Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Regional's Third Quarter 2023 Earnings C onference Call. We're joined today 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. 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. This quarter, we observed solid growth in our loan book and non-financial income. Paired with controlled expense growth, these factors have contributed to impressive income growth and improved efficiency ratio. Our quality earnings have reached an all-time high of MXN 1,563 million, indicating a 20% growth quarter-on-quarter. This accomplishment is bolstered by our continuously gaining market share, resulting in an expanding portfolio and a productive cross-selling strategy that has impacted our non-financial income sources, growing at a remarkable double-digit rate. As Mexico economy is currently undergoing a period of increased dynamism, we are poised to capitalize our distinctive capabilities, ensuring sustainable growth and enhanced profitability. Our geographical expansion and infrastructure development, digital capabilities, exceptional services, and deep market insights have consistently deliver exceptional results, allowing us to expand our customer base and maintaining high cross-selling levels. As a result, the financial margin for the third quarter expanded 29%, with a net income increase of 20%. Our strategies to gain market share and a solid credit demand resulted in an increase of the total loan book by 20%. The most dynamic growth has been observed in the individual portfolio at 48% and the SME portfolio at 25% year-on-year. We continue growing the number of clients, now standing at a robust 1.2 million. This significant growth is fueled by our streamlined commercial strategy, exceptional customer service, and a notable increase in our Cross-Selling Index, which have resulted in an increase of our non-financial income by 15%, with the insurance income surging by 42%, trust business by 49%, and cards and merchant fees by 43%. Additionally, the core deposit base increased 21%. Our Efficiency Ratio has improved to 41.7%. We have effectively moderated the rate of expense growth by implementing strategies that will produce more profitable growth, with an emphasis on productivity. In the following quarters, we are anticipating an improvement in our Efficiency Ratio as our expansion plan has producing very good results in the short term. We are comfortable continuing our expansion plans in both platforms. Now, let's move to the performance of the individual platforms. Banregio consistently delivers exceptional results as we expand our geographic reach and enhance our commercial infrastructure, while preserving a distinctive customer experience and a strong profitability. We have experienced an expansion of loan growth, reaching a 15% increase. We attribute the increase to a surge of investment in the regions where we have a strong foothold, as well as a robust labor market, which has translated into a more demand of goods and services. We expect this trend to continue in the following years, and loan growth could accelerate even more if rates decrease in the following quarters. We continue investing in increasing our sales force, as well as capabilities to continue having competitive edge and gaining market share. On the retail segment loan growth, we saw a very dynamic growth, with an increase of 22% on our individual portfolios, as well as our SME portfolios growing at a very dynamic rate of 17%. This is a result of our efforts of cross-selling and our expansion plan, which has translated into very productive growth. As we continue to gain market share, we remain confident that our expansion plan will produce highly effective branches that will drive our growth in deposits, a lower cost of funding, and higher margins. The bank's biggest differentiator is its quality of service, which is reflected in its high net NPS at 77, the highest on the industry by far. Our unique 360-degree strategy follows to our tailor-made solutions for both businesses and individuals, focusing on high-quality customers and cross-selling. This success is reflected in an increase of 8% in our client base, 22% expansion in core deposits, and coupled by the surge in customer activity, demonstrated by the 11% increase in credit card transactions and 17% increase in debit and card transactions. Loan growth has been accompanied by better-than-industry standard NPL ratios, particularly the individual portfolio, which has a NPL ratio of 2.7%, and our commercial with an NPL of 3.1%. All of this results in a better-than-market financial resource, Banregio's financial margin, and an amazing increase of 23% year-on-year, with a NIM of 6.1%. Operating expenses grew 7%, achieving an efficiency ratio of 34.5%. We expect the expansion plan to remain expenses growth for Banregio between 9% and 12%. Moving forward, we expect NIMS to remain resilient in the coming quarters due to the expansion of our profitable portfolio, such as the SME and consumer loans across Banregio, as well as an optimization in funding mix, achieved by reducing high cost deposits, notably government checking accounts and repricing of our securities portfolio yield. We had an excellent performance in asset quality, maintaining an NPL of 1.3% and a cost of risk from 0.6%. We expect these levels of credit quality and risk of credit to continue during the next quarters. Moving on to Hey Banco, we continue on our path to operating separately from Banregio, and plans are on schedule, with a target to initiate operations in the third quarter of next year. As mentioned before, our focus is on having a very good profitability ratio from the beginning of operations at Hey Banco. We're committed to the strategies of organic client growth and cross-selling to our satisfied customer base, as well as a shift to only lend to the formal and mass affluent market. This redefined strategy promised to enhance profitability as it translates to lower cost of acquisition, lower operating costs, higher volume of loans and deposits, thus increasing customer lifetime value. Our lifetime value over cost of acquisition has improved from 59 to 534 quarter-over-quarter. Our goal is to conclude this year with a strong clientele of 700,000. As previously highlighted, our strategy focus has pivoted towards catering to more formal and mass affluent customers. We firmly believe that prioritizing organic growth and targeting a more resilient customer base will foster a more productive expansion and producing very profitability for Hey Banco. As our financial results, due to the growth of our loan book, financial margin has grown an impressive growth of 118%, reaching MXN 227 million and a NIM of 8.4%. Optimizing marketing expenses have led to a decrease in acquisition cost of MXN 12, yielding an impressive lifetime value over cost of acquisition of 534, and an NPS of 64. While total expenses grew 36%, the efficiency ratio improved to 80%. We maintain our efficiency initiatives