Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Regional's Q2 2023 Earnings Conference Call. Today, we're joined by Manuel Rivero Zambrano, Chief Executive Officer of Regional, Enrique Navarro Ramírez, Chief Financial Officer, and Alejandro Lobeira, Head of Strategy and Planning and Investor Relations Officer. 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, you will need to press the Raise Hand button. Please be advised that today's conference is being recorded. I will now 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 satisfied with Regional's Q2 results, as we believe we are harnessing the opportunities offered by Mexico's economic expansion, as nearshoring and demographic dividend present us with a unique window of opportunity to achieve sustainable growth, further increase our operating leverage, and boost our profitability. As you know, Regional is well-positioned to benefit from the growth, as our geographic footprint, superior capabilities, extraordinary service, and knowledge of the market are continued to yield an outstanding performance across all businesses and segments, resulting in an increase of our expanded financial margin of 30% and a net income of 13%. The continued growth of the economy has translated in an overall credit demand, together with our strategies, a gain in market share, resulting in an increase of the individual's portfolio of 39% and the SME portfolio by 22% year-over-year. We continue growing the number of clients, reaching 1.2 million, as we have been able to serve them with more products, resulting in a growth of our cross-sell index. This has resulted in an increase in our non-financial income by 20%, with insurance and income surging 27%, trust business, 28%, cards and merchant fees income by 16%, as well as an incrementing the core deposits by 20%. Our efficiency ratio has improved to 42.6%. This expense growth of 16% is mainly related to the inflation, as well as Banregio's infrastructure expansion plan, as well as the staff of Hey Banco. Going forward, we expect expenses to grow, to reduce to a low teen number, further enhancing our profitability. Let's move to the performance of our individual platforms. We're very satisfied with Banregio's overall performance as we continue to consolidate our geographic expansion and continue expanding our commercial infrastructure without compromising our consumer experience and profitability. This has resulted in an increase in the number of clients by 8% and an expansion of core deposits by 20%, as well as growth in consumer usage, reflected in a surge of credit and debit card transactions by 11% and 17%, respectively. Furthermore, we have intensified our cross-selling strategies, growing our consumer loan portfolio by 22% and the commercial loan portfolio by 12%. As we continue to gain market share, we remain confident in our commercial infrastructure expansion plan that aims not only to create simple yet effective branches, but also to grow deposits, lower the cost of funds, and achieve higher margins. The bank aims to achieve this by focusing on quality customers and cross-selling credit. The bank's biggest differentiator is the quality of service, which is reflected in the Net Promoter Score of 75, which is the highest in the industry by far. Banregio's unique 360-degree strategy allows the bank, the same banker to oversee both business and individual needs, furthering and deepening the tailor-made solutions for clients. In terms of our financial results, Banregio's financial margin had an increase of 27% with a NIM of 6%, an expansion of 50 basis points year-over-year. Operating expenses grew 9%, achieving an efficiency ratio of 37.1%. We expect the expansion plan to maintain expenses growth for Banregio between 9%-12%. Moving forward, we expect NIM to remain resilient in the upcoming quarters due to improved loan mix with the growth of SME and consumer loans across Banregio, as well as an optimized funding mix by reducing high cost deposits, notably government checking accounts, and finally, maximizing the securities portfolio yield. We had an excellent performance in an asset quality, maintaining an NPL of 1.3% and a cost of risk of 0.5%. We expect these levels of credit quality through... Risk of credit to continue during the next quarters. Banregio continues to have strong credit demand due to the positive effects of nearshoring, and we expect this trend to continue and show its full effects during the next years. Up to now, we have been growing in loans for home and industrial developers, manufacturing, agribusiness, services, as well as small and medium company loans. Banregio has increased its penetration in digital customers, both in-app as well as web-based electronic banking. In the later part of the year, we'll continue to roll out the program that incorporates the use of Hey Banco's technology within our Banregio's products. This integration will enable Banregio's customers to utilize a single app for both individual and business requirements. This approach will provide faster access to Banregio's products, enhanced features, and dedicated customer service