And therefore there is a lower cost of credit, which can help us along through the time with the NIM that is better. On the other hand, we did with the derisking better clients’ lower risk and lower profitability. So even though it’s generating value adjusted to the risk we’ve had margins that were lower, because we’ve worked with profiles of companies and individuals with more affluent and a better level of risk. So with contribution margins are lower, but we are still positive in regards to the NIM. And maybe keep what we are operating or maybe this is something that will happen, but it depends on the macro scenario, and the future risk factors.
Rafael Frade : Thank you.
Renato Lulia : We have with us Tito Labarta from Goldman Sachs. Hi, Tito. Good morning. Thanks for joining us.
Tito Labarta: Hi, good morning, Milton and Renato. Thank you for the call and taking my question. A couple of questions also shifting a little bit more to capital. Now you showed some nice increase in your core Tier 1 above your minimum. And you’re doing good ROE. How do you think about potentially increasing dividends? Also yeah, just thinking about loan growth, right. 6% to 9% of guidance for this year. How do you see loan growth evolving from here into next year is asset quality seems to be getting better interest rates potentially coming down? Could you accelerate the loan growth into next year? And how will that influence potential dividend payouts just to kind of to give capital and loan growth time to next year?
Renato Lulia : Okay, Tito Nice to see you. Again. Thank you for your question. I start to say that we are taking the full benefit on the interest on capital on a running basis. So we expect this year a minimum dividend payment of around 30% this is where we are when we consider the interest on capital. On top of that, we are still expecting the regulation on operational risk Basel III. We should have information about that in the coming weeks. I would suppose that this month, we would have the view of the new regulation and with that we can do our planning of the capital need to run the business because the operational risk will be implemented in 2025. And we still don’t know how the phasing we work out. The good thing is that our capital generation has been improving, as you know, but we want to approve by the end of this month in November in our board of directors, what direction we’re going to go, and what are the alternatives we have.
And we have a few, we should or we can increment the dividend, we can repurchase shares. So there is a mix of things that can be done. And these discussions will have by the end of this month, if the regulation on the operational risk comes up, and this is our best guess now. With that in mind, our view is that we could, and we should have an increase in our dividend and/or repurchase of shares will depend on the alternatives that the board will take in consideration. We will have and make a proposal by the end of this month. So we believe that in the coming weeks, we should release new information to the market with that respect. And talking about growth, portfolio growth, I would say that we are right now planning 2024 we should have the guidance, then releasing the numbers of next quarter by the beginning of next year.
We’re still working on that the same way we did looking to the portfolio’s that we want to have in the long-term, understanding how to manage the portfolio to balance that in the long-term to be more resilient through the cycle. And this is the discussions we’re having now. I cannot anticipate that because we didn’t finalize, we still have some work to be there. So far, whenever we have this information available, we will share with you Thanks, Tito.
Renato Lulia : Going back to [Indiscernible] English. So now we have Rosman from BTG Pactual.
Eduardo Rosman : Good morning, everyone. I’d like to talk about valuation and your opportunity for M&A. So I want you to get the opinion, Milton, on the valuation of the bank in the world the ROEs are positive, most of the geographies, nonetheless, the valuations are very cheap because in the past, it was very low. And we didn’t know what was the real book and what was the ROI? I think that Jamie Dimon had complained about the deficiency of capital in the United States. In Santander, it talks about the unfair competition with players or a non-banking players. So what is the challenge for the sector not only in Brazil? Have you discussed with other CEOs all throughout the world about this? And maybe to understand from you do you see this as an opportunity to have capitals, excess capital as your question?
You have a sub optimal operation in Colombia, Chile, there is a space so you can be more relevant. So would it make sense to use some of that capital to eventually maybe purchase banks in the region? I think therefore, the bank is always challenging to pay above the booking because of the intangible. I wanted to get your opinion.
Milton Filho: Thank you, Rosman. Thank you for the question. So I agree with your initial affirmation. Our vision is that the prices are cheap. We do not manage the business on the price of the share on the short term, there is volatility. There is always the effect of the bankers the effect of the competition, there is the effect of Brazil itself on the activities of the bank. So our share ends up having multiple effects. You can have the multiple bank, but then you have to look at a competition where we can have more upside, or a less upside. So that’s what we look at here as on the long-term. That’s how we deliver the value on the price of the share and the price of the dividend the value creation we believe because of the level of results that we are generating.
Up ahead, the prices are low, not only ours, but our other banks outside of Brazil, we’ve seen that. This is a bank dynamic of the shares. The issue of the M&A, we’ve always had our history of records the bank is because of relevant fusion that happened in 2008. But we are always looking at opportunities outside of Brazil. The asymmetries are still very relevant. And regardless of the price of the assets, whether it’s fiscal asymmetry, which is I have to pay a tax in different times the tax. You have an effective rate in Chile, lower in Chile and Colombia, and I have to bring it and recognize it in the books of the bank and capital above all. When they consolidate the assets in Brazil, we work with the appetite level of the board that is set 1.5 of 81 with 3% of level one, those operations run with the — working with the local capital below that.
