Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Banco do Brasil, Fourth Q uarter 2020 Earnings Conference Call. This event is being conducted in Portuguese with simultaneous translation into English and is also being recorded and broadcast live via webcast to Banco do Brasil's website, www.bb.com.br/ir, where the presentation is also available. All participants will be in listen-only mode during the company's presentation, and after that, we will initiate the Q&A session when further instructions will be provided. Questions in English will be received in writing only via the chat icon at the bottom of the platform, and for questions in Portuguese, just dial star one.
Should any participant need assistance during this call, please dial star zero to reach the operator. As of today, our Mr. André Brandão, CEO; Carlos André, Financial VP and IRO, and Mr. Daniel Maria, Head of Investor Relations for Banco do Brasil.
With that introduction, you may proceed, sir.
Good morning, everyone. Thank you very much for joining us today during our conference call for the results of 2020. As always, I will start with a brief introduction, and I'll be before Carlos André to elaborate on the details. I would like to start by talking about the year of 2020. As I said in our previous meeting, it has been a very unusual year, and as we said during the presentation, it was a challenging year for several reasons, personal and professional reasons. And also, it was a very transformational year because it led the financial industry and Banco do Brasil as well to rethink about ways of operating in this new momentum. And in terms of what we saw, competition grew, digital banks, fintechs, regulatory changes, as we are now seeing with Open Banking, Pix.
Certainly, this has been a very unusual and unique year in the way we have to operate. Usually, we say in the bank that Open Banking will drive customers to be more empowered. They will decide what they want to do. So, as a result, I would like to reinstate a few points. Having the customer at the center, a way to retain clients goes to customer retention. Therefore, we have to understand how that client is, how he thinks, and we have to be on his shoes to see how we can best serve that client. I already talked about digital. 2020 is a year that led us to really expedite that digital transformation. Also, in terms of having a client-centered view and to empower our clients, we see clients who will favor digital interaction, whereas others favor a more personal interaction.
That's why digital is here to stay, and we just have to adapt. And specialization and this proximity that we have with our clients lead us to be more specific in terms of the way we want to operate and serve our clients. In the past, at Banco do Brasil, that acceleration, both in terms of digital specialization and channel integration, all of that has become very clear and part of our strategy. Certainly, a unique year with the pandemic and the role of the financial system and the role of Banco do Brasil in society has become very important. We already talked about that on different occasions, but we were very strong in terms of our actions and the way we supported society and our clients as well.
As we mentioned before, everything we did was in a very responsible way with true alignment to our view and the way we operate in the credit line or credit-granting line. And finally, given everything that has happened in this past year and in social terms as well, sustainability has been a very clear pillar, not only for society as a whole, but as it was. This is something that is all over the place, and last year, this was accelerated even further, and we also wanted to stress that. Next slide. You might remember that I showed you this mandala. I don't want to get into all of the details of it, but I would just like to draw your attention to a few things. I already talked about the importance of the customer standpoint. Customer experience involves physical and digital interaction.
So I would like to refer to how we are prepared to face the digital agenda and how we are operating with that agenda. I would also like to talk about efficiency. Last year, I said that we would follow this agenda, and this is what we are doing right now. That's why I would like to elaborate a bit in this regard, and Carlos André will give you more details about what we are doing, and he'll give you some more numbers about it. I would also like to talk about our ESG agenda. This is a mainstream thing in the world, and I would just like to let you know what Banco do Brasil is doing in that regard in regards to ESG. Banco do Brasil has to work in many details in terms of revenue leverage, and we are focusing on that as well.
I do not intend to have a very lengthy introductory remark, but I'll allow some time for questions at the end. Last year, I talked about three important aspects to integrate our business further, and I can talk a bit more about that, but we have a lot of cross-selling between retail and wholesale and payroll. But this goes even beyond that because it involves insurance products, agriculture, productive chain that also involves small, large corporate, small and mid-sized clients, and even retail clients. I also talked about some areas where we stand out, where we take the lead, where we're protagonists. And agribusiness and government are two important areas, and certainly, these are areas that will help us strengthen our operations. And certainly, there are some other areas that were still untapped, and now we are getting into this untapped market.
I mentioned this briefly last time we met, and I talked about Open Banking and cards. This is an area where we are focusing right now because we believe that we also have to operate through partnerships if we are engaging in partnerships. Now, finally, an update because I talked about investment banking, and last time we talked, I mentioned our partnership with UBS BB. We are moving quite well in this direction with strong growth, very robust pipeline. Since the announcement, we already have almost 40 transactions in the capital markets that have been concluded with over 30 mandates, and the pipeline is growing. Therefore, I would say that we are on a good track, positive track, and with the growth of the capital markets, Brazil will certainly benefit from that. Now, going to the customer experience point, I would just like to say that this is a journey.
Last time, I talked a lot about that, so I don't want to elaborate further about that slide. I just mentioned two important points. First, the indicators or the KPIs. We talked a lot about that, and I have here some indicators of Banco do Brasil. The main one is NPS. We already have very robust NPS. We are growing our NPS in general. There was an increase of 10 points from last year to this year, and we anticipate further growth looking forward. This is not the only indicator we look at because, as I said during a previous meeting, we have a new area, and that area will work with several KPIs, and NPS being one of them, like sales quality, quality lives, suitability, etc.
All of these aspects will help us understand how we can best serve our clients and, at the same time, have sustainable revenue. Indicators are not everything. It's not the target that we will look at because, as I said, these are indicators. Our goal is to perform a cultural transformation in this agenda. So it's cultural, analytical. It involves data on the cultural side. As I said, this is a journey. We already started in that journey, and we are really focusing in that area. We already have adequate governance, and this cultural transformation has to do with the induction program. And I believe that any deviation or, I mean, any problem that we may have in terms of not pleasing our client maybe has to do with some including actions.
So we have to work with our team to make corrections along the way, and this involves training on our side so we can help salespeople do that correctly. And finally, we also align our business to clear indicators, and this, in return, impacts the compensation of our employees. So once again, it's a journey that involves alignment and also compensation, and it's a journey of strengthening the culture of the company. And the pillars involve using data and analytics to help us best understand our clients and serve them adequately. So we are going on this journey because this is the way that we believe we should go. Now, speaking about digital, well, digital is really important all over the world. I just want to bring you some indicators.
Firstly, I think we've seen that in the industry, the percentage of transactions conducted through digital platforms accounts for 86% of all transactions, and this is as of December of last year. Therefore, transactional operation is migrating into digital. That's why we have to adapt to that. We have more digital clients, growing 40%, reaching 21 million digital clients, active clients. So these are clients posted transactions with the bank in the last 90 days. We also monitor those digital native customers, and there was significant growth since December of 2019, almost 80% growth, and we have 6.8 million native digital customers. We are also serving clients through File Consultants or through WhatsApp, and we posted a significant growth in those areas as well. This is here to stay. Also, we have operations of credit disbursement, and we are doing that both remotely and digital.