assistance. Additionally, this strategy will aid in of our cross-selling index, as well as improving our Net Promoter Score. Moving on to Hey Banco, we're very excited to announce a major development. On July 14th, Banregio Grupo Financiero received the authorization from the Comisión Nacional Bancaria y de Valores to establish Hey Banco as a new banking institution. We expect to operate as an independent bank in the next 12 to 14 months. As you know, we distinguish ourselves by our sustainable growth culture, superior capabilities, and customer experience, that has resulted in a steady growth and outperforming profitability. For this manner, we have put forward initiatives that translate to a lower number of low-value clients and focusing even more on quality customers, particularly employees, and formal, experienced small business. We have an increased emphasis on client usage, higher cross-selling indexes, and lower customer churn. This refined strategy promises enhanced profitability as it translates to lower customer acquisition costs, lower operating costs, and higher volume of loans and deposits, such as increasing the customer lifetime value. We aim to maintain a healthy depositor base and comply with our regulations, and exceed in AML practices. As we implemented our latest machine learning model into detecting possible fraudulent accounts, we canceled more than 70,000 accounts, and going forward, we don't expect the sharp declines as we are running this model now on a regular basis. Despite the decrease in active clients, our consumer engagement has grown impressively, with an increase in debit and credit transactions by 70% and 142% year-on-year. We are aiming to finish the year with 750,000 clients, as we have cut the majority of ads on digital platforms, as the cost of ads related to digital banks have risen with the competitive landscape, and it brings very low income level accounts. We are convinced our client growth will be more productive when it's organic and motivated by our content creation, as well as below the line initiatives, as we have rolled out a more attractive referral program and Hey Coins, which aims to incentivize product usage and activations through gifts and gamification activities. Due to the growth of our loan book, financial margin has shown an impressive growth of 99%, reaching MXN 191 million and a NIM of 7.2%. Optimized market expenses have led to a decrease in acquisition cost of MXN 99, yielding impressive customer lifetime value over cost of acquisition of 58, and an NPS of 65. We expect the CAC to lower even in the next months. While total expenses grew 56%, the efficiency ratio improved to 80%. We maintain our efficiency initiatives that will lead to lesser growth costs during the next quarters, improving our cost to income ratio even further. As we continue to expand, we've secured our position as the sixth largest merchant acquirer nationwide. Hey Pago continues growing at an accelerated pace, with an average monthly billing almost reaching MXN 10 billion, and a 15% year-on-year increase in POS. In the number of POS. Hey Media, on the other hand, which, has not only expanded, but deepening the connection with our communities, amassing a formal community over 1.4 million followers across all platforms. More impressively, these followers are actively engaging, leading to 1.7 million monthly interactions. Looking ahead, we have exciting new features lined up, adding a membership with cost to access the rewards program, and adding benefits, helping to increase our fee income. We're also proud to announce the rollout of Hey GPT, an AI-powered chatbot designed to provide customer with information, financial advisory, loan quotes, and unparalleled client services and assistance. This aligns with our goal of controlling services, team growth, automating repetitive tasks, and enhancing customer service and interactions, and further our commitment to digitalization. As for guidance, for Regional, we maintain the one provided on January conference call. As we forge ahead, we remain committed to referring our operations and exploring new opportunities across all our entities, always striving for a superior customer service and shareholder value. 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 Ernesto Gabilondo. Please go ahead. Hi, good morning, Manuel, Enrique, and Alex. Thanks for the opportunity to ask questions. My first one is on your guidance expectations. You mentioned you are maintaining your guidance, when looking to the long road, it has been behaving above your current guidance of 10%-15%. Just wondering if we could expect the high end of the range? In terms of earnings growth, now, if we can also expect the high end, if you are willing to pay another 25% ordinary dividend payout ratio in this second half. My second question is on your NIMs expectations. We saw NIMs didn't expand quarter-over-quarter, although we saw an important NII expansion. Could you elaborate on what limited the NIM expansion? Was it related to an increase in term deposits? Maybe, well, you're having higher funding costs today, but maybe next