Unidentified Analyst: Got it. Okay. That’s all for me. Thanks for answering my questions.
Jose Fernandez: Yes, thank you for your questions.
Operator: We’ll take our next question from Timur Braziler.
Timur Braziler: Hi, good morning. Maybe circling up on the loan commentary and the expectation for 3% to 4% growth next year. I mean, you’ve been calling for slowing loan growth here now for a couple of quarters, especially on the auto side and trends seem to be going in the opposite direction. How much of that 3% to 4% is more wishful thinking versus what you’re currently seeing? And then specifically on auto, are we close to an equilibrium there? Or is there still a big delta between supply and the increased demand?
Jose Fernandez: So you bring a very good point. And you’re correct also. We’ve been kind of guiding towards a slowdown in loan originations, particularly on the auto side and hasn’t played out. But we continue to feel that the level of cars inventories in the island, the level of new auto sales are starting to stabilize. And I think the fact that interest rates are going up and the effect that might have on slowing down the economy during 2023, we should see a slowdown. We’ve been wrong for a couple of quarters. But we want to not be wrong on the wrong side of the equation here. So we’ll be also prudent on the auto lending side. On the other buckets, on the commercial side, interest rates also play a game here in terms of the demand for commercial loans.
So we’re also seeing good pipelines but not as strong as they were last year. So we were confident that we will continue to have good strong generation of origination of loans on the commercial and auto but none of the same levels of 2022.
Timur Braziler: Okay, and your competitor reported yesterday, their auto balance, actually I think shrunk a little bit. I’m just wondering, is there kind of a changing of the guard in the auto market on the island? Or I guess what are you seeing from a competitive standpoint in that asset class?
Jose Fernandez: I can’t speak for our competitors. But I can tell you that is a very competitive market. And I do not see any change of guard happening in the near term. We see very strong competition and certainly the largest competitor is a formidable competitor.
Timur Braziler: Got it. And then as you think about funding that loan growth, is the expectation that we should continue to see the bond book being used as a source of funds for both loan growth and then I guess maybe looking at the deposit base, I would love to hear your thoughts on what you think deposit balances do if we’re in a higher for longer type Fed environment?
Jose Fernandez: I could not hear well, the first part of your question. But the second part of your question in terms of deposit balances, first I think we will see a transition of some of those deposits either to wealth management, which we have seen so far. I think for 2022, the full year deposits transferred to our wealth management unit was around 100 million bucks. So that’s one thing that we’re seeing already clients with high deposit balances, putting money in the investment treasuries or whatnot. That’s one shift that we saw. I think we also seeing a shift from savings to CDs to longer term CDs to 12, 18, 24 months So we will continue to see that. And as I mentioned, I think someone asked me earlier about the deposits.
I think commercial deposits, large balance commercial deposits were also — look at different ways to optimize their returns. So that’s kind of what I see in terms of balances. I think internally, we’ll have a little shift there. And we will then have to retain our customers and deal with them on a customer relationship perspective as we look into higher cost of deposits.
