Good morning, and thank you for waiting. Welcome to Bradesco's conference call about the results of the fourth quarter of 2018. This call is being broadcast on the Internet at the investor relations website of Bradesco, banco.bradesco/ir, and there you will find the respective presentation as well for download. We would like to inform you that there is simultaneous translation into English, and all participants will be in listen-only mode during the call. Afterwards, we will have a Q&A session when further instructions will be given. Should you need assistance during the call, please press star zero to reach the operator.
Before proceeding, we would like to clarify that forward-looking statements that might be made during this call in relation to the business perspectives of the company as well as financial and operating projections and targets are assumptions and beliefs of the company's management as well as information currently available to the organization. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions as they refer to future events, and therefore, they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors may affect the future performance of the company and may lead to results that differ materially from those expressed in such forward-looking statements. Now, I would like to give the floor to Mr. Carlos Firetti, Market Relations Director. Good morning, everyone.
Good morning, everyone, and welcome to our call to discuss the results of the fourth quarter of 2018. Today, we have the presence in the call of our CEO, Octavio de Lazari Jr., our Executive Vice President, André Cano, and the CEO of Bradesco Seguros, Vinicius Albernaz, the Executive Deputy Officer and Investor Relations Officer of Banco Bradesco, Leandro Miranda. We thank you very much for your participation. Now I give the floor to Octavio de Lazari to start the presentation. Good morning, my friends. It's a great pleasure for me to have your presence, and I thank you for that. We are going to talk about the figures of the fourth quarter of 2018 as well as the full year. I think we could start by saying that our figures are very robust ones and a very sound balance sheet. Let's go to our presentation now.
Let's go to page number three. This is where we have the financial highlights of 2018. 2018, as well as everybody knows, was a very complex year with a great volatility and uncertainty due to the election scenario. This ultimately affected the expectations of the economic agents, and in the scenario, economic growth and investments did not happen exactly as we expected. Even if we consider the fact that we were leaving the biggest recession, the biggest crisis that we have faced in the recent past of Brazil, and we should be tapping into the recovery of a cyclical recovery. Although this has not happened and in spite of the challenging scenario, Bradesco had a robust performance in 2018.
The bank was and is adjusted and prepared to grow, this allowed us to expand our loan portfolio, increase our services revenue, and with a strong decrease in our ALL expenses. Operating costs of the bank remained totally under control, we partially absorbed the impact of collective bargaining agreement, resulting in costs growing below inflation. Net income was BRL 21.6 billion in 2018, a 13.4% growth compared to 2017. I would like to mention that the operating income grew 24.9%, or almost 25% in 2018. ROE made 19 basis points, 19% in the fourth quarter, 19.7%. One of the major highlights was the expenses of 7.8% in the loan portfolio delinquency dropping 120 basis points, and we can talk about the better BIS ratio, 150 basis points higher, 13.7% overall.
Let's go to page number four, where I would like to highlight some important initiatives, maybe the first one is the revamping of our brand, the brand becoming lighter and younger allowing us to have a better communication with our clients, be it over TV or written media or this is with a very important impact. BIA is an important point. We are evolving gradually with Bradesco artificial intelligence that we call BIA, B-I-A, over 70 million interactions already, we will be getting into that afterwards. Next, as we had said, 500,000 clients. Our goal is to reach 1.5 million by the end of this year. This is a commitment on the part of our team to reach 1.5 million by the end of 2019.
On page number five, it is worth mentioning the new segmentation structure of the bank at the beginning of 2019, we announced a redesigning of our management structure, reducing the number of executive vice presidencies from six to four. This movement aims at speeding up the decision-making process and increasing more the cooperation and synergies among the areas. Furthermore, we improved our client segmentation, seeking to provide an even more customized service to our customers. That is to say, the client is the core and the reason being of our organization. This is the reason why it is so important to have this as the core, to have the customers as the core of our organization.
