Hello and good morning, everyone, my name is Renato Lulia, and I'm the Head of Investor Relations and Market Intelligence at Itaú Unibanco. Thank you very much for participating in our conference to discuss our earnings for the third quarter of 2023, which as always, we are broadcasting directly from our office at Faria Lima. Today's event, as usual, will be divided into two parts. In the first part, Milton will go through our performance and our earnings for the third quarter of 2023. Right after that, there will be a Q&A session during which analysts and investors can interact directly with us. I'd also like to give you some instructions on how to get the most out of today's meeting. For those who are accessing our website, there are three audio options on screen, the entire content in Portuguese, the entire content in English and the original audio. The first two options there is simultaneous translation. To select your option, just click on the flag in the top left corner of your screen. Your questions can also be sent via WhatsApp. To do this, just click on the button on the screen for those who are watching on the website or send a message to 11-97-825-5707. Our presentation today is available for download on the website screen, as well as on our IR website. I'll now hand over to Milton who will start the earnings presentation. And then I'll come back to moderate the Q&A session. Milton, the floor is yours.

Good morning, everyone. Welcome to our earnings call supported by a very objective presentation. I'm going to run through the figures for the quarter and emphasize the Argentina effect which as you saw on Friday, we settle the sale of this operation. I'm going to show you how this affects our earnings and how the guidance is kept unchanged, except for just an adjustment that removes the effects of Argentina from the seven months that this operation was part of our earnings and how we've disregarded the remaining five months and the guidance that's been published in the second quarter. So let's get started. We've delivered a recurring managerial result of BRL9 billion results, which points to very strong earnings that has grown 3.4% quarter-over-quarter. We've reached a consolidated ROE of 21.1%. Brazil's ROE which is the most comparable with market was 22% up half a percentage point. It's key to highlight that if we were working with our capital within the risk appetite threshold approved by our board this ROE would be around 24%. I'm telling you this just to give you an idea of the effect that capital has and how it dilutes ROE by 2 percentage points. In commission and fees and result with insurance operations, the growth was 3.6% quarter-over-quarter reaching BRL12.9 billion results at a cost of credit of BRL9.3 billion riyals This is the first nominal drop we've seen with a 1.9% decrease quarter-over-quarter. This is very good news from lending. The NPL rate is absolutely stable with no news, which is in-line with the message I've been sending you for a few consecutive calls now. The Level one capital ratio, which I mentioned just now reached 14.6%, an increase of one percentage point in the quarter. I'll show you in a moment our…

Milton is back with us. Thank you very much for being here and for your presentation. And now we will start the second part of our meeting, which is the Q&A session. Remember that this is a two-language session. We are going to answer the question in either English or Portuguese. If you need support, with the translation, you can choose the audio that you need. You can submit your questions via WhatsApp the number is 11-97-825-5707. The list of participants is long. We have the first question without further ado, let's start. We have my friend, Renato from Autonomous here with us in video. Thank you for taking part of our call.

Good morning, everyone. Thank you for the opportunity. Would you please comment on the improvement on the ROA with the business on retail, regardless of the revenue didn't grow so much. I want you to understand the drivers behind that improvement. And maybe under certain scenarios for the next quarters if there is a trend. And if you can comment on your expectation regarding the meeting with the Central Bank that is scheduled on the credit cards. Thank you.

Thank you, Renato, for the questions. Welcome, everyone. I would like to start with profitability. In fact, when we look on the quarter-on-quarter, the result on the retail is stable, but with competition that is different. With a turn of the quarter, we have had a revision of the capital allocation with a regulatory changes, and the demand of capital in the retail operation was reduced. Therefore, the capital that was economically allocated on the operation is dropping, but the operation is stable. Why? Because all the remuneration of capital is one side of the business, you'll have less capital allocated with the business, you'll have less remuneration of the capital allocated in the business. That's why you remove the effect of the margin of the operation, but the core the operation was improving, it is improving a lot. When you remove that working capital, you'll have the constant and then you demand less capital. And then you have two levers, the operation of the company that is expanding, and growing with greater profitability with more efficient capital allocation. And the inflection point that I said, where the business of individuals already happened. And we are improving quarter-on-quarter the profitability. So yes, there is a return, but there is an evolution with every return even though it's flat quarter-on-quarter, year-on-year, though it's an important growth. And we can see a recovery and the individuals with all the drivers more client engagement, less cost of credit, more efficient, less cost, less costly operation. And we can work with all the levers. And the companies have been growing with great profitability. And the competition of both. Lastly insurance has allowed us to improve the profitability of retail and we can believe on an improvement, looking up ahead. This is one point. Second…

Thank you, Renato. Second question, we have Bernando Goodman [ph] from XP. Good morning. Thank you. The floor is yours.

