Banco Santander Brasil's (BSBR) CEO Sergio Rial on Q1 2016 Results - Earnings Call Transcript

| About: Banco Santander (BSBR)

Banco Santander Brasil SA (NYSE:BSBR)

Q1 2016 Earnings Conference Call

April 27, 2016 09:00 AM ET

Executives

Luiz Felipe Taunay - Head, IR

Sergio Rial - CEO

Angel Santodomingo - EVP, CFO

Analysts

Operator

Good morning and thank you for waiting. Welcome to the conference call to discuss Banco Santander Brasil SA's results. Present here are Mr. Angel Santodomingo, Executive Vice President, Chief Financial Officer; and Mr. Luiz Felipe Taunay, Head of Investor Relations. All the participants will be on listen-only mode during the presentation. After which, we will begin the question-and-answer session when further instructions will be provided. [Operator Instructions] The live webcast of this call is available at Banco Santander's Investor Relations website, www.santander.com.br/ir, where the presentation is also available for download. We would like to inform that questions received via webcast will have answering priority. [Operator Instructions].

Before proceeding, we wish to clarify that forward-looking statements may be made during the conference call relating to the business outlook of Banco Santander Brasil, operating and financial projections, and targets based on the beliefs and assumptions of the Executive Board, as well as any information currently available. Such forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and hence, depend on circumstances that may or may not occur. Investors must be aware that general economic conditions, industry conditions and other operational factors may affect the future performance of Banco Santander Brasil, and may cause actual results to substantially differ from those in the forward-looking statements.

I will now pass the word to Mr. Angel Santodomingo. Please Mr. Santodomingo, you may proceed.

Angel Santodomingo

Good morning everybody. Thank you for being present in our 1Q '16 results. I'm going to go through the presentation as always, and then we will open the floor for Q&A. The presentation will be divided in five main blocks. The first being key messages, specifically our strategic messages going forward. Then I will stop for one slide on results of Santander Group that are already known in public to the market and then we will go specifically to Brasil, into Santander Brasil going through the macroeconomic scenario, highlight and results and the four months of this 1Q. So going to the four main strategic messages in terms of customer orientation, it will be the first strategic pillar of the bank. We want to support our customers and businesses, so we continue to invest in our retail franchise, increasing customer satisfaction and reducing complaints, and these are tangible facts, it's not only position of the bank.

In fact, this quarter we again remained above our peers in the central bank complaints ranking that is published as I said monthly. This is a result of our increased client linkage. Also one month ago, which is the first we launched our new position which clearly expresses our customer centric model through the sentence or through the question of what can we do for you today in Portuguese [ph] which is basically what we could do for clients being closer to them today, not just for tomorrow trying to offer this possible solution. And now we continue to build our multichannel platform to reach out with others and I must say that we already got to 5 million digital customers as we speak.

Next slide, talking about the integrated -- we think are nicely and widely positioned through an integrated offer including wholesale and retail service products to our clients. This is probably unique in Brazil in terms of being able to offer these integrated offer and service. Global corporate banking in that area we are leaders already in trade, finance and FOREX operation. And in that group we were also leaders year-to-date in ECM operations. In SMEs, we have the most comprehensive offering of any Brazilian bank with a complete package of financial and non-financial products and services including an integrated account with a client access to international risks, an online platform with deliveries of potential employees and a training platform for owners and their employees, unique offer for these SMEs.

And finally this is an award in Portuguese joining retail and wholesale and this is the unique position that I was mentioning to you. For example, we just agreed with a big company here with 5,200 points of sales in which we are going to offer in stores in integrated solution both -- with the risk and financial services in all its shopping points. Third point, maintenance in cost control, I would just here underline that we continue -- we expect to continue including costs below inflation in 2016 as we had done in the last three years, already saving more than 15% in Real terms. This continues to be in the -- of Santander Brasil. And finally the fourth strategic point, I would like to draw your attention to our excellent risk management which has proven both preemptive and effective especially given the current macroeconomic Brazilian scenario. As a result, as you would see in the next slide, our NPL ratio remains under control, increased only by 30 basis points in the last 12 months.

