Q3 2023 Inter & Co Inc Earnings Call
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Tears C E O Alexandria, retail senior Vice President of retail banking and Santiago Stell Senior Vice President of finance and risks.
Speaker Change: Please be advised that today's conference is being recorded and a replay will be available at the company's IR website.
Speaker Change: At this time all participants are in listen only mode. After the prepared remarks, there will be a question and answer session.
Imagination can find love playing.
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Speaker Change: Throughout this conference call, we will be presenting non <unk> financial information. These are important financial measures for the company, but are not financial measures as defined by I F. R. S. Reconciliations of the company's non <unk> financial information to the I F. R. S financial information are available in interest earnings release.
Speaker Change: And earnings presentation appendix.
Speaker Change: Today's discussion might include forward looking statements, which are not guarantees of future performance. Please refer to the forward looking statements disclosure in the company's earnings release and earnings presentation, now I would like to give the floor to Mr. As you won't Victor minute, Sir the floor is yours.
Speaker Change: Thank you operator, good afternoon, everyone.
Speaker Change: I'm pleased to announce another record breaking quarter in our history.
Speaker Change: We believe that we have successfully enter a brutal cycle that lead this into a sustainable growing and profitable business model.
Speaker Change: Once again, we can affirm that our results are no longer a glimpse as we said a few quarters ago, but a clear testament of our long term broke the ability potentially.
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Speaker Change: Yes.
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Speaker Change: When I reflect on the states in our history I see Peter phases.
Speaker Change: The first which was until 2021 focus on growth.
Speaker Change: Okay.
Speaker Change: Great and the full ecosystem of products and.
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And gaining market share, while creating deep primary relationships with our customers.
Speaker Change: The second which took place during 2022.
Speaker Change: When we have our platform in place and it started to prioritize when a disease.
Speaker Change: Building the foundations for our business model.
Speaker Change: That's what's built blessed.
Speaker Change: Now in the third phase with the foundations in place we started 2023 with strong momentum with congenital improving our broke stability, while reaccelerate our growth profile.
Speaker Change: As I mentioned before we have entered a virtuous cycle as we can see on these lives.
Speaker Change: Driven by our innovative DNA in the center.
Speaker Change: We.
Speaker Change: Build a best in class financial Super App.
Speaker Change: Delivering the broadest these though offering with a topnotch UX that continuously attracts new clients.
Speaker Change: As these clients engage more deeply with us.
Speaker Change: We are generating higher revenues that yields rone profits, making it a sustainable business model.
Speaker Change: This dynamic then restarts to the begin by reinforcing our innovative DNA.
Speaker Change: And this cycle keeps moving.
Speaker Change: On and on.
Speaker Change: To conclude I believe that the importance of this quarter goes beyond <unk>.
Speaker Change: The amazing numbers, we are reporting.
Speaker Change: It represents something far more relevant.
Speaker Change: We are in the right direction to meet our five year Northstar, which we named the 630 30 plan.
Speaker Change: The commitment to the fixed 30, 30 is already generating significant value to all our stakeholders, which you believe is the only way to build a company the last.
Speaker Change: Let me elaborate a little more on that.
Speaker Change: First.
Speaker Change: To our clients by disrupting the industry offering the best value banking services.
Speaker Change: Second to our employees with a great place that foster creativity and growth.
Speaker Change: Third.
Speaker Change: The regulators developing technology, and bringing efficiency into the financial system.
Speaker Change: Fourth to our community with acquisitions business model.
Speaker Change: And last but not least we're generating value to our shareholders by delivering sustainable long term profitability.
Speaker Change: Before passing the word to <unk> and something I will highlight some of our record breaking numbers of the quarter.
Speaker Change: We delivered impressive combination of record figures.
Speaker Change: We do believe proves we are on the path to sustainable profitability.
Speaker Change: From a financial perspective.
Speaker Change: Our gross revenue had another record quarter, surpassing $2 1 billion has.
Speaker Change: 39% higher than last year.
Speaker Change: The combination of topline growth and cost control enabled us to achieve them.
Speaker Change: Jennifer Western has endorsed Sue has subramanian praising him. That's a principle effective leader who has served as a firefighter emt and advisor to President Obama and fought to keep our kids safe from gun violence votes do Hospira Congress by June 18th.
Record efficiency ratio of 52, 4%.
Speaker Change: On the bottom line, we had our highest ever profitability level.
Speaker Change: With a pretax income of 145 million and both tax income of 104 million hacks.
Speaker Change: This is making you uncomfortable good when you've got type two diabetes like me you have up to four times greater risk of stroke heart attack or worse that.
Speaker Change: We also achieved a record breaking a rate of five 7%.
Speaker Change: Even when meeting near a one CECO discomfort can help you and I'm not trying to skirt I'm empowering you to get real with your health care provider talk to them about lowering your risk of stroke heart attack or death.
Speaker Change: When we look at the operational side, we also see a series of milestones.
Speaker Change: For the third quarter in a row, we attracted 1 million new active clients.
Speaker Change: We also continued increasing our activation ratio.
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Speaker Change: Reaching 52, 7% the highest level since for Q21.
Speaker Change: Our monthly our park increased once again, reaching the record level of 48 packs and.
Speaker Change: And finally, we had a great quarter in terms of transact with volumes expanding our PPV to 219 billion hacks.
Speaker Change: Now I'll pass it to Sunday.
Speaker Change: And Santiago, who will deep dive on both fronts.
Speaker Change: Thank you.
Speaker Change: Thank you Joe and good afternoon, everyone.
Sunday: I'll start talking about credit and for and our funding capabilities.
Sunday: Jumping to page 10, I'll pass through some important highlights regarding credit this quarter, we were able to accelerate the growth in our loan portfolio growing by 7% and remaining focused on high ROI products, such as our App GTS loans, which.
Speaker Change: Once again grew more than 20%.
Speaker Change: And home equity, which grew nearly 10% and reached a market share in the originations also 10%.
Speaker Change: Yes.
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Speaker Change: The most interesting factor of this quarter wasn't credit cards we.
Speaker Change: <unk> reached a growth of 13%.
Speaker Change: This is the result of continuous improvement in the credit or the right credit underwriting processes Act.
Speaker Change: Active portfolio management, the success of loop amongst other factors.
When we look at pricing on the top part of the page.
Speaker Change: <unk> yield excluding real estate loans, which is the dotted line continued its quarter over quarter improvement.
Speaker Change: Now moving to page 11, we will talk about the improvements in our asset quality metrics.
