Good morning and welcome to the fourth quarter 2023 Gentera's conference call. Now I'd like to turn the call over to your host, Mr. Enrique Barrera, Investor Relations Officer of the company. Sir, you may begin.
Thank you. Good morning and thank you all for joining us and for your continued interest in Gentera. I'm Enrique Barrera, the company's Investor Relations Officer. I'm very pleased to introduce our management team. With us today are Mr. Enrique Majós, Gentera's Chief Executive Officer, Mr. Patricio Diez de Bonilla, Banco Compartamos Chief Executive Officer, and Mario Langarica, Gentera's Chief Financial Officer. Enrique Majós and Mario Langarica will present Gentera's result for the fourth quarter period and the full year 2023 as per the report that was issued yesterday. Patricio Diez de Bonilla, along with Enrique and Mario, will actively participate in the Q&A session of this conference call. Please note that during this presentation, Gentera may make forward-looking statements. These do not account for future economic circumstances, industry conditions, company performance, or financial results.
Additional information on forward-looking statements can be found in the disclaimer located in our earnings release. If you did not receive a copy of the release or you have any questions, please do not hesitate to contact our Investor Relations Department in Mexico City. If you are a member of the media, we ask you to contact us directly. I would now like to turn the call over to Mr. Enrique Majós for his presentation. Enrique, please go ahead.
Thank you. Good morning, everyone. We are always very happy to have you here, and we appreciate your interest in Gentera's results report. At this moment, today we are going to report the fourth quarter, but also what looked like the 2023 year, which was, by the way, a very, very good year for Gentera. In this call, I will start by pointing out the main highlights of 2023. You will see that 2023 establishes the solid foundation, ground, and starting point for 2024. Also in this call, I will close my remarks by talking about our expectations and guidance for the present year, which is also very, very promising. As you have found in our press release in 2023, we achieved record numbers for Gentera in several business indicators.
In terms of number of clients, Gentera reached more than 5 million people through our different financial products and services. This means that just in one year, we grew more than 500,000 net clients. I'm very happy to also tell you that recently in Gentera, we are celebrating two major events. Last October, Peru reached our first 1 million clients. This is a remarkable milestone since Gentera bought Financiera Crear in 2011. We started on those years with 80,000 customers located only in Lima and Arequipa, and now we're getting to this first 1 million clients nationwide. The other event that we're celebrating is that in Banco Compartamos, we reached our first 3 million customers just a couple of weeks ago. As you know, one of the fundamentals of Compartamos Banco's mission has to be with reaching as much people as possible.
In 2008, Compartamos reached its first 1 million clients. By 2011, we reached 2 million clients. As of January 2024, we are celebrating our 3 million customers milestone. Another record result is our total portfolio size. At the end of 2023, Gentera reached MXN 65 billion, which represents a 21% growth on a yearly basis. And as I said, it's a record number. Net income reached MXN 5,052 million, which, by the way, is also another record number. In other results, we can also proudly report that the quality of our portfolio and cost of risk is within our guidance. Our guidance, as we have said in NPLs, is between 3.5% and 4% if we want to talk about a healthy portfolio. And NPLs was 3.4% at the end of the year.
Cost of risk stood at 11%, including the impact of Hurricane Otis in Acapulco, which, by the way, has been very well managed by our team. Our clients happily are finding their way out to recover from the contingency. In other relevant indicators, ROE was 19%, and our funding and capitalization ratios are equally solid. At the same time, expenses are under control. Our income is growing faster than our expenses, and we expect to keep positive jaws for the rest of the year. I would like to mention some milestones regarding Aterna and Yastás. During 2023, Aterna placed 50 million policies. This is an impressive number. This represents 16% growth compared with the previous year, and this growth has to do with a great job of increasing our insurance product offer, as well as increasing also our distribution channels.