year on a easing cycle, we can expect lower funding costs. Also, how would be Hey's role next year, related on the strategy, to protect the consolidated NIM? Thank you. Thank you, Ernesto. Thank you for your comments, your questions. I didn't hear the second one in terms of the guidance. You said net income, right? Yeah, loan growth and net income. Net income. the high end. Yeah, yeah. Yes. Yeah, we do expect the high end. As for dividend, we've already talked to the board about it, and it seems like if everything's going to place, there is going to be a proposal from management to a board on the next, on the next meeting. Okay. We will definitely give you more color as we continue on the development of these initiatives. Excellent. Can we expect it for the last quarter, or...? Yeah, I think it will be at the end of the year. Excellent. At the end. Yeah, yeah. For NIM expectations, we. Mainly the part that didn't, that hindered the growth in this quarter was the securities investment NIMs that we have at the moment. As there's a good amount of it that matures in the short term, those are gonna be repriced at a larger, better rates, so providing further NIM in the upcoming months. At what we're seeing in the loan mix, going forward, we see a better loan mix on by our cross-selling strategies on consumer loans and individuals, and definitely small businesses, and that, and for sure, that's been able to create an expansion of the NIM. We think that that's a trend that will continue going forward. For the next year? Yeah. For next year, definitely, Hey Bank will continue to expand the depth. We're more interested in growing auto loans and SME loans. We don't expect a huge increase, right? We do expect a good increase in terms of NIM, but not, we're not aiming to increment our consumer loan book by that much, as we've said already, that we stopped advertising on the open market for the credit card as a first product with our with Hey Bank. In that sense, we'll see a good increase, but not to that extent, right? Yeah. At a consolidated level, at Regional level, considering that it is likely to have an easing cycle next year, how should we expect about NIM? Should be stable? Well, as you know, we have a sensibility, Ernesto, and we are not, if your question is about if we are hedging on the opposite, we are not hedging. We have increased our fixed rate portfolio, and we have obviously, the cost zero, demand deposits. We expect it to reduce, as the rates reduce, and at the pace that, you know, we reprice our assets and liabilities. On a specific strategy in terms of hedging or buying any type of interest rate swap, we are not pursuing right now. We right now only have the interest rate swaps for mortgage, and it's a very small portion of the whole loan book. That sensitivity, Ernesto, if you remember, is on the NIM of total loans, not the total NIM. Yeah. obviously, as demands start growing, we can move the our repo business, reduce our repo business and change it to the loan mix. That will improve, then the total NIM. The NIM of total loans is, as Enrique mentioned, is sensitive to the rate. Yeah. Correct. That's important, because as the repo business has increased to close to MXN 60 billion, as Manuel mentioned, we are renewing every month, the proportion that is the finish, we are renewing at higher rates. That will be a natural protection for the next year. It will be a protection of the NIM, as right now is avoiding that we capture more expansion of the NIM. I don't know if I was clear? No, no, just wanted to double-check for next year, if you're expecting NIMs to be stable at a consolidated level. I understand that... Yes. Banregio could suffer, Hey can help to have modest expansion. At the end, should we expect stable NIMs at a consolidated level? Yes. Okay, perfect. Understood. Just, just a last question, if may I, on the digital bank, Hey, you said you have obtained the banking license from the regulator. I don't know if I heard correctly that it should take you, like, 12, 14 months to pass everything to the digital bank. Just want to double check on that. Also, as you mentioned, Hey reported lower sequential active users, but also you are seeing a strong engagement and a nice improvement in the acquisition cost. Would you continue to see that Hey Banco can deliver MXN 100 million this year, and how much are you targeting for the next years? In terms of the banking license, we have to request for many approvals. We will start next week with all the protocols. it's not only that we have to get the approval and certification for the initiation of operations, that's the more important one, but we have to get approval from Banco de México to have this pay, all the alliances that we have with OXXO and 7-Eleven. There are many approvals that we have to do in parallel, and especially the approval to move the customers from Banco Regional to Hey Banco. That's why we expect around 12 months, all the approvals that we have to get from different authorities. That's in terms of the timing. In terms of the Hey Banco strategy, yes, we are aiming for a lower number of customers, but