Milton Filho: Well, I like to dream, I always dream big. And this is a bad set, we will continue to trail. Looking at the ROE. Well, clearly speaking, we still see quarters that are very solid, very consistent. You have determined of the year, another quarter, right. So how do we — since we affirm in the guidance the guidance has predicted the result of ROE above 20 of course, we are reviewing the numbers for next year. There are elements well known, and those that we use, because of the budgeting looking up ahead. And there are the elements that are unknown. There may I always have changed regulatory change that is positive we are considering that. We believe I’m not going to anticipate that the profitability level that we are operating seems to seems sustainable looking at the horizon ’24.
Of course, there are levers on both sides, but ballpark, we can imagine I would say 20%, close to 20% seems reasonable, we would have to naturally look we are tracking the numbers here. So we can have more long term vision. But you say that it was ’24-’25. I’m not, I cannot give you guidance on that. It depends on the FY the budgeting and the market conditions. But the dream is there, as you mentioned, and if there is an opportunity to improve without the management that was done with profitability, value creation, but now remember, I digress. We’re going to have a cycle of reduction of the interest rate. And it’s important not to look at the ROE. Are we isolated from the cost of capital, because if the interest rates are going to drop, because we mentioned that they’re going to drop, what’s going to happen is that the cost of capital is going to drop as well?
And the level of profitability tends to follow suit, there is a correlation not so big, we see that the sensitivity is less than the select rate. Of course, it doesn’t — the select maybe cost of capital is dropping, then you start to work with the price more competitive. And when we see as a delta ROE where the cost of capital, which is the value creation, and we’re going to continue to deliver that with our best expectation for 2024 we really believe in that. Now, going back to your original question, it was sorry — okay. Payroll, payroll, let me confirm, Federal Bank stated that the cap problem week three week that the market, the rate, whatever is defined by the competition. There’s no need to place a cap because the rates practice on average, they end up being within the caps.
And the market is dynamic. I mean, during this series of players, banks, big banks, medium banks, small banks that work with payroll alone, and the market is very competitive. Problem is that cap looks at the SELIC rate in an isolated way. And it doesn’t look at the long term curve. What we’ve seen over the last few months is that it’s only drop, but because of what happened abroad, and the fiscal uncertainty, the interest rates in Brazil increased the long terms. When the loan interest rate goes up, you end up losing the capacity of originating new credits because the rates of return are not adequate. Once you get the cap, you remove a population of the banks that stop having access. What Federal Bank published BRL2 billion of production monthly production left the market.
So BRL2 billion letters of credit for retirees in the cheaper credit line. So you’re trying to get efficiency in regarding just select, but you leave outside a very relevant and public that has access to more expensive credit lines. And you hinder them, because you had a better off credit offering, you will have two possibilities for the distribution of the payrolls for the person that are in the bank but with the correspondent bank, which is important for the payroll though, the only way that you can make a profitable product is making adjustments. And every bank has payments, and some officers are going through larger difficulties. And you have to consider — when you consider the commission for the corresponding bank and the price, you end up reducing the public that you have the capacity to offer the payroll bonds.
So the portfolio end up suffering 40% of our production is with the banking corresponding, 60% was — is in our network. And in the past, it was the opposite, but with this change in the dynamic, we are removing a lot of costs that are not paying for itself and unnecessarily the cost is dropping for the one that takes the payroll along. And you end up making them having access to more expensive lines. And this is the difference of FEBRABAN is we believe that the cap is not the best way. We have to look at the long term interest rate, and that the reduction of the cap isolated following this a leak rate drop is not the adequate way of managing the cheapest and most access line for retirees. That is a success, and that the market has always seen with good eyes.
