Earnings Call: Q4 2019

Feb 14, 2020

Slides

Good morning, and welcome to the 4th Quarter of 2019 Results Conference Call of Banco BTG Pactual. With us here today, we have Roberto Saluti, Yolande Dantes, Pedro de Rojalima. We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the bank's presentation. After Banco BTG Pactual's remarks, there will be a question and answer session for investors and analysts when further instructions will be given. Today, we have a simultaneous webcast that may be accessed through the website, www.btgpakshao.com/ir and the platform. There will be a replay for this call from February 14 through February 20. Before proceeding, let me mention that this call may contain forward looking statements relating to the prospects of the business, estimates for operating and financial results and those related to the growth prospects of Banco BTG Pactual. These are merely projections and as such are based exclusively on the expectations of Banco BTG Pactual's management concerning the future of the business. Such forward looking statements depend substantially on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in Banco BTG Pactual's filed disclosure documents and are therefore subject to change without prior notice. Now I'll turn the floor to Mr. Roberto Saluti, who will begin the presentation. Mr. Saluti, please go ahead. Thank you very much. Good afternoon or good morning to all of you on the call. We actually are quite satisfied with the results of the Q4 and especially with the results of the full year 2019. We'd like to start the presentation by highlighting some of the key points of the Q4 of 2019 on Page 3. For the Q4, revenues were up 14% when compared to the 3rd quarter with exceptional performance by all of our client franchises. As can be seen on item number 2, asset management expanded significantly. It had a 50% revenue increase 4th quarter versus 3rd quarter. Large chunk of that due to the accrual of performance fees, but not only that, but also of the growth of the underlying business. And this can be seen in our assets under management and assets under administration, which grew 30% year over year. In Wealth Management also, we had a growth in assets under management in the Wealth Management business of 40% year over year. But more important than that, we also had some very important recognition of the quality of the service and the platform they're offering to clients. We were awarded for the 3rd time in the row the best upper retail digital platform to invest. And for the 2nd year in a row, we were elected the best private bank in Brazil by Euromoney. And in this case, we were actually the winner in all of the 16 categories, which just shows the quality of the service that we are able to provide to our clients. Going to item 4, Investment Banking had a record high quarter. Centro IPO all time high, doubling its revenues from the Q4 of last year. Going to the 5th item, our sales and trading had a phenomenal year, not only year but also quarter. And we finished the year with DKK2.8 billion of revenues from sales and trading, basically taking advantage of increased client activity, increased flow, be it in fixed income sales, be it in FX sales, be it in equity sales. But not only that, but also the market presented very good opportunities throughout the year. And finally, we had a normalized cost income ratio of 40% for the quarter, which is slightly below our average. Even while we were investing significantly, especially in our digital retail platform. This means that there will probably the costincome will increase to 41%, 42% over the next quarter and for the next year. But it just shows that we've been able to even though our costs are increasing, we've been able to increase revenues more than proportionate to the increase in costs. Moving to Page 4, we can see the highlights of the numbers of the 4th quarter. We had total revenues for the quarter of BRL 2,480,000,000 and adjusted net income of BRL 1.10 billion. That gives us an annualized return on equity of 19.1 percent. And if we exclude the capital allocated to Don Cupain, that gives us a 19.6 percent return on equity for BTG Pactual core business. We had a net income per unit of BRL1.16 and an accounting net income for the quarter of BRL1.179 billion, which BEMPA will then later reconcile with the adjusted net income of the $1,01,000,000 As I mentioned previously, we had a cost income ratio of 39.5%, comp ratio of 21.4%. We finished the quarter with total assets of BRL160.4 billion, a Basel ratio of 14.9 and shareholders' equity of BRL21.4 billion. It's important to mention that we had significant amount of capital allocated to market risk, given the opportunities in the market and the amount of client business. We have now gone back to our historical average. And with that, we are seeing an increase in our capital ratio of roughly 3% to around 18%. So what this means is that we have more than enough capital