At the end of last year, the indicator was 72% of individual disbursement. Pix, the volume of transactions has increased to Pix, and Banco do Brasil contributes with 31% of this Pix market at the end of last year. As for innovation, we launched Pix through voice command and WhatsApp as well. We are committed to innovate and to follow the changes in the industry. Certainly, to do all that, we need investment, and therefore, we are investing heavily in this area. Investment growth is over 100% year on year, more particularly in terms of artificial intelligence and analytics. But we know that the way to operate digital and throughout this process involves partnerships with other platforms, and we are open to do that and heavily engaged and committed to that. Finally, I would like to stress the quality of our app, of our mobile app.
It was ranked both by Apple and Google with some of the highest ratings. While we are increasingly more digital, we are investing even more, and by the same token, we will generate more savings, and this will allow us to invest further. Certainly, this is a very strong trend for us at Banco do Brasil. In addition to that, going to the next page, we are now looking towards the future, and that involves digital inclusion. And here, I would like to mention two aspects. One is business, and the other is social. We believe that social inclusion will help on the social aspect, and that's why to that end, we partnered with the Ministry of Communications, and they are helping us with internet capabilities in the interior of the country. So through our foundation, we are also bringing digital and financial education to students and their families.
This not only will help society, but will also help serve our clients once they navigate and browse through the digital world. Banco do Brasil today has, I mean, clients of older age, and then we have to tackle those that are younger. This is very important. This is also another way to operate looking towards the future. Not only does it involve the social aspect, but it also has to do with future onboarding and customer attraction. And then we have the business side. We will talk a little bit about that further on, but working together with the Ministry of Communications, we are providing free Wi-Fi in our stores or branches or Mais BB stores. And with that, we help our clients to acquire digital maturity, connecting them to our platform and making them more aware of our apps and help them to navigate through our web.
We are visiting now 1,000 cities in the next coming months to increase digital maturity. Again, this involves a combination of calls and free Wi-Fi with the antennas provided by the Ministry of Communications, and with all of this effort, we will be able to improve digital maturity of our clients, and by the same token, we will gain more efficiency. This also applies to rural areas. As we said before, we are very strong in agribusiness, and nowadays, the rural areas, they need better internet connections. On the one hand, we want to invest in providing funding to providers to improve connectivity in the field and also moving to a social aspect. Part of the municipalities where we will operate at are rural communities, and so we want to educate our clients to operate in the digital world.
All of that is done in combination with the Ministry of Communications. Moving on to the next slide. Now, I would like to mention one growth leverage, but this refers to specialization, something I mentioned before, specialization in our customer base. First of all, we identified that we still had clients that were not totally added to our management base, and now we are including 1.3 million customers with expert advisors. So all retail, high retail customers will be served 100% by our expert professionals. This not only improves profitability, but also customer satisfaction. This is one avenue of growth. Moreover, in terms of investment, we increasingly know that clients need some expert advice. Our clients and investors were served by branches that offer a whole range of products, including investments, with a small area with investment advisors.
So then we decided to change the platform and focus at the top of the pyramid of these clients, adding 800 expert professionals and investment advisors. And now we have 46 regional offices operating through 32 platforms. We will take that customer base and have them being served by expert professionals and removing that activity from the day-to-day operation of the branch. And at the same time, we will be closer to our investor clients. Another point is the fact that we are already very strong in agribusiness, but our traditional way of operation, I should say, that in almost all of our branches, we talk about agribusiness. We are already very active, but in terms of being more specialized, we are adding 2,000 specialized professionals only focusing on agribusiness. We will have 18 specialized branches only working with agribusiness. They will not do anything but agribusiness.
We will have 915 customer portfolios in 643 municipalities, and we will be able to grow 40% in terms of customers with professional advisors. That means that we are engaging this avenue of specialization. Finally, as I was saying, customers are increasingly more advanced, so they no longer go to a branch. Therefore, we created our light offices, as we call them, and we have almost 1,500 expert professionals that will operate in a very specialized manner, and that's why we are creating two separate superintendencies. Now, speaking about efficiency, and this is a very important point, and I mentioned this during our last meeting, this is an obvious agenda. I don't think I need to explain any further because this efficiency agenda is a given in the global market. I would like to now refer to our aspiration.
Our administrative expenses are about 31 billion BRL every year, and we aspire to reduce by 3 billion, or approximately 10% of all of these recurring expenses every year. To do that, we have to engage in several different actions. Some of that you are very familiar with. Right? Performance and compensation plan is something that we mentioned last quarter. As the more we trim our employee base, things become faster, things are quicker, and then we have home office, we are returning some of the buildings, and this continues to happen after the pandemic, and this will be even stressed further to improve efficiency. Also, energy efficiency, we continue to pursue these areas and ESG as well, and then it also involves organizational restructuring, and that involves retail and wholesale as in our headquarters and supporting areas.
All of these areas will be impacted, taking into account the overall change to the system. Therefore, we are now going to optimize these areas. And finally, PAQ and PDE, we just released a material fact. This process has been concluded. As I said, 5,533 employees are here to the volunteer severance program, and 80% of them are either very close to retirement, meaning almost 80% of all of the employees were very close to retirement, so they decided to adhere to the voluntary severance plan. Only this PAQ and PDE area will allow us to reduce our recurring expenses by almost BRL 800 billion. This is quite important. The process has been completed, and we can elaborate further on that during Carlos André' s presentation. And finally, I would just like to revisit the review of the retail network.
On the one hand, we are focusing on efficiency, and on the other hand, we are focusing on serving our customers. I talked about light offices, having them part of our portfolio of experts, and this is all part of our remodeling of the retail operation. The media talks a lot about that. They only refer to the reduction in the number of our own facilities. But in terms of our own buildings and third party, we have 8,300 POS, and after the refurbishing of our network, we are focusing on the reduction of our own network, but also we are increasing the number of Banco correspondents carrying the name of Banco do Brasil that we call Mais BB. With that, we are increasing our range to serve our clients and gaining efficiency in areas that didn't really need a brick-and-mortar branch.
Another aspect is that we will not leave any municipality. On the contrary, we will be in 4,483 municipalities. We will just alternate in terms of PO service, service stations, and physical and brick-and-mortar branches. So Banco do Brasil is not going to lose any clients. We will keep the ones we have. We are just changing the way to serve these clients. And any changes in branches will be performed very carefully. We will previously introduce a banking correspondent, and also we have a digital channel. All the municipalities or localities that will be altered will go through what we call a Blitz. That is a group of people that will go to that place to improve the maturity of our digital clients. Now, moving to our next step, I would like to talk about our international operation.
