Banco bradesco investor relations

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U.S. STATECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF THE FOREIGN PRIVATE EDITOR UNDER ARTICLE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of November, File number 2019 Commission 1-15250 BANCO BRADESCO S.A. (Exact registrant name as defined on its map) BRADESCO BANK (Translation of registrant's name in English) Cidade de Deus, s/n, Vila Yara06029-900 - Osasco - SPFederative Republic of Brazil (Directorate of the Chief Executive Office) Indicate with the control mark whether the registrant is filing or will submit annual reports under cover form 20-F or Form 40-F. Form 2 0 -F ___X___ Form 40-F _______ Indicate with the control mark whether the registrant providing the information contained in this form also provides the information to the Commission in accordance with Article 12g3-2(b) in accordance with the Securities Exchange Act 1934. Yes ______ No ___X____ . Banco Bradesco S.A. .br name: Leandro de Miranda Araujo email: diretoria.executiva@.br phone: (0xx11) 3681-4011 name: Carlos Wagner Firetti email: investidores@.br phone: (0xx11) 2194-0921 Official Journal of the State of Sao Paulo and Valoron Economico, both in the Financial Statements of S?o Paulo and in the Consolidated Financial Statements, related to the year ended 31 December 2018, 31 January 2019 05 February 2019 Shipment to B3, CVM and its availability to shareholders (Website) 31 January, IFRS 2019 Financial Statements related to the year ended December 31, 2018 Shipment to B3, CVM, SEC, NYSE, LATIBEX and its disposal to shareholders (Website) March 7, 2019 Form 20-F regarding the year ended December 31, 2018 Shipment to B3 , CVM, SEC, NYSE, LATIBEX and make it available to shareholders (Website) April 30, 2019 Report Form for the fiscal year ended December 31, 2018 Shipment to B3, CVM and its disposal to shareholders (Website) May 31, 2019 Financial Statements and Consolidated Financial Statements, related to the six months ended June 30, 2019 Shipping to B3, CVM, SEC NYSE, LATIBEX and make it available to shareholders (Website) July 25, 2019 Publication August 14, 2019 Quarterly Consolidated Financial Statements (Portuguese and English) Shipment to B3, CVM, SEC, NYSE, LATIBEX and make it available to shareholders (Website) Annual/2 018 31 January 2019 Regarding the 1st quarter/2019 25 April 2019 Regarding the 2nd quarter/2019 25 July 2019 Regarding the 3rd quarter/2019 31 October 2019 , 2019 Public Presentations to Analysts and Investors Event: Public Presentations to Analysts and Investors, opened to other stakeholders Date / Time / Location March 26, 2019 (Tuesday) ? Osasco, SP Day ? 1 p.m. to 5:30 p.m. N?cleo Cidade de Deus, Pr?dio Vermelho, Vilala - board of directors. August 20, 2019 (Tuesday) ? Rio de Janeiro, RJ Accreditation starts at: 2 p.m. - Presentations start at: 3 p.m. - Close at: 5:30 p.m.m (APIMEC) Bradesco Seguros ? ? Rio de Janeiro, 555, Kuzu. October 8, 2019 (Tuesday) ? Brasilia, DF Accreditation starts at: 6 p.m. Presentations start at: 7 p.m. - Close at: 9 p.m.m. (AFIMEC) Hotel Royal Tulip Bras?lia Alvorada ? SHTN, Bloco C, s/n, SEN Trecho 1 Conj. 1B, Asa Norte. November 7, 2019 (Thursday) ? Belo Horizonte, BH Accreditation starts at: 6 p.m. - Presentations start at: 7 p.m. - Close at: 9 p.m.m (AIMEC) Hotel Promenade BH Platinum ? Av. Oleg?rio Maciel, 1748, Lourdes. November 13, 2019 (Wednesday) ? Osasco, SP Accreditation starts at: 2 p.m. - Presentations start at: 3 p.m. - Close at: 6 p.m (Bradesco Day - APIMEC) N?cleo Cidade de Deus, Amphitheatre of Pr?dio Rubi, Vila Yara. Annual Shareholder Meeting Mission to B3, CVM, SEC, NYSE and LATIBEX the Announcement of the Meeting and Management Proposal, including the information required by CVM Guidelines No. 07 February 2019 Publication of the Call Notice 8, 9 and 12 February 2019 Date of the Annual Meeting of Shareholders 11 March 2019 Mission to B3, CVM, SEC, NYSE and LATIBEX the main discussions of the Annual Meeting of Shareholders March 11, 2019 Send to B3 and CVM of the Annual Meeting of Shareholders Minute 20 March 2019 Statement Reference Month and Base Date of Rights Ex-Rights Payment Date January 2, 2019 January 3, 2019 February 1, 2019 2019 February 4 2019 1 March 2019 1 March 2019 6 March 2019 1 April 2019 1 April 2019 April 1, 2019 2 April 2019 2 May 2019 3 May 2019 3 June 2019 3 June 2019 3 June 2019 , 2019 June 4, 2019 July 1, 2019 July July 1, 2019 July 2, 2019 August 1, 2019 August August 1, 2019 August 2, 2019 September 2, 2019 September September 2, 2019 September 3, 2019 October 1, 2019 October October 1, 2019 October 2, 2019 November 1, 2019 November November 1, 2019 November 4, 2019 December 2, 2019 December December 2, 2019 December 3, 2019 January 2, 2020 Type of Action Per Share Gross Net Common R$0.017249826 R$0.014662352 Preferred R$0.018974809 R$0.016128588 Banco Bradesco S.A. Leandro de Miranda Araujo Executive Deputy Officer and Investor Relations Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned , must be duly authorised. Date: 11 November 2019 BANCO BRADESCO S.A. From: /S/Leandro de Miranda Araujo Leandro de Miranda AraujoExecutive Deputy Officer and Industrial Relations Officer. FUTURE STATEMENTS This press release may contain forward-looking statements. These statements are statements that are not historical facts and are based on management's current view and estimates of future economic conditions, industry conditions, company performance and financial results. The words provide, estimates, expects, plans and similar expressions, as related to the company, are intended to identify forward-looking statements. Statements Statements the declaration or payment of dividends, the implementation of the main operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting the financial situation, liquidity or results of operations are examples of future statements. These statements reflect management's current views and are subject to certain risks and uncertainties. There is no guarantee that expected events, trends or results will actually happen. