Banco de Chile (BCH) has reported a strong financial performance in its third-quarter earnings call for the year 2024, with significant growth in net income and a solid return on average equity. The bank has also demonstrated strategic progress in digital banking and efficiency while maintaining a cautious approach to credit risk amidst economic uncertainties.
Key Takeaways
- Banco de Chile's net income for Q3 2024 reached CLP288 billion, an 11% increase year-on-year.
- The return on average equity stood at 21.3% for the quarter, with a year-to-date figure of 22.8%.
- The bank has seen strong growth in high-margin lending products, especially consumer loans.
- Digital banking initiatives have led to a 36% increase in the digital client base year-on-year.
- The bank's strategic focus on customer satisfaction, efficiency, and sustainability remains strong.
- Economic indicators show a recovery in the Chilean economy, with GDP growth at 2.2% and a trade balance surplus.
- Inflation remains elevated, prompting the Central Bank of Chile to cut interest rates.
Company Outlook
- Banco de Chile anticipates loan growth of around 5% for 2025, considering political and global economic factors.
- The bank maintains a strong position in the Chilean banking sector, focusing on innovation and customer service.
- A more dynamic loan activity is expected in 2025, despite lower contributions from inflation and interest rates.
Bearish Highlights
- Inflation continues to pose challenges, impacting purchasing power and potentially affecting payment behavior and asset quality.
- The bank is cautious about the medium-term outlook for asset quality improvements due to economic uncertainties.
Bullish Highlights
- The bank has regained leadership in local currency demand deposits, indicating a stable funding source.
- Banco de Chile's non-performing loan (NPL) coverage ratio stands at 262%, well above industry peers.
- The bank's strategic initiatives in digital banking and operational efficiency are yielding positive results.
Misses
- There are no specific triggers established for the potential release of provisions, despite current provisions possibly being higher than necessary.
Q&A Highlights
- Management discussed the high NPL coverage ratio, reflecting prudent policies in response to economic uncertainties.
- The bank's executives remain vigilant about inflation's effects and are prepared to adjust risk coverage provisions as necessary.
- A future discussion is planned to follow up on year-end results and provide further insights into the bank's performance and strategies.
In summary, Banco de Chile's third-quarter earnings call painted a picture of a resilient institution navigating a complex economic landscape with a strategic focus on customer satisfaction and digital innovation. Despite the challenges posed by inflation and economic uncertainties, the bank's strong financial results and commitment to sustainable growth position it as a leader in the Chilean banking sector. Stakeholders are invited to participate in future discussions to gain more insights into the bank's year-end performance.
InvestingPro Insights
Banco de Chile's strong financial performance in Q3 2024 is further supported by real-time data from InvestingPro. The bank's market capitalization stands at $11.76 billion USD, reflecting its significant presence in the Chilean banking sector.
InvestingPro data reveals that Banco de Chile is trading at a P/E ratio of 7.94, which is relatively low compared to its earnings growth. This aligns with one of the InvestingPro Tips, which notes that BCH is "Trading at a low P/E ratio relative to near-term earnings growth." This valuation metric suggests that the stock may be undervalued, potentially offering an attractive entry point for investors.
Another key metric from InvestingPro is the bank's impressive dividend yield of 5.3%. This substantial yield is consistent with the InvestingPro Tip stating that BCH "Pays a significant dividend to shareholders." Furthermore, the bank has maintained dividend payments for 27 consecutive years, demonstrating a strong commitment to returning value to shareholders even in challenging economic environments.
The bank's revenue growth of 10.24% over the last twelve months as of Q3 2024 supports the positive outlook presented in the earnings call. This growth, coupled with an operating income margin of 60.41%, underscores Banco de Chile's ability to generate profits efficiently, which is crucial in the current inflationary environment.
It's worth noting that InvestingPro offers additional tips and insights beyond what's mentioned here. Investors interested in a more comprehensive analysis can explore 11 more tips available on the InvestingPro platform, providing a deeper understanding of Banco de Chile's financial health and market position.
Full transcript - Banco Del Chile (NYSE:BCH) Q3 2024:
Operator: Good afternoon and welcome to Banco de Chile's Third Quarter 2024 Results Conference Call. If you need a copy of the management financial review, it is available on the company's website. With us today we have Mr. Rodrigo Aravena, Chief Economist and Institutional Relations Officer; Mr. Pablo Mejia, Head of Investor Relations; and Daniel Galarce, Head of Financial Control and Capital. Before we begin, I would like to remind you that this call is being recorded and the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements. I will now pass the call over to Mr. Rodrigo Aravena. Please go ahead, sir.
