Good afternoon, ladies and gentlemen. Welcome to Banco do Estado do Rio Grande do Sul's video conference to discuss the results for the first quarter of 2025. This video conference is being recorded, and the replay can be accessed soon, right after our results and earnings call. It will be available on our website on investors' relations. In addition, the broadcast has simultaneous translation into English, and if this is your preference, just click on the button you can see on your screen. Today's event will be divided into three parts. First, our CEO and President, Mr. Fernando Lemos, will talk about the main highlights of this quarter. Next, our CFO, Mr. João Gonzaga, will discuss in greater detail the main figures and performance for the quarter, and we'll finish this event with our traditional Q&A session with our market analysts. Now, let's start our event. Mr. Lemos, the floor is yours.
Thank you, Nathan.
Good afternoon, everyone. It's a pleasure to be here with you holding this video conference. Last year, in May, we had our headquarters completely flooded. I think you remember the tragedy, the flood that took place here in Rio Grande do Sul. It was a lot of pain in here in Rio Grande do Sul, but thanks to the resilience and the support of Brazil and even from abroad, Rio Grande do Sul is back, is strong again, investing strongly. Today, we can say our situation is much better, and we have to celebrate the return of Rio Grande do Sul to its normality and productive capacity. In Rio Grande do Sul, we are here back in our headquarters, in our head office, 100% fully working. Back then, in last May, we were 100% of the time online. No client, no customer suffered for a lack of service.
All of our branches were virtualized, so we kept our service provision, which proved our technical capability. In our highlights, we are presenting an income of $241.5 million in the first quarter, an improvement of almost 30% year on year, and a reduction of 15% if compared to the last quarter because it is the first quarter and it is a traditional occurrence. We can say we are truly happy with our figures. Our financial margin had an increase, reaching $1 billion 514 . Our net interest income, our cost of risk is 1.4%. Administrative expenses are within our limits. We have full control over the bank's operation. Our assets reach BRL 151.3 billion. For the first time in the history of our bank, our loan portfolio also had a growth of over 18% in the last year, in the previous 12 months.
Last year, we said we were going to direct our loan portfolio more to companies, and this is what is going on. The flood had brought some problems, but anyway, we are advancing more and more so that the bank's mix is better adequate and better adapted. Our funding is in the order of BRL 98.5 billion. These are the figures of our institutions. We are focused on the bank's performance. Right now, we are for 66, this new law that directs the workings of the bank. Our CFO, Mr. Gonzaga, will later talk to you about that, about this new regulation. Once again, I want to tell you that we are happy to see our state advancing strong again, thanks to the collaboration of our people and the collaboration of the whole of Brazil.
We will always be grateful for the people of Brazil and the people of Rio Grande do Sul who knew how to face the terrible tragedy. We are rebuilding Rio Grande do Sul, this state, preserving nature in a proper way, always keeping in mind that we need to bridge our work today with the future, with our tomorrow, under different bases so we can respect nature, learn with what happened, and may take Rio Grande do Sul ahead. Brazil is almost reaching 100 years of its foundation, and we are getting ready for the next 100 years. Thank you very much. Mr. Gonzaga, the floor is yours.
Good afternoon, everyone. As our President said, in this past quarter, we had BRL 241.5 million with a growth of 28.8% if compared to the first quarter of 2024. In the past quarter of 2024, always led to a readjustment.
There was a recovery in loans, and so the performance was better in the fourth quarter of 2024. Point by point, our earnings, our results are within our expectations, confirming our idea. Our net interest income is like the gross spread today, based on the form of calculation according to Resolution 4.966 regulation. If you compare the fourth quarter of 2024 to the first quarter of 2025, we have an 8.6% increase, a slight increase in the past quarter of 0.2%. Our return on investment is 1.6 if measured against the first quarter of 2024. As the performance of the last quarter of 2024 was very good, there was a slight drop, a slight reduction in the first quarter of 2025. The expectation is very positive. Next, please.
