Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Regional's third quarter 2022 earnings conference call. We're joined today by Manuel Rivero Zambrano, Chief Executive Officer of Regional. Enrique Navarro Ramirez, Chief Financial Officer, and Alejandro Lobeira, Head of Strategy and Planning and Investor Relations. At this moment, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press the Raise Hand button. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Manuel Rivero Zambrano. Thank you, and please go ahead. Thanks. Good morning, everyone. We appreciate everyone's participation today. Regional achieved outstanding results during the third quarter with our portfolio maintaining the positive trend versus the system and maintaining an outstanding asset quality. Our commercial loan portfolio has grown at a compound rate of 8.3% during the last five years, compared to 4.7% of the banking system. Our financial margin and non-financial income keeps expanding rapidly as a result of higher policy rates, a solid expansion in our profitable business segments, and a strong growth in term deposits. Regional reported MXN 1,303 million of net income during the third quarter. This represents a 50% improvement year-on-year, achieving a quarterly ROE of 22.4% in an ROA of 2.8%. The financial margin expanded for the fifth consecutive quarter, reaching MXN 2,522 million with a 34% year-on-year variation. The strong upside trend in the financial margin is a result of our successful strategies to maintain double-digit growth in deposits, higher margin loans, and a higher positive rate. The NIM for the third quarter was 5.9%, and the NIM of total loans was 7.0%. Our loan to deposit ratio continues to improve on a year-on-year basis, reaching 100%, while our CASA ratio stood at 57%. Regarding our asset quality, our portfolio keeps showing an outstanding behavior with the NPL contracting 35 basis points against the third quarter of 2021, standing at 1.3%. Furthermore, the cost of risk declined 17 basis points year-on-year, reaching 0.67%. During the third quarter, MXN 207 million of provisions were created, and the coverage ratio stood at 173%. The non-financial income keeps showing a very accelerated growth, presenting an increase of 26%. The main growth driver for the line was merchant acquiring business fees growing at a 69% year-on-year, and insurance income growing 55%. Likewise, FX fees increased 21%. Total revenues for the quarter amounted MXN 3,001 million, which is 29% higher than the third quarter of 2021. On the other hand, operating expenses amounted to MXN 1,306 million and 11% year-on-year growth. The increases general expenses were driven by our customer acquisition strategies that have led to higher marketing expenses. Additionally, expenses related to the volume of expansion of our cards and payment business, which are presenting double-digit growth. Since these expenses are income associated, we will continue to see this item growing as we keep expanding our active customer base. Salaries and benefits amounted to MXN 763 million. The growth is explained by technology expenses related to the hiring of more developers, a higher headcount in services areas, and the current inflationary trends. Even though we're satisfied with the size and capability to retain teams, the approval of banking license could lead us to increase the headcount, especially for our mystery areas. Despite the dividend payments, this year, Regional's capitalization ratio remains solid, standing at 15.2% as of August 2022, which generates an excess of capital of 316 basis points compared to our original limit of 12%. During the quarter, the total loan portfolio Regional delivered 9% growth, which was led by the SMEs and consumer portfolios, which keep growing at double-digit rates. For the next quarters, we are optimistic for loan growth, as we are confident that the growth pacing for indirect investment in Mexico remains at a possible potential benefit for credit demand, particularly in the North and the North central regions of the country, which industries like manufacturing, industrial warehouse builders, commerce, and agriculture are growing at a very fast pace. We are continuously reevaluating the behavior of our portfolio, as well as the market conditions, to seize opportunities where we are able to serve industries with better dynamics that improve our profitability and asset quality. For Banregio, the wholesale portfolio had a loan growth of 6%, while deposits keep increasing at a double-digit pace, expanding at 80% year-on-year. We expect the trend in deposits to continue during the next quarters, which will benefit Regional to further improve its margins. Regarding Hey, it keeps attracting new clients as our customer strategies are delivering high-quality growth. This quarter, we successfully migrated Hey clients to a new independent technology infrastructure, and this will allow us to cater at least five times more active customers than we have right now. Unfortunately, this past quarter, we had to pause social media marketing expenses, which hinder customer growth and client satisfaction. In the third quarter of 2022, Hey passed 517,000 active clients, which stood at 1.8 products per client, an NPS of 62, a cost of acquisition of 132 MXN, a lifetime value of 3,877 MXN, and a lifetime value over cost of acquisition of 29.4 and an ARPAC of 119 MXN. Our merchant acquiring business continues showing excellent results with the transaction evolving, growing, showing an average monthly billing for the quarter of MXN 10,139 million at 55% increase versus the third quarter of 2021. The number of POS increased 20% to reach 39,202. As of Hey Tech, we are enthusiastic to have our first client, Ventario, which next year will be running on the same digital solutions of Hey Banco. This will allow us to communicate faster, enable better customer service and more efficient, higher, and more efficiency and higher