Good morning, everyone, and thank you for joining us for our second quarter 2026 earnings conference call. We are broadcasting live from our headquarters in São Paulo, and we will be dividing this event into two parts.

First, our CFO Carlos Muñiz will provide a detailed analysis of our performance and our strategic direction for the coming periods. Next, we'll have the Q&A session.

Here are some instructions for you. We have three audio options on the screen: Portuguese, English, or the original audio.

To select your preferred option, simply click the button at the bottom center of your screen. To ask a question, click on the hand icon at the bottom of your screen.

Today's presentation is already available for download in our IR website. Now, I'll turn the floor over to Carlos to begin the presentation.

Thank you, Camila. Good morning, everyone.

Unfortunately, we don't have to have a button or translation into Spanish, I'll try to use my best Portuguese, and then during the Q&A, you can ask your questions. I will start with a summary of the best results for the quarter.

We ended the quarter with recurring net income of 3 billion BRL and ROAE of 12.5%. This result reflects a more challenging macroeconomic environment, particularly due to the rise in the cost of risk.

It also reflects the decisions we made in managing our balance sheet. We are rebalancing our product and customer mix, always striving to achieve a better risk-return ratio.

This shift may have short-term impacts on revenue, but it is essential for building a more balanced, resilient, and predictable operation. Our focus remains clear: to grow with quality and sustain consistent profitability over the medium and long term.

Now moving on to the next slide, we present the evolution of our customer base and the initiatives to deepen our relationship with customers. We ended the second quarter of '26 with 76.2 million clients, a 6% increase over the past 12 months.

As you may recall, we discussed in the first quarter the launch of Santander Rewards. The first cohorts already show increased engagement, particularly in the growth of card spending.

To date, 15% of the eligible customer base has enrolled in the program. We also posted a 30% increase in the number of registered Pix keys.

The rewards program, combined with the use of artificial intelligence, should expand our ability to create value with every interaction. As a result, we are strengthening customer engagement, customer primacy, and long-term relationships with our clients.

Now we will move into the numbers. As we have highlighted in recent quarters, we continue to grow our loan portfolio selectively.

This progress reflects our dynamic portfolio management and our ongoing focus on risk-adjusted profitability. We maintain strict lending criteria, and as a result, we see varying growth rates across products and segments.

In all cases, we prioritize quality, pricing discipline, customer loyalty, and transaction volume. On a year-over-year basis, I would like to highlight growth of 13% in cards, 15% in consumer finance, and 11.5% in small and mid-sized enterprises.

In retail banking for individuals, we remain attentive to the portfolio's composition. We have reduced our exposure to higher-risk profiles, especially among customers with monthly income below 4,000 BRL.

The portfolio of this segment has declined by approximately 30% over the past 12 months. In mortgage, the highlight is home equity, with 40% growth over 12-month period.

Consumer finance also remains significant, supported by a higher quality mix and a greater share of new and electric vehicles. In corporate, we maintain positive growth concentrated in the corporate segment and supported by disciplined pricing.

Overall, the portfolio reflects the choices we made to improve its composition and strengthen the risk-return profile. Next, we see that client NII has remained virtually flat for the year, despite the declines seen in the quarter.

There are three main reasons behind this trend. The first is the increased impact of deferred expenses related to banking correspondents.

The second is the lower funding result due to the lower average CDI. The third is the selectivity in loan origination, which we discussed in the previous slide.

Combined, the effect of the deferral and the lower CDI impacted the spread by approximately 10 basis points. NII also reflects the shift in the customer mix toward the high-income segment.

This segment has a lower structural spread, approximately half that of the low-income segment. Therefore, its increased share is consistent with the portfolio's rebalancing.

As for market NII, we saw a slight improvement in financial management results, partially offset by weaker performance in the market-making activity. In funding, we continue to expand the retail share funding.

This strategy reinforces customer loyalty and increases transactional volume. Transactional deposits grew 18% over the past 12 months.

