Good morning, thank you for waiting. Welcome to Magazene Luiz's Conference Call to discuss the results of the First Quarter of twenty fourteen. We would like to inform you that this event is being recorded and that all participants will be in listen only mode during the conference during the company's presentation. Afterwards, we will have a question and answer session when further instructions will be given. The replay of this event will be available soon after it ends and will be available for a week.
We would like to inform you that forward looking statements that might be made during this call related to the business perspectives of Magazeni Luisa, operating and financial projections and targets, our beliefs and assumptions of the company's management, as well as information currently available. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect the future performance of Magazin Nuiza and may lead to results that differ materially from those expressed in such forward looking statements. In order to start our call, we would like to turn the floor over to Mr.
Marcelo Silva, CEO, who will start the presentation. Mr. Marcelo Silva, you may begin. Good morning, everyone. Thank you very much for joining us in this call when we will be talking about the results of Magazin del Luisa for the first quarter of twenty fourteen.
It's a great pleasure for us to tell you that undoubtedly this is the best result ever for a first quarter for the company. The first quarter has its own characteristics about sales in January, February and March carnival. And for our activity, this is really non typical, but this has been the best first quarter as far as we can remember. And this performance starts with sales. In the first quarter, vis a vis the first quarter of twenty thirteen, we grew 28%, of which we stressed same store sales, 5.4% increase, 22.3% conventional stores and e commerce 44%.
I believe that this has been the best growth in retail as a whole in Brazil for same store sales. And this was done by keeping our gross margins 1.9 percentage point growth in e commerce. This has been happening gradually and we had the best performance in the Northeast as well. And we can go back a little bit also increase in gross margin. We finished the integration in 10/20/1233.
We already started to reap the fruits from this integration Last year, the second half, the Northeast has a much better performance and 2014 even better. And we also had the participation of e commerce with a strong performance in high margin categories such as smartphones and tablets. And this is a market that Lagardere de Vida has been concrete. And we also had a major reduction in our operating expenses 2.2%. This is very significant because we went from 25% last year going down to 23% operating expenses.
And I would also highlight the results of Riza Credi. Luisa Credi has been growing its results quarter on quarter and delinquency is under total control at Luisa Credi, the best indices in the last two years and also reducing operating expenses. And with that, our EBITDA margin goes from 8.7 last year to 17.8%. And as a consequence, the net margin of LISACRE goes from 4.6% to 10.2%. Fantastic results by Luizacrejo with the outlook of maintaining net margin at these levels for Luizacrejo.
And with that, our consolidated EBITDA went to $120,000,000 growing 1.7 bps vis a vis the first quarter of twenty thirteen. And this growth in EBITDA of 92% vis a vis growth of 28.5% in our net sales. So you can see that it is a significantly positive result that we bring to you with great pleasure. And net income as a consequence went to 20,000,000 yen And later during this call, we will talk about the trend of the net income, the upward trend of this net income growing gradually as we have always been seeing in this growth in our sales. I would like to stress our marketing actions.
We have very solid media coverage because we are sponsoring the World Cup at Edoble Global and we made an outstanding promotion and unprecedented promotion, which is called the whole building for you. One of our clients has already won this draw and the media gave it very wide coverage. And in the second half of the year, we are announcing a new building and the promotion has been very strong over 30,000,000 coupons issued already for the draw for the first building. So the moment that we are living and the motivation by the whole team and strong media coverage and the care that we have in terms of maintaining our gross margin under control, much better supply because of our inventory management efforts. And we have been advancing in this regard quarter on quarter and our margin has been under control as well due to our price management model that we adopted and those who follow us have already heard us remark about that.
And also a more and more rigorous tracking of our operating expenses. So with a very good growth in our sales, maintaining our gross margin and diluting our operating margins because of that EBITDA and net income are consequence of that. Although financial expenses are impacted much more by external factors like the increase in the CDT rate and the CDI. Okay. Having said that, as my opening remarks, I would like to give the floor to our CFO, Roberto Benissimo, who will be making a presentation about the performance of Magazini and Luisa Kres.