Just to explain this new structure, we have a wholesale bank with Marcelo Noronha, involving large corporate, Corporate One, which was the Bradesco Empresas or Bradesco Enterprise, and the whole support structure to the business, global market, securities, Prime Brokerage here in the exchange international and private bank as well, with total synergy with this area. Another important vertical axis is our high-net-worth bank. Cassiano in charge of this area. The high-net-worth involves prime, Prime Invest, top tier, brokerage houses, both Ágora and Bradesco Corretora, and wealth management, which is a new concept, which is here and is also in our private bank. A third vertical axis is the retail bank headed by Eurico, our VP. In this one, we have the branches, we have the digital branches platform, the mini branches, the Bradesco Expresso, digital channels, and the cards structure.
A fourth vertical axis, which is the control and business support structure that supports these three areas so that they can have a fundamentally commercial focus. This is the technology and human resources area headed by André Cano, who looks after technology and human resources as well, and risk and finance and some other areas of the organization. The bank has a very lean structure now, and each one of the vertical axes has its challenges and their obligation in terms of delivering results. On the next page six.
When we talk about the customer experience, I say that the customers are the core of our organization, our objective is to improve the customer experience with better products and services being distributed through the digital channels, better understanding the need on the part of each customer at that specific moment of their lives, also speed up the services and the convenience and the products and services portfolio becoming better tailored for our customer needs, that this may be much more dynamic. We are sure that we are already reaping results in our NPS that have improved around 20% in 2018 vis-à-vis 2017. On page seven, we talk about BIA, B.I.A., Bradesco Artificial Intelligence. This is a victorious endeavor on the part of the bank so that we can deliver a better experience to our clients.
This is a major investment made by the bank. We already have 8.3 million customers that have already used BIA, with over 70, that is to say, 73 million interactions. A major advantage of BIA is that it is multi-platform. It is in the Bradesco App, Next, WhatsApp, Google, and other apps as well in order to meet our clients' needs. This evolution has been very fast, and the accuracy of response is around 90% today and tends to enhance every time we interact with our clients. This accuracy is gradually improved. BIA has a wide range of applications. BIA already assists our managers, our clients, our traders to clarify doubts to execute transactions. BIA is already a transaction app within the bank.
On page eight, talking about Next, as I said before, we have the commitment of reaching 1.5 million clients. We are opening about 5,000 accounts per day. 77% of these clients who join Next are not or were not Bradesco clients. We are bringing oxygen to our client base, and this is fundamental for us to continue in the long run. Over 70,000 accounts were opened in 2018. The number of interactions with BIA by means of WhatsApp alone keeps growing fast, has already exceeded 5.2 million interactions in the fourth Q. The volume of loans released through mobile and internet access increases steadily. In 2018, we had an expansion of 63% of credit for individuals and 76% of credit assigned to companies.
Just to give you an idea to you of personal loans by the bank, 55% of origination already comes from the digital channels, fundamentally mobile, but also internet banking. We have reached a total of digital clients who use mobile and/or internet banking of 15.3 million, represents 53% of our clients. On page number nine, talking about efficiency, we have a commitment which is very strict regarding optimizing our service network. Over the last two years, practically three years, we made an important adjustment. Because of the acquisition of HSBC, we closed branches in 2017, 213, 2018, 220, which were branches that still needed some adjustment because of overlapping. We are very pragmatic because branches have to remunerate the shareholders' equity and have to deliver good services to our clients.
Well, the closing of branches will be smaller because of the process that we are living today and the perspective of economic growth, where the points of sale are very important, and we have to be very pragmatic as we are in keeping only the branches that give an adequate remuneration to our shareholders' equity. The digital clients have been growing very fast, and we created the digital platforms. A good example of digital branches are where we select clients that are heavy users of mobile and internet banking, and we invite these clients to participate in a digital platform. The growth in this platform has already exceeded 25%, and we expect to triple the number of platforms in 2019 of digital branches.
A client that is served by a digital branch in comparison to the profitability of the brick-and-mortar branch during one year, the growth is of 40%. Besides, the efficiency is much higher because we have a manager in the digital branches, and they are very well prepared in order to serve these clients on a digital branch till they can serve three times more clients, each one of the managers, so 400 clients in a portfolio and up to 1,200 clients in one platform or one portfolio. Now going to page number 10, talking about the insurance world and the insurance operation. The main highlight, well, it represents one-third of our results, the main highlight is the decrease in claims resulting from important measures that we took in the last few years.
