Q3 2022 Banco Santander Mexico SA Institucion de Banca Multiple Grupo Financiero Santander Mexico Earnings Call
It closed and can be found on our Investor Relations website.
On our call today will be.
The 9%, but then in Mexico, and the Amendment, Vice President of administration and finance it.
Reviewing our third quarter results, we would like to remind you.
So we made the market that as previously announced our parent company Grupo Samsung intends to increase its ownership and are back to a 100% from 96, 2%.
In other words, it will acquire the remaining 38% of common stock held by minority shareholders with the intention to delete the shares from both the Mexican and then you'll get it.
Changes.
And we also remind you that certain statements made during the course of the discussion may constitute forward looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties, including COVID-19 pandemic that could cause actual results to materially differ including factors that could be.
Be beyond the company's control.
For the explanation of these risks please refer to our filings with the SEC and the Mexican stock exchange.
Please go ahead.
Thank you Victor good morning, everyone and good afternoon to those of you participating from Europe .
I am very pleased to share with you that the third quarter was our best quarter ever in terms of net income.
In turn this drove our highest ROE as soon as the third quarter of 2013.
These strong results were possible. Thanks to the solid performance of our core business businesses and to maintain excellent asset quality throughout the loan portfolio.
Total loans grew 12% year on year with strong performance across our entire loan book.
Individual loans, we had a significant increase compared to last year, mainly due to double digit growth in credit cards payroll loans and mortgages.
It is worth noting that August was our 29th consecutive month of market share gains and individual loans.
In deposits, we remained almost flat year on year as we continue prioritizing demand deposits from individuals and foregoing some relatively expensive corporate deposits.
Also given the higher rate environment time deposits continue to increase for both individuals and commercial clients.
Regarding asset quality, our improved NPL ratio and cost of risk reflects positive performance related to certain clients that enabled us to release some provisions that we booked during the pandemic.
They also reflect healthy asset quality across our entire loan book, thus at the end of the quarter, our NPL ratio stood at 2% and cost of risk at one 5%.
In terms of profitability, we posted a 20% Roe.
As I said was our highest ROE in the third quarter of 13.
This was a result of the strategy of the strategies, we have implemented to support loan demand from our clients mainly in the individual portfolio to strong asset quality as well as normalizing capital levels.
Also during the quarter, we continued to maintain a strong balance sheet as reflected in our solid capital ratio and liquidity position.
The charts on slide four shows our steel complex environment for Mexico's economy, while GDP expectations for 2022 are slightly better than our forecast for 2023 has been declining due to expectations of rising uncertainty and slowing investments.
This is in line with the slowdown expected in Latam for 2023, where some countries such as Brazil, Chile, and Puerto Rico are starting to wake them ahead of us.
Regarding inflation, we expect it to remain temporarily high above our target range, reaching eight 8% by year end.
Consequently, there has been a tightening of monetary policy.
Given current price conditions, the market expect additional rate hike in 'twenty, two reaching 10, 5% by year end.
According to the Mexican Institute of Social security more than 789000, new jobs were created between January and September of this year, representing the third highest increase on record and bringing total jobs to 21.409 million of which 87% are permanent however, and this is important.
To highlight highlight most of these jobs are of low quantity.
Other macro indicators are also shown shown improved performance.
Consumption is now 20% higher than before the pandemic, while the industrial activity remains black practically at the same pre pandemic levels by contract and best investments have been lagging due to lower confidence levels in the business sector.
Although the operating environment is still marked by challenges and uncertainty we are well positioned to continue contributing to Mexico's economic growth by supporting our customers' financial needs.
On slide five you can see that system loan volumes in August maintained their solid growth trend, increasing low double digits year over year, the highest growth rate since June of 2018.
This good performance was mainly driven by continued growth in consumer loans, which increased almost 15% as well as improved demand in commercial loans.
System deposits continued their strong rebound growing more than 10% year on year with demand deposits increasing 8%.
Now please turn to slide six where I would like to spend some time to provide an update on two key growth initiatives as well as a new one that we have also been focusing on.
I'll start by pointing out that we are revolutionizing the Mexican market with Cashback baby are aggressive cash back program.
Launched during September .
Through a very simple skin customers using our like nuclear cards and debit cards will start getting back up to 15000 patients a year, that's roughly $750.
It is worth highlighting that more than 716000 like you credit card users and almost 5 million payroll customers, who are ultimately enrolled in our new Cashback Baby program as one of the stars are already enjoying the program's benefits.