Good morning, everyone. Let's go to page number four, where we show the evolution of our stores. Compared to one year ago, we inaugurated 13 stores and we show investments in the first quarter, 16,000,000. Growth in same store sales and the average age of our stores. We still have almost 40% of our stores that are not mature yet, but they are becoming more and more mature as you can see based on the results that we are presenting today, the evolution of the Northeast and the Bau stores.
This is all very clear in the evolution of our earnings. On the next page, Page five, we have some indicators of Luisa Cregi. The portfolio of Luisa Cregi continues to grow, highlighting the credit card portfolio, which is more profitable than the others and with a better client profile as well. It reached almost 3,000,000,000 And sales of Liza Ked continue to go up at a 12% rate this quarter on a quarter on quarter comparison highlights being the billings on the card. This means that our clients are using the card more and more within and without inside and outside our stores.
CDC has been growing and personal loans going down. And the CDC as a consequence of our conservative policy of credit assignment by Grisa Kretsch. On the next page, Page six, we have the evolution of our delinquency rates. Delinquency is a highlight in our results, because delinquency is under total control and the long term indicators show a downward trend in delinquency 10.3%. NPL higher than 90, lower than December, lower than September.
So there is a downward trend that we see here as a consequence of the conservative credit assignment policy that we have implemented for quite some time already. And because of that provision for loan losses were lower on an annualized basis around 14% compared to the annualized pace of seventeen percent one year ago. So we have been reducing delinquency and the provision for delinquency, thanks to the improvement in our portfolio. And the short term delinquency is more seasonable in the first quarter. It tends to go up slightly.
However, the indicators continue under total control on our part and the approval rates continue to be very conservative. On the next slide, Page seven, we have the growth of our gross revenue 26.6% this quarter Internet 44% growth and gross profit 24% up. It was the maintenance of our gross margin with accelerated growth at the same time. Page eight. Here we have the breakdown of our operating expenses.
We were able to dilute our operating expenses in practically all lines and growing our revenues at the same time. And the growth in our expenses was much lower than the growth in our revenues. And because of that, we obtained a dilution of expenses of 1.7 bps adjusted for the IAS accounting effect. And non recurring results It didn't happen this quarter because all the results that we are showing today are totally current and consistent. On page nine, we show our equity income coming mainly from Luisa Credi, 1% on net revenue.
Luizacreage, as we said before, had a return of 36% on return on equity. And for one point years, Visa Credit has been delivering very consistent results and it's the sixth quarter ever since 2012 and all the quarters of 2013. And growth in sales and maintenance of our margin and dilution of expenses because of all that the EBITDA practically doubled from $63,000,000 to $121,000,000 And I would like to highlight the maturation of the new stores contributing to this result. On Page 10, the effect of each one of the lines in the EBITDA evolution, as you can see here. And the highlights were the dilution of expenses, both selling expenses and administrative expenses and also equity income.
On Page 11, we show the financial results. Financial expenses net financial expenses grew to 53%, very close to the growth of the CDI to the increase of the CDI rates during the period that went up from 7% to 10.5% practically. And it reflects the lower indebtedness of the company. We're able compared to one year ago, we were able to reduce our indebtedness and reduce our leverage even more leverage and the growth of data. But the cost is higher because of cards.
But we were able to grow our financial results nevertheless and maintain growth similar to the increase in the CDI rate. And in the working capital line, we reduced our net working capital from three point four percent one year ago to 2.3% this quarter compared to December. Of course, there is an increase because of the seasonality of the period. However, vis a vis one year ago, we are more efficient in working capital use, thanks to the maintenance of the inventory terms, inventory turnover and our purchases, keeping a more healthy balance and our suppliers line higher than our inventory. Now the evolution of our net income in a very consistent fashion quarter on quarter since the beginning of twenty thirteen, reaching million dollars almost 1% this quarter.
