Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Itauza's Conference Call to discuss First Half of twenty twenty Results. At this time, all participants are in a listen only mode. Later, we will conduct a Q and A session and instructions to participate will be given at that time. As a reminder, this conference is being recorded.
The file will be available at the company's website at ww.itauza.com. Bren at the Investor Relations section. This conference call and slide presentation are being transmitted via Internet as well. You can access the webcast by logging on the company's website, ww.itauza.com. Bren.
Before proceeding, let me mention that forward looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Actual performance could differ materially from that anticipated in any forward looking comments as a result of macroeconomic conditions, market risks and other factors. I inform that during the presentation, the questions can be seen by webcast and it will be answered at the section of Q and A. With us here today, we have Mr. Alfredo Gigi Setubo, CEO and Investor Relations Officer at Itauza Mr.
Henry Pensions, Chairman of the Board of Directors at Itauza Mr. Priscilla Greco Toledo, CFO at Itauza Mr. Bruno Salem Brasil, Investor Relations Manager at Itauza Mr. Renato Lula Jacobi, Head of RR and Market Intelligence at Itau Unibanco Mr. Carlos Biel, Investor Relations Manager at Ao Pargatas Mr.
Natasha Pucer, Investor Relations Coordinator at DuarteX. It's now my pleasure to turn the conference over to Mr. Alfredo. Sir, you may begin now. Ladies and gentlemen, please hold.
Ladies and gentlemen, please hold. Mr. Alfredo, you may proceed now.
Okay. Thank you. Hello, everybody is listening. I will start.
Yes, you can proceed. Mr. Alfredo, you may proceed now.
Hello?
Yes, we can hear you. You may begin.
Hello?
Mr. Alfredo, you may proceed.
Okay. I'm restarting, Thank you. Sorry for the connection problem. We are starting from our conference call for the first semester results for Itauza. That's our agenda for today.
We will pass through quickly from the slides and then we open for Q and A session. Going to the next slide please. We are on Slide number four, about COVID actions, reactions in our operations for our companies. Of course, all the companies suffered especially at the beginning of the crisis, sanitary and socioeconomic here in Brazil. The bank had to make the central bank approved some measures to facilitate the banks for renegotiations of credits.
We did millions of renegotiations for individuals and small in and medium companies, but especially small ones. So we are passing this moment with a lot of many millions of renegotiations in credits for individuals and companies. Let's see what will happen when these renegotiations stop it and we have to go back to the normality of the situation. But at the same time, we had an increase in loans in the portfolio, especially at the beginning, especially for big companies that use their credit lines to increase cash for face the pandemic and medium sized companies also. The bank in the first semester made additional provisions for about BRL 9,000,000,000 in terms of credit above the minimum required for the Central Bank in the policy of the expected provisions policy that we have in terms of loan losses.
Let's see how the economy and how the credit performs in the next quarters to see how much is more necessary to complement this level of provisions. As you know, the Central Bank imposed restrictions for the distribution of dividends and interest over capital. So we have a limitation in our statutory bylaws. So we the bank can only distribute this year 25% of the results of dividends or interest in capital. That, of course, will impact the inflow of Itauza in terms of dividends that we are going to receive.
Our Pargatos also had problems at the beginning. We have huge reduction in production. So we adjust the production in the beginning. We have also term extension for clients. We made a provision for losses from the company in terms of our clients, especially in terms of distributors.
And to face all these factors at the beginning, we raised BRL 2,100,000,000.0 in cash from the bank using the disposable lines that the company has in the banks. Today, the situation is much better. The company increased productions in May, in June and also in July. We are operating at full capacity now back due to the better conditions in the local market and also because of exports, they are in a very good pace, especially for Havana. So I think in the case of Alphagatos, most of the problems are gone and we are going back to normal activity in this third quarter.
