[Foreign language]
Good morning, everyone. I'm Renato Lulia, Group Head of Investor Relations and Market Intelligence at Itaú Unibanco. Thank you for participating in our video conference to talk about our earnings for the third quarter of 2022, which are broadcasting directly from our office here on Faria Lima Avenue in São Paulo. This event will be divided into two parts. In the first part, Mr. Milton Maluhy Filho will explain our performance and earnings for the third quarter of 2022. Next, we'll have the Q&A session, where analysts and investors will be able to interact with us directly. Now, I'd like to give some instructions for good participation in this meeting today. For those of you who are accessing this via our website, there are three options of audio on the screen, the whole content in Portuguese, the whole content in English, or the original audio.
The first two options will have simultaneous translation. To choose your option, all you have to do is click on the flag on the top left of your screen. Questions can also be forwarded via WhatsApp. To do so, all you have to do is click on the button on the screen on the website, or send a message to the number +55 11 99914 8308. The presentation we'll make today is available for download on the host site screen and also, as usual, on our investor relations website. I now give the floor to Mr. Maluhy, who will begin the presentation on the earnings, and then I'll come back to you to moderate the Q&A sessions. Milton, go ahead.
[Foreign language]
Good morning, everyone. Thank you for participating in our conference on the earnings for the third quarter of 2022. I'll go straight to the figures, and then during the presentation, I'll bring in some information that I consider relevant. The first good news is that we posted a very robust recurring managerial result of BRL 8.1 billion in the quarter, up 5.2% from the previous quarter. In Brazil, we posted a growth of 4.8%, reaching BRL 7.4 billion. Consolidated ROE of 21%, an increase of 0.2 percentage points. In Brazil, we've been able to maintain a very high and stable profitability level of 21.6%.
The consolidated loan portfolio grew 2.5%, reaching BRL 1.1 trillion, and in Brazil it reached BRL 900.3 billion, up 2.7% from the previous quarter. The margin with clients also posted a very positive increase in the quarter, growing 6.4% to BRL 23.4 billion. I'll provide more details later on. When we look at Brazil alone, it grew 5.5%, reaching BRL 20.6 billion. Speaking of delinquency, there was a very small increase in the NPL ratio of 0.1 percentage point in the consolidated figure. When we look at Brazil alone, it grew 0.2 percentage point. I'll provide more details later on. On the capital ratio, we have good news.
We were able to increase our capital base, which grew 0.6 percentage point, reaching 11.7% of core equity in the quarter above our risk appetite. There's no good financial performance without our clients, so I decided to include a slide here to show very briefly what is behind the figures we deliver. There's a lot of work and dedication. There are a lot of tools. The central message here is that we've been, for some years now, working with the Net Promoter Score concept, so we have the measurements for all products, channels, global NPS, transaction NPS, and competitiveness. We receive more than 4 million pieces of feedback every year. Every one is read and interpreted, and we incorporate them into our model to understand from our client's standpoint where the levers and opportunities are.
We've been receiving this high volume of feedback, and the process already incorporates them into the interpretation of the information. We made a commitment back in 2018 to grow 20 points by the end of 2022. In our global NPS, we consider all main segments of the bank on a straight line basis to understand how the client has been assessing us. The good news is that we've already grown 18 points in this period. Therefore, there are 2 more points to go, and I'm confident we'll achieve our goal for 2022 by the end of the year. Therefore, we have another 7 points to grow by the end of next year, which I believe is very possible, and the expectation is to reach 25 points of increase.
Therefore, we have another 7 points to grow by the end of the year, which I believe is very possible. Two more pieces of news here. 60% of our businesses are at record high levels, so this is excellent news. We've been monitoring this every month. More than 25% of our businesses are above what we believe is a level of excellence, that is above 75 NPS points. Speaking of the loan portfolio, we can see a growth of 3.4% in the quarter for individuals and 4.5% for SMEs. In Brazil, we see a quarter-over-quarter growth of 2.7% and a year-over-year growth of 20.8%. Obviously, we have an explanation for each of these lines. Personal loans grew 6.8% in the quarter.
I'd like to say that part of the personal loan portfolio consists of consumer credit paid in installments and the overdraft accounts themselves, but 90% of this growth took place in higher income segments, therefore with lower default rates, both in the Personnalité segment and in the Uniclass segment. Another highlight regarding the loan portfolio is that we had a huge gap in payroll loans with public sector, and I've been telling you this for some time now. We always had an important share in the INSS pensioners in the private company sector. We set the goal of increasing our share in the public sector as well. The good news, we grew 8% in the quarter and 77% year-on-year.
Regarding SMEs based on the profile of our portfolio and where we've been focusing over the years, we can see that there was an increase in origination, which grew 15.4% in the period. Seventy percent of this origination was in larger clients with higher revenue and therefore with lower default levels. The portfolio grew in a very healthy way, and although we can already see a slowdown from the previous quarter, we've decided, and I've already told you this, to make adjustments throughout the cycle. Trying to understand where the opportunities are, where there's room for growth, and where necessarily we need to make origination adjustments. Very good news for financial margin with clients in the quarter. The core margin grew BRL 1 billion and the working capital another BRL 400 million.
It grew BRL 1.4 billion, up 6.4% from the previous quarter. Another important message is that we've been increasing our average margin quarter on quarter. In the consolidated graph here, it started at 7.4% in the third quarter of 2021 and reached 8.6% in the third quarter of 2022. In Brazil, it went up from 8.5% to 9.4%. This growth was not only seen in the annualized margin, but also in the annualized risk-adjusted margin. It's good news. We've been managing to grow with quality. I think that this is a very positive highlight. The next item I want to highlight is the margin with market.
There is currently a very challenging market, as you've seen, with the higher interest rates and more volatility, and even so, we've been able to consistently maintain the result over the quarters. We remind you that this year we established the capital ratio hedge, and it cost around BRL 500 million per quarter, as we mentioned in the beginning of the year when we released the 2022 guidance. The cost is very susceptible to an increase in the interest rate and to the difference between the interest rate in Brazil and international interest rates. Despite that, we performed well this quarter in Brazil with a margin in the market of BRL 900 million, and we've been able to meet our expectations. We should keep in mind that we no longer have the effects of the overhead strategy.
This means that the 2022 numbers compared to last year's number, that included the overhead result. We've been able to keep a good margin. I draw your attention now to the growth we had in number of lines under commissions and fees and results from insurance operations. We recorded a fair growth in the period. Credit and debit cards increased by nearly 8%. In the asset management business, we have a drop of 11.8%, but it's crucial to draw your attention to a very important accounting criteria. We recognize on a cash basis the performance fee of the asset management business. Typically, this effect is felt in the second and fourth quarters. Therefore, it was accounted in the last quarter, and it will happen again in the fourth quarter of the year.
Therefore, comparing the third quarter with the second quarter is not ideal. In the fourth quarter, if we manage to perform well in our funds, we should also recognize the performance fee. Another highlight is that the insurance business continues to grow. Here we have positive impacts on insurance operations and less positive impacts on pension plans due to portfolio hedge and deflation in the period. What we call core insurance is growing 53% year-on-year. I've been telling you over and over that there was a gap in our insurance business and that we would focus on it. The fact that we've been improving our performance. I'm just delighted with this evolution. Moving forward to financial advisory and brokerage services, despite a drop in this line, we keep on trying hard.
This is a harder year for equities, but the bank has a very solid performance in both fixed income and M&A. There was a slight drop due to a little less activity in the quarter. Equities have not been so good, but we've been leading all the fixed income rankings, and as you can see, we have a fair share here of 27% in origination, 33% in distribution, and 31% in ESG bond issuances. Let's just say that the DCM performance is really strong. Last but not least, let's talk about asset management. In addition to the effect of the performance fee, which I've mentioned before, it's essential to show that we keep on growing.
