Good morning, ladies and gentlemen, and thank you for waiting. We would like to welcome everyone to Bradesco's fourth quarter 2019 earnings conference call. This call is being broadcasted simultaneously through the Internet in the investor relations website, banco.bradesco/ir-en. In that address, you can also find the presentation available for download. We inform that all participants will only be able to listen to the conference call during the company's presentation. After the presentation, there will be a question and answer session when further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Banco Bradesco's management and on information currently available to the company.
They involve risks, uncertainties, and assumptions because they relate to the future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Banco Bradesco and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Carlos Firetti, Market Relations Director and Head of IR.
Hi, everyone. Welcome to our conference call for discussions of our fourth quarter 2019 results and also the discussion of our guidance for 2020. We have today with us our CEO, Mr. Octavio de Lazari, our CFO and Executive Vice President, Andre Cano, Vinicius Albernaz, Chief Executive Officer of Bradesco Seguros, and our Executive Director and Investor Relations Officer, Leandro Miranda. For starting the presentation, I turn the floor to Leandro.
Thank you very much, Firetti. Hello, everyone. First of all, I'd like to thank you for your participation in our conference call. This time for the release and disclosure of our fourth quarter 2019 results, as well as our guidance for the year. 2019, as you have realized reading our financial statements, was very positive for us. The signs of improvement in the economy we had seen at the end of the third quarter were confirmed. We saw the pace of economic recovery consolidating, mainly with the boost in consumption, with strong retail sales volume, both in Black Friday and Christmas. We also see initial signs that companies will be finally entering an investment cycle, and we see it on our day by day in our credit committees.
We've increased in the number of public investment announcements, as well as the intention to invest that we hear directly from the owners of the firms. We live in a scenario of historically low interest rates, but with inflation under control, what's good for the country, and we are still able to navigate in a very good way. With the possibility that interest rates will remain at low levels for a long period, we see space for the continued increase in credit penetration in Brazil, with emphasis on real estate financing. The year also ended positively in the field of economic reforms. We had the approval of the most important of all reforms, the social security, with an amplitude above the initial expectations. This alone brings conditions for a balance of public accounts in the medium term.
New reforms, such as the fiscal and administrative reforms, may be approved in 2020, which further raises our optimism and for the market as a whole. We also see the acceleration of privatizations and concessions with the potential to have a significant impact on investment and leading to increased productivity. Our economic team has already raised our GDP growth projection 2020 to 2.5% per year, a significant acceleration compared to our 1.2% expectation of growth in 2019 and maintaining the consistency of the economic policy route for the maintenance of the positive scenario for 2021. In this context, with improvement in the economy in confidence, we had a great performance in 2019. Our net profit reached an all-time high of BRL 25.1 billion, a growth of 20%, and with the very good news of our operating profit growing 11.5% itself.
We have capped the ROE over 20%, as you have been seeing all over the year, so it reached 20.6%, and our ROA at 1.8%. According to a recent announcement of Euromoney regarding to the top 20 banks in the world, we have the highest ROA at all. Credit portfolio presents a robust growth of 13.8%, 4.6% in the last quarter. This growth was boosted by individuals and SME segments, and also an acceleration in the large companies. What was not expected of ourselves, but seems to be very good news, not only for the fourth quarter, but for the coming quarters as well. As we present in the guidance, we expect that 2020, the maintenance of this positive scenario for credit as a whole. Our delinquency remains under control, with the 90-day NPL closing the year at 3.3%, a reduction of 30 basis points in the quarter.
In the quarter, the positive evolution of the SME and corporate segment, we stood out. We highlight also the low NPL creation level, the lowest level in the series in our history. We see credit quality indicators remaining at very comfortable levels in 2020, considering the information we have about the most recent credit vintage so far. Finally, we highlight our dividend distribution in 2020, which totaled almost BRL 16 billion, representing a payout of approximately 74%. In this total, it also included the BRL 8 billion of extraordinary dividends already paid and complementary dividends of BRL 491 million that we have just announced it this morning. Jumping to page four, I would like to share and highlight some initiatives of ours that we've been very important. First of all, almost all of them have in common a great focus on improving the experience of our clients.