Banco do Brasil is operating abroad for many years, and the way we are operating abroad was a bit spread around. We are just finalizing a study to optimize our footprint abroad, and then we defined two strategic avenues. Number one, our operation abroad has to serve only Brazilian customers. Again, these clients are companies. The idea is to help them and promote foreign trade. We don't just want to be there for them just to provide funding or financing in the countries where they are because there are other larger banks that are funding to do that. So our idea there is just focus on foreign trade. In terms of individuals, I truly believe that there is a migration of Brazilians abroad, and we can certainly serve them providing banking solutions, exchange solutions, and depending on who they are, we can also provide international investment.
Along this new strategic line of operation, we have some drivers. One driver is customer focus, improving customer satisfaction, and certainly efficiency. As I was saying, to do everything I said that we want to do, we can operate in a more centralized fashion with leaner structures, and this is exactly what we're doing. Today, our offices abroad are very expensive, particularly due to the exchange depreciation, and it's important that we generate efficiencies without impacting our customer base. With that, we will generate further efficiencies and optimize our service to clients. This is what we have in terms of our units abroad. There are two other topics I would like to mention. I first talked about our ESG agenda. Banco do Brasil has been for years very sound in this area. We are the bank's largest in terms of sustainable agriculture.
We are recognized by several Brazilian and international rating agencies, and we decided to go one extra mile, and for those that have not watched this video, I recommend you watch it because it talks about our strategy and how we should operate and also the commitments we have for ourselves moving forward. We listed tangible commitments. They are divided into three pillars. One is to help our clients on this transition towards a more sustainable economy, and among these commitments, we have renewable energy reaching BRL 15 billion in funding for renewable energy. We are also starting to operate even more strongly in agriculture. We just recently had an agreement with BRF to help them to deploy photovoltaics. We just signed an agreement with a platform called Portal Solar, Solar Portal, to help our agribusiness clients throughout Brazil to make that transition to photovoltaic energy.
And we are just emphasizing funding for this sector while we want to grow even more in this area. We are already very strong in terms of funding entrepreneurs in Brazil, but we want to strengthen our footprint, reaching 1 million customers or entrepreneurial customers in the country. And finally, our strength in the state and municipalities, we want to increase the efficiency of both the state and municipalities, both in terms of energy and sanitation. And to the end, by 2025, our portfolio will reach 20 billion BRL. Another way to push this further forward is what I call an intermediation between investors and borrowers with the intent of increasing their sustainable footprint. And we're doing that through an ESG fund. We want to reach 20 billion in ESG funds by 2025, and the vast majority of these assets, 100% of these assets, are ESG certified.
Also, in terms of the capital markets, we want to provide funding and companies to then invest, and we want to provide 30 billion BRL in these transactions. Finally, we have to operate in a responsible manner, and after 2021, we want to compensate 100% of GHG and also reduce 30% by 2030, all of the GHG emissions. We will compensate with reductions, and there is another platform saying that our consumed energy will be 100% renewable, but 90% produced through photovoltaic energy, and we will then find certificates to reduce that further. We also believe in social impact, diversity, and governance. To that end, we are committing to having 30% of our base leaders being female workers and 22% Black and mixed race. I talked about the digital platform.
We want customers to be increasingly more digital, not using paper anymore, and we want to reach 17 million paperless customers by 2025. Talking about Fundação Banco do Brasil, we intend to invest 1 billion BRL by 2030 in education, social technologies, and many other things that are already part of the pipeline of the foundation. Now, I'll give the floor to Carlos André and André, but I would just like to stress two points that caught my attention. First is the capital. Our capital is very strong. Our expenses are very stable in 2020, but as I said, we have what it takes to continue to grow or to, I mean, to continue to reduce expenses. I would also like to mention our loan portfolio that grew 9% in a very unusual year, which is a very reasonable volume.
But given the fact that our portfolio quality is very robust, we have everything that is necessary to outperform and to be even better. So thank you very much, and I'll give the floor to Carlos André .
Good morning, everyone, and thank you very much for joining us today during our earnings release call. Thank you André, for your initial remarks. And now I will talk to you about our main numbers and indicators. First of all, on slide 15, I think that it's important that we highlight what happened last year. I mean, last year, we needed to put in place some preemptive provisions, and these provisions somehow impacted our results. Despite all that, it's important that we start by mentioning the results of Q4 2020 that grew 6.1% vis-à-vis the previous quarter.
By the same token, our accumulated net income in 2020, adjusted net income, was 13.9 billion BRL, which is an ROE of 12%. It's also important to highlight that our PPOP was very resilient. PPOP is pre-tax and pre-provision earning. So by the end of 2020, we reached 42.4 billion BRL, growing 5.9% vis-à-vis the same period of the year. Now, speaking about our expanded loan portfolio, by the end of 2020, we had 742 billion BRL, growing 1.5% vis-à-vis the third quarter, and also growing 9% vis-à-vis the end of 2019. The main highlights involve the individuals' portfolio, which grew 6.7% vis-à-vis 2019, with some, particularly payroll deductible loans with the good performance. We grew 15.2%. Also, when you look at SMEs, we grew vis-à-vis 2019, we grew 25.6%. The highlight here goes to our participation in the government aid programs, especially PRONAMPE and CGPE.
Now, speaking about large corporations and large corporates and government, there was an increase of 10.8%. And probably I would draw your attention here to our performance in the upper middle segment that is in keeping with our goal to improve the mix of the portfolio for better returns. And finally, agribusiness, which is one of the highlights of the bank, we were able to post 4.3% growth when compared to 2019, and mostly this was rural credit. Moving to the next slide here, we have a lot of information, and we bring a lot of details about our credit forbearance portfolio. And I know that analysts will look at this in a lot of detail. Our credit portfolio was BRL 130.1 billion, which served 2.3 million customers.
First point here is the quality of this forbearance portfolio, with almost 95% in operations with AA to C ratings, with over 98% of transactions with no delinquency history, with a very long history of the bank, over 17 years of relationship time. We had four waves of credit forbearance, and the last two waves, I think if you look at the yellow bar in the slide, here we had a relevant participation of government clients. And due to a very specific law approved by the end of November, they were able to adhere to these forbearance portfolios. When we consider the government segment together with the payroll loans of individuals out of the 130 billion BRL, almost 45%, considering payroll loans and government, add up to the two items with the lower risk in this forbearance portfolio.
In addition to that, in payroll loans, as part of that gray bar that appears in the slide, we also have the dynamic flow of exit from grace periods. That's why sometimes it's difficult for us to distinguish what is really forbearance because of the pandemic or what are natural forbearance that is carried with the operation. And SME is an area that we have to look closely because of the risk. 85% of the credit forbearance were geared towards companies that are more resilient. Speaking about the portfolio, we showed you how we were able to expand the credit. Now, we look towards the future. The first point here is that over 50% of all of the transactions are already presenting good payment flow. And I would like to refer to NPL.
