Bolsa Mexicana de Valores SAB de CV

BMV:BOLSAA

Earnings Call Transcript 2023-Q2

[Operator]

Greetings, and welcome to the Bolsa Mexicana de Valores Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ramon Guemez, Chief Financial Officer. Thank you. You may begin.

[Ramón Sarre, executive]

Thank you. Good morning, and welcome to Bolsa Mexicana Valores Second Quarter 2023 Earnings Conference Call. Before proceeding, I would like to provide a brief safe harbor statement. This presentation contains forward-looking statements and information related to Bolsa that are based on the analysis and expectations of its management as well as assumptions made and information currently available at Bolsa. Such statements reflect current views of Bolsa related to future events and are subject to risks, uncertainties and assumptions. Many factors could cause the current results, performance or achievements of Bolsa to be somewhat different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political, governmental and business conditions, both in a global scale and in individual countries in which Bolsa does business, such as changes in monetary policies, in inflation rates, in prices, in business strategy and various other factors.

Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary considerably from those described herein as anticipated, believe, estimate, expected or targeted. Bolsa does not intend and does not assume any obligation to update these forward-looking statements. I would also like to remind participants that today's call is being recorded, and a replay of this call will be available online on July 20 at Bolsa's corporate website, www.bmv.com.mx. During this call, all figures are in Mexican pesos and compared to the second quarter of 2022, unless stated otherwise.

This call is intended for the financial community only, and the floor will be open at the end to address any questions you may have. Joining us for today's call are José-Oriol Bosch Par, CEO; Claudio Vivian, Chief Information Officer; Hugo Contreras, Chief Compliance and Regulation Officer, Jose Manuel Allende, Chief Capital Formation, Market and Information Services Officer; Roberto Gonzalez, Chief Post Trade Officer; Gabriel Rodriguez, ICAP CEO, Alfredo Guillen, Managing Director of Equity Markets, Jose Miguel de Dios, Managing Director of Derivative Markets; Luis René Ramón, Director of Investor Relations; and myself, Ramón Güémez. I would now like to turn the call over to our CEO, José-Oriol Bosch.

[José-Oriol Par, executive]

Thank you, Ramon, and good morning, everyone, and thank you for joining us today. Mexican Stock Exchange second quarter 2023 earnings conference call. I will go over a couple of points that are important to consider when comparing the second quarter of 2023 with the same quarter of 2022, then I will walk you to the different business division results, and finally, open up to questions on the conference call line. First, the FX, the Mexican peso appreciation against the dollar had a double impact in the quarter and half year. About 30% of Bolsa revenue and 25% of [ fee ] expenses are linked to the U.S. dollar. On one hand, the strength of the Mexican peso had a MXN 70 million negative impact in revenue for the first 6 months, mainly in information services and the central securities depository in the bulk. On the other hand, expenses were MXN 32 million lower than expected in the first semester, mainly in technology and sub-custody fees.

The net negative impact on the EBITDA was MXN 38 million. Second, in the first semester of 2022 the total nonrecurring revenue in Indeval and SIF ICAP amounted to MXN 134 million. With that, let's get started on Slide 3 to review the second quarter financial highlights.

If you can go to Slide 3, the revenue in the second quarter of 2023 was MXN 946 million, down 5% because of lower volatility trading, fewer cross-border transactions and as mentioned before, and unfavorable exchange rates. Expenses were MXN 483 million, up 8%, mainly due to higher personnel costs, technology upgrades and regulatory projects as well as BMV's building renovation. EBITDA reached MXN 521 million, down 14% and net income was registered at MXN 356 million, 12% below second quarter '22.

On the next slide, we will go over the half year results. The revenue in the first half of the year was close to MXN 2 billion, down 8%, mainly due to lower equity trading fewer cross-border transactions as well as the nonrecurring revenue reported in 2022 and the FX appreciation. Expenses were MXN 954 million up 6%, in line with inflation and explained by personnel and technology costs. EBITDA reached MXN 1.1 billion, down 16% but after adjusting for nonrecurring revenue, the adjusted EBITDA decreased 7% with an EBITDA margin of 58% versus 61% last year. The net income amounted to MXN 771 million. It was a resilient half year results once you adjust for nonrecurring revenue and FX.