We have many projects being delivered in 2020, which will increase even more the perception of our clients regarding the quality of our services. Among these initiatives, we'd like to highlight four. First of all, expansion of our customer base. We had a significant growth of our customer base in 2019 of 1.8 million clients. Only in Bradesco, we have net 360,000 accounts opened through the mobile app. Today, 60% of our checking account customers are digital, performing their transaction through the website or the mobile app. We have several initiatives being implemented. In the traditional bank, we have a better digital onboarding experience for individual clients and also for entrepreneur and companies. In addition, Bradesco Expresso has increasingly shown itself to be an efficient and cheaper way to serve our customers, generating an important volume of new accounts and important savings for our shareholders.
Another important highlight was the bank's position in the acquisition of rights to process public sector payroll, a business in which we benefit from our extensive service network, and that usually has a very high internal rate of return. Comparing our performance to that of our direct competitors, we acquired the largest number of payroll and customers in the office carried out in 2019. The second major initiative is branch optimization. As you know, we closed 139 branches in 2019, as we had anticipated in our last quarter. Now we plan to close more than 300 branches in 2020. We continue to convert larger units into units with optimized formats whenever we see the potential. We also expand the number of units in the hub and satellite concepts, where we create a network of many branches integrated to a central one that's our hub.
Very important to highlight the development of Next, as you know, our native digital bank, which reached 1.8 million customers in December, and now in January, we have reached two million clients. We expect an even greater acceleration in 2020 now that our onboarding has improved significantly, and we are targeting 2.5 million customers until the year ends. We introduced a new version of the app, which, for example, in its latest version, made the homepage customizable. Pretty much clients can choose which kind of services, product information they wish to see first. We will bring new versions throughout 2020, which among others, will allow direct access to the Ágora platform. Ágora is an open platform and will be the unique investment platform with Next, making Next investment experience the most complete on the market. We continue to advance in our strategy of segregating Next from Bradesco's platform.
Next has already moved its own headquarters to another place, and we created new administrative and management structures, such as human resources, IT, among other initiatives. We hope to complete the total separation still in this first half of 2020. Finally, regarding Ágora Investimentos, it differentiates itself from the other participants in investment market. For individuals, Ágora is the Bradesco's arm for retail. We have Bradesco Seguros for institutional investors. Not only Ágora has a cutting-edge technological platform, offering the best investment products available in the market, as well as exclusive products. It has a unique distribution capacity and financial service.
Now, as you have been able to read in the papers this morning, Ágora signed an exclusive partnership with Grupo Estado, allowing Ágora to seize Grupo Estado's excellence and high journalistic credibility on a daily basis that impacts over 25 million clients through its various channels, from paper to digital, broadcast, as well as Grupo Estado radio network. Together with the launch of the new Ágora, we incorporated approximately 850 personal investment advisors into Bradesco's operations. We choose the best ones from them, we are pretty sure that they will provide a great financial advisor to our clients. Basically, we are complementing these teams with the remote platforms that we call PGP. We believe that we have a significantly increase in our financial advisory offer to clients, that we should achieve important results still this year.
Moving to page five, as Otávio has made this important announcement, last year, we became a signatory of the Principles for Responsible Banking, or what we call PRB. More than adhering to the commitment, we were the only Brazilian bank to participate in the construction of the principles in partnership with the United Nations. We are a founder of this Principles for Responsible Banking in Brazil, together with United Nations as well as 19 other banks all over the world. Since then, we have been working on implementing these guidelines to strengthen the positive impact of our business. As a result, Bradesco announced this morning also two important actions aligned to our climate change agenda. First, in 2020 still, we will become one of the first large financial institutions in the whole world to have 100% of our operations supplied by renewable energy.