In the case of Duratex, also we have a huge impact at the beginning. We practically closed all the factories in the March, April. We also had to renegotiate time for extension for the clients in our supply chains. But we also made provisions around BRL25 million for the debt possible losses. And the company also increased liquidity at the beginning in BRL 1,600,000,000.0 to face the crisis.
Also, Duratex restarts the production back in the April. All the chain of distribution of Duratex products remained open during all the periods, the material companies and all the material companies remain open. Someone is with the microphone open, please shut down please.
So
Dura Tex increased their production in April and May and June and July. We operate full in July, probably full for this quarter. So in the case of DuraTek and Alparagata, I think most of the problems are gone and we are back to normal activity for the moment. What is good news, probably both of the companies are reducing the loans that we raised for face the pandemic crisis. I think the situation today is much better than we were expecting during the first days, the first weeks of the economic situation, the economic crisis in the beginning.
And in TS, we had also to grant a temporary deferral for Petrobras that is returning to normal pace now. And we also postponed some investments that we were doing during this period. We can move to the next slide, where we can see how the companies that we participate and how Itau itself made support for the crisis. Itau opened a line to our foundation for culture and social benefits for the Brazilian society in BRL 1,000,000,000 in a new line, in a donation for the foundation. We also received more BRL $250,000,000 from donation from other companies, individuals and especially from the Moreira Salis family that is the family that with Itauza controls the bank.
So it is only through the bank BRL 1,350,000,000.00 in donation for support, especially hospitals, public hospitals in the combat of the Duratex also made donations also for the Tauru Banco Foundation and products from our line of products, especially for the new hospitals that were made to support the public service during this period. Aupargatta has also made donations of MXN 16,500,000.0, including also a donation for the Itau Foundation of BRL five million and many products and masks and uniforms for hospital attendants and serological tests, respirators, shoes for magicals or plastic shoes. So we adapt our fabrics to support the support that we gave for the public hospitals. NTS also BRL4.1 million in donations for an equipment for the hospitals.
Itau Uza itself donate BRL50 million for the project Todos Pelasauudi, that is the initiative of the foundation of the bank. And also these two families, Togo and Vilela, also made donations of BRL50 million for the foundation of Ritaluru Unibanco. So I think all the companies and all the families are helping the country and the public health system to support the pandemic that in Brazil is taking a long time in terms of decline of this considered the first phase. Going to the next slide, we are going to see now more things related to our governance, ESG practices. We all know that Itauz and all the companies that we participate are very concerned about the ESG practices.
In this quarter, Itauza released again the 2019 integrated report, you can find detail of our strategy, the way we took decisions, how we analyze M and As, how we do everything from the companies or all the commissions and committees that support the administration of the company is a very complete and very transparent report that we released this year for the second time. Itau will join now the FTSE for goods. That is an index from the Financial Times for companies that demonstrate outstanding ESG practice was what for us is that we are very proud to be part of this index also among others that we participate like the Dow Jones Sustainability Index, the EG here at B3. So I think this also confirms the good process that we have related to ESG and our shareholders and our actuation also in all the fields that we are involved in Brazil. We created a commission for corporate governance.
Of course, we did many things through these last years, but we decided to have a special focus and a special commission to work on all the policies and practices that we have and that approves now our Board of Directors. So we now have a formal commission to analyze all the governance proposals for the company and to keep it updates to the best practices that we see in Brazil and outside Brazil also. We're going now to the next slide, where we have passed through one slide per company to all the companies showed already their results and made their own conference calls. So here is just a glance a quick glance in the results. We, in the case of the bank, we put in this highlight the loan portfolio that grew 20% in the period, also related to medium and small sized companies.
And as I said in the beginning of the crisis, with large companies requiring huge amount of lines that were preapproved for them to face the pandemic. We have been very strictly continue to be with the expenses of the bank. So we have an increase in normal terms and we increased the expected losses in 120%, as I said at the beginning of the explanation. But we have been very cautious in terms of new loans. Of course, we are providing new loans for millions of clients.