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. Picture Source: The Motley Fool. Banco Bradesco Sa (NYSE:BBD)Q1 2020 Earnings CallApril 30, 2020, 12:30 p.m. ET Contents: Ready Comments Questions and Answers Call Attendees Prepared Comments: Good morning operator, ladies and gentlemen, and thank you for waiting. We would like to welcome everyone to Bradesco's First Quarter 2020 earnings conference call. This call is transmitted simultaneously over the Internet to the Investor Relations website, banco.bradesco/ir-en. At this address, you can also find a presentation available for download. Before proceeding, let me report that forward-looking statements are based on the beliefs and assumptions of Banco Bradesco's management and the information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect Banco Bradesco's future results and could cause significant differences between the results and those expressed in these forward-looking statements. Now, I'm delivering the conference to Mr. Carlos Faty, director of market relations. Carlos Firetti -- Director of Market Relations-Head of Investor Relations Hello, everyone. Welcome to our conference call to discuss the results of the first quarter of 2020. We have today with us, our CEO, Octavio de Lazari Junior; our financial director, Andre Rodrigues Cano; the coo of the Bradesco Seguros group, Vinicius Albernaz; and our Executive Director and IRO, Leandro de Miranda. After the presentation, we will run the question and answer session where you will be able to post your questions. Now, I'm turning the presentation to Leandro. Leandro Miranda - Executive and Investor Relations Manager Thank you very much, Firetti. Good morning, everyone. I hope you and your families are okay, and I welcome you to our conference call. Today, we will discuss the results of the first quarter of 2020, and once again we will talk about our position during this rather difficult period. This quarter has ended up quite different from what it was in mid-March, and we had very strong performances on a number of lines, even above our guidance, as you can see ahead. The scenario was radically altered by the worsening Covid crisis in the second half of March. However, we stress that our balance sheet remains very strong. Since the crisis reached the scale it is today, our priorities have changed completely. We focus on keeping our services to our customers and keeping the Bank in full operation, along with the well-being of our employees, and are committed to supporting society in overcoming this crisis. All interested parties are important and we are monitoring each of them very well. I am proud to declare that through the efforts of our entire team, the Bank has adapted quickly, above expectations, and continues to operate in such extreme conditions, while always accounting for the good of our people and customers as a basic parameter. To give you a report, today, over 90% of our staff who usually work in our offices now work from home and 50% of the teams from our network of stores, which are - we regard as a basic service, are at home. We are also trying to resolve any critical issues facing our client today, starting a process to go beyond what matures for at least 60 days for small companies and individuals, and opening a direct line of negotiation with large companies. We have also worked with other banks and the Central Bank, as well as with BNDES on restructuring loans to finance small business payrolls, and discussed other measures with the Central Bank and Fibra Bank. As mentioned earlier, Bradesco and all the other banks have the interest and duty to help customers emerge from this very difficult time with the ability to fulfill their commitments and get on with their lives without facing financial ruin. We would also like to mention in our CALL COVID discussing deeply [vocal] previous crisis in which the financial sector was the main sponsor of the crisis. This time, in particular, as our CEO says over and over again, we are an important part of the solution, and we embrace this responsibility. Given the uncertainty inherent in any projection at this time, especially considering that we still don't know for sure when the closure will end and what the pace of repetition will be like, we have decided to suspend our 2020 guidelines. We will outline the new guidelines when we have sufficient clarity of the situation, and our administration will decide on this. In the meantime, we must stress that we do not see our ability to produce radically changed returns. The functions are healthy and rich. In addition to returning revenue and resolving loan issues, which will take place with the recovery of the economy and a return to normality, one of the ways to recover our return is through a substantial cost adjustment, and we have done so very much We have already performed quite well this quarter, thanks to the initiatives we took earlier this year to control costs throughout 2020, as well as in March due to the impact of the crisis in some directions. However, our new experience in managing the Bank during this period will allow us to accelerate cost adjustments. We see even greater opportunities for store network adjustments through the use of new smaller formats, as well as lower costs. The main focus is on conducting business and advising us ? and providing advice for our clients, we seek to strap on and train our talents in a new way to serve our customer base. Another key focus during this period was on risk management. In order to provide support to this country at this time and to our society as a whole, which was important to keep the Bank liquid and very well capitalised. We headed towards the crisis with a strong capital position and increased liquidity levers. We finished the first quarter of 2020, which already reflects the period of market pressure with a comfortable 11.4% Tier 1 index. In addition, we saw a 6% increase in the [Voice] process and from client funds, a clear attractive quality. Our expanded loan portfolio has had strong growth, up 5.1% over the quarter and 17% over the past 12 months. Part of this expansion can be explained by the effect of exchange rates and part of this approach is due to strong demand growth, mainly by our companies at the beginning of the crisis. Our crime increased by 40 basis points. We believe we are preparing well enough for credit provisions to deal with the impact of the deferral that will be detected [vocally] by the crisis. We increased our oversupply this quarter, marking a forecast of BRL 5.1 billion on our balance sheet to address the consequences of the credit pandemic. Our aim is to maintain our balance sheet with similar measures taken by other global banks, especially the largest banks in the US and Europe, like us. As for the first quarter results, we posted an income of BRL 3.8 billion, a decrease of nearly 40% over the 12 months and 45% in the quarter, with a return on equity in the quarter of 11.7%. Income and performance for the quarter were less negatively impacted than our forecast for excess loan loss this quarter, along with other market conditions-related impacts. Now, we will turn to Slide 4, related to the suspension of our guidance for the year. Although it's not common for us to be more we included in the table column with our performance in the month of January and February. I would like to remind you that in the first two months of the year, we did not have our full capacity as 60% [Voice] of our general managers, account managers, investment advisers, bankers are on vacation. You can see that we have very strong numbers, even better than the guidance in addition to the insurance business, mainly because of the Results. By February, the credit portfolio was growing by 14.4%; NII, 11,7%; fees by 2.6%; cost on the other hand was about 0.1%, and we had a good return on loan loss forecasts. We have decided to suspend the guidance without presenting a new one, because we