Good morning, everyone. Thank you for the opportunity. I wanted to understand more on the retail segment. The bank has de-risking very objective derisking. And now you have the result with the delinquency that stabilized. You talked about the high income and bank is very well positioned in that segment. However, on the other hand, some competitors already have results, pointing out with more appetite, releasing the strains on the retail. And while, you didn't get hurt out of the cycle, would it be -- would it make sense to expand the composition of the portfolio? Looking at the segments that are the base of the pyramid that are focused by mainly by the FinTechs? Thank you for the question, Renato. But thank you for your time.

Okay, let me give you an opinion over here, we are very much convinced about the decision. Well looking back, the derisking decision of portfolio was a very correct decision not only derisking, but we often all these orders, we have grown in our target segments. Since our portfolio is very large, you'll have the credit card portfolio 120-127 very and whereas big numbers within that portfolio, we have the high engagement clients. With the profitability and risk levels that are adequate, you have a big portfolio that we call it, the open ocean, not only the clients that we acquire digitally, but the finance and the association that we have. This is a very big portfolio. And we've done, well credit card is one of the products vehicles, we've also had to do adjustments. And just to give you a few numbers that really stand out to me. This is the first quarter consecutive that we have the reduction of the NPL of credit cards. So the market, there is the first inflection, the system as a whole, we are in the second quarter with a relevant reduction in vehicles. We're in the third quarter consecutively doing the inflection of the long delinquency, with expressive drops in delinquency and the equation of risk and return. If we look at all the production to return all of our models, and while we expect to have profitability through the cycle. And we've been playing implemented the portfolio management that was very efficient on the wholesale, we implemented that on retail. So we balanced the portfolios. We have worked with all the publics. It's not that we don't work with lower income, we've worked with a lower income with the correct product with the correct client in a correct way, with an…

Thank you, Milton.

We have [indiscernible], UBS. The floor is yours.

Good morning, everyone. My question, well, still working with the second -- with the previous questions, credit card and low income. Credit card, it was an impressive improvement. You talked about the two quarters of the HR, the BPS. But you shown that there was a change in the mix that was very big, the growth, strong growth of Uniclass and Personnalité, big drop in the lower income, you don't have the numbers. Credit card, my doubt is if the mix is constant, would we have a better outcome? This is the first point. Second, in the low income, you mentioned that some of the company's competitors, Santander, they said they have a deficit in the lower income. So we need a solution for that business. Well, based on your explanation is the solution is Itaú One or something along that line. How are the -- well on site, well, would it be viable to have the -- well, the question is what the bank agency -- this is Itaú One - I'm sorry for the question it's very complicated. But yes, will the Itaú One would be a solution? Well, if we maintain the same mix, the results wouldn't have improved as what we've observed.

We estimate that derisking of the portfolio would be 200 points of NPL in our -- the other way. So just so you can see the dimension of derisking that we've done and the moment that we've done it. And these are portfolios that can regenerate the bank product, we talk about the top-line if you don't see the backbone through the adjusted cost of credit, and that margin induces you to take a decision that with the inadequate appetite. Of course there was it was an over offering of that product in the market, every new competitor got in with a credit card offer. So client that today could have had two credit cards, the experience of having a credit card more -- it's more difficult to do digitally in one day they can open and get five-six-seven Credit cards. And then there is a phenomena of not charging the fee. It seems like it's three in the pocket of the client. So they use the credit cards whenever they need. And if they are not a client that is engaged in the organization and the first credit cycle, they get the credit card away and then they go to the next product. And then they try to keep the last credit card with the bank that they have the best relationship there is a natural trend that the engagement leads to lower delinquency but the credit models for as better as they might be. They don't they do not improve the income of the clients. So that's the first point. We are very, very much convinced de risking is fundamental, just so you can understand. Our delinquency on credit cards. Quarter-on-quarter we show the bank balance sheet, the delinquency dropped in 6%. The vehicle loans also dropped in…

Thank you, Milton. Fourth question from Rafael Frade from Citibank. Rafael, the floor is yours.