So how are we positioned? On top of the Forex the lines of action, we are well positioned being the only international bank in Brazil with critical mass. So we are their reference in that sense. With the market set of close to 10% across business, we get the ideal size and it's called to take advantage of growth opportunities. Having made this strategic position in interaction, I would like to stop five seconds to Santander's Group results. The Group as you know has presented a net profit of €1.6 billion with an increase of 12% Q-on-Q and 5% down compared on a year-on-year basis. 61% of that total income comes from Europe and 39% from the Americas. The Brazilian results as you can see are important for the growth account for almost one-fifth of the total.

So moving to the macroeconomic scenario, how we see things on the macro's last political sign[ph]. Last year, as you know, was characterized by a transition of adjusting prices in consumption. This process we believe is not yet complete, and as a result, in 2016, the company is expected to experience a recession of around 4% accompanied by a steer high inflation of around 7%. Recently, an improvement in Brazil's outlook together with some improvement in the commercial scenario enabled the Real to strengthen somewhat in-line with the rest of the markets. Additionally, we have seen a strong change in expectations, now estimated in the rate by the end of the year. The deflation process could be intensified if the currency strengthens follow, paving the way for our monetary which we felt that the economy recover even further.

Despite the ongoing challenges, we continue to be optimistic about the future. The country remains one of the most attractive emerging markets, if not the most. In fact, Brazil presents a low financial traded risk, international reserve, a strong solvency and liquidity levels and I will acknowledge banking system. The country also has some institutions in which is supportive of growth and economic sectors. We see the current moment as one of opportunity we're looking forward, which could believe -- to resume a stronger and more sustainable growth with greater productivity important social gains.

So moving to the highlights of the results, in this slide, we present to you the three main buckets about both the results and the balance sheet. On the green zone, I would refer to the balance sheet, on the yellow boxes will refer to P&L and finally the profit we're presenting. So, our first quarter results we've seen we're positive being the main highlights that the bank's capital and liquidity position remains absolutely comfortable. The loan portfolio reflecting the economic scenario as you will see in the next slide. And nevertheless, the customer base expanded and revenues increased. Asset quality metrics we managed are mainly stable or are deteriorating in a limited and controlled manner. Total cost growth remains below inflation as I mentioned and as a result, net profit declined by 3% reaching almost BRL1.7 billion.

Going to the specific performance of these 1Q results, as I mentioned, net profit totaled BRL1.6 billion in the first quarter of this year, 3.3% up compared to the previous three months. In the year-over-year comparison you can see net profit increased 1.7% which underlines that we are on the right path of our sustainable and more resilient results. And we have achieved this increase in recovery from base, with an increase of almost 300,000x linked in the last 12 months or 650,000 difficult clients and we could increase a total base of clients by 1.5 million in 12 months reaching 32.8 million clients. On slide 16, we show the main lines of our results about which I will go in detail later

Regarding revenues, net interest income increased by 2.9% over the fourth quarter of 2016 and 6.4% over the first quarter of 2015. Fees fell by 3.7% in the quarter due to the seasonal impact of credit cards and insurance, but the resistance in the strong year-over-year outcome of 9.3%. The allowance for decreased by 12.2% in the quarter, returning to similar levels of 3Q '15 after we commented -- we already commented this in the previous results presentations after we commented in the 4Q '15 results as I said, and presented our 12 month growth of almost 15%. General expenses declined by 4.8% over the previous quarter and grew by 7.5% over the same period in 2015, which is still below inflation even considering the annual collective bargaining collected agreement of 10.5%. As a result, as mentioned, net profit totaled BRL1.7 billion, BRL3.3 more than in the fourth quarter of last year.