And now I would like to give the floor back to Marcelo Luciuva, and he will be talking about the outlook for 2014. We maintain our trust in the sales performance of the company in the second quarter. We will have a very strong effect of the World Cup and a greater marketing effort. And you saw yesterday on TV, the media coverage of the eight sponsors and the focus was mostly on Magazemi Luisa. We were the only retail company shown and we expect better productivity at the integrated chains, the Baou and the Maestors in the Northeast.
And we should be keeping our gross margin at an adequate level and we will continue to conquer new gains and diluting operating expenses due to the growth in our sales and the austerity program regarding expenses in the company. Luizacre, as Berto said, does not expect any problem regarding delinquency or cost increase in the long run. And we continue to work on our operating efficiency by reducing costs as much as we can as well as the Magazeni. And we expect to achieve a result much higher than 2013 that already was very good without non recurring effect. And we had the did last year.
And we trust we should be delivering margin and consistent results as we have been saying and repeating consistent and gradual and positive results. Having said that, I would like to place all of us available to you to answer questions that you might have Federico, Fabrizio, Beth, Isabel, Marcelo Ferreira from Liza Kredge. We are all here in this room and we will be available to answer your questions and clarify your doubts about the results of the first quarter of twenty fourteen. Now we will start the question and answer session for investors and analysts. Questions asked over the Internet will be answered afterwards by e mail and we will be available to solve any doubts that may remain.
Mr. Fabio Monteiro from BTG Pactual would like to ask a question. Good morning, everyone. About the growth in sales, Could you give us some idea about the growth pace in smartphones and tablets? And how much they represent in our overall sales and help us think for the next few months.
You talked about two digit growth for 2014 in conventional stores, but I would like to understand how you see in Q2 and Q3. On one hand the benefit from smartphone and tablet sales and also the benefits coming from the increase in productivity and the ramp up of Baumayo stores in the Northeast. There is this plus on the one hand. And on the other hand, During the World Cup, there will be many holidays, so stores and malls will be closed probably. So how do you suggest we think about sales for the second and the third quarter of twenty fourteen?
For the second quarter, well, we already have April and of course, the figures have not been published yet. Main is starting well. And we expect to continue this in this IT area, smartphones, tablets, cellular phones and even TV sets. We have been achieving very significant sales levels. And regardless of the World Cup, you're talking about the second and the third quarter.
After the World Cup, we will go back to normal. There is a specific seasonality now in place because of the World Cup mainly TV sets and all the IT equipment, other IT items. So the second quarter should have a very strong growth in these items. We should be achieving a very significant growth. And in the third quarter, we believe we will go back to normal levels.
And I would like to remind you that the first half year will be compared to the first half year of 2013, of course, maintaining the same performance as the second half of last year. So the comparability of the second quarter of twenty fourteen will be much better than 2013. And the second one well, the second will be more difficult to compare. You must remember that last year, the third quarter was very strong and the fourth quarter as well. However, we expect to reach the end of the year with two digit growth in our conventional stores and very robust growth in e commerce as well, continuing to grow as we have been growing quarter on quarter in our e commerce.
We understand that this media that is called MediaNet that covers the whole country for Heidi Global also favors our e commerce because municipalities in which magazine doesn't have conventional stores. We are there by means of the World Cup advertising and coverage. So we placed our bets there and we have been very successful in this regard. This is the reality for the World Cup. And also regarding I have another question, Marcelo.
For five quarters, you have had a ghetto evolution in your margins. And of course, some of your stores are not mature yet. And growth in sales is very good. In three, four years, for instance, what do you believe could be the EBITDA margin level? Of course, we have to reach the point that we show in our IPO, you have the figure.