cross-selling rates. Our main objective is Ventario achieves similar KPIs through Hey, but with larger volume clients, which will accelerate regional revenue streams and customer engagement. We are convinced that we are building a solid leading platform. We are at least three years ahead of the digital alternative of banks in Mexico, in which we have launched three versions of the app, while at the same time we have continued to refine all our processes and proprietary technology. enables us to achieve a high efficiency and effective operation, as well as a deep understanding of the market dynamics, allowing us to continually enhance product offering while strengthening our user experience. We'll continue to use innovation and data intelligence to serve our customers of any size and sector, always aiming to expand our cross-selling capabilities that will result in higher customer lifetime value. Lastly, we are updating our guidance for 2022, given the results of the third quarter, last three quarters of the year. We updated the market conditions. The new guidance for net income ex-AIF for this year is growing at 30%-35% compared to the previous range of 13%-17%. We expect the ROE of last 12 months to be from 18%-20% versus 17%-18% range that the previous guidance that we had before. To summarize, our strategies have resulted in higher margins, a consistent increase in non-financial income, a continued double-digit growth in deposits and even better asset quality and accelerated expansion of our digital banking channels. We remain confident to achieve the objectives stated in our guidance as our commercial and risk management strategies keep delivering satisfying results. A distinguished customer service and an ample offering would lead to a better customer satisfaction, which we consider as a key pillar to keep redefining the financial service industry and maintain Regional as one of the leading financial institutions in Mexico. Thank you very much. We appreciate any questions. Ladies and gentlemen, to ask a question, you will need to press the Raise Hand button. To withdraw your question, press the Lower Hand button. Please stand by while we compile our Q&A roster. Our first question comes from Ricardo Buchpiguel. Please go ahead. Good morning, everyone. Congrats on the good results. I have two questions. First, we see that NPLs are still in historical lows at around 1.3%. I wanted to understand what is your view on how NPL should behave in the short term, and what that means in terms of cost of risk, especially also considering that coverage ratio is at also historical highs. For my second question, if you could please talk a little bit about your perspective for loan growth and need for next year will be helpful. Thank you. Thank you, Ricardo. In terms of what we're expecting on the cost of risk, we do have our guidance in 0.7%-0.8%. We definitely think that we're gonna be with a better result this year than we expected. I have a sense that we can achieve a similar result that we have had this quarter, as we don't see a pickup trend in terms of collections in all of our lines of portfolio. In terms of next year's guidance, I don't wanna do a formal guidance, but we are seeing a positive trend in many lines in terms of continuing our growth in terms of loans. We're satisfied to continue seeing more and more positive trends in our wholesale business, mostly in the north central part of Mexico, which has been a positive trend in terms of foreign direct investment. In a sense, we see difficulties in terms of growing with a high rate, growing loans at a higher rate. It is difficult to say that we have clear wins ahead in terms of growing loans. We think that we have right now a positive trend, which will continue to serve for growth in the next following quarters. But definitely we're keeping an eye on how the interest rate hikes. Which has cooled the economy further, in terms of hindering growth in terms of loans. We have not seen that at the moment. We have not seen that in the multiple lines, even in the wholesale portfolio, which is more volatile in that sense. But definitely, we'll keep an eye on that and keep you informed as we see that line, you know, of customer growing. We definitely see a very good result in terms of cross-selling our retail products, and that will deliver customer growth in the consumer portfolios, which will allow us to continue expanding our NIM. The good thing about it is it's customers that we know, right? It's customers that we serve in their checking accounts, customers that we serve in their deposits. In a sense, we have a lot of knowledge of these customers, and have a very good relationship with them. We think that we are gonna be able to continue growing those portfolios at a very good rate, and with achieving very good results as we have had in the last three quarters. We're definitely positive in those parts of the balance sheet, right? I think it will depend on how the impact of the hike of interest rates has on the local and community, but definitely foreign direct investment is helping a lot to drive more demand as we've seen in the short term. hope I give you more color. Yeah. Thank you. Very clear. Thank you, Ricardo. Our next question comes from Ernesto Gabilondo. Please go ahead. Hi. Good morning, Manuel, Enrique, and Alex. Congratulations on your results, in both your strong earnings growth and in your high ROE. I have some questions. Let me start with a follow-up on your new guidance. Basically, where you see the improvements is on NIM expansion, no, on higher rates, and the cost to risk. Can you elaborate on your NIM expansion? Where are you seeing rates for this and for next year? In terms of cost to risk, actually, as you mentioned, could be below 0.78% for the year, right? Hi, Ernesto. In terms of NIM expansion, basically what we see is that the rate will continue growing. We expect around 10%-10.5% at the most. The policy rate, the TIIE very