As you can see, we have an open platform and have been working a lot on incentive models with complete independence, which allows us to grow more in open platforms than in our own products. It all depends on the cycle, whether it's a higher or lower interest rate scenario, and our clients' investment profile, and on what investment products they are looking for. We have a lot of flexibility when it comes to meeting our clients' needs. Speaking of delinquency, I'll get started with the NPL 90 days overdue because we have some important messages. There was a slight rise in NPL 90 days overdue in Brazil, as I told you in the beginning of the presentation. I also told you that when we were to make any sale in an active portfolio, we would make it with transparency.
If you compare 3.25% to 3.29%, the difference is basically the effect we had from the active portfolio sale in the period. It was a positive economic result, and it also decreased the NPL ratio. Again, for the sake of transparency, we thought it was important to share this piece of information with you. The total 90 days overdue NPL was impacted by only 3 basis points. If it weren't for the sale of active portfolio, our NPL would have been 2.85%. Once again, the sale of active portfolio was made at a positive economic value, which is something good and healthy for the bank's balance sheet. When we talk about NPL 90 days overdue in Brazil, individuals NPL posted a slight rise by 30 basis points.
As the active portfolio sold was mostly made by individuals, the impact would be an increase of 7 basis points. Here I'll pause for a moment to talk about something that will surely come up during the Q&A session, because I'd like to address a critical point. You must remember that in the third quarter of last year, I told you that there would be a gradual normalization of the NPL ratio. This was the bank's expectation for 2022. As you can see, the normalization has been happening in a very healthy way, while still operating in lower levels than pre-crisis. We expect the NPL for individuals to get a little worse, perhaps for one more quarter. We expect the impact for next quarter to be of a similar scale to what we have this quarter.
This is our best expectation for the information we have today, but of course, there's a lot of uncertainty. Things may change. We expect NPL normalization to levels similar to those we had pre-COVID in the first quarter of 2023. This is an important message. We see a slight rise of 10 basis points in NPL for SMEs. Moving to the short-term delinquency, individuals NPL ratio for 15 to 90 days overdue rose 10 basis points, whereas for SMEs, there was a drop of 10 basis points. We expect well-behaved short-term delinquency rates and 90 days overdue NPL to gradually normalize to levels similar to those we had pre-COVID, which is super consistent with what I've been telling you for the last 4 quarters.
NPL for the large corporate segment is at really comfortable levels, 0.1%, although NPL is not exactly the best measure for monitoring delinquency in this segment. Moving to credit quality and cost of credit, the ratio renegotiated portfolio to total portfolio was flat at 3.2%. There's an increase of BRL 1.7 billion in the quarter, of which only BRL 900 million correspond to NPL ninety days overdue. We keep highly focused, renegotiating what makes sense to renegotiate. There's no purpose other than providing good service and some support to clients who really need it. However, for those clients who are regrettably far in the red, we follow our collection rules with all due care. Another important piece of information is that the coverage for NPL ninety days overdue in this portfolio is over 220%.
This is a very sound coverage, which is also very positive news. The reprofiled portfolio is the one that we segregated in the beginning of the pandemic under the Travessia Program, which was the program implemented to help our clients who were not overdue at that time to make it through the crisis. This reprofiled portfolio started at BRL 53.5 billion, and it's now at BRL 21.5 billion. More than half of the portfolio has been amortized to this two-year period, down 39% year-on-year and 10.8% quarter-on-quarter. 60% of this portfolio is collateralized, and duration tends to increase once the remaining unsecured amount is paid. Therefore, the amortization volume tends to drop, but with more collateralized mix and good credit quality. The cost of credit to portfolio ratio also posted a slight increase.
The nominal value is up due to the portfolio growth, but we are still running at levels lower than those of the pre-pandemic period, so there's not much worth mentioning regarding this item. We reached a coverage ratio of 215% flat or a little drop compared to the previous quarter with fairly adequate coverage in all segments. We reached 188% coverage for individuals, and we must keep in mind that the average coverage from 2015 to 2019 was 167%. That is, we've been operating at nearly 20 percentage points above the historical average. Going forward to OpEx, I'd say this is a more challenging quarter due to the effects of the collective bargaining. The negotiated bonus was a major effect in the quarter.
The 2021 salary adjustment of 10.97%, which impacted until September 2022, was based on inflation measured by INPC plus 0.5%. The broad consumer price index, so-called IPCA, was up 7.2%. General market price index or IGPM rose 8.2%, and we recorded a bonus effect of BRL 80 million in September 2022. OpEx increased 3.8% quarter-over-quarter and 6.9% year-over-year. Just to remember that last year there was no bonus since it was a different negotiation of collective bargaining negotiated every two years. This means that we managed to run OpEx below inflation even with the bonus impact in 2022. I'd like to show our OpEx agenda as follows. First, we compare core expenses between 9M 2021 and 9M 2022.
There was a 0.9% rise, way below inflation. As a reminder, the bank's inflation is much higher because of the salary adjustment. We have in place our efficiency program, which started some time ago with positive results. Moreover, the bank keeps on growing, doing more business. I would like to say that transaction costs may be a burden in OpEx, but this is a counterpart in increasing revenues. Our investments grew by BRL 1.9 billion. There are investments in technology, in new business, and in business expansion, seeking higher efficiency, productivity, revenue generation, and cost reduction. These investments are focused on the long term. In the end, we excluded Latin America operations. The bank has had a great performance with financial discipline and good cost management. It's true that we do not manage cost for the sake of cost.
We manage the efficiency ratio, and we have the lowest ratio in the banking industry when calculated in the complete methodology. Our efficiency ratio reached 38.9% in Brazil and 41.1% in the consolidated. Last but not least, the news regarding capital is great. We managed to increase capital by 60 basis points in this quarter, with CET1 going to 11.1% from 11.7%, and AT1 to 1.6%. You only have to keep in mind that the regulatory limit is 1.5%. The message here is that we still have a buffer of 10 basis points just in case the Brazilian real appreciates and we have to optimize our capital ratio. CET1 reached 13.2%, basically due to higher earnings, including the recognition of a provision for dividends and increase in loan portfolio.
This way, we were able to finance our growth and also accumulate capital for shareholders, which is very good news, too. Here I finish my presentation. These were the main messages. We feel very positive about the results of this quarter. Of course, we're aware of the challenges we face at all times and highly aware that we'll face major challenges in the future. I'll be joining Renato now for the Q&A session. Once more, thank you very much for your attendance and participation. See you in a while. Take care.
[Foreign language]
Milton has just arrived, so we can start with our Q&A session. It will be bilingual, so we will answer the question in the language of the question. If you want translation, we have the option for English and Portuguese. You can select it. Please remember that you can submit your questions via WhatsApp, and for that the number will be +55 11 99148 4308. Well, we have the first question now. First question now from Flavio Yoshida from Bank of America. Hello, Flavio.
[Foreign language]
Hello, everyone. Well, first of all, I would like to congratulate you for the excellent work and the very good results of the bank in a scenario that is very challenging. I would like to understand, in your opinion, profitability for the future, at least for the next year, 2023. The scenario is challenging, the visibility is low. However, most of what you've done all throughout this year will be, let's just say, you're planting so you can harvest next year. From that dynamic, are we expecting a good result next year? I wanted to understand the dynamic of the credit portfolio. What we've seen was an acceleration in the second quarter. Now there was a bit of a deceleration year-on-year, and I wanted to understand what can we expect. I know that you're still going to publish the guidance for next year, but what can you give us as a feeling for the growth of the portfolio for next year?
[Foreign language]
Hello, Yoshida. Thank you for the question. Well, I think you concluded very well. Well, since it's the first question, I don't wanna provide any information that is not correct. We're still working with the scenario of 2023. We have a lot of uncertainties and a lot of points that we need to refine. We're in the final points for the issuance of the budget. In the first call of the next year, with the results of the fourth quarter, we're going to talk about these points. The message here is a sustainable growth. That's the central core point, and that's what we've been working for over the last few quarters. There is a review of the guidance of 2022. Well, we haven't really reviewed it. Of course, there are ranges for the lines, but we understand that within this geography we can deliver the results of the bank and reaffirm therefore the guidance for 2022. The expectation, therefore, is that we will see a growth that is healthy.