Our loan portfolio has a good performance so far, and based on the recovery of the economy of Rio Grande do Sul, our main market, with 18.6% year on year in the past 12 months. In the first quarter in this quarter, there was a 2% increase and for individuals, 12.5% in the past 12 months in the commercial portfolio, obviously, and in the quarter, 2%. Highlighting the portfolios of personal loan, overdraft, and credit cards portfolios. We've been working on low or granular retail market portfolios which have a better margin, and this is what we've been working or focusing on: small retail, daily retail in our individuals' commercial portfolio. For companies, it's no different. We've been working on retail strongly. We have the Conta Única.
This product has a good margin for small and medium-sized companies and also for companies with higher turnover, with higher sales for Rio Grande do Sul. Mostly small and medium-sized companies, they rely a lot on this Conta Única product. The quarter-on-quarter reference is 23.4%. The other products lead to a 9.2% growth and 2.7% in the quarter for companies. We've been working very well with this portfolio. The market in Rio Grande do Sul is very strong. In the foreign exchange, it's very good, CC and CE in this market. We like this market because it gives us a very good margin in services. In the past 12 months, we have 86.2% growth, and we have evolved. This is a portfolio we've been exploring.
I mean, Banrisul clients would work with foreign exchange, and now we are focusing more on this segment, unlike in the past. We are focusing on the segment. This is a segment of strong capitalized companies that they have foreign exchange service and also funding and commercial loan services. Other services too. In terms of our asset quality, it's within our expected range. We are working with our statistic models based on Resolution 4966 regulation, but this equation hasn't changed much. Our default ratio from 90 to 360 days, 2.2% for individuals and 2.1% for companies. And portfolio per stage, 94% of the portfolio are in stage two of the company. Cover ratio by stage, stage one, 1.7%, stage two, 20.8%, and stage three, 64.1%, totaling 5%.
If you look at PDD and cost of risk or net provision expenses and cost of risk, we closed the quarter with 1.4%. Working on both ends, equalizing these figures, these figures were systematized and streamlined so that we could work with comparable figures differently from the model we had followed up until March 2024. Now we are using the same database and equalizing our figures using the same level of information. Next, please. In terms of our administrative expenses, we've been working very strongly on this side, consolidating branches. We have two branches. If we have two closed branches, we put them in the same point so we don't need so many points open. Today, with basically individuals using their cell phones, we don't need as many branches. We've been streamlining the number of open physical branches. Likewise, we've been relocating costs related to rents.
To work very strongly to reduce these administrative expenses, we incorporated PR and PPR. Even with these two other results, we had the collective agreement in maintenance and conservation of assets, totaling 4.1% in growth if compared to the first quarter of 2024, a little below NPC. In the first quarter of 2025, it was BRL 1,159.4, and the first quarter of 2024 was BRL 1,114.2. However, we've been working to decrease these expenses and to control these expenses. Although we have made investments in IT and many other investments, even with these investments, we are keeping our expenses under control, cutting expenses whenever possible. In terms of service fees, in the past, there was a growth of 2.2% in the first quarter of 2025. If compared to the first quarter of 2024, there was an evolution in this area in the past quarter.
The last or the fourth quarter of the year very well holds it and helps us in this front with our acquired company led by cards, accounts, which have a fee that we charge from our clients. We also have insurance consortium, the foreign exchange product helping us in this area with a growth of 2.7% quarter over quarter in revenues coming from account fees and the banking system specifically with the contribution given by digital banks. The system has been cutting a lot of revenue in these areas. We need to adapt to this new market to compete with this banking services market. It's a struggle to keep these revenues under these limits. We need to find other sources of revenues like foreign exchange and other services. Vero helps us very much on this front.
In terms of funding, we had 82.2% cost of funding, 80 with a small increase in the global cost of funding, all portfolios, and 86.7% in the deposits. If you take the index, the index, we have evolved with the total of this portfolio. If we add 14% due to these savings accounts, and we have 13.6% and 12.7% in savings, this is our natural hedge we've been looking for. With the increase in the tax interest rate, we have prefixed portfolios, especially in payroll loans with a lower margin. These portfolios with the evolution of select interest rate, we need to be careful to maintain the margin. The portfolio we've been working in the prefixed service with a lower cost of hedge, we've been working strongly in this portfolio to maintain the balance of the bank between liabilities and assets.