close, 25 basis points above. We will see the NIM expansion will continue as we increase the price or adjust the price in the variable rates. As you know, more than 70% of our portfolio is variable, then it will automatically increase. As Manuel mentioned, we are increasing the consumer lending, mainly credit cards and auto, the new cards and the new auto loans have a better margin than the one in the portfolio. We expect the NIM expansion to continue basically in both portfolios. In the wholesale because it's mainly variable rate, and in consumer because we have adjustable auto loans and credit card is variable. In terms of cost of risk, as Manuel mentioned, we are maintaining our guidance of 0.7%-0.9%. It will not be reached for the whole year, but if you see this quarter standalone, we're around 0.66%. We believe we're reaching a stable level of cost of risk. Starting next year, next year will be very similar, as we will have absorbed all the impact of the new quality scoring for the loans. I don't know if I was clear. Yes. Yeah, super helpful, Enrique. Let me go to my second question on the potential regionalization and reassuring opportunities. We see that almost half of the loan book is located in the north of the country, and also you have a very nice exposure to the center states of the country. How are you preparing to take advantage of those opportunities? Can you elaborate in which subsectors is Regional planning to participate in the next years? Basically, Ernesto, we are, in both senses, we are expanding our infrastructure. We are hiring a larger number of bankers, not only in the north, also in the center of the country. During the COVID lockdown, we did some layoffs of bankers, obviously the worst ones or the ones that were not delivering results. Right now we are growing back in the center. In the north, we are reinforcing the infrastructure, the number of bankers, the number of branches either or also. That's basically what we are doing. We have not changed our credit approval policies, because we never changed it neither during the pandemic. We are very open to new loans. We are very strong, as you can see in our balance or in the sector slide in the conference call presentation about more real estate and within real estate, one big proportion is home building, but also another big one is industrial property. We will continue lending to the industrial property market that is very saturated in the north. I guess you have seen the reports from the FIBRAs. Mm-hmm. Mm-hmm. Especially the FIBRAs that are in the north and are in the industrial rental property. There are no new properties to rent available right now. They are constructing new ones. Also in the Bajío. The Bajío zone is gaining more on the Querétaro than in León. That used to be the more growth. All the Bajío is growing, both Querétaro and Guanajuato State and Jalisco. We are reinforcing our infrastructure also there. Basically is what we are doing. Oh, very helpful. Thank you very much. Just my last question is on Hey, your digital bank. We have seen recently that Banorte got a digital banking license. Just wanted to know from you, when are you expecting to get your license? Also related to Hey, is Hey already profitable? Is it in your strategy, profitability versus client growth? If that is the case, where do you see the medium term ROE target for Hey? Well, in terms of what we're seeing. Well, definitely good in terms of more competition in the digital arena. I think more investments there will continue to further the convenience of the customer base in terms of adding more value in the digital products, being able to achieve better efficiencies and being able to give customers better rates and smaller fees, right? It is good that in that sense more and more competitors are entering and giving a more dynamic environment. In terms of time to market, I think definitely we are way past the process that Banorte is right now. We are way ahead in terms of understanding the market, in terms of getting to know the complexities and being able to achieve growth in a very profitable manner. Yes, we are profitable in our Hey Individuals, in our credit card business, in Hey, in Rich, in Hey. All our merchant acquiring business, which is Hey Pago, is very profitable. Yes, our aim is to continue growing at a profitable manner. We are not looking to grow just for growth, right? We're growing to understand the customer dynamics and understanding the value, and that's how we're adding more and more value to Regional and aiming to have a more massive customer growth, right? Without hindering the customer service, which is obviously quite complex. Right now between Banregio and Hey Banco, we have above 1 million customers. Very enthusiastic about next year's growth. We definitely think that we're gonna be able to achieve the 1 million customer mark for Hey. We are very positive for Banregio's trend too, in terms of customer growth, as we are gonna be able to, for example, go for our p ayroll lending, which we didn't want in the past because we didn't want to have that business in our more high-end branches. With technology, we are gonna be able to cater those clients and being able to serve them and being able to cross-sell more. In a sense, we are very positive in terms of customer growth for next year in both markets. In terms of being independent, we're expecting, hopefully this January, to receive the approval from the authorities. I think we're gonna be able to have an independent operation in the second quarter of next year. Excellent. Just, a follow-up on this. In the past, Banorte has mentioned that the digital bank should have a cost to income level of around 25%. Do you agree on that? Are you close to that? Again, no, I think it's still soon to think about a target for the ROE, but is this something that probably you will start to provide in the future? Well, we definitely, in the model, we see very positive