Good morning, everyone. Two questions. One, well, you commented on the issue of derisking of the retail portfolio, but it's very surprising that in fact, when we look at it the last 12 months, the consolidated goes up regardless of all of the derisking. So the question is at which stage are we in looking up ahead, that is a last let's just say when against us, and we have a more a better growth in the portfolio, we can have a marginal improvement on the portfolio. The second question is regarding the financial module with the clients that have had an expressive growth in the quarter, but what we subdivided between the retail and wholesale, actually more than half of that improvement on the current market comes from assets of corporations. So can you just understand what was the factor? How do you -- how is this reflected on the others?

Well, thank you Rafael. Let me start by the second question. And then I can answer your [Indiscernible] issue. Second question very simple. If you look at the financial margin in a way that we publish, we separate the working capital effect. So you can see that in the margin, there is no working capital associated to the market. But 95% is where the capital recommendation by the client because it's credit risk and operational risk associated to the credit operations. So when you see that we exclude BRL2.9 billion in the last quarter in and it was BRL3 billion, you can see that in the consolidated the remuneration of the working capital is stable off, there is an increased NPL in a period, it's already there, it's a patrimony growth, and our rate continues to be positive, and the way that we do the hedge of the working capital. So what we still have benefits, that is important information. How do we unfold this to the business? And this is why you see the difference. So if we look at quarter-on-quarter, there is a change in the regulatory working of the capital, how do we work with our models business models? I have the necessary capital that has to be allocated in the operations, since there was a reduction in the risk -- for the credit risks, or the -- for the risk of credit, for example for Basel layer three, for retail and wholesale, there was a reduction. What do we do with our business model, is we exclude that excess of capital that was still larger. And we like -- we put it on a corporation, so I don't leave it in business, the remuneration of the access of capital, it stays in a corporation. So when…

Thank you.

We have with us Tito Labarta from Goldman Sachs. Hi, Tito. Good morning. Thanks for joining us.

Hi, good morning, Milton and Renato. Thank you for the call and taking my question. A couple of questions also shifting a little bit more to capital. Now you showed some nice increase in your core Tier 1 above your minimum. And you're doing good ROE. How do you think about potentially increasing dividends? Also yeah, just thinking about loan growth, right. 6% to 9% of guidance for this year. How do you see loan growth evolving from here into next year is asset quality seems to be getting better interest rates potentially coming down? Could you accelerate the loan growth into next year? And how will that influence potential dividend payouts just to kind of to give capital and loan growth time to next year?

Okay, Tito Nice to see you. Again. Thank you for your question. I start to say that we are taking the full benefit on the interest on capital on a running basis. So we expect this year a minimum dividend payment of around 30% this is where we are when we consider the interest on capital. On top of that, we are still expecting the regulation on operational risk Basel III. We should have information about that in the coming weeks. I would suppose that this month, we would have the view of the new regulation and with that we can do our planning of the capital need to run the business because the operational risk will be implemented in 2025. And we still don't know how the phasing we work out. The good thing is that our capital generation has been improving, as you know, but we want to approve by the end of this month in November in our board of directors, what direction we're going to go, and what are the alternatives we have. And we have a few, we should or we can increment the dividend, we can repurchase shares. So there is a mix of things that can be done. And these discussions will have by the end of this month, if the regulation on the operational risk comes up, and this is our best guess now. With that in mind, our view is that we could, and we should have an increase in our dividend and/or repurchase of shares will depend on the alternatives that the board will take in consideration. We will have and make a proposal by the end of this month. So we believe that in the coming weeks, we should release new information to the market with that respect. And talking about growth, portfolio growth, I would say that we are right now planning 2024 we should have the guidance, then releasing the numbers of next quarter by the beginning of next year. We're still working on that the same way we did looking to the portfolio's that we want to have in the long-term, understanding how to manage the portfolio to balance that in the long-term to be more resilient through the cycle. And this is the discussions we're having now. I cannot anticipate that because we didn't finalize, we still have some work to be there. So far, whenever we have this information available, we will share with you Thanks, Tito.

Going back to [Indiscernible] English. So now we have Rosman from BTG Pactual.

