So we’ve seen a stronger activity. But we can see that in the third quarter. The GDP will be published should be weaker GDP because of the monetary policy as expected to control the inflation. But we seen — we’ve seen the increase of demand on the origin nation. And we service fit very well with a great conversion level favourability great returns and well-priced operations. And when we see an exaggeration of pricing or market, we rather lose share, market share and defend our convictions on the long term. But the demand has grown and we’ve managed to service it in a very relevant way via capital markets, the numbers show that or the balance sheets are the big companies we’ve seen an acceleration in that quarter. Our expectation and it is that that will continue to be so in the long term future.
Renato Lulia : The same bank, different analysts. So we have with us, Nicolas Riva. Hi, Nicholas, good to see you. Thanks for joining the call.
Nicolas Riva : Hi, Renato and Milton thanks for taking my question. Nice to see you guys. So my first question is a follow up on the question that Mario just asked about the Argentina sale, which is really why sell now that business? So you sold for $50 million, you had an important loss on the sale BRL1.2 billion. I calculate about 0.2 times price to book on the sale. If you can confirm, actually that was the price to book on the sale. And again, why sell now that that business. I know Milton that you refer before to the fact that outside of Brazil for you, it’s difficult to generate, perhaps an ROE above your cost of equity and generate value for your shareholders. And then a quick second question, my initial question on the rounds on the ones on the Tier 2s the 29th, if you can, kind of can I know, whatever you do with the call is going to be been noted for market conditions and refinancing costs.
But if you can at least tell us, confirm Milton, that given that the Tier 2s the 29th start losing capital next year, it’s not called if the inclination would be if you will be more inclined to call even regardless of market conditions to some extent. Thanks.
Milton Filho: Thanks, Nicolas. Thanks for your question. It’s a very simple answer for Argentina. The NPV of this transaction on a economic perspective, looking from the shareholder view, is positive. And why is that? Because even though we don’t capture the full book in Argentina, between the announcement and the payment, there was a relevant evaluation in Argentina. And there are multiple sets in U.S. dollars, the $50 million, what could the transaction at fair value the way we were planning. Second, the payment was made outside Argentina. So how can I get the capital out of Argentina with all the discussions? So the acquiring company had the capability to issue bonds outside have the approval to pay outside? So we received good $50 million, was not a [Indiscernible] transaction, when you try to make a better price locally.
And the most relevant reason why we sold has to do with the CTA that generate these impact. The CTA, we’ve been accumulating for a long period. The net CTA in the balance sheet of the bank is positive when we consider the other operations that we have. But in the case of Argentina, due to the level of interest rate, it was a very, very huge impact. And we’ve been accumulating that for many years now. So what happens if we don’t do anything is that we will keep accumulating some negativity in the long run. And the profitability of the operation, together with the CTA was generating a loss in our balance sheet was not remunerating the capital, and we have to keep the balance to keep the bank to maintain the cap, the bank, there is a lot of costs of maintaining the structure, we have regulation aspects, we have to consolidate the operation.
So when you put everything together, even the cost of the hedge of the capital index, which was positive, the decision to sell was much less for the amount that we got in the operation stand alone, which was at fair value at $50 million, in our view the way we were valuation. And the second question, how do you do a DCF in Argentina with the cost of capital in Argentina? So do the banks trade at book value? What level of profitability you need to have due to the cost of capital which you are in a DCF get something better than book. So it was very difficult to do this DCF. So when we do the DCF, the price was fine. But in the other hand, we don’t have the CTA anymore. So it’s a stock loss on the CTA in our balance sheet, which brings us to a very positive NPV.
And regarding your second questions about the bonds, we will keep I know we’ve been telling that. We will be looking to the efficiency of the capital of our Tier 2, how much it costs, how much benefit brings in terms of capital, what is the cost of a new one, and our capital needs. So this is the way we are approaching every single maturity and every single call. And on the economic side, if it makes sense to us to exercise the call, we will. If it doesn’t, we won’t. But we’ll give clarity to the market of course before in a window where we have the confidence to give you more information. We’re going to be very transparent on that.
Nicolas Riva : Thanks. Very clear, Milton.
Renato Lulia : Next question coming from Carlos Gomez for HSBC. Hi, Carlos. Thanks for joining the call.
Carlos Gomez: Hello and thank you for your patience and for trying to reach every single question at length. So briefly, first I would like to ask you about the wholesale portfolio, where the NPLs? I mean we were expecting to see a normalization of credit cost this year. I think that’s fair to say for everybody. And it continues to be better than normal. Is that because they are coming later or they are not coming? And second, could you tell us whether you think the issuance result that you’re having today is sustainable, or it should be higher or lower in the future? Thank you.
Milton Filho: Yes. Hi, Carlos. Good to see you again. Thank you for your question. I hope we don’t see the NPLs, so we are not looking for them. But just to let you know, I think it’s a mix of things. Okay. First of all, we thought this year could be a little bit worsen in terms of cost of credit. And it’s been better than what we thought on the wholesale spectrum. But you have to remember, and you know, that better than most of us that the NPL in the wholesale, it really happens at the very end of the process. It’s very difficult before you go to the NPL, you do a restructuring, you do a negotiation, there are clients that go to bankruptcy, or to Chapter 11. And they are not to do with their obligations is still. So then they always not a very good index.
