So you saw relevant grow in the credit card portfolio, especially when you see the site payments. So it’s not buy now pay later. That means that there is a seasonality. And we are not here trying to increase the level of risk appetite. We will not be running more risk than we should. And I think it’s the opposite. We’ve been derisking the portfolio, especially in some segments, but we’ve been growing a lot in the segments like Uniclass, Personalite and other clients where we do believe that they are very resilient through the cycle. So this is our main focus. On the acquiring side, I think we’ve been very successful in the hedges integration and we are getting benefits of doing that. So a comment for you and for everyone is that you cannot look the P&L of hedges the way we have, they stand alone company balance sheet the way you have it published.
And why is that? Because hedge is completely integrated inside the Itaú Unibanco. So when you look to that business, you have to look that in the retail business operation and not only the P&L on a separate basis because this won’t give you the full vision in how we manage and view the business. For us, it’s a new product that we have in the relationship with the client. So the relationship is key and then you have ways to take the best conversation or the best product to that client. And hedge, the acquiring business is one of it. So I think we had a very strong year, 2023. Hedge had a very strong recovery in the P&L the way we see and the way we measure, okay. Just to give you an idea, when you look to the hedge’s P&L, we take the working capital out of it and we take the working capital and we take it to the corporation.
So in the business model, all the working capital that has been benefit from the interest rate, it’s not in the business model. So this is not the way you see the other companies that they are standalone balance sheet and they have a huge working capital. So you have to discount that to compare their business with our business because we don’t live in our business model, the working capital inside hedge balance sheet. So this we take to the corporation level. So this is just one example. The other one, we do a lot of anticipation and business cross sell in the bank’s balance sheet, not only in hedge’s balance sheet. So that means that if you look only the take rate considering hedge’s balance sheet, you won’t see the full picture. So the number we see is completely different from what the market sees.
And for us, it’s a business of integration in the past. I used to be CEO of hedging that time. Two thirds of the P&L came from the open market, clients that didn’t have the domicile or a relationship with Itaú Unibanco. But when we look today it’s completely the opposite. The relationship has to do with engagement, with principality, with cross-sell. So this is what we see. That means that the integration was done at the right moment, at the best way possible, and we are getting benefits of doing that. And when we look forward, we see a lot of benefits to reach. And the competition will always be there. So you might see some movements coming from one player or the other play. This is life. So we have to keep doing the integration we did. And I think we are in a key position, very advanced when compared to the market, to deliver a unique value proposition to our clients.
And this is what we’re going to pursue in the coming quarters.
Renato Lulia: We have from JP Morgan, Brisbane.
Unidentified Analyst: Thank you for taking my call. And my question. On ROE per segment, it calls for attention retail improving, going back to levels above 20% of ROE. And when we do the decomposition of that result, it seems that it comes from cost of credit. I wanted to hear from you, Milton. The correct evaluation of that improvement of ROE is that an issue of mixed. You’ve talked about growing in segments Personalite, Uniclass because of the balance of that segment is higher in the ponderation of the ROE. And a consolidated ROE is higher in that segment. Are we seeing the ROE of the lower income improving where you know that the MPL of lower income is three, four times the higher income. And it’s fair to say that in the process of the improvement of an MPL that lower income should improve more in the cost of credit.
If you can comment on, how are you using these sub segments, and do you think it’s sustainable that ROE above 20% we had a lot of debate in that period of how much is it structural or not that process how it’s cyclical, it is, there were some caps in along the road and the payroll loans. So how do you see the sustainability of these ROEs above 20%.
Milton Filho: Thank you, [inaudible]. Well, time is suffering. As I say, that was your doubt and we were not satisfied with it. The level of profitability we needed to work strongly to recover the profitability. There are issues of the market structural changes. There’s a little bit of everything and we have to understand what is happening with the big variables. You’re talking about the — what — you have the payroll loans. You have the cap of the retail and then there is the structural changes to credit card, the rotation. So there is a structural change. There is a dynamic of the fees changing. When you have the offering, you have the fee business pressure. There is a competition of the margin, and there is an expansion of the period.
So the credit service relationship change, that business has a higher dependency and credit than they had before, for example, overdraft. And we’ve grown an insurance that has an increasing growing of, well, insurance. If we look at the three year window, through 93%, the profit in our operation. And this year, we will double the results over the last four years. And insurance is cross sell, business that helps with the profitability. To explain here, I told you that when we were questioned a few quarters below, we saw that it was the bottom, and then we saw the inflection point. What generates that inflection? Several aspects. There is the play of the generation of top line, which is important, so we have to work with the correct, mixed way, the correct client in a relevant way.
We’ve done that with quality. There is the play of the cost of credit. You are right at the end of the day with all derisking that we are doing with the portfolio and all the credit crisis that we have observed with a higher concentration in some portfolios where we have over the double of the second place. Credit card is that example. Our portfolios, in average, have more relevance of credit card, and our proportion is more relevant at the market. So it brings a cost of credit that is higher in more difficult cycles. And we were capable of doing that turnover of the portfolio, regardless of the size and absorbing those losses and the balance sheet of the bank and we’ve produced crops with positive quality. So it’s a mix of margin, cost of credit, net margin has had a relevant role in that profitability.
All of our mono liners are below the or above the water line. So that thing of losses or operations are all positive, all of that positive — all of them positive. The challenge is always isolated the cost of capital for some specific business and we’re working to improve them relevantly. So we understand that it’s sustainable that level of profitability, we understand that we can expand it all through all the years. So we expect a lighter expansion of the profitability of retail along the lines of what we committed with the turnaround of the operation. All the review of the business model, the structuring of the business model is the new operational model that we assembled in the bank. It has a big impact on that and all of our journey of the super-app that is working this year will also help us strongly to have a full bank offering for all the clients that do not have an offer a full bank in the bank so they will help in the profitability.
And on the other hand, our companies business retail has grown with quality, and we are seeing an expansion in the profitability of our company’s business, whether if it’s the management or credit Basel pondering, the adjustments that are recent. But basically, a value proposition that is very well fitted with a value generation that is very consistent. And we can see all the businesses having an evolution in the performance in ‘23 and in ‘24. We expect to continue with a lower or higher level that expansion we are very optimistic so we can have a more balanced portfolio in the terms of profitability. And when we look at the wholesale, the view for ‘24 is to deliver a profitability level that is strong. We talked about 28% of our ROE, 27% in last quarter.