Rodrigo Aravena: Good afternoon everyone. Thanks for joining this conference call today. We are pleased to present the performance of Banco de Chile during the third quarter of this year. Once again, our bank demonstrated its unquestionable leadership and consistency over the time. Some of the main achievements of this period includes: we continue leading the industry in profitability after posting a net income of CLP288 billion equivalent to 21.3% return on average equity in the quarter and 22.8% year-to-date. We also outperform our peers in terms of NIM, fees and operating margins. In addition, our customer income continues to grow on an annual basis, primarily stirred by income from loans on the ground of improved lending spread. Despite the low industry business growth environment, we grew faster than the market in loans, gaining market share in all the segments in line with our main long-term strategic goals. We also had positive advances on efficiency, posting a cost-to-income ratio of 36.5% year-to-date, outperforming our main peers and our long-term target. On the non-financial side, we were distinguished by external entities due to our excellent service quality and corporate reputation and also, we also continue carrying out several initiatives aligned with our strategic pillars, which will be presented later in this presentation. As usual, we will begin this webcast with a brief analysis of the macro environment. Please go to Slide number 3. The Chilean economy continues posting signs of recovery as you can see in the chart on the left of this slide. In the second quarter, the GDP increased by 1.6% year-on-year following the 2.5% year-on-year expansion seen in the previous quarter. It's important to mention that in 2023 the economy grew only 0.2% as a consequence of the normalization after the several imbalance set that we had during the pandemic. The local recovery has mostly been attributable to the greater contribution in net exports as the chart on the top right displays. As of June 2024, the trade balance posted in the last 12 months a surplus of $17 billion, a figure 43% higher when compared to the balance seen a year ago. This trend continued in the third quarter as the last 12 months trade balance surplus improved even more to $20 billion increasing 51% year-on-year. In a breakdown of domestic demand, consumption continues showing a slight recovery. In the second quarter it expanded by 0.8% year-on-year after posting 1.5% growth in the previous three months. This trend has been consistent with the behavior seen in the labor market, well, the unemployment rate has been hovering around 8.7% with higher real wages. As you can see in the chart on the bottom right. Nevertheless, gross investment remains subdued as it has contracted by 6.1% and 4.1% year-on-year in the first quarter and second quarter 2024 respectively. Available information from the third quarter suggests that the recovery is underway. The GDP expanded by 2.2% year-on-year and 2.1% year-to-date. However, the breakdown from the domestic demand still reflects mixed trends. While several consumption related figures, such as retail sales and services, continue improving, the main investment indicators, for example, capital goods, imports and real estate indicators, continue suggesting a weak investment, at least in the short term. I like to move to our analysis of prices and rates. Please go to Slide Number 4. The headline inflation rate continues hovering around the upper bound of the Central Bank target. As seen on the left chart, the annual inflation rate in September was 4.1% in line with the 4.2% year-on-year posted in June. The persistence of the CPI has mostly been attributable to energy which increased by 9.6% year-on-year in September due to the adjustment in electricity bills, which according to the Central Bank estimates could rise the CPI by 150 basis points between mid-2024 and mid-2025. Services have also contributed to higher inflation as they rose by 4.9% year-on-year in September. On a sequential basis, the CPI increased by 1.1% in the third quarter after rising by 0.7% in the previous quarter. The downward trend in inflation has allowed the Central Bank to continue reducing the interest rate. In its latest monetary policy meeting held in October, the board decided to cut the interest rate by 25 basis points to 5.25%, accumulating a total reduction of 600 basis points since the beginning of the current easing cycle in July of 2023 as seen in the chart on the upper right. Chile has been one of the countries with the most aggressive reduction in the interest rate during the last year. In fact, the spread with the upper bound of the FED funds in the United States has narrowed from 575 basis points one year ago to only 25 basis points today. This situation has driven a weakening in the Chilean peso in multilateral terms, as can be seen in the chart on the bottom right. Now, I’d like to present our baseline scenario for this year. Please go to the next slide, Number 5. We expect the economy to continue posting signs of recovery. In this environment we foresee an increase in GDP growth from 0.2% in 2023 to 2.3% this year. This expansion would be driven by an increase of around 6% in export that should positively be influenced by external factors such as copper prices and the improved dynamism of our trade partners. Consumption is also expected to perform better relative to 2023, as a consequence of lower interest rate and the partial recovery in the employment. On the opposite, we expect investment to continue in negative territory this year as uncertainties surrounding the track