more profitable, and with a lower cost of acquisition. We have reduced almost to zero all the marketing expenses or the advertisement expenses, to be more precise, and that's what drives a lower cost of acquisition. We are implementing a very attractive referral programs, in order to increase the referral new customers or referred new customers. Excellent. Excellent. Just to the numbers that you have mentioned in the past, that this year could be delivering MXN 100 million, and next year, I don't know, are you targeting a number or? For this year, we see challenging the MXN 100 million. We have had more expenses and more provisions than originally budgeted, but it still will be a positive number, around MXN 50 million. Okay, perfect. For the next couple of years, are you targeting an amount of...? Not yet. around MXN 200 million for 2024. Okay, perfect. Thank you very much. Thank you to you, Ernest. Thanks, Ernest. Next question comes from Pablo Artuso. Please go ahead. Hi, Manuel, Enrique, Alejandro. Thank you for taking my question. I wanted to understand a little bit more about the consumer loans of the bank on a constant year basis, because this quarter, the growth rate was of 7% quarter-over-quarter, if I'm not wrong. I just wanted to understand how much responsible the digital bank, I mean, Hey Banco, was in this performance, and what could we expect as growth rate for this portfolio this year, and also for 2024? My second question here, I also wanted to understand the provisioning policy going forward, because considering or in light of this expansion consumer loans, the hike on cost of risk was not enough to maintain the coverage ratio stable this quarter. My second question here is: Should we expect this coverage to continue decreasing, given the guidance for the cost of risk between 0.7 and 0.9? This dynamic could put some pressure on the guidance for the cost of risk at the bank and at the upper level. Thank you, guys. In terms of the dynamics, we will see lower growth of consumer loans, specifically on credit cards, for the next quarters. Banregio will maintain the pace around 20% growth, but in Hey Banco, as you saw, we have close to 200%, 179% increase. In the consumer side, that is what is driving the provisions up. We decided to close the criteria, the adoption criteria or the acceptance criteria in our credit scoring models. We are only accepting right now employees that we have demonstrated that they are employees with experience in the credit bureau. In time, we will see an improvement on the credit quality of the Hey Banco digital initiative customers. Also a very similar growth to Banreg, both of them around 20% year-on-year on the next quarters. That should drive down the provisions, not for the next quarter, but for the last quarter of the year and the next full 2024. In terms of the whole Regional guidance, we will maintain it in 0.7%-0.9%, because even it's an increase on provisions for consumer, considering the relative size, it doesn't move the whole cost of risk. As I mentioned, it will improve in the next two quarters. Okay, that's perfect. Just to follow up, on Hey Banco, very quick here. What drove the quarterly drop in the number of active clients? Just to make the link here to the consumer loans. I just wanted to understand, that this drop in the number of active clients here, it's more related to a fiercer competition, from some incumbent banks or newcomers, or it was related to some other aspect, like lowering the risk and being more selective, et cetera? Yeah. More the second. Uh. In terms of the, yeah, so we installed a machine learning model in order to keep fraudulent accounts out of the bank, and we canceled 70,000 client accounts this quarter. That's the main part of it. We don't expect that further sharp declines as we are implementing them all in a regular basis. As well as we decrease our ad spending dramatically, focusing on organic growth, this because the typical client that comes from the digital platforms, it's the income of in the of those accounts are very small, and it's very difficult to loan with our quality risk that we are comfortable with. In that sense, making an investment in ads doesn't work for us anymore. As we are experiencing good organic growth, and we've been able to cross-sell more and more products to our existing customers, as you can see, Hey Pro customers growing at a faster pace. In that sense, that's what we're aiming for, and being able to produce a more profitable with clients with substantial more income, and being able to generate a very productive outcome for next year. That's perfect. Thank you, Manuel. Thank you, Enrique. Thank you very much. Next question comes from Ricardo with Spiegel. Please go ahead. Hey, guys. Can you hear me? Hi. Thanks for the opportunity to make questions. I have two questions here on my side, if I may. First of all, the nearshoring has clearly been helping Mexican banks grow the portfolio, and so in the recent quarters, especially in the real estate development segment. There are still some doubts whether we should see this effect more deeply in the other sectors, and