So looking at each individual line, let me address in slide 17, the evolution of our NII which totaled BRL7.6 billion in the first quarter, 2.9% up versus the previous quarter. The increase is explained by market activities which maintain a good performance in the quarter as well as NII from liabilities which is starting to reflect our already announced efforts on this side of the balance sheet. Net interest income from credit reflected a drop in volumes and due to the weakening of economic activity, but it is highlighting that clearly spread on the loan book increased by 10 basis points more quarterly in a 12 month comparison. With high [ph] more than offsetting the negative impact of the change of mix. So the price of it has more than offset the mix effect in terms of the impact in the NII.

Moving to volumes, the expanded loan portfolio totaled BRL312 billion which represents a decrease of 5.7% in the quarter and 3.8% in the last 12 months, a natural tendency as I mentioned in the previous slide, even in the challenging macroeconomic scenario. Adjusted by Forex, the drop in the quarter is 4.5%. For our clients, it is worth noting the performance of the -- portfolio which increased by 0.9% of the previous quarter and 7.2% in the last 12 months. Favorable lending and mortgages continue to be the main growth drivers. Consumer finance which decreased by 3.6% Q-on-Q reflect weaker -- or car market. Our model is extremely efficient and we were constantly able to gain market share in the current scenario, maintaining our leadership and the large corporate portfolio reflected the mentioned weakening derived from the macro scenario. In the last case, in the last corporate portfolio, 3% of the quarterly drop is explained by the strengthening of retail.

On slide 19, you can see that we are -- funding. Funding from clients we put on BRL83.1 billion, we are down 1.7% Q-on-Q but up 8.6% year-on-year. The decrease in the quarter can be explained by the different deposit performance again reflecting the economic scenario, while treasury notes are increasing in order to offset both payment of dividends and reserve requirements. Good performance of assets under management as you may see, pricing is strong both in the year and quarter. So total funding including off balance sheet asset funded management came to 512 billion or 13 billion 14.6 Q-on-Q and climbing 9.3% in 12 months. Moving on to the P&L commission side, as reflecting our increase in linkage with clients, fees are evolving positively. Total fee income came to BRL3 billion in the first three months of 2016 are remarkable absolutely level compared to the past, 9.3% higher than in the same period last year. This particular -- that fee revenues are moving towards the expected pattern growth into 2016. In fact, if we exclude the kind of one-off effects of the sale of business that we announced last year, fees will have increased already at 10.2% year-on-year, double-digit increase as I mentioned.

Higher account fees, again, reflects an improvement of our relationship with clients with more than 24% growth year-on-year. In the Q-on-Q comparison the 3.7% downturn was impacted by our traditional insurance and credit cards seasonality effect. Excluding the first effect, the 4Q high insurance and revenue impact that we normally have, fees would have increased 1.2% instead of we mentioned minus 3.7%. So as I mentioned in the first I spoke in the presentation here in commissions fee revenues are a measure of the loyalty of our customer base, a critical parable in our business model.

If we move to credit quality on slide 21, I would underline 50 to 90 base of our new portfolio adjusted for the analysis specific facts in the corporate -- 4Q '15 if you remember I mentioned that in the presentation of the 4Q results wasn't somehow or somewhat in the quarter again reflecting seasonal importance and the derivation in the economic activity. This last economic situation also caused other alteration in the business. NPL over 90 days increased by 10 basis points in the quarter with both, individual and corporate segment remaining flat. This was due to a combination of our continuous efforts. I couldn't mix more focus on low risk products, more customer knowledge in terms of risk and effective portfolio monitoring.

