To start today we have Ricardo Forni, CFO, and Daniel Maria, Head of Investor Relations. Our CEO, Fausto Ribeiro, will not be able to join us today, but he left a message for this conference call opening. The Q&A session will begin right after the presentation and further instructions will be given. Now, we will begin the presentation.
Good morning, everyone. It's a pleasure to be with you today to discuss the third quarter 2021 results. When I became CEO of Banco do Brasil, I set 10 structural initiatives in line with the strategic planning. These 10 initiatives are summarized in three pillars, proximity, digital efficiency and profitability, that enable the main deliveries of the last nine months. When I talk about proximity, I'm talking about being always available with a specialized relationship that understands the customer's moments of life, their needs and their preference. We offer specialized service to micro and small companies, which can count on 7,000 dedicated professionals. Also, I'd like to highlight our specialized service for rural producers, both in retail and wholesale. Finally, our private offices, which provide highly qualified advice.
We made robust investments in analytics that allowed us to extend managed service to more than 7 million people, escalating the service with efficiency. With the best customer knowledge technologies, we personalize experiences. An example of this is our advisor robot, which recommends investments considering our customers' goals. At Banco do Brasil, customers can be served throughout Brazil, digitally or in one of the physical points of contact. We are changing our services structure to lighter and more efficient models, increasing the number of banking correspondents. Banco do Brasil has nearly 22 million active customers in digital channels. Our app has a qualified audience with a daily peak of almost 9 million people. This is our biggest showcase. Digitally, customers can renegotiate debt through WhatsApp and also pre-approve loans. Through our channels platform, we offer a full credit cycle.
If the customers want, it's possible to start a loan operation on a particular channel, such as a cell phone, and end it in another one, such as a branch in our omni-channel view. The purchase of credit follows the customer desire in a fluid and a safe manner. All of this results in a full experience in channels, ensuring the best convenience for our customers. We see continuous and consistent growth in the satisfaction of our customers, with an annual increase of 8 points in our general NPS. Every interaction carried out by our employees is followed by a service evaluation. In September, we obtained 4.8 rate in individual service and 4.86 rate in company service on a scale between 1 and 5. Our app ranks among the highest rated in the financial industry.
That's what we pursue every day, our customer satisfaction through a close, personalized, and increasingly digital experience. For us, being digitally immersed means advancing every day, bringing benefits, and improving customer loyalty. At Loja BB, our store in our app, we centralize in one place non-financial solutions such as gift cards, recharge, prepaid phones, and the benefits and promotions of Vantagens BB program. We are launching a new business model, an affiliate marketplace, which generates cashbacks for customers and fee for Banco do Brasil, diversifying our revenue sources. For the launch, we made an agreement with Amazon Brasil that is available to our customers. Soon, we will bring new brands, adding even more value to our customers, making Banco do Brasil more relevant and present in their lives.
If you want business diversification, I would like to highlight Broto, our agribusiness virtual platform built together with BB Seguros. The platform reaches BRL 1 billion in bills since its launch. MPE Week, a digital initiative that put virtually together SME sellers and buyers, was a successful solution. Other initiatives that are part of the constant improvement of solutions for our customers are the Clube de Benefícios, with rewards from products and services, and the Ponto pra Você program with cashback in account. Now, I would like to talk about sustainability. This is the reason why I'm here in Glasgow in the next few days, participating in panels and debates at the United Nations Climate Change Conference. In last September, our sustainable business portfolio surpassed BRL 282 billion, growth of 80.9% in 12 months.
Banco do Brasil is working to engage clients to invest in sustainable assets, offering a portfolio that combines profitability, corporate governance, and social and environmental responsibility. As an example, the recent launch of LCA V erde reached BRL 158.4 billion raised. As a result of our position in the ESG agenda, we are ranked as the most sustainable bank in the world by Global 100, and recently, we were elected as the most sustainable bank in South America by CFI.co. The convergence of proximity, digital intensity, and profitability guidelines are reflected in our performance over nine months of 2021. For the third consecutive quarter, Banco do Brasil posted record results. Adjusted net income reached the highest level in the historical series, BRL 15 billion in this year, an annual growth of 48%.
We also show growing credit with a portfolio exceeding BRL 814 billion and NPLs reduced to 1.82% in September, below the financial industry. Our CET1 reached 13.70% organically. To end my speech, I'd like to reinforce our commitment to profitability and to the construction of increasingly sustainable results. Now, I will hand the floor to our CFO, Ricardo Forni, who will detail our results with you. Thank you very much.