This action, coupled with efforts to reduce energy consumption, should reduce our carbon emissions by approximately 20%. In addition, Bradesco will also offset of the carbon emissions generated by operations from 2019 onwards. This includes all emissions, direct and indirect, that are part of our greenhouse gas inventory. These are advancements in the agenda that we have created since we have signed it for the Responsible Banking. For a long time, we ensure that Bradesco is totally prepared to face these kind of risks and benefit from the opportunities that the transition to a low carbon economy provides the market as a whole. Besides that, we are reinforcing our understanding, management, and disclosure of climate impacts on our business, in line with the recommendations of the Task Force on Climate-related Financial Disclosures.
This shows that we are in line with the main demands of the market and investors worldwide, that companies enhance their contribution to the sustainable development agenda through innovations in their business models. We are doing that. Moving to the financial results of the fourth quarter 2019, I would like to start here on page seven, with the recurring income statements. We had 14% growth in our net income in the fourth quarter, and 20% in the full year. In 2019, the NII expanded 5.4%, and the provision for loan losses reduced 2.4%. We highlight also the strong performance of our insurance operations, which grew incredible 12.7%. We will present it in more detail, different lines of the results on the following slides. On page eight, we show the events affecting our results, extraordinary.
The main one was the gain resulting from the revaluation of our inventory of tax credits due to the increase in social contribution by 5%. This revaluation had a positive effect on the result of BRL 6.4 billion. At the same time, we revalued a series of provisions for contingent liabilities and loan losses, and we made an impairment of non-financial assets. Some of these new provisions were due to changes in the calculation methodology. We believe that these provisions reinforce our balance sheet and demonstrate that our management is conservative, but on the best way possible for a bank. We may explore more details about these provisions in the Q&A session, if you wish. Moving to page nine, our ROE in the quarter expanded again, reaching 21.2%.
The ROE expansion this quarter in addition to the earnings growth, is partly explained by the effects on the capital of the distribution of extraordinary dividends and also by the effect of the provisions we made in the quarter. We consider that a return around 20% is sustainable for 2020, as we have talked to you in the last month. Even with these effects, our shareholders' equity has grown by 10.4% in the last 12 months. Our ROA in the first quarter remained in 1.9%, and as I have told before, according to Euromoney, the largest among the top five largest banks in the world. On page 10, the expanded credit portfolio shows a strong growth of 4.6% in the fourth quarter, bringing the annual growth to 13.8%. There was a strong acceleration the growth of the corporate portfolio in the fourth quarter.
That was good news for ourselves. It was nothing that we expected to happen in such a pace in the fourth quarter, but this trend may continue on the following quarters. That impacted the overall growth of the portfolio as a whole. Considering the portfolio reclassified by the new segmentation, the corporate portfolio grew by 8% in 12 months, the SMEs accelerated to 17.5%, and the individuals portfolio grew by 19.2%. Considering the individuals portfolio, the main highlight was the personal credit line with growth of 35.4%, followed by the payroll at by 23.7% and vehicles at 22.3%. We highlight the credit card portfolio also accelerated, reaching a growth of 14.7%. Moving to page 11, regarding to loan origination for business day, we see the comparison remained robust for both individuals and companies, indicating that the growth in the portfolio balance should continue to be strong.
On the following page 12, to be more precise, regarding to net interest income, we see that the NII grew by 4.4% in the fourth quarter and in the annual comparison with a strong performance of the client NII in a reduction of the market NII, which was very strong in the fourth quarter 2018 with the improvement of the market after the elections. The client NII grew 9.2% in 12 months with a positive effect of volume growth and some spreads compression, and we are keeping the same level so far. The gross credit spread remained stable in the quarter. In the quarterly variation of the NII, there was mainly a strong positive effect of the growth in the volume of our operations and transactions.
We would like to remind you that in the first quarter 2020, the credit margin should suffer the negative effects of the implementation of the new overdraft rules, which set the maximum rate at 8% per month. Despite of that, we are very confident that we shall fulfill our guidance. Delinquency ratio over 90 days. Moving now to page 13, you're going to see that we performed very well in terms of credit quality with the reduction of the total NPL by 30 basis points, positively impacted by the corporate and SMEs, while individuals segment presented a small increase in defaults, mainly due to the growth in higher risk clients that are more than offset and well-paid by the very high margins that we get in these segments.