of reforms in diverse economic fields has continued to drive and delay investment decisions, which has coupled with lengthy approval processes in the case of large scale projects. Inflation expectations have increased this year mainly due to the unexpected rise in energy bills as I mentioned earlier in this presentation. Due to this, we expect the CPI to post a 4.5% increase this year in an environment where the central bank will likely maintain a contractionary monetary policy since the interest rate would end the year at 5%. In the table of this slide, you can see the summary of our estimates, while the chart on the right clearly shows the upward trend in consensus forecast for both interest rate and inflation. It is worth mentioning that these forecasts are subject to several risks. As we mentioned in previous calls, the evolution of the global environment is extremely important for Chile, given its deep integration into the rest of the world. Factors such as the GDP growth of China and the U.S. and the potential escalation of armed conflicts in the Middle East and Eastern Europe and uncertainty related to the change of government in the United States are worth to paying attention to. On the local side, it's important to analyze the evolution of inflation, especially considering potential second round effects after the rise in electricity bills as well as the leading indicators of gross investment since it is the main concern on local growth. Finally, monitoring the discussion in the political agenda is also relevant, considering there are discussions related to pensions and taxes in an environment marked by several elections. Before moving to the bank, I'd like to refer to some trends in the banking sector briefly, please go to Slide number 6. The banking industry profitability remains strong even though we are in a slow economic environment. As you can see in the chart on the top left, return on average equity reached 15.8% this quarter above the 12.7% posted the same period last year. This rise was due to greater operating income, lower cost of risk related to the release of additional provision, as well as greater recovery of loan write-offs. This was partially offset by a rise in operating expenses related to personnel and administrative expenses. In terms of volumes, as you can see in the chart on the right, the weak economic environment has maintained long growth at low levels for the industry, expanding only 2% year-on-year. Of this mortgage have been the main driver of growth, up 6.7% year-on-year and consumer loans have increased 3% in the same period. However, commercial loans are taking a hit, dropping 1.2% year-on-year. This has resulted in a change of mix in the portfolio as you can see on the chart on the bottom left, where today mortgage represents 36% of total loans, up from 34% one year ago. Commercial loans have dropped from representing 54% to 52% of the total in the same period, while the consumer portfolio has remained relatively stable. Consequently, due to both the weak economy and the normalization, due to the more normal levels of liquidity from customers, NPLs have consistently increased to 2.5% and [indiscernible] has decreased to 1.5 times. Despite these weaker business results, we should begin to see greater activity in line with the expected improvement in GDP and the reduction of interest rate. Now, I’d like to pass the call to Pablo who will go into more detail about Banco de Chile advances and the financial performance.
Pablo Mejia: Thank you, Rodrigo. Let’s begin by reviewing our strategic progress. Please go to Slide number 8. We are steadily achieving strong results in executing our strategy, which emphasizes customer satisfaction, efficiency and long-term sustainability. This strategy is driven by six main priorities, illustrated at the center of this slide. On the right are our mid-term targets. Our primary goal is to lead as the most profitable bank among our peers. In summary, this translates into a long-term return on average equity of around 18%, assuming a positively sloped yield curve and the Central Bank inflation rate that targets are met. Regarding cost to income, our performance continues to exceed our long-term targets. While this is partly due to a robust top line growth that has stemmed up from both increased revenue and extraordinary FX that have temporarily remained after the pandemic. We are confident that our productivity levels will continue to improve through current and upcoming efficiency initiatives, which we’ll discuss later in the presentation. For market share, our goal is to lead in commercial and consumer loans as well as demand deposits in local currency. In this regard, over the year, we have gained market share in high margin lending products such as consumer loans by maintaining an adequate risk return relationship on the grounds of responsible credit risk management practices. In addition, we have retaken the leadership in local currency demand deposits, which has been a traditional competitive advantage for us that provide us not only with a competitive funding but also with a very stable funding source. Lastly, we remain committed to delivering exceptional customer experience and positively impacting society. This commitment is reflected in their high Net Promoter Scores and a corporate reputation that ranks among top three in Chile. These accomplishments are achieved by evaluations from reputable independent firms. In the next slide, we will go over some advances in digital banking, efficiency, and ESG. In order to keep our leading position, we continue implementing new innovations in