So under that, auto is primary and it’s still registering much better performance in terms of charge-off rate than we had pre-pandemic.
Orlando Berges-Gonzalez: What you’re seeing is the commercial side it’s behaving very well. So we have seen some of that reduction coming on the commercial portfolios. As you have seen on the release, the consumer side has increased in the allowance coverage only because of this trend. You mentioned a 1.7 or something in the call, I don’t remember what you’re referring to, but we can discuss more. We were above 1.7 if you were talking at our ACL, pre-pandemic. So we can discuss later if you want a little bit of those ratios.
Timur Braziler: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Alex Twerdahl of Piper Sandler. Your line is now open. Please go ahead.
Alexander Twerdahl: Hey, good morning.
Aurelio Aleman-Bermudez: Good morning, Alex.
Orlando Berges-Gonzalez: Good morning, Alex.
Alexander Twerdahl: Orlando, with respect to your NII and your NIM guidance, which I think you said is inclusive of rate cuts, what if we don’t get rate cuts? Is the repricing in the — on the asset side, you think sufficient to fully offset deposit, I guess, continued deposit pressure?
Orlando Berges-Gonzalez: I believe so, Alex. Remember that a significant portion of the pressure, again, on the way of pricing and the market was foregoing deposits. Rate stay where we are. It shouldn’t be similar — that repricing shouldn’t be similar to what we face in the past. The only repricing on the deposit side would definitely come from the maturing time deposits. Still that — that is a manageable one. But once you consider that the lending portfolio, it’s larger — it has a yield up of 7%, meaning on the commercial side it’s going to be a little bit less combined, but it’s still a very ample yield. And the fact that the investment portfolio, as I mentioned continues to run off, and it’s a very low yielding, we should definitely be able to still increase the margins, assuming those components.
Alexander Twerdahl: Okay. And then you kind of alluded a little bit to sort of the yield on commercial loans. Can you just give us a sense for — you know, like what sort of spreads are like down there right now? We’ve seen a pretty big pullback in the five year, and I think some bank managements are saying that customers are demanding that and others are saying that they’ve got pricing power. I’m just kind of curious, where you’re able to put on new production in Puerto Rico?
Orlando Berges-Gonzalez: The overall yields on the commercial portfolio, on the portfolio — on the general loan portfolio it’s about 7.73% (ph) as of the — for the third quarter. The spreads we continue to price similarly, which are based on market rates. So we try to sustain a spread according to internal profitability models that we want to achieve on each case, considering operating expenses and things like that. So you’ll see depending on the kind of loan and the kind of pricing, somewhere between 2.5% and 3.5% spreads. But it all depends on the terms and the nature of the facility. So over market terms, I’m assuming over market rates. So the consumer side, we continue to see on the auto yields above 8%, credit card, it’s priced out of a prime rate, so it’s — the 16% to 18% range.
And obviously, residential, we do exactly the same as you see on the marketing in the U.S. But we are not adding too much in terms of portfolio on the residential side. So the average yields on that portfolio are around 5.70% or 5.80% on the overall portfolio. And that should stay somewhere in there because of the movement of the new cases. The repayments are upsetting a lot of what we put in and the new things we put in.
Alexander Twerdahl: Great. Thanks. And then, I guess, just a final question for me, just as I think about capital and capital generation and really you — I think mentioned in your prepared remarks, third year of a 100% payout. And you think about the growth down in Puerto Rico, it seems like the growth that’s available, even though it’s picked up a lot is probably still not sufficient to utilize the full amount of capital that you guys generate every year. So is it fair to assume a 100% payout, with respect to dividend buyback in the near term should continue?
Aurelio Aleman-Bermudez: Yes, it’s a fair assumption. Yes, that’s correct.
Alexander Twerdahl: Perfect. Thanks for taking…
Orlando Berges-Gonzalez: We…
Aurelio Aleman-Bermudez: Okay. Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Kelly Motta of KBW. Your line is now open. Please go ahead.
Kelly Motta: Hi. Good morning. Thanks for the question. I may circle back to the loan growth side of things. I appreciate the color that you are budgeting or looking for mid-single digit growth, but it sounded like you were optimistic that perhaps you could do more, can you? One is that, was that the right interpretation? And two, where could you see opportunities to do better, or conversely where might there be more pressure?
Aurelio Aleman-Bermudez: Yeah. Obviously, the mix, if you look at the three prior years, we have achieved double-digit growth in the consumer. We expect that demand to reduce a little bit. Obviously, the larger the portfolios, the repayments are larger too. So when you combine demand and repayment, so we don’t see double-digit growth in the consumer world this year. On the other hand, we do have the construction portfolio. So we see, we experience mid-single digit in the commercial overall, when we add the disbursement that we expect next year in the construction. So that should actually be larger than that. And then mortgage, we see basically almost flat year, we have achieved in the most recent quarter. So definitely we look for opportunities to do better than that.