In the quarter, we saw the 100% provision of credit operations of BRL 356 million, which contributed to a reduction delinquency ratio by 10 basis points. We see a very good performance in the new credit vintages, which indicates that the delinquency ratios must remain very well-behaved. Moving to page 14, where we address NPL creation and allowance for loan loss expenses, we see that there was a sharp reduction. We reached BRL 3.7 billion. In the quarter, we had an increase in cost of risk, which reached 2.6%. We see this indicator remaining very well-behaved throughout 2020, allowing a growth of provision for credit losses is smaller than the growth of the credit portfolio, especially because we have already reported our provisions in the last quarter of the year as you have seen. On page 15, we see NPL creation.
We'd like to highlight that it reached the lowest number in our whole history. We are very proud of that. Fee and commission incomes were very good news. Pretty much we accelerated the origination of these in the last quarter, and we are able to get into our guidance. Now we'd like to highlight the checking account lines, consortium, custody, and brokerage, as well as investment banking fees that helped us to get such a faster pace than when compared to the previous quarters. Moving to page 17, when we see operating expenses, it's a clear line that we want to address in 2020. Our CEO has been very vocal saying that we are trying the best we can with every single head of the different divisions here at the bank to work on a base zero.
We are very confident that we shall keep the guidance that we are providing to you. The acceleration in cost expansion in 2019 was primarily due to investments that we decided to make. We have it totally under control according to our strategy. We implemented a new variable compensation program for our relationship managers, from now on, we just shall see it according to inflation at most. A structure measure that was of great importance of our business, impossible to see in this new world, the lack of such a tool that we have adopted. We also would like to highlight the higher cost with labor claims that we initially anticipated due to the acceleration of agreements, that from now on shall keep on the same levels.
In terms of number of employees, the impact of the voluntary dismissal program is already partially reflected in the quarter, but some exit will extend over the first quarter. In addition, we had a reduction of 139 branches in 2019, and we expect to close more than 300 branches in 2020. The reduction of the staff and adjustments in the branch network should contribute to a better performance in costs in 2020. Income from insurance, pension plans and capitalization bonds. We had a great performance in insurance with total premium growing 7%, despite having been a year of adjustments for the pension plan segment as a whole, we did it. The result of insurance operations grew 12.7% in the year, which allowed us to expand net income by 16.6%.
Of course, we realize that with the decline in interest rates, we shall have a lower range, but still a very strong operation when compared, especially to our peers. The insurance group ROE in 2019 was 23.5%. Still, in insurance, pension plans and capitalization bonds, we had a 28% profit growth in health operations in 2019. The life and pension plan segmented showed a more modest profit growth, pressured mainly by the reduction in the management fee for the pension plan product as a whole when you consider the industry totally. In the full year, we continue to present positive evolution both in claims and in combined ratios. Moving to page 20, when we share some numbers regarding to our BIS ratio, you can see that our Tier 1 capital reached 13.3%, basically had a reduction in the years for very good reasons.
It was too robust, we have paid extraordinary dividends of BRL 8 billion, announced and paid in the period, as you all know. The effect of prudential adjustments also represented by the impact of the extraordinary provisions made in the quarter. Already net of the effect of the distribution of dividends from the insurance operating companies to the holding company. We see our Basel index evolving organically throughout 2020, already considering our dividends and the growth of credit portfolio. Now, last but not least, we go to our guidance. Pretty much as you can see, we are keeping the guidance of 2019 for extended loan portfolio, net interest income, and fee and commission income that is accelerating. We are also keeping it to operating expenses due to the lack of new measures such as our dismissal voluntary program and labor lawsuit settlement that we had initially.
Our income from insurance, pension plans and capitalization bonds are being slightly reduced to 4%-8% because of the current interest rates that we live in the country. The extended provisions were set at I'm sorry, BRL 1 3.5 billion-BRL 16.5 billion. That's pretty much where we are. We are very confident with 2020. As you have realized, we have the best data in the industry, and we are pretty much sure that we're going to keep on presenting very good results to our shareholders, employees, and community as a whole, to all of our stakeholders. Thank you very much for your attention. Now we remain at your disposal to the Q&A session. Thank you.
