Rafael Frade : Good morning. Thank you for taking my question. Doing a follow-up of two points. First the NIN making it very clear that we expect a stability in the NIN but all throughout the last few years you always said that the liabilities margin has an important contributor for the improvement of the NIN and maybe last for ‘24 but the effect also throughout ‘24. Is that more of a detractor is thinking for the end of ‘24 and for ’25. And second question is a follow-up on the issue of cost of risk. I think it’s very clear the guidance accommodates fluctuations but we wanted to understand more on the retail when we see the fourth quarter, the aforementioned side at the level of 2019-18 but you commented at the beginning that you have an important shift in the portfolio seems like this is a safer portfolio than ’18-‘19 so specifically in retail can we see an NPL formation for ‘24 maybe below what was the official records. Thank you.
Milton Filho: Thank you, Rafael. Pleasure to see you again. Let me start by the NIN, liabilities are growing for us and we managed to grow in an important way you can see the net cap grew 70% of the last quarter we do not talk about the absolute numbers but these are strong numbers I can assure you, therefore there is always the interest rate effect but the volume as well combination of both generates an effect on the NIN, when you look at the margin of this quarter the volumes are very relevant. Second aspect, for the financial margin for the clients we do the hedge whether if it’s working capital or liabilities. We do the hedges with longer vertices so it shows that in a longer cycle for better for worse we have a long better stability in remuneration there is a reduction in the margin.
We can see the margin of the working capital reducing but there is the increase of the pay of the pays and the liabilities have been growing importantly. And there is the demand for the banks products which increase this effect. So we believe that 2024 we’re going to have a great year for volumes. The rates from the application and the hedge of the bank they tend to be less sensible to the effects of the select rate and that highlights what I’ve mentioned. We’ve seen some reports that said that our line is very sensitive to the interest rate. This is another proof, seeing the cycle as it is, that our NIN is very stable regardless because we can work with both sides of the equation. The interest rates they tend to drop, but they will stabilize at a threshold of nine.
We’re never going to see a drop of interest rates as we’ve seen way back when. And that is sustainable and it opens up the growth or portfolio that compensates at the other end with volumes and growth of assets. So we consider that NIN is stable regardless of the pressure of these liabilities and the volume compensate the effects of the interest rates. And this shows that our investment strategy and the review of the offerings and platforms are very well successful. We have an NPS that is measured by an external auditing company that does all the measuring, and it’s where the best when we compare with the main competition and we continue to advance. Naturally, you’ll have a better offering in regards to the platforms, the new platforms for the investment.
The positive news is that in investments, this was our best year with the relationship with the platform. We had some months of positive capture in regards to some of these players, and we ended up delivering a nominal net cap above what was published by the competition. And it shows that we’re doing our homework. This is very important. The second aspect of the delay, the delinquency, well, there is better portfolios that are being produced all throughout the cycle. We see a nominal delay above 90 that is below what we saw in the pre-pandemic. We continue to be positive; we expected the NPL creation will tend to have, well, stability really looking up ahead. We see in the natural presence there is a reduction in the two consecutive courses, there is a drop in the formation in the natural presence, and we believe that this is a great trend.
Of course, more exit for write-off within the regulatory rules that has to do with the portfolio that was made in the previous periods and with the renegotiations we have a balance and with the renegotiation with the quarters we see the effects in the write-off. So yes, we see the formation that is very positive and the cost of credit that are nominal for the retail are reducing step by step and this is great news where the portfolio growing and the margin expanding. So on overall, we can deliver an NIN that is very positive with an expansion in the risk adjuster line, which is what we are doing consecutively over the last quarters.
Renato Lulia: Next question from Thiago Batista, UBS.