Good morning, everyone. I'd like to talk about valuation and your opportunity for M&A. So I want you to get the opinion, Milton, on the valuation of the bank in the world the ROEs are positive, most of the geographies, nonetheless, the valuations are very cheap because in the past, it was very low. And we didn't know what was the real book and what was the ROI? I think that Jamie Dimon had complained about the deficiency of capital in the United States. In Santander, it talks about the unfair competition with players or a non-banking players. So what is the challenge for the sector not only in Brazil? Have you discussed with other CEOs all throughout the world about this? And maybe to understand from you do you see this as an opportunity to have capitals, excess capital as your question? You have a sub optimal operation in Colombia, Chile, there is a space so you can be more relevant. So would it make sense to use some of that capital to eventually maybe purchase banks in the region? I think therefore, the bank is always challenging to pay above the booking because of the intangible. I wanted to get your opinion.

Thank you, Rosman. Thank you for the question. So I agree with your initial affirmation. Our vision is that the prices are cheap. We do not manage the business on the price of the share on the short term, there is volatility. There is always the effect of the bankers the effect of the competition, there is the effect of Brazil itself on the activities of the bank. So our share ends up having multiple effects. You can have the multiple bank, but then you have to look at a competition where we can have more upside, or a less upside. So that's what we look at here as on the long-term. That's how we deliver the value on the price of the share and the price of the dividend the value creation we believe because of the level of results that we are generating. Up ahead, the prices are low, not only ours, but our other banks outside of Brazil, we've seen that. This is a bank dynamic of the shares. The issue of the M&A, we've always had our history of records the bank is because of relevant fusion that happened in 2008. But we are always looking at opportunities outside of Brazil. The asymmetries are still very relevant. And regardless of the price of the assets, whether it's fiscal asymmetry, which is I have to pay a tax in different times the tax. You have an effective rate in Chile, lower in Chile and Colombia, and I have to bring it and recognize it in the books of the bank and capital above all. When they consolidate the assets in Brazil, we work with the appetite level of the board that is set 1.5 of 81 with 3% of level one, those operations run with the --…

Thank you, Milton.

Next question, Daniel Vaz. Welcome, I hope you have a great time in your new house. The floor is yours.

Good morning. My question is also on capital. I know that it was commented in the question of Tito. But I wanted to understand in your capital overview that variation of the origination of SME that we've just seen SMEs, that represents the additional capital that you have, in your opinion, will it be -- what is behind in more originations for the small and medium sized companies? Do you have any real movement seeing an improvement in the perception of the risk? Or actually these movements aren't the adjustment of the origination? If you consider, that's the first question. And last but not least in the renegotiation, we saw the stability in the quarter. I don't know if there is an effect of the [Indiscernible]. But maybe this will be a good indicator looking at the head. Do you agree with that information of the renegotiations? How do you see this from the standpoint of the bank?

Thank you, Daniel. First and foremost, capital is not an active restriction of the bank for growth. This is the main message that I wanted to leave through. When we do a capital plan, looking at the long horizon, we take into consideration the capacity of growing the portfolio within our appetite and ready to generate capital with our profitability level that we've managed to bring to the operation. Today we have the organic capacity for generating capital that is strong more than enough for growing the portfolios. So wouldn't say that your capital is a restriction in itself. And the only restriction will always be at this moment always appetite until we well -- how do we want to roll in which public the -- which product with which deadline which product portfolio is the optimal one so we can at least get volatility through the cycle. And this is the way that we working. Look at the volatility of the portfolio, wholesale and the more of a volatile moment. This is what we've tried to do with the retail portfolio. So we rather have less cycles of ups and downs and having a positive EPS with less volatility. This is what we try to do within a management at the bank. Capital is not an active restriction, but we the vision is to have that excess capital. We don't want to retain more of that excess and what we niche for growing investment. We've talked about the capital allocation at the beginning. If we were working with a defined capital by the board of 11.5, have said one ROE would have been 24% number. So we have an ROE of 22 and with a capital level one of 13. And we've managed to act to remunerate and allocate…

Thank you.

Next question. We have Gustavo Schroden from BDI.

Good morning, everyone. I wanted to ask two questions. I wanted to be more specific on the payroll loan. I know that you talked about the retail but this is a very important product. And while you have that reduction in the INSS portfolio. Looking at your material, you have -- you said that it was intentional the reduction because of profitability that was lower. I wanted to understand from you, I mentioned that this experience lead a [indiscernible] to happen. And if we look at the recent records, as this liquid is dropping, and while there will be another drop in the cap of the INSS. So if you can tell us what is the strategy, because this is a product that when we see that derisking happening across the board, all the banks are going through the rhythm, they decrease the appetite in more risky lines and credit card? So, the payrolls are a product that the banks use as a counterpart against the reductions on the retail. So can you explain what is the strategy on the payroll loan? I think it would be very interesting. And the second question would be on the ROE. You mentioned twice that if we had had adjusted as an equity one to 11.5, we will be talking about 24% of our ROE in Brazil. If your [indiscernible] is a perspective for profit, dividend sharing, dividend distribution, sorry, of course, according to the decision of the regulator, there is a possibility I mentioned that the bank has maybe a gain in efficiency, the PDD is dropping next year. So can we look at 2024 and it may be dreaming of an ROE 24%-25% next year? Thanks.

