That’s another important thing here to have scale. We have scale to serve this market and to be able to compete in this market. That’s how I see it. There is room for those will serve in a certain way. And there is days for those who will serve in a more connected way. That’s what I think for Bradesco over time, and we’re going to show you that. And then I think you asked about the side how we’re going to grow. Yes. We are going to grow effectively with good models. We have the capacity to do that with good credit models, a good follow-up portfolio management, and we are going to have portfolio management looking at the entire expanded portfolio from the retail bank to a wholesale sale bank, how we’re going to operate capital allocation. That’s obvious.
But we have distribution capacity. So I believe that today, competition is a lot more among the incurrent banks rather than fintechs. They still have a small share. So of course, they have opportunity, and they will grow a little bit more, but we have the levers, and we have the capacity to distribute in growth, depending on our models. That’s what I showed in the last quarter, we had that inflection point for the curve, both for individuals and SMEs. Thank you. Thank you, Tito. Our next question Jorge Kuri, Morgan Stanley.
Jorge Kuri: Yes. Good morning, everyone. Thanks for taking the time to do this and progress Marcelo on the new goal and best of luck. I wanted to ask about the return on equity that’s embedded in your plan and your ambition, your return on equity based on the 2024 guidance, it’s going to end up roughly at 10% to 11%. That’s half of what the guidance for Itau, which is your biggest peer is. I wonder how long do you think it’s going to take you to close the gap vis-a-vis and your best-in-class peers, five years out, if you execute your transformation program, where should the ROE be? That’s my first question. And first question I’ll ask my second one later.
Marcelo Noronha: Thank you for your question. As I mentioned, our ambition, our main target is to grow our profitability over the next five years quarter by quarter. We have an opportunity to show better ROE maybe at some quarter during 2026.As I mentioned, I believe in the first question that was asked. That’s when we probably will be able to exceed that cost of capital. And the idea is for us to grow during these five years, delivering comparable returns with our shareholders’ expectations and compatible with our expectations. That’s our ambition. There’s no date and time. There’s no deadline-specific date for this delivery — thank you, Jorge, for your question. But this is what we pursue as the main goal of our strategic plan. Thank you.
Jorge Kuri: Thank you, Marcelo. And my second question is about the C-level compensation package and particularly your compensation package, what type of targets is it linked to? Is it return on equity? Is it market share? Is it stock price? Can you walk us through how the success of the bank and your success are tied together?
Marcelo Noronha: Okay. So look, we are reviewing this plan. We’re preparing, as I said, a new human resources plan to be implemented by the end of this quarter. We’ll discuss it during the month of February. And the idea is to approve it in March in order to implement it. And then the C-level will be connected to this total compensation that we’re going to determine. Of course, we already have references and benchmarks in the bank. We are still working with the previous policy, but I believe that we are competitive enough to bring C-level individuals to our organization with competitive compensations. And we’ll compensate both people who are on the rate bank and those on change the bank, recognizing their respective roles here.
And then look, you talked about the indicators, so the indicators will depend on each of the departments, right? Where they are. We have indicators related to the plan, and we’re going to have indicators department by department for digital, of course, physical to effectively implement this new human resources plan. Of course, the higher the level of the executive more linked to the whole they are, the higher the hierarchic more relationship it has with what they effectively do and deliver. Next question from Eduardo Nishio with [indiscernible].
Eduardo Nishio: I wish you a lot of success in the new strategic plan [indiscernible]. My question is more related to the cycle and how this should change with the new strategic plan. In this past cycle, in my own assessment, you had three big challenges if we can call them that. treasury, market NII, there was way below the peers, ALL, particularly in the low-income segment, which negatively impacted the results of the bank. And your digital strategy, which was then restructured and now is under the bank. So if you could speak about these three points, what will they be like with a new strategy? I know you have very few days, just 60 days since you took over. But do you see any structural change in these three pillars?
Marcelo Noronha: Thank you, Nishio for the question. I will divide the answer with my colleagues. So I won’t be the only one speaking here. I’ll ask my colleagues to begin, and I will add to their themes. Cassiano and then Firetti, feel free to contribute.
Cassiano Scarpelli: Thank you. The market NII, as you said, suffered in 2022, ’23. 2023 recovered almost €1.7 billion compared to 2022, and it became positive. In 2024 in our guidance, it’s basically the natural levels that we had in prior years. So that’s a phase that is behind us. The whole loan book originated in the prefixed area and did well in our trading desk and client desks working strongly. So for the treasury, we believe that we now are handing the baton from the difficult period to a more normalized period of 2024 onwards. That’s for ALL. Marcelo mentioned we had ability to pay, particularly low-income cards, and as Michel mentioned, in our numbers, we see the important means that all delinquency curves are reducing, which is very good.
All our testing in the new cohort puts us in a very good position regarding additional ALL allowance for low lawsuits. So this still poses a reduction in mass retail. This has been happening in growth given the growth of the loan book, the nature of the loan portfolio with different types of clients. With more risky clients, we need more provisioning. So this year, that’s when we will be paying the bill this past bill and study in 2025, we will have a more natural cycle in terms of gallons for loan losses. As for the ALL as Marcelo showed, we recognize that we have adjustments to make, not only in ALL but in the whole credit cycle, which is reflected in our credit business unit, they will look at credit in an integrated way. The loan book, quality of credit approval.
So these structures in our view, will give a lot more effectiveness to credit management. We will also be making adjustments in terms of credit modeling. I think that modeling has always been a strength in this bank. But there’s always room to evolve and cost improvement. So we do acknowledge the need for adjustments in this part of the strategic plan. And Nishio, let me add, digital. Strategic paths are not limited to one. You can choose different paths through different paths, different organizations who can achieve common goals with both initiatives being successful. We decided in the past to better next DG. And then we saw that the values, the prices of the business changed in the market with a decent growth. So now we brought this close to Bradesco because it’s a core business for us.
But there are a lot of lessons learned in value here embedded in Devon NEXT. Our client base continues to grow. We continue to do things differently. I’ve that DG is an important laboratory for us also in our strategy for visco digital. So everything is closer to us, whether we’re going to integrate the platforms or not, well, we’ve seen so many interesting things with the new diagnosis. That perhaps will integrate next, keep the brand. So we have beyond bank. Our market place. We brought it from NEXT. We just delivered it for friends and families here at Bradesco. So we are testing this introduction with Bradesco-based but also connected to NEXT. We have another part of Beonbank, which is agribusiness, another marketplace. So this theme of beyond bank is quite often.
