Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Regional's fourth 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. Good morning, everyone. I hope you and your families are healthy and well. We appreciate everyone's participation today. We're very pleased with the outstanding results that Regional achieved during last year. We saw strong bottom line and improved financial indicators, mainly driven by a great funding base, excellent results in our non-financial income strategies, and a solid performance across all of our portfolios. We would like to highlight our commercial loan portfolio, which grew at a compound rate of 8.5 during the last five years compared to the other system of 5.4. Regional reported a net income of MXN 1,336 million during the last quarter, representing an increase of 45% year-on-year, resulting in an expansion of our ROE and an ROA. It's important to mention that due to the adoptions of IFRS standards, we reclassified MXN 5,4 00 million from our pure leasing portfolio to our loan portfolio. This reclassification had a positive effect in our equity of MXN 19 million. Income formerly recorded as non-financial income is now recognized as interest income, having a full-year impact of additionally MXN 467 million in financial margin and a reduction of non-financial income for the same amount. The net income was not impacted by this classification. The financial margin expanded for the sixth consecutive quarter, reaching MXN 3,166 million with a 57% year-on-year variation. This strong upside and trend is a result of the financial risk margin with a higher policy rate and higher growth loans. Our successful strategy is to maintain double-digit growth in deposits, plus the recognition of additional financial margin due to the reclassification previously expanded, explained. Without considering the leasing reclassification, the financial margin had grew 34% year-on-year. The NIM for the last quarter of 2022 was 6.8%, the NIM of total loans was 8.9%, and our loans to deposit ratio continues improving in a year-on-year basis, reaching 108%, where our CASA ratio stood at 57%. We had a great performance of our asset quality, reaching the NPL ratio at 1.3% and a quarterly cost of risk at 0.6%. During the fourth quarter, MXN 193 million provisions were created, which is 26% lower than last year. The non-financial income keeps expanding at an accelerated pace. Our merchant acquiring business income expanded by 56% year-on-year, while growth of insurance and fees grew 26%. Without considering leasing reclassification, the non-financial income grew 20% year-on-year. Total revenues for the quarter amounted to MXN 3,193 million, representing a year-on-year expansion of 27%. Operating expenses grew at 9%, reaching MXN 1,491 million, mainly driven by our customer acquisition strategies that translated to higher margin marketing expenses and the volume expansion of our cards and payment business. Salaries and benefits amounted of MXN 847 million as a result of higher headcount of developers, commercial and service areas, as we have been staffing as a result of our client growth. Therefore, the efficiency ratio for the quarter stood at 43.7%, showing a contraction of 519 basis points. The capitalization ratio remained very strong at 50.2% as of November 2022, which generates excess capital of 316 basis points compared to our internal limit of 12%. During the quarter, the total loan portfolio Regional delivered 16% growth, which was led by the SME consumer portfolios, which kept growing at a double-digit rate and the reclassification of our leasing operations. The North Western regions of the country have experienced higher income activity due to the foreign direct investment inflows. These regions have led the demand in our loan portfolio, presenting an 11% and 18% growth, respectively. Our commercial efforts have shown X-ray results from Banregio with the SME portfolio increasing 25%. Demand deposits from Nuevo León and Mexico City had expansion of 13% and 26% respectively. On the other hand, the wholesale portfolio, loan growth of 8%, highlighting Jalisco, which grew 23%. Demand deposits, which keeps increases in double-digit pace, expanding at 17% year-on-year. We expect this trend in deposit to continue during the next quarters, which we will benefit Regional for further improving margins. We're confident that the year ahead represents a great opportunity for loan growth as the regions where we have more presence in the north, west, and central regions have always positioned to have strong credit demand due to the positive effects of nearshoring. Even though we have been seeing loan growth driven by nearshoring, we expect this trend to continue. These full effects for the next several years. Demand will be led by sectors manufacturing, industrial developers, commerce, logistics, and agribusiness. We will continue seizing opportunities in the industries to foster portfolio growth without compromising asset quality. In the coming years ahead, we will focus on expansion of our infrastructure in the key regions with the objective of reaching our maximum potential of infrastructure of the segments we want to serve and increase significant market share. As part of Banregio's five-year plan, we will accelerate our branch growth, executives, and ATMs in all the regions of Mexico where we are already been serving our customers. During the 2022, Banregio will adopt Hey platform to continue bettering our customer experience, improving cross-selling capabilities, and un-unlocking customer engagement and growth. Regarding Hey Banco, it keeps attracting new clients as our commercial strategies are delivering high quality growth. This quarter, we added two important functionalities of our customers through our alliance with OXXO for cash withdrawals and our partnership with Google Pay to keep expanding our payment alternatives. As of the fourth quarter, Hey surpassed 582,000 active clients, reaching MXN 10,240 million in core deposits, and MXN 6,990 million in loans. 