This progress reinforces the growth of primacy and better funding composition. Talking about commissions and as a result of this trend, fees and commissions were also impacted by stricter credit standards.

Nevertheless, we maintained strong performance in credit cards and consortiums, both on a quarterly and annual basis. In credit cards, we continue to grow within our existing customer base, driven by increased transaction volume.

In insurance, we saw improved performance in non-credit-related businesses. In credit-linked lines, however, the trend was influenced by selectivity in origination and by the higher share of new vehicles in our consumer finance.

In checking accounts, the increase in transaction volume has expanded the benefits and waivers granted to customers. This trend helps explain the performance of this line item, and at the same time highlights the growth in client primacy.

Now turning to provisions, the quarter was impacted by a couple of significant factors. Among them are specific wholesale banking cases and the inventory adjustment resulting from the new methodology for writing off transactions.

Together, these factors totaled 700 million BRL. We also continue to see pressure on the portfolios of smaller companies in the agribusiness segment and among low-income individual clients.

This scenario required a higher level of provisioning. Part of this trend also stems from the more restrictive stance that we are adopting in renegotiations.

We have been requiring additional collateral or cash infusions to formalize agreements. This discipline may create pressure in the short term, but it will improve the quality of renegotiated loans.

Regarding delinquency, we observed a favorable trend in the short-term indicator. The long-term ratio also improved.

However, part of this change is related to the adjustment in the classification of non-performing loans, which had an effect of approximately 29 basis points on the total indicator. We continue to monitor these portfolios closely, carefully, and with discipline.

Moving on to the next topic, let's review the evolution of expenses. During the quarter, personnel and administrative expenses remained well under control, favorable behavior.

Their growth was significantly below inflation, reflecting our continued discipline in cost management. Lower revenue generation put pressure on the efficiency ratio, which closed the period at 39.3%.

It is important to note that this performance was primarily driven by revenue dynamics. There has been no change in our spending discipline.

We continue to invest in business expansion and technology. Today, 100% of our employees have access to AI-powered tools that support both our efficiency initiatives and our growth agenda.

At the same time, we continue to reduce our cost to serve. In the low-income segment, this indicator has already declined by more than 30% over the past two years.

In addition, the broader adoption of global platforms is expected to further increase our operating leverage and accelerate this efficiency journey. To conclude, we see here our income statement.

We ended the quarter with recurring net income of 3 billion BRL and a 12.5% ROE. The decline in net income and profitability reflects a more challenging macroeconomic environment.

Revenue growth was lower, and the cost of risk increased, with the latter being partially affected by one-off items, as I mentioned. Even so, our portfolio continues to show an increasingly attractive risk-return profile.

We also maintain a well-balanced funding mix across funding instruments, client segments, and pricing. This quarter reinforces an important take-home message: discipline in balance sheet management may have short-term impacts, yes, however, it also leaves us better positioned to navigate periods of volatility and sustain a stronger trajectory of growth and profitability over the medium and long term.

We continue to make progress in key areas, such as client primacy, while improving portfolio composition, funding efficiency, and technology. We are building an increasingly balanced, resilient, and predictable franchise.

Thank you very much. Now, let's start the Q&A with Camila.

Thank you all. We are back.

To ask questions, just click in the hand icon that appears in the lower part of your screen. We will answer the questions in the language that they are asked.

We would ask analysts to ask just one question so that everybody has the chance to participate. The first question comes from Pedro Leduc with Itaú BBA.

Good morning, Pedro.

Good morning, Camila. Good morning, everyone, and thank you for taking my question.

My question is related to revenue. I would just like to get a better understanding, because when we look at NII and in fees and services, there may be some detractors, or also some positive things.

Could you please help me understand about the offenders like changes in mix or whatever went against it, but maybe you can help me explain what would be a favorable wind? At the end, maybe you could help me understand when do you think that revenue will resume growth, maybe year-over-year or month-over-month?

That would be great. Thank you.

Pedro. There are some aspects that we can control and some other aspects that escape our control, like CDI is something that we have no control over and we have no idea how it will perform in the future.