We redesigned many pricing models, you have already seen in our balance sheet that the volume of premiums has gone down, profitability has gone up because of the pricing models that were revamped. Very good work done by Vinicius and May regarding the acceptance of risk and also at Varies and very important work done by them and Bradesco Saúde, for instance, Bradesco Saúde, regarding risk acceptance, but mainly in cost control. We established packages with hospitals. We know exactly how much some procedure or some hospitalization will cost, and this makes the operation much more streamlined. We have also invested in primary care. We have nine units, and we will have 22 by the end of the year.
We have over 28 already contracted and waiting for approval so that we may increase and expand this, and this will bring the better management of claims in the Bradesco Health area and also Bradesco Seguros overall. We have just started with this operation, but what I can tell you so far, absolutely sure about after one year of experimentation, is that one client in Meu Doutor and the same client in another hospital, the level of client satisfaction is much higher with Meu Doutor and 42%-48% lower cost than if we had the same patient in a hospital. We have 24 million policyholders. Private pension plan. What I can say is that it is part of the investment portfolio or the long-term investment portfolio of the Brazilian population.
We have other initiatives as well that are focused on the client experience, with the offer of products by means of the digital channels. As incredible as it may seem, through mobile alone, we sold over BRL 500 million last year. Let's go to Bradesco Brokerage House and Ágora. We concluded all the investment, our platform for the brokerage houses, both Ágora and Bradesco Corretora, working in the same environment now, and the Ágora platform has been completely redesigned, and our brokerage houses have a potential market. Aside the 300,000 clients, the potential market is worth 1.3 million clients for prime and private segments. These clients will be looking for equity more and more.
We will continue to evolve our wealth management strategy that we started last year and bringing further news about that during the first quarter of 2019 vis-à-vis high wealth and finalizing the first block. I think we should mention again the contribution given to society by our organization, Fundação Bradesco, for instance. Last year, we invested over BRL 600 million in basic education of almost 100,000 students in Brazil, all over Brazil, Bradesco giving back to society part of the trust that is invested by this population in Bradesco. This is what this country needs in order to get into a sustainable growth cycle. This year, we have already confirmed that we will be investing about BRL 650 million in order to maintain these schools and everything that these children need.
On the other hand, we can see BRL 61 billion of added value by the bank, 34% paid in taxes, 30% to the compensation of our employees. The distribution that you can see on the slide regarding the social work that is developed by Bradesco. Going to page 14, already talking about the fourth quarter results and going straight to the recurrent income statement. From now on, we will discuss the figures of the quarter. I highlight BRL 5.83 billion of net income, which represents about 20% on a year-on-year comparison operating result growing 32.9% year-over-year. With that, our ROE reached 19.7% of the quarter and ROA 1.7%, and other figures will be discussed on the next few slides. The slide number 15 now.
Here we see a timeline starting in the first quarter of 2017, you can observe cycle level has increased in the last two quarters. This is the result of the loan book increase and adjustments that we made in the bank. We believe that we have the right conditions to continue to deliver even higher levels of return. Our operational momentum is very good. We have been consistently extending credit with absolute cost control, as you will see. Lower ALL levels and with a downward trend and a focus on extending our NIIs. We have a positive view for the economy this year and a positive view regarding the bank's ability to deliver even better results. On page 16, another point to be highlighted, we've been emphasizing this for several quarters, is the recurrent improvement on loan origination.
In the annual comparison, loan origination grew 23% for individuals in the first quarter and 37% for companies in the first quarter. What is better, when we analyze delinquency of these new originations, these new operations, we see that delinquency is very much in line or even below what we've seen recently. The new vintages are healthier and healthier. This will be seen in the delinquency ratios that I will show you momentarily and also in the delinquency ratios for the future. Moving to page 17, talking about our extended loan portfolio. The larger origination contributed to the increase of our extended portfolio, which was 7.8% in the year above the guidance for 2018.