also in the following years. If you were to take the nearshoring effect out of the equation, could you also please explain what would be the main drivers for loan growth in the following years? How optimistic would it be with loan growth dynamics without this nearshoring effect? For a second question related to Hey, could you also comment a little bit on the slight deterioration we saw in unit economics for the bank? We saw a slightly lower RPEC and higher cost to serve, even though you are growing a little bit less your client base. Can you explain a little bit more what drove that? Finally, if you could also provide more color on the levels of NPLs for Hey, it would also be helpful. Thank you. In terms of, you were asking, what would be the loan growth without nearshoring? I wanted to understand a little bit more about the drivers of loan growth, excluding the nearshoring, what would be drivers for loan growth in the following years, not taking this effect into consideration? Yeah. I think one of the moments that we had in the economy, when Trump got into office and then López Obrador came in, I think in that, in that environment, we saw a quite decrease on foreign direct investment, and loans in the industry did definitely lower. For us, we were doing around 10%. In that sense, I think the local market would definitely need more demand for loans, as there are a very positive trends in terms of a demographic dividend, which obviously translates into a more dynamic local markets, right? In that sense, I think it would be probably around 10%. But obviously it's hard to tell in terms of. I mean, this NAFTA started at 1994. Foreign direct investment to Mexico has been one of the top 10 worldwide. Our home state in Nuevo León is obviously the second city in Mexico to get more investment. In that sense, it's difficult to get that out of the question, right? As we're seeing the consumer trends in U.S., and we're seeing the industrial production in U.S. and how it's evolving, and we see how that's impacting the demand here for many consumer goods and services, and obviously for manufacturing. Obviously you can see that in the unemployment index, which is pretty low, and obviously creates more usage of loans, consumer loans, et cetera, right? In that sense, it's difficult to get that out of the equation. In that sense, I think I hope I answered your question. No, I understand. It makes sense. Also, I would believe that in terms of a decrease in interest rate would also kind of help a little bit and just accelerate loan growth, at least in the following couple of years, or not? No, definitely. For sure, we think right now, the rate hinders credit growth. Evolving in the next years as interest rates continue receding, definitely we'll see more demand in loans. I don't think in consumer loans per se, but I think definitely on medium to large companies, which are more correlated to all the increments in the interest rates, right? Consumer loans are not that correlated. Oh, perfect. In terms of, the unit economics and NPLs of Hey? NPLs? The unit economics in general, as you mentioned, we saw a decrease in the customer acquisition cost. A little bit of increase, if we separate Hey individuals on the cost to serve, that is related more than the number of customers was reduced, more than an increase on expenses. The other one that increases is the cost to serve in Hey Pago or Hey payments. Basically, it's related to more payments to the servicers. We have outsourced the service and higher payments to the vendors. We have started remunerating and incentivizing some of the vendors, both in Hey Banco as well as in Banregio, with fees to maintain the relationship, not to attract new POS's. I don't know if there is... In terms of NPLs, is what I was talking, we have an increase of NPLs in credit card. The other three portfolios are really healthy, below even than Banregio. Auto is 0.5%, mortgage is 0% of past due loans or NPLs, and SME, small and medium businesses, is less than 1%. Credit card moved from 3.5%- 5%. That's what drives up the whole Hey Banco from to 1.39%, I guess. I'm looking to the. Thank you. Very clear. Yes, that's the reason. It's basically the credit card, and as I mentioned in the previous question, all the efforts that we are doing to improve the quality of that portfolio, from one side to collect, obviously, all the more than 200% or close to 200% of increase of growth. That brought also an increase in past due loans of the same, of a similar, proportion. Perfect. Thanks. Thank you, too. Our next question comes from Julie Fernandez. Please go ahead. Hey, guys. Thank you very much. I would like to follow up on Ernesto's question regarding margins. I understood, if I'm not wrong, that you're calling for maybe stable consolidated NIMs in 2024, with maybe the margins at the bank level decreasing, but your investment yields, like repos, kind of offsetting this. I just would like to confirm if that is the message, if we should expect NII to grow mostly in line with the loan growth for the next year? And also the sensitivity, like the classic 100 basis points sensitivity. I