I believe you have the figure in mind. And at some point in time in the three years that you mentioned, we you remember that in 2010, we already had 7% EBITDA, 10% EBITDA. And with the maturation of our stores, we will get to this level that we placed for the future. When you say three years' time, this is a level or this is the horizon that we believe is achievable for our activity. We do not have Maya and Bauu yet.
And we didn't have Maya and Bau at the time in 2010 and we got to 7% EBITDA. And as we still have about 40% of these stores in this maturation curve year on year or quarter on quarter, we have the maturation of these stores and it takes about four years on average to have full maturity. And the improvement in productivity and efficiency is checked every single quarter. And we are achieving improvement in the profitability of our Northeast stores and the Bauu stores are totally integrated with very positive performance already. And this is why I always mention integration because this is a period in which we set up the compensation ways of our people of and of course, all this is on a maturation curve.
We are very happy with the results obtained so far. So the company places its bets on the growth of the market itself. And even with adverse circumstances, we can go up. And the best defense as far as we are concerned is the best attack so to say. So we grow same store sales and we trust that at some point in time what we achieved in 2010 and that we mentioned as being reasonable for our activity will be achieved and we are very close to that.
Thank you very much. Thank you, Marcelo. Thank you, Fazu. Elena Nassiz from Brazil, Pluto. Good morning, everyone.
Thank you for the question. What is the company's strategy in terms of commercial aggressiveness, so to say, as far as I understand based on your comments and your results and given to the maturation level of the integration of the Maya stores, this should have a positive impact on your gross margin. And it seems to be lower than expected. I would like to understand if you are using the gains from Maya to be more aggressive in terms of gaining additional market share. And from now on, how will you be reacting to your competition in order to continue growing at the pace you expect to grow up to the end of the year?
Federico Tragiano, our Operations Director will be entering the COO our COO. Gerami, good morning. As we said before, last year at the end of last year vis a vis 2014, the World Cup and the growth in some specific categories ultimately generates a different margin mix. It doesn't mean that you're being more aggressive or getting more discounts. So theoretically, our margin should drop, but it didn't drop because we are integrating positive factors in our management in Ba'ul and also mainly in The Norte.
So we are not being more aggressive in terms of pricing this year. And if you look at our gross margin over the last ten quarters, you can see a very stable gross margin. Like Azini Luisa works with a remuneration model, a compensation model to our sellers, which is linked to our gross margin. We are not aggressive price wise. This is not our culture.
This is not our characteristic. Historically, we have stable gross margins and the market is always asking when are you going to drop your But historically, we have been keeping our gross margin even with double digit growth and even with the effect of the World Cup and the sale of TV sets, which is very significant in our mix and that would tend to press your margin down. We are being able to keep our margins with some specific channels and e commerce works with a lower gross margin than conventional stores. Proportionally, the expenses are lower.
And even with a 44% growth in e commerce, we would have been able to keep our gross margin. And we are working with the same pricing policy and intelligent pricing and a healthy one, a mature one. And we are not doing anything extraordinary to gain market share, but very good media actions and very good work in our stores and growth in the Northeast and also take advantage of these inventories in these categories. And this doesn't mean at all that we are being more aggressive in prices and we have not given this guidance to the market in terms of increasing our gross margin. I would like to add to this answer by saying that we improve our margin per category and our salespeople they are paid based on sales and margin based on categories.
So it's not margin per category. And conceptually, if you want to know our position regarding aggressiveness, I can say you that Magazin Iluiza I can tell you that Magazin Iluiza is competitive. And we do not aim at changing our prices. We are competitive. Our focus is not to have a low price every single day.
We want to be competitive. And we want to attract our clients and we have very good on store service and the relationship with our clients very good and also with our employees. Thank you. Another point, I understand about the margin and the negative impact of the mix and how the Northeast helped to neutralize this, but that you have not changed your commercial policy. I have understood all that.