Speaker Change: What we see in this slide is the result of our ongoing efforts to enhance our credit underwriting processes and collection strategies, reaching a more precise data driven model.
Speaker Change: As a result, we're delivering flattish npls both on our 15 to 90 days and above 90 days basis.
Speaker Change: When we look at the cohorts of Npls of credit cards, we continue to see a sequential improvement.
Speaker Change: Forecasting a positive trend for the upcoming quarters.
Speaker Change: Finally, the NPL and stage III formation also have shown stability.
Speaker Change: On page 12, we can see a very positive improvement on the cost of risk metrics, which decreased by 30 Bips.
Speaker Change: This improvement was driven by our active risk management mentioned in the previous slides.
Speaker Change: Despite the decrease in cost of risk our coverage ratio increased 200 bps to 132%.
Always worth mentioning that around 70% of our portfolio is collateralized.
Speaker Change: Presenting are lower than the average risk profile.
Speaker Change: Overall these results give us confidence for the quarters to come.
Speaker Change: On page 13, we can see once again that we have one of the best in class funding franchises in the industry.
Speaker Change: Our deposit growth accelerated to 11% this quarter almost twice the growth level off last quarter.
Speaker Change: Total we reached our funding base of around 40 billion Reais.
Speaker Change: In page 14, we see that we continue delivery and impressive cost of funding, which is now $61 four 4% of CDI, including all interest bearing liabilities.
Speaker Change: We're confident in the sustainability of this cost of funding profile for the quarter shook out.
Speaker Change: Our deposit base is diversified in more than 14 million retail customers that trust us with their savings and transactional balances.
Speaker Change: Our average deposit per client grew by 4% to $2 6000, despite the accelerated growth in our activation rates.
Speaker Change: Now, let's move forward.
Speaker Change: Talk about our transactional platform session.
As mentioned in the beginning we're reporting our third consecutive quarter, bringing 1 million new active customers, achieving $15 5 million.
Our activation rate showed another quarter of strong progress increasing by 49 bps.
Speaker Change: It gives milestone combined with the lowest cap since the third quarter of 2020 is a direct outcome of our commitment to leveraging better client profile targeting.
Speaker Change: New customer journeys and communication strategies were constantly deepening our understanding of customer profiles and feeding these new knowledge into our algorithms to optimize the new cohorts.
Speaker Change: In terms of volumes you can see that our PPV reached an impressive 219 billion reais, mostly driven by credit and peaks.
Speaker Change: This is the highest credit PPV growth in a quarter since the second quarter of 2022 combined with a more balanced mix.
Speaker Change: Between credit and debit transactions.
Speaker Change: This contributed to a greater interchange revenue growth this quarter.
Speaker Change: In a cohort basis as presented in the right chart, we can see that the newer cohorts are starting at higher levels and growing at a faster pace than the older ones.
Speaker Change: We're proud about this performance, which is a strong evidence of better quality in client adds and activation mood.
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Speaker Change: Moving forward to our other verticals, we can see the power of our financial Super App ecosystem.
Speaker Change: On E Commerce, we reached $2 9 million clients.
Speaker Change: Who conducted over 10 million transactions in the quarter Another records.
Speaker Change: We also have 870 <unk> leveraged by our inter day in July seven.
Speaker Change: Our net take rate in the quarter was eight 7%.
Speaker Change: Combining this we reached a record breaking gross revenue in this vertical off of 124 million Reais.
Speaker Change: On insurance, we had a great quarter, reaching more than 322000 sales.
Speaker Change: And one 6 million active clients and finally on investments our simpler and accessible product offering resulted in an impressive 74% year over a year client growth, reaching $4 2 million.
Speaker Change: Along with a stronger youll see that increased to 83 billion reais.
Talking about our global solutions, we experienced another quarter of strong success.
Speaker Change: We achieved over 270 million U S dollars in deposits and AUC.
Speaker Change: We continue to replicate our Brazilian offering in the U S by taking advantage of our scalable technology to create a best in class Global App.
The strong adoption of this product is a result of the continuous UX improvements.
Speaker Change: And.
Speaker Change: Our focus on Brazilians with travel invest <unk> are immigrants in the U S. The client base grew nearly four times year over year, reaching almost $2 million.
Speaker Change: Before passing to <unk> I would like to comment that in the U S. We're replicating our number one competitive advantage that we have in Brazil, which is our unique cost of funding.
Speaker Change: Now 30. Please go ahead.
Speaker Change: Thanks, everyone.
Speaker Change: Thank you Shannon good afternoon, everyone now I will use to a financial section.
Speaker Change: Jumping to page 21 here, we can see the revenues, which had another great quarter, reaching also record numbers.
Speaker Change: As mentioned at the beginning of the presentation, we achieved $2 1 billion a growth of one 3 billion of net revenues this quarter.
Speaker Change: Sure.
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Speaker Change: The growth was mainly driven by fee expansion resulted from the strong performance of interchange ecommerce insurance and banking revenues.
In terms of net interest income the lower inflation in the quarter impacted NII, resulting in a growth of 2% that we're seeing acceleration into the fourth quarter as inflation returned to normalized levels.
Speaker Change: Signature seasoning and buttery flavor and every twist.
Speaker Change: Since recently sees in Brussels.
Speaker Change: So our kicks off this summer.
Speaker Change: Inside of LCR.
Speaker Change: Now moving to page 22 here, we can see the unit economic metrics.
Speaker Change: Okay great.
Speaker Change: 50.
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Speaker Change: Our growth monthly ARPA reached 48 here is an all time record.
Speaker Change: Yeah.
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Speaker Change: This is impressive in our opinion as we continue adding a strong number of new plans every quarter.
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Speaker Change: As to rollout, but combined with favorable cost to serve because led us to improve our gross margin proactive plan for the fourth consecutive quarter, reaching another record of 35 <unk>.
Speaker Change: The question is why don't any of your Disney Pixar ski inside out to really be the only theaters Friday.
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Speaker Change: We expect that this trend will continue improving as the new approach of client acquisition activation and the personalization continues to move forward.
Speaker Change: Jumping to the Nims on page 23 here, we can see that our NIM 1.0, which cause he has the full portfolio, including cash receivables do not accrue interest known important to east as Avista with seven 8%, our second highest level ever.
Speaker Change: Regarding NIM Cooper zero, which goes here is only the interest earning portfolio between nine 2%.
Speaker Change: This quarter.
Speaker Change #100: As mentioned before we observed lower inflation levels in the third quarter, which are now normalizing to the current one.
Speaker Change #101: Additionally, we had more renewal <unk> creative maybe this controller program, despite impacting NII kind of positive effect on cost of risk.