NPL, I mean the shorter NPL, 15-90 days, and NPL over 90 days, they are still at very low level, 0.76 in the short NPL and 0.44 longer NPL. Well, we certainly will see adjustments in these figures. As by the payment dynamics, we expect to see a higher concentration in the first quarter of this year, and the remaining of the portfolio will be normalized in the next coming quarters. Now, moving to slide 19 here, we will talk about the renegotiated portfolio. And I would like to make a distinction between the forbearance portfolio and the renegotiated one. The renegotiated one ended in BRL 29.6 billion in the base case that was included in this calculation. What I would like to highlight here are revenues minus net interest that presented a good performance.
We had 2.8 billion BRL, which represented an increase vis-à-vis previous years, and that was a positive performance in terms of delinquency levels, a very satisfactory coverage ratio. In regards to individuals, I would also like to emphasize renegotiations through digital channels. 47.5% of renegotiations are through digital channels, which creates a more positive experience to clients, and at the same time, these negotiations are more efficient on our side, and this led to almost 372,000 contracts from individuals. Now, moving to the next slide, we talk about ALL and credit risk. As I said earlier on, this year had a very unique dynamic on the provision side. We introduced into our balance sheet preemptive provisions for credit risk amounting to 8.1 billion BRL. These preemptive provisions were spread in a very uniform way between all of the four quarters of 2020, about 20 billion BRL per quarter.
ALL expanded at the end of the fourth quarter, had BRL 5.2 billion being added. In fact, there was a decrease when compared to BRL 5.5 billion on Q3 of 2020. In fact, this was partially attributed to our good performance in terms of recovery of write-offs. I mean, 50% of credit recovery was done with cash payments, and this is a very significant aspect. And also, a reduction in impairment when we compare fourth quarter to third quarter. Anyway, we believe that we were able to build and indeed build a good portion of provisions, good enough to allow us to navigate to 2021 in a very comfortable position, offering all the preconditions that are necessary for us to improve our results. Slide 21 refers to NPL.
Our NPL indicators, if you look at the growth of the portfolio and negotiation dynamics, they are in a very comfortable position by the end of 2020. I mean, NPL over 90 days is just 1.9%, meaning that is lower when compared to the average of the national system, which was 2.1%. And NPL 50 to 90 days is flat, but very comfortable results once again. Coverage ratio, provision, vis-à-vis delinquency balance, very robust. At the end of 2020, we had almost 350% coverage, whereas NPL formation and new NPL coverage here remains at very comfortable levels. Now, speaking about our revenues, first of all, I would like to emphasize our NII. NII was up by 5.1%, reaching at the end of 2020, BRL 56.7 billion. Very important contribution coming from our funding costs. Our funding costs were significantly reduced in 2020.
That was an important contribution coming from the reduction of the basic interest rate. And in 2021, I think it's reasonable to expect that this contribution on the funding side would be proportionally lower. But we believe that credit revenues would be strengthened, and as a consequence, we will be able to deliver a net interest income, which will be very competitive. In terms of fee income, looking from the third towards the fourth quarter, there was an increase of 1.5%. And once we compare 2020 to 2019, in fee income, there was a reduction of 1.7%. And there are some peculiarities in the way that where we calculate our fee income some lines that traditionally for some of our peers at the end impact the fee income. In our very specific case, they are calculated in the lines of equity income.
I can talk about credit card acquiring business, and part of that revenue is captured through equity income. Also, with our partnership with Cielo in the area of capital markets, part of the revenue from capital markets, a significant part of it, will also be calculated through equity income rather than fee income. Now, speaking about admin expenses, our CEO already talked about that. It was very stable between 2019 and 2020. The highlight is in personnel expenses, which had a decline of 0.1%, resulting in an efficiency increase of 36%. As I ended the previous slide with expenses, I think it's important that I mention now our efficiency measures already mentioned by André. Here, the goal is to seek for further reductions of 3 billion BRL in a recurrent way.
Once we deploy all of the measures, we aim at reaching an expense reduction of 3 billion BRL, reduction in recurring expenses, and then we have what we call institutional reorganization. In fact, this is a combination of measures that starts with a combination of our branches that we are now implementing in our head office. Also, we are making changes to our back office and commission positions, and this will generate savings of 982 million BRL, close to 1 billion BRL in terms of the FORMA and the implementation plan. This was a measure that began with the home office, and all of the actual efficiency measures that have been previously announced, and I think you might recall that we have talked about the capacity to reduce expenses of 3.3 billion BRL during a period of five years with FORMA, FlexPD, and efficiency measures.
Due to the dynamics of all of the other measures, and in particular related to TAQ and TDE, we will accelerate the capture of these savings, especially with FORMA and new competition plans, so much so that in the next five years, we will probably reach savings of 10 billion BRL. In 2020 alone, our gross savings reached 1 billion BRL. In voluntary severance programs, TAQ and TDE, our calculation indicates recurring savings of 783 million BRL a year. Moving to slide 24 here, I talk about both voluntary severance plans or termination plans. We already had the appearance of 5,533 employees that are adhered to the program. Almost 75% of these employees are employees close to retirement. There was an additional percentage of about 5% of other employees that very soon would be eligible for retirement.
As I said before, these two programs, PAQ and PDE, will provide us with recurring savings of 783 million BRL annually. In the next five years, we will reach savings net 2.9 billion BRL. The evolution of our employee or headcount appears in the bottom part of the slide. At the end of 2019, we had 90,190 employees. In 2020, we had retirement or natural terminations of 1,500 employees. At the end of 2020, we had 91,673 employees, with an additional reduction of 5,523 of employees who adhered to the voluntary program. When all of the terminations are completed, we will end up with 86,140 employees, so a reduction of over 7,000 employees. Another interesting point to highlight is the average cost of new employees or employees that will be future employees of the bank is average 50% lower than the current average cost.
Finally, already mentioned by André, it's always good to mention our CET1. At the end of 2020, our CET1, which is 13.62%. This was a combination of some indexes, well, net income, positive effects of mark-to-market, some potential adjustments that had a positive impact. On the negative side, I would probably mention actuarial impact, which reduced that number a bit, and also risk-adjusted assets. An important thing to mention is that now we have a very sound capital base, and this will help in the performance, boost the performance of our loan operation. I already talked about 2020, and now we are revisiting our guidance for 2021. I'll just highlight a few items.
Our guidance for adjusted net income for 2021 is being presented here in the range between 16 to 19 billion BRL, and contributing to this guidance is the return to normality of the provision dynamics, and we expect here that the expected ALL should be between 14 and 17 billion BRL. Our growth expectation of our NII is between 2.5 and 6.5%. I already talked about what we anticipate in terms of the dynamic of 2020. I mean, we have funding dynamic that should be compensated by some loan dynamics, and we still envision some additional gains, even though not so high in terms of cost of funding. Loan portfolios, we expect to grow between 8 to 12%. In our view, this is very robust growth. Fee income, I already explained. I think that it's important to mention, and I will re-emphasize that.