Finally, coverage reached 200% remaining at quite comfortable levels. In general terms we expect to -- challenging macroeconomic scenario to result in a -- may have this credit quality trend in the coming quarters. Moving to cost of credit, the allowance for loan losses as you may see totaled BRL2.4 billion in the first quarter, a 12.2% improvement or drop over the previous three quarters. And the cost of credit fell back to the levels of previous quarters. This trend can be partially explained by the normalization following the up -- in the prior quarter that we announced and which was associated. As mentioned in the 4Q results presentation with a specific issues in the corporate segment. Moving to slide 23, we see the evolution of expenses and as was still mentioned, cost control is a cornerstone for Santander to grow sustainability or to continue sustainability. Expenses decreased 4.8% in the quarter and increased 5.7% in the last 12 months. If we consider constant perimeter, let me remind you that would mean excluding the new trademark for Banco Bonsucesso Consignado, the payroll joint venture that we share. The expenses instead of that 7.5% would have grown increased by only 6%.

Moreover, the year-over-year evolution was also affected by the annual collective -- process that I also mentioned before. Going forward, we remain committed to cost control initiatives. We expect to deliver extensive growth below inflation also this year for a fourth consecutive year. The next slide deals with our performance ratios. There was a widespread improvement in the quarter. Efficiency improved 60 basis points and finalized at the end of the quarter at 50.8%. Recurrence increased by 69% -- from 69.3% to 70.1%, every time that we improve this indicator we bring more predictability and grow our results. Thanks to these advantages, return on equity increased to 12.6%. As we have mentioned in several location, we continue to improve results in these area. On slide 25, you can see that our liquidity and capital position remains solid, with a stable funding sources and an adequate funding structure. The loan to deposit ratio reached almost 88% a comfortable position and the lowest since 2009 I think. This ratio has stood up 16.4% an increase of 70 basis points over the previous quarter. In addition to having a comfortable level, our capital of excellent quality with a tier-1 ratio of 16.1%.

In sum, and I'd like to -- our management model has proved its effectiveness, controlling risk, expenses and liquidity and capital levels. Therefore, building a solid plant on which to continue growing with quality. In the commercial area, we made rapid progress with our digital agenda which together with our order efforts has helped improve customers' experience and reduce complaints. We have also -- and expanded our importance in the public businesses, exemplified by the standard our foreign exchange platform is the biggest in the country. With regards to investments, we conclude the outright acquisition of Consignado, a prepayment digital business with enormous growth potential. Our motto following Brazil's biggest online vehicle purchase and sale side, acquired the Busta Carlos Brand [ph] which has several important locations in the south region with high market service. In our payroll business, we finalized what I mentioned a change of the name from the previous Banco [ph].

And thanks to all these efforts, we generated a positive impact on both of our operations and our balance sheet. This was the eight quarter in which we faced -- recorded net income growth since the beginning of 2014. We gained more clients and encouraged them to carry out more transactions with us. Consequently, profitability increased in our main performance indicators improved. So as my final words, I think we shall get necessary infrastructure and capital and positioning with an efficient commercial model and important competitive advantages ensuring that we are ideally positioned to continue delivering profitable growth. Then with other issue, last couple of ideas, that I think would be of interest for you.

First, our two latest contribution into the Brazilian society, the Santander Theatre in Sao Paolo that we just inaugurated and the Santander approach in Porte Léger [ph] reaching 15 years. And in the next slide, illustrates our full offer of services in Brazil. This is the system of Santander Brasil in Brazil that shows the potential and the positioning in each of the segments and each of the products.

Thank you for listening, and now I open the floor for the Q&A session.

Question-and-Answer Session

Operator

[Operator Instructions]

Luiz Felipe Taunay

So we start from -- to go through the questions that are received, many themes, we'll summarize the themes and try to put together, the questions that are related to same topic. So starting with loan portfolio, we received a question from Baronet [ph] asking how we see credit evolving 2016 and 2017 given the contraction that we saw in this quarter?

