We have automation, cost reduction, digital processing, migration to the cloud, amongst other initiatives. The important thing is that this is a program from all the organizations. There is no silver bullet. All the initiatives are implemented, followed up. We have an important control of the budget as well, so that the initiatives that we implemented, they are not, the economies are not eventually used. And more important, which I believe is the relationship between the good management of cost and efficiency. You can see that the guidance, we are not doing the investments that we consider that are important to reach a certain level of cost or efficiency. Why am I saying that? Because sometimes the important investment, because of an accounting issue, they have costs that come earlier.
You have the amortization of the investments and technology as well. So our discipline here is that this is a program is to be consistent all through all time. We don’t give a specific guidance of efficiency, but we want to have efficiency levels that are sustainable, that are reachable, and they continue through all time. Keeping the modernization of our platforms and a higher focus on the client, client centricity, all these initiatives and the efficiency level, Thiago, is inserted in the context of management of the bank as a whole. It’s not an objective that is independent. Having said that, we believe and imagine that there are important opportunities for improvement all through all time.
Renato Lulia: We have Bernardo [inaudible] from XP.
Unidentified Analyst: Well, good morning, Alexsandro, Milton. Thank you for the opportunity. I want to understand better the strategy for the composition of the funding of the bank over the last quarters. You’ve had an improvement in the participation of exempt instruments. And with a new regulation, these instruments should be more restricted for issuance. What is the reading of Itau about the impacts for the system? Looking at the businesses of wholesale and retail, what is the market stock that you estimate as well in these instruments post the changes? Thanks.
Milton Filho: Thank you, Bernardo. This is a new issue. Of course, naturally, the resolution was published last week, we are naturally going over the details. What I can anticipate is, without a doubt, the exempt instruments have a participation in the funding of the system as a whole. They are growing out throughout the time. There is a creation of LIG which brought, you had the double backing of the LIG and LCI, which you could use, but the exempt in the interest, they are 15% of our capture. They are important, but they are limited to 15% of all the capturing volume that we have. And in that change, recent change, basically two thirds of our capture were not affected. So we are talking about a reduced impact. So we are talking about 4.5% of the total funding of the bank.
These are the materiality. And it doesn’t mean that the resources are leaving. There is a natural migration of resources. When you do not have the exempt from the income tax, you do not offer new products. And this is a systemic overview. The system as a whole goes through that. We’re given a level of relationship with our clients and the capacity for generation of backing. We don’t see the impact and the cost of capture of the bank. This is immaterial. And we will substitute by instruments of CDB and banking letters, other instruments that make more sense for the investor and that are going to have some impact in our cost of capture, but it’s immaterial. So I believe that for the system, it’s difficult to do an assessment. There is the mapping being done.
There is a global level to see what is the level of impact because it depends on the generation of coverage, the profile of business of each institution, relevance in the events of the capturing of each institution. 50% in our case, we can see in other cases less or more. It’s very difficult to do an assessment of the market. It’s very difficult. Every bank will start to talk about the impacts in their activities. We are in a phase of deepening in the norm, doing a deep dive and analysis, but there will be an impact, but it’s not relevant or immaterial for the size of our operations. And we continue with a very broad portfolio, the investments, 360. Our focus is to offer the best investment for the client in that cycle. As we always say, our executives of investment all are measured by the profitability of the portfolio of the clients and not the selling of products.
So we’re going to have funds, titles of interest rate, income tax, and if there is any migration, then we can retain that asset under management or under custody within the bank. So we don’t see an impact in the relationship with our clients because we expect that we have the capacity to replenish these alternatives in a very efficient way.
Renato Lulia: Next question comes from Tito Labarta from Goldman Sachs.
Tito Labarta: Hi, good morning. Thank you, Renato. Good morning, Milton, Alexsandro. Thank you for the call and taking my question. A bit of a follow-up, I think, to Thiago’s questions earlier on efficiency, but slightly different perspective. When you look at the guidance on expenses, like core expenses, as you mentioned, below inflation, but you are growing above inflation this year, you had about R$ 3 billion, I think, in business and technology investments. For how long do you think you’ll need to continue to do these types of investments? And I’m asking in the context of the competitive environment, just with increasingly more digital players becoming more and more relevant, just to think about how you’re positioned. And somewhat related, but on the credit card, very strong quarter for credit cards, both on the issuance and acquiring.
There’s been a lot of competition there on both sides. How much of the growth in the quarter was just seasonally and how much are you maybe, given the credit cycle, looking a little bit better? Are you able to be a little bit more aggressive there? And also, a couple of your peers announced that they’re trying to privatize their acquiring business. So if you can just comment on the competitive dynamics in cards, both on the issuance and acquiring side, given where we are today.
Milton Filho: No, sure. Nice to see you. Thank you for coming, Tito. Good to see you again. So just follow up here, first of all, on the efficiency ratio. We’re always going to be investing in the long term of the bank. So this is our long-term view. We’re not looking for one or two quarters efficiency ratio. And this is the trend, especially on the technology investment. We doubled the force. So we had 8, 000 FDs nowadays we’re running with 15, 000 FDs when you look four years ahead. But we stabilized now two years in a row. We do believe that we achieved the level of FDs that we need to do all the digitalization and the modernization of our platform. So our idea here is to keep doing this project. So this is very relevant because we have to finalize what we really need to modernize.
We are two thirds of the journey so we still have investments to be done throughout 2024 and over. But the most important is that whenever we do the investments, we amortize the investment in the coming years. So you see a strong pressure coming from the investments we made in the last period coming those years and we are being able to absorb all this amortization in our P&L. We still believe that there should be another level of increase in the amortization. But then it should stabilize when we look a long term period. This is very positive because there we’re going to be in a cycle where the level of investment will be much more similar in the coming years as opposed to what we observed in the previous years where we came from a very slow amount of investment and we had this curve of increasing the investment in technology so.
And part of the investment in technology is done to get more efficiency and more productivity in our operation. So you will see the cost of the amortization of the investments, but in the other hand, you will take pressure from the run the bank costs that we are seeing in those periods. So we do believe that the level of FD is there. We should see a stabilization in the level of investment as well. But technology score is much more than modernizing the platform. In that sense, it will reduce. But then you have to keep running your business and modernizing the platform every single day to achieve the best level of experience for our clients. So this will keep being the trend and we are very focused on that. Talking about the credit cards, the quarter is very seasonal, okay.