But just a follow-up on this question. About the campaign, the draw and the World Cup and whole building draw, do you think this explains the market share gains that you are achieving? Or is there any other factor coming into play in terms of commercial aggressiveness? Do you think you are similar to your competitors? Going back about growth in sales, we had a very strong bet on media and inventory for the first quarter.
We had a lot of inventory available and lot of media visibility because of this bet that we placed on the World Cup. And this generated a very high growth in our sales vis a vis last year in a market that tended to buy technology products. Not only we had very positive factors, but e commerce grew a lot and this is inexorable trend for the long run. And this has been happening in the last few quarters. The Northeast grew a lot.
This is something that we had already been watching and growing much more than conventional stores. And the BAU stores grew a lot due to the improvement in the supply of the stores and the improvement in training of the team. And besides the technology sector, the white line due to the seasonality of the very warm season that we had in the first quarter, white line performed very well with air conditioning and fans and portables and helping a lot. So many different factors came into play and all this together and not necessarily a competition in terms of low prices to gain market share, reinforcing what I said before. Thank you.
Mr. Luis Garbago from Zanes Capital would like to ask a question. Could you talk about the e commerce channel? How do you see the e commerce margin? Given all this growth, how do you see the final contribution?
Not exactly the gross margin, but in terms of the cost of the channel itself and if you are happy with the growth rate that you are being achieving? Thank you very much. Good morning. This is Federico again answering your question. As we have always said to the market, our e commerce is one of the only or maybe the only profitable operation in the market and the whole market unfortunately.
We cannot disclose any specifics regarding the margin and the margin contribution. And we have a very unique model, which is a multichannel model in which e commerce is fully integrated to and fully integrated to the supply chain of the conventional stores, we have the same distribution centers. And all distribution centers are operating, but one that will be concluded still before the end of this month to supply both e commerce and conventional stores. And this integrated model gives us a very competitive advantage in terms of SG and A because this is shared with the conventional stores. So we do not have a duplication of costs such as in the case of most of the other operations in the market or that are under another taxpayer number for instance, taxpayer ID.
So the final margins of our e commerce contribute positively to the overall margin of the company. So the more growth in the bottom line, it does help the company to expand. And also it's capital light. We can grow e commerce with a very small CapEx, which is rather positive if you think about the company's ROIC. So we will continue to grow a lot without the need to invest a lot in UDCs or anything like that, because they are sharing this infrastructure.
One further clarification, within e commerce, the B2C, could you update us about how many orders you're processing per day or some physical data that you could give us about the growth of this B2C channel? What goes directly to consumers and not doesn't go through the stores. Luis, I don't know whether I have understood your question. The figure that we report is sales and it is totally B2C. They go exactly from the website or from our electronic operation to the final consumer.
So this is where we reported 40% growth in sales. And this is the only figure that we have to report to you. And that shows how much this operation has been growing. The number of orders processed, what is the growth? The 40% growth, you mean about prices or volume?
Well, do not we do not talk about the average ticket for the operation. We are growing both in volume and in average ticket, okay? This is Andrea Teixeira from JPMorgan would like to ask a question. Good morning and congratulations for the results obtained. I would like to know something about growth, which is rather strong as we see, but I would like to know the results from your advertising campaign and the effect of this campaign on your SG and A, how are you allocating this expense, this higher expense because this quarter was very interesting.
You had an improvement in SG and A, a dilution of SG and A. And I would like to know if you expect something similar for the next few quarters because of the World Cup campaign? And also now turning to e commerce, What should we consider in terms of growth for the second half? And what's your is your expectation? I apologize because I was in the queue to participate and maybe you have already talked about that.
So I apologize for the question. If it has just it has already been answered. But have you changed your expectation? Or do you continue with your double digit growth guidance? In the case of e commerce, it's about 30% growth.