In 2022, income from insurance products represented for Gentera 6.7% of its total income. In 2023, this number increased to 8.8%. The insurance business is taking more and more relevance for Gentera. Moving to Yastás, with 25 million transactions accumulated in 2023, our network continues to consolidate as the strategic partner for more and more financial service providers. Banco Compartamos is the most relevant client of Yastás in terms of number of transactions. However, there are other financial providers like HSBC and Banorte, and now we are proud to announce that we recently launched our partnership with Banco Santander. Just to finish with the 2023 highlights, let me point out that besides the remarkable overall Gentera's consolidated results, we feel very proud that all and each of our business units are showing historic growth and healthy operations.
As you can see, 2023 left us with very solid results foundations, and we have an outstanding starting point for the rest of the present year. So let me now move to our guidance and expectations for 2024. 2024 will be a year of execution and consolidation. As you know, we are in the process of implementing several transformation initiatives. By executing 2024 according to our strategic plan, following years will be even better since we will have the processes and technology to operate in a more convenient way for our customers and in a more efficient way for Gentera. We estimate that once we finish executing most of our initiatives this year, we can anticipate double-digit growth for the following years. And just to remind you about some of the most relevant transformation initiatives that we are implementing, let me just point out 3 of them.
In Peru, since the second half of last year, we are operating 100% through our digital credit management platform that is called Kallpa. This platform allows loan officers and clients to operate completely paperless. By using this platform, in 2023, we improved in Peru our loan officers' productivity by 25%, and the use of this tool will keep us giving incremental improvements in the following years. We are sure that this platform will reinforce Compartamos Financiera's market position and leadership. Actually, as of today, Compartamos Financiera is the number one microfinance institution in terms of number of clients and the number four if we consider the entire Peruvian financial system. Now, in Banco Compartamos, we are developing and deploying several digital initiatives.
Some of them are focused on making our credit management process more efficient, and some others are designed to make better use of data, business intelligence, analytics, all this to improve risk management and cross-selling capabilities mainly. The consolidation of these initiatives for Banco Compartamos in 2024 will take us to another level of productivity for the following years. Other relevant transformation initiatives have to do with our Crédito Individual product in Banco Compartamos. Marketing effectiveness, loan officers' productivity, origination, and portfolio management have been improved through new processes and technologies along the last 1-2 years and even before that. And as you have seen in our recent quarterly results, this product is taking off strongly, solid, and healthy. Well, finally, let me confirm the guidance for this year that you found in our press release.
We expect to grow between 18%-20% in portfolio, and our EPS will be between 3.5 and 3.6, which means between 17%-20% growth compared with last year. We are also expecting to distribute dividends based on our 40% dividend policy. Our board of directors will submit this proposal to the next shareholders' meetings, and we believe the proposal will be approved. Finally, as I already mentioned, we will maintain positive jaws, and our ROE will move above 20%. Let me now turn the call to Mario Langarica. As usual, he will provide more specific information regarding our business and financial results. And after Mario's remarks, Patricio, Mario, and myself will be glad to take your questions. Thank you for your attention.
Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in Gentera. As Enrique signaled in his remarks, we're very excited with the solid results that Gentera achieved in 2023 and are very enthusiastic with the strong dynamics that we're expecting for 2024 and the opportunities that lie ahead going forward. Before we enter the specific financial data, we want to highlight the success of our decision to take advantage of the strong market opportunities that we saw in the first quarter of 2023, hiring more than 3,100 employees and upgrading our infrastructure that allowed, as Enrique mentioned, us to reach a historic amount of more than 5 million people served. In 2023, we reached a historic growth of 574,000 credit clients, 72% higher than our best year ever, and almost three times more compared to the number of clients generated in 2022.
These efforts drove Gentera to end the year with a historic loan portfolio over MXN 65 billion, growing 21.4% compared to 2022. It is important to highlight that our three credit subsidiaries, Banco Compartamos, Compartamos Financiera, and ConCrédito, end the year with double-digit growth in their specific loan portfolios. The dynamics that we're expecting for 2024 are very solid and support our guidance of 18%-20% growth in the portfolio. Another excellent result for the year is that even after the strong growth of our portfolio, Gentera's cumulative cost of risk amounted to 11.1% within our expected range, and NPLs at the end of Q2 2023 stood at 3.44%, which is a very good level. We're growing strongly, and at the same time, we're maintaining solid asset quality.