pretty much do not have clarity and vision of all the impact this virus can have on the economy. The outlook remains rather uncertain, and there is no cure for the virus nor an accurate definition of recovery time for the economy. We will establish a new guidance when we have a better capacity to provide a perspective and our management says so. Moving forward, following slide 5, in terms of provision and credit risk. You can see that when the scenario became stressful, especially in the second half of March, we rolled [vocal] several areas of the Bank to conduct an in-depth study of possible and uncertain future scenarios. As was clear that the recent upsize [Vocal] growth, which is slowing and crime is accelerating. And, in fact, increasing the numerator and reducing the denominator. Two worlds [Vocal] will perform, one consisting of present recovery teams and the other of risk and financial groups. Both study the crisis of the past, presenting future impacts on crime and revenue, both in retail and corporate credit. Despite the use of different methodologies, the results were pretty much the same, and guided us through our delivery measures to address the COVID crisis. Now, turn to slide 6. We map the behaviour of mass market MDs in the global crisis of 2008 and the Brazil crisis of 2016, and we put forward a varied specific scenario for this COVID crisis, which affects all sectors on a different scale. Our understanding that booking additional provisions to deal with future credit losses was also necessary by the other banks that we use their profits, especially in the US and Europe. Now, as far as Slide 7 is concerned, with regard to the provisions we have taken to deal with this adverse economic scenario. In light of this study, we have already created an excess provision of 4.9% -- BRL 4.9 billion, a total of BRL 5.1 billion to address the impact of the pandemic on our credit portfolio, and we will use it through the crisis. We believe that this provision is appropriate at this particular time and reflects the information we have at this time. We will constantly assess the need to anticipate this crisis as we monitor the development of the economy as a whole and in particular the health problems we have here. The provision includes a BRL of 2.4 billion related to what we refer to in [Vocal], the forecast for an adverse economic situation, which is part of our previous supplementary provision and will be used throughout the crisis. New additional forecasts for an unfavourable economic situation of EUR 2.5 billion Billion. impact of the crisis. Moving on to the next slide, Transparency 8. You can see that we quickly provide our customers as individuals and as small businesses access to credit installments they make their extensions through our digital channels, call centers and through our administrators. We use our entire network to help our customers. We also use the first - we were also the first Bank to provide access to payroll 24 hour customers. We have already extended more than 1 million transactions with tranches of EUR 1.4 billion. We constantly evaluate the financial situation of our customers and offer the best solutions for each of them, whether a credit extension or a restructuring of the total debt. It is worth stressing that among the measures announced by the Central Bank, we had BRL24.1 billion of reserve release requirements, but although the number of BRL24.1 billion, we are able to source BRL57 billion in new loans between March 16 and April 23, almost double - more than double what we had in releasing reserve requirements. Now, turn to slide nine. We have already talked about our priorities at the beginning of the crisis, looking after our people, maintaining our services, operating smoothly, helping to overcome the crisis and managing the risk imposed on us by the new scenario and keeping the Bank capitalised and liquid. We can say that we have succeeded on all three pillars of this initial phase, and we continue to work hard and are confident that we will continue to be successful in our missions. We have set up two more businesses in order to turn our business into a mainly office-based home business. We have a smallscale structure in place, but we are able to expand it very, very quickly. Today, as I mentioned earlier, over 90% of our employees who did not work in our branches now work from home. We should thank all the teams involved in this process, our senior management and especially our technology and system staff, as well as our industry teams for continuing to serve our customers in this essential activity for the population. Now, moving on to the financial results, we find here on page 11, to discuss the figures for the quarter, in which we have already experienced a significant impact from these unfortunate events in March, as well as society as a whole around the world. Our net income was BRL 3.8 billion, a decrease of 39.8% over the last 12 months. Some of the factors contributing to this decline included an additional provision for loan losses of BRL 2.5 billion to address actual COVID loans, EUR 200 million. , mainly due to lower economic results, the impact of forecasts on the [Indeciperable] and the mismatch of inflation of the index, index, IPCA and IGP-M, inter alia; lower tax advantages due to a reduced provision for interest and capital during this quarter. Now, turn to slide 12. Our Roe in this quarter posted a significant decrease, settling at 11.7% as a result of everything I've just presented to you, and the same event can be seen in our ROA. Our shareholders' equity fell by 3.1% in the quarter due to the negative impact of the asset decline. So as the economy evolves in the market that is less volatile, we will also have the recovery of shareholder equity due to the signal in the asset market. Now, turn to slide 13. The loan portfolio recorded an expected year-on-year growth of 17% and 5.1% in the quarter, with 2.6% in individuals, 7.6% in large enterprises and 4.4% in SMEs. Part of this growth can be explained by the effect of exchange rate fluctuations on the [Voice] dollar portion loan, i.e. the portfolio of large companies. Excluding the impact of exchange rate fluctuations, our portfolio would have increased by 3.4%. In addition, there was a significant increase in demand for loans from large companies in March, particularly in the second half of the year. Companies are starting to build up a liquidity reserve at that time, but the situation has returned to normal. In private and SMEs, the quarter's growth largely reflects the strong performance we had posted through February. We expected a low slowdown in growth in the coming quarters, but it is still very difficult to predict the magnitude of reduced demand for a long time. On slide 14, you can see that total NII decreased by 6% in the quarter and increased by 2.9% year-on-year. The decrease in the quarter is related to the performance of the profit margin with the market. The profit margin with customers increased by 8.4% over 12 