as we would lead to less cost of growth during the next quarters, improving our cost to income ratio even further. As we continue to expand, we maintain our position as the sixth largest merchant in Mexico. Hey Pay continues to grow at an accelerated pace, with an average monthly billing of MXN 10,442 million, an increase of 17% year-on-year in POS. Hey Media, on the other hand, has not only expanded, but deepened the connections with our communities, amassing a formidable community of over 1.6 million followers across all platforms. More impressively, these followers are actively engaging, leading to over three million monthly interactions. Looking ahead, we are excited new features line up, adding a membership with cost to access the rewards program and better pricing in investments and adding more benefits. This will help to increase our fee income. We have also integrated Hey Coins, a reward program aiming to incentivize the product usage, enhancing the customer interactions and deepening our commitment to digitalization in the back office to produce even better results in our efficiency ratio. To conclude, I would like to mention that the board has approved the convening of a shareholders' meeting to seek an approval for a second dividend payment, as we remain firmly committed to deliver sustainable value to our shareholders. As for Regional guidance, we maintain the one that we provided on the January conference call, as we are confident that we can continue to outperform the market and excel in our financial results. As we move forward, we will continue to refine our operations and explore new opportunities, always committed to our strategic goals. We have strong confidence that Regional will keep delivering a strong financial performance during the coming years, sustaining distinguished profitability and exceptional asset quality. Thank you very much. We appreciate any questions. Ladies and gentlemen, to ask a question, you will need to press the Raise Hand button. Please stand by while we compile our Q&A roster. Our first question comes from Eric Ito. Please go ahead. Hi, guys. Good morning. Thanks for the opportunity, and congrats on the results. I have two questions here. The first one is regarding loan growth. So you mentioned that loan growth could accelerate depending if rates decrease. So my question is: What can we think about 2024 about loan growth? And also, if you could give the breakdown on the different segments, so consumer, commercial loans as well. And my second question is regarding if you could recall us the NII sensitivity to interest rates, and what can we expect for NIMS on a consolidated basis for 2024? So maybe we can maintain this around 6% NIMS, as the lower interest rates are offset by more consumer loans. Can we think about that? Thank you. Yes, Eric, thanks for your questions. About the second question about the NIM sensitivity, it's around 15 basis points per 100, up or down, on the total loans NIMs. ... On the total NIM, or the full NIM, the official one, is lower, and it will depends on the size of the repo business, and more precisely, of the investment securities portfolio. As you can see, it has grown from MXN 50 billion to MXN 60 billion, and right now is going down. We are repricing and improving the yield on that business. Then, that's why we are always focused on total loans NIM, and the sensitivity is 15 basis points or 16, between 15 and 16, per 100 increase or decrease. In terms of loan growth for next year, the portfolio that is more sensitive to the interest rate will be the wholesale portfolio, right? So, definitely we're gonna see more increase on more demand, as projects will have a better return when interest rates see it, right? So, not so much, I think, in terms of the consumer portfolios. I think right now, the portfolios are growing at a good pace. I don't think there's very sensitive to the interest rate. So, definitely it will impact, as we have most of our in Regional portfolio on the commercial side, so in the wholesale, so it definitely will see a pickup there. I don't wanna say a percentage as of right now, so in a sense, I just wanna give you an idea that as we go further in terms of if the economy continues to expand and things will see in terms of the inflation, we could see a pickup in terms of more loan demand in the wholesale business. Perfect. Thank you. If I could make a quick follow-up, just understand if you guys expect your NIMs to remain at least around 6%, or do you see more downward pressure for next year? Thank you. For the next year, specifically, we expect them to remain stable around 6%. As we expect a decrease in the second half of the year, then the average tier should remain close to 10%. Say that we will see pressure if the reduction of the policy rate is higher. And in 2025, we expect another 200 basis points, then we will see the impact more on 2025. But definitely, we have a pressure downwards, because we have a very similar sensitivity, up and down, on the average tier. That, that's important. It's not the final one, it is the average one. Very clear. Thank you very much, guys. Next question comes from Tito Labarta. Please go ahead. Hi. Good afternoon. Thank you for the call, and thank you for my question. A couple questions, also. First on the fee income, there was a decline in the other fees. Just to understand, if you give some color, what happened there? Should that normalize next quarter, or is this a new base on that, the other fee income line? Then second question, in terms of provisioning and, you know, remaining relatively stable, we did see a little bit of a pickup in the NPL ratio, and as you grow more in retail loans, how should we think about the cost of risk, from here? Thank you. About other income, we noticed that we were presenting wrongly, and we corrected this quarter. An interest that is that comes from the deferral of what we call, I would say, the translation, literal, months with interest. When you... We allow our customers to split the payments in 12 or 24 months. That income, that interest was being registered as a commission, and we make the reclassification this quarter. And all the first quarter and second quarter, that were MXN 51 million, were reduced on that line, and then moved to interest. For the next quarter, should be right, should be an interest. And we have seen an increase on that interest, mainly in Hey, as we are allowing the customers to do the referral, the deferral payments in the app. I don't know if that was clear, Tito. Yeah, just to make so this is the other fee income line that was MXN 169 in 2Q and fell to MXN 87. That was because of that- Yes. Reclassification? Yes. Okay. There should be around 120, if you normalize. Okay. So going forward and normalized, it's closer to 120? Yes. ... Okay. Yep, okay, so that makes sense. Then the second question on the cost of risk and asset quality. On the, can you repeat, remind me? Yeah, just how to think about the cost of risk. I