Please turn to the next slide to go over the different business lines. In Slide 5, in the revenue by business line, starting with capital formation or the listing of equity and debt as well as its terminal maintenance contributed this quarter with 13% of BMV Group's revenue. Transactional businesses which consists of equity trading, including derivative trading and clearing OTC trading generated 38% of revenue. Information Services made up of data analytics, indices, valuation and financial risk management services has a 19% weight. The Central Securities Depository Indeval which is responsible for the custody settlement and global market services participated with 27% of revenue. Once again, our diversified business model played a strong growth.

Lower equity trading and fewer cross-border transactions in Indeval had a negative impact while information services and capital formation remains strong. The nature of our business includes highly recurring revenue and strong customer retention. About 50% of BMVs group revenues are transactional and the other half subscription.

Please turn to Slide 6 to go over Equity Trading and Clearing. Revenue and cash equities trading and clearing was down 19% in the second quarter. The average daily traded value at BMV was registered at MXN 14.2 billion, with BMV's market share stable in the mid-80s. The total market ADTV was [ MXN 17.2 billion ]. That's an 18% drop for the quarter and minus 13% for half year. Although this figure is not good, it is better when compared to other markets, given the current market conditions. For example, [ NASDAQ ] close to 30% lower in value traded, Euronext 20%; and [indiscernible] 17%, to name a few.

Let's go on the next slide to review Derivatives. Revenue in derivatives trading and clearing was down 5% in the quarter due to lower trading of dollar futures. The total number of open derivative contracts of Dollar Future low or open interest dropped 67% compared to December 2022 because clients closed hedging position.

On the other hand, the total value of interest rate swaps or notional value increased 124% because of the monetary policy actions. In Asigna, the average margin deposits were MXN 33 billion for the first -- for the quarter and MXN 35.7 billion for the half year. We continue attracting new clients to the Mexican derivatives market, including broker, market makers and prop trading firms as well as vendors, mainly in the U.S. Furthermore, we migrated successfully from LIBOR to [ software ] and starting this July Dollar Futures and options are valued using software.

On the next slide, on the OTC trading in SIF ICAP, OTC trading made progress with revenue reaching MXN 184 million, up 1%. You may recall that in second quarter of '22, SIF ICAP Chile registered nonrecurring revenue of MXN 4 million for VAT refunds without having an impact on personnel expenses. Excluding this item, SIF-Chile was up MXN 3 million, mainly due to higher trading of interest rate swaps by institutional clients. On the top right, the 10-year bond rate together with double rates in the yield curve are starting to show a change in trend as inflation decreases.

On Slide 9, we have the figures for the capital formation in listings performed strong in both short-term and long-term debt markets with revenue increasing 30%. That has been the largest driver in capital formation top line. In short-term debt, 321 issuances were placed for a total amount of MXN 56 billion while in the long-term debt 25 issuances were registered for a total amount of MXN 77 billion. The amount issued in long-term debt increased 46%. However, we registered the same number of listings as last year. Because of the [ cap fee ] structure, the number of efficiencies in a period is a better indicator for forecasting listing revenues. In the equity market, 2 Fibra had follow-on offering. Fibra Prologis for MXN 7.1 billion, which focuses on managing logistics and manufacturing facilities and Fibra Nova raised MXN 2.7 billion with over 18,000 investors.

This is a new record high. It is the largest number of retail investors participating in an offering in the Mexican stock market. Furthermore, Axtel was also listed in the market without an initial public offering after the completion of its spin-off process from Alfa. It is worth noticing that 46% of the total long-term debt issued in BMV during the first 6 months of the year was sustainable through thematic bonds, green, social and sustainable and sustainability linked bonds. We will continue promoting this market for our digital platform and education program. Regarding maintenance, revenue was down 2% since the amount issued is not directly linked to the revenue due to cut in other fees.

In 2022, we had a couple large long-term debt issuances. For example, America Movil for MXN 24 billion and [indiscernible] for MXN 15 billion and a [indiscernible] MXN 11 billion to name a few.

Moving to the Central Securities Depository on Slide #10. Indeval revenue was down MXN 37 million in the second quarter, MXN 23 million due to FX mainly in the global market services and global custody to fees are in dollars and MXN 14 million because of a lower number of cross-border transactions and trade settle in the global market. Assets under custody in the first semester of 2023, increased 9% in the local market to MXN 31.9 trillion and decreased 8% in the global market to MXN 1.5 trillion.

