So here we need to be very careful with that the government has that we hear. That message already arrived, Federal Bank positioned. We respect the decision, but the impacts are presented as we shown.
Gustavo Schroden: Thank you. Thank you, Milton.
Renato Lulia : English, we have with us Jorge Kuri from Morgan Stanley. Hi, Jorge, good to see you. Thanks for joining the call.
Jorge Kuri : Hi, everyone. Thanks for taking my question. I wanted to go back to the credit card regulatory inquiry. I appreciate Milton’s comments about how this has opened up a discussion about the card industry and know the different puts and takes and it feels that everyone’s more educated on how the whole ecosystem works. But at the end of the day, the reason the interest rates are high is because you have all of the policy levels. And so it just feels that any outcome that cuts rates without modifying the [Indiscernible] will be artificial and not really move the business forward. So and we’ve gotten mixed signals from the government, the central bank has commented that they’re open to it, but the finance minister has said absolutely not.
And so where do you think the current thinking is, among decision makers, the people that ultimately are going to have a say in these on reducing the [Indiscernible] regulating the [Indiscernible] facing them out tightening them a little bit? And, so that’s, that’s question number one. And the second is, if, if that just doesn’t happen, because it’s not palatable from a consumer perspective and the negatives that that may have on consumption, and this is a popular government. How does that leave you if then the solution is just as simple as okay, but we’re not going to move any of the different moving parts other than rates, and we’re going to put a cap that is equivalent to 100% interest rate, interest payment over the size of the loan, kind of like what the law currently stands.
What does that mean for you in terms of the growth of that business, the profitability of that business? How many cards you’re going to have to cancel, because evidently at that, those level of rates, some of those are just not good businesses. So I really wanted to get more details rather than just this overview of everyone gets it and we’re having this nice conversation. But it’s a pretty simple thing, either you got the [Indiscernible] or the outcome for the card issuers is going to be bad.
Milton Filho: Yeah. Jorge, I’ll take you with me in the next meeting with the government because I really believe that you understand that it’s very difficult to explain. I think the government understand the central bank understand, but it’s a complex topic. It’s not simple. This is something that the country has been working with for many years now. And it’s very difficult to introduce the concept that to show people, what are the real impact, as you were saying right here. So being very objective, I have nothing to say, different than what you said at the very beginning. So we know that there is a disequilibrium. There is a way where the risks are not priced accordingly. We have BRL127 billion credit card portfolio out of BRL20 billion is paying interest.
So how come? How can you bear the risk for BRL120 billion portfolio, and only BRL20 billion paying interest. Who pays the interest at the end of the day, is the less capable population and the delinquency as you have a solution adverse selection is very high. So you have to charge very high interest rates. So if you asked me what we believe, we do believe that the government needs to understand that the [Indiscernible] bear interest. It’s only a communicational issue. That’s all because it bears interest. The acquiring company anticipates to the immersion, immersion in embed the interesting side, the good and so there is no [Indiscernible]. But people believe that there is no interest at the end of the day. So that’s why the communication comes like that the narrative comes like that.
And people believe that because they don’t understand and say, look, I have something and who pays that. They should bear the risk, they acquiring companies anticipate and get the anticipation profitability, charging the SMEs are risk that they run at the end of the day, that is Itau, Bradesco, Santander, Nubank and all the other banks. So this is the risk that they bear. So our view is that if we don’t look to the international market, and we do a composition of rebalancing the [Indiscernible] reducing [Indiscernible] creating the [Indiscernible], where you transform that in a way to finance the clients at a very, very competitive levels, 4% per month, you can do that with the [Indiscernible]. And also, you make a way where you can reduce strongly, the rate on the [Indiscernible] on the revolving credit, where you can charge from these people are very, very lower interest rates.
So what’s the problem we want to solve? We want to help the population and make the transition. Just to give you a few numbers, let’s say that we have a capping interest rate of 8% in credit cards the same way we have in the revolving credit in the current account, overdraft. If we have this 8% we have to cut the country as a whole 60 million credit cards, 60 million credit cards needs to be abandoned. And also you might have an impact of BRL350 billion consumption because you take these people out of the consumption market, you will have a very huge impact in the population that was included in the financial system, they will be excluded from the financial system. Where they will finance themselves, how they will buy how they will be part of the system.