30% of our customer base have an active credit card with an average transactions of 4.14 transactions per client. We're very successful at rolling out new products, furthering our cross-selling index at 1.8 products per regular client, and 2.54 products per client of our Hey Pro clients. We're bettering our NPS that stood at 61, we expect this trend to continue as we advance our capabilities to serving our customers. We continue bettering our cost of acquisition as a result of the efforts to add more value to our offer and bettering our alliances with our social media partners and the original content creator tool throughout our Hey Media brand, reaching 1.2 million followers on our social media accounts. We're focusing on adding more value to our Hey Pro clients, which grew faster than our client base, furthering our cross-selling and productivity. We continue bettering our lifetime value of our customer acquisition on both individuals and small business, as we have been able to cross-sell loans at a faster pace with a very good efficiency, quality, and pricing. During the quarter, Hey Pago kept showing excellent results. The transaction volume at an average monthly billing in the quarter of MXN 10,086 million, a 17% increase versus the fourth quarter of 2022. The number of active POs reached 40,969, increasing 16%. Our objective is to further expand our customer lifetime value through our differentiated offer and based on size, sectors, and special needs that will result into even better cross-selling results. In conclusion, we are very proud with Regional's 2022 results. Our efforts have been reflected in an enhanced profitability and asset quality and an outstanding deposit base that allow us to operate with excellent quality liquidity levels, solid loan growth, great performance of our non-financial income line, and performing results in our digitalization efforts. We are optimistic for the upcoming year, and we will maintain distinguished customer service and an ample offering as key pillars to keep redefining the financial service industry and maintaining Regional as the leading financial institution in Mexico. At last, we would like to show you the next year financial objectives throughout our guidance. Total loan growth between 10% and 15%. Core deposit growth between 10% and 15%. NIM between 5.8% and 6.2%. Net income growth between 10% and 12%. ROE between 20% and 22%. NPL ratio below 2%. Cost of risks between 0.7% and 0.9%. The efficiency ratio between 43% and 45%. Regarding both brands, Banregio total loan growth should stand between MXN 9,700 million and MXN 14,200 million. In Hey Banco, between MXN 4,800 million and MXN 6,400 million. Core deposits between 8.7 and 3.8. Hey Banco, 4.4 and 5.2. The NPL ratio would stand at 1.3% and 1.6% in both banks. Cost of risks between 0.7% and 0.9%. In Hey Banco, between 2% and 4%. Thank you very much. We appreciate any questions. Ladies and gentlemen, to ask a question, you would 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 Olavo Arthuzo. Please go ahead. Hi, guys. good morning, and thank you for taking my questions. I just wanted to understand a little bit more on Hey Banco, just an update on the case. first, I would like to understand about the asset quality among the three types of loans, the credit card, auto, and mortgages. how has been their behavior along the last year, and what the bank sees going forward for this year? we will need to pay more attention in some segment, specifically on Hey Banco. the second question is just for you guys to remind us what is the goal in terms of clients for this year. Thank you very much. Hello. Thank you, Olavo, for your question. In terms of the asset quality, we have improved in Hey. In trade card, we have an NPLs of 3%, but in auto and In mortgage is 0% of NPL and in business loans also. Let's stop there. Okay, okay. In credit card is 1.9% at the end of December. Auto is only 0.3%. As you can see, it's a very good NPL ratio. We are reporting the total for Hey is 0.7%. I understand that this is mainly because of the early stages growth company. The next question on this, and then if I may, do a follow-up on the guidance, but can you just remind us on the goal for Hey Banco and number of clients for this year, what do you expect? Thank you. Yes, Olavo. I will further your conclusion in terms of why our NPL ratio is so low, and I'll say that the main aspect of it is that we are targeting quality customers. That tells you that the number of clients that are delinquent in the first 90 days are pretty low. In that sense, that tells you the type of strategy we're aiming at. It's not high tickets that we're aiming, but high quality customers. In that sense, that's the main reason why NPLs are at that point. Obviously, as you said, the portfolio is still small, and it's growing, and it should obviously, translate in, into high NPL ratio as we go on further. In the sense, I don't wanna take you... I mean, you should the thing I want you to get out of this is that we're focusing quality customers. In terms of the customer growth, definitely we're aiming at a 1 million customer for this year, for this 2022. Our main objective is to grow our loan base and our core deposits at the pace that we're aiming. We were wishing for one million customers for December of this year. We didn't get it, we got our objective in terms of our deposits, our core deposit that grew at a very good rate. We've been able to grow with very good tickets per average customer, which obviously translates into better lifetime value over cost of acquisition. We're very happy of the type of client that we are catering. As we said, Hey Pro customers have 2.54 products per client, which is pretty awesome, and 30% of our customers base have a credit card active with us. It tells you that we have a great offering, and it's translating to a customer that is very profitable for us and with a cost of operation that is pretty manageable. It has been, I think, a pretty much a very good experience for our customers. We will see further on, I think, as we continue bettering our offer, we will continue seeing our customer acquisition costs lowering, hopefully, and translating into a higher customer growth. We could definitely hike up our ad spending. That will translate into higher customer growth very immediately. We just wanna wait a little bit more and understand our capabilities more and see later on the year if we hike our budget even further than we've been able to do so. We are rolling out pretty good promotions this part of the first part of the year. We are adding more value to our Hey Pro customers. Those are our main objective for growth. We grew more our Hey Pro customers than our regular customers. In