The total of the portfolio of funding and deposits, LCA, LCI, and other bank notes and saving deposits has an evolution of 14.1% at the level of select if you measure select in the period for the past 12 months. It covers everything: time deposits, judicial administrative deposits, demand deposits, savings, bank notes. This is a very friendly cost of funding. We've been working to maintain our margin, a safe margin, margin of profitability in the first quarter as we have worked. Assets under management showed an evolution of 16% in the past 12 months. If you compare March 2024 with March 2025, this is a comparison year on year and the volume of the portfolio. If you look at the slide, you have on March 2025, BRL 19,770.6, and March 2024, BRL 17,030.2.
We have a very good relationship with the municipal governments, and we have evolved in the services we provide to them, and we hold a very good market share with these clients. Most of our portfolio, two-thirds, is related to assets under management. In terms of our capital, we had a small decrease, 15.8% in the past quarter. That is a level one, a tier one capital change. There was a small drop, and we reached 12.8%, but it's a manageable figure. Soon enough, it will be back to normality. We've been working under the new model based on the Resolution 4.966 regulation. There are debt accounts and overdraft checks, and we are not using this. If the client doesn't use the services, if you tell them we are going to lower their limit, we are not working with this operating margin.
From the second quarter on, when the client is under default, we can decrease their limits, their overdraft limit, and this will make a difference on the order of 1% or 0.5%. It will be back to this number. This is a pretty manageable figure. We are not in a hurry or in a hurry to make this balance. This would be our base figures regarding the performance related to the first quarter of 2025. We are available for your questions to discuss these figures in more detail.
Thank you for your presentation, our Chairman and our CFO, Gonzaga. Now we advance to the next part of our event with our Q&A session. Before we start, let me tell you that if you'd like to ask a question via audio, please press the reaction button and then click on raise hand.
If your question is answered, you can leave the queue by clicking put your hand down. Let's start in the first question to Ricardo Busquet from BTG Pactual. Can you hear us? You can move ahead.
Good afternoon. Thank you for this possibility. I have two questions. First, we've noticed there was an increase in the default ratio for the 90 days in this quarter. Could you talk about this increase in the default ratio? Is there any segment that is more challenging regarding quality of credit? My second question is that the provision of civil up to BRL 121 million, they fell quarter by quarter because why do you have this drop? Could we look at BRL 120 million-BRL 130 million as a recurring figure for next quarter, or if it's due to another impact?
Starting with your last question regarding the levels of provisioning for civil lawsuits and labor suits. In the past quarter, in January, always we realigned these figures related to labor lawsuits and provisioning. There was a decrease, but numbers are not so expressive. The idea is that it will get back to normal. We will wait for new numbers. There's always a difference. There's always a change, but we hope or we expect this to be a straight line. I would say this quarter is a little atypical in the sense. In labor costs in the past quarter of 2024, there was a higher provisioning due to a collective lawsuit. In this first quarter, we did not have to deal with that. We are back to normal regarding labor suits. In civil suits, we need to revisit the base.
Every semester, we do that according to our legal policies. As we revisited these bases, there was this change between possible and probable suits that will affect these numbers. In the past quarter, there were some labor lawsuits that were dealt with last year, so now we do not have to deal with them. Now, regarding the 90-day default rate, regarding the regular portfolio, loan portfolio, we are in the beginning of this new modeling system. The models have been tested and retested. However, we still need to perform or to make some adjustments. The economy is not so inviting. There is a high interest rate, and all of this always leads to some level of cost of risk. We work on the conservative side, so we wanted to change more and give more volume, credit volume, and better provisioning based on a conservative perspective.
Default rate has been heavy in the market, and we are no different. Our real estate portfolio is collateralized. The payroll loan is also very good, and the retail company's portfolio is very strong too. There is always some claims, but these numbers are under control and well calibrated in terms of provisioning, I would say. That's perfect. Just a follow-up regarding this past comment. Could you talk about this increase in this default rate? Was it pushed by a credit given to individuals, to companies, or payroll loan? Individuals in the non-payroll, there is default rate. It's under control, but there is. Companies, it's for the low-ticket retail area. This area has suffered with a certain level of default.