In the first quarter, it was even higher than that. Regarding SG and A, dilution of two percentage points already includes the increase in our marketing expenses. So the first quarter absorbed the previous quarter in this regard and it will happen in the next two quarters. So the marketing expenses are the only ones that grew more than the others, because the others are within a normal range of variation vis a vis the previous year and also vis a vis the growth in our sales. So we have already absorbed on a quarterly basis the marketing expenses such as they are.
So we had in December the World Cup expenses appropriated in Q1. So in Q2, we will be appropriating these expenses of Q1 and Q2. What I mean is that it is appropriated on this base. Thank you. But the weight will be higher in the second quarter?
No, because we are expecting a robust growth for the second quarter as well. June, it would be speculation. If we said, well, this is going to have this or that effect, Let's see what about holiday, for instance. We are discussing this with the IGV because we have to check what kind of impact that could possibly have if we have all these holidays because of the World Cup. But we will take advantage of June because of the World Cup.
And we will sell a lot. Good morning. Regarding June, the mayor is requesting a holiday only for June 12, and that would be very positive. Because if we speculate, then we could have up to six holidays and this will not happen if the bill of law that was submitted by the mayor is approved. So June is still a big question mark, but the news that we are receiving are positive.
And what about Mother's Day? Because Mother's Day is non typical because there is a lot of campaign. I know that this is a very relevant event for retail. Well, the mix of this month is not typical because the participation of the image line is much bigger and this happens every four years because of the World Cup. So the demand for TV sets started already in April, but the demand for smartphones is very strong as well.
So there is a change. The TV category has a much higher participation than in the normal month because of the World Cup. So we have a strong Mother's Day and plus the image sector because of the World Cup and both have a positive impact. I believe many children would like to give their mothers a TV set to watch the games. Yes, I'm a little bit concerned with the variation on the weekends that precede Mother's Day.
Maybe the mix was a little bit impacted negatively because of that and you have to take advantage of that and it might cannibalize ultimately. Well, the mix changes because of the higher participation of TV sets, but the other portables and wide line continue to sell very well. So you're still selling more or the sales are growing for these categories, yes. And regarding credit, just to finish the effects on credit. Of course, you achieved an outstanding result with the improvement in your delinquency levels.
And what has been happening with delinquency more recently? Marcelo Ferreira from Luisa Credit will be answering. The short term indicators show a high degree of stability in delinquency and the approval rate is not changing. We have been improving our credit assignment model. We are leveraging other bureaus and the approval rate is maintained and we expect it to go down that is to say the losses to go down.
So the new crop, so to say, are showing that things are very much under control regarding delinquency. Thank you. Marcelo or Federico regarding well, is focusing on growth besides the results, of course. But how much do you believe the market overall grew this first quarter? Because you had a very good performance, you gained a lot of market share.
And within same store sales, you mentioned a few factors that explain the strong growth, some stores maturing and the integration of the Bau stores. How much do you believe these 22% can be broken down among the different drivers, maturation of new stores represented so much or how much same store sales is growing in mature stores? So be it. We do not break down this kind of information. And as we said, it's a whole set of factors that we mentioned and that led to this growth and the comparison base with the first quarter of last year.
So it's a whole array of different factors. And your other question, you asked two questions. I remember just one. I asked about the market as a whole. How much was the growth of the market?
Do you think the well, the data that we have are published by the IDB and the IBGE. IBGE published up to February, so it's a 13% growth. In February, we do not have March yet, because they only published forty five days afterwards, so May 15. And the IDV has been showing that supermarkets have been growing less and winter has not arrived yet. So the winter collections are not selling yet.
So the IDV figures are closed. But what we know is that we have grown more than the average of our own market. But each company has its own strategy, its own model and we cannot really draw a comparison there. GSK, we do have GSK. We just observe GFK.
And when the last there are some data that are not included in the GFK, so the degree of comparison is hindered by that. I have two questions to confirm my understanding of what you said. Regarding the proposal or the bill of law submitted by the mayor to have one single holiday on June 12, What if it is not approved? What are the legal implications? Well, the bill of law goes to the City Council of Sao Paulo City.