We will now initiate a question and answer section. If you would like to ask a question, please dial star one. If at any point your question has been answered, you may remove your question from the Q&A by pressing star two key. Our first question is coming from Thiago Batista of UBS.
If Thiago is not there.
Mr. Thiago Batista was disconnected. Our next question comes from Mario Pierry from Bank of America.
Hi, everybody. Good afternoon. Congratulations on your results. Let me ask you two questions primarily related to your guidance. First of all is on your net interest income growth guidance of 4%-8%, roughly half of the growth that you're expecting on your loan portfolio. Can you break down this growth for us between market-related and client-related income? What is the impact that is embedded here from the caps on the overdraft? If you didn't have the overdraft cap, how much do you think that your margin with clients would have grown? Then I'll ask my second question later.
Okay. As you know, we provide the guidance for the full NII, not for the part. I would say, considering the scenario of interest rates, probably the market NII would be a little bit smaller than what we achieved this year. Basically, the most important driver for the NII as a whole is the client NII. If you break down the proportions, roughly the client NII makes for 85% of the total NII. It is really the most important driver. In terms of, as you said, the NII this year is negatively impacted by the new rules for the overdraft product.
Probably, if we didn't have this rule, the growth in NII probably would be closer to the growth of the average loan book. That is the main driver, considering we have spreads under pressure, but a positive impact from it. I wouldn't say it would be growing in line, but probably more closer to the loan growth level for the average book.
Mario, this is Leandro complementing here Firetti's answer. How are you doing, man?
Hi.
Well, pretty much as you have seen, we have a much more significant decrease in interest rates in 2019 than is expected to 2020, right? If in 2019, we are able to grow the market by 4.4%, it's very likely that we shall have a lower number on this figure this year. On the other hand, the client NII, that is the healthiest one, right, grew 9.2% in 2019. Pretty much the way we see it is that we are accelerating in this portion. We shall see the NII keeping the level. On the other hand, we see the healthiest portion growing much, much faster than the market one. That's good news.
Okay. No, that's very clear. My second question is related to your guidance for provision charges. If we take the bottom of your guidance, you could actually consider a decline in provisions in 2020. When you talk about your loan growth of 9% to 13% driven by the consumer primarily, where I think you said it could grow as much as 20%. I wanted to reconcile that. Why do you think that your provisions could actually decline when your consumer loan book should be growing close to 20%?
We think, basically, if you break down these provisions, I would say the provisions for the retail products basically are growing more driven by the average loan growth. We have very low provisions for the corporate loans. Basically, this is the main driver. As you saw this quarter, we also strengthened our balance sheet with provisions. Part of that relates to, as we mentioned, revision in the criteria for letters of credit and guarantees, impairments of bonds, and also strengthening some provisions. Basically, considering we already had a very healthy position in provisions and topped with strengthening of provision, we believe the flow of new provisions coming from the remaining of the portfolio should be much reduced, and this is the main driver for keeping provisions in the levels we are indicating. We can say we are very confident with the range of this guidance.
Mario, just let me give you my two cents here. Besides everything that Firetti said that pretty much reflects our view as a whole, I would like to add that we are growing very fast in individuals, especially personal loans, that allow us to have incredible spreads, but with a much riskier portfolio. That's the reason why, together with the other items that Firetti has pointed out, that we are also increasing our provisions despite of the ones that we have put in the fourth quarter. The second thing is that we did not expect to have such a growth in the large corporate. As Octavio was previously mentioning, the capital markets may play an important role this year, we do not know if we're going to have the same growth in corporate names such as we had in the last quarter.
Okay. No, that's clear. Does it mean that your reserve coverage then next year or in 2020 should be lower? Is that how we should read it? Like, you boosted your reserve coverage with this success gains that you had now in the fourth quarter, your coverage should be declining probably here?
