Thiago Bovolenta Batista: Good morning. Thank you for taking my question. I have two questions. One is I mean, it’s a follow-up question. My first question is about the insurance business. We could see an increase in technical provision, quite significant this quarter. But when you look at the details, you had BRL2.4 billion in additional coverage provision. Moreover, there are also other technical reasons. Last quarter, you used part of that technical provisions. I would just like to understand two things. If this was part of your income statement or there was something that was recurring and you wanted to reset, so what was the reason for that additional coverage? And now speaking about Mario’s question on capital, I understand that you said that maybe at the end of the year, your capital position will be similar that the one we have today.
Does that include any kind of arrangement in terms of the capital for the insurance company? Or I think in 2015 or 2016, you will get capital together with IOC. Is there anything included in this line? Or maybe historically you think that you could keep capital very stable? Because the portfolio, I think, increased by BRL1.4 billion, and you consume BRL1.3 billion in capital. So, it doesn’t seem ideal to keep it stable and maintain the guidance without any sort of arrangement in terms of the insurance company or IOC.
Unidentified Company Representative : I mean, to answer your second question, I will say no. I mean, you’re saying that you have an additional flexibility. We won’t even need to use it because we could even think about using it, but I don’t think we will need to. Our projection leads us to say that with great degree of certainty. What changed from last quarter to this quarter? The main motivation evolved two things: payroll. We had the payment of two important payrolls. And also, NTNP, which is mark-to-market bonds, and this is due to the natural hedge of our funding. And also, this is related to private pension funds, which is an important part of this range. So, these were two big movements. So, this was an one-off event. And the difference is due to the payroll payment I mean, to the payment of payrolls.
That’s why our projections and our growth curve is very much under control. I think we can also ask Ivan to answer the second question. But I would like to recall another point about the insurance company. This is something that we already saw in the past. Thiago said that himself, this is the part of the technical strategy. So, at some moments we had to do some improvements in the provisions. This was strictly technical and the provision has to do with all of the economics of the insurance business. Now, I would like to ask Ivan to edge to my comments. Ivan, I think you may recall the question. You talked about technical provisions. And whether that had any impact on our income statement and what would be that additional provision. So, Ivan, go ahead.
Ivan Gontijo: I think Cassiano already explained the technical view. I would just say that that increasing provisions is linked to an increase in the revenue of insurance and pension funds, special pension funds, and savings bonds. So that link in that increase in provisions is proportional to increase in revenues. And secondly, this is also due to the so-called product mix that we have. We have insurance products, patient fund products, and certainly, they demand an adequate level of provisions, always having a very conservative approach. And, Marcelo, you mentioned our provisioning, which is close BRL380 million, especially products like pension funds that increased significantly during the period. I would just like to emphasize that there hasn’t been any kind of recurring gain that could probably lead us to have anything different in our structure.
So, everything is business as usual and in compliance with the regulating agencies, because it’s important that we comply with our short, mid- and long-term agreements.
Operator: Next question from Tito Labarta with Goldman Sachs.
Tito Labarta: My question is on your funding. Looking at deposit based, providing this quarter and I know that we can see the narrowing related to that. We also have also seen a big shift from demand deposits to time deposits. Now that could be a function of rates. But just putting that in the context of the competitive environment that we’re seeing. Are you having to pay more to retain deposits than retain clients? And is that limit your ability to grow your NII, because you’re in order to fund the growth, you would need to pay more deposits? Is that how are you thinking about that? It’s about competitive [indiscernible].
Unidentified Company Representative: [indiscernible] actually got to liquidity ratio. It’s quite robust. And so, it’s been reducing a little because we have to balance with our credit granting. We have to optimize cash and cost. So, funding cost somehow continues to grow. It has a little bit to do with the reduction in LCR and credit consumption. Demand deposits continue to suffer, because as clients pay attention or their approach by our investment department or our platforms, they tend to look for products with more profitability. Our funds grew almost 20 billion and some of that comes from the movements of demand deposits and the savings accounts. Savings accounts have been dropping in the system as a whole. There’s always this discussion about savings, accounts, and CDI.
And this comes from the discussion with the Fintechs. So, clients look at differentiated opportunities. We have Agora, our experts, onboarding the channels. The app or Internet banking. And they one way or another observe this and provide opportunities to clients. So, we see this as a natural moment in the industry, but we have products with different allocations to different clients. So, with savings accounts and demand deposits, they are enough to maintain our strategy for rural loans or mortgages, real estate finance. Would you like to add anything? But, you know, in savings accounts, we had a market share of 13% and that increased to 13.1%. This is kind of the DNA of our clients. We have a savings account DNA. So, savings accounts tend to remain flat, but the non-floating products with higher interest rates have a trend to capture more clients.
So, we see this movement with the as being natural. And a lot of people have asked us about funding linked to changes in those what we call exempt securities. And the impact here is practically zero. First, because we have funding with exempt, securities that is being accelerated to purchase inventory, and then we have a natural replacement of these exempt securities by other bonds. So, the impact here is practically zero in our funding.
Operator: Next question from Eduardo Rosman with BTG.
