Ricardo Dutra: This Ricardo. I’ll start, and then Artur can help us with the provisions and so on. So, we start from backwards. When you look at nano merchants, we see €“ as always, there are many moving parts here. There are nano merchants that become merchants because of the COVID, because of unemployment, because of pandemic. Some of these means that the mortality of these businesses, there are some nano merchants that got a formal job and decide not to work by themselves anymore. So, there are many moving parts. And that’s why also the nano merchants base some point, we €“ it’s not only one reason that it’s going down. There are many reasons. Some people may shut down their businesses, they get a job and so on. Nano merchants, we think they could be profitable, but in such a way that we have PagBank account, they use the account, we can get the data, they have a , we can have the benefit of the float and so on.
But if you had to subsidize POS, the level that we have today in subsidies, the exchange rate between reais and dollars and so on, it doesn’t make sense for us to invest in nano merchant with this risk of mortality and churn and so on that I mentioned because there is no payback. But we can work with these nano merchants in PagBank. We are happy to work with them. And to some point, we keep working with them to sell devices and so on, but we are not subsidizing the same levels that we had in the past that we had thousands of net adds or gross adds, and we didn’t have payback. So, we were more disciplined in 2022, as we said in all the calls. And that’s why we’ve got these record levels of net income. Talking about the unsecured products, we have the processes in place.
We’ve been improving our models. We have a better team than we have in the past. We are investing in this department in the company. But definitely, the macroeconomic scenario doesn’t help. We see even the banks that have a lot of experience doing this type of credit in Brazil. Not struggling, but have difficult with NPLs and so on. So definitely, it’s not the time to go to the unsecured products. And by the way, we have a lot of demand for secured products. So, that’s why we are growing 5% in terms of credit portfolio every quarter. The unsecured product used to be 35%, now it’s 40%. So, we have demand for secured products. So, there is no reason for us to go to unsecured at this point. If we will be able to do that or if you do that in Q2, we’ve got to wait a little bit.
But at this point, the best info that we have is that we don’t have a plan to go to unsecured products in the short-term. So Artur, can you help with those provisions and so on?
Artur Schunck: Yes. In terms of provision, Neha, we increased a lot the level of provisions in Q1, Q2 and Q3. Now, in Q4, we could reduce the level of provisions €“ the level that we have is enough to support the losses that we are expecting for the next 12 months. During the year, we also worked to adjust all the credit models that we have. We adjusted the structure and also the processes. And on top of that, we have two other effects that create a good expectation for us in 2023. That is improved in the IFRS 9 provision model that we improved this year and create some comfort to us that we also have this right level for provisions for the future. And also, the secure products that now we are originating request less provisions for the future. So, we have a good expectation for PagBank in 2023.
Neha Agarwala: Perfect. Thank you so much.
Operator: Our next question comes from Tito Labarta, Goldman Sachs.
