Youssef Lahrech : Thanks, Lago. Good evening, everyone. I will now take you through some of the key indicators of asset quality and credit portfolio health for the third quarter of 2023. Let’s begin with NPL trends. Our leading indicator, NPL 15 to 90, showed a slight improvement with a decrease of 10 basis points from last quarter, ending Q3 at 4.2%. This was in line with our expectations. Our 90 plus NPL ratio Increased from 5.9% to 6.1% quarter-over-quarter and was also in line with our expectations. It’s important to note that this ratio exhibits a stock behavior due to loans moving through the delinquency buckets rather than a flow behavior. As a reminder, we haven’t sold any credit receivables, so our NPL ratios require no adjustment.
Renegotiations stood at approximately 9% of the book this quarter. It’s worth noting that nearly half of these renegotiations were from loans that were current and not past due at the time of renegotiation. Furthermore, about 90% of renegotiations occur before the loan is 90 days late, thus having a limited impact on NPL rates. I’d also like to take the opportunity to reiterate what Lago mentioned earlier. We see meaningful opportunities to continue to expand our credit portfolio going forward with attractive returns and robust resilience levels. We expect that part of that growth will come from expanding down the credit spectrum. As a result, this may lead to intentionally higher delinquency rates, but our goal is to ensure that these will be more than offset by additional revenues and result in even higher risk adjusted margins as we grow.
Now turning to the performance of our credit card portfolio versus the industry. These 6 graphs show the time series of NPLs for credit cards by incumbent. The purple line represents new, and the gray line represents the Brazilian industry. As you can see, our NPLs continue to outperform the industry on a like for like basis in most segments, and this is even more pronounced within the lower income bands. The growth of our portfolio has a direct impact on provisions because we front load credit provisions when originating loans in accordance with IFRS 9 standards. Therefore, the increase in credit loss allowance of $628 million this quarter directly reflects the elevated level of loan origination during the period. Despite this increase in provision volumes, our risk adjusted net interest margin reached the new all time high Of 9.0% for the quarter, a 100 basis point increase quarter-over-quarter.
Compared to the same period a year ago, risk adjusted NIM is up nearly 3x. In summary, we’re very pleased with our results this quarter With the progress we’ve made and the track record we’ve built over the years. Our asset quality and returns remain robust through the cycle, reflecting our effective approach to pricing and superior credit underwriting capabilities. We couldn’t be more excited about the prospects for continued resilient high return growth going forward. With that, we’re now ready to address your questions. Thank you very much.
Operator: [Operator Instructions] I would now like to turn the call over to Mr. Jorg Friedemann, Investor Relations Officer.
Jorg Friedemann: Thank you, Operator. And our first question comes from the line of Jorge Kuri at Morgan Stanley.
Jorge Kuri: I wanted to ask about, well, first of all, congrats on the numbers. I wanted to ask about credit card growth on a sequential basis. We see the dollar numbers, and those seemingly decelerated quarter-on-quarter. But I’m wonder what the FX impact is. You know, we just don’t know what percentage of the book is Brazil and versus Mexico. So it’s hard to look at it on an FX neutral basis. But just assuming most of it is in Brazil, I’m getting to a FX neutral quarter-on-quarter growth of credit cards of around 6%, which is lower than the 10% you registered in the second quarter and also 10% in the first quarter. So somewhat of a deceleration. So wanted to see if indeed those are the right numbers on an FX neutral basis. And if so, what do you think explains that much lower growth rate versus the previous quarters? Thank you.
Guilherme Lago: Yes. Think you very much right, on the needs to do an effects adjustment. I think, the Brazilian, currency depreciated in the third quarter of the year. And therefore, it’s probably makes more sense to look at this on an FX neutral basis. In our calculations, the FX neutral evolution of our total credit portfolio, both credit cards lending grew by about 9%, which we believe is continues to be a fairly healthy growth. But in terms of credit card more specifically in the third quarter of 2023, the overall market decelerated a little bit. We, however, continue to gain share. We grew what we estimate to be anywhere between 50 to 60 basis points market share in the quarter. We believe that we have become the second largest credit card issuer in Brazil already.