Well, there is a small. There is a decrease in the portfolio. There is inertia for the portfolio next year. There is a way that the interest rates still impact our business and the way that the bank does the hedge of the working capital, the deposit. So there is always an integral that we have to see, observe. Well, there are challenges such as the investment bank, how the activities will unfold, and we have to keep an eye on this. There is challenges in the cost of credit. We're still careful in the follow-up of the risk of the bank and very cautious. The scenario inspires cautious. Linking to your first question, well, second question actually. There was a decrease in the third quarter, and we're growing nonetheless. The portfolio is growing healthily. We're getting a penetration in the lower risk p-clients.
We are de-leveraging some clients that have higher risks. We've been able to have a portfolio in clients that we have a history. Well, we are increasing the share of wallet in these groups that we have a relationship with. We are very careful with the external challenges, especially mono products. If we have to mention two cases, the credit cards and the mono product. Here, the credit card for the shareholders, well, for the clients of the bank, we have the Open Finance segment, where we acquire the digital clients and also the clients where the only lever is credit, and typically you have a lower income than the average. Here we've been ultra-conservative, and we reduced the concession in a material way, over 90% reduction in the period and in the financing. They have a value proposition with our partners.
We've done adjustments in the concession of credit. Nonetheless, this is a quality of risk that is much. Well, the Open Finance. You use the Pessoa Física. Well, you do the scoring, and this is what we've been following up. There was a decrease, and I can see that for the next year, if we anticipate the guidance, we're gonna see a portfolio that is going to grow less than it's been growing in 2022. We just have to see that this is a portfolio that has been added over the last quarter. Since there is a reduction in the base effect, we're gonna see a reduction in the portfolio as a whole. A central point here is to look at our business.
When we look at the cost of credit, we are a universal, robust bank, where we are very relevant in all these segments and where we are working. This balance of the portfolio allows us to be able to navigate in a very consistent way throughout the very difficult period. There are some important compensations in the portfolios of the bank, and also an upscale affluent profile that allows us to have results of credit that are very adequate. Now we go back to what we observed in the pre-pandemic.
[Foreign language]
Thank you, Milton. We have now the next question from Thiago Batista from UBS.
[Foreign language]
Hello, Milton Maluhy Filho, Renato Lulia. Congratulations for the result. Very strong. Quality, good portfolio. My question is about margin for your customers, and here I'm focusing in sensitive operations to spread. If we look at the rate of spread of this spread, we are seeing a growth quarter-on-quarter, but still much lower than what was pre-COVID. Pre-COVID n ow it's 8%. It was higher. Now, can we imagine that margin will converge because it was pre-COVID or not? The change in mix was so large. The mix of customers, clients, and products were so changed. Why don't we come back to those levels then? The other alternative is the margin post-revision. That is, 100 and 200 bps below the pre-COVID, so it's 5.6%. It's close to 7%. Can we imagine that the margin is the spreading or the provision will go back to the levels of the pre-COVID? That's the point.
[Foreign language]
Okay. Hi, Thiago. Thank you very much for your question and for analyzing the results. Well, first of all, things are much more different than the pre-COVID. A few information that is key that we have to pay attention to the evolution of the margin. The first thing, our guaranteed portfolio has grown five percentage points. It increased the capillarity of five percentage points. Of course, that brings a mix to an accounting less risky, but with less margin, of course. There is an effect at the beginning of COVID, which was the regulatory cap that had an impact in the profitability of the profits of the products.
We had the risk line, so which had dropped, and the portfolio that was growing and that had an effect in the margin. Well, there is a mix between guaranteed and non-guaranteed, i t changed. That's an important information. For example, bank overdrafts. Look, our wholesale portfolio, if we just go back three years, it's something that grew 55%. If you go back three years down in the past, it's a portfolio that is very horizontal. If you have more wholesale, less. Well, we have more guarantee and less clean. That's the second phenomena that has an impact on the margin. The third aspect, and this is very relevant for the period, is that we've seen an interest rate increase until the 13.75%.
The speed has been very high, and there are some products that are impacted. In the flow, we've really increased the rates, but in the portfolio, there is more impact when you compare retail and wholesale. Y ou have the overdraft. It has a cap. The real estate in the MCMV, we have a dynamic spread, post fixed. On one side you're benefiting from the benefit of the savings account, and on the other hand, you have an impact in the credit, and you have the two effects. You leave the spread in the credit and the liabilities in different lines. There are some, several other effects. My vision is that we should not go back to what we had in margins in the pre-pandemic. We are still seeing our margin stabilizing with maybe a bit of an expansion, but stabilizing above the levels that we are seeing here. This is o ur best estimation thus far.
[Foreign language]
Thank you, Milton.
[Foreign language]
Third question online, Gustavo Schroden from Bradesco BBI.
[Foreign language]
Hello. Good morning, Milton. Good morning, Renato. Thank you for the opportunity. Congratulations on the results. Very strong. I'll suggest few questions. The first one is asset quality. I don't know if the correct wording is appetite for risk. I'm going to use that phrase for lack of a better one. Well, we see delinquency in the individuals is growing. There are some different dynamics between the players. In fact, it has been growing for everyone.
My question, Milton, is regarding, well, not trying to predict the future, if the NPL will stabilize on the next quarter or in the first quarter of 2023. Up until what do you believe that we can maintain, let's just say, that appetite for risk in those riskier lines? How much do we accept of deterioration in the NPL so we can continue still, going along with this rhythm? We see a deceleration in the growth, specifically credit cards. It's growing, but there is a deceleration. Also, vehicles, of course, financing. Well, what is your limit really looking at deterioration? I'm not even thinking about if we stop at this quarter, next year we're gonna stop. You're gonna stop. It's very difficult to estimate, but I wanted to understand your risk appetite in those lines. The second question is quicker. It's about dividends. I think that the capital is replenishing itself. There is a high level of ROE, 20/21, with a dividend of 25%. The trend really is to exclude effects, extraordinary effects. The trend is the capital to go back. Do you think that the dividends are gonna go back to 40% next year?
[Foreign language]
Well, Gustavo, thank you. It's a pleasure to see you once again. Thank you for the comments about our results. Let me address delinquency and individuals, natural persons, Pessoa Física in Portuguese. Well, we have to understand the complete portfolio. Well, our operation for individuals is very diverse. We have the account holder in all the segments that we have, the Uniclass person that enter all the products. We have our operations, mono-liners, credit, real estate, we have vehicles, and we have the operation of credit cards.
The two portfolios that feel like to say the cycles that we're observing with the increase of inflation is a portfolio of credit cards, Open Finance, as we've talked, and our appetite is to create value. Our appetite hasn't changed. It's dynamic and depends on the conditions of what we see in the prospective scenario, what we are observing. In the reality, the results of these crops, let's just say. We've had very relevant adjustment in concession. We reduced rigorously the concession in certain products, like credit cards. Open Finance is one of them. Vehicles, we've done, as you commented, the portfolio of vehicles at the margin. The total portfolio is reducing, and that shows that we've been able to adjust to the necessary adjustments. Now the important is that we are always the exposed, the X before, and then we retrofeed this model.
This is within our appetite. You have the vehicles, it's already fitted. The credit card is more volatile. We're doing a very active management of the portfolio, very intense, but the portfolio is very relevant, as you know, and it is subject to more volatility, but we've been able to absorb this in this period. All the account holders, given the profile of our client, the capacity to capillarity in our relationship, two-thirds are clients that are engaged. We have a credit performance that are very solid during this period. Therefore, since the portfolio of account holder is very diverse, the individual is very. We have compensation. Some are more pressured, some are less pressured.
If we look at the future, there will not be a review of the appetite in terms of expanding with more lines of risk, unless we have clients that we have records, that we have a good relationship with, we have a good capillarity of credit. So what we've been able to do is increase the share of wallet in those clients, increase the value proposition, improving the relationship, and that allows us to grow with quality. That's the central message. Well, the harvests, the crops are fitted, the adjustments have been done in a relevant way. When we look at companies, we have to do the breakdown in two worlds. We have wholesale and retail. We have the middle market above BRL 50 million, and then we have the ultra-large, the biggest corporations of Brazil, they're clients.