trends. Obviously, this is not a guidance, and we don't want to give, in a sense, a - y ou know, no official guidance in terms of ROEs, but what we're seeing in terms of ROEs is definitely very high ROEs above 30%, and cost-to-income definitely at those ranges. Oh, excellent. Excellent. Thank you very much, Manuel. Definitely. The most impressive thing about Hey is being able to achieve quality customer growth. I mean, right now we have MXN 10,000 million in deposits, which is completely grown digitally. It's amazing how customer engagement has been reaching those levels. I mean, we only have MXN 5,000 million in loans. In a sense, we have a very liquid bank, which is gonna be profitable since day one and growing at a very fast pace. We think that most of the investment in terms of technology has already been impacted, so we don't think that we're gonna be hiring many more developers as we are reaching a level of understanding and a level of satisfaction in terms of the app and the onboarding technology. Those developers, in a sense, will continue to have a good positive trend in terms of operating leverage. Oh, excellent. Thank you very much, Manuel, and congrats again on your results. Thank you, Manuel Rivero Zambrano. Our next question comes from Jorge Henderson. Please go ahead. Hi. Thank you. Good morning, and congratulations for the results. Thanks a lot again for the Q&A space. My question is on asset quality. Hey Banco has increased its share in your asset mix. It now represents about 5% of your total portfolio. You mentioned this portfolio has a higher yield and that you should benefit, your NIM should benefit because of this. What should we expect in terms of asset quality? How different is Hey Banco's cost of risk versus Banregio's cost of risk? Should we expect a permanent change in your stable cost of risk? Thank you. Well, in a sense, I mean, the models of credit assessments are as prudent as Banregio. The customers should be very similar in terms of comparing portfolio per portfolio, right? I mean, sorry. In that sense, it is quite the same. Now in a matter of the portfolio that Hey will grow, sadly, credit cards require a lot of reserves. In that sense, growing credit cards is a very costly business in terms of reserves, which obviously is just a financial cost, right? We are catering clients which are already banked in terms of credit. In terms of deposits, obviously we're catering everyone. In terms of credit, right now we're only catering customers that already have a relationship with another company. That's why we love Nubank, right? Because they're giving more color to the system, right? In a sense, that's why we will have, on a comparable basis, very similar cost of risk than Banregio. Catering customers of high creditworthiness has given us a very good edge in terms of operating expenses, and that's why we love it, and that's why we are aiming to better and better customer satisfaction in order to gain more and more traction in those customer bases that we see that in other banks have very, very bad service. In a sense, we think that we will continue growing, and in that sense, we will continue doing reserves, sadly, because that's how the law requires to do a lot of reserves, either or that you didn't have the expense of Of write-offs. Okay, thank you. As of right now, for example, in our credit card business in Hey Banco, we have write-offs below what Banregio has at the moment, even though we have the same number of credit cards, right? I mean, obviously, the outstanding loans are much higher in Banregio that have a loan portfolio which is much more, which is older. But what I'm trying to say is the aim is on quality customers. In that sense, we will continue to have very low cost of risks in those portfolios compared, obviously. Of course. I'm sorry, just a follow-up question there. You're expecting Hey Banco to boost the cost of risk of 0.8%, which is what you expect for the- No. I'm saying compared to the portfolio. Sorry, not to the whole portfolio. I was saying, as Hey Banco has more credit cards and more consumer and more small business, it will have a cost of risk higher. If you compare the cost of risk of the portfolio of credit cards of Hey Banco and of Banregio, it will be very similar in the long term, right? Right now, Hey Banco is below, but it will catch up to those similar levels of Banregio. In that sense, the same is true in terms of mortgages, the same is true in terms of SMEs, and in terms of auto loans. Compare between the portfolios, it should be the same cost of risk. In terms of the added cost of risk of Hey Banco will be higher as we need more reserves in the credit card portfolio and consumer portfolio and the small business portfolio, that's how, sadly, the law is written in Mexico, right? We think it's not good because it disincentivizes. Disincentivize. Yeah. Disincentivize. It doesn't drive banks to lower the prices in terms of needing to do reserves. Obviously, that model is calibrated for banks that have a very high cost of risk, for example, Coppel or Azteca or BBVA or Banamex, which have very big portfolios that have all types of clients and normally have higher cost of risk. We are not aiming for those customers at the moment, and we definitely see that we have a lot of potential growing. As you can see, our customers in Hey Pro, which are the most engaged customers, give you an idea on how credit growth will be growing at a very fast pace, but definitely with very good quality. Okay. Thank you for the complete answer. I have a second question, very quick. I'm sorry then. It's about your cost of funds and also related to Hey Banco. Now, we're seeing that the Hey Banco deposits already amount to 8% of total deposits. These deposits are costlier than regular Banregio's deposits. My question is: How do you expect this trend to affect cost of funds, and what do you expect in general to be the main drivers of cost of funds ahead as interest