think, like in the previous calls, this was 15 basis points, 16 basis points, just confirming, where is this sensitivity now? That's the first question, like basically margins outlook. I have a second one regarding cost of risk. You already discussed a lot, Hey Banco, increasing cost of risk, we also noted an increase in Stage 2. And I know Stage 2, they are still performing, you know, a little bit more risky kind of loan, for sure, not a Stage 3 yet. We saw a 15% quarter-over-quarter increase on this bucket. Can you clarify what are those Stage 3 loans, if there is a risk of those Stage 2 loans eventually becoming a Stage 3? Because your message on the guidance, it seems pretty, you know, sound, remaining with 0.7%-0.9%. I would like to double-check if this Stage 2 could not be a risk in the coming quarters. Thank you. Yes. In terms of margins, yes, the sensitivity is similar. It's 15%, as the fixed rates loans increase, like mortgage, auto, and all the financial leasing, it will vary a little bit lower, because we will have more fixed rates that will benefit from a down reduction on the policy rate. Remember, Yuri, that is on the NIM of total loans. It's not the total NIM, that sensitivity that Enrique is talking about. As the investment securities portfolio right now is more than a third, it's a large proportion of the whole assets, of the total assets, that should be considered, and that's why we say, as a consolidated level, we should expect a very stable NIM for the rest of year. As, answering directly to your question, yes, should grow the net interest income in line with the growth of the loans. Also will depend on the pace of the reduction of the policy rate. I don't know if I was clear enough. Oh, super clear, Enrique. Makes total sense, and also thank, I think, Manuel. Regarding Stage 2, what is... I know it's still very small, but, it was something that- No. Yes, as I mentioned, credit cards in Hey is increasing Stage 3, and in the commercial, Stage 2 is from Banregio, from medium to large customers. We don't expect them to go all the way to Stage 3. Obviously the team, the collections team, is working with them in any type of solution, then we are not worried about that. We are working on that. As you can see, the Stage 2 comes mainly from commercial, more than consumer, the growth in the last quarter. Can you remind us, Enrique, what is the percentage of your commercial book that has collaterals? Any type of collateral is 96%. Real estate collateral is 54% of the loan book from commercial. Perfect. Thank you very much. Thank you. The next question comes from Jose Luis Cuenca. Please go ahead. Hi, good morning, everyone. Thank Thank you for the presentation and for taking the question. Just two quick follow-ups here, with regards to the last question in terms of what was being described in Stage 2. If you could just comment a little bit more, when we talk about the commercial, what kind of sectors or industries are using this? ... this trend of migrating to Stage 2, if you could provide a little bit of additional color on that. My second question is just to confirm, from what I understood on Hey Banco, it seems that cost of risk would be relatively under control on their over a relatively short period of time, if I understood correctly. Just wanted to confirm some time horizon where we could expect more stable cost-to-income ratio for Hey, and more stable provision or cost of risk. Thank you. in terms of the stage two, there is not any specific sector. Is, uh, in the same proportion of all the, sectors. As we have a, higher proportion in, construction and real estate, loans, the larger number are in there, but there are also some of manufacturing and services. Then is, is, is not really a sector trend. Similar to the proportion of our portfolio. Yes, exactly. It's nothing. are very specific cases like someone that has a problem with insurance. There are specific cases, not a sector risk or neither a region. They are not neither concentrated in a region. In terms of Hey Banco, both cost of risk and provisions, and then the cost-to-income efficiency ratio. In terms of provisions, we could see a more stable quarter until the last quarter of the year. The next quarter will be still high, as you see the trend. As the new vintages from April are very clean and very high quality vintages, for the last quarter and for the whole next year, we will see a lower and stable cost of risk for Hey. In terms of cost to income, as we are as Manuel mentioned on the, we are doing some initiatives to maintain the cost in Hey, not to increase it more, we should expect an improvement quarter by quarter, as we expect to increase the income and maintain the cost and expenses. Thank you. Thank you, too. Next question comes from Chikiran Kanaluri. Please go ahead. Hi, thanks for taking my question. My question is around the different levels of loan growth we see in different regions. When we hear about the commentary on you're showing in the media, what we frequently read is how Nuevo León and Monterrey are benefiting a lot. When we see our core wholesale loan book, the growth