I would also like to share an important announcement, Indeval and CCP will accelerate the settlement cycle to T+1 in May 2024, in line with the U.S. and Canada. The current standard cycle for settling equity trades is T+2 or trade date plus 2 business days, meaning a trade executed on Monday is due to be settled. by close of business on Wednesday. Accelerating this settlement cycle to T+1 will better serve market participants by reducing cost and mitigating risk.

Finally, on Slide #11, information services, information services performed well. Revenue reached MXN 180 million in the second quarter of 2023 up 8% despite the appreciation of the Mexican peso against the dollar. Both market data and Valmer accelerated, supported by international sales and value-added [ data ]. We expect this business line to continue growing at double-digit rate, given the demand for our data locally and internationally. All in all, a good set of numbers in capital formation and information services. On the other hand, equity trading and Indeval are facing a challenging period given the current interest rates and exchange rates. As mentioned at the beginning of the call, the strength of the Mexican peso had a [ MXN 70 million ] negative impact in revenue in the first 6 months of 2023.

Now let's look at our operating expenses in Slide #12. Operating expenses in the second quarter and half year of 2023 were up 8% and 6%, respectively. I will go over the main items. Personnel expenses increased 8% due to annual salary increase and higher recurring revenue in SIF ICAP. Technology up 16% because of upgrades to maintain evergreen platform by enhancing features and security as well as the segregation of post-trade infrastructure. Rent and maintenance increased 23% because of higher maintenance costs and building renovations. And sub-custody expenses were down 43% since Indeval was authorized as a qualified intermediary by the U.S. Internal Revenue Service. And this in turn transforms into lower costs associated with the administration of platforms and [ WA ] format.

It is important to note that foreign exchange fluctuations had a positive impact in expenses during the semester that amounted to MXN 32 million lower, mostly in technology and sub-custody. We continue executing with cost discipline towards increased operational leverage while investing in technology to strengthen the resilience of our platforms.

Please turn to Slide 13 for our conclusion. Notably, the first half of 2022 makes for a tough semester to compare with because of the extraordinary revenue concept and foreign exchange fluctuations. Nonetheless, BMV Group delivered resilient recovering results which highlights the strength of our business model, especially our diversified range of revenue.

We maintain our leadership position in Mexico for both capital formation and equity trading. In derivatives, we continue looking for options to increase liquidity as well as other growth projects that require regulatory approval. Furthermore, we are committed to strengthening our data and analytics offering and increasing our footprint in the insight that drives trading, and those trades generate new data and so on. Regarding BMVs technology transformation, we have made good progress in strengthening our platform with the aim of having an [ evergreen ] and seamless technology across all divisions. Additionally, we continue working in a design study with a third party market infrastructure to analyze caps and evaluate the needs of upgrading our post-trade platform to enhance our product offering and simplify our operations. Furthermore, the segregation of for trade infrastructure is on track. I thank you for your time, and together with my colleagues, we will gladly answer any questions you may have. Thank you very much.

[Operator]

[Operator Instructions]. Today's first question is coming from Ernesto Gabilondo of Bank of America.

[Ernesto María Gabilondo Márquez, analyst]

Thank you. Good morning, Jose-Oriol, Ramon and Luis Rene, and good morning to your team and to everyone. Thanks for the opportunity to take questions. I have 3 from my side. The first one is on your revenue sensitivity against the FX. I was wondering if there is an appreciation or depreciation of the peso against the dollar, what would that mean in pesos for every change of 1 percentage point. And also related to this question, how do you see the FX or the peso against the dollar for the rest of the year and for next year? Then my second question is on your expectations for cash equities volumes. Is it true that in every presidential election, volumes tend to be favored from increased volatility. Do you think that this, together with a combination of lower rates and a potential peso depreciation next year could be some drivers for revenues?

And then my last question is on competition. We saw [ Viva ] was able to gain again 2% market share during the quarter to 17%. So just wondering at what level would you be concerned on Viva's market share. If it goes above 20%, that will be something, it should be a concern for you? Or since the best execution implementation Viva has been between 15% to 20% with that range is something that is already kind of expected? Or again, if it goes above 20% then that could be something that could make you to be more concerned.

[Ramón Sarre, executive]

Thank you, Ernesto, thanks for your questions. Regarding the -- our revenue sensitivity, I would say for every peso that we get appreciated or depreciated roughly consider MXN 40 million of revenue and MXN 20 million of EBITDA for each peso movement in the FX. Regarding our expectations for FX and equity volumes, we think you're much better at forecasting than we are. So we don't make projections or give outlooks in terms of economic outlook. Sorry about that. And for Viva market share, I will pass it over to Alfredo Guillen.