mean, asset quality is, you know, doing fairly well, a bit of a pickup, but, you know, if you're growing more in retail, should we see a pickup in the cost of risk from here, or...? No. We are seeing the highest level. We have seen two, two impacts. The one is in, with the change of the methodology last year, the provisioning for stage two loans is higher than used to be before. Then in Banregio, we have higher stage two loans, in that level of, NPL. Well, it's not still NPL, it's due. And both in Hey and Banregio, we have a deterioration in credit card, in consumer. You will see also on the split on the quarterly report. And we changed since March, and then in June, our risk appetite, we are being more selective on our credit scoring model. We will see still another quarter of NPLs in consumer, that, as you know, is a very small portfolio, and then an improvement for first quarter of 2024. We still maintain our guidance of 0.8%-1%, and right now we are on the high level, around 1% of credit risk annualized. Okay. That's clear. Thank you very much. Our next question comes from Ernesto Gabilondo. Please go ahead. Hi, good morning. Can you hear me? Yes, Ernesto. Perfect. Perfect. Thank you. Thank you, Manuel, Enrique, and Alex. Thank you for the opportunity, and congrats on your results. I have three questions from my side. The first one is on OpEx growth. We have seen that you and some other Mexican banks have been investing in hiring commercial bankers to take advantage of the nearshoring aspect opportunities, and this with the expectation of higher credit demand in the next years. Also, we have seen these years, there have been a lot of investments in branches and technology. So just wondering, how do you see OpEx growth this year, and how should we think about it for the next year? Then my second question is on Hey Banco. You, Manuel mentioned some, introduction lines about the business, but wanted to hear a little bit more about the strategy. It seems that you are focusing on profitability versus client growth, and this is notable as, active clients have slowed down, recently. So considering this a profitability focus, do you continue to see around MXN 50 million in earnings for this year, and around MXN 200 million, for next year? And how feasible do you think you can get to those numbers? And also related to this, have you getting any concern about Nu requesting for a digital banking license? And then for my last question is, related to, your earnings growth for this year. Now, if running the numbers, I think it was around 12%, the earnings growth for the first nine months. So just wondering if you are keeping your guidance or there could be some upside risk. And looking to next year, if we can think of a same pace of growth, or it could be even a little bit higher, and if that's correct, what will be the drivers behind that? Thank you. Thank you, Ernesto. Thank you for your comments and for your questions. Well, in terms of the second question, in terms of Hey Banco growth strategy, definitely we are focusing on profitability. We're focusing on being more productive and being more efficient. You can see that in the efficiency ratio has been developing, which is. We're very happy for that. As we continue going forward, as we said, we shifted for a more loan growth in terms of formal markets and a more affluent market, which is a mass affluent, right? So you can see that the lifetime value has increased, and LTV/CAC has increased, right? I'd say, we're very happy with those results, and we will continue developing our core strategies to have a more dynamic growth in terms of customer growth. ... Definitely more focus on volumes and more focusing on margins, and which obviously will translate into better results. We just rolled out Dizzy. Tomorrow, we're rolling out the membership programs. They'll deliver more fees, and this will create a more profitable operation. Sadly, we have had some episodes of fraud in terms of our credit cards, and sadly, we just-- we're not gonna be able to reach the MXN 50 million in terms of profit this year. But we definitely took care of that, and we've learned a lot, and obviously that as right now, we're gonna be, as we said, shifted for a more formal market. So that will produce a NPL ratio of a bettering NPL ratio, probably in the next three to four quarters, right? So when we reach in the third quarter of next year, we will reach at a point where we are targeting a profitability even above or trying to target our profitability even above what Banregio has. So definitely making sure that things go that way, right? So fixing in terms of pricing, better performing in terms of customer acquisition, having more robust growth in terms of fees and producing obviously better results. Nub ank, definitely think they're their strategy. I mean, they notice that having a bank is something in Mexico that is needed. We knew that already many years ago, and that's why we have this point already. I think the challenge here in Mexico is the infrastructure that you have to build from then on forward. Because not only that you have a bank, you have gonna to be able to have a better infrastructure for your customers. For example, you have to have, for example, connections to the ATM machines, that you have to have an X amount, and you have to have an association with other banks. So they will have to invest not only on building the bank, but then on adding more infrastructure to have the same customer service that we are having right now. So good for them, but I think, I mean, the customers are gonna receive a better service probably three or four years from now, which obviously has... For us, it produces a lot of time to continue growing at a good pace, and then, being able, I guess, to do credit cards of MXN 2,000 or the average that they have. In terms of the growth, as we said, loan growth, and I don't know if you asked the loan growth or the income growth, but I think the loan growth has, as I said, we think the wholesale market will accelerate as yields, as interest rates continue to see or hopefully see next year at the end. And that will produce a more dynamic growth in terms of loans. Not... We're not saying expect a very exponential growth, but definitely we could see a more robust growth in terms of wholesale. In the OpEx growth in Hey Banco, as I said, as we've halted the increment in the developers and the—in a sense, we've already reached the capabilities, the technological capabilities that we need in order to serve the market digitally. We are now focusing on the back office and making sure that we digitalize the whole thing and being much more productive. So in a sense, the expense growth there should not be that much. Obviously, there's a small staff that we have to build up in Hey Banco to start operations like treasury, the tax. There's a lot, some of the aspects that we need to start operations. It's not gonna be a very high increase. Definitely, we could see something