So but very we want to see how really the economy will perform in the coming quarters. And so we have been very concerned and very conservative in terms of providing new loans to the clients because there are a lot of uncertainties related to the economy and employment, how the economy will really perform after the support that the government are going even for the families. So many uncertainties relate to the economy. So we have been cautious in this period to see how things will go in terms of the economy. We continue to operate the bank.
We take took advantage of these new scenario for the economy. So we increased our digital operation. We increased 1,000,000 new accounts for the banks opened in through our app in the first half of twenty twenty. So it's a good performance. We had 22,900,000 of customers.
Now we had an increase of 17% when we compare one year ago. So clients are using more the digital channels that we provide for them. So we are happy to see that, that we have possibility to continue to reduce costs and increase the digital transformation of the company. We continue to provide credit. We opened new lines, as I said, with a more conservative approach.
But we provide credit from the new lines also that the government provide for the banks for payroll and etcetera. Anyway, the results reduced. Here, we have seen the numbers little different from the numbers that the bank showed in the announcement because here, we are seeing the numbers in IFRS. So we have a difference when we compare to the bank numbers released the last week because the bank continued to use the Central Bank regulations for accounting. So we have a reduction in the recurrent net income of 41.7% in the bank at BRL 3,800,000,000.0, also, of course, a reduction in the ROE from 22% to 12% almost.
The loan portfolio, as I said, increased in the period. Going to the next slide, Slide nine, we can see highlights from Opera Gatos. Opera Gatos increased almost double 93% growth in online sales for the first half in all regions. So minimize the effects of the store closures in the period. But anyway, we have a recurring EBITDA that reduced 42.7%.
Anyway, it was a good results, much better than we expected when the crisis started. Most of the that we used to sell products of Alparagato, especially supermarkets remained open. So we could operate the company in a lower level, but in a reasonable level during the period. And these were growing from May, June, July. So we are now almost normal in terms of production.
So the online was a big highlight for the company that increased dramatically in all the channels that we operate in terms of digital. We continue to management the capital. Capital. We definitely really wrote the investments in Argentina. So it was a bad investment when we bought the company.
We took some years to close, but we finally closed and sold all the operations that we had there. We sold the factories, we sold and now we are in Argentina only selling Havana's products. What is good because there were a loss of capital. It was we had bad results in Argentina for many, many years. Net income reduced, recurrent net income, 63%.
We showed BRL 25,000,000 now. Of course, also the ROE reduced to 0.65% to 6.6% and EBITDA also reduced. But this is for the first half, we this quarter expect a much better result, almost a normal result for Alparagatos considering the trend that we see in June and also in July. Now we're going to see DuraTech on the Slide number 10. DuraTech also suffered at the beginning of the crisis.
We almost stopped all the factors of the company in the March and April. But since then, we started reopening the operations operations and all the factories now are operating since June in a very good level. July was very, very good. We are full operation 24 in all the sectors, remembering that the material construction network and stores and so on to be opened during all the prior period the segment that the government didn't ask to close. So and the sector with low interest rates and so on are very active.
We gained market share. We used our financial strength to renegotiate and give more thermal extension for clients. We gained market share during our strength and brands and also with problems that our competitors had, especially in April and May. So we gained market share in all the lines and all the products that we have. Our factory that we are building with lending solving pulp continue to be constructed.
We don't see delays in the start of the operations that is in the beginning March of twenty twenty two. This continues to be in line. And we announced how the project will be financed, how is the financial structure for that investment. Duratex for the first year released their integrated report also with long term strategic vision, how the company operates, how decisions are made, why we are inspectors. I think it was a very important releases for our shareholders and analysts and portfolio managers that follow the company.
They found there a very good piece for the company. In terms of results, of course, we had bad results because March and April was very bad, but we recovering. Second quarter was better. Third quarter looks to be very, very good for the company. Also the ROE reduced for 3% and EBITDA reduced less than we expected.