Is a truly unique offering no bank or Fintech has anything similar that is focused on promoting the use of Clark of card payment methods and reducing cash use while enhancing the customer experience.
12 months ago, we launched like you since these innovative products launch we have issued almost 760000 like new cards exceeding our own expectations.
Currently almost 90% of like new cardholders have activated their card.
So far we're pleased with our results in the market strong acceptance of our unique card that mainly targets young people.
45% of likely cardholders are new generations between 18, and 30 years old compared with 21% of our other credit cards.
Also I would like to point out that like you credit card can be a 100% digitally declined one and there is also the physical version for those who prefer.
As we design this critical for everyone, but everyone can make it their own.
Given the product's strong success, we will soon launch a campaign to tap the open market with the aim of maintaining solid growth in this business segment and to offer these products to many more Mexicans.
In auto loans, we continue to rapidly expand these businesses gaming 570 basis points of market share during the last 12 months.
With 15% of the market our auto loan business in line with our market share in loans to individuals consolidating our position as a third player in the market.
We're very proud of this significant accomplishment and remain determined to rank up soon.
In addition to our alliances with leading automakers in Mexico, our growth and gaining market share were facilitated by our Super Auto Santander platform, which integrates financing and insurance offering in a single place a significant convenience for car buyers in Mexico.
Digitalization of our products and services remains a top priority, which is why we continue investing in technology to further transform our bank and get even closer to our clients.
We also want to better understand our clients' behavior and relying more on data analytics to offer them more tailored solutions as well as maintain the optimal service model to.
To that end our digital evolution includes collaborating with Fintech analytic companies to introduce faster and more convenient digital digital tools and functionality.
The strategy is well aligned with global priorities and group's commitment to invest more in Mexico. Despite of the listing we're confident and with the support of our new global CEO and his deep knowledge of the Mexican market will allow us to effectively continue expanding our customer focused strategy and help us further consolidate mexico's participation.
Strategic business of Grupo Santander.
We feel very proud of the newest global Ceos in Mexico, Peru, who lead bankers out there for many years and will now lead the global Bank I will now turn to Vivian will continue with a deeper discussion of the results this quarter.
Thank you Philip and thank you everyone for joining us today, turning to slide seven our total loans increased over 12% year on year above the systems growth rate and posting a sequential increase of more than 2%, reflecting our solid performance in individual loans on the commercial front loan demand is also improving among middle market.
Companies and government and financial entities, increasing by low double digits together with loans to corporates growing in the high single digits year on year.
So we continue to see an upturn in higher yielding segments, which coupled with higher interest rates should boost our margin expansion, while we maintain sound and sustainable asset quality on slide eight you can see that individual loans grew close to 15% year on year, our highest growth level since March 2016, our mortgage portfolio.
Continuous expanding on a solid base of more than 10% year on year and 13% organically over.
Over the years, we have distinguish ourselves with active and competitive offering in mortgages.
So we have made substantial progress in the digitalization of our processes, improving the customer experience and creating another point of differentiator differentiation in the market.
Within consumer products auto loans continues showing strong growth today, the balance of our auto business is close to 24 billion pesos. In addition, with the aim of expanding the business. Further we are now very active in the used car segment of the market as of today used car loans represent 10% of our total auto loan.
Portfolio. Moreover, we're targeting at 25% level in the medium to long term.
R&D payroll loans also delivered solid performance during the quarter, increasing close to 18% year on year, while personal loans increased almost 2%.
In this business, we're recovering the monthly premiums through all the strategies, we are implementing including improving our <unk>.
Processes and benefits programs among others.
At the same time credit cards are accelerating with a solid 20% year on year increase or 5% sequentially.
This encouraging performance was mostly driven by our flagship credit card like you.
Currently 11% of total billing comes from these relatively new credit card for our new payment and create value offerings. We are confident that we will acquire a significant number of new like users within our customer base together with customers participating in our new recurring program Cashback baby, which.
Philipp explained earlier with boost our loyalty program by offering clients complementary benefit.
<unk> are like UK car in the open market in the coming months will also enable us to keep growing steadily and organically in <unk> nine and we will do so without compromising prudent risk management in any way.
Turning to slide nine solid expansion of loyal and digital customers continues with year on year increases of 10%. Each the ratio of loyal customers also continues to increase now representing 43% effective client compared with 41% in the same quarter of last year the growth in loyal customers reflects consists.
Improvements across a large number of our products and services as we aim to be the best option for our clients.
