Milton Maluhy Filho: First of all, talking about cap, as I was saying at the very beginning, we still believe we have room to increase our capital base. Just to get your second question, then I go back. Yes, we decided to run the bank with a CET1 €“ core common equity of 11.5%, which is a little bit below of the 12% that we had in the past. Why is that? First of all, because, in the past, the most relevant negative impact that we could have in capital had to do with the FX rate. Okay? And for two reasons. First of all. the overhedge strategy that would generate a lot of tax credit and withholding tax and capital. And second, due to the operations, we have not only in LatAm, but dollar linked or other currencies linked portfolio, this brings a lot of volatility in our capital index.
So, having said that, when we took out the overhead due to change in the regulatory environment and also implementing the hedge for the capital index, we took out all this volatility. So that’s why we reduce our appetite, so we don’t need to run the bank with 12% of common equity, but 11.5%. That was the most relevant explanation for the decision. But more than that, we are very concerned about our ratings. So, we don’t go much below that. We could. Because we want to keep a very good standard of ratings, and are doing some local or international, more than that, benchmarks to understand what would be reasonable for us to keep in terms of capital. So, that’s why €“ so we believe that the most relevant impact for volatility is out of the table now.
So, the buffer is more relevant today than it was in the past even with this 50 basis point reduction. Talking on the operational side, this is very early to say. We’re not releasing a specific figure. But my view is that we may have something that could be around 100 basis points depending on how it is implemented. So, this is reasonable to expect. So as we see an increase in our capital for 2023, more profitability, the risk-weighted assets growing much less than what we used to be in 2022 and other major/minor impact, we still believe that we will be generating capital for the year end of 2023. Now depends if the operational risk will be implemented or not in 2024, but we are, of course, provisioning and planning the capital base of the banking, taking these in consideration.
This number, it’s very, very €“ 20,000 seat information, I would say. Just to give you a sense that, even with that, and with the capital plan that we have, we won’t be below the level of risk appetite of the bank. So, we’ll still be in a very well position in terms of capital base.
Renato Lulia: The next question comes from Gilberto GarcÃa from Barclays.
Gilberto GarcÃa: I had a quick follow-up on the complementary allowances. We thought that the they did increase quarter-over-quarter, but in a much lower magnitude than the exposure to the subsequent event. So is it fair to say that if it hadn’t been that €“ if that hadn’t happened, you could have released something like BRL 1.2 billion from these complimentary allowances? And then a quick question on your guidance for expenses, you have a fairly wide range. Is it okay to understand that if €“ let’s say, if conditions are challenging throughout the year, you could delay or hold off on some investments?