Coverage, as we always say, is not a reference for us. Basically, it's much more a kind of a product of the process of provisioning. Basically, we expect NPLs relatively under control, probably already close to the bottom of NPLs. Basically, we're not going to touch next year on the additional provisions. Probably these provisions will be integrated in the provisioning process when we migrate for IFRS 9. That probably is going to happen in 2021. Basically, I would say provisions, the default rate maybe will reduce a little bit, but again, it's not really even something we look at. It doesn't really connect to our provisioning process.
Again, it's too early to say.
Yeah
Let's work on.
Okay. No, very clear. Thank you very much.
Our next question is coming from Thiago Batista of UBS.
Hi, guys. Sorry for the problem I had in the beginning. Just one question on the insurance business. The midpoint of the guidance implies an expansion of something close to 6%. How much is the top-line growth that we're expecting in insurance business in 2020? Which type of segment should lead this expansion? To try to understand which business will lead this expansion, and also if you are expecting an acceleration in the growth of number of clients in insurance company.
Hi, Thiago. This is Vinicius here. Yes, indeed we are expecting that the operational results will be able to counterpoint the expected fall in the financial results. As a matter of fact, if you take into account both the last quarter as well as 12-month 2019, we already had a very healthy growth in the operational results, even higher than the growth in the financial results. In the full 12 months, we had 14% growth in the operational results and 10.8% growth in the financial results. Of course, we don't expect the same kind of scenario that allowed us to have such a strong growth in the financial results next year. We are counting on that strong trend of operational results to continue growing through 2020. In terms of client base, yes, we are expecting a continuation of growth in our client base.
If you take into account, for instance, the auto segment, even though if you take into account P&C as a whole, we had a growth of 2.2%, the auto segment more close to 3.5%. If you take into account our premium growth was actually 6.5% in the auto sector. We did in fact had a very healthy growth in terms of [ICMS insured] and as well as in the health sector, as you know.
We are not disclosing our expectation of top-line growth, but we are definitely expecting that the rebound in the economy, the return of growth in jobs will allow us to deliver the kind of operational results that we need to deliver. Just to finish here, we are very well positioned in terms of our distribution platform to capture those opportunities. We are actually investing a lot as well as in our digital platforms to be able to leverage those opportunities.
Very clear, Vinicius. Thank you.
Our next question is coming from Tito Labarta of Goldman Sachs.
Hi, good afternoon. Thank you for the call. A couple questions. First on your loan growth guidance, just to understand, you kept it pretty stable compared to 2019. I think you mentioned you don't expect large corporate growth much. Just want to get a sense, given GDP growth should be accelerating this year, why you don't expect an acceleration there? If you can maybe give some color by segment in terms of how you expect retail loans to grow and corporate loans to grow this year. A second question in terms of fees.
You also kept your guidance similar to 2019. If you could maybe give some color by line, right? Because we saw some pressure in some segments in 2019, such as card, asset management, but offset by good growth on brokerage and underwriting. If you can give some color on the fee income guidance by the different segments and where you could see pressure and where that could be offset. Thank you.
Okay. Tito, that is Leandro speaking. I am going to start here with our guidance regarding the portfolio, making some views regarding to the GDP as you have requested. Firetti and I, we are going to touch base here regarding to the evolution of each line in terms of service, okay? First of all, we had a very important growth because of the wholesale in the last quarter. We do not know still if it is going to come along in the way to us or if it is going to be absorbed by the local debt capital markets. We prefer to be a little bit more cautious and conservative here.
Nevertheless, as we are growing in SMEs and especially in individuals, where we see very much higher margins and the delinquency is very under control, the new vintages are pretty much healthy, we believe that we shall see our margins growing despite of the portfolio being on the same growth. On the other hand, we shall have to see the year, how it's going to evolve. Regarding to the fee side, basically, we have seen an acceleration in the fourth quarter. We have had new clients. We have made adjustments in every single line of business, and Firetti has here some notes in which he can pass it to you our view in the main lines.