For year 2024, we expect to maintain sound asset quality with a cost of risk between 11%-11.5% and always maintaining robust coverage ratios above 200%. Net interest income grew MXN 2.27 billion, or 9.2% in 2023. For 2024, we expect that NII will grow very similar to the expected growth of our portfolio, around 19%. Consequently, NIM for full year 2023 amounted to 39.7%, which was in line with our forecast for the year, and our expectations for 2024 is to keep moving around 40%. Accumulated provisions for loan losses for the year amounted to MXN 6.47 billion, 21.7% higher compared to 2022. This higher level of provisions is mostly explained by the strong portfolio growth of all our subsidiaries. It is important to note that in the fourth quarter, we booked in Banco Compartamos MXN 194 million in non-recurring provisions related to Hurricane Otis.
It is important to note that since January, we have been observing an improvement in the economic situation of our clients and much better collections than expected. Therefore, the financial impact could be lower than what we originally provisioned. Accumulated net interest income after provisions grew 5.8% compared to 2022. For 2024, we expect that delinquency should also grow very similar to the expected growth of the portfolio, around 19%, and NIM after provisions for 2023 amounted to 30.1%, and for 2024, we expect that this index should move around 30%. Net fees amounted to MXN 2.88 billion, representing a 54.3% growth compared to 2022. As we have explained in other conference calls, most of our fee income comes from our insurance business that, as Enrique previously explained, has continued to evolve to become a very relevant contributor to our revenues.
As mentioned in past conference calls, part of these fees are non-recurrent. Therefore, we should expect that for 2024, net fees should grow very close to the growth rates expected for the loan portfolio. The incremental use of Yastás and Banco Compartamos branches has benefited Gentera in depending less on the use of third-party channels and thus reducing fee expenses in relative terms. Accumulated operational expenses for 2023 amounted to MXN 17 billion, representing 40% growth compared to year 2022. As we explained before, a very important component of the expense growth that we observed in the year followed the actions that we took to capture the market opportunity, such as hiring employees and upgrading our infrastructure. Another important component of the expense line are the strategic investments that Enrique mentioned that we have been developing and implementing to make our operation more productive, efficient, and modern.
As mentioned before, most of our revenues coming from these investments have already started flowing. Revenue generation since January has been very solid, and we expect this income to keep flowing, as explained above in the margin sections during 2024 and in line with our guidance. Since almost 75% of our expenses are related to sales, we expect that during 2024, we will still have double-digit growth in expenses moving around 17%. But very important, and as Enrique mentioned, we expect that total revenues will grow above expenses, implying positive jaws for the year. And since January, we have already been observing these trends. These expenses and investments will allow us to generate the solid loan portfolio growth and net income generation that we have guided. Net income for the year amounted to MXN 5.05 billion, and also, as Enrique said, it's a historic record.
Gentera's controlling participation amounted to MXN 4.72 billion, representing an EPS of 2.99. While we recognize that these results are slightly below the low end of the range guided last quarter, this happened mostly by the impact of Hurricane Otis, as explained above. If we hadn't had this impact, the additional net income generated in the year would have been around MXN 140 million, which would have implied an EPS of 3.07. Our commitment for 2024 is to deliver 17%-20% growth in EPS. Gentera's controlling ROE for the year reached 19.3%, where Banco Compartamos posted a return on equity above 24.8%. Compartamos Financiera improved its ROE from 12.2% to 17.7% and ConCrédito improved from 19.1% to 24.4%. For 2024, we expect controlling ROE moving around 20.5%, all of this maintaining solid and healthy liquidity levels, strong and diverse access to funding sources, and robust capitalization.