digital banking. This quarter, we added new functionalities in our main banking app, including notifications about benefits, transaction blocking and profile updates, providing users a greater control and real time information about their accounts and transactions. We also introduced a mortgage loan credit simulator on their website to simplify the home loan process and launched a digital account with a credit card option tailored for university students. Finally, we implemented tools to enhance the digital experience for companies, ensuring that they can seamlessly manage their finances through our apps and web pages. Our constant efforts in digital banking have contributed to a substantial increase in our digital client base that grew 36% year-on-year, reflecting the positive impact of our strategy. Regarding efficiency and productivity, we continue the efforts to optimize our branch footprint, closing five locations this quarter, reducing 10% of the total network in the last 12 months. Also, the higher adoption of digital processes allowed us to reach important efficiencies in investment and commercial support functions. It's important to note that the gradual approach is the key element to ensuring that efficiency actions do not impact customer satisfaction. We have also made significant progress in transforming our retail service models, increasing technology adoption at branches. Additionally, during the quarter, support areas have streamlined layers and dependencies, enabling synergies and agility, including optimizations at subsidiaries. By executing these initiatives and leveraging IT CapEx, we are confident that we are well positioned to maintain our leadership in the financial sector. In terms of ESG matters, we have been active in volunteer programs including beach and river cleanups removing over 6 tons of waste to help preserve the environment. Aligned with our commitment to the entrepreneurship, we continued supporting SMEs, maintaining our market leading position in the FOGAPE Chile Apoya program. We also launched the ninth edition of the Entrepreneurial Challenge to encourage businesses that create positive and innovative impact on society. Finally, thanks to a dedicated team, strong reputation and best practices in talent management, we were recognized by MERCO as the best bank in attracting and retaining talent for the 11th consecutive year. Please turn to Slide 11, so we can begin discussing the key highlights of our financial results for the quarter. I am pleased to report that we delivered another quarter of solid results, thus continuing our strong performance track record. Our net income reached an impressive CLP288 billion, up 11% when compared to the same period last year. This translates into a return on average equity of 21.3%, a clear indicator of our efficient use of capital. Moreover, when we benchmark our results against our peers, we continue to outperform across the board. As demonstrated in the charts to the right, we have not only maintained a wide margin year-to-date in net income, but we have also sustained a superior return on average equity, further reinforcing our competitive advantage in the market. These metrics illustrate our ongoing leadership in the sector and the consistent execution of our strategic initiatives. Please turn to Slide 12. In terms of operating revenues, we continue posting excellent results, growing 6% year-on-year fueled by an 8% rise in customer income. This was partially offset by a 3% reduction in non-customer income, which was mostly driven by the end of the FCIC program at the industry level that represented a low cost funding source. In turn, improved income from trading investment portfolio due to favorable shifts in interest rates allowed us to partly mitigate this impact. The annual rise in customer income is explained by an expansion in revenues from loans equal to CLP20 billion on an annual basis, a rise in the contribution of deposits by CLP11 billion as well as an increase in fees by CLP13 billion. In terms of income from loans, the consumer portfolio was the main driver of growth. Specifically, our focus on profitable growth has gradually allowed us to increase average lending spreads during the period by 13 basis points overall and 128 basis points in consumer loans, due to both the maturity of former FOGAPE operations and improved consumer originations. This was further boosted by a rise of 4.3% year-on-year in average consumer loan volumes and in terms of funding, we have also seen a higher contribution for deposits due to an expansion in margins from time deposits, thanks to a proactive and targeted pricing strategy, as well as a moderate increase in demand deposit volumes. Finally, the yearly rise of 10% in net fees was mainly driven by two business areas. First, revenues from mutual funds and investment funds management grew by 23% year-on-year. This was driven by a significant expansion in assets under management that rose 37% year-on-year. Second, fees from transactional services posted an annual rise of 15%. This was primarily due to a positive effect in the appreciation of the Chilean peso against the dollar on their credit card loyalty program and to a lesser extent, a rise in usage rates from both credit and debit cards thanks to campaigns and attractive benefits that incentivize customers to actively use our cards. This allowed us to reduce the impact of the effect of lower interchange fees that the industry experienced due to new regulations. Finally, fees from cash management services were also positively influenced for us due to revised fares associated with commissions for