We have some peculiarities that really distinguish us from our peers. I think that these peculiarities in part explain our expectation to work in the range of -1.5% to 1.5% growth. Admin expenses, the range is -1.5% to 1.5%. This takes into account inflationary expectations. We already planned for the CET1 ratio to benefit as of 2021. After 2021, we expect to increase our performance in terms of admin expenses. We will work hard to be on the negative side of the range in order to deliver sustainable results in the future. With that, I conclude my presentation. We are now available to take your questions.
Ladies and gentlemen, we will now initiate our Q&A session. I would like to remind you that the questions in English will only be received through the chat icon at the bottom of the platform. For questions in Portuguese, please press star one. Our first question comes from Mr. Jörg Friedemann from Citibank.
Thank you very much for this opportunity. Can you hear me well?
Yes, very well.
Thank you. I have two questions. The first one is, thank you, Carlos, for the very detailed explanation about the range of NII. But we were a bit surprised even with that range because when you look at the numbers for 2020, if you could please give us an idea of what would be that adjusted figure. The recurrent with equity income, this would be really helpful. This is my first question. And my second question is about capital. You are surprising us very positively quarter on quarter. It's really impressive. And impressive growth of the loan portfolio. The RWA of credit risk is lower. It has been quite stable, certainly due to the government program.
But you have very good management of your credit risk. But what is the destination of that surplus capital? You have 11% in terms of your CET1. Do you have any idea in terms of the destination, that capital or dividend, or even the payment of that BRL 8.1 billion, even if you were to adjust it by that, you would still have CET1 of around 12.5%. And whether that will be also discussed by your executive committee.
Well, thank you, J örg. I will start with some explanations. And here, we also have Carlos Bonetti, who is our vice president for risk and credit risk. Well, addressing your question about NII, I don't have here a performance number of what would be the range once you perform all of the adjustments, considering the peculiarities of NII. So I'll leave that for Daniel Maria.
Maybe you can do that homework and give you an overview, considering all of the items that appear under equity income. And in terms of the dynamics or the components that are captured in fee income, here we have important contributions in that line. And all revenues related to the checking account fees. And in this regard, because of competition, etc., we have very challenging scenarios. But I would also like to mention the other side of that, which is the improvement of our service capacity, putting more customers on board. If on one side this competition is high, we also believe that we still have further opportunities to capture through better service and better opportunities to serve clients better and more encompassing. And eventually, we will certainly see some contribution coming forward with fee income. Another important component is admin expenses of asset management.
In 2020, we made several adjustments to some credit lines and some asset management to adjust them to the new reality of low interest rates. Therefore, we expect that using, I mean, good investment consulting, we want to make a transition from products to more sophisticated products, so products that have exposure to international markets, etc. So despite the competition and despite this very challenging scenario, especially in terms of fixed income investments, we will be able to deliver good results and growing results in terms of asset management. We see still some other opportunities in terms of pension funds, insurance, and premium bonds. This is the first part of your question. There was another question also. I think that's impressive. This is a very robust number. You should also recall some peculiarities that lead us to be more conservative on our side.
One point is the item related to actuarial risk. With actuarial risk, I think you are quite aware that there is some volatility that comes to our capital index because of actuarial issues, especially related to Previ Employee Fund and our healthcare plan, and as a consequence, we understand that it would be prudent to keep a safety cushion for some contingencies, and another point you mentioned relates to capital debt index, BRL 8.1 billion. We are still looking at it and discussing issues related to probably the return of that plan to the National Treasury. I mean, during a more recent discussion, there was a safeguard to maintain legal security on the side of the asset, having as a base all of the funding that was earmarked. This funding was used for agribusiness, and the portfolio of these agribusiness transactions has a very long maturity date.
So until you have the mature portfolio, I mean, it takes a long time for the portfolio to be totally mature. And during that recent discussion, they mentioned that we have to respect issues related to capital. And with all that, I believe that we have very comfortable rates, and they allow us to outperform in terms of revenues and assets. Now I'll turn the floor to Bonetti.
I just want to mention the way we would use that capital. I think the most direct answer is offering credit. Our growth guidance is very robust for 2021. So this capital will be used to using our main business, which is loan portfolio. The bank has a big appetite, and we will still use this very positive gear. Another follow-up. So that changes the view about your capital target, a CET1 target, or it still remains at 11%?
Or maybe we should assume that in the next quarters, you will consume that CET1 to converge to your expectation. No, our target remains the same at 11%. And we also believe that with a better dynamic in the economy, we will have the opportunity to allocate that capital in our credit business. Thank you.
Thank you very much. Our next question comes from Mr. Mario Pierry from Bank of America. Good morning. Good morning, everyone. And thank you for your presentation. I have two questions. My first question is about your decision to remain offering that wave of renegotiations. For the first time, private banks were only offering one or two waves at the most. You said that most of that renegotiated loan refers to payroll loans or government credits with lower risk.
I just want to understand the bank's decision to continue to offer these renegotiated opportunities, especially in cases with a very low delinquency rate. Then, PAQ and PDE, you made clear what the benefits were. But I just want to understand what is the cost of these programs to the bank? What could we expect in terms of some extraordinary expense looking towards the second and third quarters?
Bonetti, I will start addressing your first question about renegotiation. The fourth wave that we implemented, I mean, both the third and the fourth waves had a larger number of forbearance, especially in regards to government transactions. The regulations that allowed for that extension came a little bit later, and that's why this was mostly concentrated in the third and fourth wave. These are loans backed by the federal government, and in fact, the risk is very low.
The idea here is just to organize and optimize the cash flow of these governments for the payment of the installments. We still also had, I mean, loan portfolio forbearance from large companies, about BRL 4 billion in the fourth wave, earmarked for large companies. And again, serving the needs of the bank to organize the cash flow and the payment flow of these transactions. It's important to remember that we are talking about clients that have been with the bank for many years. The relationship time exceeds 17 years. Therefore, we are very much aware of their business. And we know we're very much aware of the cash flow of these companies. That's why we granted that extension. Then we have a number of individuals. This involves the organization of payments from payroll loans from the state.
The idea that it was renegotiated together with the paying agents was just to give a relief to the families in terms of the deductions from their payrolls, extending the payment to a later date, well, we know the paying company, the payer, and therefore we decided that it was an adequate move to grant an additional payment release to those plans. So in fact, you're right. At first, we have the implementation cost of some of these programs. But we expect the impact to be around BRL 800 million in terms of implementation cost on year one.
Thank you. Thank you very much.
I would like to remind you that questions in English should come through the chat icon. Our next question is from Gustavo Schroden from Bradesco BBI. Good morning, and thank you for the opportunity. I also have two questions. My first question is about NII.