rates reach peak and start to decrease in the future? Thank you. Well, we only give that high rate customers of Hey Pro, right? Those are the ones that are receiving that high rate. The others are receiving a much lower rate. That's part of the marketing strategy, and it's helping to not impacting the cost of funds, but growing at a very fast pace, right? You have to have six transactions, so you have to have an operating checking account. In that sense, that's how we're growing the checking accounts and lowering the cost of risk even further, right? It is a marketing scheme in the order of having a high rate, and we are giving that high rate. It's not something that we're not doing. It is something that we've been able to do because we can invest those funds very easily in the market at very short-term bonds and having a yield at the moment, a very positive trend. That is a thing that we can do right now, and that's how we are keeping up for that growth. Obviously, we will love to grow loans at a faster pace, but definitely, as you already know, we're very prudent in that sense, and we're catching up, I think, probably in the next two or three years. In a sense, we are very able to give those rates to those customers because we don't have all the management in terms of branches and cash management in that sense. I think that we will be very able to continue. This is not so only because we're a digital bank, right? It's how the offering it is structured, right? It is a very particular thing, Hey Pro, and that's yielding very good results, and we're being very able to cross-sell more and more customers. In a sense, the 2.7 products per customer that we have in Hey Pro more than outstands the yield that we're giving those customers. As you can see, the lifetime value of the Hey Pro is outstanding. I mean, I haven't seen any documents in the world that's yielding those lifetime values in the digital arena and growing at that pace. We're very positive there. That's how we will continue to being able to easily give a very good rate on those deposits. Great. Thanks. Thanks a lot for the answer. The average cost is 66% of TIIE. In Banregio it's around 60%. It's not that far above. As Manuel mentioned, we have the mix and we started last quarter to gather deposits from businesses, and it's mainly checking account from businesses. But all the mix is around 60. No, not around. It's 66% of TIIE with the current value of the TIIE. Thank you. Our next question comes from Gustavo Schroden. Please go ahead. Hi. Good morning, everybody. My question is still on Hey Banco. Sorry about that. My question is about the client profile. If you could give us an update of a client profile, especially as you are growing. If you could tell us in which regions are you growing faster in Hey Banco? What type of clients in terms of income, in terms of age. So any color on that would be great. As you mentioned about Nubank, I think that we discussed about competition versus Nubank, but how do you see the competition versus Nubank, for example? Are you fighting for the same type of clients or different clients in different regions? Any color on that would be great. Thank you. Thank you. Thank you, Gustavo, for your question. The customer base of Hey Banco is pretty different from that of Banregio. Mexico City and Estado de México, both of them, have 25, between. It's like 30% almost. 30% of the customer base. 16% is in our home state and 7% in Jalisco and 48%, in all those. 6,000 customers in the U.S. That's a good thing. We think that I mean, with the customer, obviously, it's younger than Banregio. It is between 30-35 years old. It is not 20 years old, right? We do have 20-year-old accounts, but we have children account, but the average will be 30-35. Compared to Banregio, for example, the average deposit and/or checking account, it's three times less, right? You can imagine that we have a lot of room to grow there in terms of adding new customers without overlapping in Banregio in any matter. In a sense, there's a huge potential, we think, for those clients that are served through branches in other banks that have very bad service and being able to give them a much better service. I mean, compared to the credit card that Nu has, we're definitely well above that. I mean, our average credit card is a line of MXN 50,000 compared to that of Nu that's MXN 2,000. It is very different. We do have a product for those customers, but it is a guaranteed credit card with a rate of 15%, 18%. Very different from the unguaranteed credit card of Nubank at 70%. Good thing that we have more and more color on customers as we see that Nubank has been growing at a very fast pace, and that's giving us more color and allowing us to go for customers that have a Nubank card and are looking for a better deal in terms of a much valued card with points and a lot of things that are very different from a just monoline credit card business. It will be, I think, more similar than the high yield, the high-end product that Nubank has. From the beginning, we always thought that it will be better if we start from the top and go all the way to the bottom compared to going to the bottom and all the way to the top. Because obviously, it creates a brand that has a perception of lower prices, right? In the long term, it will deliver, I think, a better perception in terms of being able to be a bank that has much better costs. Customer service and obviously pretty good rates and being able to have that all the way through as we continue furthering down and being able to reach those clients. We're very happy for NPLs investing a lot of money on getting more color in the data in the credit bureau data. Positive there. Okay. Okay, very clear. Thank you very much. Our next question comes from Thiago Batista. Please go ahead. Hi, guys. Congratulations for the results. I have a question, and it's basically a follow-up of Gustavo's questions. I'm focused more on the