in Mexico City and other regions has been faster than the loan book growth we see in Nuevo León. What are the different trends and demand drivers you're seeing for credit in different regions? I have a second question, which maybe I can get after this. Thank you. Yeah. We, as in the last 12 months, we experienced more loan growth in Nuevo León than anywhere else. And right now, we're seeing more on other regions, for example, the Bajio part, and other parts of the Northwest. Mexico City, finally, we've seen a development in terms of their economic growth. We've seen that we're regaining growth in that region, and in that sense, that's where we see, you see a more dynamic growth. I wouldn't say that it's because of the impact on nearshoring on a region basis. In that sense, it depends on last year's growth too as well. I see. I think going forward, I think obviously the North and the Bajio part will be definitely more attracting more and more foreign direct investment than the central part of Mexico, right? And obviously tourism in some places, which definitely is one of our main industries, so definitely there's some aspects in the South as well. For sure, nearshoring will be more prominent on North, Northeast and Bajio parts. Understood. Yeah. In the contribution of Nuevo León, to the portfolio, in both, the retail and wholesale segments, in the next, let's say, near term, 3-5 years, do you expect any change, to the portfolio composition, including, let's say, excluding the impact of Hey? Yeah ... cities? Yeah. I think the proportions would be similar there right now, in the next, I think 12-24 months. Understood. got it. Thank you. My second question is around a bit more long term. If we see, I think for the past, 3, 4 quarters, we've been seeing that the segments of the loan book, which used to be smaller, are growing at a faster rate, like consumer loans, for example. As we see, in terms of, mixed value, on a consolidated basis, where would you, where would the core wholesale loan business, trend in the next few years? Since these are, relatively smaller segments that are becoming bigger, if you could also let us know how the underwriting takes place for these kind of loans, because of the different risk profile, and what kind of risk calls you take, and where do your models fit in over here? That would be helpful. That's my last question. Thank you. Well, definitely, you've seen an increment on consumer loans. We looked at it at loans for individuals, which are mortgages, auto, and consumer loans. While it definitely is in a fact on focusing on cross-selling, rather than going for open market strategies, which differentiate our NPL ratio compared to that of the system. That's our main objective, and to continue doing it, so that it translates to good growth in terms of being able to do it in a profitable manner. We're taking advantage of all the positive days. I think that's the main aspect of this strategy, and this obviously translates into a more clean and lean operation. Definitely, we're very happy for the development so far. We're not aiming to grow outside of our risk tolerance. As you know, we're in Mexico, there's a good need to go to have collectors if you want to go to a lower income and more riskier loans in terms of consumer credit. Those are two segments that we're not aiming to do so. In that sense, the same orientation of quality as you can see in other portfolios, that's our aim in the consumer and the individual part. We're aiming to do a relationship for the long term. We are looking to lower our churn, and in that sense, we're aiming to do a long-term approach and strategy and be able to do it in a very steady manner. Thank you. Just if I could follow up on a very small detail on that. These new, I mean, these consumer loans versus the wholesale loans, would the fee income profile of these loans be any different when you write a new loan, when you disburse a new loan, or over the course of the tenure? How would the fee income profile of these two compare with each other? How the fees... Yes. Would relate- The processing fee of a new, loan. Yeah when we write, or over the course of loan, late payment charges, everything put together, would we expect the traditional book to have, higher fee, income for, to loans, or would the ratio be higher for the consumer loans? I didn't get the question, sorry. As the loan book changes to more consumer loans, should we expect higher fee income, or should we expect it to be same? Yes. Sorry. Yes, sorry. Finally ... consumer loans have higher fees. Understood. Thank you so much. It's very helpful. Congrats on a strong quarter, and all the best. Thank you very much. Thank you. Our next question comes from Anand Bhavani. Please go ahead. Thank you for the opportunity. My first question is around Hey Banco, client, number. Now, while we reduced the clients by 70,000, on this new number, what is the eventual goal? We spoke about 1 million clients, about three, four quarters ago. What is the new kind of target in terms of number of clients on Hey, over let's say next three, four quarters? Yes, we as we said, we're