Carlos talked about some pressure on the funding cost. But I would just like some additional clarity. What is behind that pressure on the funding cost, and whether that has to do with the expectation of increasing the Selic rate? And after so many changes in the mix, what about today? I mean, how much of your asset today is pre-fixed, and how much your liability is pre-fixed? So this would give us a better idea about what will be the impact of the potential increase on the Selic rate and what is the dynamic of the margins throughout 2021. My second question, because it's not very clear to me when we look at the numbers, when you talk about BRL 6 billion, but for how long? This is not very clear to me. And how does that communicate with that savings of BRL 10 million by 2025?
I just want to understand that window of time. And how does that talk to that 10 million by 2025? And whether in your OpEx guidance, do you believe that your expectation is 100% included in your guidance? I know that this is a plan. You have an expectation of having an improvement of BRL 3 billion. Are you already considering that BRL 2 billion improvement in your guidance or not? Thank you.
Well, thank you, Gustavo. I will start with your first question, which is related to our margin. And then you asked us to elaborate on funding. And in fact, as you put it yourself, in 2020, there was an important contribution in the reduction of the cost of funding. Still, structurally speaking, on the funding side, on the liability side, most liabilities are indexed to CDI.
I don't have the exact numbers, but we can tell you, give you more details about the mismatch, but certainly, an important part of our portfolio is on the asset side, pre-fixed rates, actually, we are getting into 2021 where we see an evolution of the Selic rate, and this somehow puts some pressure, I mean, not really puts some pressure, but it changed the dynamic in terms of our NII, well, number one, we still have additional gains to be captured on the funding side due to renegotiation of some escrow deposits or legal deposits, some of them were already implemented at the end of 2020, so as a consequence, the benefit from more interesting renegotiations will be captured in full throughout the year of 2021, also, on the funding side, we anticipate that our treasury will be more active to capture further opportunities.
Therefore, proactively, we will be able to perform better in terms of this mismatch between assets and liabilities. Just to give you an idea, in terms of assets and liabilities, on the asset side, we have a higher percentage, so a higher mismatch in terms of pre-fixed areas about BRL 45 billion, I would say. Now, post-fixed, it's flat. So this most important mismatch where we have BRL 45 billion on the asset side, this is a position by the end of last year in terms of our funding. But it's also important to say that, number one, this is not a very significant number. And point number two is that recycling of this portfolio occurs in a very short period of time, which allows us to go back to some positive and competitive levels in terms of NII. And I think you had a second question.
Daniel, I think you can answer the second question. I still have a comment about this question.
Gustavo, I recommend you to look at this information later on. This mismatch, we have about BRL 400 million, and this is carried over, as Carlos and I said, through savings, and the other part is the indexing, but 60% of this amount is priced in up to one year. And because of that, the impact is almost neutral. In some transactions, there was a shock of 100 basis points in the curve, which would mean something around a reduction of BRL 100 million in terms of NII, and I would like to remind you that this higher interest rate will gradually and at the end mitigate the impact in terms of NII because the behavior is almost neutral. One more point.
Your second question was about the dynamic of the way we capture savings, right?
Yes. I just want to understand the dynamic behind that 3 billion and what is the timeframe and how much you're considering in your OpEx guidance. I mean, how do you consider the capture of that 3 billion, whether this is considered in full or you consider this guidance, you already believe this will be in effect in 2021, or you'll be more conservative?
Well, the first important point is that the guidance considers what in fact we believe will be captured throughout the year of 2021. And during my presentation on slide 23, our gross savings would be for 1 billion BRL in 2021. And in 2021, this is a year where somehow our implementation costs will be in effect.
That BRL 3 billion, the full implementation of each of these areas will help happen in a timeline. But it's a short period of time. So in a short period of time, we believe that all of these measures will be fully implemented. And I would say that most likely, most of these measures will be captured in the next three years. Now, certainly, some of them will occur in that timeline, like pro forma and new compensation plan. You might recall that we made changes to the fixed compensation of commissioned positions with a reduction in the fixed compensation. And there is a reduction in variable compensation. The capture of this reduction due to lower fixed remuneration occurs as the turnover of our staff occurs in that timeframe.
With the implementation of PAQ and PDE, our expected headcount turnover to capture savings throughout time in our pro forma and new compensation plan was down because employees leave the voluntary severance program. So that turnover was accelerated. And with flexibility and execution of these plans, we will capture these savings in that timeframe as we deploy both restructuring of our real estate occupation and also capture of energy efficiency.
Thank you. Very clear.
Thank you very much. Our next question comes from Nicolas Riva from Bank of America. Thank you for this opportunity. I have one question. Can you comment on your discussions with the government to pay for that BRL 8 billion of debt after the decision from the accounts court? Could you comment on the timing of that? Thank you very much.
Here is Bonetti. Well, the discussion about debt repayment is still ongoing. We don't have a timeframe yet. But there is an important assumption, which is to follow the schedule of rural credit schedule, which is capture of that capital. So we are talking about following that repo schedule. That schedule is long. It's up to 10 years. This is the time that these transactions will remain in our portfolio.
Okay. Thank you very much.
Our next question is from Otávio Tanganelli from Credit Suisse. Good morning. Thank you for this opportunity. I just have one question related to assets. We do see some pressure coming from asset pricing.
Strategically speaking, do you anticipate maybe a migration in these assets to a more risky asset that charge higher management fees, or whether there is something to be done in this area, or maybe you can engage in some partnership, or whether it would make sense to have an asset in the bank, or maybe you think about some divestment? I would just like to understand what is your view. Thank you.
Otávio, here is Carlos André. Thank you for your question. I would even benefit from my previous position because I used to be CEO of TVM, and this will help me to answer your question. As you put it yourself, we've been seeing a very important move in the industry in terms of repricing, repricing of some product lines. And in particular, some fixed income products or capital funds, the market is more competitive.
Not only that, macroeconomic conditions are requiring some repositioning in these particular product lines. On the other hand, what we see is a better one. In fact, here we have the opportunity to promote a better fund allocation, so to diversify into better added value products like funds that are allocated in assets abroad. Not only will we be able to deliver a better portfolio to our clients, but also we not only will be able to compensate for some potential necessary adjustments from those more passive products, but it's important to highlight another move that we are currently implementing. It was announced by André during his presentation, which is to strengthen our investment advisory area. We are adding more than 900 expert professionals in asset management. We are also focusing on investing in our retail clients so as to give them a more personalized service.
By the same token, we are focusing on investing in our digital tools so that investors that are more independent in terms of their investment decisions, they can find not only advice but additional information to help them make investment decisions, so we want to grow our investment base. We want to improve the mix somehow to some products that are more profitable so that we can work with admin rates and better products, and he also mentioned a more strategic move involving our asset management area. One point that I would like to mention is that this is a very important activity that we can offer our clients, meaning that investments are not out of the radar of what we want to offer our investors. We have a very relevant footprint. We have about 20% market share. This is a relevant presence.