When we look at the wholesale, the performance is extraordinary. We've grown with controlled costs. We have the capillarity with our clients. We have a very solid value proposition. The cost of credit is changed. We have the middle market companies, but this is for the wholesale. Because we operate with a profile of the retail, where we have the small companies, but our mix is a bit more upscale from the invoicing, and they have a better quality for the retail. When we go to middle, this is not different. The story is not different. We've been growing with a lot of quality, with a cost of credit that is very well behaved and a net margin that is very healthy.
As we see by how we're managing the bank, we're not just looking at top line. We refine our models as we bring new observations and new elements, and we are always looking at profitability, always looking at that. Our mantra for the creation of value, the return on allocated assets, this is the main driver for the decision-making process. Even though we have appetite policies for credit that are very well-defined, in margin, we are always pricing well. We are making the operations run as quickly as we can in the best way possible, not only being able to look at the past, but also doing an estimation of the future performance of our bank. That's how we manage.
We've done relevant decreases, and we're growing with quality and expanding as possible our financial margin with our clients as the portfolio grows. Dividends. Sorry, question number two. Before we give the floor to Rafael, about dividends, the question is very objective. Our policy for dividends, you know that table that was published when we said there is on the one hand that matrix, the RWA, the assets that are funded by risk, and on the other hand the profitability. Our appetite for risk for the said one has reduced to 11.5. It was 12, and we had a reducer at the board, and now we are talking about 13 percentage points on capital one. So this is our appetite. For the table of dividends, we're still observing the 13.5.
This second point, when we go to an excess of capital, we are always observing prospectively and not looking to the past, our real capacity to be able to grow and invest. Not only growing the portfolio, we're doing new investments, acquisitions. We have opportunities that are coming up. In the past, we used to operate with a quarterly payout that was very high because there was an excess of capital in the bank that was very high, and we didn't see the perspective of the use of that capital. That's why we created the policy for the extraordinary, and the payout was very high. Now we don't see the payout increasing. We're still working at 25% for two reasons. We are doing a catching up in the capital.
If you look at the last two years, we've really replenished the main capital of the bank. We are above the appetite. We have challenges for the future, positive and challenges nonetheless, in the same way that we have a change in Basel that can risk to credit. There are benefits or operational risk. There are some public bids. There are some transactions that we are working with the regulator that consume the capital. There are intangibles that go against the capital, and then we are still investing in the bank. Really, looking at the reasonable horizon, at least the next 12 months, we do not see any sense in increasing the payout.
What we are doing, yes, and we've been able to do with predictability and consistency, is increase the profit and the payout. The information is that we're working with 25, any changes. Looking at the future for any scenario, if we do not understand that the bank has the capacity to have an adequate profitability, the capital of the shareholders, then we're gonna increase the distribution then, certainly.
[Foreign language]
Now, Milton, we are gonna go Rafael. Yes. Sorry for the false start. Now it's your turn.
[Foreign language]
Well, I think that I was gonna have to answer about your dividends, your policy of dividends. Well, good morning, everyone. Congratulations on the results. There are two questions here. I think that Milton has commented on that on the previous event even. On the over-offering, maybe there is an over-offering of credit cards in Open Finance. You've commented really on that issuance. Could you give us a readout on what you understand that happened in the market, specifically in that segment, that there was an excess of offering? The second question, still while not trying to get a guidance, but just to understand your dynamic of delinquency.
I mean, Milton already mentioned that if everything else is constant, maybe delinquency will be stabilized in the first quarter. What are your expenses with provision? I imagine that the expenses with provision are going to go to the fourth quarter. Would it be reasonable that it is a percentage as a percentage of the portfolio, would it be maintained in the same levels from the fourth quarter? There is a stability, and then the provision for the percentage of the portfolio would trend, will have a trend in the evolution in the same rhythm, let's just say, or there would be any variations. How do you see this?
[Foreign language]
Hi, Rafael. Thank you for the question. Thank you for your initial comments. Now, let's talk about the Open Finance and the credit cards. Now, we always talk about the benefits of competition, more players, more digital players, more competition. Certainly, that brings benefit. The client is benefited, the experience changes, and that makes the bank having to reinvent ourselves every day, so we can deliver a better value proposition and experience for their clients. Now, if you add a series of effects, and I'm talking about regulatory effects, and I'm talking about the whole scenario issues.
Well, we have the lower interest rates are negative in some places. The phenomena of the abundant capital for fintechs and new companies that are growing, and the greatest driver, it was growth. We always heard about the growth, the base. Those were the drivers. Now what happened? A lot of these players started their operations based on credit cards. That was their main product, or maybe the only product at the time. At that time, the investors said, "Grow fast, increase your base of clients, and reduce your acquisition costs." Many of them, they had journeys that were incredible for the clients, but they are growing with a lot of effort. The second aspect is that the growth was given in an unbalanced way. Unbalanced. What do I wanna say about that? Their products, they don't have any fees.
They're free with a digital experience that is very good, and that generates an imbalance, economic imbalance between the client and the organization. First point. Today is very easy, and it was very easy. Any client would acquire a product of credit card. Whether it would be through the digital channels and the fact that they didn't have to pay any annuity, any fee. They can have seven credit cards issued in one day, and that was very easy. The second element, since there is no cost. You get a credit card in your pocket and you leave it there until you need it. Third, that we observe in the Open Finance, the behavior of the client is a client, a customer that generates the sudden death.
Well, it has a mono product with you, relationship only uses you with that credit card until they have the difficulty of paying for the product. What they do, they get it in the drawer, and then they go to the next. The main engagement is key in that relationship to be the main engager. That's the, that's the core issue. The third element is that when you created something that is artificial in the tariff for the interchange of the prepaid, several businesses had a revenue that was artificial, that was asymmetric, it was artificial. That made the profitability of the business model. Now we have more interest rates, the main avenue for that excess is interest rate, and it's coming up all throughout the world. The investors, they have less appetite.
The correction for the market value of many of these companies happens now, and the value of these companies drops, and the investors are expecting profitability. For them to get profitability, you have to get levers of monetization. You have to have a risk and credit app that is adequate. When you operate in a very low income public, the main lever is credit. They don't have pockets. These clients don't have the pockets you have other relationships with you. It's very difficult in a scenario such as the one that we are observing an increase in inflation, interest rates and all the effects that we've been seeing. It's very difficult for this client, Sergio. Well, their bargaining price it has been corroded. They don't have purchasing power. They have difficulty sometimes paying their obligations.
Yes, there was an over offering. There was a capital asymmetry that was relevant. The banks consider the capital levels to operate with this public. It was much higher than the FinTechs. I believe in proportionality. I think we need to classify by size. The central bank has done that recently here in Brazil, but it's still not implemented. There's still a phase-in of that change. The rate of the interchange also. Well, the business model was based just on them, mainly on that tariff. That was more than double the regulatory cap of the central bank defined by the central bank, by the MDR of debit. We generated that effect that was very relevant. That's very important effect.
Part of what we are seeing of delinquency has to do with the over offering. The client is leveraged, they have less financial education, maybe less capacity for the decision-making process, up until when they can go with their indebtedness. The indebtedness of the families has increased. When we stratify this base, we can see that the growth of low income was two products, credit card and personal credit. Personal credit, it becomes a lever for you to remove the client from the credit card and give them deadlines so they can pay. It's a renegotiation that is forced, so you can remove the client from one product and then getting them to the personal credit portfolio.
This is a portfolio that grew on the market, but part of the delinquency will be up there with the time in the future, because you have to look at the dynamic as a whole. I think that there was a very, very large. There was too much access here. The corrections happen and it takes time. It takes time to digest, and it takes time to do the adjustment that this harvests in such a way that it will affect the growth of the portfolio on time. About the cost of credit, if you look up ahead, we still think that there was a small expansion in the indicator. I'm not anticipating any guidance. Look, but we still believe that they're going to stabilize in levels that was lower than the pre-pandemic.