there. And then the expansion plan of Banregio, which we are, as we know, growing around 15-20 branches per year, and that's our plan. It's producing good results. We've seen very good results from the market. We are very optimistic about how things are going. And as we continue developing our capabilities in terms of service, in terms of products, in terms of the knowledge of the market and our digital capabilities, we're very confident that we can gain market share. As you know, Mexico economic population is growing at a 2.5% rate, so there's definitely pretty good market growth, and the labor market is very dynamic right now. So there's an increase in taking in more demand in retail products. So we are very happy to have all the capabilities needed, and we're sure that it will produce good results. It shouldn't translate to an efficiency rate, a deterioration in our efficiency ratio, because the amount of branches is, as a percentage of the total, not so much, and it's producing, as I said, very good short-term results. And I think those are all the questions. The last one, in terms of your expectations for earnings growth for this and next year? Yes. For this year, we are online for guidance. We are not going to change. It's very close. It's 10%-12%. As you mentioned, we were last quarter aiming for the 10. Right now, it looks like we're aiming for the 11 or 12. But we'll be in that range. We are not changing the guidance, and we feel comfortable that we will achieve at least MXN 5.5 billion profitability. That is the 10%, the lower range. We know that the last quarter has more earnings, usually. That's why maybe we can reach the 12, but in that range. And for next year, it will depend mainly on the, there are many moving parts, but mainly on the rate that we already talk about, the policy rate reduction. But as Manuel already also said, we have great expectations of growth, both in Banregio as well as in Hey. Then, in all in, we expect a better growth on profitability, but as you know, we don't guide until the next quarters. Perfect. Perfect. And just to follow up on two things. First, OpEx growth. So you mentioned now that now on Hey, you are focusing on, in the back office, the expenses growth going forward, should not be too much, but also you recognize that you need to do some investments in treasury, the expansion plan of Banregio. So how do we think about OpEx for next year? In line with inflation, a little bit above inflation, just to have, like, an idea. And then in terms of Hey, as you mentioned, it's unlikely that you will deliver the MXN 50 million this year because of the cyber fraud. But actually, you're seeing that it could be a good year next year, no? So will you continue to see the MXN 200 million for next year? Yes. What we are not assuming is the MXN 50 million positive this year. Again, if you roll the numbers, will be, like, MXN 50 million negative. We will not manage... Even though this quarter was profitable, it's not as profitable as we were expecting. Then, say that the MXN 200 million for next year is very achievable, as we already have profits this quarter, and we will have on the last one. If you do the numbers, is MXN 23 million this quarter, profits. Correct. In terms of the OpEx question? In terms of the OpEx, no, it's definitively above inflation, as we basically have all the expenses indexed, contractual or factual, the increase, then that's our base. Plus the effects that you already mentioned, but we are aiming to around 10%, maybe not lower to 10%, but not high teens like the last two years. Okay. No, excellent, excellent. And just last question, last question. Some investors have been saying that there are some concerns of potential tax or regulatory risk after what happened to the airport. So just wanted to hear from you if there is any noise on the sector. From what I have heard, I believe the Antitrust Commission in Mexico is proposing to the Mexican Central Bank to review the MDR rates, especially on the clearing part, so the part of E-Global and Prosa. So I don't know if you have heard anything on this, and if there could be a potential impact on your side. Yes. No, the tax thing, no, we've not seen anything. And we've, I mean, in terms of the banking association, we've not had any talks with anyone in terms of that. In terms of fees, definitely there's a motion by the COFECE in terms of the government that has to review, and this happens normally, and we think that it will not be very material. Anyways, in terms of the fees that will generate probably it will impact more in terms of the rewards programs that banks have, right? So those are the ones I think that will hit the most. So customers, in a sense, will... If things go south, probably things in terms of the impact would be more so in the rewards program of credit cards than any other thing. Okay. So I think the main impact will be on customers, not necessarily on the bank's balance sheets. Okay, understood. Thank you very much. Thank you, Ernesto. Next question comes from Olavo Arthuso. Please go ahead. Yes. Thank you, guys. Thank you very much for the opportunity. I have a quick, more specific question on Hey Banco, because we noted on Slides 19 and 20 that this is the second consecutive quarter that the bank recorded a decrease in the number of customers. And also this quarter we saw a decline in the total deposits of Hey Banco. So my question is, what does explain this trend, especially related to the reduction in the number of clients? And if you could please add Nubank in Mexico to this question, that would be also very, very important to us. Because Nubank recently launched their Nu Cuenta. We noted that this accelerated the onboarding process, and they also started to offer some personal loans in Mexico. So in few words, would Nubank be related to this slowdown on Hey Banco, or this slowdown in the number of clients and the decline in deposits of Hey Banco as well, are all related to something else? And what would be the reasons, this is it? Thank you, guys. Well, well, the main reason is that we've not hiked the interest rate that we offer customers, right? So, our main competitor is a platform in the government that's called Cetes Directo, which you can invest in Cetes. So our all digital customers are very able to do so, and to open an account in Cetes Directo, and invest their money there at 11%, right? So we have for our customers, that's a rate of 10%. So in a sense that we've not hiked that rate because we are not interested in doing so. And the other thing is, as we are focusing on more formal clients and more mass affluent customers, obviously, the credit card authorization percentage declined, and that so translated into low customer growth. And another thing, obviously, it's the impact that the ad spending had. So what we've seen is that the ad spending for cost for accounts is very low-level accounts, compared to what we've seen in terms of our customers referring us clients. So we are most