Speaker Change #102: Finally, our repricing strategy continues a lowing and in addition to a shift in underwriting mix, we expect to continue improving the play rates of our portfolios.
Speaker Change #103: Moving to the expense side on page 24 here, we can see better trends in the last three as a result of our cost control initiatives.
Speaker Change #104: As our profitability increased our personnel expense line reflected an increasing compensation associated with accrued bonuses and profit share agreements.
Speaker Change #105: The other expense lines remain roughly in line with prior periods of course, it was a multiple initiatives to optimize our cost structure.
Speaker Change #106: With this disciplined focus on expense management, we still see still opportunity to continue delivering economies of scale.
Moving to page 25 to summarize the work that we're doing on the operational leverage front. These two charts provide good insights.
Speaker Change #107: On the left hand side, we can easily see the remarkable increase gap between the growth levels in mid revenues and expenses.
Speaker Change #108: And on the right hand side I would like to highlight another great quarter of improvement in our efficiency ratio, which once again is a record low of 52, 4%, meaning 100 bps better than the prior quarter.
Speaker Change #108: Unlike in the prior two quarters on this third quarter the improvement in efficiency was led entirely by revenue growth.
Speaker Change #108: On page 26.
Speaker Change #109: Actively monitoring it into what the percentages of the SG&A base relative to the net fees.
Speaker Change #110: As you can see in the chart the ratio has been nicely eroding during the past few quarters and now stands at 73% are all time high.
Speaker Change #111: The continuous improvement in this ratio is a key component to meet our Roe goals.
Speaker Change: Okay.
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Speaker Change #112: In terms of profitability on page 27, we couldnt be more proud of what we achieved.
Speaker Change: Yeah.
Speaker Change: Starting your day with NATO me.
Speaker Change: The number one pharmacist recommended vitamin and supplement brand.
Speaker Change #113: We're able to deliver a record breaking a row, 5% percent by appointing our best ever net income of 104 million <unk>.
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Speaker Change #114: On a pre tax basis, we reached 145 million <unk>, which is more than 80% higher than in the prior quarter.
Speaker Change #115: Concluding our financial section on page 28, we recorded at 23, 7% CET one ratio this quarter, our first ever organic capital creation.
Speaker Change #116: As mentioned in prior calls our capital is fully comprised on top quality core equity with no hybrid instruments.
Speaker Change #117: Now I'll pass the mic back to <unk> for his final remarks.
Saatchi: Thank you Angie and Saatchi for highlighting our important topics are far or another record breaking quarter.
Speaker Change #119: Before moving to Q&A I would like to summarize these impressive results partner in one phrase.
Speaker Change #120: We are building a business model to the left by adding value to our stakeholders.
Speaker Change #121: Our our competitive advantage, which our cost of funding cost to serve.
And strong fee income remain as strong as ever.
Speaker Change #121: We are delivering solid growth.
Speaker Change #122: Leading to strong market share gains disrupting the status quo.
Speaker Change #123: Our state of the art technology is like no other and set us apart from our competitors offering the best UX and integrated banking experience in the market.
Speaker Change #124: I would like to close by thanking all of our thinking about I'm just for the amazing work done this past quarter, we will now start the Q&A. Thank you very much.
Speaker Change #125: We will now begin the question and answer session.
Speaker Change #126: Once again for this Q&A session. We ask you to write down your questions via the Q&A icon at the bottom of your screen. Your name will then be announced and you will be able to ask your question live.
Speaker Change #127: At this point a request to activate your microphone will appear on your screen. If you prefer not to open your microphone live. Please write down no microphone at the end of your question and our operator will read your question out loud.
Speaker Change #127: Our first questions comes from Flavio Yoshida from Bank of America.
Flavio Yoshida: We're now opening the microphone. So you can ask your question live.
Flavio Yoshida: Go ahead Sir.
Flavio Yoshida: Hi, everyone. Thank you for the opportunity to ask questions I actually have two questions on my side.
Flavio Yoshida: The first one is on the net interest margin. So are you guys already mentioned the impact of lower inflation that.
Ended up impacting the NII, but I was wondering what happened here I mean, you guys were doing a great job on the repricing process and in house on the shifting Delaware portfolio mix towards a higher alloy products. So we're not expecting a mean reduction in this quarter. So what really happened here.
Flavio Yoshida: And what should we expect going forwards and then my second question is on expenses, specifically on personal expenses right. So there was a strong increase compared to the previous quarter.
Flavio Yoshida: Even considering the head count reduction right. So according to our calculations.
Speaker Change #129: Cost per employee increased more than 40%.
Speaker Change #130: Year on year. So I would appreciate if you guys could share some color here.
Speaker Change: She looks nice, but does she loves about insurance claims she's wrong with you.
Dale: Thank you Vivian and Dale here I'll take your question and thank you for asking so on the first one regarding NIM first let me clarify that the NAA did grow this quarter from 802 million reais to $818 million.
Speaker Change: Because each Virginia pays about $1000 a year premiums.
Speaker Change: Premiums to cover full stop.
Speaker Change: <unk> brought the reward of up to $25000.
Speaker Change: Legend versus newcomer weight aren't you too on the same team yeah.
Speaker Change: And peanut butter.
Speaker Change: [music].
And after a very strong growth that we exceeded it in this last quarter sort of a high base. We grew on top of that that 818 that we reported this quarter is 50% higher than a year ago narrowing.
Speaker Change #132: Narrowing to NIM, specifically there are several factors playing out here on the negative side, we did experience lower inflation, which impacted our real estate and loans. There have revenues linked to the inflation index in bcf that at around $20 million of NII.
Speaker Change #132: Delta nearly delta this quarter.
Speaker Change #133: Second point is that we had greater volume of renegotiations of portfolio. This quarter in the context of the controller program and the awareness that that program created that's close to 30 meter Harris or impact to those two.
Speaker Change #134: Push the NII down relative to what we were higher than the prior quarter, while we expect to come in excellent.
Speaker Change #135: The positive side, we had a continuous.
Speaker Change #136: Optimization of their reserve requirement, playing the full three months that the clinical component of or loop program.
Speaker Change #137: We announced on the last quarter and we haven't been ration of the improvement in our loan mix as the higher alloy products continued to grow faster than the newer ones and they gain representation in the in our loan mix. So all that together when NII, the numerator will less than the average earning assets the denominator.
Speaker Change #138: The fundamentals of our trend to expand net income margin.
Speaker Change #139: <unk> continued to be strong maybe adding on our funding franchise and the important arrow driven great portfolio. So we don't see that we are deviating at all on the repricing strategy will continue to lead.