months, mainly as a result of the increase in the volume of loans, which more than offset the negative effects, the regulatory ceiling and overdraft limit interest rates. The market margin decreased by 37%, mainly due to the impact of market volatility and throughout the year indicated in the market of our trading book. Turn to slide 15. We have a growing NSN creation this quarter, already reflecting the impact of the loan portfolio pandemic and at the end of March, any specific positions in our corporate division, as well as the growth of the loan portfolio, and the shifting mix. It is worth noting that the creation of NSEs in the third and fourth quarters were already affected by a large corporate credit that became due and later renegotiated for which we have already fully provided, it is much easier to make a comparison if these adjustments. Our extended loan provision amounted to BRL 6.7 billion, including the impact of the additional provisions of BRL 2.5 billion and the required provisions of BRL 200 million. They were pretty much done with the effects of the crisis and credits. The forecast in relation to the portfolio we refer to as risk costs, which amounted to 4.1%. Move to slide slide on the delinquency ratio that we announced today, more or less received, increased by 40 b.b. The reasons are the same as those we gave for the evolution of the creation of NSRs. On the slide below, you can see that the 90-day NPL coverage ratio was 228% in the quarter. As we mentioned earlier, we have a provision -- we had a provision of BRL 5.1 billion for the adverse economic scenario. We will consume these provisions throughout the crisis, which may reduce our coverage ratio in the coming quarters. In addition to the consumption of [Voice] temporary interest rate reservations, we will continually adjust our plans to assess the necessity of the new provisions. Now, on transparency 18, we are talking about the fee revenues we have in our different business sectors. As you can see, fees decreased in the quarter by 6.2%, and increased during the twelfth period -- by 2.6%. We have experienced negative impacts on card revenue, which decreased by 7.1% quarter-onquarter and 2.4% year-on-year, mainly influenced by CLO and interchange fees. We have also had a negative impact on the lines of asset management and loan operations. The audit accounts, on the other hand, have paid off very well, with an increase of 7% year-on-year, mainly due to the increase in the customer base. Custody and brokerage services have been positively affected by the increase in volume in both institutional, commercial and individual transactions in Agora, our investment firm. We would like to highlight the assessment we had at Agora, bradesco's investment house, which has a complete portfolio of projects with a redesigned platform, which is very user friendly and a careful selection of the best investment products on the market in any kind of investor profile. In addition, clients have access to specialized investment advisors, content provided by Agora research teams and now the largest JV on financial content with Grupo Estado, for the investor channel, but also recommendation from market analysts who support and are made with decisions and investments. By the end of the first quarter of 2020, we reached 416,000 customers, an increase of 13.4% compared to the previous quarter, but a strong increase of more than 246% in active [voice] trading volume over the same period. Operating expenses in - on the following slide, Slide 19, you can see that we operate very, very well in terms of operating expenses with a decrease of 0.4% over the last 12 months. As our CEO has said repeatedly, our goal is to have a 0% increase in operating expenses in 2020. We have seen a sharp slowdown in annual growth related to administrative and staff costs and strong reductions in on the two lines for the quarter. These performances are mainly due to the measures we took to reduce costs at the beginning of the year. Although our guidance for 2020 is from 0% to 4%, our target, as I mentioned, was 0% growth. In addition, the decrease in operating volumes in March has already had an impact on the administrative We reduced 78 branches in the first quarter with expectations of closing more than 300 branches in 2020 and a decrease in the number of employees due to the voluntary redundancy program. As we mentioned earlier, the experiences we have in the context of the Covid crisis such as home office, the push into the use of self-service by customers and remote customer service have opened up a space for a profound restructuring of the way we operate. We see space to speed up the transformation of branches into customer service points and reduce traditional branches. For our staff who do not work in branches, this is an opportunity to continue using the office at home and reduce the amount of occupied space. Now, finally, moving on to insurance, pension plans and capitalization bonds on our last slide here. You can see that there has been a significant impact on financial performance due to the impact of market volatility on portfolios, particularly in some equity portfolios and in reference investment funds [Phonetic]. In addition, we have had the effects of lower Selic and negative effects of the mismatch of our IGP-M collecting obligations and IPCA collecting part of our guaranteed assets, which should affect our ALM. On the one hand, we know that economic results will be a challenge. On the other hand, we continue to see a significant improvement in operating performance, with a decrease in the loss ratio compared to the fourth quarter of 2019, which resulted in an improvement in the combined index. The insurance group monitors the economy and the business impact caused by the new effects of the pandemic. We understand that the importance of our product as a means to help and support the resumption of families who may actually be victims. Various measures were taken to ensure that the best service and securities and adapted to the reality presented. Through an exclusive call center, the adaptation of the operation of primary care clinics that since the onset of the pandemic operate in extended hours and even on weekends from Sunday to Sunday. Thus, this initiative also serves to alleviate the demand for emergency care when it arises, with the launch of social measures, this is currently being observed. Changes in the behavior of events and [Undying], for example, if on the one hand, there was a slight decrease in selection procedures, on the other hand, it was possible to see a gradual increase in emergencies and hospitalizations due to the new virus. It is worth noting that this selection process should be taken forward, extensive necessary. Although it is premature to make any kind of projection at this time about the future of the conduct of events, it is estimated that their results return to deteriorate in subsequent periods. And we were careful to make predictions about it. In automatic insurance, the reduction