So Durapex is also as our target is probably going to have a good third quarter. In the case of MTS, we had received $95,000,000 in earnings from the company in the first half of twenty twenty. As I said, we have deferred some revenues from Petrobras. Petrobras has started the process of divesting the 10% stake that remains with Petrobras in their portfolio, and we are analyzing what we how we are going to do with this process of the investment of MTS. Of course, the consortium that bought the company and that we are in this consortium are interested in buying these remaining states from Petrobras.
And TS acquired Antiquera compression station in the state of BRL million for BRL 46,000,000. And we have the affirmation from Fitch ratings of a AAA rating here in Brazil. Going forward on Slide 12, we are going to start to talk a little about our own results, those results that we released last night. Net income of BRL 1,600,000.0, reduction of 67%. The recurrent net income of BRL 2,500,000.0, a reduction of 46%.
ROE recurrent of 9.4 mainly because all the companies had bad results in the period, especially the bank that showed also huge reduction and is our main investment in our portfolio. Shareholders' equity of almost BRL53 billion and total assets of BRL56 billion. That is mainly the investment that we have in the companies that we have stakes. Dividend yields in the last twelve months, BRL9.1 1%. For this dividend yield, we will be reducing in the coming quarters because as I said, we are going to receive less dividends from our subsidiary and we pass through less dividend for our shareholders this year.
Going ahead, we can see that we continue the practices of paying to our shareholders the same amount that we the dividends that we received from the bank. We have the restriction, as I said, from the Central Bank to pay more dividends than 25%. We are going to continue to pass through the dividends that we received from the bank to our shareholders and keep the dividends from the other companies to pay for the cost of the holding to face the cost that we have in terms of fiscal and administrative expenses to our client to our company. As I said, we have the dividend yields. So we continue to pass through the dividend that we received from the bank.
And we are now we announced a dividend for this month of August that we will pay at the end of the month zero at point $20 per share that is equal for what we pay each quarter for our shareholders. So we will be as a new quarter in terms of dividends for our shareholders that we are going to receive this month. Going ahead, we see the discounts that we have, the discounts of 20.2% compared to the sum of the parts and market value of fair value for our portfolio. The discount reduced during July is around 16%, 17 at this moment. We continue to have a great evolution of the individual client share stockholders.
We achieved seven and fifty one thousand shareholders Edithausa in June 2020. Our trade increased to BRL $226,000,000 per day and the discounts reduced from BRL 25,000,000 to BRL 20,000,000 and now is around BRL 17,000,000, BRL 16,000,000 during the last weeks. And the final slide is the performance of the shares. Of course, the performance in recent periods are not so good, especially because our main investment that is Itau Unibanco Holding had a bad performance in terms of results due to the crisis that we all know and I talk a little about the fall in results of the bank. That's what I had to say and we are open now to question and open question and answer session through the web or through the telephone as you wish.
Thank you.
Thank you, Mr. Alfredo. Ladies and gentlemen, we now begin the Q and A session. Our first question comes from Jason Molley with Scotiabank.
Hello, everyone. Hi, Jason. Good
to hear from you. My question is related to the outlook for tax policy in Brazil, particularly given that the piece coffins that you pay on the dividend flows, what are you thinking about can you hear me? What are you thinking about the future tax regulation changes in Brazil and how that could impact Itauza?
Okay. Thank you for your question, Jason. Nice to hear from you. Well, we saw during the last week that the government sent to the Congress a law project to change the law in Brazil related to taxes involving especially the peace, coffins and ISMS, the ACMS from the states. So it's a total new regulation that is has been proposed by the government.
Of course, this will need a lot of negotiations from the government and the Congress. There are very, that's my opinion, difficult issues that are proposed by the government that we need a huge negotiation with the governors, superiors and the Congress to really achieve a negotiation that can be approved. I personally believe that the way the proposal is done, we are going to see many changes, especially in the percentage of the new tax that is being proposed of 12%. It seems by many economists to see things be higher than necessary. So we are going to see what will happen in that case.