For the following years, as Enrique mentioned, we expect to continue delivering double-digit growth in Gentera's loan portfolio, generating solid growth in total revenues with a healthy cost of risk and operational expenses under control, generating positive jaws that should allow us to keep delivering ROEs above 20%. That is all for my remarks. Thank you all for your attention, and now we can move forward to the Q&A session.
Ladies and gentlemen, to ask a question, please press star one on your telephone keypad at this time. If you're using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment. One moment while we pull up for questions. Our first question comes from Luis Yance with Santander. Please proceed with your question.
Hi, Enrique. It's Mario Pato. Thanks for taking my questions and congrats on the results. A few questions on my side, and I appreciate, Mario, you're giving a lot of detail on the guidance for this year. But in particular, with OpEx growth that you mentioned for this year, probably growing around 17%. When I look at last year, a lot of the growth in operating expenses had to do with hiring, right? Hiring grew 14%-15%, and OpEx grew kind of the same. Just wondering, on that assumption of growing OpEx 17% this year, what's the assumption in terms of hiring? Are you almost done with hiring, and that's just the reflection of a full year of what you hired last year? Is it inflation and salaries going up, and how we should think about it going forward?
As you keep growing your portfolio double-digit, does this line continue to grow in that way, or at some point, we will see that inflection point in terms of operating leverage and perhaps this line growing less? That'll be my first question.
Yeah. Thank you, Luis. Very good question. Well, yes, we have finished the hiring that we did last year, and as you said, the payroll was not for the full year last year. So that's an important component. Another important component, which is very relevant, is that incentives grow basically at the same rate as the portfolio growth. There is a smaller component of inflation, but in general, our wages increases are very in line with inflation. So most of it, it's variable expenses. Should this relative size of expenses versus revenues change in the future? That's what we expect from 2025 going forward when we start capturing all the efficiency of all the initiatives that we are already putting in the market and developing 2024. So for the following years, we should expect a better composition in relative terms.
Great. Thanks a lot, Mario. And my other question has to do with NIMS. I mean, you mentioned perhaps we should expect NIMS to be relatively stable around 40% for this year. Does that take into account the imminent interest rate cutting cycle, or if we start seeing the central bank cutting rates this year, that will be an additional benefit? Or how are you thinking about using that benefit? Would you try to pass it on to customers so you can reinforce this positive loophole with the customers, or some of it will benefit Gentera? Maybe part of it will be passed into customers. Just to get a thought about your thoughts about what happens to you when rates get cut.
Our projections for Mexico include a base rate of around 9.75%. If rates reduce faster or more than this, it should benefit us, but we are already assuming a slower reduction in rates in our projection, but that is included. And in Peru, what we're putting in our projection is something around 4.5%.
Great. And my last question, in terms of loan growth, I mean, very robust guidance of growing 18%-20%, what's the assumption for each division, ConCrédito, Peru, and Mexico? And if there is additional upside to that, in which division do you feel comfortable you might exceed guidance if that were to happen?
Thank you, Luis. This is Patricio. In terms of portfolio growth, the momentum that our sales are having due to the high end of 2023 will remain for the coming months. So we are thinking about productivity of our employees, those that we hired last year, and all the subsidiaries should be growing. For example, Banco Compartamos, we expect to grow around 17% portfolio. Compartamos Financiera should grow around 20%, and ConCrédito also around 17%, more or less. So the dynamics are already there. The market opportunity remains since competitors, both in Mexico and Peru, remain relatively weak. So we want to be focused on the execution, as Enrique just said.
Great. Thanks a lot, Pato and Mario, for the answers, and congrats again on the results.
Thank you, Luis.
Our next question comes from Olavio Arthuzo with UBS. Please proceed with your question.
Yes. Hi. Good morning, everybody. Good morning, Enrique, Patricio, Mario. Thank you for taking my question. Actually, I have two. And my first one, it's basically related to NPL in Peru because we saw some sharp contraction to 4.5% on this Q. So we understand the mathematical effect here from the low acceleration quarter, but what could you share with us about the quality of new credit concessions in Peru during the quarter, and how much that acceleration of the credit portfolio was responsible for NPL decrease in the quarter?