Well, I like to dream, I always dream big. And this is a bad set, we will continue to trail. Looking at the ROE. Well, clearly speaking, we still see quarters that are very solid, very consistent. You have determined of the year, another quarter, right. So how do we -- since we affirm in the guidance the guidance has predicted the result of ROE above 20 of course, we are reviewing the numbers for next year. There are elements well known, and those that we use, because of the budgeting looking up ahead. And there are the elements that are unknown. There may I always have changed regulatory change that is positive we are considering that. We believe I'm not going to anticipate that the profitability level that we are operating seems to seems sustainable looking at the horizon '24. Of course, there are levers on both sides, but ballpark, we can imagine I would say 20%, close to 20% seems reasonable, we would have to naturally look we are tracking the numbers here. So we can have more long term vision. But you say that it was '24-'25. I'm not, I cannot give you guidance on that. It depends on the FY the budgeting and the market conditions. But the dream is there, as you mentioned, and if there is an opportunity to improve without the management that was done with profitability, value creation, but now remember, I digress. We're going to have a cycle of reduction of the interest rate. And it's important not to look at the ROE. Are we isolated from the cost of capital, because if the interest rates are going to drop, because we mentioned that they're going to drop, what's going to happen is that the cost of capital is going to…

Thank you. Thank you, Milton.

English, we have with us Jorge Kuri from Morgan Stanley. Hi, Jorge, good to see you. Thanks for joining the call.

Hi, everyone. Thanks for taking my question. I wanted to go back to the credit card regulatory inquiry. I appreciate Milton's comments about how this has opened up a discussion about the card industry and know the different puts and takes and it feels that everyone's more educated on how the whole ecosystem works. But at the end of the day, the reason the interest rates are high is because you have all of the policy levels. And so it just feels that any outcome that cuts rates without modifying the [Indiscernible] will be artificial and not really move the business forward. So and we've gotten mixed signals from the government, the central bank has commented that they're open to it, but the finance minister has said absolutely not. And so where do you think the current thinking is, among decision makers, the people that ultimately are going to have a say in these on reducing the [Indiscernible] regulating the [Indiscernible] facing them out tightening them a little bit? And, so that's, that's question number one. And the second is, if, if that just doesn't happen, because it's not palatable from a consumer perspective and the negatives that that may have on consumption, and this is a popular government. How does that leave you if then the solution is just as simple as okay, but we're not going to move any of the different moving parts other than rates, and we're going to put a cap that is equivalent to 100% interest rate, interest payment over the size of the loan, kind of like what the law currently stands. What does that mean for you in terms of the growth of that business, the profitability of that business? How many cards you're going to have to cancel, because evidently at that, those level of rates, some of those are just not good businesses. So I really wanted to get more details rather than just this overview of everyone gets it and we're having this nice conversation. But it's a pretty simple thing, either you got the [Indiscernible] or the outcome for the card issuers is going to be bad.

Yeah. Jorge, I'll take you with me in the next meeting with the government because I really believe that you understand that it's very difficult to explain. I think the government understand the central bank understand, but it's a complex topic. It's not simple. This is something that the country has been working with for many years now. And it's very difficult to introduce the concept that to show people, what are the real impact, as you were saying right here. So being very objective, I have nothing to say, different than what you said at the very beginning. So we know that there is a disequilibrium. There is a way where the risks are not priced accordingly. We have BRL127 billion credit card portfolio out of BRL20 billion is paying interest. So how come? How can you bear the risk for BRL120 billion portfolio, and only BRL20 billion paying interest. Who pays the interest at the end of the day, is the less capable population and the delinquency as you have a solution adverse selection is very high. So you have to charge very high interest rates. So if you asked me what we believe, we do believe that the government needs to understand that the [Indiscernible] bear interest. It's only a communicational issue. That's all because it bears interest. The acquiring company anticipates to the immersion, immersion in embed the interesting side, the good and so there is no [Indiscernible]. But people believe that there is no interest at the end of the day. So that's why the communication comes like that the narrative comes like that. And people believe that because they don't understand and say, look, I have something and who pays that. They should bear the risk, they acquiring companies anticipate and get the anticipation…

Thank you very much.