going to go for 750,000 at the end of this year. We'll definitely reach the 1 million mark at the beginning of next year. Okay. The accounts that were discontinued, can you give us a sense of how much credit cost came from those accounts? The credit cost for those accounts were. Like- I don't have any specific number at the moment. Okay. But- Any ballpark figure as to how much we had to write down as we closed those accounts? Were there any loans given to those accounts? No, well, those accounts. No, the canceled, we canceled, didn't have any loans on them, so they didn't, they just had, deposits on them, very low deposits. Okay. Yeah. Okay. we didn't, we didn't have to under, yeah, to-. ... No, it's not related to the credit cards, issue. It's the 70,000 accounts that were canceled, basically, they didn't finish all the process of identification, the fully verification and identification, identity verification, sorry. And they were potentially being used for other purposes. We don't loan, if you don't have a biometric authentication with the. Election. Election card, you definitely need another level. Those accounts that we canceled were level 2 accounts that didn't have a lot of deposits on them. That's the only thing that they were. Got it. Got it. Yeah. About, you know, Hey Banco's separation from the parent, at this point in time, how are you thinking about it? Would it be a spinoff, with shares being given to existing shareholders, or would it be in some other way? What is the thought process? Yeah, right now, we're focusing on getting the license up and running, and when it does, it's gonna be under the umbrella of the financial group, which is a company of Regional. Hey Banco would be under the umbrella of the Banregio Grupo Financiero, and Banregio Grupo Financiero is under Regional. If Hey Banco continues growing at a, at a faster pace and continues developing in a well manner, and it, If it gains the necessity to, in, need more capital, we will definitely look to the idea of getting out of Banregio Grupo Financiero, Hey Banco, and put it in place in order to allow that spinoff to happen, right? We're at the... Not at that moment, at the time, the plans for right now are aimed to make Hey Banco up and running under Banregio Grupo Financiero umbrella, and for that, is our objective in the short term. Got it. One last question, if I may. You had some plans to sell the technology that you developed for Hey Banco to other banks and other financial institutions. Any update around that? That's my last question. Yeah. Our first client is gonna be Banregio, which, for sure we're gonna be able to profit from that relationship. At that moment, the regulator has not allowed any. open banking. Banking as a Service platforms to happen. We're waiting for that piece of regulation in order to continue developing. We're obviously on the same Grupo Financiero, we are able to do so. Obviously, that's going to be very productive in order to produce the solution even further. Thank you. All the best. Thank you very much. Thank you. Next question comes from Neha Arora. Please go ahead. Hi, thank you for taking my question. Just very quickly on competition in terms of the digital players, there, we believe that there's more players in the market, like, now, but not they have that issue bank, Bineo, and you have Nub ank entering the space as well. Do you see that competition in the past few months maybe have picked up? Has that had any impact, first, in terms of your CAC or in terms of your, the quality of the customers that you're able to attract? Have you seen any changes in that regard because of competition? Thank you so much. Thank you, Neha. Definitely we've seen a good fair competition, and it will depend on the product. I think the main differentiator that we have in Hey Banco is that we are multi-product, multi-segment. In that sense, we're gonna be more resilient in order to produce a profitability as per, in a per client basis, compared to others, for sure. In that sense, we're aiming to do a more organic growth and not being dependent on platforms, in order for that issue of more competition for the same search words, not to impact our cost of acquisition, right? That's our main objective as for right now, to continue to produce the capabilities needed in order to produce... The strategies needed in order to produce a more organic growth and being able to just don't care about how many people invest in ads in Google and Facebook, which right now seems a bit too crowded, and for sure, in the next 12-18 months, it's gonna be much more, right? You have some in the open bank just starting in 12 months, and Bineo at the in the next at the beginning of next year. Definitely they're gonna be more focusing on ads, and we're gonna be past that, right? In that sense, we that's our objective, and in that sense, we don't think that the impact will be significant in the cost of acquisition. Okay, understood. Thank you so much. Thank you. Thank you, Neha. 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. Have a good day. Thank you very much to everyone. Hope to see you soon. Thanks.