Thank you. And this is back to them, Patricio. In terms of Peru, as you remember, last year, in 2023, we started the year with some climate events that, I mean, hit hard certain regions of the Peruvian market. So asset quality went up at the beginning of the year, and we started to handle this situation throughout 2023 with good results by year-end. Of course, we are still focused on asset quality. We like to grow with quality. Peru is not aside from that. So we expected to maintain this good momentum for asset quality in Peru, despite the fact that the economy is decelerating and the economic conditions are relatively weak. So we will continue to be focused on originating the loans as well, and we expect to maintain stable asset quality for this 2024.
Okay. Thank you very much for this. And my second question, it's a kind of broader one. It's just to hear your thoughts about Dinero Móvil, just to understand what would be the contributions for the bank and what you guys think about the potential impact over the industry, just for us to understand a little bit more on this and thinking about your customer base as well. Thank you very much again.
Thank you. I mean, many new initiatives to digitize the cash transaction are taking place. Codi was an example in the past, and now it's Dinero Móvil. And again, most of our efforts, it's around how to move physical cash transaction into the digital world. In Mexico, we expect to use, for example, Yastás in order to do this cash-in and cash-out transaction for our customers. And once you have this physical cash into the digital world, you can use Dinero Móvil or other apps to start doing transactions locally. So, of course, it's an effort that everyone is interested in. In Peru, for example, BIM and all the billeteras are working very nicely in Peru, so we are trying to take advantage of what we've learned down there in order to move that experience to Mexico.
Again, I think that most of the financial industry, it's clearly focused on how can we migrate the physical cash transactions into a digital world that is also as convenient as the cash is. So still, the euro is on, and we need to see how this evolves and how we lead these efforts to digitize our relationship with the customers.
Okay. That's great. Thank you very much, guys.
Our next question comes from Tito Labarta with Goldman Sachs. Please proceed with your question.
Hi. Good morning. Thank you for the call and taking my question also. My question, I guess, following up a little bit on the asset quality but more on the provisioning side. I understand provisions went up partly Hurricane Otis and the strong growth in Compartamos, but yeah, some mixed asset quality trends. I think you mentioned perhaps the provisions for Hurricane Otis were a bit higher than you may need. So how do you think about the cost of risk and provisioning for this year? Can that maybe improve a little bit given the additional provisions you booked in 4Q? Just to think of what's a cost of risk that we should be thinking about for this year. Thank you.
Thank you. How are you, Tito? On the asset quality side, we have strengthened our origination processes. In the past, we were dependent on the loan officers to disburse loans. Today, we are using more data in order to analyze the creditworthiness of our customers, both in group lending as well as individual, both in Mexico and Peru. And this is why we expect that even if we have had strong loan growth, we shouldn't be concerned about asset quality at this point. So the reality is that most of our loans are within the ranges that we expect as good asset quality. And as Mario said, the cost of risk is around 11% and should be around more than 1% above or below this threshold for this 2024.
So we expect to have Cost of Risk under control, again, due to the fact that we are using more data to originate loans, both in group lending as well as individual in Mexico and Peru. So I don't see still something that concerns us in terms of asset quality at this point.
Okay. No, that's great. Thanks, Patricio. Maybe a second question, if I can, on fees. Very strong growth in fee income. How do you think about the sustainability of that growth? What's a normalized level of fee income growth that we can expect?
Yes. As I mentioned, net fees should be growing similar to the portfolio. As we mentioned in the past, this year, we had specific non-recurring insurance fees that mostly related to adjustments in our claims and sinistrality with our insurance company. Going forward, net fees should be growing similar to the portfolio.
Okay. Very clear. Thanks, Mario.
Our next question comes from Eric Ito with Bradesco . Please proceed with your question.