Thanks, Milton. Next question, [Indiscernible] Bank of America.

Good morning, everyone, congratulations on the results. Two questions. I lost his audio. You lost his audio?

I can hear you. Milton, can you hear me? No?

Okay, two questions. At the beginning of the year, you do a hedge of the capital for real for the exchange rate, about BRL2 billion at the beginning of the year. Given the sale of the assets of Argentina can we expect those costs to be lower next year? And can you give me the magnitude of that reduction? Second question, Milton, I believe it's very clear that the appetite of the bank to give credit is improving, given the improvements on the delinquency, but I was itching to hear from you. How do you see the demand of credit? Do you see the appetite improving with the economy with the reduction of the interest rates? Can you tell us on the side of the demand more stuff?

Well, thank you. Objectively speaking, Argentina, in the same way that it had a negative CTA, for the cost of the hedge of the index would bring a benefit and not something bad, because of the difference in the interest rate, what will -- what caused the problem to carry over this asset which was the cost of result with the exchange rate in the Argentina. When I do the hedge of the capital index, the carry of that, of that Argentinian peso is positive in regards to the real. So in the last quarter, about BRL70 million so if we remove the two months would have been the impact -- positive impact that the cost of hedge. So we see on the long term, we have improved our way of doing the hedge, using well, using the hedge of the strong currencies, while the correlation with the real is very close to the other countries in Latin America. We have a big emphasis on euro and the dollar because there is not a big, it's not a good correlation. And that helps with the hedge and the interest rate that is dropping, that helps the cost of the hedge. That's why we see a reduction over the last few months. Argentina for that end, above all the impact there was a positive impact. It has while the carry of the currency was in favor in regards to the cost of hedge. That's the explanation. Looking ahead to the portfolio, we've seen an increase in the demand. I've shown you, the origination of the big companies increased over the last quarter, the capital market is coming back. So we see a market that is more active the company's anticipating dropping the interest rate. There are more positive prospective GDP growing this year. So we've seen a stronger activity. But we can see that in the third quarter. The GDP will be published should be weaker GDP because of the monetary policy as expected to control the inflation. But we seen -- we've seen the increase of demand on the origin nation. And we service fit very well with a great conversion level favourability great returns and well-priced operations. And when we see an exaggeration of pricing or market, we rather lose share, market share and defend our convictions on the long term. But the demand has grown and we've managed to service it in a very relevant way via capital markets, the numbers show that or the balance sheets are the big companies we've seen an acceleration in that quarter. Our expectation and it is that that will continue to be so in the long term future.

The same bank, different analysts. So we have with us, Nicolas Riva. Hi, Nicholas, good to see you. Thanks for joining the call.

Hi, Renato and Milton thanks for taking my question. Nice to see you guys. So my first question is a follow up on the question that Mario just asked about the Argentina sale, which is really why sell now that business? So you sold for $50 million, you had an important loss on the sale BRL1.2 billion. I calculate about 0.2 times price to book on the sale. If you can confirm, actually that was the price to book on the sale. And again, why sell now that that business. I know Milton that you refer before to the fact that outside of Brazil for you, it's difficult to generate, perhaps an ROE above your cost of equity and generate value for your shareholders. And then a quick second question, my initial question on the rounds on the ones on the Tier 2s the 29th, if you can, kind of can I know, whatever you do with the call is going to be been noted for market conditions and refinancing costs. But if you can at least tell us, confirm Milton, that given that the Tier 2s the 29th start losing capital next year, it's not called if the inclination would be if you will be more inclined to call even regardless of market conditions to some extent. Thanks.

Thanks, Nicolas. Thanks for your question. It's a very simple answer for Argentina. The NPV of this transaction on a economic perspective, looking from the shareholder view, is positive. And why is that? Because even though we don't capture the full book in Argentina, between the announcement and the payment, there was a relevant evaluation in Argentina. And there are multiple sets in U.S. dollars, the $50 million, what could the transaction at fair value the way we were planning. Second, the payment was made outside Argentina. So how can I get the capital out of Argentina with all the discussions? So the acquiring company had the capability to issue bonds outside have the approval to pay outside? So we received good $50 million, was not a [Indiscernible] transaction, when you try to make a better price locally. And the most relevant reason why we sold has to do with the CTA that generate these impact. The CTA, we've been accumulating for a long period. The net CTA in the balance sheet of the bank is positive when we consider the other operations that we have. But in the case of Argentina, due to the level of interest rate, it was a very, very huge impact. And we've been accumulating that for many years now. So what happens if we don't do anything is that we will keep accumulating some negativity in the long run. And the profitability of the operation, together with the CTA was generating a loss in our balance sheet was not remunerating the capital, and we have to keep the balance to keep the bank to maintain the cap, the bank, there is a lot of costs of maintaining the structure, we have regulation aspects, we have to consolidate the operation. So when you put everything…

Thanks. Very clear, Milton.