a sense that tells you of the type of customers that we're catering. High quality growth, highly transactional, very engaged customers. Okay. Thank you very much for the... That was very helpful. If I may, I just wanted to shift to another topic to make my second question regarding the guidance for the year. It's a very quick one. Just to understand the drivers, I mean, on the NPL guidance for this year, how do you guys expect to be the dynamics among SME, auto, consumer, mortgage portfolios? Which segment we should pay more attention that will have a larger impact on the trend that you guys just provided of 2.0 at the top, the maximum? Basically, as you know, we are on 1.3 in average. As you saw in the presentation that we have, basically the large accounts, what we call the wholesale, is less than 1% of NPLs. In mortgage, we have been decreasing and recovering the NPLs from the last year. The only portfolio that has increased is credit cards and personal loans. All the other ones are improving. That's the reason, it's not that we see a deterioration when we talk about moving from 1.3%-2%. It's just that, below 2% we feel comfortable. In fact, if you saw the last slide, we are guiding 1.3%-1.6%, as the, w e go back to normal operations. Okay. The base case would be like a normalization or a normal increase, following the risk of the credit portfolio. Is that correct? Can you repeat? Sorry. Yeah. You are just mentioning, that you guys, like, expect, a potential increase on NPLs just following, the credit risk of the credit portfolio. Is that correct? Yes. Yes, that's correct. Okay. Thank you very much for this. Thank you. Our next question comes from Ricardo Chupiel. Please go ahead. Good morning, guys, and congrats on the solid results. I have two questions here. First, I want to understand the rationale for the lower NIM expansion indicated in the guidance. It's around or flat or growing 30 basis points this year. Considering that NIM in Q4 was already at much higher levels and we still see high average interest rate expected for the following quarters. I imagine you have been more allocating more liquidity in less profitable securities like repos and other instruments like that, but I thought this would change as you increase your loan demand. Also, with CRE reaching a higher scale in several different products, what should be its role in impacting the group's profitability for this year? It should be more near zero or it should already reach a positive impact in the profitability? The first question... Sorry, Ricardo. It's about the NIM expansion... Oh, okay. The first question. Yes, you are right. It's basically that we are capturing most of the NIM expansion in this year. We are guiding just a slight increase. It's also the mix on repo, the repo business on the securities investment. As you know, in the securities investment, we have a margin between 15 to 20 basis points. That's why we usually split the NIM and the NIM for total loans. In NIM for total loans, we believe we can capture a larger margin increase. Let me see if I have in the notes the projections and later on during the call, we will clarify for total loans. For the total NIM is because the repos, and because we have captured most of it already, except for the last December increase, because it takes, like, two months for our loans to reprice, and around between two and three months for all the liabilities or all the term deposits to reprice. No, very clear. Just a quick follow-up on the, on that matter. The reason you are growing more on repos are mainly because you have been accessing more liquidity with higher deposits growth or? Yes. Stuff like that? Yes. We have more liquidity, more deposits from customers. Basically what they are looking is, a high interest rate. Then we can switch from, time deposits or, yes, pagaré in Spanish, to, repo, to, government bonds. In that way, the customer still receive the high rate that they are looking for their money. We don't have, loans to match. That's why we match with trips, with securities investments. In terms of the net income of Hey Banco, there's around MXN 100 million-MXN 150 million of net income that we're expecting for this year, around. Mainly because the creation of reserves in the consumer credit portfolios are very demanding. In that sense, even that it's good quality customer, you had to do a lot of reserves, and in that sense, that's why most of our income goes in that line. You will see a more impact on 2024. The other part of the equation is that we are expecting the banking license at the end of this year to be fully operational. We are needed to do a staffing out of the necessities that we have to have the license. It's not much, but in a sense, that is impactful in the second part of the year. We will continue to see a further loan growth, in 2024, and we expect to continue, adding obviously more non-financial income. We definitely will see a much more profitable operation in 2024. Oh, very clear. Just could you please repeat the net income for Hey Banco this year? Also what is the comparison compared to 2022? No, it's very, it's very marginal. I think we're expecting between MXN 100 million and MXN 150 million. Mm-hmm. Compared to that of Banregio between MXN 5,500. No, MXN 5,400, MXN 5,300. That's MXN 300. Yeah. Very clear. For my final question, could you please comment what is the funding cost or pricing strategy for your deposits? In the cost of deposits of Hey Banco, it's around 6.6%, and the cost of Banregio is around 5.4%. Very clear. Thank you. Yeah. Our next question comes from Marlon Medina. Please go ahead. Hey, Manuel, Enrique, Alejandro. It's Yuri Fernandes here. I have a question regarding fees. It grew a lot this year. It was 38%. Credit cards, they grew a lot. You have some slides showing Hey Pago doing very well on TPV, like doubling the TPV. My first question is: What should we expect for fees for 2023? Should we continue to see fees growing those, you know, super sound numbers? Should fees decelerate because the base is getting tougher? That's the first one. I have a second one regarding G&A, regarding expenses. You provide some color on your presentation, and I think a lot of those expenses, they are investments, right? They are necessary for your income coming years' growth. How much should we see expenses growing this year? Because on your cost to income guidance, on your efficiency guidance, you have mostly flattish cost to income, right? 