Angel Santodomingo

Okay, thank you. Well, as I mentioned in the presentation, we think apart from FOREX impact and kind of the non-like for like issues, it is through that we are seeing the macro economic scenario or situation or environment affecting the devaluation of the portfolios. We remained -- I mean this is the recycled one, but we remain with the idea that probably the Q-on-Q receiver in terms of economic indicators could turn to be positive sometime in 3Q against the 2Q or 4Q against 1Q. At some point we're seeing that the economy will bottom up. Another discussion is the size, the strength, and the timing of the way out. But we do think that we should assume to see that positive territory in the next quarters.

If that is the case, we should also see reflection of that situation on volumes. So I would expect something like single-digit, low single-digit -- cost in single-digit for this year gaining a little bit of momentum for next year. It is what we have been saying more or less during the last, I don't know -- at least three, four, five quarters. So we haven't changed the message here. And we still think that if the economy behaves as I mentioned, we should have started to see that kind of behavior. Obviously, the confidence levels are going to be crucial in the discussion, and so the general momentum that the country could be involved during the next months will be kind of important to understand how the economy try to grow [ph].

Luiz Felipe Taunay

Regarding NII, we received one question from Gelami Costa [ph]. We noted that price continue to evolve partially but the non-portfolio reduction caused contraction in the NII, credit related NII. Could you comment your expectations for NII in 2016, especially given the scenario that you have for 400 basis points?

Angel Santodomingo

Well, the first thing I have to say that what we include in the presentation is consensus number, and so we do see this leak going down by the end of the year, that we -- I think in time that we were one of the unique banks here in Brazil that had a clear call in terms of monetary easing by the end of the year when the consensus in the market was on the opposite side, we held almost 150 basis points of interest rate increases in the year. So we do think that this will go down by the end of the year.

What will happen with NII? Well, I already elaborated in terms of volumes, what we are managing are prices in weeks. If you see the last long series of quarters, in general terms, we played with some -- but in general terms we have been able to offset the mix effect with price management. And on top of that I will also agree all phases still a low amount. I will also address the liability in NII. So I will be somehow positive of still with low amounts on the liability side. In terms of NII, obviously the volume impact will be there. I would say that in terms of NIM, we should be in positive territory. And the third component which is obviously the market components, that is -- this is one to estimate.

Luiz Felipe Taunay

Regarding asset quality, we have received six questions. And they are from Philip Finch [ph] from UBS, [indiscernible]. So starting with the more general questions, given the current scenario of the outlook, how the bank proceeds delinquency going forward? And more specifically, do you -- regarding -- for corporates, given that we saw an uptick in earlier considered in previous quarter, that was partially regularized this quarter. How do we see the outlook for corporates going forward, Sergio?

Sergio Rial

Okay, thank you. With regards to credit quality which is one of the main issues currently in Brazil. I would like first to -- what I mentioned in the presentation, I would like first to repeat the Air force at Santander Brasil has landed in the last 3/4 years. I mean, this has been -- it is clear we have been doing the -- this has been clearly reflected in our ratios. We have done a strong convergence towards this and we not only converged towards this but we remained clearly in a comfortable levels in logic terms.

So -- and this is not kind of -- this is not magic, this is obviously the reflection of knowing the client behavior, understanding the morals, increasing diversification, improving kind of exposure, etcetera. So -- and this is -- again, this is not our bank job, this is a job that has been done by the redeployment and the full operation I would say during the last 2-3 years. So I can check that. How do we see quality going forward, obviously deteriorating. I would say, as I mentioned obviously in the presentation, marginally and a specifically controlled but obviously reflecting the situation that we have to bear in the economy. If U.S. made by -- I mean, trying to differentiate the behavior between different segment, I would say that also this is not the case today in terms of NPL ratios.

I will say that the normal trends should be that the retail side should perform worse, in relative terms compared to corporates etcetera because as the crisis, continues to be present, the capacity of surviving by the retail side is obviously lower and that should be reflected. Specifically speaking, of 15 to 90 days, I would say a couple of ideas here. Once we kind of normalized the behavior of the false queue that I mentioned in the presentation three months ago, with that specific issue that on that same day was supposed to be sold and it was sold yesterday, some hours after the presentation was done but we decided to maintain what was real in the moment of the presentation.