Speaker Change #140: CV, we're also ceasing opportunities like the contract on both the reform or there were negotiations now.
Speaker Change #141: Stay true to our mission to deliver double digit means now going to a second question on personal loans.
Speaker Change #142: Given the strong bottom line result, this quarter with our group business on profit bonuses and profit sharing for employees and executive.
Speaker Change #143: These factors personnel expenses growing 5% this quarter.
Speaker Change #144: <unk> continued to reduce organically announced stance totaled $3 3000 employees. The average salary of employees is growing as we are increasing.
Speaker Change #145: The performance and talent level of employees across the organization and we think that going forward. The extent some personnel expenses will be highly correlated with them and with their bottom line.
Speaker Change #146: <unk> go in with noting that we don't do any adjustment in net income related to expenses of salaries personnel share based they are all in so the bottom line to a close here. So all these expenses in that metric. Thank you.
Speaker Change #147: Thanks, a lot century.
Speaker Change #147: The next question comes from Rafael Friday from Citi.
Speaker Change #148: We are now opening the audio so you can ask your question live.
Rafael Friday: Hi, guys. Please go ahead Sir.
Speaker Change #150: Hi, guys good afternoon.
Speaker Change #151: So two questions here why don't you sokoloff on <unk> comments about renegotiations just to be clear, how this $30 million impact the NII.
Speaker Change #152: If it's related to discounts I understand that the other banks, maybe classify this as as cost of risk. So just wanted to send a little bit this dynamic copper renegotiations.
Speaker Change #152: On the NII in the quarter and second if you could comment on fees. So you have a very strong performance quarter over quarter, so quite for the seventh year. If there is.
Speaker Change #152: Some one off here or if its a base that we can use.
Speaker Change #152: Used as a reference moving forward. Thank you.
Speaker Change #153: Thank you very for your question so starting with the one related to renegotiations. So realizations were then or interest income to accrued interest income. So that's the impact that line has been done.
Speaker Change #154: Wafer alumina because the discounts are done or accrued interest so that impacts it intra.
Speaker Change #155: Interest income, we do think we will continue having a bit of that in the in the in the fourth quarter, we're looking at being integral or the full economic impact in the P&L of this so when we look at it together with an invaluable asset quality is clearly in a positive and it can.
Speaker Change #156: More context on this if rajiv as a written off portfolio has grew significantly we started to debate whether to continue with our original portfolio sale loan portfolios that we have historically been doing would typically give discounts on those.
Speaker Change #157: Plus plus 90%, but these what we're doing in the context of the program are close to 40%. So these have much better performance on them on the P&L and we see great results from the clients anticipating payments as soon as they are.
Speaker Change #156: Womens.
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Speaker Change #156: Dan.
Speaker Change #156: And then going on to fees.
Speaker Change #158: The increase in fees was 100 million hedges this quarter.
The main driver of that was growth of interchange of credit cards. This is driven as a consequence of the increase in the loan portfolio of cars in particular, which had 13% growth.
Speaker Change #159: The second highest in our portfolio followed by insurance revenues totaled $10 million now the Israel on Mastercard, we had extra performance of close to $20 million as a consequence of beating the performance metrics that we have with them intercept performed very well in many of our growing <unk> with <unk>.
Speaker Change #160: Third quarters and that generated an additional 10 <unk> am.
Speaker Change #161: Of revenue so it's a combination of bankers, we do see M D. As a key component of our of our strategy. We always say that it's one of the three competitive advantages that we have a cost of funding cost to serve and a high percentage of fee income, which continues to be around a third of it toward the late fees and this is the way Sam is playing out well.
Speaker Change: Okay.
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Speaker Change #161: Happy with the performance are expected to continue delivering that way.
Speaker Change: Yes.
Speaker Change #162: Perfect. Thanks, so much.
Speaker Change #163: Project here is don't be too just to complement on Santiago sensor.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
I have been telling our shareholders and everybody for a while that the fee income is very important for our business.
Santiago: By delivering that growth on fee income and a sustainable fee income our.
Speaker Change #165: A few comments here.
Speaker Change #166: That's going to be here for a while are not charging the Tam has on the peaks.
Speaker Change #166: Type of things, we will always have a big percentage of our fees on top of total revenues.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change #167: And with that ran through you always be able to improve our ROE going forward. So I myself I'm very very dedicated to improve our pipes off peaks on inter shop on showings on the expansion through last two effects will do this as a very important.
Speaker Change: Yeah.
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Yes.
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Speaker Change #168: And revenue generation point, or so I do believe that it will keep being Barton.
Speaker Change: Okay.
Yeah.
Speaker Change: Okay.
Speaker Change #169: And then also ICU room.
Speaker Change: Okay.
Speaker Change: Okay.
Keep improving on a percentage basis wound parked okay. Thank you.
Speaker Change: Okay.
Speaker Change: Hum.
Ralph: Thank you Ralph.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change #171: The next question comes from Nihon Agarwalla from HSBC. We're now opening the audio so you can ask your question live. Please go ahead.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Nihon Agarwalla: Oh, Thank you for taking my question.
Speaker Change #173: Allocation on the NIM discussion.
Speaker Change #174: Have you got.
Speaker Change #175: All of the negative in the backend of that I think we're close enough about planning no interruption in their own patients over something that did you see in the coming quarters as part of that or do you think the adjustment is not be done by now.
Speaker Change #176: My second question is on asset quality apples plugging some final stable.
Speaker Change: Okay.
Speaker Change #177: Let me note that we will be activating for closing the contract portfolio. So how do you think about the asset quality.
Speaker Change: Okay.
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Speaker Change #177: In the credit card portfolio.
Speaker Change #178: How do you see income lived enough.
Speaker Change #179: So you tell me in guys.
Speaker Change #179: Our portfolio today.
Speaker Change #180: How confident are you with yet.
Speaker Change #181: This nation, having made in the past quarter. Thank you so much.
Speaker Change: Okay.
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Speaker Change #182: And yes, it wont be for here.
Speaker Change #183: I'm going to talk about the growth on a credit card and this trend is going to is going to cover leaner billings.
Speaker Change #184: So first of all.
Speaker Change #185: We have always been very cautious on credit card underwriting.
Speaker Change #185: Body knows that.
Speaker Change #186: We like to have a very well collateralized credit portfolio, but I would say that for the past 12 months or so have been proven.
Speaker Change #186: Our our underwriting process and mouth, so our collection processes as well.