Good morning, everyone. I will start the presentation on slide 10. The adjusted net income grew 47.6% compared to the third quarter 2020, and 2% compared to the second quarter 2021, reaching BRL 5.1 billion in the third quarter with an ROE of 14.3%. Compared to the second quarter 2021, the result was driven by the positive performances, both in the NII and fee income, and the solid cost control, partially offset by the 36.7% increase in the allowance for loan losses in the expanded view. The nine-month accumulated net income was BRL 15.1 billion, an increase of 48.1% compared to the same period of previous year, driven by the reduction in the allowance for loan losses.
Throughout 2020, we constituted preemptive credit provisions to strengthen our balance sheet in face of potential impacts from the pandemic. Likewise, the good performance on the income side and the control in administrative expenses driven the result on the nine months accumulated, and the ROE ended at 15%. On slide 11, we show the net interest income breakdown with growth of 11.9% compared to the third quarter 2020, and 9% in the quarter. In the accumulated nine-month view, NII grew 5.3%, accounting BRL 44.6 billion. The income from loans increased, driven by the credit growth with a better mix. Also, the positive performance from treasury helped the NII. These movements more than compensated the growth in funding expenses due to a higher Selic rate in the period.
On slide 12, we have the loan portfolio in the extended view, which grew 11.4% year-on-year and 6.2% compared to June 2021, totaling BRL 814.2 billion, mainly on individuals and agribusiness portfolios. Individuals portfolio grew 5.7% compared to June 2021 and 14.2% compared to September 2020. Highlights are the positive performance on payroll loans, consumer finance and credit cards, as a result of our strategy of changing the mix. The agribusiness portfolio grew 9.7% compared to June 2021. Agribusiness securities also had a positive performance. The SME segment, which includes companies with annual revenues of up to BRL 200 million, grew 10% in the quarter comparison, influenced by disbursements in the amount. The corporate and government portfolio grew 1.1% year on-
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Year-on-year and 6% quarter-on-quarter. We highlight the growth of transactions with companies with annual revenues between BRL 200 million and BRL 800 million, contributing positively to the portfolio mix. On the next slide, we have the agribusiness portfolio breakdown. We reached the distinct mark of BRL 265.8 billion, 18.5% from September last year. Besides the traditional loans, I would like to highlight the 483% increase in the agribusiness credit rights certificates, commonly referred as CDCAs, which constitutes a new form of agribusiness funding. In addition to the high demand, the strong performance is driven by Banco do Brasil's historical protagonism in this segment, with specialized service, dedicated professionals, technical knowledge and national popularity.
In addition, we start from a robust strategy to strengthen our presence in the agribusiness with actions that improve businesses, bring modernity and technology to the relationship with the entire agribusiness chain. As a result, we had another record of disbursements in the first quarter of the 2021-2022 harvest plan, with a growth of 6% compared to the same period of the previous harvest, with operations in 4,715 Brazilian municipalities. On slide 14, we bring the highlights of the agribusiness portfolio, which grew 4.3% compared to last June. As I mentioned, the highlight in the period was the growth of the SME portfolio, favored by disbursements of BRL 80.1 billion in the two main lines only in the last quarter.
We are investing in an important strategy called Elos Produtivos, which brings a closer relationship with the supply chain of wholesale agribusiness and government companies. In the first nine months of 2021, we disbursed BRL 15.4 billion in credit to micro, small, and medium-sized companies under this movement that integrates the BB service network. On slide 15, we see the schedule for the resumption of payments for the operations of the forbearance portfolio. Payments are being made according to plan, as shown both by the reduction in the balance of this portfolio and the reduction in the balance in grace period, which is about BRL 3.6 billion in September 2021. From the amount in grace period, half are expected to resume payments in the fourth quarter of 2021, as shown in the graph on the right-hand side.
The NPL over 90 days of the forbearance portfolio increases in relation to the previous quarter as expected and remains under control at 2.29%. On slide 16, we show the evolution of the allowance for loan losses in the extended view, which ended the quarter at BRL 3.9 billion, a reduction of 28.8% compared to the third quarter 2020, and an increase of 36.7% compared to the second quarter 2021. The increase in the quarter is mainly due to the higher credit provisions in line with the loans portfolio growth. The good performance of the recovery of write-offs also have helped the allowance for loan losses.