The tradition incorporates has been the core in the 15 to 90 days as 30 basis points. And in retail as you can see, it has been 70 basis points. So how do we compare that? How do we put this in context? We compare for example; with the 1Q in 2011 and 2012 which was last credit cycle in which quality as you know deteriorated. The tradition there was around 150 basis points in average, 140 basis points and 175 basis points on the quarter in retail, which compares to our 60 basis points or 70 basis points deterioration. So we're speaking of cost from that deterioration. In the same moment we thought crisis almost three years long. The same comparison in terms of corporates, this also has the same -- almost the same conclusion. The 30 basis points compared to 90 basis points.

So in division, we are seeing alteration, obviously we should see alteration, it will be kind of on limit of -- and really, we didn't see that. Having said that, it is in relative terms limited and we feel comfortable in terms of how we are controlling that and why I say that because as you see in the NPL ratio in the 90 days, the situation is flattish or controlled or deteriorating in reasonable way. So we are doing our job in terms of -- in between the 15 to the 90 days, in terms of fine that clients do not go into the NPL situation after those 90 days. Our perspective is for both regions deterioration will continue, at least, until what I said before; the economy starts to show some kind of recovery of -- in a small quantity.

Now we start going to the more detailed questions about asset quality. The first question is, as BRL appreciation contributed through asset quality. Actually the BRL appreciation makes the reported NPL to be 5 basis points higher than it would be in case if BRL had not appreciated. The second question is, can you explain the fall in the lab work provisions in the first -- Q1 2016. Was it somehow related to FX changes? Okay, in terms of FOREX, the answer is no. I mean if you see -- aggressive, simply, I mean if you see -- the FOREX has two signs depending if you compare the year-on-year or the Q-on-Q. And if you see the NPL ratio, the year-on-year move from 3% to 3.3% and specifically companies from 2% to 2.1%. So I really would not put a lot of emphasis here because what I mentioned before in terms of credit quality is not effective.

And in terms of the call or the drop in provisions in 1Q, I would say that what I mentioned in the 4Q results, I mean we did and we communicated and we published that we were making a specific efforts for companies. That meant that in the Q at that time we climbed from almost BRL2.4 billion to BRL2.8 billion of provisioning. And now the levels of provisioning and returning back to 3Q levels or even if it occur compared to 2Q. So cost of risk is for or less stable until these levels around 3.1% to 3.3%. And so I was more underlined than given the 4Q more than the 3Q, normal levels of provisioning with a gain potential deterioration going forward in a controlled way.

Luiz Felipe Taunay

And later it came a question from Philip Salami [ph], Morgan Stanley. The question regards Brazil. As a shareholder, can you share any details on the outlook of this business and if Santander has the right provision to launch and investments made?

Angel Santodomingo

A quicker one. We don't speak about clients and we don't speak about levels of provision and we've been -- the only thing I can say, this is not with regards to whoever we are speaking is that the criteria that Santander Brasil applies in terms of provision is absolutely conservative, and I repeat, absolutely conservative.

Luiz Felipe Taunay

And lastly, regarding asset quality, there was a question whether there was any sale of portfolio because it's not -- and I'm going to transfer, there was a small sale of BRL21 million. So it had no major impact on any matrix or in terms of delinquency or gains or impact on the P&L. So now moving topics, we are going to -- there is a question regarding order operating expenses from Carlos from Banco Brasil. The other operating expenses Rial, 49% quarter-on-quarter, and year-on-year. What exactly impacted this line and what can be expected for the coming quarters?