Thank you very much.
Thank you, Ricardo. Moving on. Now let's go to Olavo from UBS. Hi, Olavo. Can you hear me?
Yes. We can. Thank you.
Good afternoon, and thank you for this presentation. I have two questions. First of all, I would like to ask you about payroll loans. We saw the incumbent showing their earnings results and medium-sized banks talking about that. It is worthwhile listening to your opinion about this project. I could divide this question to be more objective into two areas. First, I would like to understand what is the position Banco do Estado has considering this project, and what is the strategy the bank has adopted or is adopting right now. The second part is, could you talk to us about the basis you have of credit and loans? How many of them are CLT or have a fixed employment relationship? Could you talk to us about where you are aiming at regarding each line of the guidance from this quarter on?
Olavo, just let me—you are talking up—let me ask you, you're talking about the payroll, the private payroll, or as a whole?
No, private payroll.
Regarding private payroll, credit or private payroll loan, we started this in our branches and also in our bank app. In the next few days, we'll start operating this from the digital portfolio. This is a small operation. We are in the beginning of it. It's pretty residual in terms of the total value of our payroll service. We have expectations regarding this payroll loan service considering the business strategy for this project. Our expectation is a positive one considering this project from the second semester of this year on. We need to be careful with this project.
We need to check the company we are going to work with for this payroll loan because there will be risks if it is distributed with no criteria and simply providing this payroll loan. We need to be very careful before attributing these loans. What is your second question? Gonzaga, just a follow-up on this question. Could you talk about how many of them are employees, private employees, or CLT in Brazil? Our payroll loan portfolio out of the BRL 19.6 billion, I think that is the figure, right? BRL 19.6, yes. BRL 30 million are private payroll loans before this model. It is a pretty healthy, small portfolio with an excellent margin, but we have not operated in payroll loan with companies in a generalized fashion. We do have payroll loan with companies, but with very few of them.
It's a very healthy portfolio, but usually, we work with municipal governments in the state of Rio Grande do Sul and INSS. It's the same for any banks in Rio Grande do Sul with the Brazilian Social Security Institute. There is the regular level of default rate. For municipal government, it's a profitable portfolio. With the flood, there was a reduction as top over these receivables. After four to six months, clients restarted their payments, right? The other non-payroll loans for individuals, usually it's for civil servants. They have access to these payroll loans to finance their vehicles. Eventually, we have a product called Crédito Minuto. Sometimes our clients take this loan, and they pay this loan by the end of the month. It's a very good margin. Talking about the other part of your question, where was that?
Yeah, I just wanted to confirm this with you. It's okay. The second question is about the guidance. It's a very broad guidance, right? Could you give us, could you provide us with the north for this semester, for this next few quarters?
Our margin is 7-12%. It's 8.6%, so it's within our expectation for the guidance. I hope that now we work with the spread. The margin is based on the growth spread. We are strongly working with retail, and naturally, the margin will have to be high, right? Our portfolio is concentrated on retail, which has a higher margin for companies and individuals' accounts. Non-payroll loans, they must have a margin because they have a high risk associated. It's a growth margin. On the other side, there is PDD.
In the net revenue, it's not going to be all connected to the margin. In our credit or loan portfolio, we have a moderate appetite related to that due to the macroeconomic scenario, due to the high interest rate. We are providing credit. We are providing loans, but we are being selective. We are not working without care. We are working very carefully. We have 1.2 as the figure. We hope to get to 2.2 for our collection for the default rate over 90 days. We will work very hard on collecting and to reduce this default rate and also reduce administrative expenses because there may be claims and due to interest rates and due to the economy scenario. We need to control expenses so we can have a very—we can have good numbers at the bottom line.
Thank you very much.
Thank you, Olavo.
Now moving on with our Q&A session. Let's talk to Antonio Reck from Goldman Sachs. Can you hear us, Antonio?