Speaker Change #187: We have been in spite of the market have been more excited about this product you will see that our DPP has grown as sontag also mentioned, we improved the credit payments from 'twenty to 'twenty five below has so it's a big incremental.
Speaker Change: Yes.
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Speaker Change #188: And mcgwire. So now so we are more excited with the credit card business going forward.
Speaker Change #189: Not only that we believe that we have a lot of change on the regulatory.
Speaker Change #190: Framework have and combine what we learned and what we are improving and what we're doing on the credit card together with inter shop, we do believe that we're going to have the best consumer finance product available in the market.
Speaker Change #191: To run this business here at <unk>, So I'm very excited with the improvements on a credit card and combining this with inter shop initiatives and therefore, having these state of the art consumer finance portfolio regarding the Unbilled AR, we have a gap between what to have underwritten before in our multichannel covered okay. Thank you ma'am.
Speaker Change #191: Thanks.
Speaker Change #192: Thank you and you have so.
One on the non on the nonperforming loans and delinquency as we expected.
Speaker Change #193: The asset quality metrics deep performed well during this quarter so cost of risk closed at five 9%, that's 30 bps better than last quarter NPA NPL 15 to 90 and 90 plus.
Speaker Change #193: Reported flat figures, which is we see it as good news and also NPL formation was flat at one 6%.
Speaker Change #194: In terms of what's driving delinquency. It continues through the bulk of it continues to come from the credit cards about 90% of it.
Speaker Change #195: When we look at the credit cards more deeply we see improving delinquency on a cohort basis. So like on page 11 of our presentation.
Speaker Change #196: We see that there is a consistent improvement across all the cohorts that we have in terms of cost of risk. The reason for this 30 bps improvements.
Speaker Change #197: Improvement is mainly a result of their underwriting models and collection initiatives that we have been implemented.
Speaker Change #198: So we've implemented maintenance strategies in the card portfolio and part of that is increasing limits for high performing individuals and part of that is to reduce the limits of clients that have deterioration in the credit profile that tends to be favorable.
Speaker Change: I would describe.
Speaker Change: Great.
Speaker Change: Jim.
Speaker Change: [music].
Speaker Change #198: Short and long term.
Speaker Change #198: For reduction of cost of risk.
Speaker Change #199: In terms of mix when we think about the overall portfolio. We continue to add F. G. T S and home equity loans that have better and better average delinquency levels. So there's two segments. They represented 8% of the portfolio a year ago and now they're at 13%.
Speaker Change #200: And finally, but important to highlight our cooperation coverage ratio increased two percentage points to 132%, even considering that the biggest part.
Speaker Change #199: The portfolio has a strong level of collateral.
Speaker Change #199: With that said, we're very comfortable with our underwriting machine and truth and the speed that we are evolving thanks Nina.
Speaker Change #199: Okay.
Speaker Change #201: But that's all along.
Speaker Change #201: Topics.
Speaker Change #202: You mentioned about in the call.
Speaker Change #203: Thank God for the English or is there something that you've already started to finally start ups.
Speaker Change #204: Funding levels, and maybe something lithium thank Tony for.
Speaker Change #205: Okay, and you guys won't be speaking here.
Speaker Change #204: As I mentioned.
Speaker Change #206: We do believe that the future of consumer finance.
Speaker Change #207: Integration of <unk>.
Speaker Change #208: The payments the installments together with commerce.
Speaker Change #209: And yes, we started that already I would say that we started a little while or by not being there two months ago or so and we don't have yet.
Speaker Change #210: Yeah, Yeah yeah.
Speaker Change #211: The right trends the right number for the delinquency on that product, but the good news is.
Speaker Change #212: The good news or we get a very reduced take rates on that product and we do get a adult payments are the products. So when you combine bulk payment plans are good take rates there.
Speaker Change #213: The cash from that to half our delinquencies huge so we're very confident that this product is going to be profitable going forward, we expect to share more on depth on that on the NPL ratios maybe by end of the year are <unk>, okay, but.
Speaker Change #213: Yeah.
Speaker Change #214: Again, I'm myself, we're excitedly.
Speaker Change #215: The the way you are combining these two things the commerce and the banking side. Thank.
Neil: Thank you Neil.
Neil: Okay. Thank you so much on the new well.
Speaker Change #217: And back on the energy portfolio and the limitation was that something that could impact the governing bodies of the zama why are we done.
Speaker Change #217: No.
So on inflation and we're seeing now for our fourth quarter similar levels that we saw in the first half so the impact on the third quarter, which actually has one month of lag. So that was the last month of the second quarter June July and August had nowhere inflation levels now were seeing them.
Speaker Change #218: Normalized levels into the following three months. So we are back to what we saw on the first graph over the air.
Speaker Change #217: Okay.
Speaker Change #219: Okay perfect. Thank you so much.
Speaker Change #219: The next question comes from Yuri Fernandes from J P. Morgan.
Speaker Change #220: We're now opening the audio so you can ask your question lives. Please go ahead.
Yuri Fernandes: Hello, everybody and thank you very much I have a follow up on the she is on this question on <unk>, we know the interchange growing a lot like <unk>, 60% parts a little quieter, but you are you are your credit cards E. Excluding eats was growing like 8% so.
What drove it is a different behavior, usually CPB and interchange baked into follow each other.
Speaker Change #222: Interchange is growing faster because I don't know I and compliance the high income cards, just we'd like to have more details on the interchange versus TPG.
Speaker Change #223: <unk> and I have a second question regarding other revenues.
Speaker Change #224: Other revenues was also part of the good word to rights what keeps growing 60% acquired so required search and when you look to your financial statement, we see capital gains other revenues and performance issues for pharmacy, Easter and you already mentioned that if he was mastercard.
But what's wrong with the capital gains in the other revenues My my point about these line is all recurring is are the revenues should be forthcoming partners. Thank you.
Sandy: Hi, you already do that Alex. Thank you for a question I'll take the first part and defer the second one for Sandy.
Speaker Change #226: So in terms of the interchange revenues, what we had was a change in mix. So we started growing credit cards again.
Alex: And had the mix flip with credit becoming more relevant and debit that was the key change so relatively simple and drives a lot more interchange fees, which is a good move for US we are preparing us won't be information earlier.
Sandy: Keep on growing on that front with several things as the nation, including loop. So our loyalty program is starting to kick in in terms of bringing more recurring spenders chewing through so I'll pass the word to sandy. Thank you.
Sandy: So on the other fee revenue question, 100% of these other if your revenues are correlated to business volumes, where we excel in cards insurance and investments.
Sandy: The Navy on each of these points.
Speaker Change #228: <unk> of cards.