When we look at the fourth quarter of 2019, around then, we were running 3.2% of the credit index. We believe that it will be the relationship should be going slowly towards this threshold. But once again, there is a lot of uncertainties. There is a lot of things that were not defined. We're gonna follow up, and at the beginning of the year, we're gonna have maturity to give a guidance that is more robust line per line of the bank.
[Foreign language]
Very good. Let's go to the next question. We have a long list of questions today. Next one, Renato Meloni. He is on screen.
[Foreign language]
Hello, everyone. Hello. Congratulations on your results. Can you expand a little bit more on the adjustments that you're doing with the credit concession? For example, how much did you do on the cut, on the cutoff, on the limits? How much the drop in approvals? Also, with these reductions, are you gonna continue next year, or are you at the correct level for the scenario nowadays?
[Foreign language]
Renato, first of all, I think that the adjustments that were necessary was already done. Of course, there is always space in the margin, and this is a dynamic agenda. If we are in a calmer scenario, then we can do adjustments, we can look at the history, how the model is performing, and there is always a perspective vision. Remember, we've been working with our models, not only that look at the expectation of the bad rate of this client with time, but also what is the macro perspective.
There is a macro variable and the cutoffs, well, on Open Finance was very relevant, but not only per channel. We did really adjustments that are relevant in lower incomes. These are the incomes that are impacted, the people that are impacted more in this process. That was a decision that was made f or a long time, we've been managing this sharing. There was a reduction in 10 percentage points in the period. Our share with this public, just to give you the relevance of the adjustment that we've done, and we grew in publics that have a risk level that is better given the income that are suffering less in this cycle.
There is the guaranteed products. We have the guaranteed products, and we've increased them by percentage points in their capillarity of these pro-products in the portfolio as a whole. For the things that we're analyzing and based on the information that is available, the adjustments that were done, if we look at the future, there can always be an adjustment, additional adjustment. The big shearing already happened. If you look at vehicles, the cuts in production, very relevant. In credit card, we cut 90% of open action, 90% gives you a dimension of the size of the adjustment. Whatever the volume, 90% of adjustment shows how much we're seeing these harvests with more volatility, and they are not connected to our appetite. The central point is that we're quick and dynamic. We interpret the data, we have the deviation, we work surgically, and our models allow for this.
[Foreign language]
For next question, let's do the switch to English, cause the next question comes from Tito Labarta from Goldman Sachs. Hey, Tito, good to see you. Thanks for joining.
[Foreign language]
[Foreign language] I heard you. You can speak Portuguese.
[Foreign language] Great, thanks for the call, and taking my question. My question, a little bit on the capital, but more specifically, given the macro and political environments, right? You mentioned, I think core Tier 1, 11.5%-12%, right? You're right around there, you know, good improvements this quarter. Just given the scenario that we're going into, do you feel that you would need to hold maybe more capital, right? I mean, asset quality is deteriorating, some uncertainty on the fiscal situation in Brazil. I don't know , what you've heard on potential movements from the government. I mean, just what we've heard is like, you know, increased use of public sector banks, potentially renegotiating some debts. Any color you can provide on, you know, what you're hearing from government potential programs, and would that make you more cautious to wanna hold more capital?
Okay, Tito, thank you very much. I'll answer in English to respect the language of your question.
[Foreign language]
[Foreign language]. The topic is just going back when we define our risk appetite and the levels of Tier 1 that we were expecting for the bank, we were seeing about 13.5%, and this is what we use for the dividend policy of the bank. At that time, if you remember, the largest or the biggest impact that we could have in our capital base was related to the FX devaluation, real devaluation. Why was that? That was because we have a huge portfolio, not only in Brazil, in other currencies, but also the banks that we have abroad, especially in Latin America. You have to take this into consideration. From that time, when we look today, there is a second huge impact that was due to the FX devaluation.
It was the overhead strategy of the bank that whenever we had a real depreciation, it would generate tax credit, and this would have a huge impact in our capital base. There is no more overhead, so there's no revenues, but there is no risk for capital. Second, I think successfully, we implemented by December of last year, when we announced that we were implementing the hedge of our capital index. That means that there is a cost, this BRL 400 million-BRL 500 million per quarter. When we look a full year, there is no volatility due to the FX. Even though we had some appreciation at beginning of the year, we are seeing some devaluation, and our effectiveness of the hedge has been perfect. That is very good news.
That means that the buffers that we had for this type of volatility, now we can replace with other uncertainties that we might have in the future. We are very comfortable, and we do a stress test in our balance sheet all the time, and we have these discussions, and we see that we have a very comfortable capital base and that our appetite is pretty well defined with 11.5 CET1 and also 1.5 additional Tier 1. We are confident with that. I think we have a comfortable buffer. We don't have the FX risk anymore. We should be increasing our capital. There is some positives and negatives, as I was saying just a few minutes ago. We have for credit, Basel changes, maybe have some positive impact in our capital.
We have the operational risk that will impact the bank, but this won't be in 2023, should be in 2024. We have some approvals that are still pending, investing or buying some companies. At the end of the day, we're still comfortable. We feel that we have the capability to keep growing capital, but still with a good buffer, from far away from the regulatory requirement that can lead us to uncertainties and changes in macro policies. We think it's still early to say what's going to happen, and although we see the market very volatile, yesterday was a good example of that, but still, in the mood of expecting new flows to understand what are the risks that we are seeing looking forward. We have a very comfortable capital base, and we are very fine with that.
Thanks, Milton. The next question comes from Jason Mollin. Jason, I'm never sure in which language you're gonna ask your question, but you know, I'll leave that up to you. Good to see you.
[Foreign language] . I'll ask my one question as requested, and I'll do it in English since you have all, everything set up to do that. Well, first, I'd like to repeat the congratulations on the solid results. Itaú Unibanco is living up to the very high standards in a challenging environment, in my opinion. Most of my questions on operational performance have been addressed. Let me ask this. In the management commentary report, you started with the statement that Itaú Unibanco's digital and cultural transformation agenda continues to evolve. You have provided strong digital metrics and customer satisfaction through NPS. If you can provide a recap and an update on how the cultural transformation is evolving, have there been challenges, and how have you been facing them? I think it really differentiates Itaú Unibanco.
Great. Good to see you, Jason. Thank you for the compliment. It's a pleasure to have you here with us. I think someone the other day was asking me how much of my time I spend with the cultural transformation, and I answered 120%. Why is that? Because cultural transformation is something that come top-down, and we have to do that every single day, okay? Every single decision, every single promotion, every single discussion, every single moment, you need to walk the talk, the new culture. The thing is that last year, we worked very deep in defining the territories of this new culture. We had discussions internally with many people from the bank.
I would say that 90% of our employees, more than 4,000 people in this survey, said that they would expect a relevant digital, relevant cultural transformation, okay? This was just to let you know that we still have a very fertile ground to invest. We started to discuss in the executive committee with the board of directors, saying, "What are the possible movements that we can do?" We were bold at the end of the day. We really think that we have a lot of good things of our culture that never change. The ethical thing, client thing, profitability, performance, sustainable performance are things that won't change in the coming years. We still have to modify relevant things in our culture. We did that.
We've been working a lot of workshops, internal workshops. We've been discussing with all the managers since the executive committee. Just to let you know, I was part of four workshops with this active committee, where we had very, very deep discussions about the new culture because we have to keep in mind that the change begins in ourselves. Before saying that people should do this way or that way, we have to be sure that we are doing the right way. This is the discussions we've been having, this active committee, to guarantee that we are the role model. The partners of the bank are the role model. The directors of the bank are the role model. They have to be trained. We have to be trained.
We have to be very open mind to understand that things are changing, and we have to do things in a different way. This is basically the way we've been working. We've been having many workshops. We have teams dedicated to the cultural transformation. I think if you ask me, how can I measure culture? It's not only by the workshops or the reaction or the capability of doing things. We had major changes in the bank. There is no title anymore. I always say that it's not an irrelevant information, it's a very relevant. We only have directors. We don't have director, executive director, executive vice president. We are all directors.