You have the Greater Sao Paulo and you have the Sao Paulo City. And the President said that she's not going to declare a holiday for the whole country because this is specific for each city. So one thing is a city that is hosting a game. So in that specific city, of course, nobody is going to work on that day where the game is going to happen. And so the IGV has the biggest stores included and we are all working together in order to avoid this.
You have most of the people are just going to watch TV, okay, for the Brazilian team. Okay, great. So you want to watch the Brazilian team, but it doesn't make any sense to have a holiday for people to stay home and watch TV and watch other teams play. And the bill of law that was submitted by the mayor of Sao Paulo City is a very good initiative. Thank you very much for this information.
Of course, there will be a very strong reaction because the cities and the states, everybody has to collect taxes. So the less holidays we have, the more taxes. So talking about the IDV, Marcelo next year, the benefit of the INSS has a validity date. So it is 2015. This law will have to be reviewed.
Well, you know that as sales increase, the law loses value for certain companies because the percentage gets higher. Walmart, Carrefour, Ponjacuca, of course, they are not in this plan. So there come a time when this will no longer be interesting. We do not know. It will depend on whether the same administration is reelected or whether a new administration will come to power, but we will fight for it.
Mrs. Imasgard from Goldman Sachs would like to ask a question. This is Bernardo Cavalcanti, not Imasgard, a follow-up on marketing expenses. I would like to better understand this. You are recognizing expenses as you disperse.
Is this what you mean? And we do have a higher disbursement in the second quarter. Let's say, you will spend 100 coins for instance with the World Cup. Are they being appropriated linearly? Or could you please explain how you're going to account for these expenses?
Morning, Bernardo. This is Roberto. They are appropriated as they happen on an accrual basis. And this coincides with the payments being made or they are very close for the year as a whole. This is the only expense that shouldn't be diluted.
It should remain stable as a percentage of our net revenue vis a vis the previous year. All the others, we are working on them and we are diluting them and we should continue to dilute them over the year. And marketing expenses due to this investment that we are making for the World Cup, this is happening. This is helping us grow more than we would have grown otherwise. But marketing itself for the year should be similar to 2013.
And these expenses, marketing expenses were slightly higher in the first quarter and will be higher in the second quarter because of the World Cup sponsorship and the building campaign, the draw. Two other questions. As there was a more significant maturation of the previous acquisitions that were being integrated for quite some time, are you considering new acquisitions? And what about Luisa Cregi? We see a worsening year on year of 13% to 15% or almost 15% in the NPL 90 and provisions went down.
So you went from 147% to 126% coverage ratio and this compared to 150 or 200 for banks that have a less risky portfolio because they land with collaterals and real estate, etcetera. And your credit has less collateral for individuals. So how do you see the coverage level that will be stabilized? And are you comfortable with this level? How you compare this to a bank's coverage?
So these are my last questions. The first question, I will answer and the second Marcelo Ferreira will answer. The first one is the following. We always say that, well, we will never do this. So we don't say we never say never.
Let's say there is a great opportunity ahead of us, then we might study it, but our plans for 2013 and 2014 did not foresee any acquisitions whatsoever. So now in 2014, we have no intention of making any major acquisitions. We intend to open 30 to 40 new stores and Fontofrio is the divestment that was mandated by Cagi and it has to be published, of course, and communicated to the market plus organic growth mainly in the Northeast. And we are talking about between thirty and forty new stores for 2014. But as far as acquisitions are concerned, no, they are not on our radar screen.
But let's say in the six months of 2014 or 2015, let's say, we see an opportunity. Of course, we will study it. But I repeat, we are not talking with anybody. We are not being approved by anybody. We are not planning anything in this regard.
Ladies and gentlemen, please standby. Lagardino Alisa's conference call will return in a few minutes. Please standby. You may proceed. This is Roberto again.