We have an idea, but not any certainty. The adjustment of the correspondentes is something that we know, that's something that will happen.

We know that things will not be any worse in the future. Then we usually say that it's not a matter of following, believing or not believing, but we focus on quality, quality, quality.

We are not concerned with market share in the short run. We are more concerned with macro returns, being certain that every origination we do has to be a profitable origination, one that makes us comfortable.

This is what's leading us to make tough choices. I wish I could have an overwhelming revenue, but with all of the things we have in the macro return, I would like to focus in a more safe path.

Then what happens is that we are putting on the side the most profitable products. We are decreasing our presence in all products that have very, very large margins and rather focusing our attention in secured operations: government guarantees, Pronamp, FGTS, real estate guarantees or mortgage guarantees.

I don't know whether I've heard it from you or other analysts, but our consumer finance is growing. We are growing in new vehicles, electric vehicles with a very strong down payment at the beginning, and in the older vehicles, we just focus on the audience with lower risks.

This is linked to many of credit operations. Fortunate or unfortunately, the more risky customers, maybe we have the possibility of getting more fees, but we are putting that on the side just to other areas that we have more opportunities.

This is why we are stepping back a little bit in our fees. We are expanding in other lines, like consortium, insurance, and others, but we also saw some drop in those that were more linked to credits in the lower brackets of the population.

We are very optimistic in terms of growing our revenue. I think we will have a good performance.

The purpose is now not to grow this line, but just make sure that we are not going to make bets or investments, because then we don't want to have to pay the bill in the future. We are still in the process of low single digits in the year.

That's interesting. Thank you.

Pedro, I will only add here something related to client NII. If we look at the spread, Carlos quickly mentioned the impacts we have in terms of funding margin and with a lower CDI in the quarter, and also impacts with the higher expenses of banking correspondentes.

Quarter-on-quarter, this has a 10 basis points impact, and in the year, almost 20 bps or basis points. This impact should be fading out over time, we hope that by the end of the year, we will get back to our regime in terms of expenses.

As for the mix, this is what is putting pressure on credit. There, I would highlight two aspects.

One, we are growing more with secured loans, as you said. In SMEs, we have more than 40% of the portfolio that is secured.

In terms of individuals, I would like to highlight 8% growth in the Select segment, whereas in the lower income, there was a drop of 10% in the year. At first, this puts pressure on the result, will impact revenue, but there's still the counterpart of lower loss provisions.

At the end of the day, we hope to reap the benefits.

Thank you, Camila.

Thank you. Now we move to our next question from Ricardo Buchpiguel from BTG Pactual.

Good morning. It's Schroden.

Schroder, Gustavo Schroden from Citi. Good morning, Gustavo.

Good morning, and thank you for taking my question. Good morning, Carlos.

I will speak not necessarily about revenue, as Leduc mentioned, but a combination of revenue, loan loss provisions, and credit quality. I think it's very clear through your comments that the bank's intention is to be more conservative, to focus on mid and high income, but the counterpart is not there yet, which would be a lower loan loss provisions.

We understand that there would be some one-off cases, that was one very specific case and the change in the write-off policy, 700 million BRL should be therefore understood like a one-off in loan loss provisions increase. We see a higher over 90 NPL in all lines.

Therefore, what could we imagine in terms of asset quality and loan loss provisions throughout the year? Or if you could also give us, not a very specific date, but when do you think we would be able to see NII after loan loss provisions improving?

Do you think it's more towards 2027, or maybe by the end of the year we would see an improvement in this risk-adjusted line?

Thank you for the question, Gustavo. I think I already said that personally I'm not very optimistic.

If I had to put this date, maybe this date would be closer to 2027, and I don't know whether Camila would agree with me. We are still waiting for this change, not only improvements in loan loss provisions, but we still have operations following the 4966 section.

Every year, we have to incorporate a new macro scenario. This macro scenario, I wasn't here when it was done last year, but I think what we will have to incorporate this year will be worse when compared to what we have currently in our models.

