Bruno Santos: I’ll start with the ROE question. We didn’t set a target for ROE. The 30% that you mentioned, Thiago, is basically a mass equation based on the second quarter earnings results that we said, look, if we take out of the capital the excess capital, and we also discount from the BRL977 million of net income in the second quarter, the remuneration post tax of that excess capital and we annualize that new net income and divide it by the new equity, we would get close to 30%. So that was just a math calculations to say, look, we have the potential as we move forward and start distributing more capital to shareholders. Again, keeping our balance sheet in a very conservative way in terms of liquidity, in terms of leverage and so on, we are not going to change that, but using better the vehicles that we have in the group, leveraging more and reducing our capital ratio as we move forward.
The time horizon for that, I’d rather not answer you directly because otherwise, it would become a guidance when we are going to achieve the potential 30% in the future. What I can tell you is that there is a plan ongoing in the company in terms of corporate restructuring in terms of, of course, controlling efficiency ratio, that’s a must. We are not going to — we are not going to take our eyes out of the ball in terms of efficiency ratio to keep evolving net income and controlling the capital ratio. So as I mentioned in the call, we want to end next year with a capital ratio below 20% and we’re only going to achieve that keeping our profitability if we distribute capital to shareholders. Regarding the net income, was the net inflow question, right.
Thiago, the second one.
Thiago Batista: Yeah, the second question is about the LCA, LCI and LIG. How bad things —
Bruno Santos: Yes, the impact. It’s hard to say how much, right? We know there is more than BRL 2 trillion sitting on cash in the system right now, more than that. And we know that when you have these banking funding instruments being favored because of the macro conditions, it becomes much more a balance sheet business than an investment business by itself. And XP does not have the balance sheet that our competitors have. We do not want to have — and in times like that, we have less products like this one. Of course, we have a lot of fixed income products with good returns. We try to compensate that with other offers I mentioned in past, I don’t know, in calls or conversation with investors. For example, we did an agreement with one of the big five banks to buy some LCI from them and we could distribute billions in a matter of a few months.
So there is appetite in our client base to buy that type of product whenever the market is like the way it is right now, but we do not have the balance sheet business as of the bank. That’s a certainty.
Thiago Batista: Last follow-up, sorry, Bruno. But in your corporate structure to try to become a bank is trying to issue at least LCA or not?
Bruno Santos: Not really. That’s not the plan. The plan — again, we — the strategy started to go beyond investments, so we could have other products to make our clients get rid of the incumbent banks and cut completely the link with the incumbent banks that was the strategy. We are following up that strategy as we move forward. And by having a bank, it gives us the possibility with this corporate restructuring to put the bank as the main entity in Brazil for funding purposes. And then we can leverage more. We can lower the cost of funding. Just to give you an example, we have a corporate bond issue at XP Investimentos S.A., roughly BRL 2 billion. It does make sense. The bank can issue a financial bill at a cheaper cost and easily. So it makes part of the strategy to have a better corporate structuring and is natural. We are moving forward as we develop the bank. It’s not to have because then it becomes a balance sheet business.
Thiago Batista: Thank you. Very clear.
Antonio Guimaraes: Thank you, Batista, and now we have Neha from HSBC. Hi, Neha.
Neha Agarwala: HI. Congratulations on the result and thank you for taking my questions. Just had a quick clarification on what you mentioned about the Modal transaction. So what was the impact this quarter? And when do you expect the transaction to be accretive? And what is the level that is required to be accretive? Just clarification of that is on very clear. Thank you so much.
Thiago Maffra: As Bruno mentioned, and thanks for your question, Neha. As Bruno mentioned, the net income impact was close to BRL20 million positive, okay and we expect the due to be accretive in 2024. As Bruno mentioned, to be accretive, we have to make 150 million net income or more, okay? So that what we expect for 2024. Okay. Super clear. Thank you so much, Thiago.
Antonio Guimaraes: Thanks, Neha. And now we have Geoffrey from Autonomous Research.
Geoffrey Elliott: Hello. Thanks very much for taking the question and apologize for the background noise here. A quick one on the DCM revenues. Clearly, there were some big DCM deals in the quarter. Was there also an impact to retail revenues from those, I guess, on the distribution side? And could you help us quantify it. Thanks.
Bruno Santos: Yes. DCM, as you know, there is a secondary trading part and the primary issuances part, that is the channel fees. In this quarter, we do not disclose, Geoffrey, exactly the numbers between secondary and primary. What I can tell you is that secondary is it still the most relevant one, and it was more relevant than primarily in the third quarter this year. But when we compare to previous quarters, the primary component of revenue in third quarter compared to second quarter, for example, was approximately double. So, yes, we did have some very good offers in terms of channel fees that helped fixed income to reach these historical revenue in a quarterly basis of BRL718 million.