in urban traffic caused an instant change in the frequency of the notice of claim, claim, with the closure of the repair shop, as well as the beginning of the decline in the sale of years, reflecting the sale of new insurance, directing the focus to [Voice] renewals of its insurance policies. That said, we are open for the question and answer session, and we remain at your disposal. Thank you for your attention. Q&A: Operator Thank you. We shall now begin the question-and-answer session. Our first question comes from Mr Mario Pierry with Bank of America. You can continue. Mario Pirri -- Bank of America Merrill Lynch -- Analyst Good evening to all. Thank you for your presentation. Let me ask two questions. Leandro, you mentioned that you expect, I think, in the Portuguese call that you expect the NPLs in this cycle to be higher than in the 2016 cycle. At the same time, the amount of forecasts you got this quarter, BRL2.5 billion, you think is enough to cover this ? some of this expected increase. But I'm just trying to put that in perspective, that's brl2.5 billion, right, because it doesn't seem so much given the magnitude of the crisis. And if you're trying to predict some of the losses, why not get a bigger forecast this quarter? That's my first question. Is that BRL2.5 billion enough? And why don't you take more? And then my second question relates to your slides on page 26. We see that the creation of NPL in the SME segment more than doubled in one quarter. So I wanted to understand why we are seeing such an increase in the creation of NDS before the crisis even hits? What if there are specific sectors or areas where you see this big pickup in the creation of NDS in the SME department? Thanks. Leandro Miranda - Executive Director and Head of Investor Relations Ok. Hello, Mario. Firstly, the provision that we consider to be not BRL 2.5 billion, but BRL 5.1 billion, because we had previous provisions added to it. Otherwise, we have grown even more. We believe that this new crisis, we have never experienced anything like this. And so, in that sense, we have discussed with our analysts and customers as a whole. And there is a common attitude that no one knows when it is going to be dealt with, when it is going to be completed and what the overall impact of this will be on the economy, because we don't know when the recovery - the full recovery will happen. If we have the clear scenario that it would be even worse than 2008, we will have to do exactly what we said. But on the other hand, according to the information we have today, according to the lock cancellation that is going to happen, we believe that BRL5.1 billion is sufficient at the moment. But that is why at the Portuguese conference with our CEO, the Octavio said we are ready to continue to provide as we get more information about customer prospects if necessary. As far as SMEs are concerned, the criteria of the NDS - a creation in which you have seen a stronger growth than the rest, a few things to Out. First of all, we have not yet seen a full programme for all SMEs that we have seen in the past. We've taken care of the payroll for the individuals. We have been refinancing all our customers for 60 days. But SMEs have had less liquidity than the big companies, which is why you are seeing a faster creation of NSEs here. I'm not sure if my colleagues want to fill in this? Octavio de Lazari -- CEO yes. Just to create NSMs for SMEs, adding to Leandro what I said in the Portuguese appeal, basically, this quarter, we had about BRL 500 million in new NSEs in these large SMEs. We have the -- in the expensive portfolio of SMEs, SMEs up to BRL 30 million, this is the retail part of the business that basically runs smoothly. But in the other place that reaches up to BRL500 million annually - in revenue, basically, we had three cases, one of them amounting to BRL300 million moving to 90-day offenders, all of them fully provided. And that's basically the main reason for this jump. The fourth quarter was actually lower, mainly given the implementation of some SME loans in the quarter. So the base is low. Probably the fair basis for this SME portfolio is more like the third quarter and before. So basically the answer is this: the jump is mainly related to the BRL500 million and also reflects what Leandro said. Mario Pirri -- Bank of America Merrill Lynch -- Analyst Ok. Let me - just a follow-up then. When we look at the level of commission, correctly, the amount of your forecasts, was lower than the creation of NSEs and I understand it, you had some previous NSEs that you had already foreseen. It wasn't official NPLs, I get it. But if you look at your reserve coverage today of about 229%, if you go back to the 2015-'16 crisis in Brazil, your coverage rate was running at about 190%. Is that the level that you think should be appropriate in the cycle to maintain a coverage rate of 190%? Or since this is a worse cycle that you will be more tended to, be more conservative and maintain the coverage ratio well above 200%? Octavio de Lazari -- CEO Mario, as we always say, in your question, there is a false assumption that we manage the coverage ratio. The coverage ratio is much more than we put of our procurement methodology. So basically, we're not going to do anything different because the coverage ratio was moved to one level. That said, in cycles, basically, you usually have a consumption of coverage in the sense that in the normal procurement process, you will end up deleting part of your orders. And in this process, say, the production of coverage tends to get lower. Mario Pierry -- Bank of America Merrill -- Analyst Okay, guys. Thank you very much. Leandro Miranda - Executive Director and Investor Relations Manager Thank you, Mario. Take care of it. Operator Our next question comes from Mr. Tito Lamarta with Goldman Sachs. You can continue. Tito Lamarta -- Goldman Sachs Sachs Analyst Hello. Good evening, everyone. Thanks for the call. A few questions too. All the time only for NSEs. Just to understand a little more, given the first quarter was really only the last two weeks of March hit by the crisis. So is it fair to assume that this increase in NDDs should get even worse, as you see more of the impact of the crisis? Just to understand the kind of size associated with, I guess, the extraordinary ones you mentioned and the increase in NPLs? I mean, is it fair that this is going to continue to deteriorate at a similar rate or even higher? I guess that's the first question. And then my second question is about the chapter. We've seen a significant reduction in the Tier 1 core. I know part of that was FX and brand-in-the-market and portfolio growth. But if you can help us think about that, I mean, your capital is fine now. But if you have another 200 basis point reduction in the Tier 1 core, then it's probably a different conversation. So, given the level of growth we