Hello? Everything's fine. Thank you. Thank you for your time and for allowing us to make questions. I have two questions. First of all, I read in your slides that the pre-fixed funding has gained more relevance in the past year. And as Mr. Gonzaga said, it helps us to maintain the difference between liabilities and assets, especially when there is the scenario of changes in interest rates. Is this a trend that will continue? I mean, these margins of pre-fixed services gaining more relevance to decrease this mismatch between liabilities and assets?
Yes, that's our policy. We have a product, the basic product in the market for retail banks. All of our competitors do.
We have an automatic CDB product with a residual value that is in the client's account, like BRL 100 or BRL 15. They return this into our remunerated account. This is automatic. It's an automatic service for the savings account. Obviously, it's previously agreed upon with the client. This helps clients to manage their account, and it can be used throughout the month. It's a pre-fixed product. We also have those operations, the LCA operations, real estate, letters of credits, CDBs. We have competitive rates considering the markets and other banks that work with this modality. In letters of credit, some of them are rural credits. We work with pre-fixed interest rates for rural loans. We have these products that can be matched. As time goes by, we want to have a residual difference between assets and liabilities based on these indexes.
This number, or this mismatch, was higher in 2021, 2022, when there was that change in the interest rate during the pandemic. However, this number has been reduced, and the trend is our trend. We like to have spread and not risk in the fees. The Select interest rate is 15. If it goes down to 10, you can work more loosely. In general, we like to operate based on the interest rate. The difference or the mismatch is very small. It does not change our results.
Thank you very much. Now, the second question with the accounting change. You started reporting for the three stages regarding the portfolio breakdown. I would like to pick your brains regarding provisioning. Moving on. What are you going to look for?
Because before you have those coverage targets for 90 days default rate, but what is the policy from now on? Are you going to have a target coverage for stage three or a coverage for each stage or total coverage on 90 days? Could you give us some ideas on provisioning? That would be great. Thank you.
We have been adopting a policy that is a conservative one, a conservative policy. The idea is, we presented the coverage percentage. We have been announcing them per stage. We look at the quality of our loan portfolio. Because we have a policy of not being aggressive in the granting of this portfolio, we want to keep with good businesses, good spread, giving priority to short-term, giving priority to collateralized operations with receivables, payroll loans. With a conservative policy, we will keep on growing.
However, we'll be basing our work on short-term operations and safe operations. Point number one, the priority here is an aggressive collection policy to maintain our negotiation with the clients, to negotiate the debts with clients. The idea is to go and collect and keep a surveillance on debts with our clients. Just a follow-up. When you look at the coverage of each stage, would you say, because we are learning to base our coverage on stages, I believe from now on, we look at these numbers from a different perspective. When you look at the coverage of each stage, that's an adequate, a proper value. That's a conservative number, according to you, right?
Yes.
I just wanted to say that the stage three issue pulls a higher provision, which is necessary due to the 4.966 resolution by the central bank that places a portfolio from 1 to 5. In portfolio 5, we have a minimum step of 50% within the classification or ranking of clients that have become problematic clients. They start with 50% right on. Even if the model works with something a little lower, we are obliged to work with this minimum provision based on the central bank resolution. As these problematic customers are on this portfolio number 5, there is this provision of 50% and above. In this specific point, the 64% represent the necessary provision for stage 3.
As time goes by, as operations will be written off by the end of the period of time it takes to get to 100% of provisioning, that is 18 months for portfolio number 5, there will be something near 50%-100% as time goes by, according to this stage 3 classification. Stage 1 and stage 2 are the pure model applied to the portfolio under these stages. Stage 2 is 32. Stage 1 is the portfolio that is working, good performance, and stage 2 has some days. From July, I mean, in July 26, it will be changed. In this transition phase, we will look for a growing line, a steady line. As we lower or write off these credits, these loans, they are with a default rate of 120 days in April or May next year.
Every month, there will be new newcomers, and debts that will be paid off. In this scenario, we'll learn we have new models to work with in a new stage and a new phase. We need to change our mindset to welcome this new stage, this new phase. Statistically, it will be different. When we equalize everything that we need to do, we'll be just like 2682 regulation. Yes, after this transition period is over, I mean.