to allocate the growth of our business, especially to our credit portfolio. Finally, in the quarter, we also announced a distribution of interest on capital of BRL541 million. Moving on to Page 5, we look at the highlights of the numbers of the full year results. Here we had total revenues of BRL8.33 billion and adjusted net income for the year of BRL3.833 million, very similar to accounting net income. This gives us an ROE for the year of 19.1%. For the year, we had a cost to income ratio of 40.3 and a comp ratio of 21.6. As I mentioned previously, we had a shareholder increase of 13.5 percent year over year and ended the period with BRL21.4 billion of equity and distributed throughout the year BRL1.165 percent of interest on capital. Moving to Page 6, you can see the distribution of revenue, revenues among our business units. I would what we would like to highlight here is that if you sum our client franchise businesses that don't use capital, so basically investment banking, asset management, wealth management, they're roughly 1 third of our revenues, 30% for the quarter, 28% for the year. And this gives us a coverage ratio of 158% for the quarter, 145% for the year, which is very satisfied with the growth of the client franchise businesses and a more distributed income coming from businesses that choose capital and businesses that don't choose capital. This is exactly what has been happening over the last years and quarters, and we're quite satisfied as this trend continues and we expect it to continue over the next few quarters. Finally, turning to Page 7. Here you can see, as I mentioned previously, the core BTG Pactual business yield for the quarter 19.6 percent ROE, when you exclude Banco Point. We were actually in doubt whether we should exclude this slide or not because it made much more sense when we had to exclude EFG from the calculation of EFG is outside of Banco BTG. It does not make much sense, but we decided to keep it for the last time in this quarter. But it's interesting to notice that the core BTG Pactual business yielded for 2019 a return on equity of 23.5 percent if you exclude HIPAA and EFG. So very strong performance from our core business. Moving on to Page 8. We understand that there's enormous demand from our clients, our investors and society in general for greater transparency of our ESG initiatives and policies. And what we are committing to is throughout 2020. We will improve the transparency of our ES agenda, achieving the highest ESG reporting standards. But we thought this would be a good opportunity to just give a few highlights of our current policies and our current businesses. We have already integrated ESG aspects into decision making process for transactions. We are signers of the UN Global Compact of the cargo disclosure program and as a PRI, the principle for responsible investment. In 2019, we compensated for the 2nd year in a row our indirect and indirect carbon emissions linked to energy consumption. Our credit portfolio has a €10,000,000,000 exposure linked to the green economy, of which $4,600,000 were disbursed in 2019. And finally, our BTG Pactual Timber Asset Management business has assets of $3,500,000 in forests in Latin America and the U. S. And we annually report ESG indicators related to it. As I said previously, we're conscious that this transparency has been very timid, but we're committed to increasing this to what will be the best, highest reporting standards of ESG in 2020. With that, I pass the floor to Jean Dantas, which will give more details on the performance of each of the business units. Thank you, Rodrigo. Thanks, everyone, joining the call today. We have a lot to go through in the individual business performance. But to start with a more comprehensive and to put things in context, markets in 2019, they were quite benign for our business, and we were provided with plenty of opportunities to grow our business organically, both increasing our market share and also widening our reach into new client segments. Our teams following that have successfully seized those opportunities, which results in the strong financial performance and operational metrics that we'll show in the next slide. So turning to Page 10, starting with Investment Banking. Our revenues in Investment Banking in the 4th quarter reached BRL306 1,000,000. This is our best quarter ever in terms of revenues. And our full year revenues reached BRL 942 million, so approaching the BRL 1,000,000,000 level. We were 2 in number of transactions in M and A in Brazil and Latin America, and we were 1 in ECM in Brazil and Latin America. We had a very strong year. The strongest performance in the year was came from DCM Debt Capital Markets had provided us, for the first time in our history, the largest share of revenues inside Investment Banking. We also had good performance in ECM and M and A in the year. We had also a strong year in Investment Banking in Brazil. We grew significantly