During the quarter product sales via digital channels accounted for 61% of total teams a substantial increase compared to 53% a year ago.
Monetary transactions also maintained outward trend, reaching 48% of our total with mobile transactions accounting for 98% of total data transactions. In addition, mobile clients grew nearly 11% over the past year to over $5 5 million, thanks to promotional campaigns and incentives we offer.
So digital channels as part of the Bank C Tech transformation going forward, we will focus on enhancing customer experience.
As shown on slide 10, commercial loans increased almost 9% year on year, driven by a double digit increase in loans to middle market businesses and to grow maintain financial entity and by high single digit growth in loans to corporate note that these types of businesses are being more active with loan demand versus last year Permanente.
And at the same pace of this years two previous quarters, given the complex economic environment, we're facing.
Firstly SME loans are still being affected by weak economic conditions.
Total and low credit demand these category of loans decreased seven 6% year on year and three 1% on a sequential basis similar to prior quarter sequential contraction.
Moving on to funding on slide 11, total deposits were practically flat year on year, and three 3% lower sequentially likely previous quarter deposits were driven by term deposits, increasing almost 20% year on year on tobacco for a higher interest rate environment demand deposits decreased 7% year on year, mainly too.
At 13, eight drop in corporate deposits as we continue forgoing certain expensive corporate deposits in order to improve the overall cost of our deposits.
Demand deposits from individuals increased 6% year on year supported by our promotional campaigns.
So we have been able to show greater resilience to central bank rate hike, increasing our cost of deposits by seven.
70 basis points year over year like the reference rate increased 450 basis points as of September .
Turning to slide 12, we competed with a very strong capital and liquidity positions, our liquidity coverage ratio stands at 181.1%, representing a substantial buffer and still far above the regulatory threshold, our core equity tier one and capitalization ratios as of September or $13 40.
6% and 18, 90%, respectively significantly above the minimum requirement established for systemically important financial institutions like ours. It is worth recalling that on June 28, and July 28, we made dividend payments of roughly 9 billion and $8 8 billion peso.
Respectively with these payments, we have exhausted our capacity to pay out dividends. The regulators' recommendations each year. We also maintain a sound funding position at the end of the quarter, we have made loans to deposit ratio of 102, 3%.
As you can see on slide 13, net interest income had a solid double digit increase of 17% year on year and more than 6% quarter on quarter, mainly driven by higher retail volumes in loans and deposits as well as higher interest rates during the quarter <unk> increased the reference rate by 150 basis points to 925.
<unk>.
As a result, our NIM expanded 330 basis points year on year to 494% for the quarter.
Please turn to slide 14, net commissions and fees had a strong increase of 18, 5% year on year.
Solid performance was mainly driven by <unk>.
18, 5% increase in insurance fees, and credit cards, which increased 18% year on year, mainly due to the excellent performance of our <unk>.
Credit card that we've been discussing besides financial advisory services had a one off increase of almost 57% year on year.
Going forward, we expect the sustained good performance in credit card fees as our ambitions for the like UK car to continue increasing average monthly billings, while achieving a better mix of fee income.
Turning to slide 15, gross operating income increased more than 14% year on year. This growth was driven by solid performance in net interest income supported by our individual loans and deposits and by higher interest rate.
High double digit increases in credit card and insurance fees were also strong contributors as discussed earlier moving.
Moving on to asset quality on slide 16, our NPL ratio improved 55 basis points sequentially to 2% benefiting from the reclassification of a specific corporate clients as well.
Our faith at the stage three during the pandemic due to an imminent risk of default but.
Subsequently upgraded to stage one healthy trends in the rest of the loan portfolio also improved our NPL ratio, excluding the one off benefit of thesis specific corporate clients, our NPL ratio would be 244% still showing an improvement compared to the previous quarter.
Provisions in the quarter declined almost 73% sequentially and 82% year on year, mainly driven by the release of provisions related to certain corporate clients together with a positive performance in our <unk>.
Our portfolio.
With that.
The cost of risk stood at 154% at 121 basis points year on year decrease and a 52 basis point sequential decrease.
Excluding the release of provisions cost of risk would have been 2.0% to 3% still showing an increase compared to the previous quarter.
Going forward, we expect provisions to normalize as we are raising our risk levels in regards to credit cards and consumer loans.
Turning to costs on slide 17, administrative and promotional expenses decreased 3% year on year, but increased 6% excluding the reclassification.