Speaker Change #229: Filling up of what I just mentioned.
Sandy: 12% this quarter exclusively of credit cards noted $10 3 billion reais in a quarter with no particular positive seasonality just driven by our acceleration in the Quaker business, while loan portfolio as you know a growth grew 13% and other relevant number to mention which I think drone.
Speaker Change #230: <unk> anticipated a bit it's the increase in our credit card limits from $20 billion to 25 billion discipline, 5% increase in our neuro limits in just a quarter focusing on clients with higher propensity to spend therefore driving kind of TBD.
Speaker Change #231: Endpoint is insurance that has two parts. The first part is related to performance, where we've been over delivering the business goals with our bank assurance Bartlett partners, both Liberty and sample and for that we have good recurring revenue and the second one is related to or taking them to stay with us while we have profit sharing agreement and the more pro forma as the company has.
Speaker Change #231: The more we benefit from it.
Speaker Change #232: Third and last is investments, where we have a volume base agreement will be three that we've been building quarter after quarter and for which we also receive a performance fee to put numbers into these three components.
Speaker Change #233: We have a great guards totaled 20 million of her eyes.
Speaker Change #235: On insurance costs appointing me as the eyes.
Speaker Change #234: And the remaining east mainly investments with the idea of it.
Speaker Change #236: The shelf as well so that explains the $50 million and their time now that our revenues, it's 100% again related to business and we think this is recurrent.
Speaker Change #237: Though some of them are growing in every single quarter and some are recurrent and every single year, but not necessarily in every single quarter, which I understand that maybe made morning, a bit more complex about the hello, Kitty and each of the prior years and they will continue to occurring in the future.
Speaker Change #238: The <unk> 30, which one is reflecting capital gains of those.
Speaker Change #239: The insurance reinsurance.
Speaker Change #240: Insurance is a couple of years.
Speaker Change #241: If I may guys, a third one on capital it was pretty good capital described to your tier one ratio was up almost 100 100 bps right like 90 bps.
Speaker Change #242: What drove this is basically the new Central Bank credit Suisse regulation or are you optimizing capital somehow because either better disclose about doing some things to improve your capitals. So just checking if there is more regulation or if this is also doing something on the capital side. Thank you.
Peter: Judy just won't Peter speaking.
We always like to.
Speaker Change #244: To get all the benefits from the context of the market, which are exactly what to national some change on the regulation, but we are also working at.
Peter: <unk>, India to improve everything from operations in the way we use our capital.
Speaker Change #245: And I would I would say that one of the most recurrent towards.
Speaker Change #245: For the past I would say.
Speaker Change #246: <unk> also got the ETR was Roe.
Speaker Change #247: So every underwriting credit underwrite what what the ROE what was our worry is that delivering a good area for US yeah, no, let's not underwrite so we really changed our mindset on that.
Speaker Change #248: We need to remember that before we had I know, 50% CET one after all of the fallen on offers through the <unk>.
Speaker Change #249: We are not so so concerned about the right to use of our equity I would say that again for the past 12 months as a whole different scenario. So have been way more diligent on underwriting and get the best use of our equity that's why I also in Asia.
Speaker Change #250: One of the previous question, we want to see these fee revenues that you also asked grown consistently quarter over quarter year over year. Because this is going to help also our CTO unsold.
Speaker Change #250: Using the equity on the rights go in the right way with the credit portfolio in bringing more more revenue fees, we will always have.
Speaker Change #251: I would say the best city, one on the on the retail banking industry in Brazil. So that's what we're working hard to achieve.
Speaker Change #252: And Super clear, Israel, and thank you and congrats on diarrhea.
Speaker Change #253: And the best of quarters. Thank you.
Speaker Change #253: The next question comes from Eduardo Rosman from BTG. We're now opening the audio so you can ask your questions live please.
Eduardo Rosman: Please go ahead.
Eduardo Rosman: Hi, I have one question here.
Speaker Change #255: The show ladder.
Speaker Change #256: The press release, you mentioned that interest is currently ahead of schedule.
Eduardo Rosman: With respect to the 6% to 30 30 goals for 2027 right. So I do believe it's just a matter of time of doing more of the same to get there or do you still need to come up with new products, such as overdraft and or expanding in other geographies like such as U S rates. So it would be great. If you could share.
Speaker Change #257: With US you know where do you think you are ahead of schedule and what needs to be done for you to get there. Thanks.
Speaker Change #258: Oh horizontal dutra speaking, thank you kartik rational yes, we our hub say ahead of the budget.
Speaker Change #258: But we're.
Speaker Change #259: You're still trying to work harder even harder to try to anticipate as much as we can and to draw.
Speaker Change #259: Two.
Speaker Change #261: Kept being ahead of it so I believe that on client engagement and client.
Speaker Change #259: Yeah.
Speaker Change #260: Adoption of our doing great. So yeah.
Speaker Change #262: Then I would say 151 6 million new clients average single arch and with a very good capsule. They are doing a really really good job I also own efficient were able to I would say two two to get most of the fact that we had at the conference. So we improved a lot but also we we we.
Speaker Change #263: Just gone after the vendors the biggest vendors through renegotiate most of our contracts. So anyway, we're working hard to to also improve our or.
Speaker Change #263: Our efficiency ratio, we still have room to improve that for close to 50, but we see this also head of the budget and lastly on our way with them now and then.
Speaker Change #264: 30 of the <unk> project.
Speaker Change #264: We know that we are.
Speaker Change #265: Are still far from the 30% Mark but again we.
Speaker Change #266: We need to consider we have a big.
Speaker Change #267: <unk> of Citi. One so we'll keep growing our credit portfolio, we can grow our credit portfolio awesome and we do have only I would say 151, 2% of the credit portfolio, Brazil, but we do have 8% of the big transactions. We do have a very good cost of funds actually the best cost of funding on this trip.
Speaker Change #268: We do have seven different credit portfolios for us to grow and add more up more credit portfolio such as after they ask Biggs can add so we're very comfortable that we will average more our balance sheets and then combined with the fee revenue with us are very good we'd be able to achieve maybe on.
Speaker Change #269: <unk> is also ahead of the budget of our.
Speaker Change #269: Our our 699, so I'm very.
Speaker Change #270: I'm very convinced that it's achievable.
Speaker Change #271: More than the winning relaunched its when we unveiled it by the beginning of the year, but again to a lot of work to be done, but I'm happy that we are improving.
Speaker Change #272: The proof points of the plan so.
Speaker Change #272: That's how I see.
Speaker Change #273: Uh huh.