But again, we want to strengthen our credentials. And by doing so, we will somehow envision strategies that will help us to strengthen our capacity to manage and offer these products. And certainly, this is a partnership. It's an option. We do not call them divestments, but it's just a partnership to strengthen our capacity to develop solutions and, in particular, considering this current scenario.
Very, very clear, Carlos. Thank you very much.
Our next question comes from Victor Schabbel from Bradesco BBI. Thank you for this opportunity. Still, along the same lines as Otávio's question, especially now regarding emissions, what do you think moving forward, considering that this sector is becoming more and more competitive when you are looking at issuance of credit cards by fintechs, and you also have other players offering cashback, and you keep 100% of the cost and 50% of the revenue?
How do you think you can equate that situation, considering cost and emissions and competition and volume, considering the fact that these banks are growing right now?
Victor, thank you. This is Carlos André. Thank you for your question. I will talk about two of the aspects you mentioned. The universe that we call means of payment, and I'll try to be very encompassing. You already said it yourself that it's important that we take into account the market dynamics. In fact, this is a market segment that is going through enormous transformation with new players, new players being very disruptive to the traditional model. Therefore, we have to take into account the market dynamics.
Another point Andr é says, is that products related to payment means and solutions related to payment means, like acquiring this in itself, are all businesses and solutions that are important and strategic in regards to the banking relationship that obviously not only we must maintain but also strengthen. Moreover, in all of the different segments, if I take the entire means of payment offering, we also have to take into account the format of all of our initiatives and strategies. In some cases, we have these partners. In other instances, we work with these companies and with minority shareholders. Therefore, it's important. And what we can say about it is that, okay, undoubtedly, this is a segment that is certainly going through a very quick transformation in competitive terms.
The second point is that we understand that certainly we do have some solutions and some business lines that are important that they remain in our best offers to our clients in favor of our relationship with them and all of the banking relationships that we intend to develop further. And also, we have to take into account the partnerships and the relationships that we have when it comes to thinking about solutions that can strengthen our position. I think for now, this is all I can say. I don't know whether that was helpful. Thank you.
I have another follow-up. Do you believe that some eventual solutions to optimize or to unleash additional value in this context of means of payment could also be built up in a reasonable timeline of one or two years?
Do you think this is something that you can structure in a good timeframe, particularly in view of this very quick change that the industry is going through right now?
Well, we believe, yes. We certainly have some alternatives and solutions that can be deployed quickly. It's difficult to tell you what would be the ideal timeframe. But considering what I said before and what we are noticing from the market, I think it's reasonable to expect that our expectation would be to go and look for measures to strengthen our business. It's difficult to give you a timeline, but we want to move as quickly as possible.
Excellent. Thank you. Thank you very much.
Our next question is from Jason Mollin from Scotiabank. Good morning. Congratulations for having just one earnings release call rather than two. I like that efficiency.
And I think you answer most of my questions about efficiency gains. But my first question is, with a decrease in headcount by 2021, do you see the possibility of coming up with other additional programs for voluntary severance or termination in the future, and also changes to your distribution network? And my second question is about joint venture with UBS and the outlook for future joint ventures. You already mentioned an amazing number of transactions concluded in a two-year mandate. So the question is, your current net equity, is that appropriate? And what should we assume in terms of profitability for that subsidiary? Moreover, could you give us some more color about your strategic objective to pursue further asset sales or divestment?
Hi. This is André. Thank you for your question. I think your first question was about additional voluntary severance programs. This certainly depends on the market.
Clearly, we see that with further digitalization and the reduction of physical transactions, this certainly has an impact on the transactional move. We decided to do what had to be done to anticipate our move to other criteria as well because our employee base, our headcount base, and age bracket is very different when compared to our peers. But I think the main answer I could give you, to be very transparent, is that this will be done according to adjustments to the model. I believe that the industry as a whole will continue to be impacted. And efficiency is just part of our everyday operation. Our guidance will be a bit tighter. Therefore, this will be a reality looking forward, as you can clearly see happening abroad.
Now, in regards to your second question about our JV with UBS BB, as I said before, it was a very good start. We certainly changed our relationship dynamic and the content as well when we talked to our clients, and as I also said, the pipeline is growing significantly beyond transactions. The Brazilian capital market is evolving as well. Therefore, I'm very optimistic, and I'm very optimistic as well in terms of potential growth looking forward. Therefore, we want to increase our balance sheet capacity with our company proposition to our clients. This is still in its infant phase. Certainly, we are already a large bank for several clients, and the idea now is to strengthen our position. Our main clients, we are now coming up with a list of different categories of clients for capital markets, etc., and the idea now is to evolve in this process.
As I said, we are just starting. As we said before or last year, this JV not only increases our funding capacity in the Brazilian capital markets, but also it increases our distribution capacity abroad, both for wealth and also on the institutional side. It's a win-win for both parties. We are improving. Not only are we improving on the relationship side, but also on the content side. We are adding new people to provide content in terms of M&A and on the capital markets as well. We are very pleased with the beginning of this transaction. This tends to grow, certainly depending on the evolution of the capital markets in Brazil. The trend is very positive. In terms of other partnerships, Carlos André just mentioned potential alternatives that involve the asset management area of the bank. What we see is our track record.
Banco do Brasil traditionally uses partnerships to expedite distribution processes to best serve our clients. We did that with insurance many years ago. And this is just a trend. I briefly mentioned that, but more and more, Banco do Brasil understands that the way to accelerate our technological capability and also for more products, it's through partnerships. Considering this current momentum with fintechs, etc., we don't have a lot of time to develop everything internally because there are other alternatives available in the market. We can offer different offerings to clients in terms of technology, etc. So announcements of other partnerships will continue to appear. They will be more common. Thank you.
Our next question from Mr. Yuri Fernandes from J.P. Morgan. Thank you very much, and good morning. Congratulations on your initiative to improve bank efficiency. I have one question about taxes. I don't think anybody asked this question yet.
Can you tell us about what happened this quarter? The tax rate was very low. When we did the reconciliation, there were some adjustments coming from equity. Can you explain what happened, and what is your view for 2021? I know that equity income helps your average tax rate. I have another question about investment on digital. You talked about BRL 2.3 billion in the next two years. And how does this compare with what the bank was doing before? There are some investments at the past about an investment which will mean a higher average compared to digital. How does that compare to your track record? And the third question is about your fees. I think we already talked a lot about those. But very quickly, the number of clients is even increasing. Is the bank changing its strategy, or is it becoming more aggressive?
What is your view on that specific line in terms of fee income?