43%-45%. Basically, this implies, you know, very high G&A growth. I just want to check with you guys how much you are thinking about this line. Thank you very much, congrats on the quarter. I will start with the last one. In terms of expenses, yes, we are expecting a growth of total expenses around mid-teens. We don't guide exactly. Sorry. I will repeat again. We're expecting mid-teens. That will be the answer for expenses, both in operational expenses, that will be a little bit higher. And then I will move, because they are related to the POS income or the merchant acquiring business income. As we will continue growing, and we expect to continue growing the income from merchant acquiring and from credit cards and fees, also the related cost will be increased. We maintain, as Manuel mentioned, the goal to increase our customers in Hey to reach in some point of time during this year the 1 million customers. That implies a cost, obviously, on the cards and in the merchant acquiring business also there are related costs. In terms of personnel, we are as Alejandro has mentioned, we are expanding our branch network in Banregio, and also we are expanding our bankers, mainly in the North, but also in Mexico City. As for Hey, as we continue growing the customers, we keep growing the people for service. For collections and all these departments that grow with the number of customers. That will be the main explanation of the growth, I will conclude saying that we expect mid-teens. Yes, it's a double digit. In other expenses, we start with an 8% of inflation, then that is difficult to have a lower increase. Oh, that's super clear. Yeah. Regarding fees? Regarding fees, as I mentioned, in POS or merchant acquiring business, we expect at least 30%-35% of growth. Also in the credit card and debit card fees from 50%-70% as I mentioned, continue growing the number of customers. Super clear. Considering, credit cards and acquire, they are about 40% of total fees. Should be a very good year, right, for fees for you? Yes. Perfect. Thank you, Enrique. Thank you, Ricardo. Yuri. Yuri, sorry. Sorry, Yuri. No, no worries. Thank you, Enrique. Thank you. We got shut off by the name, yeah. Sorry. Next question comes from Gilberto Garcia. Please go ahead. Hi, good morning. Thank you for the call. I was wondering if you had any thoughts on the announcement last week from Banorte about the very significant increase in their number of bankers as they seek to capture some of the growth opportunities from nearshoring. I guess also, you know, with the issues that non-bank lenders have had trying to capture market share, do you expect that to significantly alter competitive dynamics? Do you plan to respond? I guess you just mentioned that you might also increase the number of your own bankers. Any color you could provide on that would be very appreciated. Yes, definitely. I mean, Banorte has been a very good competitor and I think, I mean, they're pretty serious, and I think it's a good thing that they're pushing in a more aggressive growth. I mean, in terms of SME growth, we normally share the risk in all banks share the risk. In a sense, Banorte has been a very good competitor, and I think in that sense, it's a good thing. In terms of our objectives, in terms of expansion of our infrastructure, we are restarting our growth in being able to saturate the markets that we are serving in the segments that we cater, not only in the North, but definitely on the Bajío region and the center part in Mexico City, which is a pretty important part of the market share. In a sense that we are going in a five-year plan to continue growing our number of branches and our number of executives and being able to translate into having a market share similar that we have in most of the regions that we cover, right? In, for example, in our home state, we have, in terms of SME lending, we have a participation of 20% in terms of market share. It is pretty strong market share, and in that sense, we are very able to have a stronger presence in most of the regions that we already have. Definitely, the last three years, we did not expand, and we're focused on other objectives, as you know. In that sense, right now, we think that we have the right environment to expand our infrastructure and have a better infrastructure to serve our clients. In that sense, I mean, we have the best NPS in all Mexico. We have, I mean, the NPS of Banregio, it's at 80%, which is outstanding. That tells you that we have a pretty good offering, that clients are pretty eager to continue further in their relationship with us. In that sense, we're very confident that as we grow the infrastructure, it would be in a very productive manner and resulting in pretty good results in loan growth and revenues from fees. Definitely very... I think the trend in terms of expansion, I mean, is Banorte tells it, we're seeing it too. In that sense, we're pretty happy for the evolution of the economy as we see all the trends turn into a positive thing. Okay. No, that's clear. Just as a follow-up, do you believe that there will be enough current demand to go around for all players to, you know, achieve these ambitious goals? Or could it also potentially result in tighter spreads and, I guess, just from increased competition? What are your thoughts on that? No, well, I think competition has always. I mean, we're not afraid of competition. Competition has been very strong for many years. I mean, we have pretty good players, BBVA, Santander, Banorte. They're pretty good players in the sense. We think that, I mean, they're very professional and very. I mean, they're good partners and in some, in many of our clients, and in a sense, we have, we can be. Definitely if the trend of reinvestment and doing more infrastructure, it is something that tells you the market expanding, and the economy is growing and the customer base is doing the same. In that sense, more infrastructure is needed. I mean, if you see any measure of infrastructure in the banking system in Mexico is one of the worst, and in terms of margins, is one of the best. That tells you. Definitely a increasing population in terms of economic growing workforce, and definitely that translates into a more demand in infrastructure in many ways, right. Hey Banco, obviously it's as a