The expansion fits the profile we have forecast. The largest increase occurred in individuals growing in those portfolios that should grow. Even cards grew a little, the highlight goes to individuals growing 15.8% in payroll loans. We maintain the leadership in this market, growing 13.6% in mortgages. Today, the ABECIP ranking was published and Bradesco is the leader both in individuals and companies in 2018. Outranking Caixa Econômica Federal, which is a historical mark, we are in the full conditions to maintain that leading position. We have funding, we have savings, we had our first tranche of BRL 450 million, had a second tranche of BRL 450 million, and have the third tranche expected for next year of BRL 450 million, totally allocated for high net worth clients of the bank. We have a lot of room to improve.
We have a 14% increase in CDC and vehicle leasing with very good quality of portfolio. Most of it coming from new vehicle loans, personal loans growing 18%. Like I said, 55% of origination of personal loans in the bank comes from operations on the mobile platform. That's how comfortable clients want to be. They want to do it at any time, anywhere, at their own convenience. The results are being seen for individuals. Companies also showed a good growth at 10.1%, the two-digit range. When we talk about corporate credit, growth increase is lower because the large corporate segment have not fully taken their investment cycle yet. We remain very pragmatic about this. Our loan operations have to remunerate our equity. If not, we need to maximize our results.
We will serve our clients using our balance sheet if we can remunerate the capital adequately, or in operations via capital markets or even originating operations, going to markets, motivating, incrementing the secondary market where necessary. In a nutshell, we will serve our clients and serve their needs, but always focusing on equity remuneration, which is a sine qua non condition for us. This is something that was on page four that I skipped and that it is important to highlight. What makes me confident is the operating results of our corporation. The operating results of the bank grew almost 33% in the fourth quarter and year-over-year, the operating results grew 24.9%, almost 25%. Please go to page 18, talking about the net interest income, NII. We had a good performance.
Insurance NII improved and ALM and others strongly grew in the fourth quarter as markets grew steadily by the end of the quarter and mainly with improvement in the interest markets. Credit intermediation NII remained flat in the quarter despite volume increase. This is due to spread compression. As you can see, it was 12.1 down to 11, and we can see 6.8 to 6.4 in net funds. We are totally aware that spread compression is a given. We cannot change that. Spreads will be compressed, and this is good. Good for the country, good for the company, it is good for the population, and it will continue to happen. The remedy for that, our response is to gain scale. This is the focus of our service network, our branch network, our traders and all of our employees.
We have to gain scale, optimize our client base and gain scale. For 2019, we expect the average loan volume to increase and that the mix of the portfolio will partially offset the reduced spread, allowing us to more significantly grow the NII. On page 19, the delinquency ratio over 90 days. Another good piece of news. The delinquency ratio over 90 days continued to enhance, improving by 12 basis points. Delinquency has been dropping for seven quarters in a row. The expectation is that it will continue to drop marginally. Individual delinquency decreased 23 basis points and SMEs delinquency 21 basis points, while large corporate remained practically steady. In our large corporate, our understanding is that we can bring delinquency of the large corporate segment down even further. Moving to slide 20, talking about NPL creation and Allowance for Loan Losses expenses, ALL. This was another good highlight in the quarter.
We had an NPL creation increase of BRL 467 million. Increase happened mainly in SMEs and was concentrated in 20 medium-sized companies. This is nothing that can cause a concern. We don't see any systemic trend of increasing delinquency. We see the higher level of NPL creation in the quarter for individuals, but everything is in line with expected. Our extended ALL for 2018 remained in the center of the guidance as the revised guidance showing a slight increase in the fourth quarter. Moving to page 21, coverage ratio over 90 days. Like I said, coverage ratio had a slight increase, reaching 245% in the fourth quarter. This will start to drop when the NPL index stabilizes. Regarding our excess provisions, which is a frequently asked question, we should use these provisions for the IFRS 9 adjustment, and everything will happen as expected.
All of the tests and trials have been done with our modeling systems. It is very likely that the excess provision will not be used to comply fully with IFRS 9. On page 22, we talk about fees and commission income. This is a good highlight as well, exceeding our expectation. This is November, the scenario was more challenging. Highlights are checking accounts, asset management. Really, checking accounts are growing almost 8%. Asset management is growing 7%. Consortium is growing more than 10. In trading, the brokerage house operations with our structure, Bradesco Brokerage House and Ágora Investimentos representing a good growth. On page 23, talking about operating expenses, costs are totally contained. In 2018, within the guidance, growing 1.7% below inflation. This represents a decrease in real terms. In 2017, costs fell 2.9% in nominal terms.