Angel Santodomingo

Okay, thank you Carlos. This line is kind of volatility share. So analyzing very sorts and stages in terms of Q-on-Q or year-on-year etcetera at times is little bit difficult. What do we have there, we have all kind of things. I mean we have from adjustments from variations from the liability, from monetary adjustments from the liability side, some expenses and technical costs in terms of some judicial things. We have said FX expenses which is the positive. So the concept of orders as you can imagine and as we have shown in the past is quite volatile. It's really too difficult to estimate, a bit difficult to see our trendy line there, given the -- as I said Q-on-Q and the concepts, because you have a full list of concepts, we think on that line.

Now moving to tax rate, effective tax rate. We received questions from Philip Sinch [ph], UBS; Lucas, Credit Suisse; Chitto [ph], Duestche Bank. The question is, what is the outlook for the second tax rate and if we can share some color on the volatility of the effective tax rate overtime. I'm going to answer this one. So if we see in the quarter, hold on just a second, yes, the effective tax rate in the quarter was 10.9%, and last year effective tax rate was 13.6%. In 2014 it was also in the same neighborhood. So the effective tax rate that we had in this quarter is not that different from the effective tax rate that we had overall last year.

If one looks at the behavior of tax rate last year, effectively, there was major swings among the quarters because there are events like payment of interim capital that tends to make those links on the quarter-on-quarter solution. When we manage this, we are looking to the yearly figures and as we indicated in the last quarter call, we indicated that we expect the effective tax rate for 2015 to hover around between 16% and 20%.

Luiz Felipe Taunay

We received one question from -- asset quality question from Philip Perigo [ph], MetLife. Can you give us some color on the level of credit renegotiation, NPLs and provision on this portfolio.

Angel Santodomingo

Probably I think in the quarter report, that have been what the bank has been doing in the last full series of quarter, I think it's absolutely flat if I'm not mistaken. So there is not really strong variations here. We continue to obviously to do an important effort as I mentioned before in the 15 to 90 days period in which we think that -- and we have said this in the last quarter. We think that there is clear opportunity for the bank to be closer with the clients. This does not mean anything more than what I'm saying, just analyzing, making our lease department active in terms of what is the health of our clients, financially speaking, and with that in mind we try to find solutions. And this has been like I'm saying for a long time. So there is no strong variations. The numbers you have -- as I mentioned in the quarterly report and we will continue the same in the same way.

I would say that in general, Santander Brasil Group, has proven to be very capable in these territory. As you know the group has gone through different crisis in different market in the last 10 to 15 years and the capacity in terms of recoveries etcetera is already a proven fact. So we are doing the same thing here which means that we optimize our position and knowledge with the clients to avoid future impacts.

Luiz Felipe Taunay

We have no more questions that we received from the web. Now we can go to the questions from the phone please.

Operator

[Operator Instructions] Our first question comes from Rafael Reggie [ph].

Unidentified Analyst

Hi, good morning all. I have two questions. The questions relates to tech, in the quarter I understand that you use some license in there. How much more do you use to have and if you intend to use this throughout the quarters or maybe concentrating in specific quarter? And second, I would like to get a sense how relevant was the impact of the change in risk rates, if this was something relevant or not, if you can give any color on this, it would be great.

Angel Santodomingo

Thank you, Rafael. So the amount of DTAs that are off balance equals BRL1.2 billion as of March 16. How this is going to be used overtime, it will depend on the conditions. Regarding your second question, Rial will handle.

Sergio Rial

Well, I would say that you have kind of security of mark-to-market but that goes through capital. In general terms, our portfolio -- as we are totally stable so we have not been active given the market volatility and the situation of the financial markets in general terms. And obviously we do have our sensitivity but I would say that here probably more important instant is what I mentioned in the presentation is our price policies, our evolution and how we are pricing our products and services. In terms of sensitivity, I think we have said in the past, it's 100 basis points decrease/increase in part, around BRL400 million or €100 million. But as I said, we have been absolutely or fairly non-dynamic at all in this quarter.

Unidentified Analyst

Just a follow-up in the last question. It puts you in a lot of delay. The results came, the other line on your NII was higher than this first quarter. What would really put numbers through -- is it first quarter number? Is it fourth quarter something in between?