Okay. Now let me answer your question properly. The ninety day portfolio, you have to look at the more recent evolution of the ninety day and it has been dropping vis a vis the last two quarters. If you compare with the results one year ago, what happened was the following. You have to go back in time a little bit.
In 2012, we started to sell more CDC, direct consumer credit. So we reduced our approval rate for the card and we changed our strategy with preference to CDC and more balance between the CDC and the card. And in the CDC, the loss is a little bit higher, but it is offset by a much higher interest rate. And with that, we started to grow our CDC operations in 2012 by direct consumer credit. However, we knew that the NPL would be going up a little bit in 2013 because of the growth in the CTC in 2012.
So we made a lot of provisions in 2012. This is why the results of 2012 was not that good for Luisa Cregi. Then it started to improve by the end of twenty twelve. In the last quarter of twenty twelve, Luisa Cregi already obtained a very good result, but the NPL was still low. In 2013, we had a very high balance of provisions and a low NPL.
This is why we had 147%, 150% coverage ratio. And as we had said in 2012, and all this is calculated by Itau very conservatively. So over 2013, the NPL went up slightly and the coverage ratio started to drop gradually, because we already had these provisions built in 2012. As we maintained a very conservative position and we continue to improve our models and reducing some approval rates. Our expectation was for the NPL to go back to lower levels.
So it went up over 2013 and now it is dropping back to previous levels. This is why your comparison of the coverage ratio today with one year ago doesn't make sense. You should compare this with June, September, because this is where you can see the step of improvement and also because of the CDC being stabilized now. So we are no longer growing CDC as much as it grew in 2012 and early twenty thirteen. So this is why we are comfortable with the NPL trend and the coverage ratio as well.
But we do not compare Luisa Credo's coverage ratio with banks. The coverage ratio is not a target for Luisa Credit, simply the result from a calculation, which is the balance of provisions that Luisa has vis a vis the NPL and the balance of provisions is a consequence of the expectation for losses that is made by Itau based on the analysis that it carries out of the portfolio and the clients and all the models. And we are comfortable because Liza Kress has been building more provisions than the minimum required by the Central Bank for instance last year. I said that the result of Liza Kress in IFRS was BRL89 million in BR GAAP, which is a minimum required by the Central Bank by law 2682 was 160,000,000 yen So it was higher. And this quarter, once again, in BR GAAP, the result was higher than the one that we are publishing of 40,000,000 yen It was in fact 58,000,000 yen So the provisions are very conservative.
And the trend is consistent in our opinion. Very clear. Thank you very much. This will be the last announcement. Ms.
Elena Tsabego from Ani would like to ask a question. Good morning. Congratulations for the results. In billions of reals, how much were your provisions for profit sharing programs this quarter? We do not disclose this figure.
We are provisioning on a monthly basis based on our results. And I can tell you that the amount nominally will be very similar to the one used last year for our profit sharing program. This is just a normal expense during 2014. So in this cost dilution, we already include the normal profit sharing program of the company, which is extended to many of our employees. Last year, it was extended to 9,000 people.
And this year, depending on the performance of each store and each area of the company, we are already provisioning for that. And we can assure you that it will be very similar to last year's in nominal terms. Thank you. As there are no more questions, I would like to turn the floor over to Mr. Marcelo Silva for his closing remarks.
Thank you very much for participating in our call. And we would like to reiterate our commitment and our trust that we are complying with what we've said in previous years, the integration of the stores and the commitment to delivery results gradually positive and consistent results over time. So we have already delivered that in 2013 and in the first quarter of twenty fourteen and we trust this will continue to happen in 2014 leading us to better results for 2014 overall than in the previous year. Thank you very much and see you next time. Thank you very much.
The first quarter of twenty fourteen earnings conference call of PagSiniris is closed. You may disconnect now and have a good day.