[Alfredo R. Lara, executive]

Regarding your first question in terms of the volume that we expect for next year -- well, second quarter -- second half of the year and next year. Yes, three factors have affected the trading activity, which is lower volatility regarding -- in respect with last year. The volatility is the fuel of the markets and the Mexican market is not the exception. Also interest rates and opportunity costs in being integrated versus the equity markets. And as a result, the FX levels that also makes a little bit less attractive for foreign investment to participate currently in the Mexican market. So this is also something that we have seen in other markets. It's not only the Mexican market.

And by the way, it's not really the place where things have been lowering this year, other exchanges in Latin America and Europe have experienced the same situation. But you're right, volatility expected for next year, lower interest rates and a more less strong peso can indeed help the trading volumes go up. In terms of our market share, we are gaining market share in the last couple of months. And this is because of the lower -- I mean, it's very -- when volumes go down or trading volumes go down, it is easier for our competitors to take a little bit more of a piece of our trading activity. But once we take again new volumes or higher volumes, you will see that our trading activity and our market share will go up again. So that's how we expect things to go this year and the next year.

[José-Oriol Par, executive]

And, Ernesto, regarding the peso expectations, we -- as Ramon mentioned, we do not do that, but the people that do that, they are usually wrong. At the beginning of the year, the analysts, and you can look at the survey in the Citibanamex survey the expectations for the peso for the year-end for 2023 end of December, where I think that like MXN 20.5. And I think that the more optimistic was MXN 19. So I think that the peso has been a surprise for everybody. But anyway, we do have an internal policy for FX hedging. Regarding the competition, I would like to add and remind you that we are not in a level playing field competition. Remember that [ Viva ] did increase the market share that was because they changed in the better execution rule change by the regulators, and this did help them in the past months. However, we're talking about 2 points of market share.

So if we do monetize that -- and we have, as you know, a MXN 4 billion revenue for the full year and ball park number, if we say that the cash equity trading is 10%, we are talking about MXN 400 million, that's around $20 million. So each percentage point is $200,000. So we're talking about $400,000 a year. So that will help them to pay some bills, but it's not going to make a huge difference. And I also mentioned that the regulator are not -- are having pressure from the [indiscernible] with this regulation. So probably, we will see some changes. I do not know.

[Operator]

The next question is coming from [ Juan Pan ] of Bradesco.

[Unknown Analyst]

I have two, if I may. The first one is, if you can remind us on what are your expectations on the materiality of a potential securities reform in Mexico? And the second question would be if you can update us on initiatives of new products and also cost-saving initiatives. Thank you so much.

[Ramón Sarre, executive]

Regarding your first question, you're talking about the social securities reform, I assume. [Foreign Language].

[José-Oriol Par, executive]

Well, regarding the securities market law changes, I would say there are mainly 4 big changes. The most publicly was the creation of a segment for the [indiscernible]. We try to make something similar to the 144 A. And I think that's the one that could have the biggest impact and trying to attract new companies, especially focusing on midsized company, not small ones, not [ PME ], midsize. And the idea is to speed up the process on the authorization by passing some responsibilities on to the exchange. So I think that we still have to spending the one part of Congress, [Foreign Language] on September. And after that, we will get close contact with the commission in order to get details on the secondary legislation. And I think that's where the important point will be in order to set up this facility to really improve the issue way to come -- for the market, for the companies.

Also, on the regulation, it's coming the facility to adopt [ every ] structure that the company decided by having the possibility to issue both in shares. That will depend on companies and investors may be willing to acquire or not those voting shares. And that will be referring into the pricing. Some other changes are coming to the [Foreign Language] to make it a permanent segment, which may also help companies to come into that segment. And there are some changes, which may speed up the follow-on processes for companies having better time after time to market on the placement process. As I mentioned, we're still waiting for September for the deputies to approve it. And after that, we will start a process with the commission to the -- review the secondary ruling that will apply. So it will still take some time.

[Ramón Sarre, executive]

And on your second question, one, we're beginning to analyze or to look at potential cost savings initiatives. We don't have any concrete ones that we could announce just yet. But depending on how long the -- we have this adverse market conditions and -- and the impact on margin continues. We will definitely be implementing some cost savings initiatives to keep our margins. But none we can announce just yet.