Now, this gives us a lot of flexibility when we have to move people because we give them a mandate, we give them an objective, we give him a goal, and that's all. There is a compensation discussion. There is nothing else. We increased our partnership program. We used to have two levels, the holding partner, and also we have the associate. We don't have those names anymore. We have partners, and all of them are partners. We have 450 positions of partners inside the bank, coming from 195, so more than twice the size we had a year ago. We don't have one layer. The executive layer that we used to have, we don't have any more. There is much more autonomy, much more accountability, much more speed.
Agility is something that we take a lot in consideration. Never forgetting what brought us here, the ethics, the risk capability of managing, the bank, the performance and sustainable performance in the long term, and the client is something that we are always upgrading. This is the agenda that we upgraded. Also, the way we are working, the method, it's relevant for the new culture. If you have the digital transformation, where we are very advanced, if you have the way of working, change it in a more agile way, and if you have the right culture, where are the results? The NPS. At the end of the day, the client should be more satisfied. The way I measure cultural transformation, it's in the eNPS, the employee net promoter score.
Just to give you a number, we reached 83 in the eNPS. We won in Brazil the first company in the Great Place to Work, not only in the financial system, but also looking at companies all over. Number one in Great Place to Work. This is a very good feedback that we receive from our team. But the most relevant one, at the end of the day, if you have happy people, you should have happy clients, if you are working in the right direction. The NPS of the bank, NPS, has been achieving its maximum when we look at the historical range. We are very positive that we are in the right way, right pace moving forward, but still challenges. You don't change.
You don't see shifts in ROE in two or three months. We have to do that as time comes by. We are moving forward, and also we are bringing new culture to the bank all the time. We have to work and be very open-minded that we don't know everything, that we have to take the competition very seriously, that we have to look to the market, understand what they are doing, what you can do better, and you need to bring good people to the bank. This is the process that we are going towards, and we are very happy with the evolution so far. On the other hand, I would say that we are 15% or 20% of the journey, so we still have a lot of work to do in that front.
Thank you, Milton.
Thank you, Milton. Thank you, Jason . Now the next question, we have Eduardo Rosman from BTG Pactual.
[Foreign language]
Hello. Pleasure to talk to you guys. Hello, Milton. I have a very quick question for you. I think that a lot of investors are surprised with the difference of the results of Itaú and their peers. Well, the other ones, Santander and Bradesco. Well, you talk about the cultural transformation since you took on as CEO. Well, if we had to look at the difference in performance versus your peers, how much do you think can be explained by more cyclical issues? Depends on the cycle of the client that the bank operates, the high profit, the more companies and individuals that have more money. How much can that explain the transformation? Maybe that would be the structural thing. I'm not trying to get a number, but I want you to give us a guidance. How much can we see? And if that thing that you're seeing will continue, and that will mean a gap in the return for Itaú in comparison to its peers.
[Foreign language]
Hello, Rosman. Thank you for the question. I wanna do a statement before I answer. First, I have an enormous respect for our competition. Enormous. As I've always said, Itaú is what it is because Bradesco exists, because Santander exists, because Banco do Brasil exists. All of our competition has an enormous value. They've done incredible things all throughout the years, and these are long-term journeys. We cannot just look at one quarter, one year.
We have to look at the long term. That's the first statement. Second statement that I want to give you. Maybe I should talk more about the bank itself. I don't wanna do comparison, relative comparisons. I believe that you have data information capabilities to get your own conclusions. I wanna talk about why I believe that we are having a performance that is sustainable, predictable, and quality based. There is no single answer. I cannot attribute all this exclusively to one element or the other. There's a series of factors. There are factors from the long term, from the external factors, internal factors. I'm gonna try and talk about the strength of the bank. First of all, the fact that we are in a universal bank, strong, that plays a role in the quality of our results.
What do I mean by that? If you look at all the businesses that we're investing, that we have a competition, we have had a highlighted performance. We have really wholesale participation that is relevant in Latin America. We've done a great catch-up. That is great. When we look at wholesale, and I apologize, before it was retail. Well, wholesale, we have credit, we have, in every business, in the cash services products, the distribution sales. We've had performances that are, well, in the investment bank, if you just look at the ranking and you follow up that closely, we can fight for the leadership in all the rankings, whether it's fixed income, variable income, M&As. These are not decisions that were taken just now. We've been working with these franchises for many, many years.
Since Itaú BBA's inception in 2013, we really focused there on wholesale. We see an evolution that is consistent, that is constant with our operation. Back in 2005, we did an investment in the investment bank, and now we're getting the fruits of that investment. It's evident that it has to do with the human capital, it has to do with the culture, it has to do with our vision of the client. We're getting the fruits of long-term structural decision-making process. The bank is an evolution, 98 years of a story, and the bank has always evolved and has been able to reinvent itself in times of need and shorter cycles as well. There is a structural issue here at hand.
Second point, when we look at the profitability, we see that our wholesale bank, we have to really mention that. I'm talking about the Latin America operation. Treasury has a very important role in that. When I talk about treasury global markets, I'm not talking exclusively of the trading table. That also is important, of course. The bank has been navigating very well in the face of adverse scenarios. Look at the interest rate, and we're still delivering results that are healthy in the March, whether if it's the dynamic banking hedge or positions to choose in the time of hedge, you can be more directional in one position or the other. Trading is doing very well. Banking is very well.
Regardless of the challenges of the increase in the interest rates, the RAR of those positions is more pressured. We had levers last year that we don't have this year. For example, the overheads. So when you look at that, at our asset base, we've had a fantastic year, performance fees that were very strong, and I just mentioned the accounting effect of the second quarter, fourth quarter. We talk about the quality and the capacity to manage that we've had, our private. It's a market leader, and we are still growing with quality. NPS at the record high. We had happier customers, more satisfied customers, and this is a virtuous cycle that we can increase profitability of the bank as a whole. I would say that there isn't just one answer. The cultural transformation is evident that it helps.
Digital transformation is a necessary condition. It's not sufficient. It's not enough to just do the digital transformation if you don't have the right culture, if you don't understand the client in the correct way, if you don't have the agility and the capacity to react to the needs. When we look at the wholesale world, and we look at all the businesses, we had historical max. Retail is also an operation that is very complete. We look at all the businesses. Really, the retail bank is doing very well. That has to do with the quality of the team. That has to do with the quality of the decision-making process, with the transformation that the bank has done, anticipating the movement. We're talking about the digitalization as well that we've done. Really, retail, that is doing very well. Individuals doing well at retail.
The insurance business, that, for us, was a theme. It was a gap. Now we are still focusing. The insurance business is growing in a very relevant way. Our expectation is to double this business in a reasonable horizon of time, double from what we observed last year. We are going at the adequate rhythm for this. Mono liners are growing with quality adjustments. Recent adjustments have been done, where we're talking about vehicle or other portfolios. Retail is growing, the real estate is growing, and credit card business is important for the bank. This is a volatile portfolio. We cannot crucify the portfolio because we are seeing the acute cycles in the past, and that happens. If I have to give you an answer, it's a set of factors. I believe that the fact that we are universal, robust bank with competitiveness and leadership that we've achieved, that brings a great responsibility and that vision of the client that is very strong, has allowed us to navigate very well the challenging scenarios.
Milton, we're gonna switch back to English again cause we have Jorge Kuri from Morgan Stanley with us. Hi, Jorge. Thanks for joining. Good to see you.
Thank you. Hi, everyone, and congrats also on the great results. My question is on operating efficiency. I think you've said little about it, and I think you've done a lot on it, and I think that's a big part of what has driven your results to be so resilient. You've gone from 3.7% expenses-to-assets five years ago to 2.7% today, and I'm looking at expenses-to-assets just to clean out the volatility of the net interest margin with the volatility in rates. If you wanna think about it in a cost-income ratio, you're at 40. How much more can you do when you think about the next three years, the next five years? You know, could we see another full percentage point come out of expenses-to-assets over the next five years? Can you run the bank with 1.7% cost to assets? Can you run the bank with 30% cost to income ratio, and what is needed to get you there?