For what we see from this new law is good for Itauza because we reduce the tax that we paid. And I think part of the reduction of the discount that we had in the last weeks is due to the new proposal from the government that we reduced the costs that we have in the holding to support the operations and the tax that we pay. But we have to see how this will really be approved by the Congress. In the terms of dividends and corporate taxes directly, the government didn't sense yet their proposal. So we need to wait and see how the government will propose the change in incorporating taxes for the companies.
Now the finance ministers already confirmed that they will propose reduction in corporate taxes and increase the tax for dividends in the coming years. For what I personally understood, these will be done in the coming years, not immediately. So they will reduce the corporate taxes and they will increase the tax from dividends that is zero to date in the coming years in a pace that is not yet known. So we have to wait. There is not a clear answer.
But it seems that we are going to have less tax expenses and that's what the market is reading. And we agree that is probably what will happen. Let's see how much this will be really approved by the Congress in the coming months. Any other question?
I would sure. I wanted to talk about maybe you could give us an update on the liquid gas investments. We understand that it's still under review by CAJE. What is
the The status at this status is the CAJE changes the person that was analyzing the case. So we had some backwards because the new person is studying the case. So we were expecting to have the CAD proposal or approval as we entered the case in CADE for the by October, September, probably this will take more time probably by the end of the last quarter of this year or beginning of next year. But we continue to be confident that the proposal that the consortium made to the CAD already offer solutions from the concentration in many regions in Brazil, especially in the Northeast. So we are confident that the proposal will be approved essentially as we propose or with some small restrictions imposed by the cut.
But unfortunately, this change in the person that is analyzing the case, They have some small deals under the proposal. But we made, but we continue to be confident that the beginning of the year next year, the maximum, we are going to start the process of integration of the two companies. In terms of financing from Itauza, we need BRL 1,400,000,000.0 for that investment. And we analyze with banks probably the best solution will be issue of debentures for finance this acquisition around seven years due for like the one that we issued for the acquisition of MTS. So we are expecting probably by the end of the year, we had news and we probably issue a debenture in the capital markets from Itau again in seven year periods for that.
Thank you very much.
Okay, Jason. Nice to hear from you. Thank you, Samir. Don't have any questions I from the don't know if we have other questions from phone. Otherwise,
we Yes. Can We don't have any questions. So this concludes today's Q and A session. Mr. Alfredo, at this time, you may proceed with your closing
Okay. Statements. Thank you for the participation of this intermediate conference call that we made. We don't make conference call every quarter because all the companies made our subsidiaries. So we don't want to be repetitive in terms of information.
And the holding level, we don't change many things from one quarter to the other. We increased 30% in the numbers of attendance this quarter. So we are happy to be here for the foreign investors that follow us. Now different from the beginning of the crisis, operate in a full capacity, probably they are going to show a much better result in the third quarter and the second semester. The bank also the economy overall is performing better than expected.
Most of the economies are reducing the reduction on GDP for the year. So it's a good news. Hope this help also in the terms of the back. We renegotiate millions of contracts, as you know. And we expect that as the economy is performing a little better than expected that we have more provisions that we probably will have to make in the coming quarters will be less than we expected at the beginning of the crisis.
So I think the scenario for the industrial sector and for the bank also we expect a better scenario, not a good scenario, but a better scenario than we saw at the beginning of the crisis. So inflation continue to be very low interest rate is the lower level. How the unemployment will come forth in the coming months and quarters to see how we will how we will perform in the country. But anyway, we see that the results are gone and we are in a better pace for the coming quarters what will be all good for our company. Thank you for your time being with us.
Take care. We will talk to in next conference today.
That does conclude Itau's conference call for today. Thank you very much for your participation and you may now disconnect.