In the nine months accumulated, the allowance for loan losses in the extended view totaled BRL 9.2 billion, a reduction of 44.4% compared to 9 months 2020, due to preemptive provisions made throughout 2020 in the amount of BRL 8.1 billion. The cost of credits ended the third quarter at 2.8%. On slide 17, we have the credit quality, which proved to be resilient. The NPL over 90 days showed a reduction in relation to June 2021, reaching 1.82% in September 2021. The portfolio coverage ratio ended the quarter at 363.3%, a slight reduction compared to June 2021.
The new NPL on the portfolio reached 0.69%, and the coverage of the new NPL reached 113.4%. On the next slide, we present the fee income and administrative expenses dynamics. Fee income reached BRL 7.4 billion in the quarter, an increase of 2.2% compared to the third quarter 2020, and 3.2% in the quarter comparison. The growth was mainly driven by the positive annual performance in the lines of insurance, pension plans and premium bonds, consortium and asset management. In the nine months 2021, fee income grew 1%, converging to the guidance. Administrative expenses remain under strict control, almost flat in the annual comparison, totaling BRL 7.9 billion.
Even considering the salary readjustment of 10.97% as of September 21, administrative expenses grew only 0.7% in the quarter. The cost-to-income ratio accumulated in 12 months ended the period at 35.9%. On slide 19, we show BB's BIS ratio, highlighting the common equity one, which ended September at 13.17%. Finally, on slide 20, we bring the performance regarding the guidance. BB reviewed its corporate projections to better represent management's expectations. The range for the loan portfolio was changed upwards to 14%-16%. This reflects the good performance in the retail line and also the good perspective for the agribusiness sector. Those segments also had their estimates changed upwards.
The wholesale portfolio, which considers corporates with annual revenues greater than BRL 200 million, was impacted by early redemptions and higher demand for alternatives in the capital markets, which drove the revision of this line downwards. For the NII, the performance above expectations both in the loan portfolio and in the treasury led to an increase in the growth range to 4%-6%. Estimates for fee income, administrative expense and allowance for loan losses were maintained. Finally, adjusted net income was revised upwards to reflect changes in all of the lines. With that, I conclude the presentation of the results of the third . Quarter 2021 of Banco do Brasil. We can now begin the Q&A session.
Thank you. We'll now begin the Q&A session. Questions can be asked and raised by clicking on the icon Raise Hand. When announced, a request to open the microphone will appear on your screen, and you should click on Unmute to activate your microphone. By phone, dial star nine when announced, dial star six. Our first question comes from Mr. Jason Mollin from Scotiabank. Please, you may proceed.
Hello, everyone. bom dia a todos . I was wondering if we could get an update on Banco do Brasil's strategy to sell non-core businesses and an update on potential JVs in certain businesses. Also perhaps now that you've reached one year, the one-year mark on your JV in investment banking, if you could provide some color on how that is going since I see, according to the release, a lot of transactions. Thank you.
Okay. Thanks, Jason, for the question. Let's start on the divestments that let's say we are working on. I believe that we delivered the first divestment in this quarter. It's subject to approval by the central bank and the competition authority in Brazil. We sold half of our let's say half of the bank called Digio that we have in partnership with Bradesco. This was due to that this was originally incumbent bank or a bank from a financing that was let's say during the last years invested to be a digital bank. For us, it's not a synergy in our digital strategy.
The road to be digital will require a lot of investments, and we decided to sell. This is our partner over there; he had a preference. They bought this equity from us. We are just waiting for approval from the central bank and the competition authority to finalize the transaction. This is first one that we are trying to fit with the core. This is one of the first ones that we have delivered, let's say. In terms of other ones, I believe that the market always talks about Cielo. We are not interested in selling Cielo.
We are working together with our partners over there because we believe it's a good business. We have BB DTVM as well, not on divestment because my partnership, let's say , discussion. We are still studying, let's say we don't have any new or evolution in terms of this discussion. We're still looking forward for a partner that can improve our competencies and, let's say, move forward, and knowing that BB DTVM is a leader in the Brazilian market. This is something that we are looking forward for a joint venture that could keep our position as a leader in the asset management markets. We have also sometimes discussion about Banco Votorantim. Banco Votorantim is a very good bank.