Okay, Jorge, thank you very much for your comments. As we say, we like to underpromise overdeliver, so I think in efficiency, we've been doing that for a while now. My view is that, as the name say or the definition say, it's an efficiency ratio. We look for cost, but we look to revenues as well. It depends a lot on the scenario. We are in a very favorable moment now. If you see, we're in the lowest level when we look this year finding the lower level of efficiency ratio. There is a lot of operational leverage that we can do, as you can see when you look and compare to our assets. We can grow the bank, and we can keep the costs under control.
The other point that I would like to highlight is that we are investing a lot in the future of the bank. For costs, it's very easy if you want to take a cost-only approach, that you make wrong decisions, and you decide not to invest in your franchise, not to grow the businesses, not to sell product. You can do that. You have a much better cost ratio by the next quarter, but you won't have a strong franchise in the long term. Our decisions here are long-term based. Even if we have to invest, we're gonna do it because this is the way we keep growing the bank, keep expanding the business, that we do, that we have. My view is that still have room to keep doing the efficiency agenda.
We are always discussing that. Cost, you have to do every single day. This is part of our strategic agenda, and we are focused on that. We are very focused on that. My view is that still have room to increase. We are doing investments, as you know. The most relevant thing is that the level of efficiency ratio that we have nowadays, I think it's international benchmark for global banks like ourselves. We are very happy, but not satisfied. I think we did good up to now, but still have room to do more. It will depend on many decisions that will be taken in the coming quarters. It depends on the scenario. It depends on the capability and the revenues that we are able to generate.
More pressure, less pressure. That's a lot of things to do. I cannot give you one number saying that we can go 1 point more or a full 100 basis points, but I can tell you that's still room to do more. I think the core cost that we say that we grew 0.9% in the quarter is the sense that we are doing good, and we are doing much below inflation, okay? We'll keep investing in the bank, and we'll keep delivering low costs on the core costs. This is the mantra. This is the agenda.
Thank you.
Thank you very much, Jorge. Good to see you.
[Foreign language]
Now we go back to Portuguese, and we have Matheus Amaral from Banco Inter.
[Foreign language]
Hello, everyone. Congratulations on the results. My question is regarding credit card. You have demonstrated an increase in the overdraft fees, I mean. I wanted to understand what is the level that is healthy for this rate. Is there any action plan for reducing the delinquency?
[Foreign language]
Hi, Matheus. Thank you for being with us once again. In fact, during the pandemic period, we cannot just look at a snapshot, we have to look at the picture, the whole picture. With the lockdown, less expenses, less people purchasing stuff, and we have more payment and less expenses in the credit card fees. Our portfolio dropped in the credit card predominantly.
Remember that BRL 126 billion of portfolio, we have BRL 102 billion without the interest rate. BRL 26 billion is the interest rate portfolio. Yes, we saw a reduction during the period of pandemic where people were spending less. Of course, with more delinquency in some portfolios, we've seen delinquency higher in the Open Finance. Before the client goes delinquent, they go through the interest rate. They go for paying the installment, paying by installments, and then they do the agreement. Part of the delinquency goes through that previous step. Yes, we've done a series of actions.
Reduction in the margin, there is a portfolio that is installed, but the bank has the capacity to be very active in the management of the limits of our clients, whether they are they have the benefits of the capital. Those clients also that are given signs of difficulty is part of the active management of the bank to communicate with quality to, and to do the necessary adjustments. I mean, there are several initiatives. Adjustment in the Perps, I mean, the concession, the structural limits adjustment, and to try and understand up until when these portfolios. When I'm talking about the provisions in the individuals, natural persons, they had increased. The big offender was the credit card business. When I say that we are expecting a stabilization with the information nowadays, it's that portfolio has a tendency to stabilize, and we're working strongly for this. This is contained within the individual's universe, natural person universe. Thank you, Matheus.
[Foreign language]
Next question, we have Henrique Navarro from Santander. Hello. Thank you for your presence. Hi, Henrique.
[Foreign language]
Well, congratulations on the result. My question is regarding the coverage index. I mean, if we imagine that you have 215%, something like that. Imagine, 2023, the risk of the portfolio should be lower. Corporate. A corporate portfolio. So if you think about your records, that is something closer to 200%. Imagine that also we consider the way that you provision.
The provision criteria, you do it a bit before, and then you can revert that provision down the line. Imagine 2023, the regulatory risk. The taxes on dividends and even the increase in taxes where the bank is more interested in the income. Considering these profits, these hypotheses, can we work with 200 or reduction in the coverage index for the year 2023? Those assumptions that I've mentioned. Some of them do not make sense. I mean, if they don't make sense, can you comment?
[Foreign language]
Yes, Henrique, thank you for this opportunity. Thank you for the compliments. Well, I think it's reasonable to think about a certain stabilization all throughout time. 200% ballpark, I mean, we don't have a goal, we don't have an objective. We do not manage the bank through a coverage level. Since we are operating with unexpected loss, we are always anticipating through the models. The coverage index is a consequence of the decision-making process. This is a great indicator. I think that yes, the bank should remain with the coverage index that is reasonable all throughout this period. When I look at retail, yes, we are consuming coverage, but it's still above the thresholds of 15-19. We're still operating 20 basis points above what we are operating in a period of 2015-2019, which is great news. We are keeping a portfolio that is well covered.
There is an element in that portfolio that has to be taken into consideration with a lot of care, which is really the wholesale portfolio. This is an events portfolio. What do I mean by events? The coverage index doesn't necessarily. It's not an excellent metric for the wholesale portfolio. I like the coverage of provisions over the total portfolio. There are different outlooks that we can take. Any event of anything that is already provisioned by expected loss, that we already have expected liability that is anticipated, it takes on the coverage. That's why we need to separate. We have to look at wholesale isolatedly. There is gonna be volatility in retail. Before you have a delinquency, before that, you have restructuring.
When we have delinquency, it's because of a stress situation that is much stronger, and then the client will take the provision with him. It's reasonable to expect that we have good coverage levels. There are some challenges for the future. I would say that the bank is well protected. We've been able to navigate with some buffer in our relationship with coverage against provisions. Regulatory provisions will give you a good idea of the protection of the balance sheets, and this is reflected in how we mark those coverages per segment, and this is reflected in the coverage index of the bank.
I'm not gonna give you a number because we do not project it that way, but I think it's reasonable to expect a certain stabilization, above all, in the total coverage. In retail, there's probably gonna be some usage, because as I commented, we've observed an increase in the NPLs. Remember, even though we provision above the NPL formation, you're still fighting against an indicator of 200. Any time that you're in the merchant, you do that, you take your indicator to a lower level or lower threshold.
Thank you, Milton.
Three more questions down the line. Now we have Marcelo Telles from Credit Suisse. You're muted. I was waiting for that moment, so I can. You can talk, Marcelo. Hold on.
[Foreign language]
Can you hear me now? Good. Sorry, I had an issue here with my microphone, my headset. First of all, congratulations, Milton, on the great result. Clearly, it gets Itaú at a different threshold, different level in regards to the other banks. This is really impressive. Well, most of my questions were, of course, answered, but I wanted to ask you more about, given the fact that you are super important in the credit card markets, how do you see the growth of Pix, the transfer? How do you think that Pix can substitute? Do you see it as a threat to the credit card business, your business? We see an increase in the use of Pix here in Brazil, in the B2B and the transfers. Milton, what is your opinion on that type of transaction, the Pix transaction, to be able to capture part of this value chain?
[Foreign language]
Thank you, Marcelo. Thank you for the question. Thank you for the comments. Okay. I first of all would like to say the following: We were all in on Pix. As soon as we got the discussion on Pix, if we said, "If this is good for the experience, if it brings a great experience 24/7," we already didn't charge the tariff for the internal transfer inside of the bank. The client to transfer from one account to another, they always had the freedom, and it wasn't a cost. The way it was 24/7 for the account holder of Itaú when they did a transfer for another account holder of Itaú, remember that. Pix universalized that. Our first decision-making process was to get Pix in front of any product.