maintaining our leadership position. We also held up revenue levels in LATAM ex Brazil comparing 2019 to 2018, even though 'nineteen was a more convoluted year for many of the countries in which we operate outside Brazil, like Chile, Mexico, Argentina. But nevertheless, Investment Banking delivered strong revenues from those countries as well. Moving to Page 11, talking about corporate lending. Our revenues in the quarter reached BRL229 1,000,000. Full year revenues for corporate lending were BRL 814,000,000. We had BRL 4,500,000,000 portfolio growth in the quarter, of which about $1,000,000,000 came from SME lending and about $1,000,000,000 came from special situation credits. The portfolio growth for the full year was $13,300,000,000 which is 45% growth. The most part of the growth was on unfunded transactions, so off balance sheet transactions like stand by letters of credit and guarantees. The reason we're growing at this space without changing much what we do in corporate lending is very much associated with the growth of investors' confidence and entrepreneur confidence in Brazil. As you know, we typically finance the long term cycles of the companies in which we operate. We don't typically finance inventories and working capital. Typically, what we are financing is CapEx, acquisitions and expansion. And in a moment like this, where we see a significant pickup in entrepreneurial confidence in Brazil, which is still not at very high levels. We're still at average levels, But coming from lower levels of confidence, this is an interesting pickup, which contributes to the sustainable portfolio growth base that we see. And as we grow the portfolio, we have seen spreads behave very well. They are stable. Provision levels are more than adequate at this point. We have 3.9% of the portfolio as provisions, and the quality of the portfolio also remains very high. We did have some smaller contribution from special situation in terms of revenues in 2019. So most of the revenues that we have captured throughout the year came from corporate lending. But it doesn't mean that the special situations business is not going well. It's just that we didn't monetize as many transactions in 2019 as we did in 2019. And as in special situations, we don't have accrual as an accounting principle. We just recognize revenues as we realize and monetize the credits. That didn't happen so much in 2019. But the business is going well, and the portfolio is growing, We see strong prospects for this business going forward. But the one business we wanted to highlight this quarter is the SME business. We started to do SME lending in 2019. We didn't have that business before. This is a digitally enabled business where basically we, right now, are doing just one type of transaction, which is the supplier financing. It's a relationship between suppliers, buyers, which are the big corporations and us, and it's all digitally enabled. Today, we have a portfolio reaching BRL2.2 billion. We have 22 sponsored companies, which are the large corporations. And then we have about 2,200 suppliers who are the credit takers. We have an average ticket of BRL 100,000 per supplier and an average ticket of BRL30,000 per trade. And the growth of the portfolio and the initial setup makes us confident that this business will continue to grow successfully. So out of the $43,800,000,000 of the credit portfolio, today, dollars 16,000,000,000 is unfunded and dollars 27,000,000,000 is on balance sheet transactions. And of the $43,800,000,000 we have a breakdown of $37,000,000,000 of high grade credit, dollars 4,000,000,000 of special situations and dollars 2,000,000,000 of small and medium enterprises. Good performance for credit lending in 2019. Turning to Page 12, we have sales and trading. Our revenues in sales and trading reached BRL678 1,000,000 in the 4th quarter, which is smaller than the 3rd and the second quarter revenues, but still strong level of revenues compared historically with the business. We have produced for the full year of 2019, dollars 2,800,000,000 in revenues compared to dollars 1,500,000,000 in 2018, so a strong performance of sales and trading in 2019. During 2019, our average VAR increased and now have returned to closer to historical levels. So the average borrow in the 3rd quarter was 0.72% of our equity, while at the 4th quarter, it was already lower at 0.54% of our equity. The good performance for Q4 of 'nineteen comes mainly from our active positions, which took advantage of good momentum for Brazilian equities. But also, we had good performance coming from fixed income and FX with a significantly larger number of transactions. Moving to Page 13. Here, asset management. We have reached BRL284 1,000,000 of revenues in the Q4. For the full year, we reached BRL 867 1,000,000 of revenues in Asset Management. The revenues in the Q4 were benefited from the fact that we capture performance fees in the Q4. Typically, in the Q4, we have more funds that