They are delivering results. We are working together with our partners over there. We worked on a potential IPO in the beginning of this year, that the market was not so, let's say, welcoming in terms of pricing at that time. Together with partners we decide to hold and stay on the partnerships and work together. We're looking forward in the future for, let's say an exit with, let's say a good price for our stake. In Banco Patagonia, I think it's another one that is in the, let's say, potential list of divestments. The markets in Argentina are not, let's say, very liquid or welcoming for a transaction.
We are holding and waiting to see how the market evolves. Meanwhile, Banco Patagonia is a very good and profitable asset, so we are not—it's not against us holding the position because the asset is profitable. Okay?
Very helpful.
Okay.
Yeah. Is there update on UBS?
Yeah. Update on UBS, we just made one year, let's say, of the joint venture working. We are performing, say, better than we expected, considering the pandemic scenario. We have a very good transactions. We are working. The market in the fixed income in Brazil is going well. The competence of a global player like UBS and the local leader like Banco do Brasil is working well on this. Equity, we are working well as well. Let's say the market is a bit more sensitive for equity transactions. We are, let's say, advancing our confidence in the mergers and acquisitions.
I think that is something that has a more longer term for, let's say, this pipeline to come up. We are very happy with the joint venture with UBS.
Very helpful. Maybe just in a separate vein, in a separate way, if you could just comment on the competitive environment, perhaps from newer entrants or digital banks. We've seen the price range for new banks. The midpoint, I think, is over three times the market cap of Banco do Brasil. How do you think that's impacting your business? Are you seeing that on a day-to-day basis? What do you think of that disadvantage on the valuation front?
I believe that, Banco do Brasil is an incumbent bank and, let's say, we are working hard on our digital strategy. I believe that during the presentation, I believe that the material that our CEO presented about what we are doing in terms of delivering and developing new business models, and we have this, the marketplace, we have this, in the agribusiness, we have these gift cards and now our marketplace in partnership with Amazon. This is just starting, and keeping our app as the best or one of the best in the Brazilian financial system is something that we are working hard and we are trying to accelerate our digital initiatives.
We have been very active in the open banking initiative in Brazil right now. We're together supporting the central bank initiatives that speak to the open banking. The digital banks are niche players, and I believe that we are building and delivering a core digital proposition for our clients. That's what we are working on mainly, and that's why, for example, Digio was not something that would be synergy for our business plan.
Just to add some numbers to what Forni said, that is, I think that's quite important related to our strategy. First of all, we have a good number of people using our app. We have a good flow inside the organization. More than 22 people using at least once a month.
22 million .
22 million people using once a month. We have, on average, 6.7 million people using every day, including we have a peak more than 8 million people in one day. This actually shows the value that the bank has as a platform. Not only to generate business in the banking business, but also to generate other flow for non-banking business. For that reason, it's important to see the developments that we have in terms of platform, for instance, Broto. That's a circle that we are scaling this to monetize. You see also the movement that we're doing in the gift cards and now bringing to this marketplace with amazon.com.br. Certainly, this is a new way of generating to monetize the customer base. This is a good representation of the strategy, digital strategy for that.
Certainly, since you have a large market. There are more eyes looking at the market. We have the instruments, securities. It doesn't matter who is in the market.
Thank you very much for your comments. Appreciate it.
If there are no questions, I would like to turn the floor over to Mr. Ricardo Forni for his closing remarks. Please go ahead, sir.
Okay. Thanks for everyone who's attending this conference. I believe that we are very happy to deliver a very good result that is consistent with our trajectory and work with our employees to deliver a good result. I believe that we are working not only towards, let's say, to keep profitability going up and closing the gap with our peers, but working on the efficiency agenda and working on the new business models and digital transformation that is very important and is our strategy that, as our CEO said before, that he set in the beginning of his administration, this 10 lines of work that we are trying to deliver.
I believe that we are very happy in what we reached so far and are working hard on the end of this fourth quarter to deliver the complete 2021 results in good count and to prepare the floor for next year. That will be a challenging year in terms of the market scenario, but competition as well. We are confident that we have all the conditions to keep improving and delivering profitability, evolving the efficiency agenda, and, most important of all, to let's say, enhance our clients. I believe that everything that we do at Banco do Brasil is to deliver and to take care of our clients. Thank you for your comments today.
That just concludes Banco do Brasil's conference call for today. As a reminder, the material used in this conference call is available on Banco do Brasil's investor relations website. Thank you very much for your participation , and have a nice day. You may disconnect now.