A reclassification on a sequential basis expenses increased two 7%, mainly driven by administrative expenses as highly inflationary impact on our supply costs and expenses also rose due to salary increases in July and to depreciation and amortization costs related to our investment plan. Thanks to our solid revenue.
Growth and strict cost control, we managed to improve our efficiency ratio by 469 basis points year over year to 46, 3% at the end of the quarter. It is note worthy that we accomplished despite inflation pressures.
We feel confident about both the dynamics of the business and our disciplined cost control. However, we expect cost to increase around 8% to 9% by year end in line with inflation, because we continue investing in our digital capabilities and with inflation pressure expected to continue.
Turning to profitability on slide 18, net income increased almost 70% year on year to eight 2 billion pesos, mainly due to the solid increase in net interest income and fees along with lower provisions profit before taxes rose, 88% year on year for the quarter and 26%.
Reflecting the strong performance of our core.
Our business.
Return on average equity was highly versus slightly above 20% 818 basis points higher than the year ago level and the highest since 2013 that Philippe noted at the beginning of his remarks, if we exclude the one off benefit from the provisions released our ROA would have been 13 six.
<unk> still at 159 basis points higher than year ago levels.
On the other hand, our effective tax rate was 27, 5% 819 basis points higher than last year's period, which despite the effective tax rate to be between 25 and 26% by year end.
Before the Q&A session, let me share with you some brief posting thoughts on a couple of adjustments to our full year performance outlook given the strategy that we're following and with the aim of prioritizing individual demand deposits and letting go some expensive corporate deposits, we're adjusting expected growth in total deposits.
So a range of zero to 2% in terms of asset quality concerns. The excellent results. We have achieved to date, we are adjusting the cost of risk to below 2%, which is a very positive sign considering the challenging environment. We have been operating in during this year as well as a greater risk appetite in certain lines.
Business on expenses due to persistently high inflation, we now expect expenses to increase between eight and 9% as I noted earlier as for the tax rate again, we're expecting it to lie between 25 and 26% considering the high inflation rates expected for the remainder of 2022.
Lastly, we now forecast net income to grow north of 40%, taking these adjustments into account and consistent with our efforts that has been consistently delivering strong results. In summary, we continue successfully advancing and working on our strategic priorities, while implementing new growth initiatives such as cash back.
Although we have made good progress with operate operational transformation simplifying processes and operations. We are nevertheless, mindful that we must step up the pace you're working toward our goal of being a more customer focused bank. This concludes our prepared remarks, we're now ready to take your questions. Operator. Please open.
The call for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star.
One on your telephone keypad.
The confirmation.
Your line is another question.
You May press Star two.
I'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Please ask one question and one follow up.
If you have more questions to recur.
Yeah.
First question comes from Jason <unk> with Scotia Bank. Please go ahead.
Hi.
Some of the strong profitability in the quarter. Thank you for leap into the air for the presentation an opportunity to ask a question.
My question is on the competitive landscape.
How do you view the entrants of fully digital bank.
And specifically if you can provide an update on Santander has plans to launch a open bank in Mexico.
And maybe.
In the context of competition as a follow up on the deposit base evolution or.
The mix really because your demand deposits fell.
1% in term deposits were up almost 20.
And.
That definitely contrast to some of your largest competitors that showed.
Double double digit growth in demand deposits and the only low low single digit growth in term deposits. Thank you.
Hi, Jason very very nice to hear you.
Regarding the competitive landscape on the.
Digital banks I think that.
Given the dynamics in the Mexican market that provides in my opinion.
And.
Profitability I think that.
The more we should be expecting more players to come into the Mexican market.
And not only let's say new players for us certain campaigns have in.
An option to provide fully.
Fully digital bank cash.
A few weeks ago.
North.
Sure.
And use that.
Being approved.
With a banking license to operate right now.
They are fully digital bank.
I think it's.
<unk>.
No.
Taking advantage of higher digital adoption as a consequence of the pandemic and also.
An advantage of.
It jumped population for instance.
As Philippe mentioned close to 45% of our.
The new.
Clients in like your credit card.
Within 18 to 30 year stage, Okay, So and I think that that.
That segment of the population is very open and team to.
Interact with the bank on a fully digital basis, okay. So in my opinion.
There is strong demand for the service.
Also.
<unk> not only in existing banking clients, but also there is a significant unbanked population in Mexico that we be possibilities of interacting with the bank and I think you can basis.
More.
I'm sure that certain states and products of that in the past, we're not able to be offer on that.
Sure.