Okay, thank you very much for your time.
Thank you, Antonio. Now, moving on, we listen to Mr. Eduardo Nishimura from Genial. Hi, Eduardo.
Hello. How are you doing? Thank you for this opportunity. I have two questions as well. First, regarding the loan growth, there were some areas that grew very much in this quarter.
In spite of the slightly more challenging scenario, you are growing in individual loan overdraft service grew by 18% quarter by quarter. I would like to understand a little bit more how you're growing in this higher risk products. If you could talk a little bit more about the Conta Única product for companies that had an exceptional evolution in this past quarter. Comparatively, the past quarter was a little not so good, but it grew 23% if you consider a more normalized basis of comparison. Could you talk a little bit more about Conta Única and advantages compared to competitors? My second question has more to do with payroll loans and the crisis of INSS, the Brazilian Social Security Funds. According to the news, the systems are stopped. They have stopped.
Could you talk a little bit more about the funding of this product related to the INSS, the Social Security? Or are you also stopped? Could you talk about the products that will be impacted by this? Payroll credit, payroll cards, are they all stopped? Are they all interrupted?
Thank you for your question. We have been growing in individuals, portfolio, looking for new customers in the market, and even clients that were already in our customer base that started taking loans from us. Now we are working with a digital account through our app. We are reaching to 200,000 accounts, new clients, new accounts all over the country, but mainly centered in Rio Grande do Sul because the bank has its operation mainly here in Rio Grande do Sul and also in the state of Santa Catarina. Regarding Conta Única, product is one of our main products.
In companies, it has receivables collateral from credit cards, receivables, debit card receivables, bonds, PIX, any and all financial flow. They serve as a guarantee for this Conta Única. It has a big advantage for clients. They have a limit, an overdraft limit, and they take this limit as they need. They pay banking fees every month. This has a very clear advantage as these operations are based on IOF tax. Clients can manage the effective cost of the operation, managing this in their own companies. Regarding the payroll loan for INSS, we are not operating. We cannot work with the margin working with DataPrev. We do not work with benefit card or payroll card related to INSS. Our product there is personal payroll loan. We have been waiting for this period. It must be closed or interrupted for 60 days.
The clients, they can work the minute credit line. They can use this. They have a credit limit, the so-called minute credit. They can rely on this form of credit according to their capability and the amount, the payroll they have with us. Just to follow up, you mentioned new clients. Are they clean clients, or is there any type of guarantee or collateral in individual loan? They are individual clients in the digital side. We are making available a credit card and parent account, as well as funding services, insurance tag. We have been making these services available to all of the clients who open a digital account. They can have these services. They can have tags. They can pay tolls for their vehicles too. There is a series of services. Regarding personal loans, they are pulverized services, like the example of Crédito Minuto.
They are clean operations based on the payroll they maintain within the bank. They receive their payment through the bank with us.
Thank you very much.
Thank you, Nishu. Moving on, we are about to wrap up our Q&A session. Let's listen to Matheus Raffaeli from Itaú BBA. Matheus, can you hear us? No, we cannot hear Matheus for now. I think our team is going to check. Matheus, if you can check your connection or your audio. Now we are moving on. Let me call Yuri Fernandes from JPMorgan. Hi, Yuri.
Hello, Nathan. Thank you for this opportunity. Can you hear me?
Yes, we can. Please go ahead.
I just wanted to ask you about expenses strategies for the medium and long term. Banrisul has an important coverage in the state and has done some optimization of some of its channels in the past.
My question is about the efficiency level. It is a little higher compared to other peers. It is around 65, more or less. Expenses have grown or are keeping up with inflation, which is good. What is the mission of Banrisul regarding expenses? I am asking you this because a larger bank is talking about being more aggressive in terms of expenses because they lost some fees. There were some caps. There were some changes in the rules of interchange. The profitability of retail changed from five years or has been changed in the past five years. What is your strategy concerning the cutting of expenses or the management of expenses?
In terms of expenses, expenses are part of the organization structure. You need to invest. You need to spend money to make things work.