Personal costs in the fourth quarter were impacted by 5% of the collective bargaining agreement for banking workers and a lower profit-sharing participation. This improves the results of the bank. We ended the year growing costs and growing personal costs below inflation. On page 24 and 25, talking a little bit about the insurance company. In Bradesco Seguros, we've been good results, 15.4% in net income increase, and in the ROE of the insurance company end of 2018 at 20% above the guidance. In the first quarter was 22.3%. The insurance company with very good ratios and with the claims that you can see improving. Particularly due to an operational improvements that are such a reduction in NII, in the insurance NII. Combined ratio reached 88% claims paid in the quarter. Money was 86% in the fourth quarter of 2017.
For the sixth quarter in a row, there was an improvement in the combined ratio. The main responsible for this performance is what I said, the reduction of claims in health, life, and P&C. We can see the numbers. Insurance company claim ratio reaching 70.4% in the fourth quarter 2018 , compared to 70.4% in the fourth quarter. Moving on to the BIS ratio on page 26. The BIS ratio in the fourth quarter showed a sound evolution, closing the quarter at 13.7%, an increase of 160 basis points from the third quarter. Core equity Tier 1 grew 90 basis points, reaching 12.3% as a result of the retained earnings, the enhancement of the mark-to-market position, and tax credits as a consequence of market recovery.
In addition, in the fourth quarter, we had a fundraising in the Brazilian additional equity market with perpetual subordinated notes for private issuances or true issuances for qualified investors. We raised BRL 42 billion, which represents 60 basis points of Tier 1 capital. On page 27, reclassification as of first quarter 2019. We announced some reclassifications in our income statement, which we start having a new standard starting in the first quarter of 2019. We're not going to get into details. If you have questions, we can talk about that. The main change was the reclassification of insurance NII to the line of insurance results. Besides, we reclassified part of the results that was previously allocated in other successes and revenues, mainly to the margin and a smaller portion to cost of risk and services revenues. The main message is that the new guidance follows the new classification.
Finally, talking about our guidance. In 2018, we delivered on almost every line from the reviewed second two guidance, noting that the main change at that time was the decrease in the expected extended ALL. Regarding our new guidance for 2019, our expectation is growth. For the loan book, we are expecting 9%-13% growth with a total NII, 4%-8% growth. Core services, 3%-7% increase. Operating expenses, 0%-4% increase. For insurance results, I'd like to remind you that the insurance NII now reflects the better performance of 5%-9%. This is an important point because until then, we only spoke about premiums of insurance. But premiums, depending on what you have, you can increase premiums a lot, but that could entail high claims.
What we think better reflects efficiency, efficacy, accuracy, and performance in the insurance business is to work with the results of insurance operations. We're giving you a guidance of 5%-9% growth for insurance operations. For extended car service, the guidance of BRL 11.5 billion-BRL 14.5 billion. These are the main figures that we wanted to share with you. To end, we have good expectations in terms of what can happen to the economy, given the outlook, because we have the reforms that should take place. We are also absolutely convinced that there is no sustainable economic adjustment without a financial system which is efficient, profitable, and healthy. The profitability of the bank is an assurance to the shareholders and to economic agents that the economic environment is safe, healthy, and stable, and therefore favorable to new investments.
We had many economic policies along the last seven decades because we always trust the future of Brazil. We bet on it. We bet on our economy and the ability to work of Brazilians. We thank our employees. This belief is the greatest asset that Bradesco has. Our strategy of modernization is totally client-oriented. The recent changes that we made in January in our management structure, the results of our vision that clients have to be at the very top of our priorities. This is what brings financial health and robustness. Uncertainties generate opportunities as well and challenges, we're trying to invest in opportunities and treat uncertainties as a given. It is something that is out there. We have to cope with that with balance. To us, this is a benign situation.
