It’s a very relevant distribution, three times the dividends of 2022. What is our policy from now on? It’s not to retain the excess. That has to be very clear. We will look at the uses on throughout and the sources of 2023. How are we generating capital, the result, and how we are applying it, whether it’s in organic, organic opportunities, portfolio growth, and regulatory changes that are coming up ahead with the tax reform. Looking from that standpoint, we will look at the next year, we will do the projections, and if there is an excess, our expectation or our decision is to distribute the capital excess. Don’t look at that extraordinary dividend as an isolated event. It’s an important dividend. And looking up ahead, we have to understand the excess.
Well, nothing into consideration, the effects that were already aforementioned, we are going to continue to distribute an extraordinary dividend with more information and the results and the effects therein. Thank you, Milton. Well, I thought it was dividends, yes.
Renato Lulia: Second question, Gustavo Schroden, Bradesco.
Gustavo Schroden: Congratulations on the results not only of the quarter but the year. I wanted to talk about the guidance and since Milton already gave us a soft guidance of an ROE above minimum 20%. That would be the point that we have to start. It seems conservative to me on your side. So I wanted to discuss with you. Can you go over please on what should we expect of the guidance, the main lines? Where can we work more as the higher threshold, the medium threshold? Should we, well on my side we see the upside rather than upside in PDD taking on the NPL trajectory that we’ve seen but if you can just give us your true sense on those two lines and can we work above or below the guidance and can we assume the 20% that you indicated as the conservative ROE but I want to check you from you.
Milton Filho: Thank you, Gustavo. I hope that you’re right. We’re going to work so that you’re correct. Well, the guidance in the end it’s our best estimate. We are coming from a budgetary procedure. We always have a temporary guidance. Well, we have the average point of these lines. The medium is always a good reference. If you look at the last quarter, we were running Brazil with 22.2% of ROE. Very strong. Had we unloaded the dividends in the way that you’re seeing it right now, the results would be 23.4% ROE of Brazil. The effect of the dividend generates a basis effect that improves the ROE reduces the net result of the bank because of the working capital but it improves the relationship and it makes the ROE better. So I believe that we have to look at the year for the opportunities for growth of portfolio.
The average is reasonable. There is the exchange rate in Latin America, which is uncertain. So taking away that, there might be some opportunities for the growth of strong portfolio growth, depending on the scenario, the perspectives, the credit cycle. So I believe that working above 20% is a great reference. We didn’t give guidance of ROE. We are working above 20%. Can it be more than 20%? Of course, we’re going to work to deliver an adequate profitability given the scenario and the opportunities therein. Because of credit, we’ve been very successful all throughout the cycle. You’ve followed the bank for many, many years. We had a difficult cycle. Some portfolios suffer more. In our case, credit card, very relevant portfolio, R$ 135 billion.
The vehicles, very important, R$ 33 billion. Those two portfolios naturally, they suffer more. Now, the good news, it corroborates your vision with the cost of credit, is that the vehicle portfolio, fourth quarter consecutive, that we have a reduction in the overdue fees of 90 days, credit cards is the third. In the natural persons it is 50 basis point reduction in credit cards. It’s basically the double, double the reduction with the nominal of the portfolios growing less. So it shows that the cost of credit is behaving. What does the guidance have? It has a level of uncertainty because we have the portfolio of wholesale that is very relevant in Brazil and Latin America. And you can imagine a normalization of the delays of the wholesale. I’ve talked about that, we expect that by 2023, we had a benign effect except the American event in January.
We had a portfolio with the cost of credit that was very well behaved below the minimum thresholds on record when we look at the long-term cost of credit, our expectation is that we can always have a normalization if that doesn’t happen and there is in any case the really concerns us or that we do not have the adequate provision, we don’t have that, but we might consume some thresholds of the guidance, but the cost of credit is positive. The other lines, they are well calibrated and the costs depend on us. Where I think that we are going to have to follow up is the portfolio of the margin and the cost of credit depending on the events that I commented and we’re going to update you all throughout the next quarters and I am hopeful that you’re right, we will work to deliver an ROE better than 20%.
Renato Lulia: Well, let’s now we have Mario Pierry, Bank of America.
Mario Pierry: Hi. Good morning, everyone. Congratulations on the result. Thank you for taking my question. Milton, I wanted to understand your guidance of the growth of credit. Can you give us a breakdown? What are the lines that you expect higher cost? Because when you look, when you see, well, the macroeconomic scenario is positive, the bank has a great capital and the growth nonetheless seems timid. You’re talking about a nominal growth of the GDP, 5.5%, 6%. A portfolio growing 8% seems a bit shy. I wanted to understand how do you see the product itself?
Milton Filho: Thank you, Mario. Beforehand, thank you for the question. Thank you for being with us today. And I wanted to tell you, when we look at the portfolio, I’m going to do a deep dive. We hope that the companies, whether if it’s retail or the big companies, they will grow above the average point that you observe. So they carry over that. The natural persons, they grow less in that relationship in the average of the GDP. And there is a relationship there. We expand, we will expand on the products that make sense in the target segments that we are growing above two digits. But here there is a double effect. First effect, the natural persons portfolio, there is a renegotiation drop, which is good for the overall balance of the cost of credit.
But it’s a natural offensive of the balance sheet. And second aspect, when we look at the portfolios, we have the decision of reducing nominally some portfolios, important reductions that saved about 200 points of delays in the over 90 delays. So if we kept the same mix of growth that we had in the pandemic, we would be running in the natural persons, something about 6.4, 6.5 of the late 200 points above. So when you look, you have the opportunities of growth. The portfolio of real estate has grown a lot in the pandemic with low interest rates, high demand. With higher interest rates, we see that there is less demand, even though we are keeping good market share of production, the nominal dropped. So, we see INSS, and there is a pressure, and we have the caps that we already mentioned.
So, it seems that there are some effects that play against, like payroll loans, but some that are positive. In credit cards, we have derisking of the portfolio, and we are growing strongly in the target segments of the back. In real estate, we can see a deceleration. In the last quarter, we can see a deceleration of the personal credit that is very specific, the reduction of the 13th salary. Well, that happens, and there is the effect of the renegotiation portfolio, which tends to continue to drop. That is the overall of the mix. There is a capital markets effect. We expect a good growth. We are depending on the capital markets that are more active, if they are more active, we are going to give the preference for the capital markets. This is the cheapest financing of the great corporations, and we lead this market, so we have the cross-sell, and it generates engagement with the clients.
And there is an effect which is difficult to predict, which is Latin America, which is the exchange rate devaluation in these numbers, implicit, and the numbers can change all throughout the cycle. So, breaking down the portfolios, we are very comfortable with the mix that we are going to grow, and if there is an opportunity to grow, we are going to grow more. And you can see that the NIN has a stability, expanding, and the risk adjusted line above all. And it shows growth above the average, and it shows the cost of credit nominally dropping, which has a net financial margin that is improving all throughout the year. We are very comfortable with that level of growth and if we have an opportunity then we are going to seize those opportunities.
We are very focused to service our good clients and continue with the engagement and customer centricity and the NPSS that are the highest levels of the bank.
Renato Lulia: Next one we have here Rafael Frade from Citibank.