[Unknown Analyst]

Okay. And what about revenue initiatives? I mean last quarter, I think there was IRS -- the local IRS allowed you to control the tax withholding of U.S. securities did lead to some operating initiatives -- I'm sorry, the listing of foreign securities of the SEC was one of the initiatives on the revenue side. If you can comment on that, that would be great.

[Ramón Sarre, executive]

Robert Gonzalez is just going to address that one.

[Roberto González Barrera, executive]

Well, we have a few initiatives that we have mentioned in the past. We're finalizing some commissions and tariffs that we have been discussing with authorities for the last several months. So we're about to get that approval. That should have a positive impact that's related to the global market. Then we also continue on that for next year. We also continue working with authorities on the market for the electronic trading for government bonds, and that has attached the development of a central counterparty for the bonds. So that is the -- we're working on the [ project ] in the first quarter next year. We are also working with authority steps with [Foreign Language], the Minister of Finance and the Central Bank and a structure that would allow us also to bring part of the OTC market, mainly transactions that are done by [indiscernible] and some transactions that are done by [indiscernible] forest that could be brought to a Asigna and that we continue on the process of negotiations.

Hopefully, we should be able to close it this year. The impact is, again, we still don't know because we need to finalize the structure. And on some efficiencies on the global market, yes, the QI structure allowed us also to look also at the possibility to go directly to DTC and instead of going through the custodian go through the account operator. So we're analyzing offers for 4 different banks. Also, the intention is to take that decision in this year and possibly by the last quarter move or change that structure that would give us some benefits regarding costs and some efficiencies for the market. So in general terms, there are more less the initiatives that we are working on for this year.

[Operator]

The next question is coming from Yuri Fernandes of JPMorgan.

[Yuri Fernandes, analyst]

I have just one question regarding your dividends line. I guess the dividends from your subsidiaries. It was pretty higher than the past run rate. I guess, this was running at MXN 2 million, MXN 3 million a quarter and this quarter was above 13. So what happened there? Like what is driving these higher dividend, is this recurring? Like what should be the normal level for that line.

[Unknown Executive]

Yes. So that dividend comes from our position in the Peruvian Stock Exchange in Lima. It's just a one-off. It was a capital reduction about the MXN 13 million or $500,000. Usually, what you would see something similar to the last year, which is closer to MXN 3 million, MXN 4 million.

[Yuri Fernandes, analyst]

Perfect. It's very clear. A second question, if I may. Just on revenues. I guess, it's very clear the FX headwind that discussed previously, and also lower volumes, right? So any outlook for revenues this year? Do you think it's feasible to have revenues remaining flat this year versus 2022. Or are you a little bit more skeptical about keeping revenues stable this year.

[Ramón Sarre, executive]

For next year, revenues -- for the second half of the year, revenues, Judy, we have a little seasonality in our revenues in the listing fees. So you would expect those to increase in the third and fourth quarter. And that's about all we would -- I could really tell you. If we have more volatility, revenues would increase, but that's not up to us. It's not something we could control. The only thing that we could expect, as I said, is the seasonality we have in our listing revenue.

[Operator]

The next question is coming from Edson Murguia of Suma Capital.

[Edson Murguia, analyst]

I have two of them. The first one is, I look at the Mexican Stock Exchange local market equity business. And the non-shale trade is down this quarter. But it caught my attention that in the SIC equity business, the notional value is down 29%. So how the Mexican stock exchange see the outlook in the sake for the rest of the year? And if this is a trend what the Mexican Stock Exchange can do to reverse this trend. And last, but not least, reviving on settlement that you mentioned that there is a new project to be in the same way in the USD plus-1. But I was wondering, in other markets, specifically in U.K. they are in the process to be in real-time settlement. So going -- looking forward, there is a possibility in a couple of years. So maybe in the next one, are we talking about real-time settlement? Or we are going to stay in T+1 like in the U.S. Thank you.

[José-Oriol Par, executive]

Regarding the traded volume in the SIC and as mentioned during the beginning of the presentation, the traded volume for the first half of this year was lower than the first half of the previous year. And I think that this was the case of not most of the major -- all the major stock exchanges in the world. And that was because we were coming from a record size after the pandemia that will reach in 2021 and then the trend has started to go down last year, but it was still pretty high in the first half. So when we compare, it looks down. And the SIC, as you know, the SIC is -- [ depends ] on the foreign exchange markets, mainly U.S. market. And we -- I think that we are seeing that reflected in the in the SIC.