Hi, Enrique, Mario, and Patricio. Thanks for taking my question, and congrats on the strong guidance for this year, especially on loan growth. I have 2 questions as well. The first one is regarding what you guys are thinking about sustainable ROE of the bank, maybe if we can achieve those levels in 2026, because this year, you are already guiding for ROE of around 20.5%, but then you have operating expenses growing around 17%, as you mentioned. So I just want to get your thoughts on 2026, if we can see a higher ROE, and that should be the sustainable level as you get more operating leverage and your operating expenses should be lower. And then my second question is regarding just your overall view on how you guys are thinking on viewing competition for loan growth in the segment. Thank you.
Okay. Thank you very much. Well, regarding ROE, as we mentioned, this year well, since last year, we accelerated reaching our goal of being above 20% some months ago, and we were very, very happy about that. The next phase is to improve efficiency and productivity as what we have said before. As you can see, this year, we are guiding an ROE a little higher, 20.5%, somewhere around 20.5%. But we should expect that, as Enrique mentioned, going forward, the mix of better efficiency, better productivity, and better revenue generation should allow us to have higher ROEs and better efficiency ratios. At this point, we don't want to guide anything different than being able to deliver ROEs above 20%. Probably by the end of the year, when we have most of this in place, we could give you more guidance going forward.
In terms of competition, Eric, of course, we've seen a very tough year for most of our competitors, not only in Mexico, also in Peru. They are facing operational challenges as well as financial difficulties. So this is why last year, we decided to do these hiring processes and try to take this opportunity that the market had for us. This year, it's not something different. So the competitive landscape is still in both countries relatively weak. So we think this is why we are guiding, again, a strong portfolio growth for this 2024, and we feel comfortable that due to the market dynamics, we will be able to achieve that.
Okay. Perfect. Thank you very much.
As a final reminder, ladies and gentlemen, press star one at this time for any questions. Our next question comes from Yuri Fernandes with JP Morgan. Please proceed with your question.
Hey, guys. No, thank you and congrats for volumes and a good year. I have a question regarding fees. I know Tito already asked on this, but just checking. When you say fees should grow in line with the loans, you are also including other operating revenues or just the fee line? That's one. And also, you mentioned it should keep growing around the pace of loans, but you also mentioned that you had some one-offs on the insurance side, right, the performance on your policies, and we know all that. My question is if we should see a decrease because for you to grow 18%-20% fees without the insurance performance fees, maybe we should see a year of adjustment.
My question is, the pace of loan growth for fees, is from this year or no, we should see a year of a normalization, maybe not growing as much and then returning to the pace of growth? Basically, two questions. Others, should we see others grow in line with loans? And two, how to think about this non-recurring kind of impact for fees? And then I can ask a third one. Thank you.
Let me give you a little bit of understanding of the fee business. Of course, it's mainly driven now for the insurance, the products that we have throughout the companies. As you remember, back a couple of years ago, we only had one product life insurance, and this was very successful. So the acceptance for this product is around 90%. And so we started to develop new products, health, security, not only now for the bank, but we expanded this to Peru. We expanded this to ConCrédito, and we are trying to sell these products to other institutions. So the insurance business has become a very dynamic product, and this is why the trend that you've seen, it's now very relevant for us, not only for the revenue stream, but most importantly, because it generates social value to the customers.
So you should expect that, yes, it will grow in line with customers, more or less in line also with portfolio. But going forward, it's something strategic for the group that we will maintain, and you should expect strong momentum for this in the coming years. Yes. And just to give you, Yuri, the answer to your second question, the growth expected is over the total revenues of 2023, including non-recurring. So we should expect this growth including those non-recurring.
Got it. Okay. No, that makes sense, Mario. Thank you. I still don't get the 17% growth on expenses. It seems a little bit too high, but I would like to ask you about 2025, Mario. You mentioned margins flat this year, but we have lower rates. That was Luis's first question. Can we see margins ahead of 40%? Can you capture the funding benefit and run with slightly higher than 40% margins ahead, and then your ROE could be higher than the ones you have been saying? Thank you.