result of being able to capture that customers that do not need a cash management and that need a more decent service and, and products and offerings. That's why we think that the continuing expansion of infrastructure, it is needed, obviously more intelligent than in the past, but definitely, and more efficient. Definitely something that it's, that is needed to continue furthering our customer growth. I mean, the Regional has right now more than one million customers, and we right now see that growth in customer base is one of the easiest things we've done in the past, and more as a result of our capabilities of serving retail clients and being able to translate for digital platforms for our SME customers. That is translating into a growth in checking accounts at a very fast pace, and obviously translating into better results in margin because of our cost of acquisition so low and our cost of funds at a very good rate. Thank you very much. Next question comes from Carlos Gomez-Lopez. Please go ahead. Hello, good morning. And also congratulations on the results. Can we go back to your outlook for this year and for coming years? I don't think I have heard you this optimistic in the last five or six years. It's peculiar because in general, the market expects a recession or a quasi-recession this year. Is that because the revenues are high, because rates are higher, or because you actually think that the economy is going to do better than what perhaps the market is anticipating? My second question refers to the license for Hey Banco. I was wondering if, you know, as you said, you're gonna have higher expenses because you have the new license. Would you reconsider it, whether that is really necessary or you can continue to work as you are today? Thank you. Thank you, Carlos, for your question. Thank you. In terms of what we expect, in terms of the economy, well, what we're seeing right now, it's a better demand. We've seen that the SME loans have picked up more demand last quarter. We definitely are in our communication with our customers and seeing how the hike in interest rates are affecting their operations. We are definitely very cautiously and very as always has been the case with our strategies at being very close and in communication with them. Right now we feel that there is a strong demand, even though that the interest rate is at the point that is right now. We have not seen the NPL ratio, even from our smaller clients, get out of the same levels that we had at the beginning of the year. Definitely something that we're looking for, and we've not seen the case of worsening in our customer base. Definitely, as you know, we are managing in a per quarter basis, and we could definitely do a different approach if we see the conditions change. We've not changed our way of working, and we are, as you know, always focusing on customer clients, and that's why we had such great results even during the pandemic. You see the force of our loan book and the relationship we have with our clients. Definitely those are those customers that we're looking for. Definitely we see a very good demand, for example, in the agribusiness, in the manufacturing business, that in the housing business. It's a demand that we know how to serve, know how to do it, know the pricing, know the customers, and we will definitely be very happy to continue serving them in the conditions that we are right now. We have a lot of liquidity, we have a lot of capital to continue to do so in a very competitive manner. There is no operation that any bank with any force has the ability to win the operation in price for us. We have all the capabilities needed. In that sense, we feel that we have a very positive outlook in the short term. Definitely, I mean, the nearshoring part of the trend, it is something that will continue for the next years. Is not something that it is a short-term thing. We see that that trend we will be able to continue. I mean, we see the economy growing our home state at a very fast pace, and we see more investments, for example, like many in manufacturing in the auto business. If something changes in that sense, we will definitely tell you so. Right now, the demand and the optimistic from our customers, it is pretty good. I think even though the interest rate is at the point that is right now, it is, it's pretty amazing. In terms of the cost for Hey Banco, I mean, the operations need more people, definitely. I mean, we've been able to do customer service at a very productive manner and recollections at a very productive manner. More staffing is needed, even though, even the license, the banking license. Though it is a very marginal cost, that we think it is needed to translate into an operations that you guys have much more information, that the market has much more transparency in how things are going, and being able to generate a culture with different set of values in that sense. I mean, innovating at the edge of the company as many, as many, the charter has been produced in that manner, I think it is resulting in a very positive outlook for the company in terms of being able to cater more clients in a very proactive manner and having a cross-selling index that it really translates into having a lifetime value, increasing lifetime value, and translating into a better cost of acquisition and better service. I mean, customers right now are pretty engaged with the... and the app, and this obviously helps us mitigate any operational risk because customers are on top of their information every day, every minute of the day. In that sense, it is pretty important to continue furthering that. In terms of Hey Banco, I think this, the way of separating the bank and the operations, we will continue to have better results in terms of profitability and productivity. Capital will definitely be needed, but the operation right now is profitable. As we've always conveyed, that we are focusing on growing at a fast pace but not compromising on profitability. That's why you don't see the million customers, because we are focusing on doing it in a very productive manner. When we reach the one million mark, profitability will be there as is, as it is right now. We're pretty serious about that, pretty professional, and we don't care about the millions, and we don't care about... We care about the profitability, and we care about having a very neat