saw in the quarter, the level of ROE, if you can just help us think about how you think about your capital base, given all these moving segments? Thanks. Leandro Miranda - Executive Director and Head of Investor Relations Ok. Tito, let me start here, and then I'd like to give him some sense. Well, first of all, it's very unusual to make comments about the second quarter that's just beginning, and we have a crisis that we have ? all over the world that we've never faced before. So it's very difficult to tell you how we see behavior from now on. But the good part of the second quarter is that, we're going to start seeing the cancellation of the lockdown from different states, and we're going to start seeing some customers coming back to the game again. So this will be the most appropriate time to understand how we look at the behavior of NPL creation from now on. So we're not able to give a very good and clear answer about what the behavior of creating NPL is going to be from this point on. Octavio de Lazari -- CEO Tito, just to fill in, basically, with facts that we understand, as Leandro said, that basically we believe that this crisis may be in terms of NSOs worse than the 2015-'16 crisis. This actually means that the - to achieve the NPL view, they continue to grow for a little longer. Basically, the NSN, what I am saying about these cases, there is this BRL500 million already provided to SMEs. There is also something around BRL500 million also fully fed that is moving through NPL this quarter in corporate. Therefore, we have about BRL 1 billion which we already have provisions. And as you know, we created supplies even in the fourth quarter of last year. So that's kind of changed - it did accelerate NSEs faster this quarter, probably than would be the normal pace otherwise. But probably the NSS at the end of the cycle should really be higher than that. Leandro Leandro -- Executive Director and Investor Relations Manager and the second part of your question about our capital structure and the impact on shareholders' equity. It is important to stress that a significant part of this decline in shareholder equity was due to the impact of the market price on our strategies. So, as we have a better environment from now on, we will also see recovery there. We don't plan to make any kind of capital increase. We do not plan to make any acquisition of capital shares. So we believe that as the normal business gets back, we will have the appropriate composition of our ceilings at previous levels as we are profitable. And we are ready to distributed the minimum dividends in accordance with the provisions of the Central Bank, and we will keep them for some time. Octavio de Lazari -- CEO yes. In addition, we should also consume the tax credit from the compensation generated this quarter, as frankly, as has been pointed out, we have profitability from it. And also, the increase in loans should increase. Basically, the magnitude of the loan growth we've had this quarter is a mixture of the good performance we showed through February in terms of loan growth, plus the extra demand we brought in from the corporate. This level of growth will certainly be lower for the rest of the year as we have a correction in loan demand. Tito Lamarta -- Goldman Sachs -- Senior Analyst. Thanks. That's very useful. Yes. Not. That's very useful. I mean, just one follow-up, I guess, in the first. I understand the uncertainty in trying to predict where the NSEs will end up. But you have another month from the end of the first trimester. So, I guess, I was also thinking in terms of evolution from just the last two weeks of March and April and how kind of NPL formation ? I don't know if you can give any color at this point, but how can this have evolved or gotten worse or maybe rolled away at some point? Octavio de Lazari -- CEO yes. At this point, we prefer not to comment on the latest trends. Actually, it's-- again, you know we have loan reappointment for 60 days. This provides a relief for the criminal as you roll into this five - don't go to NPLs. We are also working on all customers to provide them with the best possible solution to be able to meet their obligations. And so, I think it's an ongoing process that somehow mitigates the evolution of NPLs. Leandro Miranda -- Executive Director and Chief Investment Officer But, Tito, as Octavio has previously said, if clients are needed, we are open to supporting them providing an additional six-day review or even restructuring their debt in a way that we can maintain their health and have a long-term relationship with our customers. So this is something we are open to helping customers and society as a whole. Tito Lamarta -- Goldman Sachs -- Analyst Ok. Thank you, thank you. Very. Leandro Miranda -- Executive Director and Chief Investment Officer Thank you, Tito. Operator Our Next Question comes from Mr Jason Mollin with Scotiabank. You can continue. Jason Mollin -- Scotiabank Global Banking and Markets -- Analyst Hello. Thank you very much. My question is somewhat of a follow-up to the feed-in levels that took place in the quarter. When you show on page 7 of your presentation that you had BRL 2.4 billion in pre-existing provisions for adverse economic scenarios, that you created BRL 200 million in provisions that would be required under traditional regulations. From this my understanding is that the regulator would allow you not to do this because of the restructuring in the quarter plus those BRL2.5 billion that you have discussed in new supplementary provisions. Now, I guess, I'm trying to understand the decision-making process here. I understand that it is not, as you have said many times, about reserve cover, etc. But can you talk about making that decision? What are the consequences for taxes, the creation of deferred tax assets, the consequences for paying dividends? Obviously, you mentioned a much lower bottom line. But in my view, this is a prudent conservative approach that goes into a crisis where we don't really know the real losses, what they're going to be. And what are the consequences for reversing these future ones? Thanks. Leandro Miranda - Executive Director and Investor Relations Manager Thank you very much for your question, Jason. I suppose we fully share your view on behaviour in a crisis like this. We need to be conservative to maintain our capital in order to adequately serve our customers. And there is a Central Bank decision that says banks are not allowed to distribute dividends higher than the minimum amount required. The law says the minimum amount required is 25%, but regulations can say otherwise. Our regulations say 30%. And we will continue to behave and respect the regulation. Therefore, we will not expect a dividend of more than 30%. We have no internal discussions about reducing dividends. We believe that we will have to live in this new environment, this new scenario, to make adjustments to our layout, as may be the case the restructuring of capital is extreme, it is very, very strong. We remain confident that we can help our customers return to the liquidity levels they need to return to their core [voice] activities. Jason