ARPAC of Regional. If I look for Hey Individuals on Hey Banco, the monthly ARPAC is about $2. If I look for Hey Pro, the monthly ARPAC is something close to $5. If I look at Regional's individuals, we're talking about $13. Can you comment the main difference in the ARPAC of those categories, if this is more the engagement of the clients, or the difference in the offering of products, demographics, or even the maturation of the client base? In the medium term, what level do you believe the ARPAC of individuals in Hey Banco can achieve? Hello, Tito Labarta. I wanna start with the current level. It is growing because we are growing the loan base in both individuals and Hey Pro. One clarification, the Hey Pro is a subset of individuals. We will present next time separated in order to see the rest of the individuals. Right now, Hey Pro is included in individuals. That we see that it will continue growing the lifetime value and the ARPAC, that is the base for the lifetime value in Hey, different from Banregio. But what is included is all the revenues, all the interest, plus all the commissions. We are collecting a lot of fees and commissions in both portfolios. The Hey Pro, as you can see, they have a higher cross-sell index, mainly in auto, and obviously credit card. As Manuel mentioned, most of the customers of Hey Pro, they came for the time deposit. They came to invest their money in Hey Banco for the 9% that we pay to the Hey Pro. We only pay the 9% to the Hey Pro. You could see it's 20% of the customers, is not for everyone. We cross-sell the credit card for them, and that's why we have a pretty good cross-selling index, because most of them have the checking account, plus the investment or time deposit, plus the credit card. In Banregio, basically it's an average of all the customers from our preferred customers, all the way to the small segment of payrolls that we have within Banregio. In small businesses, it's higher because it's mainly loans. There is a lot of customers with loans, and also there is a lot of customers only with a checking account. That being the cost of that checking account 0%, we are allocating a revenue to them. How far it will go, at least twice as we continue growing the credit, the lending. If you do it's just basically we are projecting what will happen if we manage to match the deposits and the loans. It will double the ARPAC. For individuals in Hey Banco. Very clear. Thanks for this. Our next question comes from Yuri Fernandes. Please go ahead. Thank you, Manuel, Enrique, Alejandro, and congrats on the quarter. I have a question regarding loan growth. It's a follow-up from Ernesto's questions before. We see a lot of tailwinds for you, right? The nearshoring, the North. I remember you have been improving the Mexico City operation, hiring new officers. I guess there were some changes in the senior management there as well. But my question is regarding loan growth, right? You are growing loans by 90% more or less. This is kind of industry pace. But given you are more exposed to the North, that historically has been growing faster than the average GDP in the country. Why not growing faster? You know, like, are you somewhat more concerned? I guess Manuel already touched, you know, being more selective here. Why not growing more? Once we see all those tailwinds helping the company, how much faster can the industry grow? Like, can you provide us some more color on what is the growth you are pushing for the coming years, considering Hey, you know, near-shoring, how much more growth can we see for you? I have a second question regarding fees. It has been very strong year-over-year. I guess the base will get tougher for 2023. My question is how much more can we see fees growing? When you look to quarter-over-quarter, the growth was around 2%, so this is a kind of annualized run rate of 8, 9, up to 10%. My question is should we continue to see fees growing at those 40% pace as we see, or given the tough comps, we should see fees growing closer to teens, you know, like for the next year? Thank you very much. Thank you, Yuri. Thank you for your comments, and thank you for your congrats. In the sense of our credits, if you see the CAGR of the last 5 years, we've been able to achieve a much better growth than that of the system. That's why you can see that. Well, banks started lending much later than we did, so that's why you see banks starting to lend this last 12 months, and that's how you see those growths in the system not compared to us, because we've been growing since the last 2 years. In a sense, they're catching up to our growth. We definitely are, as we said, investing in more infrastructure, in more talent in the commercial part, so we can be able to cater that demand. We definitely are very well-positioned. We're not changing our credit processes or credit risk assessment, so in a sense, we do think that we're gonna be growing at a faster pace than our competitors for sure, even without Hey Banco, right? Banregio alone should continue to grow at a better rate because of its obviously smaller size compared to that of the system, right? We still are a very small part of the system, and our market share here, for example, in our home state, in the wholesale business, it's like 20%. In Jalisco, it's only 5%, and in Mexico City, it's only one point- Six. 6%. You can see how the potential is outstanding in the sense just completing the geographic expansion that Banregio has been able to continue growing in the last 15 years, right? In terms of Hey Banco, it will definitely add a new line of growth. We do expect growth to be in Banregio in a delta of much like around, you can imagine between MXN 8 million and MXN 10 million next year, and Hey, we're aiming to do between MXN 6 thousand million and MXN 7 thousand million. We're still behind in terms of Banregio's production, but we think that 2024 and 2025 will probably be a similar amount. You could definitely see an