operation, focusing on high quality, customers and being able to produce results for the next 10 years. Very optimistic for that. To clarify, in the spin-off, you still expect to include the payments business in Hey Banco or that idea? Yeah. The acquiring business is gonna be on the umbrella of Hey. It is a non-bank acquiring business, so it can cater many banks. Right now we're focusing on being able to cater Hey Banco and Hey and Banregio's clients, but it can cater other banks. Definitely it is something that finishing those capabilities, we will be looking for much more clients in that sense. That's the reason that we're spinning off that part too. It is a very important part of the equation. Thank you so much. Thank you, Carlos. The next question comes from Tejkiran Kannaluri. Please go ahead. Hi. Thanks for the opportunity. My question is regarding the loan and deposit dynamics. I think QoQ, we saw a strong growth in advances, especially in business loans and consumer loans. In deposits, the growth has been in low single digits, and that has pushed up our loan to deposit ratio greater than 100. What sort of loan to deposit ratio are we looking at going forward in 2023? Once the this ratio goes above 100, are we facing higher costs for borrowing in the market to fund these loans? How are you expecting to fund the increased demand in loans that we're experiencing right now? Yes. The increase in loans, as you saw, it was a growth of 12%, plus the reclassification of the p ure leasing contracts. We were at levels of 100%, and right now we are on 110, 108. The funding we have, as we have talked about the repo business, we can convert repos to time deposits, just informing the customer of the new rate. We have that ability with that type of products, investment products for customers. In terms of the cost of funding, should not be largely affected as the cost for these time deposits is similar to other time deposits within the bank. We don't have any need to go to the markets or any need to request loans from government banks, from development banks. It's just the way to switch the excess of liquidity that we have on the repo business to the core deposits. Understood. To convert a repo to a time deposit, does it have to go through the consent of a customer, or can you do it, automatically? No, we can do it automatically, at the renewal or at the end of the term. Got it. The contract already estipulates that. Understood. Understood. Thank you. Just a follow-up on a point you had made, that the conversion of pure leasing, to sort of lending product. Would that have affected, the 89% growth we saw in business loans? Would that be a part of it, the reclassification? Sorry, I just want to understand. If it affects in 2023, as the guidance, or if it affected in 2022. It affected in 2022? Fourth quarter. Yes, yes. In 2022, if you see only the loans line, it increased 16%. Without that, it's around 12%. For the next year, it's including the leasing, the growth in loans is above the final number. Understood. We saw a surprise growth, a surprise for me at least, in 23% in Jalisco, specific region. Could you throw more light on what sort of demand you're seeing in Jalisco, and do you think if it is sustainable? That's my last question. Thank you. We have seen three different industrials. It's mainly all. We source loans for a big part of the, what we call the Bajío, the western zone of Mexico, for agro industries. That's basically. Jalisco has a lot of merchandising and commerce also. These are the three types that we have seen. We believe it's sustainable, yes, in demand, maybe not the same percentage that this year, but we continue. The way we monitor it is through our credit committees and the new request for loans, and we have seen the demand has been sustained. Got it. Thank you. Thank you so much. Congratulations on the results, and all the best for 2023. Thank you. Next question comes from Rodrigo Ortega. Please go ahead. Hello, guys. Manuel, Enrique, Alejandro, thanks for the opportunity to ask questions. Quick questions on the leasing business that you mentioned. You mentioned that leasing represents about or would have re-represented about MXN 467 million additional in leasing that you now booked under NII. Just to clarify, is this full-year impact, or is this just what was booked in the fourth quarter? You have also been mentioning that this was a reclassification or accounting change. Is this just that, or did you sell the assets under lease and provided a credit to the customer? In any case, what would be the strategy on leasing going forward? This should leave the other income line pretty clean, so to speak, with only the bad legal expenses and charges related to foreclosure of assets. Is that correct? Well, I will answer the first one, and I couldn't understand the second. The impact in the reclassification from interest as is now a loan or, well, it became a financial lease that is within the loan portfolio, is for the full-year. As the change on the accounting rule, the IFRS 16 and IFRS 9, that are the new five, basically, NIF 5. It took place in January, starting the year. It was that all the changes. It took for all longer because we had to evaluate one lease by one lease, one contract by one contract, and all the systems. Well, it was a lot of work. That's why it took us all the year. Yes, the impact is for the full-year, is one time. In terms of the second question, can you repeat, Rodrigo? I think the basically you change from pure leasing to financial leasing. There's no credit involved. It's the leasing business just change the. It's accurate t o financial leasing, right? Okay. The second part was whether the other income line is now as clean as it gets in the sense that it now will only show the past fees, legal expenses and charges related to foreclosure of assets. I mean, you have removed everything that could make some noise in that line. Is that correct? Yes. We still have, like, MXN 1,000 million, that is in Spanish for MXN 1 billion, of pure leasing. We are evaluating, still, if we will convert them also to financial leasing. Once we finish that, yes, we'll be clear, and mainly it's the foreclosure or the sale or, whatever we charge related to the leasing, like, taxes and insurance and... It's pure fee business. Yes. Thank you. Just one last question, if I may. Regarding the OpEx, to what extent, can