Hi cost can now be offered to the Esa Unbanked population.
Regarding our <unk>.
Plans to launch a fully digital bank.
It has taken longer than expected we have already submitted the application to regulators for the approval of a full banking license on a detailed basis.
We are expecting.
To receive if regulators do not there to provide additional comments.
Approval during the first quarter of next year.
The.
Typically.
You will have.
Six to nine months in order to start operations once you get the approval.
The banking commission so.
Sorry, we're aiming.
On having fully operational.
Open banking in Mexico at the end of next year.
Regarding your question on the evolution of the processing.
I would.
I would say.
A couple of things first the.
The market is growing.
Faster than panels and Thats for sure.
And we recognize that.
The fact that we've been.
Okay.
Executing our strategy to reduce our cost of funds.
Part of it has to do.
Letting go of certain.
High cost deposits demand deposits corporate deposits I would say in demand deposits. So so you have to separate both effects were growing.
Single digits on.
Demand deposits from individuals.
But we are more sensitive to interest rates on our books are more sensitive to interest rates than our competitors given the exposure that we have to.
To corporate deposits now, we recognize as well that.
At least.
Two of our competitors are showing a very positive.
Performance in terms of demand deposits. We think that this is the case given that they're slightly more advanced than us in terms of.
Their app.
How user friendly it is and also.
They currently.
Currently have a more simple interaction with their clients.
So we have identified that and we have actions in order to reduce the caps that we currently have that are customers.
The panels and clients for from other banks tell us about how how easy or how simple it is to do interact with those two banks. So so we expect it Jason.
As we have improved our.
Our deposit mix over the last few years.
The actions that we're going to take over the next few quarters, we will reduce the gap and therefore, we were aiming at increasing the dynamic in demand deposits from individuals.
And the Arab really appreciate the comments very helpful.
Thank you.
Next question comes from Nicolas Riva with Bank of America. Please go ahead.
Yeah.
Thanks very much.
For the time.
My questions.
So I have two questions. So the first one if you can discuss a bit.
You are refinancing plus for the $1 billion on our <unk>.
Senior bond maturity in November if you have already pre funded Dod if youre going to monetize some of your investment portfolio and if you plan to do a local bond issuance et cetera, and then that's it.
Question is for next year.
You have the call option on the 20 eights on the tier twos I know, we're still a year away but.
If you can discuss how you are thinking about that collaboration for example, one of your largest competitors keep saying that they.
We plan to open up the call so all the Perps.
Okay, so even though they start losing capital treatment, that's where the call date. If you can talk to us about your early thoughts in terms of.
The call option and if you were to call them.
The idea would be to place.
If you want to call them unusual on your tier two yes, it would be two two.
The parent company Santander, Spain by most of it.
Thanks.
Hey, guys.
Regarding the first question.
Yeah.
We have shared with you in prior calls that we have anticipated funding we've been quite active in the local market over the last.
Four to five quarters.
Is that the most effective funding source for us is the local market and we've been quite active or.
This time period.
Treatment for funding.
Okay and regarding Q2.
Two things.
All in.
In these uncertain times a year is too long okay. So so we'll definitely consider.
Best alternative on there.
The circumstances under market conditions, historically with Capex exercise all the call options okay.
Zinc is important and also given the.
Implementation of <unk> in Mexico, and the fact that only tier one tier two.
Capital Securities are accounted for 40 lakh, then we definitely need.
To ensure.
This instrument in order to comply with with dealers so.
We'll definitely look at market conditions, we have always on Earth.
The quality of our instruments and we definitely have a need to do each of these types of securities to be fully compliant with the SEC.
Thanks, very much if I can do just one quick follow up that comment you just made about the local bond market has been perhaps the best Avenue for you.
Especially with regards to senior maturities.
Does it also apply to tier two so I mean do the local pension funds. The authorities have any restrictions to bi loss absorbing debt like the Basel III tier twos or the bumps.
Yes.
Okay.
Well.
In the past they haven't been.
Active in that in that space.
I think there's.
My opinion, there is no there is no restriction for them.
Participate.
<unk> been reluctant to do that.
Somehow a new asset class.
For them I would love for them to be.
Willing to invest in the securities.
As these will provide in.
In my opinion, a more cost effective funding.
Funding for us, but international market is quite big.
So if you if the if we don't have the capacity to place these securities in the local market.
I think that we have plenty of chance broth.
Okay. Thanks very much.
The next question comes from Carlos Gomez with HSBC. Please go ahead.