I do not expect a big change, because probably we will have this impact and we will have to factor that in in the next quarter, if I'm not mistaken. The important thing for me and what we started to see is the actual performance of the portfolios, and we see some more positive scenarios.

I don't know whether this would be able to compensate this entire impact. You notice that loan loss provisions now, it's better in the portfolio, even though it's not exactly in line with everything you mentioned.

We are doing the right moves, and at some point this will have to stop.

I think the mix adjustments we've done is not yet apparent in that line. As Carlos said, in the past quarters, we've had impact both coming from the wholesale and agribusiness.

We already talked about this reduction, but this still represents about 40% of our individuals portfolio. With time, this will be diluted, and then we will deal more with models and also macro deterioration.

The main lines, as Carlos said, but we see more pressure in low income, agro. We lost sound.

That's great. Lower, agro, and SMEs.

How much of that higher LLP refers to review of models/4966, and how much of that reflects the deterioration of the portfolios?

In terms of LLP, we've seen it, as Camila said, only individuals of lower income and in the lower segments of companies. The remaining portfolios are flat or even improving, I would say.

For the model, I don't have a number yet. I wish I could share it with you, but we haven't yet made a calculation with the current scenarios.

That's still in progress. We know that this country will have elections right around the corner.

I come from a country where things didn't change every week like they do here, I don't know exactly what is the macro scenario that we have to assume for 2027. I think for the next regulation, we will have more clarity about how much that bill will be.

I think we will see the worsening of a scenario.

Schroden, as a reference, Carlos highlighted during the presentation, but if you look at loan loss provision expenses, this first quarter was 7.7 billion, and now we mentioned this as being more one-off impacts. There were some things related to wholesale banking and also the deployment of the new write-off policy, especially for unsecured loans.

Both things consider, we had 700 million. There is a percentage of recurring.

As Carlos said, when we update the macro scenario, we will probably have more demand in some more specific lines.

Perfect. Thank you very much.

Thank you. All right, and now with Ricardo Buchpiguel with BTG Pactual.

Good morning, Camila and Carlos. Thank you for the opportunity to ask questions.

In the quarter, we saw that DTAs have increased, putting pressure on the tangible capital of the bank. Given the importance that this part of capital has on ROE and dealing with high interests, do you see room to increase the tangible cash of your balance sheet?

What initiatives can you have to accelerate this process? Thank you.

If you have the question for that question, please do share it with us. Unfortunately, the answer is to generate revenue, and revenue that will not entail loan loss provisions.

The moment of the country is not helping. We're focusing on a risk-free revenues on one hand, and to improve the cost of risk that we are having.

You will remember that, in parallel to the solution which is this, we're making an effort to simplify the organizational structure. This is happening in the possible speed.

We are including organizations outside the perimeter of the bank. We did the last one in Q2, and this has to improve.

This will improve the consumption of DTAs. These are the levers we have in mind: integration of other organizations to improve the tax base of the bank, improve the results, which unfortunately is moving forward more slowly than we would have liked.

Clear. Do we have any feasible idea of the timing for these processes to be completed?

I don't know if you can... No.

We had told you that we thought that we would start having a turnaround of those tax credits, DTAs, between 2027 and '28. I haven't got a plan for the next 3 years yet for '27, '28, 20 '27, '28, '29, but it shouldn't change much.

Thank you. Now,

we have a question from Daniel Vaz with Safra. Daniel, good morning.

Hello, Camila. Hi, Carlos.

Good morning, and thank you for taking my questions. I actually would like to go back to the point of revenues and risk-adjusted NII.

I think that the big miss in market forecast was not the provisions, but rather NII. Particularly, NII in the spread seems to have a greater carryover for you to recover.

As Carlos mentioned, we need revenue. This gap that will take longer to recover post-provision NII seems to be playing against your ROE for longer.

With this ROE level, around 12, 13, between 12% and 15%, how long will that take? About a year?

Does this have an implication for the payment of IOC? You're paying 2 billion by half year.