focusing on referral programs, right? And the other thing is we saw that our customers have a lot of business with other banks in terms of loans, for example. So a strategy that's focusing on cross-selling will, as we said, will produce and is producing better results in terms of productivity, but and profitability, which we are aiming to do so, to be very close in the inception of payment bank in the third quarter. NuB ank, I think, I mean, they're definitely a competitor for sure, as any other, right? In the sense, I think the main competitor for us is BBVA, Banorte, and then tequila, right? They, HSBC, Citibanamex, which they have the more, in terms of more customers, in terms of... And they have a pretty bad service, right? Citibanamex NPS is very bad, and HSBC even worse. They have a large customer base, and those are detachable, right? Because we have an NPS of 65. Obviously, I mean, that takes a little bit of time to condense in a more planning growth, but we're focusing on being very profitable. I think in terms of the market expansion, as I said, I think there's room for many. I think having more competition in the market in terms of digital solutions for many, I think creates a better understanding of our offer. And I think in a sense, that is positive in terms of marketing perception of a digital bank being able to use what we've done, right? In terms of the product that we have compared to the others, it's quite amazing what we've achieved. I mean, we have more than 60 products that we can offer to individuals and again to sole proprietors and small businesses. So no one has that level of products and obviously of channels. So they have more than 10,000 ATMs they can withdraw money without any cost. Nubank has zero ATMs with zero costs. You know what I mean? It's like, oh, they have an account. Well, yeah, but the customers have to pay MXN 25 to-- or Nubank has to pay MXN 25 to their customers each time they get money out of their ATM, which obviously is very unproductive, right? So in a sense, we're very comfortable that we have a very high, I mean, our offer is very valuable and is much valuable than any other in the market. And even compared to the one that Openbank, we think that they, they're gonna produce even Bineo, right? The... So, we have a very good advantage. We're very comfortable with it. We've learned a lot in terms of frauds, in terms of risk assessment, and being able to really make sure that the bank has is able to a better ROE than Banregio, right? Because that's our main objective in terms of creating a bank that has a more operating leverage because of our expense structure, right? So being able to have an offer that customers can consume by themselves should choose in better pricing for them, as we've seen, lower commissions, higher interest rates in their in-- but obviously producing great results in terms of financial... Oh, sorry, in efficiency ratios and profitability. ... Okay. That's great. Thank you very much, guys. Thank you. Our next question comes from Ricardo Buchpiguel. Please go ahead. Hi, guys. I have two questions on my side. First, can you please explain if there is any level of overlap between the clients from Banregio and Hey targets, especially now that you are more focused on the affluent client niche? And is the plan moving these clients to Hey, since you expect to have a higher profitability there? For my second question, what should be the main product for Hey, now that you are more focused on affluent clients, especially to another way surpassing the Banregio level already in third quarter 2024? Thank you. Yeah. So, can you clarify the first question? The first question is whether there is any- Yeah. Yeah, so the amount of checking account at Hey Banco, compared to Banregio, is four times more in Banregio, the average. So you have a in a credit card is three times more. So it is much bigger, even that are tagged right now. And obviously, customers that want a tailor-made solution will have to go to Banregio, right? So that's how it is. In terms of self-service, Hey Banco is our best option, right? So that's the main difference. And obviously, customers which are more complex, it's more difficult to really make sure that we have an easy digital solutions for them, right? So many times, a relationship manager is needed in order to the amount of deepness and knowledge of a customer that we need in order to tailor-make solution. In terms of the main product is definitely the account, for sure. We've—I mean, we have even a children's account, which is producing great results. We have an account for foreigners living in Mexico. We have an account that migrants can open from the United States. So definitely, the account is a, it's a very easy product to continue, and the onboarding is so easy to do, and definitely very happy to continue developing more solutions in terms of the account. We're rolling out more things and then more in terms of payments and things that will engage more with customers. So definitely the account, everything in credit, as we said, we are focusing quality customers and the in terms of personal loans and credit cards, it's a cross-selling strategy that we're focusing on. Not, no, not anymore, a open market guided by digital platforms. That's something that we're not searching for. I think most of the digital banks there, out there, are opening there, where, I mean, it's fine, I guess, for them, not for us. Oh, perfect. And just a quick follow-up here. You mentioned the account is an important product for your affluent client base in Hey. What ways you can monetize this client through this product, right? It's mainly through deposits, so you can have perhaps even a lower cost of funding, and therefore you monetize there, or are there essentially other fees that you can charge for these clients? Yes, definitely. So definitely, obviously, the fees that we generate through the debit, but then we have, obviously, the cross-selling of credit and insurance products, which we roll out more seriously this quarter. We're looking to partner up with of, or others to create more diverse products and being more aggressive in terms of offering and promotions in insurance. And obviously, we sell mutual funds, and we sell capital markets to our customers, which are more affluent, and definitely there's fees that generate from there. Very clear. Thank you. Thanks, Ricardo. From Nika Bhavnani. Please go ahead. Hi, thank you for taking my question, and congratulations on the earnings. Just quick question on your, the Banregio business in Mexico. We see good growth, for Mexico City area. How is the quality, evolving there? Do you see, any risk in terms of growing again in Mexico City area, or the changes that you, that you already implemented, they're going well? So just, any color on, Mexico City per se, that would be helpful. And then on the Hey Banco business, we were a bit surprised to see the steep decline in the CAC for the Hey Banco customers. I see on