interbank transfers carried out at the industry level. The chart to the right show how we perform compared to our competitors. This quarter we continued outperforming all of our peers in the main profitability ratios. Net interest margin reached a notable 4.6% in the third quarter of 2024. Fee margins posted 1.3% and total operating margin also remained ahead of the pack with a level of 6.4% for the quarter. This performance is a result of our well executed business strategy and our commitment to offering enhanced value proposition to customers across lending and non-lending products and services. This has proven effective allowing us to adapt to changing market dynamics. Please turn to Slide 13. The breakdown of our loan portfolio is strategically balanced across economic sectors giving us stability in our revenue generating capacity. Our total retail loan portfolio represents 65% of the total loan book, while wholesale commercial loans reach 35% of the total loan portfolio. Also, as you can see on the chart on the bottom right, total commercial loans by economic sector are well diversified. The weak dynamism in the Chilean economy has affected loan growth for the industry as a whole. Lack of investment as well as low business and consumer confidence has impacted growth. As a result, we see a moderate improvement in total loan growth with an expansion of 3.9% year-on-year and 1.6% quarter-on-quarter. As you can see on the chart on the bottom left, we compare well against the figure posted by the industry of 1.7%. Most of this growth has come from the mortgage loan book and more recently from [Technical Difficulty]
Unidentified Analyst: Thank you so much.
Daniel Galarce: You're all welcome.
Operator: Thank you very much. Next (LON:NXT) question comes from Mr. Yuri Fernandes from JPMorgan. Please go ahead.
Yuri Fernandes: Hey guys, good morning. Good afternoon. Just some color on loan growth for 2025, I remember in the previous call you mentioned that politics could be affecting some wholesale demand. I know you still have elections next year for president, but at least the regional elections, I guess it's a little bit more clear now. So just asking if you won, you are seeing an uptick in volumes. And Chu [ph], if you can provide any color on the outlook for the next year for loan growth. Thank you.
Rodrigo Aravena: Hi Yuri, thank you very much for the question. This is Rodrigo Aravena. Yes, our focus for growth for the industry for the next year is around 5% in nominal terms. There are different aspects to consider in that that focus. First of all, we're expecting an organization from the current level of activity towards more sustainable electricity between launch and GDP. In the past we used to see a loan growth of around two times the growth of the GDP. Today we think that given the state of development of Chile, the banking penetration in the economy, et cetera. So they would think that it's more reasonable to expect elasticity or multiplier around 1.5 times in the very long term. For the next year, we're expecting a normalization with positive growth in different segments in real terms. And when we consider the inflation expectation for the next year, which is 3.5%, given that number, it's reasonable to expect a loan growth around 5%, something like that for the next year. Looking forward, we have different forces. As you mentioned, politics will be an important project to monitor. The elections held two weeks ago showed an important shift in the support of different political coalition in the country. When we compare to the elections held four years ago, there was a great support to parties from the center right and rights coalition which makes important change in terms of the political support to the country. Historically, the municipal elections has been a very important leading indicator to the Congress election. It's important to remember that next year, in Chile, there will be election for President of the country, for the Senate and the half of the lower House as well. So given the results of the municipal election, it's reasonable to expect some shift in terms of the composition of the Congress for the next year. Nevertheless, we have to remember as well that Chile is a very urban economy. In fact, Chile is the most integrated country into the rest of the world. So that's why the evolution of the global economy, especially considering the perspective for China, United States over priced and long-term interest rates, especially in the United States as well, are very important. Today, there is a consensus in terms of that the probability to have higher interest rate overseas in the next year that's where the probability is increasing, which would reduce the external – the contribution from our main partner for the country, which could use the engine of growth for the country. So where – we can pull out for the next year on the local environment, we can rule out a potential improvement in business confidence next year, in the future, but we have to be especially concern with the perspective for the global economy given the openness of the Chilean economy. All in all, we expect a normalization of results in 2025 with greater dynamism in activity in loans, but at the same time, a lower contribution from inflation and interest rates.
Yuri Fernandes: No. Super, clear Rodrigo. If I may, just a follow-up on this lower contribution from inflation. Can't you have like a book case for inflation also like higher global tariffs, like a stronger dollar? And then I don't know, maybe solution is more resilient than we think and we make more money on the [indiscernible]?