Do you have comfort to continue to distribute the same level of IOC, given this lower level of ROE?

That's a good question, Daniel. Let's try to answer it in two parts: IOC and pressure on profitability.

I think I spoke about the mix and that we are convinced that we are making the right choices in terms of the mix. The spreads we captured in high income clients, in mortgage or Pronampe and this mix, the growth we have in mortgage is not helping us post a strong growth on that end of the equation.

Even with the policy of renegotiations and doing things well, playing safe, I should say, this is not helping us have a booming growth in the top line. This will improve the mid to long term.

Will this impact the payout?

No, we will maintain our payout policy of 50%. Of course, this will depend on the budget and on what we think we can achieve in terms of results next year.

The payout policy is not planned to change. We have committed to 50%.

This quarter was a little over that, with an EBT under more pressure, it ended up being over 50%. We have had periods where during the year this was a little bit higher, a little bit lower, but I think that 50% is kind of a benchmark for the long term in terms of our payout policy.

It's clear. A comment on the ROE?

I asked whether you have visibility of how long it should stay kind of lower, in that lower range from 12% to 15%, any estimate of duration?

I believe that by next year, we will be returning ROE to more reasonable levels. The market will put pressure on us to get there.

In truth, I cannot really show you, but what we came in the latest origination cohorts, it's making me feel more comfortable that we will achieve better levels. What I do not control is the speed.

If we had a possibility of having a write-off of the whole bank at once, this would show you the results of the last 12 to 18 months. I think that you would have a bank that you would approve much more.

All right, super clear. Thank you very much.

Now,

next question is from Mario Pierry from Bank of America. Good morning, Mario.

I think his screen is frozen. Mario, can you hear us?

Let's go to the next question and then we go back to Mario. Next question from Thiago Batista with UBS.

Good morning, Thiago.

Hi, good morning, guys. Can you hear me well?

Yes, loud and clear.

I just have a follow-up on Vaz's question, because Carlos, you said that Spain will be demanding of you better profitability, and they're very vocal saying that especially when interest rates become more normal, we should see tangible equity or better returns and tangible equity approach by 20%. What about today's ROE?

Even before the last quarters, what would be the main levers so this ROE goes from 16% to 20%, or something close to 20%? What does it take?

It's very simple. On my side, we have to continue making progress with non-credit-linked revenues, and the second has to do with the group.

We have to capture all of the investments we are doing in global platforms. The third aspect is normalization of loan loss provisions, which reflects the choices we made in the past.

The combination of the three, I don't know whether they will all happen at the same time or they will happen in sequence, but that's what will help us go up to levels close to 20%, as you mentioned. Just to give you a little bit more details, non-binding credit revenues, some of them have a higher weight when you are accelerating the portfolio, but there is also funding.

There was an impact due to lower Selic rate, but we are working hard in the funding Selic to reduce the cost of deposits while, at the same time, having additional revenues coming from that same line. I think, Camila, we also talked about market NII.

We have a legacy portfolio that we inherited from the past, but with time, this will be enhanced. This will improve, as we've been saying to you, we are expecting some improvement on the side.

This should also help improve profitability. Then I'll say this is positive on the NII line, even if we pursue the same strategy of credit origination.

Thank you, Thiago. Let's try to go back to Mario Pierry.

Mario, good morning, can you hear us?

Good morning. Thank you.

I just had some technical problems. Thank you for the opportunity.

I would like to focus on the mass market segment that still accounts for 40% of your portfolio, and this is a segment that is going through a lot of pressures given the macro landscape we have: high interest rates, high household debt level. What would be the ideal level?

How much would you like to decline the exposure to this segment? I also notice that you made changes to credit cards in lower income.

Does this have to do with loss of primacy or not?

You'll need to have the answers from many banks before I can answer that question. In our case, it's not a problem of client primacy, but it's a structural problem that affects the entire country.

High interest rates puts pressure on households. I would say that I don't know what could happen in the future or what will happen after the elections.