Yeah. Good question. Well, at this point, we think that margins should stay more or less at that level. There is obviously the potential benefit of the reduction on rates, but also we will also be having a higher mix of individual lending. So at this point, what I could tell you is that we should expect NIMs to stay at the levels that we guide.
Well, thank you, Mario, and congrats for the year. Thank you.
Thank you, Yuri.
Our next question is from Andres Soto with Santander. Please proceed with your question.
Good morning, and thank you for the presentation. My question is regarding the growth that you deliver in 2023 in terms of clients, 500,000, as you mentioned at the beginning, very good number. I would like to understand a little bit about what is the profile of these new clients? Is it clients from other microlenders, or these are people coming new to the microlending environment?
Okay. Thank you, Andres. This is Patricio. As I said before, the competitive landscape in Mexico got very weak after the pandemic and recently due to liquidity issues for most of our competitors. So starting the year, we saw this opportunity, and this is why we took the decision to hire over 2,000 people in the country. So to take this advantage, we hired the personnel, and we tapped into this opportunity. As you can see, the market, it's still very large. We grew a lot of new customers, and some of them, close to 50%, are customers that had already other financial relationships with competitors and now are customers of Banco Compartamos. So new customers as well as gaining customers from weak competitors is something that we are taking advantage of, and we will continue to do so in this 2024.
Perfect. That's very clear. So half of them are, we can say, are new to the microlending environment, right?
Yes.
Have you made any adjustment to your risk models in terms of provisioning, I mean, for this new set of customers, or you believe that your current models accurately predict the expected losses from this new set of customers?
Of course, we did some adjustments. As I said, we are using not only the Salesforce experience but taking more information about our customers, existing and nonexisting, with the information that is already present in credit bureaus. So we complement the credit decision with financial and analytical tools, and this is why the growth that you've seen has not come with higher delinquency. So we will continue to use more data as we move along, and this is why we should expect stable asset quality for this 2024.
Perfect. Thank you so much. My second question is or set of questions is regarding your Peru operations. When we compare the results of Compartamos Financiera in Peru with the largest microlender institution in the country, results are quite contrasting. So I would like to understand what are you guys doing what are you guys doing better in terms of profitability at the end that make you have such much better results compared to the largest player?
Thank you. Do you remember the strategy to enter the Peruvian market is because we saw a non-attended market for group lending methodologies. The group lending methodologies are different in their financial and cost structure than individual lending. As you remember, most of our competitors in Peru move and are very competitive on the individual lending side, and this is where competition has gotten very, very fierce, still very fierce. But our strategy has been to move downwards into a non-attended customer base, and this is why we are growing very fast in number of customers, over 27% growth last year in customers. As I said, this group lending methodology has higher needs, and this is why we are more profitable than most of our competitors in the Peruvian market.
So back again, the strategy to tap into unattended market in Peru has proven to be successful, and this is why we reached the million-customer milestone last year, and we will continue to grow fast enough this 2024 despite the fact that the Peruvian economy is relatively weak.
That's very clear. And regarding the interest rate cap, I remember that this was an issue, but as the central bank started to increase interest rates, you were able again to open the door for this segment. Now that the central bank in Peru is cutting rates, what is your expectation for this interest rate cap, and how much of adjustment in your business model is going to be applied in order to continue growing at the pace that you are doing?
Right. In terms of the cap to interest rate, it was at 83%. It moved to over 100. So that gave us an opportunity to observe lower-ticket customers, and we are taking this advantage because, as you can see, smaller tickets at 83% might be challenging to serve due to the cost associated to this customer base. So with higher caps in the interest rate, we can target more customers, so that's good for the growth expectations. And if the central bank in Peru lowers the interest rate, the reference rate, we should expect a higher need for the Peruvian business, thus maintaining or increasing profitability. So the expectations for the Peruvian business remain strong, and we will continue this momentum, and we are committed with not only the country but with our more than 60,000 employees and over 1 million customers in the country.