Hello again.
I think first of all congratulate you and the rest I would like to congratulate you and thank you for continuing to be so active in communicating with the market.
The extent of the company.
Yeah.
Appreciate it.
Questions in particular I wanted to hear your comments about the decline in lending to Smes.
And with that that is a reaction to perhaps having less availability of support from the government for Matthew.
And second could you remind us what your optimal level of capital could be your CET. One of 13, 46% that you just had.
The capacity too.
Pay more dividends.
It doesn't mean that you don't have.
Do not pay more.
Neither activity in any market.
Would you like to see it anyway. Thank you.
Hi, Carlos.
I'll take your second question.
Let the lets say prolific comment on.
On what we're thinking about <unk>.
The dynamics on SME.
Our optimal capital level on your brand is should be around 12 12, 2%.
The statement that I made that we have exhausted our capacity to make dividend payments. This year is because of.
Our regulatory our regulators recommendation.
And I would like to be very clear in this regard.
Legally speaking, we could face more debate, okay, but there is there is a recommendation from the banking commission, stating that.
<unk> been asked that their tank space. This year has to be aligned with the.
The stress test that we submit it at the beginning of the year.
With the banking Commission.
This stress test.
Take into account.
Yeah.
Several.
Scenarios for several years and.
And also that you need to be compliant with <unk>, okay. So with that.
We proposed a certain.
Certain dividend.
Maximum dividend payment.
Each year that complies with.
<unk> exercise and we the restriction to be compliant with <unk>.
We feel that case types of that that's why I mentioned that we have exhausted their capacity as you look.
At the beginning of next year, we will be submitting to.
<unk>, two <unk> new exercise and.
In my opinion.
No.
We should be paying back excess capital there.
Not the.
I need to.
Significant.
Growth in loan demand or significant expectation.
The increase in risk weighted assets, we should be paying out excess capital okay.
Now on SME Felipe I don't know if you'd like to comment on the recent talks with a few times.
Thinking on that sure.
Nice to talk to you.
Let me give you a quick update on where we are with SME.
As you can see the the total loan portfolio has been declining and this is just basically because the rate at which the loans are amortizing which are relatively.
The short term.
Or is it even faster than the demand for loans and what I would also mention is that.
We pretty much can break it down into two all of our SME portfolio part of it has a guarantee from nothing.
And part of it does not the part that does not have a guarantee has been increasing however, we havent really use the guarantees all that much as a result of the pandemic and all of the adjustments that were made.
With some of those banks.
Having to use the guarantees.
The cost of the guarantees have increased and if you can make it feasible at times to Houston I think that.
We've had discussions with nothing and Thats being legalized. So we're hoping that we're going to be able to do the guarantee product also going forward, which will enable us to grow also the portfolio. It is important to mention that traditionally.
We've been very active.
In the lending side.
<unk> this year.
Not only do we see loan demand, but we see relatively high cash balances.
We've made very well with them in terms of the deposits. However on the lending side again demand hasnt been there and given the fact that we haven't been using the <unk>.
The guarantees that's what explains the decline.
Thank you and then if you can clarify on the guarantees you said they have more.
Costly, but that has been realized is that because the price has declined or are they kind of details husky and extended and how much do you usually pay for this product.
Yes, I don't have the exact.
Number of what exactly the rebate and.
I'm not sure that I can share that number because I think that it's not the same price for every single bank. It really depends on how much you use it how much do you recover after you exercised the guarantees so there's not a single price.
<unk>.
We haven't been using it throughout the year.
Does the price that was.
Suggested for this year was above were.
Above the threshold, where we believe we can do it without the need of a guarantee and make it more profitable. So that's the main reason why we believe and given the latest discussions with nothing.
<unk> will be less expensive going forward under the plan has been.
Still in the works there are some modifications to the plan and that's been applied for every single bank.
That will make the plant more appealing I think in general I think all of us in the industry used against the guarantee product less this year. So they know the property there was a bit of an overshoot. So now they are trying to make it more attractive for next year.
So that will be for next calendar year. So for the rest of the year, we've seen that much either.
Correct.
Yes.
Thank you very much.
Yeah.
Thank you as there are no further questions I would like to turn the floor back to Mr. Hector Chavez for any closing comments.
Well as always thank you very much operator, and everyone for joining us on this call and we remain available for any comments or questions. You may have and you can contact obviously directly thank you very much.
This concludes today's conference call you may disconnect. Your lines at this time. Thank you again for your participation.
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