Speaker Change #274: Intel performing on depth on depth morph Star project called the six three times.
Speaker Change #275: Great Great Joel if I may just just another topic here. Another question because we've been receiving a lot of questions on the payroll lending market there is that.
Speaker Change #276: Either digital bank that has a has set a very aggressive goals.
Speaker Change #277: For growing in that market and indeed, they are coming with a very low interest rates right. So we know that.
Speaker Change #278: We're one of the first ones you know to offer the products you know a 100% digitally so.
Speaker Change #279: What steps at all.
Speaker Change #280: You cannot take hit to further accelerate our market share gains that are what are the challenges and opportunities that you see in the segment going forward right. Thank you very much.
Speaker Change #281: Awesome. Thank you look we have been underwriting payroll long ethane since 2001, okay.
Speaker Change #282: It's not something new weapon.
Speaker Change #283: And I know you've covered the space for a while and we know that the payroll on it's not a commodity.
Speaker Change #284: I also just mentioned a few questions ago that we're being very diligent that India to underwrite.
Speaker Change #285: Grad portfolio derived our ROA.
Speaker Change #286: Amounts I just mentioned we have the best funding in the market and mouth. So you know that we're very used to.
Speaker Change #286:
Speaker Change #286: Oriented.
Speaker Change #286: And player, having said that having said that.
Speaker Change #287: In a diligent way I consider reentering the most capable.
Speaker Change #288: Player on the industry to reducing to have the best cost for the payroll loan also we don't do depth with the banking correspondent correspondents, which take a big toll on the profitability of the business and also put a lot of pressure on the on the <unk>.
When the legal claims and down the road. So I'm confident that we will be able to keep improving of course, we need to oh it.
Speaker Change #289: Always improve the CRM initiative, so to get to the clients that are willing to change and to migrate to India. We do know that when the interest rates are high.
Speaker Change #290: Easy for you to do.
Speaker Change #291: To do that their migration from one bank to the other but we're very well positioned we don't want to do a bumpy as we did before and already if you remember we were doing the best the lowest rate in caustic in Abilene, the past and we don't think Thats the right way to go but we have the tools to be one of the.
Speaker Change #292: Cheapest on the market and I would say that with time, we will conquer more and more and more clients I would say aye.
Speaker Change #293: B to C strategy, Okay. We owned up clients. They are going to use all of the product and not a b to b to C approach, so I'm excited with that product as well.
Speaker Change #293: Oh, great. Thanks, a lot Joel.
Speaker Change #293: The next question comes from Jorge Kuri from Morgan Stanley and I will read it.
Jorge Kuri: I actually have two questions. Please first can you help us understand how you're N. I am will look like if rates get to 9% is clearer than consensus anticipate.
Speaker Change #295: What are the puts and takes here.
Speaker Change #296: The second question is I also wanted to get some guidance on how your cost of risk should moves going forward your.
Speaker Change #298: Your provisions to loans are running at around 6% on a last 12 month basis, what do you think the level should be in 2024 and 2025.
Thank you operator, and thank you for the question I'll take the first one and I'll, let alessandra.
Speaker Change #297: Second one so in terms of decrease impact from decreasing Felipe.
Speaker Change #299: We believe that our balance sheet is truly unique even though we have a differentiated funding structure, where frito sexual deposits, a very high representing roughly one fourth of our funding and exclusive with we are liability sensitive and will benefit from a reduction in selic at least in the short term.
Speaker Change #300: Put this into numbers for every 100 bps of selling with action, our NII growth around $20 million per.
Per quarter.
Speaker Change #301: What happened with a reduction of <unk> is that it will start playing out ill being visible in our NIM in the fourth quarter the.
Speaker Change #302: First reaction of hearing no host it takes around one month.
Speaker Change #303: So starting with pricing on the liability side.
Speaker Change #305: I mean, we do see every store change in the equation mix as we're continuing to growing in the higher we notice as I mentioned <unk> home equity and.
Greg: Greg <unk> and the lower yielding mortgages.
Speaker Change #307: So in these combined it is a positive but for US we do need a few quarters to that for that to be reflected and it is a key component to our backlog out of digitally.
Greg: Hi, Jorge Thank you for a question.
Speaker Change #306: When we think about cost of risk.
Speaker Change #308: Looking at the past we came from like by around 3% in $2024 16 per into 'twenty, one and now last year is when delinquency really spiked.
Speaker Change #308: In the macro perspective.
Speaker Change #309: We got to five four.
Speaker Change #310: And this year, so what we call the peak at $6 two in the second quarter. This quarter. We improved we came down to $5 nine and have a lot of actions as we have discussed here before to keep pushing it down So Disney Hall has played a factor.
Speaker Change #310: A lot of modeling based collection working a lot of the renegotiation discounts that Santiago mentioned before are also helping.
Speaker Change #311: Improvements in the cost of risk and the idea is to push it towards the neighborhoods of 5% in 'twenty 'twenty, four and 'twenty to 'twenty five.
Speaker Change #312: The indications that we have as we look to the newest the newer cohorts is that this is definitely a possibility. So we'll keep working hard on the collection implementing all the strategies that we can.
Speaker Change #313: To move it and to achieve this 5% level, which should be is very aligned with the 60 30 30 plan. Thank you.
The next question comes from Pedro Leduc from <unk> BBA. We're now opening the audio so you can ask your question lies please go ahead.
Speaker Change #314: Thanks, a lot guys for taking the question on the call feel the preparers have been answered already but I would like to dig in a little bit into what you've mentioned in the prepared remarks about some tag on them renegotiated portfolio that its partially explaining the nims at least visually can you remind.
Speaker Change #315: How how large it is how much it grew this quarter and which product line is there renegotiation concentrated in thank you.
Speaker Change #316: So thank you <unk>. So the impact was mainly on or renegotiation of delinquent credit card portfolios.
Speaker Change #316: That.
Speaker Change #317: Impacted in them.
Speaker Change #318: I mentioned, there are 25 million of her eyes.
Speaker Change #319: Difference versus where we had the prior quarter in the compression on the NII.
Speaker Change #320: And that's the name although we haven't.
Speaker Change #321: The positive side and the impact of the asset quality metric the cost of risk. It was a net positive impact on the bottom line.
Speaker Change #322: Can you remind us in terms of how large it is nowadays, but in your total portfolio or wood and credit cards. They are renegotiated a portion.
Speaker Change #323: So we disclosed the renegotiation and also our financial statements and it went up from one six to one 9%.
Speaker Change #323: Were they rotated this quarter.
Speaker Change #324: Thank you.
And the second question.