Okay, Tito, just complementing Leandro. As we said, we have seen a very important growth in the base of clients. If we go line by line, we also have very interesting drivers. If you look to the credit card line, I remind you last year, we had most of the year the impact of the cap of debit card interchange that was capped at 50 basis points from 80. That was the average before. This year is an year where we don't have this impact in the comparison. We also had last year a very important impact in the acquiring business. Maybe that may continue somehow, but probably in a lower degree than in the past. Overall, in cards, we should benefit from very strong volumes of credit card and debit card transactions.
As you probably know, the estimates, for instance, from the Credit Card Association that point for a very high growth for this year. In checking accounts, we have been growing the number of clients. We grew last year 7.5% year-on-year. We think we're going to grow again, maybe not the same level, but we believe given the increase in base, we may grow something this line. In asset management, we have been doing a very good job in terms of accelerating the growth in the assets under management from clients, retail clients, and high net worth clients.
We have adjusted the mix.
Yeah, we adjusted the mix, moving more and more to products with higher management fees and higher returns as the money market strategies. We should do better. Actually, if you look at the growth pace for this line Q1 here, you're going to see that we were dropping year-on-year much more than we are right now, and the last quarter, we shrank only 0.6%. During the 2020, we believe we'll go to positive territory.
It's an inflection point for us also.
Yeah. Operações de crédito or credit operations, you have there fees on some credit operations like the mortgage, where we are growing very well. The negative performance of this line came much more from the reduction in fees in letters of credit and guarantees, for which we believe we may see a better performance this year. Consortiums is a line that we recognize revenues on accrual basis. We grow the number of clients, management fees and accruals, so it's not volatile at all. I'm not going to go investment bank. It should potentially be a very good year. As you can see, the dynamics for each line seems better for this year. In considering the mix, we think the 5% in the middle should be okay.
Yeah. Thanks. Very helpful, Firetti. Just one follow-up, if I may, just on going back on the loan growth. Do you think that the loan growth can accelerate for SMEs and individuals and, this is probably being offset by conservativeness on the large wholesale? Do you think they will stay around that 19, 20%, or they will take accelerate there?
I think we should stay probably something around that level. If you look to the pro forma numbers we report that adjust for some change in the segmentation we made in the past. We are growing SMEs at 17%.
Yeah.
It is very strong. We are growing individuals as a whole at 19. It's super strong. Probably it should be something like around those levels. The total number is not better because the growth in corporate is more like single digits, low single digits with today's point of view. Again, as we've said in the presentation, we have appetite and capital. If there are good opportunities with good spreads, we might grow more.
Perfect. Very helpful. Thank you.
[Inaudible].
Our next question is coming from Mr. Jason Molin with Scotiabank. You may proceed.
Hello, everyone. My first question is related to the non-recurring charges that you showed in the quarter that you classified non-recurring. You had the large tax credit, generating a gain of over BRL 6 billion, and that was offset as you clearly show, by BRL 3.4 billion in provisions for liabilities, BRL 2.5 billion in loan provisions, an asset impairment charge over BRL 1 billion, and provisions of about BRL 800 million for your voluntary severance program. Then, of course, you have the goodwill, which is around the level that you have been reporting a little higher. Can you talk about these items in a bit more detail, particularly, what's the timing here? Was the timing for these provisions because of the tax credit?
Is that why you decided to make these changes to the loan provisions now and then that will strengthen the balance sheet and over time, maybe you won't have to make as much? If you can give us some color on the timing and the nature of each of these charges, that would be helpful. The second question is related, again, on loan growth. You are showing on slide 11 of your presentation some really interesting numbers on loan origination per business day.
We did see a dramatic increase in companies that you show. I guess this is on the base of 4Q18, but it is interesting that the base for individuals remain the same in the fourth quarter and the third quarter. Is this the kind of origination that you're expecting? The growth, if you maintain this kind of origination, just with the higher base, your growth should be a little bit lower in lending to individuals. Can you really sustain the kind of growth that you showed in the fourth quarter? Thank you.