Next question coming from Carlos Gomez for HSBC. Hi, Carlos. Thanks for joining the call.

Hello and thank you for your patience and for trying to reach every single question at length. So briefly, first I would like to ask you about the wholesale portfolio, where the NPLs? I mean we were expecting to see a normalization of credit cost this year. I think that's fair to say for everybody. And it continues to be better than normal. Is that because they are coming later or they are not coming? And second, could you tell us whether you think the issuance result that you're having today is sustainable, or it should be higher or lower in the future? Thank you.

Yes. Hi, Carlos. Good to see you again. Thank you for your question. I hope we don't see the NPLs, so we are not looking for them. But just to let you know, I think it's a mix of things. Okay. First of all, we thought this year could be a little bit worsen in terms of cost of credit. And it's been better than what we thought on the wholesale spectrum. But you have to remember, and you know, that better than most of us that the NPL in the wholesale, it really happens at the very end of the process. It's very difficult before you go to the NPL, you do a restructuring, you do a negotiation, there are clients that go to bankruptcy, or to Chapter 11. And they are not to do with their obligations is still. So then they always not a very good index. I don't like the index to look to the healthy of the corporate portfolio. We have to remember that the middle market is in the SME index, so we are talking here basically about large, ultra large clients in this NPL. So our view is that the level of provision of that we have in balance sheet is very high. That's why we have this level of coverage through NPL in the wholesale portfolio, because you can name by name in the credit committees, and you apply a rating, you attribute a rating for each client. And this rating defines the level of provision that we have to make. So in most of the cases, you will see clients that we have 70% of provision. Let me give you a good example, America and us which is a public in name. We have 100% provisions, has not gone through NPL.…

Now there are two questions to finish. Next, in big Henrique Navarro from Santander.

Thank you for the opportunity. Well, it's great to talk to you guys. My question, from what I understand of the conversation itself, Itau starts a cycle of accelerating the credit origination, that origination doesn't appear in the numbers of the fourth -- first quarter, because there's still a process of derisking of some portfolios, specifically open ocean. Okay, looking at ahead, where do you get that credit growth? Because of all the participants in the market that we talk, it seems that all everyone is avoiding the open ocean, everybody is reducing the open ocean. In the existing clients the indebtedness of the family is still dropping, but it's so high. But where do you get the growth from? Well, maybe the high income, there's a lot of bank saying that are going to grow in the high income, we see that their high income is with the violence of credit. We cannot just depend on the high income per se to have the growth. So I want to hear from you, where are you going go grow that growth.

Thank you, Henrique. [Indiscernible]. First we are talking about wholesale -- retail, sorry, where the individuals. We've grown consistently and also we're the companies with the derisking was done with this process in the company's retail with great results. So we've worked with the companies that have a higher invoice. We didn't focus on the base of the procurement, or makes it different from the market this explains a great deal on the performance that we've done that we've obtained. We still have -- see a great opportunity and a lot of space for growth. And Bu for the company, and we have grown with accelerated high levels. The portfolio of SME had a great acceleration also, and we see a great increase with the middle market and middle market retail. In the individuals we've gained share with our clients, which is very important. These are well known clients that we have grown, I agree that we cannot imagine that other growth is going to be an income because it's not. And it's not just high income, but our portfolio management personnel has an important role. Our credit card 120 billion two thirds is not a high income. And we've still managed to do business with profitability, all the crops that were produced in the quarters, with great quality, in all segments that we've managed to grow. But there's still some adjustment in the portfolio. And I mentioned, the delinquency and vehicles and credit cards dropping. So you have an inertia of a risk, high risk portfolio that is reducing importantly, renegotiated stable, and the portfolio with the better quality growing. This is a combination that makes our growth being less than what we observed in previous years. But still, we've managed to do a positive margin and making a…

Thank you, Milton.