I don't know whether the current levels of support we have from the government to the population will be maintained after the elections or in the future, and whether the level of employment, best historical figures ever, I don't know whether they will be maintained, given the speed of the economy or whether the economy improves. Probably our feeling regarding the more vulnerable sectors may change, we don't know what may happen.

In regards to the wealthier segments, we'll have cohorts that are not so profitable to us, and these are segments that we cannot monetize as much. We have people who earn less than 4,000 BRL, and there are banks that can operate with this segment much better than we do.

The speed of the portfolio reduction will involve a mix of our operations and origination. We are still doing origination with payroll-deductible loans, 400, 500, and I think we may end the year with levels of origination higher than that.

I think what is more difficult to control for us is the fall or the drop of the portfolio that we have, because then that depends on our payment capacity or how negotiations will be happening. I mentioned that during my presentation, that we do not want to do just smoky renegotiations or things that fade out in the air.

We want to be able to deliver discounts to those who have the firm intention to repay their debt after the renegotiation is in place.

I would add one more point, Mario. We've been doing strong work to our cost to serve to this specific segment.

Carlos just said that there was a reduction of 30%. Part of the monetization of this group is LLP, that's the main part, that's where the pressure is, and the other part has to do with cost to serve.

We are working in that segment as well, we want to be profitable in that broader group that at the moment is not profitable, but we believe that in the near future, it will become an interesting business for the bank.

If I can come up with a follow-up question, because you talked about the renegotiation, what was the impact of the Desenrola program in the quarter for you?

It was very low. In general it was low.

Mario, as I said before, we already had our own recovery policy. I don't know whether the word is aggressive.

We offered big discounts to those clients that had a firm intention of paying their debt. The Desenrola didn't expanded those opportunities.

It's not that the rates were better in the program, but it didn't move the needle for us very much. I don't have the numbers right off the bat, but I think Camila can help me.

I think, just hundreds of millions, and in terms of individuals, maybe it was a bit better, but it didn't change the level much in terms of recoveries.

Thank you very much.

It was slightly higher than the Desenrola 1 program, but what we notice is that there is very little adoption from the people in debt. It was the same thing in the original program.

As Carlos said, before Desenrola, we already provided interesting conditions for this renegotiation, we didn't see any significant increase with the Desenrola program. Thank you.

Now, a question with Yuri Fernandes with JPMorgan.

Welcome. Oh, good morning, Camila and Carlos.

I'd like to go back to NII. I think that this has been asked, but I will ask differently.

I think Camila mentioned that of the 40 basis points, about 30 came from funding and the impact of banking correspondents, actually 10% and 30% is the mix related to derisking. My question is, you will continue to derisk the portfolio, right?

That's what I understood from Carlos. Will the spreads continue to drop because the derisk continues, or two, no, there was an impact of write-offs, we had more write-offs, we got a renegotiated portfolio, and that included perhaps the renegotiated portfolio and personal loans, and perhaps this has influenced a greater drop than the 30 basis points?

I just want to know whether there's another factor, because a derisking trend is not new with Santander, you've been reducing the mass retail. Why did it drop a lot?

If the derisking continues, it will drop even further. Another question regarding fiscal DTAs.

A provocation is to recapitalize dividends. You have IOC, you have the tax fiscals, you call back the capital.

It's not easy, the problem continues, but it's just a provocation. It is one way of consuming DTAs over time.

I like the provocation, Yuri, a conversation we had internally and haven't decided yet. We have to speak with Gilsan and the rest of the management to see what we're going to do, but we will communicate the market when we make a decision in that regard.

Now, going back to your question about the mix, which is a good question. We did have greater impacts that impacted the drop in NII and the loss of these basis points that you mentioned.

Yes, that derisk trend is kind of old, but I would say that it's becoming more aggressive in recent months. I think that government programs were not there all the time, and the conditions of these programs put even more pressure on margins.

Renegotiation conditions are kind of newer at the bank, and we will continue with discipline, and this has a cost. NII paying a price.