Results are solid, derived from increased business volumes in every line, as we could show you in our operational results. Increased competition creates a new market dynamic. It requires agility in responses with the arrival of new market entrants. It was important to reduce the vice presidencies of Bradesco so that we could be more focused and have more agile decision-making. We expect more growth for 2019, almost double of last year. Some people consider the pace is too slow. For us, it is necessary to gradually recover a sound business environment for our clients. We are exchanging a recession cycle for a recovery cycle. We'll share the cycle with growth. Thank you very much for your attention, we remain available for your questions. We will now begin the Q&A session. If you're listening to Portuguese, you can ask questions. Other participants will remain in listen-only mode.
If you want to ask a question, please dial star one. If you want to remove yourself from the questioning queue, please dial star two. Our first question comes from Jorge Friedman from BB Bank. Go ahead, sir. Thank you very much. I have two questions. First, regarding one point that was mentioned during the presentation by Octavio. I might have missed part of the explanation, maybe. I think you mentioned that if there is a reversal of additional ALL, this would be more related to IFRS 9. But I'd like to know from your viewpoint, is IFRS 9 something that will come for 2019 in Brazil, right? How do you think this will be implemented? From what I saw in the guidance, it is natural that we are going to have a reduction in coverage. But it seems that you are going to provision a little less.
This would mean an ALL reversal. From what I understood in this webcast, this reduction would be related only to the implementation of IFRS 9. That's my first question. The second question has to do with the guidance for fees. I think that the results were good. We had an upside with the consensus looking at all your guidance figures. It's obvious that we understand that there is some pressure in the markets because of the credit card business, not only in terms of the acquiring business, but also with the interchange change that happened recently that impacts couple fees. That guidance of 3%-7% for fees, it is lower than the 2018 guidance. In an environment where this economic recovery, credit recovery and inflation that remains low, but perhaps increasing a little. That might help pricing. What do you see in terms of additional pressure?
Are there any other lines in addition to credit cards that could contribute to drive this down, or is there room for a surprise that could be positive along the year? Thank you very much. Okay. Regarding migration to IFRS 9 implementation, compulsory implementation of IFRS 9 is in 2021, but banks are already converging gradually to it. The use of provisions to complete IFRS 9 requirements, that does not change the coverage because the total provision will not change. There will be no reversal of these provisions along the process. What Octavio mentioned when he made a comment on that was that there will be a gradual process of migration to IFRS 9, and perhaps eventually, in the future, with the expected implementation, it is possible that we'll have room to consume, to use that provision. We don't have that expectation.
The guidance is not considering for 2019 any reversal of additional provision. Perfect. Jorge, this is Octavio. We are working with the operating side regarding the guidance for fees. I think there is a pressure, and the pressure is already here. You could look at the Cielo numbers. Cielo released a guidance which is BRL 1 billion below the guidance that they had for 2018. The guidance used to be BRL 3 billion, now it's BRL 2.3 billion-BRL 2.5 billion. This is transient. I think that as of 2020, Cielo will pick up again because the market has been totally deregulated. It has been opened by the monetary authorities and that was an impact. It's a company of 63% cash generation. New entrants in the market are competent. We have an expectation that will resume the results of that company, which will contribute a lot to our fees.
In addition, this reaction with the sale of POS terminals, more than 400,000 POS terminals were sold by Cielo. Now they will have a greater commercial appetite, and this started happening as of June, July of last year, maybe August. This is one point. Much so that we gave you a guidance of 3%-7%. But the greatest pressure, the results were from Cielo, nothing else. Nothing that hasn't started happening already. We believe that we can gain in volume, in sales, so offset that. Perfect. That was very helpful. Thank you. It's Thiago Batista, Itaú BBA. Good morning, everyone, and congratulations.
A follow-up regarding your guidance about provisions, the assumptions for the guidance. NPL formation, is it going to continue? Is it because of the drop in impairment? Okay, the question is, which are the drivers? The second question is very simple. For the fiscal provision, BRL 118 million this quarter, is it non-typical, or could we expect something similar to that in the next few quarters? Thiago, thank you for the question. In relation to our ALL guidance, the assumption subjected to that. We have been talking about the credit originations with very good performance. We are with a track of improvement in our delinquency rate. NPL formation should be maintained at low levels over 2018. In our provision for 14.5, we had some specific cases of higher tickets.