accrue their performance fees on the Q4. In 2018. So we have maintained a good pace of growth of assets under management now for 3 consecutive years in the asset management business. We our inflows were marked mainly by the Fund Services business. This is a well consolidated business in Brazil, which provides excellent level of service and is growing significantly in terms of market share. We also had good inflows in our LATAM liquid funds, especially in equities, which where we delivered very good performance in the year and in the quarter, especially in the equities Brazilian funds. We also had strong performance coming from our international hedge funds. And this is an important feature of our business because we see more and more demand from Wealth Management clients in LATAM for diversification of their investments outside LATAM. And finally, we had also strong inflows in real estate funds in Brazil. We are the largest real estate asset manager in Brazil, and our business continues to grow while we see this environment of low interest rates consolidate in Brazil. Page 14 is loss management. The business has reached $163,000,000 of revenues in the Q4 and $168,000,000,000 of assets under management. Our net new money on the quarter was BRL 4,800,000,000. For the year, we had a net new money of BRL 36,500,000,000, while in 2018, we had BRL 43,800,000,000 of annual money. So again, for Wealth Management, another strong year and 3 consecutive strong years of growth in Wealth Management. The assets under management have grown 41% in 2019 versus 34% in 2018. We did have strong inflows in Wealth Management from our offshore offices, so New York and Miami as well as the Chilean business. We did open a new office now operational in Lisbon. And also, we had strong inflows here in the Q4 and along the year from the digital clients. So all of that kicking in to contribute to the strong growth in wealth under management in the recent quarters. Our Wealth Management business was awarded in the 2nd consecutive year the best private banking services overall in Brazil by Euromoney, which is one of the main recognitions of wealth management quality in the country. And our digital, BTG Pactual digital platform has been awarded for the 3rd consecutive year the best upper retail platform to invest. And both demonstrate our strong commitment to quality in these both businesses. Another final comment here is consumer banking, which is a project that we have announced before and is in advanced phase in a pilot testing. Right now, I'm happy to share that we already are testing credit cards, debit cards, utilities payments as well as payments in general and cash withdrawals. Those 5 are the main products, but not the only products. They are already, as I said, in a pilot phase being tested. We have more products that will enter now a testing phase, and we plan to launch our consumer banking platform before still this year, before year end, which is going, in our view, to be accretive both to the client acquisition and to the increase in terms of share of wallet for the clients we already have. So very good performance as well from Wealth Management. Turning to Page 15. Principal Investments had a strong performance coming from merchant banking, where basically our EMEA position has contributed well to the revenues in the quarter. It's important to remember to you all that our Eneva shares our market at a discount to screen price. We also had good performance from our investments in global markets. It's basically reflecting our allocation of capital to the funds of our International Asset Management division. We have not increased the capital allocation to those funds. Actually, we have been reducing the capital allocation to those funds. The business is growing on the back of more client activity and client inflows. But since we have very good performance in the Q4, we had reached revenues of BRL 100,000,000 in that business. And then we have BRL 17,000,000 of contribution from our own real estate investments, which are now people or operations to support the business. And we plan to continue to accelerate the pace with which we implement the project. We see that the project has gained a lot of traction, and we have a good momentum to enter this upper retail segment in Brazil. So what we could expect for 2020, as Roberto has mentioned before, is that for the core businesses, we will keep the efficiency and cost should be behaving like they have behaved recently, not really flat, but we will accelerate the speed of implementation and therefore, increase the costs non linearity overall. This will probably take our cost income ratio slightly higher but not far from the ranges we have seen in the last couple of years. Then to talk about nonrecurring events in the quarter, we have included a chart here at the bottom of the page because in this quarter, we have, as many of you know, banks in Brazil had recognized an increase in the