impact on loan growth, 2024, 2025. Adding a new line of growth that will continue to be to deliver much better results than that of the system for sure. Thank you. Aiming with quality, right? Because we could still do a lot of cherry-picking, and that's what we're doing in all of our portfolios and trying to go for those customers that have good margins and good creditworthiness, right? No, yeah. That's it. Like growing with the same risk-adjusted margins, right? And regarding fees, what is the spend for the next year? Should we see some deceleration? Yeah. Well, definitely fees, I think we're normalized to a level. I mean, we're still growing the transactional fees at a very good rate. Credit cards and merchant acquiring business should continue growing at a very good rate, more than teens. I think definitely in the twenties. The fees on the FX will depend more on the volatility, but we still have ample growth there, so I think it will be positive. Insurance, I think it's gonna be slower for next year. Practically there, I think. I think a lower dynamic in terms of compared to last 12 months, because obviously we're seeing a very good pickup in terms of the economy, in terms of the amount of transactions per customer that we see. The amount of transactions we see in the merchant acquiring business is growing up at a very fast pace. In a sense, we're very capable on continue growing at those bases. Perfect. Thank you very much. Thank you, Yuri. Our next question comes from Gilberto Garcia. Please go ahead. Hi, good morning. Thank you for the call. We saw a very significant increase in the NIM for loans quarter-on-quarter. Was there some sort of adjustment or catch-up in addition to the increase that we have seen in reference rates? No. No. It was more a catch-up of the adjustments in the previous months. The last 275 increases. Basically that's it. No. As I mentioned previously, we haven't changed our prices on the variable rate, and it's just the adjusting of the variable rate up after one or two months, depending how the contract is arranged with the customer. It's not immediate. It's more the catch-up. Okay. Thank you. We also saw a fairly significant increase in your holdings of other securities. Is that something that we should continue to see, you growing the securities in your balance sheet? Yes. In a similar amount, we are gathering deposits. We have an excess of deposits. We sell to the customer what is called in Spanish mesa de dinero. That is the repurchase agreements. For some time, we were booking them, selling what we call a repurchase or a repurchase from other banks that you could see, well, only if you look at it in the quarterly reports off-balance sheet. Then we're moving back to on-balance sheet those deposits. It's basically deposits from customers in the repurchase agreements that we are acquiring securities. It's mainly government bonds, all the securities booked. Understood. Thank you very much. Our next question come from Neha Agarwala. Please go ahead. Hi, thank you for taking my question. Very quickly, for next year, what are the biggest risks that you see for the business? Are you concerned about growth or asset quality or anything else that could be a concern for next year's earnings? Thank you so much. Thank you, Neha. Well, we're very in communication with our clients at the moment, and we've been very proactive in having conversations prior to them having a problem and being able to solve it in a very effective manner. We haven't seen anything at the moment, but definitely we're, as always, very prudent in determining the risk that our customers are seeing at the moment. Definitely we are keeping a watchful eye and definitely that could be one of those risks. The other will be definitely not being able to grow the wholesale business because of projects not being able to generate the returns because of high, like, or the high cost of loans. As we said, in the very short term, our pipeline of the wholesale business has not been hindered and continues to pile up and continues to be positive. We've not seen it at the moment, but definitely again, and with a watchful eye in that sense. Thank you so much, Manuel. In terms of dividends, what can we expect for next year? Of what? Dividends. In dividends, what we are is not a formal guidance. Basically, we have our budget with 50% payout ratio. That will be around, we have to consider the capitalization of Hey Banco once we got the license. At least the minimum, MXN 700 million. We will be additional to that, dividend for the investors. Around MXN 2 billion. MXN 2 billion in total in terms of dividends for next year. Yeah. 50% payout is expected. Yeah. Perfect. Thank you so much, Enrique, Manuel. A bit more, but yes. Yes. Thank you, Neha. Thank you for your question. Our next question comes from Jose Yong. Please go ahead. Hey, guys. Good morning. Congratulations for the strong quarter, and thank you for taking my question. Just a very quick one on Hey Individuals and the NPS that was reported for the quarter. I just wanted to get some color and update on what do you think has been keeping the score at low sixties and what factors could eventually drive the NPS higher over the coming quarters? Thank you. Thank you, José. Definitely, we're very sad for that part of it in this quarter. As I said, we changed successfully the infrastructure platform, okay? Sadly, it impacted in terms of credit acceptance in some days and that hindered the NPS that we did this quarter. What we expect for the following quarters, it is to continue further in that line. We are focusing on it very heavily. The first part of Hey will obviously was emphasized on gathering customers, not in the post customer service. Right now, definitely our focus is there, and we will continue to further on there for this year. We're gonna be very able to have a very good next year without any changes or in terms of infrastructure or anything that hinders service