I spoke about riskier products. I get surprised when I look at the level of interest rates that we have in revolving credit and others, so that we shouldn't just focus on charging interest, because we've seen some indications by the government in the past putting caps on these products, I don't want this to get in the way of our business model, which is highly dependent on these audiences and interest rates that we don't think that they are sustainable in political terms.

I think that there's the impact that you mentioned, a slow portfolio pulling down the spread. There are some securities that we carry and then we put available to clients, but the bulk of it is the mix, as Carlos mentioned.

As we reduce, as we said, the spread of Special versus Select, in Select, what is growing is mortgages, real estate, or loans, gaining almost 100 basis points in the last year. These are portfolios with lower spreads, and we're betting on them for the mid to long run when that line item would be adjusted to the cost of risk.

In the consumer finance, we had an origination for new vehicles of 7%, and now we are at levels of 22%. These are choices.

We are deepening this strategy because the macroeconomic environment is not helping us to be more optimistic. Again, I prefer to play safe.

In my first communication with the market, I prefer to have a bank that is safer. They won't give us positive surprises, but not negative surprises either.

Yes, perfect. Thank you very much, Carlos and Camila.

Thank you. Have a good day.

Now, we have a question of Marcelo Mizrahi with BBI. Mizrahi, good morning.

Hello, thank you for the opportunity. Again, my question is related to derisking.

Could you share with us any information to help us try to measure the size of portfolio adjustment? If we think that we have about 100 billion in consumer credit, SMEs about 60-odd being the credit card portfolio with more billion, thinking about the portfolios individually or about the whole portfolio, this is how much is not the target portfolio anymore and the portfolios that are undergoing derisking, the low income or mass retail portfolios that are not providing us with the desired profitability?

Camila can help me. We haven't got any problems.

We have actually appetite to continue to grow in the wholesale segment of larger corporates or second-level companies. In SMEs, that's the more concerning group.

We have a reasonable behavior, and the government programs gives an opportunity to generate credit that we are comfortable with. Now, as for individuals, Camila was very clear, we have clear in our head the Select group and the mid-Select.

These are audiences that make us comfortable, but with half the spread. For mass retail, is mass retail untouchable?

No, we can work on it, but this has to be done selectively. I think that people earning less than 4,000 BRL, we will not be able to compete with other incumbents, and we are not going to go for that.

Above that income level, we'll always look for operation with some kind of collateral, either in consumer finance with higher quality cars, not motorcycles, and in payroll-deductible loans. The unsecured loans, that would be complicated for us leading with lower income groups.

If Santander is not to lead it, sharing the leadership in the vehicles, in auto loans in Brazil, Santander has an important card portfolio,

we are talking about, you mentioned, 7% or 8% increasing to about 15% or 20% in EVs, electric vehicles, but I have the impression that this portfolio classified as mass market is still very large compared to the whole portfolio. In order of magnitude, is this corresponding to half the portfolio?

This portfolio that the bank is more cautious about, is it 1/3 of the whole portfolio, or how much of the portfolio will shrink and will be gradually replaced by a more defensive portfolio? My goal here is to try to do a simulation of impacts on revenue.

In individuals portfolio, about 40% is classified as low income, which is not Select, below 7,000 BRL monthly income, and SMEs, 20% of the portfolio correspond to smaller companies that are more under pressure. As Carlos mentioned, it does not mean that we will exclude this 40% or this 20%.

There are products that we are attracted to. For SMEs, we have been trying to grow them in Pronampe.

For the segment, we are increasing the share of this over the recent quarters. For individuals, there is a great participation in consumer finance.

They have a great share in credit cards, and this is what we are reducing. What we have to accelerate over time is private payroll-deductible loans.

We made an adjustment with more repressed loan granting, but it is a product where we see an opportunity to grow, even in low income. Given that we are strong in payrolls, this gives us a better visibility of our clients.

Excellent. Thank you very much.

Now, next question from Tiago Binsfeld with Goldman Sachs. Good morning, go ahead.