tax the deferred tax assets because of the increase of the corporate tax rate for banks in Brazil. Corporate tax rate has increased from 40% to 45%, and this commands an increase in the DPA that is recognized through P and L. The impact of that adjustment of tax rate is, as you can see in the table, BRL546 1,000,000. In turn, what we have done was to review the amount of DTA that we have recognized, and we decided to derecognize the long tail DTA. Long tail DTA for us is DTA that takes more time for us to monetize and convert into cash, still within the 5 year time horizon that Brazilian regulation requires. But we decided to mark down the long tail DTA inside those provisions, those that time horizon. And that impact was BRL354 million. So in turn, we have not even though we recognized the 5% increase in the corporate tax rate, we have not increased significantly our amount of DTA that is booked in the balance sheet. As a result, nonrecurring adjustments in the quarter were positive on the net amount of BRL 170,000,000. And this is why for this quarter, for the first time, we had adjusted net income and adjusted revenues higher sorry, on the contrary, the accounting net income and revenues higher than the adjusted net income and revenues. On the other hand, it's important to note that we also reviewed other provisions in the balance sheet like civil, labor, credit provision, And we consider we continue to consider those at adequate levels. So we have not changed on extraordinary basis any of these provisions. We know that some of the larger commercial banks in Brazil did take a position to increase their civil label or credit provisions. We haven't done so. And going forward, whenever the rate goes down in Brazil, which we expect to happen, we also don't expect other provisions to change in our balance sheet. They will continue to change according to the fundamentals of each quarter. Another point is that even though we have reflected this corporate tax increase, rate increase in Brazil now, In our view, going forward, Brazil tends to reduce corporate taxes in general. Corporate taxes in Brazil are higher than the international average, while individual taxes in Brazil are lower than the international average, which puts us as a country in a not so competitive position vis a vis international vis a vis other countries. So to be more attractive for international investments, probably we should change that. So going forward, we don't expect decreases in corporate tax rate for us and for banks and for corporations, actually the contrary. A final note. As many of you know, we have the largest tax dispute that we have with IRS in Brazil is regarding goodwill from acquisition in the past. We have had a first trial in the administrative court of that claim last Wednesday, which was in favor of us. So we're happy to report that there is still a second stance of appraisal inside the administrative court. But on the first stance, our arguments have been accepted. Moving to Page to Section 3, Page 19, to talk about the balance sheet. Three highlights here. We ended the quarter with $164,400,000,000 in assets, slightly less than what we had in the Q3. This implies a 7.7x leverage of assets to equity, which is still conservative and gives us room to increase total assets as we see opportunity to continue to grow. Our liquidity ratios remain high. Our LCR continues to be above 150%. LCR is the regulatory measure of stress liquidity in a 60 day horizon, and that has been consistently high and remains high during the quarter. And so our balance sheet sheet continues to be well conservative in terms of leverage and well covered in terms of liquidity, which gives us comfort to continue to grow in 2020. Going to Page 20, we have the broader credit portfolio, which includes the corporate lending portfolio plus lending to individuals, and it has behaved in line with our corporate lending growth. Moving to Page 20 is a snapshot on unsecured funding. Our unsecured funding reached BRL53.6 billion, a BRL 1,300,000,000 growth compared to the Q3 of 2019. Two comments here. In terms of local funding, we continue to see strong inflows. We already see some positive contribution from digital clients. You can see, for example, that on the bottom of the chart, we have seen a growth in demand deposits, which is a tiny fraction of the total assets of our digital clients, but is a consistent contribution since it's growing throughout quarter on quarter. Is a consistent contribution from digital clients. And you can expect that funding, longer term funding and CDs are also growing in the same manner. Also, we are taking advantage from the good momentum in international markets for Brazilian and LatAm issuers, and we have issued a new bond, a $750,000,000 5 year senior bond was issued in December last year with a recap on January this year, which makes us confident that international markets are quite open at this point for Brazilian issuers