Rodrigo Aravena: This is Rodrigo Aravena. Thank you very much for your question. So we have to consider several things. We are aware about the existence of different source of uncertainty on the political side in Chile, one of them is related with the constitution, as you mentioned before, it’s too early to anticipate one specific impact from the constitutional process. According to different surveys of the different options for or again the [indiscernible] are narrowing, but still you know that — there are some differences, but we have to see how it will evolve in the in the future. But despite that, that situation, we have to put also a special attention to the evolution of some reforms in Chile. One of them, for example, is related with taxes.
This year, and there was a proposal from the government, which was rejected in the early stages in the Congress. Probably, we are going to have some discussion on taxes next year. Also, Chile is discussing some changes in the pension system. Today, what is on the table today is increase on the mandatory saving rate by 6 additional [indiscernible] point, but note, how will be the distribution from that saving oriented to the personnel savings against a more solidary dealer in also we have to identify different discussions related to the political seat in the constitution, et cetera. But when we consider all these aspects, we are aware that the political, some sources of political uncertainty are reducing our expectations for investment for the next year.
So that’s why we’re expecting 1.7% of economic growth for the next year with a negative contribution for investment. On the other hand, we are more possibly for consumption. But all in all, the political uncertainty is one of the reasons that’s why we are still expecting a below-trend economic growth for for the next year. But it’s too early to anticipate any more accurate impact from the constitutional process, even though this is 1 of the 2 or 3 more relevant factors for the related with our expectation for the next year.
Pablo Mejia: And in terms of loan growth, so today, we’ve been growing quite well in terms of the areas where we’re focused on growing, but always taking inconsiderations a good relationship between risk and return. So we want to grow responsibly, so not only in market share. So where we have grown, which is where we are interested in is in retail loans. And in retail loans, you can see that we’ve been actually growing market share picking up market share this year in consumer loans, for example, we have close to 60 basis points higher market share, and this is an area that we’re very interested in growing. So if we look at — our key focus areas is the retail segment, which includes SMEs and consumer loans are the most profitable and the areas that we want to continue growing.
In terms of areas that we’ve had lower dynamism in the past has been corporate loans. It’s an area that — we would like to continue being there. That’s an area that will continue growing. The demand today isn’t there. So what we’ve seen is a much lower demand in this area, but we think that we can return to growing in in this product. If we think of next year expectations of loan growth for the industry and us, the industry, we’re expecting somewhere around the 6%, 7% nominal. And our intention is to grow above that in terms of market share. responsibly. And we should continue growing in this key area that we’re focused on, which is the retail segment, especially in consumer and SME loans.
Yuri Fernandes: Pablo, anything special you’re doing in retail, like we see some peers with partnerships with retailers like we have retail banks in Chile also growing in certain areas of retail, right, on credit cards. Are you doing something in particular, I don’t know, like on SME, do you have any special approach. What are you doing to grow on the retail side of things?
Pablo Mejia: We’re implementing different commercial strategies in order to improve the relationships with customers and offer different products and services through the channels that the customers are demanding and having the appropriate appropriate marketing campaigns are directed to each one of the customer segments. And what we’ve seen by implementing this strategy is stronger growth levels and originations across our — the retail product segments. For example, mortgage loans had a very strong growth in terms of originations versus last year, thanks to this approach of these proactive strategies in order to try and grow in certain segments that we’re interested in. . So it’s a lot of internal changes in order to improve the commercial strategies, implement the best practices across all the branches and employees in order to drive growth.
at the customer level and to use the digital accounts to continue increasing the customers available that we can cross-sell to other products and services. So the digital accounts are very important for us as well. And we’ve seen a very high cross-sell ratio and growth in terms of other products and services from these customers into the bank.
Operator: Our next question comes from Mr. Ernesto Gabilondo. Please go ahead, sir.
Ernesto Gabilondo: Thank you. Hi, good morning, to Rodrigo and Pablo, my first question is on your reserve coverage ratio. So can you remind us how much additional provisions does Banco de Chile continue to have. And when do you expect to have a more normalized level in your reserve coverage ratio? My second question is on asset quality. So you’re guiding a cost of risk of 0.9% for ’23. So how should we think about this ratio for 2024? And my last question is on your effective tax rate. How should we consider it on the lower inflation levels?
Pablo Mejia: So the coverage ratio that we have today is close to 3x long-term levels is closer to 2x. What’s driving this high level or higher than peers’ coverage ratio, is — we have a large — we have the leading level of additional provisions in the industry. You can see this on Slide 16. And this amounts to CLP 700 billion. So it’s reasonable to expect in the long term or the medium term that we should probably return to levels similar to what we’ve had in the past, which is closer to the 2x. The second question, can you repeat the second question, please?
Ernesto Gabilondo: Yes, of course. Second question was on your cost of risk. So for this year is 0.9% — how should we think for 2024?
Pablo Mejia: So cost of risk. We have to continue to see in how the pandemic and customer behaviors affect the long-term behaviors in terms of repayment and payment behaviors and as well as how the evolution of the economy continues. So if we look at the baseline scenario that we’re expecting is is below trend growth, I would say, below 2%, as you saw in the presentation, and this should translate in — and to a level that should slowly be returning to the long-term levels that we’ve seen in the past, which is around 1.1%, 1.2%. And for cost of risk. So we’re — we think that’s a reasonable level, but we always have to take into consideration that we have to see the permanent impacts of the pandemic and customer behaviors and the evolution of the economy in that figure.
Ernesto Gabilondo: Okay. Understood. So 1.1%, 1.2%. And if you release provisions, could it be more at 1% or that the 1.1%?
