line with what we had in the past. But you have to consider the change in mix that we are going through. So, as we're saying, that we don't want to deal, or we don't want to compete with capital markets in the large company exposure. That means that forecast is good. But for cost of risk, usually large companies carries lower cost of risk than the rest of the portfolio. So, the mix should change the overall end-result of the cost of risk of the bank. But that's not a negative. That's positive in terms of profitability and positive in terms capital. But we should get to the normalization by - at least by the end of 2018.

Okay. Now, that's very clear. Thank you, Bernardo. Just so one follow-up on the capital question, on top of all of these potential improvements that we mentioned, we heard that there is a discussion update I think on maybe in the level of the Central Bank, I'm not sure if [indiscernible] is leading this debate. But the risk-weighted assets of agribusiness launch in Brazil are running according to my understanding operating under circular 3644 for the Central Bank between 85% to 100%. Given the level of collateral that we have in the Piranasi [ph] segment as well as in some SMEs, it seems too high, especially compared with also other countries like France, et cetera. So, are you taking part of this debate? Do you think that at some point this could also change and maybe take into consideration these mitigating factors of the agribusiness booked to lower risk-weighted assets in this segment? Thank you.

On our point of view, I have shared that already, i.e., during the review which is very particular to results, different from things that happen in other places. While [indiscernible] analyze we have insurance. We have part of the remuneration that states for the equalization that comes from the government. We have several things that would allow a different treatment for the agribusiness - the Brazilian agribusiness than what is done from other parts of the world. But that's a discussion that is pretty much made through Fibra Bank with the Central Bank. And that it's very hard to cancel any change or to make too much comment on that. If there is any change, of course, it's going to be positive for Banco do Brasil. But we'll let the Fibra Bank to take the lead in these discussions with the Central Bank, okay?

Perfect. Thank you very much.

Our next question comes from Mr. Domingos Falavina from J.P. Morgan.

Thank you, Alberto and Bernardo. I actually also have two questions. First one is I want to follow up on, I guess, on Thiago Batista's call and as well as on the Portuguese call. In that call, you mentioned that you expect to something in the lower half or in the lower-end to be precise of the earnings for this year. And you also mentioned in that call low-double-digits earnings growth year-on-year. In this call, you even said maybe high-single-digits. If we look at your guidance, the lower-half would be something between R$9.5 billion and R$10.5 billion given the half is R$11 billion. And if we apply this low teens to high-single-digits earnings growth, we'd probably get to something between 5% and 7%. That would be below the consensus estimates. I've noticed share price is down 3%, underperforming the peers. So, my question here is, are you basically implying that earnings guidance, or should I say, the consensus for earnings next year should decrease? Is that the message you're trying to convey? And my question number two is or you're just being conservative or cautious in your guidance? And my second question is exactly in the same line but on fees. You're running at 9.9%. You also said in the mid of the guidance for fee growth. Mid of the guidance would be 7.5%. And to get to that, we basically have to see 0% growth of season in the 4Q year-on-year. And also, if you're just trying to be cautious, because I've seen this happened before on the costs, where you offer a guidance, and then eventually, in the last quarter you lowered the guidance. Or are you really basically trying to send a more negative message to the market? Thank you.

Well, Domingos, thank you for your question, which is generally [indiscernible] what are you saying is right. So, let's just look at what we [indiscernible]. And if we are going to increase net profit every quarter moving forward, we are not going to be below 10.5%, right? So, it's higher than 10.5%, potentially lower than 11%. So, what I had said is, due to the performance we should be below the mid of the guidance. Consensus is 10.7%, right? That's the consensus right now. And just do the math. If we are going to at least repeat the performance of the third quarter, where we are going to get 10.6%, right? So, what you are saying, as you are improving. So, should we be higher than 10.5%. We are not going to be higher than 11%. That's what I said.

No, makes a lot of sense. But the year-on-year is - I think is a number that strike to me as a bit negative.

No. Okay. So, look at what I said, the low of the guidance for next year should be close to the –our performance for the full year. So, let's say, we delivered a consensus, low of the guidance next year should be close to 10.7%, if you deliver the consensus.

So, perfect. You said that in this call, but in the previous one you said, low-single-digits, which wouldn't mean the basic [Multiple Speakers] guidance.

No, no, no. I said that we are not going to give the same growth as we will, but should be double-digits, low-double-digits. Okay?

All right, oh perfect, super clear. It's better, because I just - we got a couple of questions in here and you sound a bit - all right. It makes more clear.

Yeah, in fact, it's not that far from consensus for next year, what I'm saying.

Okay. So, there's no message that consensus is high. It helps a lot. Thank you.

Yes. But just to be clear, in terms of decision [ph] as well, what I said is, [indiscernible] last year was a very good performance. So, when we put fourth quarter in the math, we are going to be inside the guidance, over the middle of guidance for fees [ph], but below the top of the guidance. So, where decision [ph] is in top tends to be closer to the top than the mid.

Yes. It makes more sense now. Super clear. Thank you.

Okay. That will - thank you for the question. So, we could have clarified that for everyone. So, if someone didn't get the right message, just to give you, that we're in a good track to be leading a good growth in earnings per share next year. Thank you.

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

I just would like to thank you, everyone, for participating in the conference call. And please, let us know if there is anything else we can help with, details, any information to add. My team and myself, we are at your disposal. You can call us. We are going to be here to help you. Thank you very much.

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