When you look at our portfolio, we do not see right now, and we do not believe there will be this kind of provision. There is some room for the reduction of
Provisions for impairment, and we have already made long strides there. It's a whole array of reasons, and also our cost of risk and our delinquency. This has already happened in part, but the process has not been concluded yet to the point that are included in this guidance and how the area in charge has projected this come from these items that I have just mentioned regarding provision under others. This is a tax provision. This is a fiscal provision related mainly to two cases of tax suits, and we had a reclassification of the risk probability from possible to probable. Because of that, we made this provision. This provision has a specific characteristic. You and we do not see this kind of movement in very frequently, so this is very specific. Thank you.
Once again, we would like to remind you that in order to ask a question, you should press star one. In order to remove your question from the queue, please press star two. Mrs. Giovanna Rosa, UBS. You may proceed, Mrs. Rosa. Good morning and thank you for the question. I have two questions in relation to your Tier 1. Have you already reached this target in this quarter, your target in this quarter, 3.5%? Do you believe there will be a higher payout? Are you considering a new acquisition? I would like you to explain this. My second question has to do with your fee guidance. The central bank will be regulating open banking, as they have already said. How are you positioning yourselves in this new competitive environment? Your guidance, does it include anything regarding this new open banking situation?
In relation to Tier 1, the one that we talked about, 3.5%, well, we consider this as a very comfortable equity level. We have never placed this as a cap. We are not going to manage based on this as a cap. The discussions regarding capital allocation, dividend, et cetera, this is an ongoing discussion, and this is in the hands of our board of directors. Right now, we would have nothing to add to that. Regarding open banking, which is your second question, this is a process that is already underway. There are some definitions already in terms of regulation. What we can say so far is that Bradesco, with our platforms, we are prepared to operate in an open bank environment, we believe that the evolution will be a gradual process.
Certainly, there is no impact of the open banking in our guidance. It has much more to do with payment than other competitive moves. This is Octavio. I would like to add to what we had said. In regard to our BIS ratio, 13.7%. You said 13.5%, but we are reaching 13.7%, and this is a number that makes us comfortable because we are on the verge of seeing economic growth resuming, we believe this will happen. We have to understand that there are two different moments. We have to have the necessary capital for the different cycles of the economy. We have over 5,000 branches, et cetera, besides mobile and digital platforms, et cetera. We need to grow and have the necessary capital to grow.
We know that economic cycles have not been done away with, which means that we have to have the necessary capital as we had the situation two years ago regarding delinquency. You know that delinquency was very high in all Brazilian banks two years ago, and only BRL 450 billion were written off by the five main banks in Brazil. This equity management is fundamental for us, and we have to take care of that every single day so that we may accompany the growth cycle and the delinquency cycle. We have to wait and see. If the pension reform happens, this will be the most important trigger so that we may see economic growth. Based on that, then we will check our capital needs vis-a-vis a resumption of investments and also investments in infrastructure, energy, et cetera, everything that the country needs.
Regarding the second item, this is what I said, answering Thiago's question. It has to do much more with Cielo and the high-net-worth clients. The rates are lower and the brokerage houses operations. We do not see a big problem there coming from fintechs or whatever. If you take the website of the MEI, the micro individual entrepreneur, M-E-I, you can see that the companies that supply balance sheet and the obtaining inventory control and many other things that are necessary for these MEI. These are fintechs that are plugged in the open banking system of our platform, and we are already doing that. You are correct, there could be a little bit. This is not what is reflected in our guidance. We do not see it this way. We believe that there is even more room for growth. Thank you very much.
If there are no more questions, I would like to turn the floor back to the executive of the bank for their final remarks. My dear friends, I would like to thank you very much for your attention, for joining us in this webcast. It's always important to speak with you to clarify some points about our balance sheet. And you know that the Bradesco doors are always open. All of our executives, directors, and the IR team are all available for any further clarification you might need. We are available to have meetings with you. I, myself, am available to speak with you, to discuss some points with you, to speak a little about the future. I just want to thank you for joining us. We'll continue in 2019 to work very focused on our clients with capital discipline, with a focus on our clients.
So that we can have good shareholder returns and good return on our shareholders' capital, which is what our shareholders and investors always seek. We remain available. I wish you a good day and a great 2019 for all of you and all of us. Thank you very much. Bradesco Bank conference call is closed. We would like to thank all of you for joining us.