Good morning, Camila and Muñiz. Thank you for taking my question.

Expenses, the bank has been going through a significant process in terms of branches and personnel. Do you think that this process will be over in 2026, or you still think that this will go beyond this year?

In terms of cost to serve, how do you see the adoption of AI in the bank, and whether you could accelerate the process of efficiency gains in the bank?

I think Camila already said that one of the main concerns we have at the bank is cost to serve, because cost to serve for us is the leverage that could help us monetize in some audiences that we cannot serve as we hope to. Therefore, this debate about what would be the correct footprint is an ongoing debate.

In fact, this is a conversation that is constant in the bank, and I would love to hear the opinion about the number of points we have and the format of all of our POSs. How many stores we have and also the size and the service that each bank renders to the clients and the market.

Now about AI, I think I already talked about AI. Everyone in the bank uses some sort of AI tool.

One of the advantages of belonging to a large group is that the bank provides very powerful AI tools that we are beginning to deploy with good results. I don't know whether you heard what I said, but on the side of cost, everybody uses AI as a leverage to do the same thing at a lower cost or more at the same cost.

Not only that, but AI tools are allowing us to come up with offerings that impact revenue. Something more customized is a lot more bespoke.

In our cost agenda at Santander Bank, I think I've been with the bank 22 years, it's not just one single year that we go without talking about cost, but we talk about it every year. Now, with the new tools available to us in the market, the market will be more competitive, and Brazil is a very competitive market.

Here, we know that there are many opportunities, and this cost to serve can be reduced. Therefore, we keep focusing on finding the best levers to improve further.

Thank you.

Thank you.

Thank you, Tiago. We have a question now from Matheus Guimarães with XP.

Good morning, Matheus, welcome.

Good morning, Camila. Good morning, Carlos, and thank you for taking my question, and congrats on your results.

I think we already talked a lot about revenue and costs, but I would like to learn more about your high-income focus. We've seen competition increasing in this segment of mid to high income, and you are stepping on the brakes a bit when it comes to mass market.

I think competition is becoming fierce in this segment. What do you see going forward, and what would be your offering differential to continue on that course?

Camila mentioned 8% growth in the Select segment. What in your view is your differential, and how can we see that going forward, especially considering the whole consolidated scenario of the bank?

Thank you.

You're mentioning a very relevant point: how can we distinguish ourselves vis-à-vis the competition? We talked about the launch of Santander Rewards.

I was firmly convinced that the program would bear fruits, and in fact, now the numbers are proving that we made the right choice, because it brought a significant improvement. We are bringing the group of people that already subscribed to the program and those that have not yet subscribed to the program, and there was a significant change in more than 10 points in the satisfaction levels.

This will be one of the main levers that we have in this scenario. The other things are stories from the past that are also bringing good results, not only our advisory teams that are working much closer with investors, and insurance is another area that is proving that we are on the right track.

It's a complex task, very complicated, as you said, but the group is helping us to identify how to do that work well. I'm very certain that we will be successful, and this has been proven by recent numbers.

Revenue is growing, client engagement is growing, and client primacy is also growing. I remain very optimistic.

I think, Matheus, if I can add, with cards, we are increasing client share of wallets, spending is increasing, and it's been so in the past years. Carlos mentioned client primacy, that's something that we are measuring in this segment.

Mortgage or real estate, we even gain market share in the past few months. We have a good offering, and this is a segment that is 80% high income that is then aligned with our proposition for high income.

On the service side, as Carlos said, we have the AAA offering in the investment segment. We have a very good net funding in the Select segment.

With Santander Rewards, we can now award clients. In the past, we were looking at credit card spending, the benefits and how they were using the mileage, but now we are having a more holistic view of our clients, and the first results are very encouraging, even though it's been around for a very short period of time.

Thank you very much.

With this, we are ending our Q&A session. I would like to thank you all for joining us this morning.

After this video conference, I and the entire Santander Brasil Investor Relations team will be available to answer any further questions you may have. Thank you very much, have a great day.

Thank you.