If there was an impact in the revenue, but of course, since our agenda, our culture is on the client, it's the best product. The best product is the one that is focused on the client. That was the first decision to really focus on Pix. From then on, we've been working diligently, and we've been working with evolution of Pix in receivables and payments. How is it doing? What type of payment method is it displacing? We're keeping a great market share in transactional volume that we have at the two ends, in the receivable and the payment. The order of magnitude is 20% of market share. I think that these are very relevant numbers given our size. We're still looking at the packages of the accounts of the.
Thinking about the suitability of the clients. If they have a package of services at a certain level of offers, but they're not using it, you know, they're not using what they hired, we're doing the adjustments, so we are getting the Pix in so that the client is getting the great experience, the long-term vision that is centered on the client at the right price. I know that the central bank has a roadmap for the Pix and potential of products. Pix, B2B is the one that grew more. The B2B still going at a different speed, still time for evolution, that can be captured, and there is evolution.
We ourselves at the sandbox of the Central Bank, we have attempts of new initiatives, the Pix credit, that somehow would substitute a four-point model. If well done, this can be a complement for the payment method here in Brazil. Our opinion, it's difficult to say here today what will be the Pix and its evolution and down the line. The fact is, any evolution for any path trailed, the bank, Itaú Unibanco, will have Pix as a very, very relevant. We never had from Itaú Unibanco or any other bank any type of retaliation in regards to Pix. No. We've always wanted Pix to work since the inception.
Pix only work and is the success that it is because of the engagement of all the banks in the system, because the level of investment in the platforms is enormous, the adjustment and the checking the savings accounts, so that interoperability only works because of that. We are very satisfied with the advances and if the Pix comes. To certainly disrupt other business model, other methods of payment, we're gonna be at the vanguard of that. If it's good for the client, it's good for the bank, it's good for the long term.
[Foreign language]
Perfect. Thank you, Milton.
Milton, we are going to switch back to English again, because we have with us, Nicolas Riva from Bank of America. Hi, Nicolas, good to see you.
Good to see you, Renato, and thanks so much, Renato, Milton, for the chance to ask questions. I'm gonna ask on your AT1 capital on the Perps. A few weeks ago you said you're not gonna be calling the 6 and 11.8 in December. You said it was basically based on the economics and I guess on the difference between the coupon reset, which should be right now about 8% on the refinancing cost. You can call every 6 months, and you said you're gonna continue monitoring market.
My question is, if there is a certain premium in terms of coupon reset versus refinancing cost that you would be willing to pay in order to exercise that call option, whether it's, for example, 50 basis points, 100 basis points, or any color on that. The second, we have seen some Brazilian banks access the domestic market in recent years. Banco do Brasil in the third quarter raised BRL 2.3 billion in a private placement in AT1 in the domestic market. There my question would be: How much do you think you could raise in the domestic market with AT1s to refinance some of the global Perps? Finally, on capital, just going back to the question that Tito Labarta asked about capital, I just want to make sure I understood correctly. If your internal targets remain 13.5% Tier 1, 12% CET1, and if you're gonna be making decisions on dividends based on those targets. Thank you.
Okay. Nicolas, good to see you again. Thank you for your questions. Let me start talking about the AT1. As you said, we said to the market on a formal basis that we wouldn't be exercising the call. The difference of the repricing and the recap, looking to the prices that we should tap on market, were very relevant. It's more than 200 basis points, so it didn't make any economic sense to exercise that call. That was the decision we made. I think we were very transparent in not only communicating before the exercise date, but also much before that, I was saying this in conferences. We were saying to investors that this would be the definition that we should move.
The second thing is that there is no price that we define before saying that at this level of premium we'll be exercising the six-month call. I would say that 50 basis points we would discuss, but it's not automatic that we will say that if there is 50 basis points or whatever premium there is, we won't be exercising or we will be exercising. We will evaluate the alternatives that we have, not only offshore but also local. Just to go back to your second comment, we raised capital locally as well. The same way Banco do Brasil, we did the same. There is no depth. It's not a very deep market in where you can change or you can refinance the size of AT1s we have issued offshore within the local market.
We can do it up to a certain level, and it's very competitive. It was very competitive in terms of price, even swapping to U.S. dollars. We don't have the same size that we have to our portfolio issued abroad. The thing is, we need to understand the size, we need to understand the price, but I would say that 50 basis points we will discuss what are the benefits of exercising. Above that, it's very difficult that we will be exercising. For the reasonable future that we can see from now, it doesn't seem the case that in the short term we should be exercising the calls. We still have some calls to be exercised by March of next year. The same way around, we'll pursue the same strategy.
On the capital, the second comment, question that you made, let me be very clear on that. Our risk appetite defined on the board of directors of the bank is that for CET1, we should have 11.5. That's why we are 20 basis points above, and we'll be 13% in Tier 1. This is the risk appetite that we have defined, okay? For dividend purpose, we are still observing the same policy that we approved and released to the market. 13.5, below that, we shouldn't be discussing any extra payout, even though the risk appetite of the bank is 11.5%, and 1.5%, 13% of Tier 1.
Thanks very much for that. Milton, if I can ask a follow-up. Your comment about the 50 basis points, basically what you are saying is that right now with current rates, if you think you wouldn't be able to issue a Perp below 8.5%, then you wouldn't call your global Perps an issue, at least in the global market.
Yeah. The thing is, we're gonna be looking to the price or the yield that we have at that time. If there is 50 basis points more expensive, we will have the discussions. Again, the decision will be on economic basis. I'm not saying that if there is 50 basis, we exercise the call. I much more say if I have to make the decision today, I wouldn't exercise the call, because we discuss on an economic basis. Below that or above that, we won't be even discussing. Just to give you a good idea, you have to compare the level of price, the repricing of the Tier 1 that we have, and compare that to a new issue premium, and understand what are the premium that we have embedded. This is the 50 basis range that I'm mentioning here.
Thanks very much.
Well, thank you. We're getting towards the end. For the last question, I'm going to ask you because it's via WhatsApp. It's from Rafael, Banco do Brasil. He couldn't come and connect. I'm going to read. Well, we perceive the deceleration in the business of insurance of the credit cards through the bank's presentation. In parallel, the whole industry has seen a rise in delinquency in credit cards. Do you plan to have a more harsh measure to decelerate credit in these segments? You know, reviews of anything.
[Foreign language]
Well, first of all, thank you for the question. It's a shame that you couldn't join us today. Well, I think that we go back to the previous question. I think that we've done relevant adjustments. The market as a whole is suffering. The readjustments happen across the board. This is not specific for Itaú Unibanco. Of course, what is necessary has been done, and we've taken the necessary measures not only in the review of the limits, but also in the adjustment of the concession. This is what we still have opportunities. It's important to mention that every time that you face a situation such as this, we need to separate where do we want to do the de-risking of the portfolio and where we have the opportunity to actually continue to grow and invest in the franchise. The credit card product is very transactional, of the day-to-day of the client with the bank. Imagine a long-lasting relationship with this product doesn't make any sense. There are opportunities that we're still taking. Wherever necessary, the adjustments will be done. We've seen the deceleration in the market. The feeling from the market is that they are all doing their relevant adjustment in the concession.
[Foreign language]
Thank you, Milton. With that, we will finish the Q&A session, and also we will finish our results for the third quarter earnings in 2022. Milton, if you can do the closing of our earnings.
[Foreign language]
Well, thank you, Renato, for conducting this. I would like to thank you all for your participation and presence here in our event. For us, it's a great pleasure to be able to share with the level of maximum transparency our agenda. We've shared information, quality, quantitative. It's always a pleasure to receive your questions. Your provocations are also welcomed. I would like to say that we are facing scenarios that are challenging.
Well, you're in the market, you know it. The challenges up ahead, the bank will continue to operate with caution, with the care that is necessary, making the necessary adjustments, because our objective is to create long-term value, predictability and sustainability. This is our agenda, and this is why we prepare ourselves and we work every day. Once again, thank you very much for your presence. Thank you too for all the comments. To say on our side, we are very humble, we are very respectful, we are down to earth, not only with our competition, but also the market as a whole, and we will continue to play our role, working hard with a lot of passion for what we do. Thank you very much, and we will see each other soon. Thank you.