Angel Santodomingo

Thank you. I have mentioned this in the past. The market component if I remember well in fourth quarter results, I was mentioning that we were having a quite a good quarter in terms of market. If you see, historically speaking, the range is in between -- if I take the outliers. We consider this quarter a positive one in terms of market dynamics [ph]. Do we see this as a maximum? Or are we going to see reaching those levels again? I wouldn't say so. It depends a lot on margin on all the activities that we have for our own markets in terms of treasury, in terms of all our departments in the wholesale/banking et cetera, and we have had quite positive first quarter results in that sense and we continue to perform absolutely positively in the second quarter. So, difficult to say, difficult to estimate. You're right, this is quite a good quarter in that sense, but I wouldn't say that it's to do at all.

Unidentified Analyst

Okay. That's about it. Thank you.

Operator

[Operator instructions] Our next question comes from Mr. Domingo [ph] from JPMorgan.

Unidentified Analyst

Hi. Good morning, all, congratulations on the results. I felt some of the trends. My question is just so that we understand. I understand that the line of it is highly volatile, but how should we think about this lining versus rates? So in example, we did see a significant rate reduction. If we look at the curve three or five year over the last three months, how much of those results would have benefited from this rate cost and how should we think going forward on the move of the one-year or five-year rates and these lines?

Angel Santodomingo

Domingo, I don't know if you are referring to the offers in the NII, or the offers in the cost?

Unidentified Analyst

In NII, I'm sorry. Within NII. I understand there were some [ph] in the NII.

Angel Santodomingo

Okay. Thank you for your comment. I already know why you're here. It has not only to do with the specific selling movements or pure movements on that percent. It has to do a lot with our activity on what I mentioned before -- treasury et cetera. In that sense as I mentioned, our wholesale, there is absolutely well-positioned. I remember that we are first players in Forex along with first in advisory aid with this etcetera and that means this type of performance in that line of -- I don't like to leave others because these are specifically basically markets et cetera, but this has to do guardedly with that. I mentioned my thoughts, it's a good quarter. Can we repeat it? I hope so. I will try to repeat it, yes. We mentioned a good second quarter in that sense, but I will leave it specifically to that ability, lines, et cetera, more or less depending on what happens and trust the bank benefits more or less. But difficult for us in general sense, if I said to put myself in your place, I would analyze what has been the historic evolution. I mentioned already the ranges and then see how we all perform at those levels.

Unidentified Analyst

I'm sorry. I didn't mean like for you to forget. I asked if the interest rate curve shift upward or downwards has a directing take on that line.

Angel Santodomingo

Felipe, you want to follow?

Luiz Felipe Taunay

Yes. Domingo, you have the trading books which are the wholesale traders that I have mentioned and then of course they trade as well the interest rate markets. Right? But it's not a structural thing -- one day they can be long, the other day they can be short. So it doesn't mean that structurally speaking, you have a fine here. They vary a lot their positions over time. It's also to give any sort of sensitivity or any sort of direction.

Angel Santodomingo

That's why I was mentioning though that at the end of the day, the activity of these guys that affect and that have that kind of input, I wouldn't link guardedly if X basis points et cetera because it has to do with that.

Unidentified Analyst

Okay, understood. Thank you.

Operator

Thank you. The Q&A session is over and I wish to hand over to Mr. Angel Santodomingo for his closing remarks.

Angel Santodomingo

Well, I think that's it -- another quarter. I would like to stress that we continue to deliver. We do not want to excel. We want you to endure your position in the next Q so the idea is recurrence is continue to deliver. We are increasing little by little and we are going to the direction that we are expected. We want to deliver what we have said to the market and we strive to do it. So thank you for your presence here and I look forward to seeing you in the next quarter.

Operator

Banco Santander Brasil's conference call has come to an end. We thank you for your participation. Have a nice day.

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