the side that it's now $12 from $99 last quarter. So if you could shed some light on what led to this steep decline in the CAC? That would be very helpful. Thank you. Banregio, yes. In terms of the growth of Mexico City, yes, we have had 14% on retail banking and around 16%, I don't see the exact number here, in the wholesale. In wholesale, we have always had a good NPL. We have had some specific large customers. In fact, still the largest customer that we have wrote off is from Mexico City, and one from Tijuana that we have already talked last year. But right now, it's a very good quality customers. And we believe the growth could be or should be stable in that level. Maybe not the 41% of SMEs that will stabilize around 15%-17% as the rest of the portfolios in other regions. We have maintained our policy of a very good credit scoring in order to approve the customers. We are not lending anymore first credit customers with no experience in the credit bureau. And in wholesale, we have had two very good years on quality in Mexico City, and we expect that to maintain at the same level. And then the second one, the decrease on the CAC, basically, is that we have stopped all the advertisement on social networks, all digital advertisement, not only on social networks, also Google Ads. Then the cost reduced a lot. It's basically referrals and some promotions and events that we are the sponsors. That's basically the only cost that we have right now on post-acquisition, and some fees, external fees to third parties. That is again accounted as referrals. Referrals is not only from customer to customer, but also from what we call Hey brokers, that are individuals that refer customers, and that will be it. There is almost zero, the cost for advertising. Is that not going to hurt your client acquisition, the number of total clients in the coming quarters? How do you plan to compensate... Like, how do you plan to reach out to customers so that you're able to gain more customers in the coming quarters? Well, it has already impacted, as you see the decrease. As we have been mentioning, we are focused on a more massive or mass affluent customers and with better great quality. Yes, the number of customers should not grow as fast, but we are very focused on quality and profitability, and we are focused on promotions and better referral programs, internal and external. Internal, I mean, to customers. We have launched already the Hey Coins promotions, and we are rewarding referrals with Hey Coins. And then also we are improving our Hey Broker channel. These are not institutional brokers, these are not the large ones that we know, not to say any brand in particular, specifically, but are individuals that register with us, and they start promoting Hey products. We have seen a decrease from 3,000 accounts to 1,200 daily, some days 1,500. And we feel comfortable with that level, that there is 1,200 daily with zero cost in advertising. Okay. Just to get your view on, I understand that you're quite focused on profitability and having a good quality portfolio, and that has been the DNA of Banregio, and which has worked tremendously well. But if you look at your competition, if you look at someone like a Nu Bank, or what probably Banorte will do with Nu, the focus is more on getting customers and then gradually cross-selling and attaining profitability after you gain some amount of scale. So it seems like that is not the focus of Hey Banco. The focus is more on quality and profitability, which is what you've done with Banregio, and not so much on gaining scale.... Is that a fair description? Yes, yes, it's a fair description. We used to have the other focus, and we moved very quickly from 100,000 to 600,000. Mm-hmm. Right now, what we are aiming is to make profitable that base. And continue growing it organically. Enrique, if I can just ask one last question. Your experience of growing so fast, going from 100K to 600K, and also targeting some lower income customers in the process, where you had some experience of fraud. Could you just elaborate on what your experience has been, especially, you know, growing with these lower income kind of customers? What kind of difficulty that you faced, which is why you're kind of backtracking a bit right now? Yes, as Manuel mentioned, we have learned a lot, and we have been changing our onboarding process, both for credit cards as well as for accounts, debit accounts. And what we have learned is that we decided to start requesting stronger evidence or proof of life, that is what is called on the digital onboarding for all the lending. And even for the debit account, even though the law requires a lower identification process for the level two account, we improved the level of identification and proof of life with the video and with the INE, what we call the INE, the voting ID. Then it's what we have learned. We have to be more careful, even though you can open many level two accounts, and you can do a massive campaign for new credit cards, chances are that many of these customers will not pass the new credit scoring calibration that we did, then we prefer to go for referrals. Our main assumption is, good customers will refer other good customers. In summary, it's very expensive to spend a lot of money attracting new customers that are not going to become profitable. Super, very helpful. Thank you so much, Manuel, Enrique, and for your comments. Thank you. Thank you, Nika. Next question comes from Yuri Fernandes. Please go ahead. Hey, guys. Just on Hey here. The company was founded in 2017, and became operational in 2018, right? And I don't think it were easy years. You have a pandemic, the bank license, but do you think Hey is where you wanted Hey to be, seven years later? Because, being totally transparent with you, I see you changing the strategy sometimes, sometimes growth, a lot of times profitability. But nowadays, I look to Hey and all those answers in the previous questions, and I look and I say, "Well, this is Banregio. This is like a client from Banregio." So my question is: How do you really see Hey? Should you have done things differently? Is the market much more competitive than you thought? And I don't know, maybe what are the things you like, what are the things you celebrate about this? Because honestly, I see asset quality, you know, disappoint a little bit. I see growth disappointing a little bit. And I do believe you put a lot of love and energy in this, in these initiatives. So, like, I don't know, isn't it better to focus in Banregio and, you know, just consolidate, Hey, inside Banregio? That's my first question, and then I can ask a second one. Thank you. Sorry to disappoint you, Yuri. Thank you for your questions, definitely. Well, in that sense, we are very happy to reintroduce MXN 10 billion in deposits. As I said, we're not hiking interest rates, so we are not going to have more customers because of that reason. Obviously, we don't need it because we start growing loans later on, so