and us. CDS Brazilian CDS is trading below 100 basis points, corporate spreads at an all time low. So we took advantage of that, and we see our clients also taking advantage of that very and being very active in that space. A final comment. Our credit book is growing more than our funding in the quarter, even though the as I mentioned, the growth on the corporate book is not entirely consuming cash because most of the growth in the quarter comes from unfunded transaction or off balance sheet transactions. But nevertheless, the growth on balance sheet of on balance sheet credit is higher than the funding growth. But this is because we have reallocated cash usage from other businesses, especially from principal investments into credit. So that allows us to grow the credit portfolio, maintaining liquidity ratios quite strong. And a final comment on Page 22. You see average daily trading VAR going down from 0.72% of average equity to 0.54%. The average daily trading VAR reflects faster the reduction of risk in market risk terms. This will be ratio went from 15.1% to 14.9% in the end of the Q4, but this is because Basel typically reflects with delay due to averaging the lower consumption of market risk. Our daily capital usage for market risk has been reduced already, and we will see the Basel ratio converging up to levels above 17%, closer to 18% in the upcoming months. So with that, we conclude our comments of 4th quarter performance, and we are open for questions. Thank you all very much. The floor is now open for questions from investors and analysts. And our first question comes from Olazzo Thurzo of UBS. Please go ahead. Thank you everyone for taking my question. So the first one, you guys wrote down in Darren's release that part of the increase in the volume of wealth under management was partially affected by the BTG Digital platform. So could you please share with us a little bit more about how BTG Digital is evolving? And in the case, if you cannot talk about number of clients, digital accounts or incremental revenues, Could you please just give us a short info on how much that growth rate of 40% year on year in volumes is explained by the BTG Digital? Then I'll go to my second question. Thank you. Hi, Olavo. As I explained before, we really don't want to send the wrong incentive to our teams regarding digital. It will probably benefit our capital market story if we started releasing number of clients, a number AUM, separating wealth management from digital. But we want to make sure that we are servicing the right clients with the right profile and not overburdening our platform without decreasing the level of service. So that's why we have consciously decided to review Wealth Management as a whole, basically all of the businesses related to individuals. So unfortunately, I cannot disclose exactly what the percentage increase is, but let me put it this way. BDG Digital performed above our business plan for 2019. And every quarter that passes, it is growing in relevance, both in net new money and in total of wealth under management. Okay. So my second question, the revenue from Investment Banking is actually high in the bank's P and L this quarter. And a large part of the market participants knows that it's very challenging to forecast this revenue driver of the bank. So my question is, what are your expectations for this business segment going forward? And could we start to talk about a new normal level of revenue generation? And if so, what level could this be? So thank you, Alvaro. This is very similar to some questions which came via the Internet from the Credicorp analysts. So I'll consider them answering both. Yes, you are right. It's very hard to forecast exactly because you have M and A, which is not so transparent, the levels. And you have, many times, performance fees involved, especially in the fixed income market, where we are willing to ensure that our interests are aligned to those of the clients and that he can pay us a higher performance fee if he is very satisfied. So even though the number of transactions might have been slightly below, revenues were a bit higher, but it's because of these factors. I would say to you that, yes, we are very confident that we have reached a new normal in Investo Ambanko. It's still hard to say if that's 200, 300, 350, 350, but definitely, given what we are seeing with the whole financial deepening, this new level of interest rates in Brazil, which is our biggest market, meaning that capital market activity has completely changed level. So yes, I agree with you. It has changed. It's still very hard to know what the equilibrium is. But we agree with you. It has definitely changed. Okay. This is very helpful. Thank you very much. Thank you, Alain. And our next question comes from Nicolas Riva of Bank of America. Please go ahead. Yes. Thanks very much for taking my question. One question, you mentioned the gain you had on the deferred tax credit and you said