With that, I will stop and let’s start the Q&A. Thank you very much.
A – Camila Toledo: Thank you, Mario and Gustavo. We will now start the question-and-answer session. [Operator Instructions] Our first question comes from Thiago Batista with UBS. Good morning, Thiago.
Thiago Batista: Good morning, Camila. Good morning, Mario. Good morning, Gustavo. Good morning, everyone. My question refers to loan origination. In the fourth quarter, we saw that the bank had a strong origination in the auto segment. I think it was the best quarter ever in terms of vehicle origination. And we also said that the bank is already issuing cards with a good evolution in the portfolio. So this return to origination, is it something that the bank feels comfortable to go back to several segments or you still see a concentration in high income alone or income to mid income? How do you see origination in the Santander portfolio?
Mario Leão: Thank you, Tiago. It’s a pleasure to talk to you. We’ll start and then Gustavo will just add. We’ve been talking to you in a very linear and consistent way, meaning that throughout the years, we’ve been very selective in terms of the portfolios that we would accept to keep them flat and CP and pure CP was in that category. The most, I mean, the cleanest and the more direct loan, especially if you look at average to low income, we knew that for two years these portfolios would be flat or maybe down. And this would be compensated by other businesses. Some of these portfolios, I mean, we are investing in CP FGTS and personal loans and cards. I mean, we are focusing in all income brackets. Of course, we are looking at high income considering the bulk of Select.
But in the payroll area, that’s a very good leverage to get to know clients better. I mean, we are not doing payroll just now. We have been doing it for the past few years. But in this past year, we saw a clear evolution in terms of our capacity to understand it better and to make that a more loyal client. And then with that, we could sell like cleaner products for low and mid income. And so payroll is a very good example that justifies that. Other products we have been growing starting in 2023 and more aggressively in 2023, 2022 and 2023. But today, I mean, we still have that. We are still in that comfort zone that we had before in the same portfolios that we are growing in 2022 and 2023 like payroll, agribusiness, large corporate. We never stopped growing.
It was just a matter of profitability. But since that second half of the year, we also started growing in other portfolios like consumer finance, small and mid-sized companies were two portfolios that we decided to step in the break. We could have been more aggressive, but we chose to take care of the portfolio we had, take care of all of the origination assumptions so that starting June and August, we would put more emphasis on that. So we start 2024 with the idea of maintaining what was growing and consolidate things that were started growing in the second half of 2023. And in the customer base that we are operating, but we are careful enough to do that with the right clients, not seeking what the growth we had in 2021, but we want to grow in these lines as well.
So come 2024, we will have greater diversification with different products, etc. I hope I answered your question. Yes, thank you.
Camila Toledo: We now have a second question from Gustavo Binsfeld [ph] from Goldman Sachs.
Unidentified Analyst: Hi, Tiago. Hi, Camila. Can you hear me, he says? My question relates to provisions. During your presentation, you said you did not see any deterioration throughout the quarter, but when we look in the long run, you have been posting two years of high provisions. So what is your view towards 2024? Do you believe that is a year of transition for the cost of credit or you see a trend towards normalization? Also, if you could comment on the corporate segment, there was a very specific case in that past quarter or whether you see any other specific one-off case in 2024.
Mario Leão: Okay, I will start and then I will give the floor to Gustavo. Your question has two parts. One is the cost of credit and the other is the absolute value of provisions. Okay, during the presentation, and I would reinforce that again, is that we have been posting improvements in the cost of credit, I mean, in the factor, in that percentage. We have been posting an improvement in that line. So we still hope that this figure continues to improve going forward. So cost of credit has been improving, especially in this last quarter, once you remove that very one-off event, and Gustavo can comment on that. So we still expect further improvements. I mean, even though we are not going to give you any guidance. Allowance for loan losses, of course, there is the effect of the cost of credit per se.
So when we accelerate the portfolio as we have been doing, starting the second and the third and fourth quarter, and we hope to do the same towards 2024, I mean, with a better portfolio, our ALL, we just move along in parallel. But we just hope that the cost is lower when compared to the average, but we continue to pursue a lower cost of credit. So ALL has a behavior that talks with the cost of, talks to the cost of credit. So by the same token, cost of credit, we continue to go down. So yes, that’s precisely it. And you asked about that one-off case in the corporate world. We understand that there wouldn’t be any other relevant cases. We look at every case individually and we make the necessary position adjustments. So, looking forward in 2024, we don’t see any relevant event in the corporate world in our portfolio.
Unidentified Analyst: Now, Brian Flores [ph] with Citibank.
Mario Leão: Welcome.
Unidentified Analyst: Thank you. Thank you for the opportunity to ask questions. One about efficiency. How should we think about the income ratio? Close to 23? Close to 22? And in your view, what line should contribute more in attaining your goals?
Mario Leão: I’ll start and then I’ll turn the floor to Gustavo. Brian, thank you for the question. And for the opportunity to speak about income and expenses. There are two drivers here. Undoubtedly, we want to expand. And I started my conclusions talking about revenues. So, of course, we are super focused on expanding, but expanding the revenues line item in the right way. We want to grow our revenue, which is the strength of our franchise, which is measured in the top line. We want to grow our revenues consistently. It will never be linear. The world is not linear. But we want to grow the top, the revenues line. And I want this to be sustainable. I don’t want to have hiccups in revenue. I don’t want to have regrets. Of course, we can make mistakes, but we are careful to grow in the right way in each one of the segments, in each one of the product portfolios.
So, part of the answer is yes, we want to expand revenues. In terms of revenue, of course, we’ll have some increase in expenses. I don’t want to give any guidance, but it is only natural because the business will require more volume, more expansion. We are hiring people as we speak in some of the sub-segments that we are specializing in. I mentioned mid-income and small companies, small enterprises. We are specializing even more. And that requires more people. These are individuals or companies that need to be covered by people. We want to be truly multi-channel, omni-channel. So, in some lines of expenses, those will grow. But the question is how will we fund those in the last quarter? We had to have a turnaround in mass retail. We had to reduce our base of expenses materially between 30% 50%.