that's the main focus. And you see that in terms of the margins that are incrementing more than 100% year-on-year, right? So in that sense, we're pretty happy for that. Definitely, if we don't produce a better profitability than in Banregio, that would make any sense, right? The thing is, Hey Banco is nothing for the short term, right? So I'm a shareholder of Regional. My family has been a shareholder of Regional. We want to maintain that we're the long term. We're not in we don't manage things for a quarter basis, right? So in that sense, we're very happy for our digital platform. More so that we learn so much that when we implement that infrastructure on Banregio, it will produce a lot of good results, right? So Banregio is still operating on the another app, another platform, and it doesn't have many of the- ... Cool aspects of the brand, of the solution, sorry, not the brand, of the solution, which is probably the main aspect is the cross-selling part of it. And obviously, the usage of the app that will build more checking accounts, right? So in that sense, we are very optimistic that all the investment that we've done in Hey Banco, all the learning that we've done in Hey Banco, being able to do so in those customers of Banregio, which are around 600,000, will produce much better results in terms of service, in terms of more usage, right? So in that sense, we're, as the second part of why we are very happy for Hey Banco, is that we, as a group, produce the best solution out there in terms of the digital aspect, right? So in that sense, definitely very encouraged to do so. And there would be the market has better recognized that we are the leaders, and for sure, that obviously translates into a more dynamic and sustainable growth in the future. We've sadly had the pandemic, and obviously, that translated into us needing to cost cut and being able to boost our profitability in the short term, as we were very prudent in terms of expense growth. Those were the years that we definitely couldn't even talk with your authorities in an easy matter, because things were obviously... The main aspects that the authority was focused on is not digitalization, majority of the market, right? So, that sadly, those two years were not very good in terms of regulation for digital solutions, right? So, I mean, why even invest if the product is not there, right? So now things are in a different path. Right now, the authority is much more enthusiastic about this, and, for sure, we think that the opportunity is still there in terms of the mass affluent that is being served with Citibanamex, with HSBC type of banks, which definitely have very bad service, and they obviously are also targeting those customers that are very healthy and, in terms of margins and volumes, right? So, yes, Nubank is getting here, Rappi is getting here, Openbank, we know definitely those are, but the main aspects of, the main competitors are the big banks, which are obviously the ones that have the more volume of customers. No, super clear, Manuel. And again, I think you have Banregio, it's great, so I hope all the best for Hey, and I hope you execute as you have been executing, you know, very well for Banregio. If I may, a second question on your funding. We see your time deposits growing way faster than demand deposits, and this is a trend in the industry, but it seems that Regional has been growing faster on time deposits in the industry, right? And demand deposits are decreasing a little bit more. Is this a strategy you're looking for, I don't know, more stable long-term funding? What is the rationale on your deposit mix of time deposits growing? I know you have rates, but again, the industry is growing the time deposit a little bit below your 50% year-over-year. So just want to understand if there is some push for you to more stable, longer term kind of deposits. No, it's not the strategy. We have seen two effects in demand deposits. Obviously, we would prefer to have more demand deposits, and we are funding the growth of the assets with time deposits. As you know, we have been talking for many quarters that we have excess of deposits. This excess is in repurchase agreements, and when we need to fund the growth of loans, basically we convert repurchase agreement to time deposits. Then that's the impact that you see, and that's why it's growing faster than the competition. That's the main reason. And also, in demand deposits, we have deposits in dollars. Then when we do the conversion, the dollar to peso, with the peso appreciation, or dollar devaluation, if you can see at 17, 17.8, it looks like a reduction on deposits. The deposits in dollars are stable, around MXN 900 million. Even they grew last quarter. But the conversion to pesos is not helping, but that amount, but the depreciation or the appreciation of the peso. I don't know if I was clear. No, no- It's not a strategy to say we are going to grow 50%. No, the strategy is to grow the loan book, and we- Yes. We keep pushing our bankers to gather more demand deposits. We have done some cash management strategies to increase deposits, demand deposits. ... In Hey, we are launching payroll. In Banregio, we have relaunched our payroll, payroll payment for companies, focus more on the company that in, in the deposits of the company than in the deposits of the individuals, but both are welcome. It's the opposite, that we are focusing more on demand deposits. No, no, strictly, I know, it makes sense, right? One costs 10% a year on average, and the other is 2%, so it makes sense to keep the demand deposits better. It just caught my attention, the pace of growth here. But thank you very much, Enrique and Manuel, for your answers. Thank you to you, Yuri. Thank you, Yuri. Our next question comes from Rafael Lima. Please go ahead. Our next question comes from Anand Bhavnani. Please go ahead. Thank you for the opportunity. First question on Hey Banco. You spoke about 1,200 customer acquisition per day, so the monthly run rate would be around 36,000. So would it be fair to say that the 1 million original target that we had now happens by the Q3 of next year? Yes. Yes, it will be not met with this focus that we have right now on more profitable customers and with no advertisement. As Manuel mentioned, when we had an advantage on price on the rate, we grew very fast, and then we should wait for the reduction of the TIIE. Also, he mentioned that our main competitor is Cetes Directo or the other competitors that price close to the Cete, the time deposits. And then the short answer is yes, will be around 30,000, and not all of them maintain their active status. We have been very transparent on that matter to just report active customers, because we could say we have two million customers or two million accounts open, but if they don't transact, we are not here for that number, because also we'll dilute all the KPIs. We are presenting customers that have transacted in the last month. Some of them open up the account