Thiago Batista: Good morning to everyone. My question is about efficiency. When we look at the bank’s efficiency, Milton commented that you are the 40% historical minimum, good number when you compare to the bank itself or other banks, but it’s still above some digital banks or traditional banks. Well, [inaudible] is not the same one, but in Mexico, they operate with better efficiency. Is it possible to maybe draw from 40 % and get you 35% or not? Or 40% is the absolute bottom? And if you allow me a second question, the credit card. We see that the level of the payments of Itau increased in 2023. So we had 81%, 85%, one lump sum payments. When we look at the Central Bank, that trend didn’t happen while the data of the Central Bank. What is the difference? Why is it happening? Higher income makes a product. Can you tell us more?
Milton Filho: Okay, let me start by the second point. Thank you, Thiago, for your presence. Credit cards. The explanation is mixed. In the end, when you look at our non-financed portfolio is higher than the portfolio of the market. In the last quarter, we have 34% of non-financed portfolio. So this is a very relevant number. I always say the effects of the interest rates of our R$ 135 billion of credit card portfolio, R$ 115 billion are noninterest. So R$ 20 billion is the finance portfolio. In the last quarter, the last month, there is a seasonal effect with more purchasing and more volume. So there’s a trend of an increase in one lump sum and in the installments and noninterest, depending on the profile of purchasing of the population.
The main explanation is mixed and there is the derisking in the portfolio, of course. Since we reduced relevantly the segments of high risk that were destroying the value for the shareholders, then we rebalanced the portfolio with more focus and the mixes that are more sustainable in the long term. And we don’t look at credit card as a product isolated. We look at it in a global relationship with a client, taking away those products that you’re a mono liner, open ocean, but in the bank, we have a relationship with the clients and we’ve been growing relevantly. And the fact that our portfolio is more affluent than the average of the market. So it takes our noninterest in regards to the interest to a higher threshold. We should see a normalization.
There is a reduction in the propensity, of course, depending on the profile. And once propensity comes back, the finance portfolio will grow more in regards to the noninterest because of the seasonality of the last quarter. Efficiency, I’m going to give the floor to Broedel, but I just wanted to make some relevant comments, general. First, is that we have to look at the bank in the mix. So looking at the efficiency level of the bank, we are looking at the consolidated. We have a lot of businesses here and we have efficiency levels when we look at the operation. When you look at wholesale, you see some numbers. When you go to retails, you look at others and there is the consolidated LATAM, without LATAM. So we are running 37.9% in the picture.
It shows that inverse, so we are reducing. Relevant, well, directionally, the path has to be efficient. There is no doubt in regards to that, we’ve done a series of movements in that direction. This has happened for some years and this has to do with our DNA and culture, but there is a space for a deeper dive and a cost, the efficiency level. Well, we can get you 30%, 35%, whatever the threshold is. It’s important to say that when you reduce and you become more efficient, part of the efficiency goes to the price. So, imagine that the efficiency level just drops. It’s not true because it becomes more efficient and then you become more competitive and therefore that equation of revenue and cost is that what we work in a relevant way in the bank.
Our efficiency level is benchmarking global — of a bank of our size. It’s a benchmark, global benchmark, but we have a series of initiatives that we’re working to separate. What are the events of the wholesale? What is retail? And the investment in technology that we’ve done to digitalization naturally goes through all that. The core costs are dropping, growing less than the inflation, and that’s the trend. But it will grow less than the inflation knowing that we have an inertia that is very strong, which is a payroll. In regards to the collective bargaining agreements, higher than the inflation measured by the IPCA. Just looking at IPCA, it doesn’t translate the banking inflation that is a higher threshold. Broedel, would you like to highlight some of the points that we’ve been working?
That would be nice.
Alexsandro Lopes : Thank you, Milton. Yes, we have a concern here, as Milton has mentioned, of looking at an efficiency program that generates effects on the long term, and these are consistent results. We don’t want those efficiency levels to be a volatile indicator. We have periods, gains in some periods, losses in some periods, and that’s the up and down effect, as we say. We have a variation, but we don’t want that. We want gains that are consistent, gains that are recurrent. That point that Milton mentioned, the efficiency, it doesn’t depend just, it’s not an index, it depends on the mix of business that the bank works with. Structurally, the bank has efficiency indices that are different. Do we have a program that involves over 1, 000 initiatives?