that differently from other Brazilian banks, you didn't use that again to book more provisions for corporate clients. Can you talk about asset quality in that corporate credit book? What's the coverage of NPLs, The NPL ratio more or less, what are the trends there given that you're growing a lot in that book? Sure. Thank you, Nicolas. Yes. So just to confirm what you already expressed, yes, we reviewed all those provisions. We consider them adequate, and we haven't done any changes. We, today, have about 3.9% of level of provision as a percentage of total exposure, total gross exposure, and we feel comfortable that those levels are adequate. Typically, as you know, our corporate lending book is comprised of longer tenure transactions, so averaging from 2 to 3 years today, and they are typically issued with an average of 5 years, about 5 years of term to maturity. And typically, our transactions are collateralized by real assets, assets that are strategic for the companies to which we provide credit, that are inherent to their cash flows and therefore constitute good collateral. So typically, the level of losses that we recognize in our core lending book tends to be much lower than the average of the Brazilian industry because most of the assets in the Brazilian industry in corporate lending are shorter term in nature and not collateralized by strategic assets, but yet by inventories or liquid assets that tend to vary in value and don't constitute in our view. So strong guarantees. That's why our corporate lending book is the most resilient corporate lending book in Brazil. We have never suffered any losses in any given quarter. Remembering to you that the revenues that we report in corporate lending are just the spreads over Brazilian CDI. These are not nominal revenues, but only the real revenues above our cost of funding for that business. So when I say we never suffered losses in a quarter, we never suffered any losses, even considering that the revenues are just the real spreads. That said, we believe that the trend going forward is the same. We will continue to disperse credit to the same clients, the clients that compose our corporate lending portfolio are typically the companies we've been advising for 10 or 20 years that we are very close to the management and to the strategy and that we understand very well their balance sheet structure. Therefore, we can structure transactions that are suited to their needs with more agility than most of our competitors. And we believe that the quality of the credit will be as strong as it is today in that book. We also think that there is an opportunity to grow the corporate lending book as we see the level of confidence of those entrepreneurs increasing. As I mentioned before, it's at an average now around 50%, the confidence levels as measured by the institutes that do that, coming from much lower and depressed levels, but still with room to improve. So if things go as expected in 2020 and without putting much expectation above that, we believe that the pace of growth will continue and the quality levels will remain. With that, I can answer to you that we consider that the level of provisions are more than adequate visavis the delinquencies and the actual losses of the past. All right. Thanks very much. There is also one question here from the webcast coming from Diego Chichoni of Credicorp. Please elaborate on development of the retail business. We heard news of a spin off of this line of business. What can we expect here? So as I mentioned previously, we are quite satisfied with the relative retail. It's above business plan. And we're quite optimistic that it's really exponentializing in the growth. Yes, there was some news on a potential spin off. I don't know where that came from. But we're not considering any kind of spin off of this business or listing of this business. We think there are a lot of synergies. For example, between our ultrahigh network wealth management business and the digital business, all of the technology investments we do leverages the platform. So the technology investments we do for PME, also business benefits Large Corp and so on and so forth. So I don't know where that came from, but you should definitely there's nothing no discussion of this of a potential spin off or listing going on right now. Thank you. And that brings us to the end of the question and answer session. I will now return the floor to Mr. Roberto Saluti for his closing remarks. Once again, thank you all very much for joining our quarterly call, actually our full year 2019 call. We're quite satisfied with the results for 2019. We're very optimistic with the prospectus for 2020, and we would really like to thank all of you for your trust and your partnership throughout 2019. So wishing you all a great day and a great weekend. Thank you very much once again. Thank you. This concludes today's presentation. You may Disconnect your line at this time and have a nice day.