and maybe never deposit, and some of them open the account and deposit and then stop using it if we reject the credit card. That's the behavior that we have seen. These are not net new customers, they are just new customers. Noted. From a medium-term perspective, with this change in strategy on Hey, what is the plan for spin-off, and is there any expectation of loan book in Hey before it gets spun off? Sorry, I couldn't understand the second part. Loan book? Is there any particular size of Hey's loan book at which you might revive the spin-off plans? Sorry. Well, I will answer the first part. We are working right now, our main objective for the next 12 months will be to ensure that Hey Banco start operations as an independent bank from Banco Regional. And then after that, we will request the permission to move Hey Banco from Banco, from Banregio Grupo Financiero to Hey Controladora. And then, we will evaluate the feasibility to a spin-off. But the initial spin-off from Banco Regional to Hey Banco is already working. The second part of the question, I still don't understand. What we are going to do is to spin off all the customers from Banco Regional to Hey Banco that are already on Hey Banco that have opened the account or the loans through the app and are already registered on the systems of Hey Banco. ... Noted. My last question on growth expectations. Over the next 12 months, which regions do you see to be growth drivers? Because over the last 12 months, we have seen Nuevo León has done lesser growth than other regions. Over the next 12 months, what should be our expectation? We're still expecting a lot of growth on the north and the west and the center. Mainly the regions that are benefited both from the nearshoring, but also from all the USMCA agreement, free trade agreement. And for the size, we have still expectations on Mexico City. It is still the largest market in Mexico. Then we're still investing in more anchors, then that should be... And Nuevo León will continue growing, but as the base is larger, the percentage is not the same pace of growth. Noted. Thank you. Thank you, too. Our next question comes from Barry Cohen. Please go ahead. Hi, can you hear me? Yes, Barry, we hear you. Great. Thank you. I hope everybody's, all the families are doing well. Look, I just. There's a couple of points of clarification. I may have heard wrong, but I thought earlier in the discussion, you were talking about 700,000 customers, and then one million. I'm a little. I just want to get some clarification what your target was for next year, and ahead. No, no, no. Don't we— Yes, we... The number is 700,000 for this year. Yep. But, we haven't guide for next year. Maybe it was on the elaboration of Anand on the number of new customers, but as I mentioned, these are new customers, are not net new customers. Yep. We don't have a guide for next year. Yep. That's it. The number for this year will be 700, that is 100,000 more. Okay, great. In this last quarter. That's great. So can you maybe help us maybe then understand, because somebody brought up some of the account attrition that took place, and I know you were talking about a shift in how you look to acquire customers. Can you kind of, like, pencil out a couple of different things? Like, how much was just, you know, kind of like natural attrition that takes place in the account base? How much of it was charge-off, and how much of it was due to, like, fraud-related charge-off, right? So, like, if we could parse out, like, what the causations of attrition were, that would be helpful. Like, 1/3, we believe is related to some sort of fraud or. And our processes of anti-money laundering that we have improving more aggressively with that analytics and all the accounts that we don't like or do not comply, because it's not that we like or not like. Do not complying with the anti-money laundering processes are closed or canceled. Then will be, like, 1/3, and the other 2/3 are regular attrition for customers that decided not to continue using the account or were rejected on the credit side. Okay. That's helpful. Thank you. And then I'd, I'd like to just kind of go back to, like, some much earlier questions about, like, and I, I'm gonna, like, frame it as NII trajectory. You've had a very strong earning asset growth this year, and I suspect the fourth quarter, given that's your strongest quarter, you should continue on that trend. So only about half of the earning value of that margin has come through this year, right? Because you're gonna earn on averages through your balance sheet. Can you kind of, like, walk us through, like, how far down would rates have to go to offset kind of the rollover of earning asset from this year, plus kind of like your expectation for loan growth? Because looking at the forward curve, it would suggest that you should have a very strong NII year still in 2024, but you really haven't, like, said anything about it. So could you just kind of maybe walk us through the puts and takes? ... Yes, we believe or we expect, no, that is not the right word, believe, to continue growing the loans, as we already mentioned, in all the segments. By the relative size, the wholesale is still the largest portfolio, and, as you know, in the wholesale market, most of our loans are variable, indexed to T. We don't have an exact number, and we will do the calculation to say how much the rate should go down. But, if you reduce the rate, and we have already said our sensitivity, that is 15 basis points per 100, 100 decreases, that will be the mix. But in the opposite, we will have a higher or faster growth of loans, especially in large customers that are still waiting to do investments at an appropriate cost of funds. And yes, Alejandro notes that the repricing is in three months. But, I don't know if I understood your question correctly. That's okay. I don't wanna waste other people's time. We could always dive into, like, in more detail if it wasn't that obvious what I was asking. But, I do wanna ask one thing about capitalization ratios. I mean, it's stable year-over-year, and actually up over the second quarter, which is great, 'cause you've shown, like, significant asset growth. But I'm curious on when you look at actually your risk-weighted assets, you had much lower credit risk migration in your RWA assets, I think, like, 9%, roughly year-over-year, and which is demonstrably less than your risk asset growth. But you had a lot of migration on operational risk, like, you. And I guess even in market-related risk. What do you think drove the differences between those categories of RWA risk? Is excess funding, basically. Okay. Yes. So you're referring to, like, a repo side of the equation? Is that what you mean? Yes. The repo side that grow to MXN 60 billion. Yep. That will require more market risk assets. Okay, great. Well, that's helpful. Thank you very much. Thank you to you, Barry. 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, everyone. Thank you for participating.