So when I bring the operation of Chile, that is 9% and they consolidated here in Brazil, that delta capital, I do not need to reserve it temporarily, because this is a level of capital that my shareholder expect me to retain in the operation. When I allocate that cost of capital to 14, and 15, whatever the cost of capital it is, it’s very difficult for the profitability of that operation to generate value for the shareholders. So the logic of the value equation, you can see the Chile that works with the best profitability is when we do their consolidation, we have all the costs the cost of hedge, the capital index, capital allocation, per se. And the tax asymmetry that makes the profitability and division of the shareholder before is lower.
So it’s positive for the income, but it’s alluded on the ROE. So when we look here, we don’t have big opportunities outside of Brazil that can change that trend, or even in Colombia, or Chile. So our objective has been to improve and simplify and gain efficiency in Colombia, which is subscale operation in Chile, the operation is running in good thresholds of profitability of client centricity, the improvement, the investment that was only paying off after a few years, and we continue to be very comfortable with what we have. There is nothing, Argentina is, is something outside of the curve. And in Brazil, I mean, there’s always a regulatory competitive issue. What are the businesses that we can advance? And, of course, we have businesses that complement our offer.
We found smaller businesses that had complement our ecosystem, but we haven’t seen the opportunities that are relevant. And we’ve seen other opportunities, and we declined, because there wasn’t added value of the price wasn’t adequate. And we still look at the market in that sense. Well, I understand an opportunity to generate value we are open for that. We have M&A on M&A area that — the team that is highly qualified that is ever looking at the market, the mapping the opportunities. But our opinion is the opportunities, there’s more technological platforms, such as avenues that was approved recently by the central bank, and we can and they can complement our offers. And that’s why the ADL brokerage full digital that complements, also the partnership with Protus [ph], we are still active.
Whenever there is a good opportunity, we continue to advance.
Eduardo Rosman : Thank you, Milton.
Renato Lulia : Next question, Daniel Vaz. Welcome, I hope you have a great time in your new house. The floor is yours.
Daniel Vaz : Good morning. My question is also on capital. I know that it was commented in the question of Tito. But I wanted to understand in your capital overview that variation of the origination of SME that we’ve just seen SMEs, that represents the additional capital that you have, in your opinion, will it be — what is behind in more originations for the small and medium sized companies? Do you have any real movement seeing an improvement in the perception of the risk? Or actually these movements aren’t the adjustment of the origination? If you consider, that’s the first question. And last but not least in the renegotiation, we saw the stability in the quarter. I don’t know if there is an effect of the [Indiscernible]. But maybe this will be a good indicator looking at the head. Do you agree with that information of the renegotiations? How do you see this from the standpoint of the bank?
Milton Filho: Thank you, Daniel. First and foremost, capital is not an active restriction of the bank for growth. This is the main message that I wanted to leave through. When we do a capital plan, looking at the long horizon, we take into consideration the capacity of growing the portfolio within our appetite and ready to generate capital with our profitability level that we’ve managed to bring to the operation. Today we have the organic capacity for generating capital that is strong more than enough for growing the portfolios. So wouldn’t say that your capital is a restriction in itself. And the only restriction will always be at this moment always appetite until we well — how do we want to roll in which public the — which product with which deadline which product portfolio is the optimal one so we can at least get volatility through the cycle.
And this is the way that we working. Look at the volatility of the portfolio, wholesale and the more of a volatile moment. This is what we’ve tried to do with the retail portfolio. So we rather have less cycles of ups and downs and having a positive EPS with less volatility. This is what we try to do within a management at the bank. Capital is not an active restriction, but we the vision is to have that excess capital. We don’t want to retain more of that excess and what we niche for growing investment. We’ve talked about the capital allocation at the beginning. If we were working with a defined capital by the board of 11.5, have said one ROE would have been 24% number. So we have an ROE of 22 and with a capital level one of 13. And we’ve managed to act to remunerate and allocate the capital adequately.
