Operator: The next question is also text question. This is from Mr. Jeffrey Auto from Jeffrey Auto CPA. Congratulations on your fourth quarter and full year 2022 results. I had high expectations and you have exceeded them. I do have a concern about your NPLs. In the fourth quarter, they grew from 11 million to 35 million with the bank largely involved in trade finance. Generally short-term, I’ll like to have some color on this. Is this result of the bank’s changing lending criteria, a mistaken oversight on the Company, industry or country lending activity? Is this a level we should expect to see with the volume in the bank is doing?
Jorge Salas: Thank you for your question. First of all, credit underwriting standards have not changed and will not change. We will remain very conservative. We did have an uptick on NPLs and it’s mainly due to one exposure in particular, is a non-banking financial institution in Mexico. That represents less than 0.3% of our loan book and it’s largely reserved by the end of 2022. We have materially increased the coverage after the Company announced Chapter 11 in Mexico last November. So, we’re really not concerned about our exposures in non-bank financial institutions. That is one of case in Mexico in our non-bank financial institutions do not represent more than 3% of our portfolio, and it’s mainly regulated companies or affiliates of financial institutions, and it’s mainly in Chile. So, we are we are not concerned and not changing our credit risk appetite.
Operator: Our next question comes from Andrea Atuesta from Bancolombia. I would like to have more color about what you were expecting in NIM and profitability in the rates begins to decrease but the expenses are stable. What will the strategy to maintain solid margins be?
Jorge Salas: Let me turn the call to, the question to Annie. Do you want to comment on rates?
Ana Mendez: Sure. Thank you. Yes, our expectations as Jorge already mentioned with respect to the NIM, what we see is, we still have to see all the re-pricing of interest rate increases in our assets and liabilities. So, in the very short-term, we expect net interest margin to continue expanding. Jorge mentioned between 2.2%, 2.4% that depends on a future fed actions and the re-pricing that we see in our balance sheet. After rate increases, hope they come to a stop. Like Jorge just mentioned in the previous answer, we are in the process of developing new structure products and tailor-based solutions that will enhance spreads and that’s precisely what our five year plan is about. So, we do expect is to that to be able to compensate rate increases.
And also as Jorge mentioned, we do not anticipate that interest rates are going to go back to 0% that we saw at the beginning of the pandemic. So more than normalize interest rates of around 2.5% to 3% the fed fund rates should remain constant. So, in our projections for ROE target of meetings, that is definitely contemplated. So margin expansion, new fee generating products and interest rates that in a normalized level should be about 2.5%.
Jorge Salas: I think Sam, our Chief Commercial Officer, wants to say if you’re worried about that, too.
Sam Canineu: Yes, I’d just like to reinforce that, even though might not be so noticeable within the numbers, but a big part of the increasing profitability that we face, we then facing quarter after quarter comes from, well, I would say this new layer of business that Bladex has been building that is a core part of our new strategy that comes from, if you heard our Investor Day to the various types of arbitrage that we were doing, both in terms of clients, financing different countries as well as all the structure trade finance, parts, supply chain, finance receivable, discounts. And this and that layer of business have been increasing quarter after quarter. And that comes with the higher margin. Same as new clients, new clients that we’ve been onboarding, and I think you have the numbers for last year, we did increase that substantially.