Speaker Change #324: That's correct and capitalization.
Speaker Change #324: We're not wholesale 0.6% to 9% the renegotiated them, all and let some windows of the bus in financials.
Speaker Change #325: Thank you that's very clear small number indeed.
Speaker Change #326: Second question, perhaps more for Ron litter on the U S expansion and others, a nice chart, where you have the product rollout schedule.
Speaker Change #327: And the two mill in the global accounts almost cannot tell us does our clients in Brazil that you're bringing to global accounts are already Onboarding U S clients itself in all Europe.
Speaker Change #328: We're also sponsoring a soccer team there I imagine it's part of the.
Speaker Change #329: The marketing rollout as well thank you.
Speaker Change #330: The book is on Peter here.
Look.
Speaker Change #331: As I mentioned before when we started back in 2016, who had a very good product to offer to the market. So the word of mouth helps us a lot to grow on the Brazilian market.
Speaker Change #332: Also we.
Speaker Change #333: We saw that by bringing these clients who had the best cost of fund that has helped us to underwrite credits indifferent.
Speaker Change #334: <unk>. This is the same thing the same pattern, we see in U S.
Speaker Change #335: Our expansion will have a very good product so far just to be clear, we're not there yet so we still need to fine tune the product to have some some of the verticals in Brazil that are not there yet but to believe that's maybe another one or two quarters, we'll have the product almost ready of course, we are always improving our product also in Brazil, but.
Speaker Change #336: I'm going to have everything almost ready.
Speaker Change #337: And I would say that next year will be more icon go to market phase.
Speaker Change #338: Faith or the U S market.
Speaker Change #339: A better product in place so with more word of mouth.
Speaker Change #340: Client adoption startup just burning cash.
Speaker Change #340: On packaging.
Speaker Change #341: Of course, we want to start on the easiest way. So we started by bringing the Brazilians are taking the Brazilians do you ask for them to to transact with our debit card to use our into shop it to invest in our anchor securities that to believe that with time no.
Speaker Change #342: We will be able to bring also Americans and and also Latin Americans.
Speaker Change #343: Individuals that live there.
Speaker Change #344: To use our products and we're very confident that by having our own.
Speaker Change #352: Our product as a company. So we can replicate the quite easy for our global App, because we have as I mentioned before our state of the art.
Speaker Change #345: Our framework will be able to to have.
Speaker Change #346: I'd say it may be one of the best.
Speaker Change #347: Financials, who perhaps in U S. As we do have in Brazil today, Duke so very excited with the outcome there.
Speaker Change #348: Our rents surpassed 200 million in deposits so.
Speaker Change #349: Again, I do believe that to have a.
Speaker Change #350: A bright future for U S.
Speaker Change #349:
Speaker Change #351: On the digital banking space.
Speaker Change #351: Thank you and successful.
Speaker Change #351: The next question comes from Thiago Batista from UBS, We're now opening the audio so you can ask your question lives.
Speaker Change #353: Please go ahead.
Thiago Batista: Yes, hi, guys.
Thiago Batista: I have two questions. The first one about the big finance.
I understand that the interest includes the financing side of the car.
Speaker Change #355: But I want to double check to confirm if that's the case and more important.
Speaker Change #356: If you can comment on the asset quality trends or what's the profile that we believe disposal.
Have a if this is better or worse than the average because of our laws and also if the behavior of the users of this is more to make our money transfer or to buy I think even in the chalk.
Speaker Change #356: And the second question.
Speaker Change #357: You mentioned already a couple of times that the numbers are is ahead of your budget or or I head off after what you guys are expecting to achieve the $2 seven goes.
Speaker Change #358: It's possible.
Speaker Change #359: So you're right that's the bank or we should achieve a double digits in the next year.
Alex: Hi, Thiago this is Alex. Thank you for question I'll start addressing the first the first part so when we think about <unk> credit. We launched this product about 40 days ago, along with it. We also launched a bullet dose with <unk>.
Speaker Change #360: In bold letters with the credit cards.
Speaker Change #360: No.
Alex: The approach, we're taking to the product is to restart from the lowest risk clients and expand through the highest risk clients with different pricing according to the risk profile.
Alex: We're in the early stages of the product. So we don't have yet the behavior of the delinquency, but our expectation is to have something very similar to what we have in the in the credit card the regular credit cards.
Speaker Change #361: Our job was wrong theater here just to complement on and as Chinas response.
Alex: <unk>.
Speaker Change #362: What's interesting about the big crash them fixed volume is that we're getting the best use of this very very innovative.
Speaker Change #363: Platform in Brazil called.
Speaker Change #364: What do I mean.
Speaker Change #365: The risk profile of the clients. The same so your job is doing a credit card transaction on a shopping mall or do not fixed transaction.
Speaker Change #365: Credit profile pretty much the same but the economics are better.
Speaker Change #366: So we don't need to use the whole payment scheme.
Speaker Change #367: To make that transact transactional at Gopro and that's exactly what we're doing that into shop, we have the same credit profile, but with a better economic. So every time that we embed a consumer finance such as <unk> can I ask Melissa to connect not only ecosystem you tend to have.
Speaker Change #368: Better monetization a bear a row on the upfront. So we're very excited with fixed crash too.
Speaker Change #368: With epic's volatile and also we borrowed buy now pay later at inter shop, but S. Alicia just mentioned right on the early days of that portfolio or.
Speaker Change #368: F. I always as you know, we're always taken a conservative approach and I'm sure that we'll be able to perform very well on this space going forward and now stacia will cover the question on the ROE for 2024.
Stacia: So thank you for the question. So on ROE, We gave two numbers in the Investor day back in January we mentioned that the North star is 30%.
Stacia: 23, seven and we mentioned that in 2023, which is year one of that five year business plan, we expected to have a mid single digit ROE. We are fully focused on closing this year until we close. These yeah. We're not gonna have you any numbers were shiny items at all in terms of what we expected to be doing for we do think that the fourth quarter.
Stacia: We'll be meaningfully more in.
Speaker Change #370: Profit dollars in the third quarter that will just basically a continuation of the trends that we're seeing from the first quarter to 1% that are we sitting on a half on the second one almost six on this one this despite the high excess capital led that pushes the there we met with them and we see the contribution to the fourth quarter. We have time to talk a little headway for later once we.
Speaker Change #371: Hills this year.
Very clear thank you all on a Saturday.
Speaker Change #372: This conference call is now concluded interest I our area is at your disposal chill answer any additional questions.
Speaker Change #373: You for attending today's presentation.
Speaker Change #374: Have a good day.