Next question from Yuri Fernandes -- wait for the -- well, if you can just wait a few minutes. I'm going to get back to you. From Carlos there was an answer, because Carlos asked you about insurance business as well. Yeah, because we had an audio issue. Carlos asked about if you see this the insurance business being sustainable going forward. What was your forecast?

Carlos, sorry for that. I didn't hear that question. We had some audio issues. But here I am again. So the first year we believe is sustainable. We had this acceleration somehow compared to the other periods, because we were growing 50% year-on-year. So we reduced to 20 25% year-on-year on our car insurance business, which is three quarters 75% of our business has to do with the car business that we believe banking assurance. And with this expansion in credit and all the expansion I was making -- talking right now about the cross sell with this One Itau platform so on and so forth this will give us the capability to keep growing insurance in a sustainable way. So we still very positive. We found a way to grow. We are very embedded in the operation, a huge synergy with the commercial team, the insurance company's team. We changed the way we approach clients. So we're very comfortable that this will keep on track and will be sustainable in the long run. We are very positive about the insurance. And also if you look to the P&L on the insurance side, you'll see that we've been growing the premium that we receive in reducing the cost of losses. So our combined ratio has been evolving three points from 53% to 50%. So it's a very good combined ratio. And also the open platform has been playing a relevant role. And we will keep pushing that so on, and so forth. So we have the manufacturer, the distribution and the open platform, they have a very relevant role in our business.

Thank you, Milton. Last question. Thank you, Yuri for your patience. Thank you, the floor is yours.

Thank you, Milton and Lulia. Just one question. Quick question. It's about the digital transformation of the wholesale or retail, I apologize. So it really brings your attention to the level of the opening of new digital accounts, there is a drop. So it was 900,000- 1 million, and this quarter was 700,000-750,000 open new digital accounts, maybe the bank is still cautious with the open ocean. But more than that the number of the accounts being opened on the table, there is the data of the share of digital transactions per volume. When we look at digital transactions of credit investment payments, we see stagnation. My doubt is along that line of digital transformation, we will see, but I wouldn't say that this is an inflection point. It's circular. But maybe there will be less growth in the penetration of the digital channels. Well, that's it, thank you.

Sorry, that you're last. But you're the last but not least. First of all, let's start by the second part, we certainly are working strongly in digital, but we understand that we went through a high level of penetration. Therefore, the new penetration, the marginal will have a lower speed because most of the space was reached. Now, having said that, we are very focused, we are reviewing the client journey, the access to the digital channels, making our clients digital, we even believe that the mix of the clients in the market, you will improve the penetration of the digital channels. And we're going to see an evolution that is maybe smaller than what we observed in the previous quarter because deepening acceleration roll and after the pandemic was over the inclination, or the slope of the curve has changed as you're correct. And we're following up on that. And the relevance is important. The importance of the network, it shows not only an issue of the digital channel, but how the other physical channel is so very important and how the client still like for credit for investment still have access to the branch, the on site, you talk to their managers to understand that only reinforces the other side of the same coin. If we were a full digital bank, a relevant part of our revenues would go away. And it is the defense of digital model, we have to look at the penetration of digital channels, and we are following up on that. But we also have to look at the relevance of the on site service for that offering and the delivery of value for the clients. So this is the other side of the coin. About the accounts receivable, well, the reduction, the account…

Thank you, Milton.

Well, that was the last question of the analysts. I think part we have several questions via WhatsApp, we're going to answer thereafter with the IR team, and therefore we finish our Q&A session. Thank you, everyone that was connected to us for two hours. The floor is yours, Milton, for your final remarks.

Once again, thank you very much. It's a pleasure and privilege to be here with you. I believe that the numbers that we've managed to communicate to you, we've been very careful to provide transparency. The numbers are always numbers. So you can ask questions, we are now going to leave with that and maybe I cannot answer at the time, but you're going to get an answer. I can guarantee that we work with transparency. We understand your questions, we always do a debriefing protocol to understand what is a message to concern so we can have surety that we do not -- we don't have any blind spots. Thank you for your questions. And I hope we hope to meet your expectations, very happy with a result. Very trusting in the future. We really believe in our journey whether it's digital transformation, efficiency, cultural transformation, and we've managed to change the value vision for our client. This is the most important thing. We've grown an engagement and our clients and all the segments. With that I finish. I think that I spoken a lot. We've seen -- we will see you with it may be in the [Indiscernible] in the next call. Thank you very much and have a nice day.