in that manner. We will continue to see a better NPS. It is something that we are pretty eager to do so. Now customers in Banregio are much well catered because they have a relationship manager. Normally when they do that, when they have that, they're more benevolent in their comments in terms of the NPS in terms of the digital services, for example. We do think that Hey Tech delivers very good customer services as we are lowering the amount of communication that happens outside the app. Those conversations are delivering good results in most of our customers. In that, sadly, some aspects of our operations in terms of being an independent infrastructure, obviously it's outside our parameters aside. We think that NPS will continue. In a sense, it is very different and you consider the NPS of a bank, of a checking account, it is much more difficult to have as in credit card business. In credit card business, the NPS normally is much better because the amount of things that can go bad are much simpler to resolve. We think that the NPS is good, but definitely we will strive to do a much better job in doing things that are above 75 at least. Perfect. Thank you for the detailed answer. Thank you, José. Our next question comes from Anand Bhavnani. Please go ahead. Thank you for the opportunity. My first question is on our digital bank license. Do we have any sense of when we may get it? Yes, Anand, thank you. As we said, and we think that the license should be approved in January, and we're gonna be able to start independent operations around June, July. Thank you. My second question is about our deposits. Now, in wholesale business, I see that our demand deposit has risen, but time deposits have fallen on a year-on-year basis. What's the reason for this sharp rise in demand deposits? They're coming from second quarter level, it's quite volatile. If you can help us understand. Yes. the reason for this. Well, as you know, we don't do government lending, but we do have g ood operations in terms of the treasury management for governments. We've seen. I mean, those demand deposits are high yield, so they're not very profitable. But they're a good source. I mean, they're at a good yield sometimes. In the last 12 months, we've seen a sharp increase in the cost of those funds. We've been not very eager to continue our operations with those customers, so that's why you see the sharp decrease. It's not a sharp decrease in terms of customers going outside. It's us not wanting to further cater those clients and need a very higher rate to operate. That's why you see that volatility in the checking accounts. Sure. Lastly, a question on retail banking. If I were to look at the NPLs in the SME portfolio, it has come down to 3.6%. In mortgage portfolio, it continues to be relatively stickier at 2.5%. In auto, it's 1%. How should we think of these NPL numbers? Like mortgage, which is secured, seems to be having higher NPLs than consumer portfolio and auto portfolio. What drives this? Sorry, can you clarify the question? Yeah. Yeah. Mortgage is two parts of the answer. One is the maturity of the portfolio, and also in mortgage, we do not write off after four years. Then it's more stable, the number of NPLs. What is good is that in both portfolios, the formation of new NPLs is very low. What improves the data is that we do some write-offs in NPLs portfolio, as you can see in the quarterly report. In mortgage, it takes longer to collect via judicial process or to write off either of the outcomes on the collection. This means it's more dynamic, not only in the write-off, but also in the positive side. The restructuring and the negotiation usually is faster in the SMEs. Got it. The different dynamics. Got it. Thank you, and all the best. Thank you to you. Last question comes from Tejkiran Kanukuntla. Yeah. Thank you for hearing me out. I just looking at the loan portfolio, and you had touched upon you know some industrial property portfolio not growing in Nuevo León. Even on the overall basis, wholesale and retail loans in Nuevo León have sort of stagnated, while it has been growing better at Mexico City. What is the outlook in the medium term in terms of the regional composition that you're looking at? Well, we think definitely that the North will have a more dynamic growth in the short term. For sure. Now, as we said, we still have a very small market share in Mexico City, so that, in a sense, creates a good growth there, too. In terms of the system, I will say definitely think that the North will continue a very positive trend, and Mexico City still lagging a little bit more because of government spending that's not being obviously, I mean, for good reasons, a thing that this government has done, right? That's why you don't see a very dynamic growth in terms of the economy in Mexico City. My final question is on the repo portfolio. The own in my cross business lines, you see that we have the time deposits reducing in share, and at the same time, we have our repos increasing in share. While the structure of funding changes, what is the freedom with which you can use this funding? Can the funding received via the repo portfolio be used to lend freely, or does it come with more restrictions than- Yes. Yes, sir. That's right on the money. Yes, we can be very able to change those deposits to a normal CD deposit or a time deposit, and we could lend that money. Restrictions. Repo portfolio can be converted freely to the other types of deposits. Yeah. Okay. Understood. Thank you so much. Congratulations on the results. Thank you. Thank you. Since there are no more questions, on behalf of our senior management, I would like to thank everyone for joining the call. We look forward to speaking with many of you in the coming weeks. If additional questions arise, please don't hesitate to reach out to Alejandro and our investor relations team. Thank you for your interest in Regional, and have a good day. Thank you, everyone.