So in that sense, you’re going to see that it’s going to perform well. And also, as credit picks up, that’s also going to help us in the fee revenue. That’s basically what has been one of the ladders that fuel revenue. The seasonality in the U.S. has always been like that. I mean that’s basically the way people perform in this particular market. I mean, it’s a little different than it performs in Europe. And in that sense, it’s always been marked in the third and the fourth quarter and normally becomes a lot better when people get more money during Christmas and start to pay us back, et cetera. The dynamic that I basically explained given that there is a very strong second-hand car market in the U.S. and also that people basically don’t want to refinance their cars or don’t see the availability of loans on cars for the next few months that basically shall help us out, and that’s why you see better numbers, and I don’t see the cost of risk going beyond the 200 basis points.
And Jose gave you a very good explanation of how was the level of the cost of risk before and what is it today, and we expect it to continue. And also the change of mix is helping us out. So it’s very important for you to understand that, but this is the way the market has been always and you can see it if you go all the years behind. In terms of the reporting changes, we’re going to continue to basically show the countries as a secondary segment. So you will continue to have that information. I don’t know, Jose, if I left anything out.
Jose Garcia-Cantera : No, no, no. I think we will report as we manage the bank. So we will report these horizontal businesses as the primary segments, obviously. But we will continue, as Hector said, providing all the information from a country-level upwards, so you will be able to see the country’s performance organized by these businesses and the global performance organized by country. So you will be able to have both views at the same time. Thank you, Carlos.
Operator: Next question from Alvaro Serrano from Morgan Stanley.
Alvaro Serrano : Sorry for earlier. A couple of questions. One is really a follow-up and thanks very much for your steer on provisions for 2024. If I can sort of take advantage of — given you opened that door, in the context of what we’ve seen in the U.S. within that flat provision, what directionally or a bit of color on what — how could we expect the U.S. evolve in 2024? And in particular, I took note of your data on repossessions now at 60%, 65%, it was 58%. I think you quoted that number earlier in the year. How quickly do you think the repossessions are going to go back to historical levels? Because presumably this is savings, COVID savings and now you have student loans picking up, is that something we’re going to see sort of going back to historical levels already in 2024?
Or do you think it could take more time? Just want to understand how you’re thinking about the U.S. within that flat group context. And the second, hopefully, easier one is on the U.K. You’ve done pretty well considering some of your competitors in the U.K., has been a bit of a car crash. Can you maybe talk about the outlook there, specifically for U.K.? Given what we’re seeing in the market, pretty tough competition on deposits. You had your own offering out in September. So maybe you’ve got a bit more visibility now for Q4 and 2024.
Hector Grisi : Yes. Thank you, Alvaro. Actually, I was expecting your question on the U.S. So let me give you exactly what is the important different dynamic that car has to the loans and different things. The car in the U.S. is quite interesting. It’s not as in Europe, as in Latin America. Actually, people in Europe and Latin America pay first the mortgage and then the auto loan, et cetera. In the U.S., it’s the other way around. The U.S., if you don’t have a car, you don’t have a mean to go to work or to move around. I mean you’re completely isolated. So the behavior of the auto loans in the U.S. is completely different to anything you see because of this particular issue. Without a car, you cannot work and you cannot generate money.
So that’s exactly why the performance of the portfolio has turned it in that way because people basically take a lot of care to that. And that’s exactly why the behavior of delinquencies basically are performing that well. I mean, normally, if the economy complicates, you’re going to see that number of 60% to 62%, 63% maybe going up. Let’s see how the U.S. evolves. And if we have a soft landing or not, that will all depend on that. Also, it’s important to acknowledge that we are changing the mix of the portfolio, as we have said already. So that’s quite important because we are much more concentrating with the funding that we have from our bank to be more in prime and in near prime. And even though we will continue to do so prime because it’s a business that we know well, and we manage pretty well in the terms of risk underway, but we are trying to change a little bit the mix of the portfolio.
And also, we are offloading some of that risk through asset sales, et cetera. So it’s quite important to understand that we are being very cautious about that. I’m very cautious on the way we’re managing cost — sorry, cost of risk. So I hope I answered your question correctly. And then on the U.K. The U.K., as you have said, we have performed well. We’ll end up having a really strong year. We are working really hard to follow a strong strategy in terms of cost. We are also, it’s very important, advancing of One Transformation. We believe there is a huge opportunity there, leading to probably — and the U.K.’s leading probably to its best year in bottom line. But it’s important that you see that there is an opportunity there in transforming and decrease the cost that we have in that country.
So I really do see the U.K. with a huge opportunity. I’ve been spending a lot of my time there because I believe there is opportunities. NII has grown year-on-year 9.3%, is driven by higher rates, as you know, and a strong — what — we have a really strong focus on managing the spreads and profitability. So you’ll see that we have been lowering the portfolio debt because we’re very focused on that. You see that in Q3, I mean, we are, as the rest of the market at 2.2 [ph] both — and we are offset — offsetting the increased cost of the retail funding and a slowdown of new originations by basically playing that and also using a different mix of the portfolio and trying to see other opportunities. It’s important to tell you that we are putting profitability ahead of market share.
And we have lower risk appetite, as I told you. And we believe that we could have a NIM expansion by doing that.
Operator: Next question from Andrea Filtri from Mediobanca.
Andrea Filtri : Yes. First question on — if you can remind us of the Brazilian interest rate sensitivity? Second question is a follow-up on several questions from colleagues. If you can actually give us a concrete indication of the structural tax rate in Brazil and in the U.S. in light of the new electric vehicles leasing that you’re doing? Is this a structural move or it’s just a one-off that we’ve seen? Then on capital, given that you are confirming your 15% to 17% target with a 15% for this year, should we not see also a natural acceleration in the organic capital buildup that you should be able to generate? And finally, digital euro. What do you see as risks and opportunities from the digital euro implementation? Have you budgeted the impact to your business model and can you share it with us?