Mollin - Scotiabank Global Banking and Markets - Analyst I mean, maybe I can ask - I mean, again, it's not a metric. I know you don't make commissions like that or make any bank, but it's a reflection of what's going on. If you look at the loan loss forecasts created in the quarter, I think it was something like 46% of the way I calculate the NII, net interest income was prophested away. You were running about 25%. I looked at my model, and I think at the maximum levels I've probably seen in the last 15 years something like 55% in a quarter, but it really doesn't get much above where you predicted it this quarter. So it's that kind of limit when you look at - of course, based on what's going on in the economy and capacity - the likelihood of your customers paying and their payment performance. But it seems like - when you look at this kind of measurement, that's just - is that extraordinary? And a level that's not going to affect... Leandro Miranda ? Executive Director and Chief Investment Officer Well, first of all, you should think that we have created in the last quarter a forecast for adverse market conditions. We didn't expect to use it so soon. But luckily, we were, with a very good protection for it. So the way it seems you have to take into account the whole BRL5.1 billion package, because that was the - some of the protections we face, all the violations and losses that we may have from now on. But, of course, this amount was, as you pointed out, the result of analyzing two different things here, credit, and the risk and our financial teams that have gathered with our senior management, we have decided that this is sufficient provision at the moment according to the information and vision we have for the economy as a whole. So we don't get to a measure, especially the way we've been creating NPL in the last fortnight because pretty much it's extremely soon to say that. But if it turns out to be right, we'll keep it that way. If we have to be even stronger in terms of capital management and provisions, we are prepared to do so. But keep in mind that we have in the past provisions for adverse market conditions like this. Jason Mollin -- Scotiabank Global Banking and Markets -- Analyst Thank you so much for the frame and color. Appreciated. Leandro Miranda -- Executive Director and Head of Investor Relations Watch out. Jason, thank you for your question. Operator Our next question comes from Mr Thiago Batista with UBS. Tyago Batista -- UBS -Analyst yes. Hello, guys. I only had one supplementary question about the Bank's capital position. If not wrong, the Bank has in the past targeted a Category 1 index close to 13% or something around that level. It is fair to say that they continue with this, I think, informal target or with this Category 1 chapter target of about 13%. What if the Bank - if you start saying that the Bank's capital ratio will be close to average until, say, the return of capital at this level? And the second... Octavio de Lazari -- CEO Tyago -- oh, sorry. Go ahead. Thiago Batista -- UBS -- Analyst Sorry. And the second question is very small. You can comment a little, how difficult it is today for sell insurance at the branch and also sell fees? So how important is the flow of people to the branch that is certain, right now, you don't have that flow of people? Octavio de de -- CEO Maybe we can start with the second one and then respond to... Leandro Miranda - Executive Director and Investor Relations Manager Why don't we invite Vinicius? Octavio de Lazari -- CEO yes. On this, Vinicius to answer the second. Vinicius Jose De Almeida Alburnaz -- CEO of Arm Hee Insurance, Tiago. Vinicius here. Branches are important -- very important mainly for selling products related to pensions, capitalization products in life, okay? They're very important. We have, of course, for life and for car insurance, the credit of our insurance brokers in our branches. And what we're seeing, I mean, in March, we didn't see it because we have a whole month of almost normal operation. We have a gradual decline in operations at the end of March. But what we've seen - going through right now, is being able to give our store managers, sellers, financial advisers, and our insurance brokers all the tools needed to fully operate on a home office base, okay? So, we've seen this gradual improvement in sales of our sales potential from our various channels from office to home, okay? But there is a significant investment right now in digital, crm tools, in order to make support to these sales forces. Octavio de Lazari -- CEO Thiago, on your first question about capital, basically, I think the level of capital is constantly evaluated by the Bank. As you know, the regulator has recently reduced the minimum capital requirement by 125 b.b. Each examination of the best capital certainly takes into account the regulatory requirements with regard to the minimum capital. Furthermore, we must bear in mind that we are reaching a cycle where in fact the increase in loans should be, for some time, much weaker than it has been until now. So it has allowed us, in fact, to use less capital for the future. And on top of that, we believe we will consume the tax credits we have created relatively quickly and it is one of the main negative effects on our capital this quarter. And also, we believe that part of the market needs to be reversed. So in this situation, we - in this scenario, believe that we are in a very good position in terms of capital. We don't have targets for capital. We haven't discussed these terms in a while. But, again, I think that given what I said, we are, in our view, in a very, very good position. Tyago Batista -- UBS -- Analyst Ok. Thank you for asking [Voice] and thanks, Leandro. Leandro Miranda -- Executive Director and Chief Investment Officer Thiago. Operator Our next question comes from Mr Marcelo Telles with Credit Suisse. You can continue. Marcelo Telles -- Credit Suisse -- Analyst Hello. Hello everyone, and thanks for the opportunity. Most of my questions have been answered, but I want to understand a little more. What is the risk you see in the domain at this point? I know you're very focused on the media and individuals. And also what - I had the opportunity to see with your mix [Vocal] that the Central Bank published yesterday, and - which was important in terms, if you compare with others, this stress test, in terms of results, right, that the Central Bank did. In your case, I mean, I wonder if you could share ? if you've done any stress tests in light of the situation, if you could share with us what your capital position would be in a very, say, harsh scenario or in terms of the impact of the provisions, as well as the cost of your risk, this will be helpful. Octavio de Lazari ? CEO Marcelo, really, I'm not sure I understood your question well enough, since your voice wasn't very clear. But I understand that you asked about the health of the corporate loan book, and the stress test that the Central Bank ran in the financial stability report