I mean, there’s a number of things. And to your point, the longer litigation goes and to the extent that our partners and us say, hey, let’s go take some early actions and in anticipation this could happen to get further along that mitigation curve, the value curve. Yeah, that could provide some near-term benefit, but in that my expectation would be with partners, there’s — there could be some partner sharing, investment program in different ways. So I don’t want to say there is a boost, because our goal is not to benefit from pending, what we call, detrimental flawed rulemaking.
Mihir Bhatia: Got it. Okay. Thank you. And then just switching gears, I want to talk about credit performance. Obviously, the two-part question. First is, are you still comfortable with your longer term guide through the cycle below 6% and how do you get there — what gives you confidence you will get there, I mean, delinquency. Do you think it’s exiting 2024 thing, exiting 2025 thing, like, I am just trying to understand what the thoughts to get there looks like? Obviously, the credit tightening actions help, but just trying to understand the path? Thank you.
Perry Beberman: Yeah. I am confident that we will get back below 6% and some of its math. And so, the timing by which we get there, you would have to tell me your confidence in the economic outlook and that’s going to be part of a driver. So when you look at any past cycle, what happens is, you have a period of elevated losses and the losses, the higher loss rates and we are living through right now we have just provided guidance that we have a lower loan. So you are putting on the lower new account vintages. Now they are going to be better credit quality and but they are not large enough to replace what’s a trading through higher gross losses and normal attrition. But then as you come out the other side of the cycle, when you have an economic improvement.
Now the losses have cleansed or the riskier customers are cleansed out of the book, you are putting on larger new vintages and that — I will say that growth math a lower loss rate and now you are in a better economic cycle. Coupled with for us, you are also continued a product mix shift. So we have very good confidence that we will get there. Now I can’t pinpoint the quarter or the year, because a lot of it is the economic improvement that needs to occur in tandem with that.
Mihir Bhatia: Got it. Thank you. Thank you for taking my question.
Ralph Andretta: Sure. Thank you.
Operator: Our next question comes from the line of Sanjay Sakhrani with KBW. Please go ahead, Sanjay.
Sanjay Sakhrani: Thanks. Good morning. I don’t know, Perry, Ralph, I guess, when I think about the late fee impact as it stands right now. Could you just talk about maybe like, what you can do to offset this on expenses, because I understand like the APRs probably take couple of years, right? So in the absence of some kind of delay or deferment, it seems like next year if everything sort of static, you could actually lose money or please correct me if I am wrong, unless there is some expense offsets and some of the offsets sort of flowed through quicker than what we think. Maybe you could just talk about that plus the fact or the question as to how — can you get back to the profitability levels that you were at pre this regulation over time and sort of what the time horizon would be?
Perry Beberman: Yeah. Thanks, Sanjay, for the question. I think your question is one that is again we will go hypothetical, because the rule is not final and where it lands, we don’t know. In terms of the expense management, I think Ralph has been pretty clear and we have all been clear, we are to continue to invest in this business for long-term and not make short-term decisions that would adversely impact the business and really put us at a competitive disadvantage and not be able to serve our customers with digital capabilities, our brand partners with what they need as well. So, I think, in terms of expense efficiencies, that’s in our DNA, right? So that’s the thing where we talk about operational excellence. Our continued focus on improvement you are seeing that come through in the second half of 2023 results, you are going to see that in our commitment into 2024.
But there’s nothing that would be appropriate to do to rip down expenses that would cause sacrifice of our future. There’s so many things you have to work through and you got to work with the revenue side of this while you are making tighter underwriting changes, we will clearly accelerate things with its digital capabilities and mobile deployment things that help improve expenses, but you would do that anyways at this company. But it’s just one of these things that you just have to, as Ralph said, you got to work through this, it’s — and some it will result in tighter underwriting, sure you will have some maybe have fewer accounts. So that gives you a little bit of expense boost, but it is grinding your way back through the revenue side of the equation, and perhaps, there is less risk in the portfolio.
So you have lower losses, you have less provision build or low reserve rate. All of this is going to play out. You need the final rule and we need to work with each partner to figure out what are those mechanics going to look like. So we understand the resulting, I say, front book coming out the other side. As a result, is your comment around getting back to returns, it is possible the returns to be a little lower than they would have been pre-CFPB, but expect strong returns, because you would have a less — slightly less risky business in that process, too, because a number, Americas and consumers will no longer have access to credit that were on the riskier side of that spectrum.