we think that the high OpEx that you're forecasting for this year is a step up or a frontloading? I mean, if we look beyond 2023, can we say that from 2024 onwards, we are over the hump, and expense should grow more in line with inflation plus, or is this or this will take longer to normalize? As long as we can see for the type of expenses that we are growing, we can expect 2024 more normalized. As you mentioned, inflation plus. Expecting the inflation to be lower than this year, around 5%. Okay. Yeah. Basically, mid to high single digits. Yes. Over the medium term. For the 2024, yes. Because for Hey, will be most of the, well, we call investment because we are investing in people, but at the in the account and is expense. For Banregio, we will continue growing the branch network, but that goes through investment. That doesn't go directly to expense. Is not that relevant in, for 2024. Thanks a lot, Enrique, and thank you, everyone. Thank you, Rodrigo. Our next question comes from Silvia Bigio. Please go ahead. Yes. Hi. Can everybody hear me? Yes. Okay. Perfect. Hi, Manuel, Enrique, Alejandro. Thanks for taking my call. I have two questions. One is I apologize because I connected very late, so I don't know if you guys discussed this before. I wanted to get your thoughts on the Chapter 11 filings from Unifin and Mexarrend. I mean, in all, we've seen four financial institutions in Mexico get into trouble, two of which are much more related to what you do. First, I wanted to get your perspectives on what happened there. Is there any read-across for the health of the SMEs? Can you take advantage of these competitive dynamics? Can you buy parts of the portfolios, et cetera? The second question, I'll wait for your answer first. Well, thank you, Silvia. In terms of interest, we're not at the moment. We're in talks with one representation of Unifin, nothing serious. I mean, we're not interested in buying their operations in the sense that we don't cater those types of clients that they had. Our leasing operation is based much more on assets that we have a good capability on reselling them at a profit. That's why we are mainly focusing on leasing, for example, in the logistics business or auto business, so that we are very able. As you know, we bought the General Motors pure leasing company back in 2011. In that sense, that's been our main driver, and it's been our main focus, and it continues to do so. Many of these companies had operations in that type of asset. Definitely in the last part of the year, we saw a high in terms of obviously having a competitor setting that is pretty disfavoring for them. We definitely see that the product, the pure leasing product and the leasing product, it is very good. It is very needed. It is something that translates into good fiscal capabilities for our customers. Definitely we are mainly focusing on assets that we could repossess quite easily, and we can resell them pretty easily in a and a profit, right? That's why we are not eager to do anything about buying them or doing anything about their type of clients that they cater. Someone will definitely cater them. I mean, there's a company called Engine that was part of the GE divestment strategy back five years ago. I mean, those are the types of, I think, competitors that will take advantage of the situation. Definitely, I mean, we have no relationship with them. In that sense, we don't have any repercussions whatsoever of their operations at the moment. Any positive repercussions in the sense of a better competitive dynamic or we're talking about a completely different structure and... Yeah, I think, I mean, I think, I mean, we're expecting this year to grow pure leasing at 11%. Probably we could grow faster than we're expecting, depending on the, on how things go on. We see less competition right now at the moment. There's pretty big leasing companies here in Mexico that operate, I mean, the one German company that's pretty big. One Canadian company. We do have good competitors in that sense, we should see a better, but not that much, right? It depends on the asset that you're focusing on. That's the main thing. Got it. Then the second question is a follow-up to Carlos' question. Up until now, I think the speech from you guys and many of your peers has been that the demand for loans is more for working capital, not so much from that. Of course, things have changed in the short run, and the agro is in a major boom, right? My question is, are you seeing demand for loans for CapEx, particularly from domestic companies? You're talking about just working capital. I mean, I'm just trying to understand how much the outlook has changed with nearshoring and all the great things that are going on in Mexico. No, definitely. No, we definitely are seeing more CapEx. I mean, definitely depending on the size of the company you're catering. I mean, at the lowest point, definitely more working capital. I mean, small companies, that's how they work. Definitely at the higher end, we see a much more expanding in CapEx, depending on the industries, but definitely something that we see an expansion of. Great. Is that demand for CapEx more for export-oriented companies than other companies? Or would you say that the domestic-oriented companies are also more willing? I mean, both of them. Both of them, definitely. The customers right now are very healthy. I mean, the wages have grown at a very good pace in the lowest income levels, which is pretty positive. It is, I mean, there's no overleveraging in the family. In the sense we've seen, we will see in both of them, right? Perfect. Thank you very much. Thank you, Silvia. Next question comes from Ernesto Gabilondo. Please go ahead. Thank you. Hi, good morning, Manuel, Enrique, and Alex. Congrats on your results. Sorry, I entered late to the call, so apologies if they have already asked you these questions. My first one is on how do you see the interest rates this year? Just want to hear from you if you are fully repricing the higher rate to the client. When do you expect to start reducing the NIM sensitivity if we start to see a potential easing cycle at some point? Do you think that could be in the second half of this year? My second question is on Hey. Do you think Hey could help to protect Regional's NIM on their easing cycle, considering that there will be a higher contribution into retail in 2024? Thank