yesterday. Those are the questions, actually, right? Marcelo Telles -- Credit Suisse -- Analyst Yes. Octavio de Lazari -- CEO Ok. Marcelo Telles -Credit Suisse -- Analyst yes. Yes. And my question about the stress test is, if you've conducted an endurance test as well, and it might be possible to share with us what the results would be in terms of your capital position, what would be the scenario for raising forecasts or something? Octavio de Lazari -- CEO yes. Unfortunately, we have ? we have constantly run our stress tests, not only in a crisis environment, but basically constantly. But we don't hear that. What I can say is that our view that we are in a very comfortable position in terms of capital position relates to our stress test. We're watching, for sure. And right now, when we don't even know when the economy will be up and running again, it's always difficult. But basically, our base case pressure test really shows that we're in a comfortable position. As far as corporate, I don't know if you'd --. Ok. From a corporate point of view, we're seeing the corporate book in a much better position right now. What we saw was a path to liquidity at the beginning of the crisis. But the companies were - they are mostly held with leverage. They haven't invested too much. Some of them will certainly face difficulties in reducing their results or revenues. But here - here, I would say, companies with the right amount of liquidity will be able to make it through the process. And basically, even the most complicated cases, for Lava Jato, have already been fully committed. Most of them have yet to be deleted from our books. It is always possible to find some cases more - in a more difficult situation during the crisis period. But, I'd say, - this time it is not going to be a large number, as in the other crisis. And in that sense, we are ready to help them renegotiate, to try to improve in terms of collateral. I think it's fair to say that the hardest part right now doesn't seem to be the corporate department. Leandro Miranda - Executive Director and Director of Investor Relations And just to add to what Octavio says, is much more like an opportunity for us. Actually, the company was funded by the capital markets. And therefore, we saw it as an opportunity because we are able to charge overadvocates and rebalbal balance our portfolio risk as a whole. Thanks. Operator Our next question comes from Mr Henrique Navarro with Santander. You can continue. Henrique Navarro -- Santander Investment Securities Inc. -- Analyst Hello. Thank you so much for the opportunity. My question is about fees and commission. This revenue line is directly linked to the sale of banking products on both traditional channels and digital channels. Well, I would like to hear from you how - the number of branches that are closed at the moment, when do you expect to reopen the branches? From February to March, how was the impact on sales of banking products on traditional channels? And what was the positive impact on higher sales on digital channels? So anything could shed light and help us understand the impact of coronavirus on this 6% reduction in supplies for the first quarter? And then maybe you can try to figure out what the impact could be for the next quarter. That's it, that's it. Thanks. Octavio de Lazari -- CEO Regarding branches, Henrique, in fact, we did not close a branch -- any branches. We are - as you know, during the coronavirus crisis. We- just the branches in the malls and the ones we closed. And we kept them all open and in the places we put them. So we operate with different -- with half the people in the branches in terms of staff replacing that staff every week. As regards the reduction in the number of branches, in the first quarter, we closed 78 branches which will in fact be closed permanently. We expect to close more than 300 branches this year. As far as digital channels are concerned, in our case, we already had a very high level of penetration of digital channels. I think we had about 17 million customers who were customers of either mobile or internet bank. And with a very high level of use. Due to the characteristics of the crisis with the economy actually slowing down, we actually noticed that although we are seeing more customers using digital channels than usual internet or mobile, the number of transactions is actually decreasing. Basically, people buy less and people have transferred less money to businesses and payments, etc. So that's the kind of trend we're seeing. I don't know. Henrique Navarro -- Santander Investment Securities Inc. -- Analyst No, that's it. Just ? it's still in my question, the 6% reduction in fees and quarter income commission in quarter, how much of this do you think is related to the coronavirus? Octavio de Lazari Lazari CEO would say, the credit card reduction is pretty much related to coronavirus. It is the impact of lower retail sales on Cielo, our stock market, on our exchange revenues, which is basically based on sales. The operation of the consortium may have some effect. Investment bank, we expected a good quarter. In fact, there was - the performance wasn't as good as expected, although it was much better than last year. So maybe more clearly on credit cards and maybe an investment bank. Maybe a little bit in asset management. Henrique Navarro -- Santander Investment Securities Inc. -- Analyst Ok. Thank you very much. Leandro Miranda - Executive Director and Investor Relations Manager Thank you. Thank you all for your participation. I guess we'll finish the question-and-answer session. Business Since there are no other questions, I would like to invite the speakers for final comments. Leandro Miranda - Executive Director and Head of Investor Relations Ok. Thank you all for participating in the Q&A session and for taking the time to participate in our conference for the first quarter. Have a nice day. Operator [Operator Close Remarks] Duration: 71 mins Call participants: Carlos Firetti -- Market Relations Director-Head of Investor Relations Leandro Miranda -- Executive Director and Chief Investment Officer Mario Pierry -- Bank of America Merrill Lynch -- Analyst Octavio de Lazari -- CEO Tito Labart ana -- Goldman Sachs -- Analyst Jason Mollin -- Scotiabank Global Banking and Markets -- Analyst Thiago Batista -- UBS -- Vinicius Analyst Jose De Almeida Albernaz -- Chief Executive Officer of Insurance Arm Marcelo Telles -- Credit Suisse -- Analyst Henrique Navarro -- Santander Investment Securities Inc. -- Analyst More BBD transcription analysis powered by AlphaStreet This article is a copy of this conference call produced for Motley Fool. While we strive for our Foolish Best, there may be errors, omissions or inaccuracies in this copy. As with all of our articles, Motley Fool assumes no responsibility for using this content, and we encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for more details, including Mandatory Capitalized Disclaimers. Responsibility.

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