If you open a new branch, depending on the size of the branch, depending on the cost of rent and the cost of employees and the whole structure, you need BRL 200,000-BRL 300,000. You need to use this money. From the macro scenario or the macro standpoint, we will work to correct the expenses related to the rent of some of the branches and payrolls. They are not so elastic, but we do have some strategies the bank has been relying on to try and decrease that. We have some voluntary dismissal programs and other strategies that can help us retain or control expenses. Everything we can do, like in terms of reduction, rents, reduction over time, that is what we do. Payroll expenses, they have to do with the collective bargain agreement and other expenses. There is nothing much we can do regarding these expenses.
Sometimes when you have several branches in cities like Porto Alegre, Caxias do Sul, and Santa Maria, we've been streamlining the number of branches. If they are too close to each other, we try to close down one of them and keep just one working strongly in the digital side to gain scale in the businesses and products we offer. That's pretty clear. Thank you. Just let me tell you that we have recently signed a deal with a 24-hour bank. We are changing our ATM basis right now. Our ATMs will reach 2,000 ATM machines. An ATM can do most of what an employee can do in a branch, in a physical branch. It's important to remain with our employees at the branches, but we've been working to reduce the number of ATMs in the branches. Our ATMs are open and fully working.
Our ATMs today, they are open to any clients, even clients who are not Banrisul clients, 180 associated. We have 180 associated companies that can work with our ATMs. It is an open bank, open to customers and clients who are not Banrisul clients too. This generates revenue. It is a source of revenue. We get some banking fees coming from these ATMs. Throughout these years, we plan to reach 1,000 machines. Next year, we will finish this operation of changing or overhauling the number of our ATMs outside the network in petrol stations, gas stations, and supermarkets in other areas. We are changing, replacing these ATMs. This change has provided a very good service coming from clients who have, for example, an account with a digital bank. They will use our ATM and pay a fee. This fee comes to us.
Of course, we'll pay for the implementation and the rolling out of these ATMs, but they will provide us with some fee, the fee related to usage throughout the state of Rio Grande do Sul. This will lead to cost reduction as time goes by. That's super clear. That's the strategy of monetizing a part of the revenue always helps. You can maintain expense, but you also have a new source of revenue. It makes sense. Just a final question on capital. I'm sorry if you already talked about that, but it calls attention the changing tier one. Your tier one fell 100 basis points. I don't know if it's Resolution 4.966 regulation and if BACEN has something to do with that. As I mentioned before, we have a massive credit or loans that is available for clients.
Debt accounts from companies, overdraft, individuals for individuals, for companies, credit cards, and these available lines, and Banri compras as well. All of these sources of loans are available. For example, they have a client may have BRL 10,000 in the limit. They can use BRL 5,000, and they still have BRL 5,000 available. According to the Resolution 4.966 regulation, we can reduce this limit for the client. If I observe the client poses risks, I can change the limit. The limit was BRL 10,000, and I can lower it to BRL 7,000, for instance. This regulation is not fully operational yet, but we will complete this operation and let our clients know. If I can do this with the client, I can change the requirements for capital stock for this basis of clients or the client basis. And within this index of 15.8, we'll be back to 16.8, I mean, one point.
We still need a couple of additional days to implement this model. Just to add something to his answer, we used to have a different methodology before, and we will be back to the use of the same capital requirement methodology. We still need to adequate this methodology in the next few days. Oh, that is clear. Now, based on this Resolution 4.966 regulation, there was a change in the strategy, and other banks are optimizing limits, and then they decrease these headwinds that you had in this quarter. Yeah, this is, based on our operating evidence, we can change the evidence and reduce this capital for this available loan or available credit for our clients. This is just out of curiosity because you are well above the minimum, just to understand the moving impacts.
Thank you, Yuri. With this, we wrap up our Q&A session.
I'd like to thank our President and our Director here. I'd like to thank the participants, the analysts with us. Our RI department is available after this call. If you have further questions, we know there were many changes related to the 4.966 regulation. We can answer your questions or any questions you have regarding that. Thank you very much. See you next quarter, and take care.