Okay. Regarding the known recurring charge, basically, we clearly took the opportunity of the revaluation of tax credits to run through our models and assumptions for some different lines and took a more conservative approach. I think if you go back in history, it's not the first time we have done that when the tax rate was increased from 34 to 40, then when it went from 40 to 45. Basically, how we differentiate what is recurring from non-recurring. What we call non-recurring is basically when we have a change in methodology, a change in assumption, not really something that comes from the ongoing flow of provisions from the operations. Basically, I think that's the way we can explain it. Regarding loan growth, we believe when you look in loan growth, you have everything. You have companies, you have small companies, large companies in the company segment.
SMEs, the level of loan growth or the origination is even stronger than what you can see in the mix for companies as a whole. For individuals, if you look to year-on-year, it is growing at 24%. We believe this is enough to keep growing Our books probably high teens for individuals and mid-teens or something for SMEs. I think that's the view.
Regarding to your question, if we see a deceleration in the individual portion, and if you believe it's going to reduce, no, we do not. Basically, we shall keep the same pace or grow, because pretty much we are adjusting more and more this platform. We are still very positive on individuals and SMEs, especially individuals.
That's helpful. Maybe just a comment on the goodwill amortization. That we've been seeing every quarter, and that does have the implications for book value. What should we expect run rate for goodwill amortization should be similar in 2020 versus 2019?
Yeah. Basically, you can consider in 2020 something BRL 1.5 billion in goodwill amortization. We have a schedule. Actually, we report that. You can see the schedule for BRL 1.5 billion for 2020.
Just in case you don't have it, we can send it to you afterwards.
I got it. Thank you.
Our next question is coming from Thiago Bincelt of Itaú BBA.
Hi, everyone. Good afternoon. I have just one question about asset quality. We saw pickup in NPL for retail segment this quarter. Now that you have expanded this book more aggressively, do you believe this could be an inflection point in terms of asset quality for this book? Also, what would be your base case in terms of delinquency rates for this year? Thank you.
We can say that for individuals, probably we are in the bottom. Probably we don't expect a big acceleration, considering we are growing fair fast in some lines that have higher delinquency, for instance personal loans, that really puts some pressure in this line. Looking to the new vintage, we don't see any acceleration in any individual line that really tell us we're going to see a big acceleration. It's much more due to mix than actually a more consistent increase in NPLs.
Of course, it depends on the GDP. If we have the employment rate getting better, we shall have more individuals in the system to be banked, and then we can increase even more these individual lines.
Okay, that's clear. Thank you.
Our next question is coming from Carlos Gomez-Lopez of HSBC. Mr. Carlos, you may proceed.
My apologies. I was mute. Congratulations on the result. Questions on provisions. You mentioned in the Portuguese conference call that you have not provided for IFRS 9. Can you remind us how much you expect the impact of IFRS 9 to be, whether you can confirm that it will be applied starting next year? Also, as part of your extra provisions, did you include anything for economic plans? Thank you.
For IFRS 9, we said we didn't make provisions specifically for IFRS 9 because considering our level of provisions, we believe we are already covered for the adjustments we have to make for IFRS 9. We are still waiting for the regulation for IFRS 9. It's going to be released this year, independent if officially it starts in 2021 or maybe 2022. We're going to be studying if we even start to use IFRS 9 for ongoing provisions already in 2021 anyway. We think we are, in terms of provisions, already covered.
Basically, we do not expect to have any negative impact on the adoption of IFRS 9.
Yeah. Regarding economic plans, as part of the revision of assumptions we made in the quarter, we also made some provisions strengthening our position for economic plans.
Thank you. If I may follow up on economic plans, how long do you expect the problem to continue? There seem to be new cases beyond what were expected last year.
We are under a process of agreements where people go to the courts and accept the agreements reached by the banks with the government and supported by the Supreme Court. This is an ongoing process. There are some discussions on if they will elongate the period on which people can go into this agreement. Basically, that's where we are right now.
In terms of this extension that Firetti is just making a reference, we just want to know it by March.
Yeah.
Thank you very much.
Excuse me, ladies and gentlemen. Since there are no further questions, I would like to invite the speakers for the closing remarks.
Thank you. Thank you very much for participating in our conference call. The investor relations department is available for any further questions you may have. Thank you very much.
That does conclude Bradesco's conference call for today. Thank you very much for your participation.