Rodrigo Aravena: Well, in terms of inflation today, we are aware of the asset risk for inflation, considering some sticky prices and persistence of inflation in Chile. We have several prices denominated in U.S. So that's why in the case of our country, the past inflation is important in terms of inflation expectations. We have to pay special attention to the evolution of exchange rate. We have to remember that the pass-through wave is here [ph] in Chile is between 10%, 15%, which means that 10% of weakening of Chilean peso would rise inflation of around 100 basis points. But having said that, it's not very likely that the inflation next year will be higher compared to the inflation that we have now. It's very likely that inflation by the end of this year will be a number – considering the number that was released this morning, it's likely that inflation rate this year will be 4.6% or 4.7%. But also considering the upside risk inflation for the next year, it's not likely that inflation 2025 will be higher compared to the inflation that we're going to have this year. We're aware of the upside risk, but even considering these potential factors we still continue expecting an inflation rate next year lower compared to the prices in 2024.
Yuri Fernandes: Super clear. Thank you very much, Rodrigo.
Rodrigo Aravena: You're welcome. Thank you.
Operator: Thank you very much. [Operator Instructions] Our next question comes from Mr. Andres Soto from Santander (BME:SAN). Please go ahead.
Andres Soto: Good morning, Rodrigo, Pablo. Thank you for the presentation. My question is regarding your coverage level. You have 262% NPL coverage. This is not only significantly above your peers, but also above your own historical levels. What do you see as a normalized coverage level given that some of the negative events that you were expecting to happen actually didn't materialize and you are sharing now a kind of more optimistic outlook for the economy?
Pablo Mejia: Hi Andres. Yes, so today we have a very good level of coverage, as you mentioned, higher than we've had in the past. In the past this level has hovered well below this figure, closer to 200, slightly below that. And the result, maybe to mention a little bit for everyone, the result of these additional provisions was the permanent implementation of our prudent policies in order to take into consideration what was happening over the last four or five years. So because of different events, different inconsistencies in terms of the historically low levels of non-performing loans that occurred during the pandemic, the uncertainties generated by the recession in Chile, as well as the institutional and political uncertainty in Chile began increasing the levels of coverage through the use of additional provisions, which is something at the board level have to implement or are they implemented. So taking all these into consideration, we can't rule out that the level that we have today based on these uncertainties is less than it was before, hence this could result in a release of a portion of these additional provisions in the future. But the triggers of these timings haven't been defined. So it's important to take into consideration we have to still look cautiously at what's occurring. In Chile we don't have the triggers yet defined on when or how these would be released, but it's something that it's taken into consideration at the board level when evaluating the levels of additional provisions or coverage that we have in the bank to cover the risks that we are assuming in Chile.
Andres Soto: Thank you, Pablo. And when you look at that possibility of releasing some of those provisions, would you imagine that being in a gradual process and therefore we should assume Banco de Chile to deliver very low levels of cost of risk over the next few years or will be that sort of one off process and at some point we can expect an extraordinary dividend to be paid out of that.
Rodrigo Aravena: As I mentioned, the triggers and the definition on how this would evolve and when and what would have to occur hasn't been discussed and implemented. So it's something that the board level is evaluating and taking into consideration for the future.
Andres Soto: Understood. And talking about asset quality and cost of risk, do you believe that for the system as a whole we are reaching an inflection point and we should see finally improvement? Or what are the trends that you are forecasting for asset quality for the system? I know that you guys have a very good level, but for the system as a whole, what will be the trigger for asset quality to improve?
Pablo Mejia: I think there's many challenges that Chile is facing and at certain points things are getting better. The levels of inflation today is obviously a negative factor because if we look at different times in the history when inflation has been higher around the 2007 period during the pandemic, it's a special case. But normally with higher inflation, this affects the purchasing power of individuals and this can affect the economy and the payment behavior. So it's something to take into consideration and see how this evolves in the future. So it's true that we've seen more of a plateauing and probably in the medium term, as the economy improves and we return back to normal, we should see an improvement. But there's uncertainties based on the level inflation today and how this will continue in the future affecting households.
Andres Soto: Got it. Thank you, Pablo.
Pablo Mejia: Thank you.
Operator: Thank you very much. It looks like we have no further questions at this point. I'll be passing the line back to the management team for the concluding remarks.
Pablo Mejia: Thanks everyone for joining the call and we look forward to speaking with you for our year end results.
Operator: Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.
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