Let me just kick off this discussion, and then I'll just go forward to Daniel. In terms of digital, I'd just like to draw your attention to two aspects. Number one, there's a significant growth, but in fact, we are focusing more on analytics and AI. When I look year on year, just this year, last year, the growth is over 120%. We are growing, and we know that we won't be able to invest in everything in every area. That's why I said that we will have to team up and have partnerships with fintechs to expedite the process, and we already said last year that we have a venture capital area to invest in fintechs to help them to accelerate their growth with a larger commercial.
Critical mass, we will have additional gains, and we will accelerate that process. Growth is really significant. But investment will never be as much as we would like because things happen much more quicker. And we know for sure that we won't be able to follow things at the pace that they happen. So please take that into account. Now, investment, about BRL 3 billion a year. And those BRL 2 billion come in addition to what has been done.
That's very clear. Here is Carlos André. Thank you for your question. You talked about taxes. I think you answered your own question. The main contribution was a change in that possibility to do distribution through interest on capital. There was a cap of dividend payout of 20% in Banco do Brasil, which was increased to 30%.
That would be the net amount that could be paid out to shareholders through interest on capital. Sometimes the percentage could be higher. That was the main item of contribution when it comes to tax payments in 2020. This is part of the natural dynamic throughout 2021. There isn't much else to add about that. Now, you also asked about fee income and how we see the dynamic, especially in terms of checking account fees. The main aspect that I would like to highlight here is that at first, due to the fact that the market became competitive, those lines were a bit more pressured. Again, I repeat, probably we will have further opportunities because of the improvement of the fact that we are rendering further investment advice to our customers. We can offer them better products, and this will be translated into better opportunities.
In turn, we will have a more positive performance, especially in these lines of checking accounts. In my previous presentation, there are some lines that you see some more positive performance of asset management. We expect to see some growth. This type of capital market is now more competitive. In regards to consortium and insurance products, pension plans, and premium bonds, we anticipate some positive results and a positive contribution to that fee income line. I think that was all.
Thank you, and thank you for the opportunity. I have a question about the one-off items. What were the one-off items, especially in terms of legal risk? Because this is not very clear by reading the release. How do you see the evolution of legal risk looking forward? We saw a trend towards improvement, and we believe the trend will continue in 2021.
The other question is about provisions. The guidance, to my calculations, I think I see a 30% reduction in provisions. You're already talking about BRL 3.9 billion per quarter versus that BRL 5.2 billion posted in the last quarter of 2020. How do you see the evolution in 2021? Is it something that should be normalized in the first half of the year, or we should expect this trend upward throughout the year?
Thank you, again. This is Carlos André. So you asked about legal and one-off risks, legal risks and one-off items. In our industrialization area, I mean, we anticipated in 2021 a soft guidance of about BRL 1 billion of legal risks per quarter, something like that. But when you look at the current numbers throughout 2020, I think we were within that range, something like BRL 4.2 billion in legal risks.
But in practical terms, in the last quarter, there was a more specific move. And when we talk about legal risks, we are basically talking about labor lawsuits or civil lawsuits. In terms of labor suits, there was one specific event when there was a change in the likelihood of successful outcome on our side. In terms of civil legal claims, we have some models that use artificial intelligence whereby we try to capture all the needs for additional provisions due to the fact that sometimes we feel that we need additional provisions. And this is pretty much in keeping with our predictive models that indicated what the amounts should be, what the additional amounts should be, certainly due to the legal risk. You also asked about one-off items.
In terms of one-off items, there is one thing related to reconciliation of accounts because of the government, because we are the managing agent of this program. This is part of our run-of-the-mill operation. This is by itself a one-off item, and we post it as an extraordinary item, and this accounts for most part of what you're asking. Now, thinking about provisions, I think was your last question. Bonetti can give some more color about that and how we expect to keep evolving this year. Now, I'll just revisit the aspect of legal risk because there is another strategy that we implemented in 2020 that is worth mentioning. This is the acceleration of payments. We have a very important strategy to accelerate everything, and you know that when you do that, you also accelerate expenses, but with the intent of having savings as a result.
You also asked me about trends looking forward in 2021. The strategy will be accelerated in 2021. We will try to engage in further agreements in 2021 to preserve value in the future. This will be an important part of our management strategy to manage that legal risk. Our projection continues to follow on an improvement trajectory. Now, speaking about provisions, our reading is that in 2020, we had a potential repayment to support increasing in NPL in the future. Therefore, what is our recurring portfolio in addition to what we intend to grow in terms of credit disbursement? With that, we would be able to go back to our normal evolution of the portfolio and normal evolution of provisions without any additional needs to post additional provisions. You're talking about a very positive throughout 2021.
We will resume normality very close to what we had in 2019. That's it. I hope I answered your question.
Perfect. Thank you.
Our next question from Mr. Felipe Martinez from Morgan Stanley. Good morning. Thank you for taking my question. My question is about asset quality, especially NPL. You said some quarters ago that you expected to see a peak of NPL in the second or third quarter of 2021. So how does that stand right now? You see that your NPL is very low. It's below that of the market. How do you see the performance of NPL from 2021?
Felipe, thank you for your question, Carlos André. In fact, our NPL is performing very positive performance. Well, certainly, as I said before, there are some elements that contribute to that performance and the growth of that portfolio and the migration of some portfolios to losses.
I think the most important aspect has to do with the dynamic of the forbearance of the portfolio that in 2020, as you could see through some of our slides, we have prepayment schedules, whereas there is a higher concentration throughout the first half of the year. It would be fair to say that based on this schedule that is mostly concentrated in the first quarter, after that, you will start to see after that first quarter an increase in NPL levels. We believe that we will probably be close to higher NPL levels at the end of the first half of the year or maybe throughout the third quarter of the year. At the end of the second half, my colleagues are correcting me. That's true. We do not anticipate NPL levels to reach the peaks that we had back in 2016 and 2017.
Just to add something, we are updating MPL projections as things evolve and uncertainties are lower, so our projections for the end of the year is that we will reach the peak of that projection. The good news is that we believe MPL will resume the levels that we had at the end of 2019, so the expectation to supersede that level, I mean, this is already history, so everything indicates that MPL will perform better than what we expected before. That's good news, and that just reinstates that our provisions in place will be enough to cover that new period.
Perfect. Very clear. Thank you very much. We now conclude the Q&A session. Mr. André Brandão will now continue with his final remarks, so thank you so much for joining us today.
Once again, we are available, as I said before. Our IR team is always available to talk to you and also myself and Carlos André. We want to have a very close relationship with you. So please don't hesitate to contact us, elaborate on our figures, and then feel free to contact us. Have a very good day, a nice weekend, and all the best to all of you.
Banco do Brasil's earnings release call is now concluded. We would like to thank you very much for participating, and all of the material used during this call is available through the IR portal of the bank. Have a very good day.