you. Yes. Well, the first question, we did our projections on our budget, obviously the result is the guidance. Considering that there are still two more increases, two 25 basis points increases on the policy rate. Then we expect it will maintain that level for the rest of the year or most of the year. The second part of the question that you asked, Ernesto, is we don't expect the NIM reduction this year, but we expect it in 2024, during 2024. The same pace. We have not finished to reprice all the increases, but there is not much still missing, as the last one was on December. For February, most of the loans will be repriced. Yes, we transfer it to the customers, in the variable rates, because basically that's how it is agreed, is TIIE plus. In the liabilities, even though it's not packed in that way, we move with the market, as a percentage of CETES. That CETES is very close to TIIE. That will be in terms of repricing. In terms of Hey helping, to maintain the rates, yes. As you saw, we are growing on loans that are fixed rate, like auto mortgage, and also loans with a higher margin, like credit cards and personal loans. Yes, it will help. That will be the short answer. Just a follow-up on this. lower rates will affect Banregio's NIM, but then if you add Hey, that will help to protect the NIM on the rising cycle because of rates will be with higher margins. Is that correct? Yes. Yes, that's correct. Perfect. Thank you. Then just a last question on dividends. Yes. Should we expect a dividend policy of 50% in this year? Yes. Yes, sorry to hesitate. We are already talking with the CNBV about that because we're in the process of the license, request, the license approval for Hey, and we should fund Hey plus pay dividends. Yes, we are talking if not 50, at least 40%, but our aim is to pay 50% of profit. That will be MXN 2.5 billion. Perfect. If we get the approval, plus what we need to capitalize Hey Banco, that is around MXN 700 million. Perfect. Excellent. Thank you very much. Thank you, Ernesto. Our next question comes from Andrés Soto. Please go ahead. Good morning, Manuel, Enrique, Alejandro. Thank you for the presentation. My question is regarding the profitability outlook for Hey Banco. It's really helpful that you guys are already providing more detailed information in terms of cost of risk. And when I compare Hey Banco to Banregio, there is a significant gap. I imagine some of that is going to be covered, or is covered actually by NIM. But the key, the key variable I imagine for Hey profitability is efficiency. So my question is, do you have any number in mind in terms of what is the ROE potential for Hey Banco and how, when you expect to reach this level? Thank you. As we've been focusing on product... on profitability and being able to be productive as a per client basis, we will definitely see a very healthy operation. As of the mix, it is a mix that is more on SMEs and on consumer business, but more on loans that are that have a guarantee. In terms of mortgages and autos, they have a physical guarantee. In the SMEs, we have a government guarantee of the 50%. It is a good mix, and it will definitely produce good results if we continue following as we've been doing so with good clients and being able to cater customers that have a need of loans and a need of a bank that has more products and being able to buy them in a very easy manner. We see the potential for Hey to continue growing at a very fast pace and continue furthering our loan growth. Definitely being able to produce an ROE higher than Banregio because of how we are managing the infrastructure and how we're managing and how we've been very able to capture deposits at a very fast pace with a very good cost. That will definitely. Being able to have a very neat operation as we are catering good quality customers. You have the possibility to have a very neat operation, very, very tight in terms of expenses. Obviously, as we finish the infrastructure needed, in Hey Banco, there's no further increase for infrastructure from 2024 on forward. In that sense, all growth will result in a very positive return as the operating leverage expands fully throughout the next years. In that sense, the ROE that we expect and the efficiency ratio is much better than Banregio. Perfect. Thank you. As something that is very good to understand is customers that are in need of cash management, if you, if your operation, it is very cash oriented, as in Mexico still we have a very high use of cash. Even in this administration, we're seeing a hike in more use of cash. If you're a customer that has a need of more cash management, the offering of Banregio is much more attractive to you. If you are someone that needs a tailor-made offer, Banregio is much more well suited for you. If you are a customer that is more digital native and more oriented to digital transactions and more and no need of cash management or a very small need of cash management, Hey Banco will be much better for you. In that sense, we have these two franchises that definitely will help us gain more market share and being able to generate pretty good results in terms of service. As you know, that's our main attraction, and we work very hard to have the NPS that we have right now. For example, in Banregio at 80%, which is amazing. And it is the best in class. And we have that upper hand. In that sense, we will have a very productive expansion. In doing it at the best moment in terms of interest rates will help us gather more profitability in the future. Both offerings are pretty good, and definitely, we'll be gaining market share as we continue even investing more on having an offering that is much more compelling. Absolutely. Thank you. you. Thank you, Manuel. You mentioned that you expect Hey to exceed the profitability of Banregio. And, you know, when I look at the numbers based on the comments made before, the ROE currently for Hey, it's less than 2% for 2023. When do you expect, how long will it take for Hey to catch up with the profitability of Banregio? No, I think it's in 2024, probably at the end of 2024 we'll be in that point. Perfect. That's very clear. Thank you very much. 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 in our investor relations team. Thank you for your interest in Regional, and have a good day. Thank you, everyone. Thank you. For any further questions, please let us know.