Great. Thank you very much for your responses. Very clear.
Thank you, Andres.
Our next question is from Carlos Gómez with HSBC. Please proceed with your question.
Hello. Good morning, and congratulations on the results. Two questions on the balance sheet. First, we see that the goodwill level, the Crédito Mercantil, is unchanged at MXN 4.6 billion. Are you reviewing that calculation, and do you anticipate any possible impairment for any of your units, in particular ConCrédito, in the future period? And second, you expect to grow in double-digit, 18%-20%. With that level, what is your sustainable dividend payout, and is the capital level of the group as it is now adequate, high, or low relative to where you would like to be? Thank you.
Thank you very much, Carlos. Thank you very much. Well, as you know, given the importance of the goodwill, we review that every year and even more frequently. And what we can say is that for 2023, the results of ConCrédito were above the projections. Therefore, there is no need for impairment. Having said that, we will continue reviewing the performance of the company versus the projections, and in any case, we would register an impairment if needed. As we said in 2022, if that happens, which we don't foresee that at this point, the amount of impairment, if it happens, should be something similar to what we impaired in 2022, something around MXN 350 million. But again, we are not expecting that. ConCrédito is performing well over its projected flows. Well, sorry.
The second, regarding the dividend payout, well, as we have said, we plan to keep at this point this 40% dividend payout. As you can assume, the next years will imply a strong growth in the loan portfolio and therefore a strong growth in funding. We think that it's sustainable, but in any case, if at any point we would need to fund organic growth, what is very important is that we generate a lot of capital to do so. But at this point, what we would say is that we expect that 40% to remain. Regarding the capital adequacy, as you can see, we are now monitoring very closely tangible equity. Tangible equity for the year ended at around 22.1%. We have an internal limit on that, and we keep monitoring tangible equity.
With the expected guidance that we have given and again, for 2025 going forward, we can accumulate more capital than we could expect that capital levels could increase.
Very clear. Thank you so much.
We have one question in your webcast. Rafael Méndez asks, "Can you give us some guidance for provision growth in 2024?
Well, what we give as guidance in terms of risk is the cost of risk, between 11% and 11.5%, and I already also gave the expected growth on net after provision, so I think that it could help to answer the question. Well, I don't know if we have additional questions.
There are no questions in the queue, so this concludes the question-and-answer session. I would now like to turn the call back over to management for final remarks.
Well, thank you all, again, for your interest. We are always happy to report to you our results. Let me point out some key messages that I take out of this call. First of all, 2023 established a very solid foundation growth and starting point for 2024. So I guess that 2023 results will give us a very solid 2024 with the plans that we have already communicated to you. Secondly, and speaking about 2024, I think that this year will be about basically four things. The first one is we will continue growing since we see a big market opportunity and potential, so growth is one of our main focuses for this year. The second one is that we will continue our transformation process and specifically the use of technology to improve our customer experience and Gentera's efficiencies.
So that's why I said in my initial remarks that 2024 will be about execution and consolidation of this transformation initiatives to consolidate the growth and the efficiencies and the customer experience not only this year but also for the following ones. The third thing that we will be focused on in 2024 is, obviously, as we know, risk control and the quality of the portfolio. We believe we have very healthy numbers, but we have to be very aware about the context and the growth that we are looking at in our portfolio. So risk management will be also something that we'll be watching very closely. And finally, in the fourth place, we will be very, very focused also in expense control, making sure that expenses are devoted to things that will give us business growth and investments that will continue our transformation journey.
So having said that, I would only like to add a message of being grateful to you, thanking not only, in the first place, our management team. I think that they have done a very, very good job during last year, and we continue doing it. I think that we should especially thank our sales force staff and the people that are in the field working and serving our clients, and their commitment and hard work is outstanding. And finally, thank you to you for your trust and your support, and see you next quarter. Thank you and have a nice day.
Thank you all for participating in today's conference call. You may now disconnect your lines.