In addition, the SIC has also been an FX trade, not just equity trade for some local players. And again, as mentioned, the volatility for the peso has been going down significantly lower, and this also reduced the credit volume. And I think that the other one is the interest rates, and this has been -- and I think that, that explains the lower traded volumes in all stock exchanges in the world. Interest rates have been higher, going up. Mexico has not been the exception. And we have seen flows that have been moving from equities to fixed income, taking in advantage. In the case of Mexico of interest rates above 11%. So I think that now if we look forward, the expectations are interest rates are close to the highest levels in most of the countries. And also, as mentioned, volatility, not just in Mexico but when there are elections in a country, usually, the volatility pre or post could be a bit higher end. So that could be something positive for the expectations that we have for the second half of the year. And regarding the other one, Roberto.

[Roberto González Barrera, executive]

Regarding T+1, when we insure that the U.S. and Canada announced the intention to move to T+1 next year, we started discussions with the Brokers association. So while the decision or the change in the regulation will come at the central counterparty, it really has to do what does make more sense for the traders for the broker dealers. So we discussed it broadly with all of them, and we received a formal letter from the Brokers Association in which what they would like is to do and adjust the settlement cycle exactly the same day that the U.S. and Canada does next year. If you take a look, there is a very strong combination and very strong operational linkage between the U.S. and the Mexico market. In fact, when the U.S. is closed, I think we trade about 10% of the normal volumes.

So it makes more sense for trading for arbitrage and for a lot of different strategies for Mexico to be on the same cycle than the U.S. So that's mainly the decision taken by the brokers, and we would implement it at Indeval for the global market. Basically speeding up the process, how we settle transactions is mainly in the U.S. We will keep T+2 for the European securities as Europe will stay T+2. And the Mexican securities will move to T+1 since most of them are traded or heavily traded at for investors, mainly coming from New York. So that's the reason why we are aiming to do it simultaneously with those markets.

[Edson Murguia, analyst]

Okay. Just a follow-up on this. do you have as an estimate timeline for next year? Or it's going to be a project because it's related to the broker dealers and there is a lot of Anson that needs to be done before it stated data specifically.

[Roberto González Barrera, executive]

Well, basically, what we're aiming is to do it exactly the same day that Canada does it, that is May 27 next year. And the U.S. will do it May 28 because 27 is a nonworking day. So that's -- we announced it last week. We came forward the announcement, and that's a target date if the U.S. and Canada moved that date we most probably will adjust to the date if they decided to postpone. We've heard that most of the community in the U.S. was looking for more for September, October rather than May, but the SEC was the one that defined May 28 for the U.S. market. So there's a calendar, there are a lot of projects and working groups with the brokerage association, but the date is May 27 the target date for now.

[Operator]

The next question is coming from Kaio Prato of UBS.

[Kaio Penso Da Prato, analyst]

I just have one question on my side here. We talked about Viva market share on the trading business. but I would like to have your view about competition in the order lines of revenues such as listing, maintenance and market data. If you are seeing the gaining more traction as we are seeing in trading recently if you have some data to share? And if so, what are the plans of the company going forward in order to mitigate this effect. Thank you.

[José-Oriol Par, executive]

Yes, I think that we do have some public data that we can share on the -- and we are talking that in capital formation that for our revenues is very important. I think that the right number, if we look at the first half of the year in long-term debt, I think that our market share is 95%, so even higher and also public information, there the most important client in long-term debt for Viva is a [ Totalplay and Elektra ]. And I would say that the second one is [indiscernible]. Those are top 2 or 3 clients that they have in that -- but the numbers are public. And I think that in terms of amount, we do have 95% and 5% in Viva. So we feel pretty comfortable.

[Kaio Penso Da Prato, analyst]

Okay. But can you share with us how is this evolution of that? And additionally, what you can share in terms of market data, if you have something to share as well.

[José-Oriol Par, executive]

I think that has been pretty stable. Have been pretty stable in the -- since they have started. So actually, maybe they have a couple of clients that at the beginning that moved back to [indiscernible]. So I would say that the trend should be even better for us.

[Operator]

The next question is coming from Gilberto Garcia of Barclays.

[Gilberto Garcia, analyst]

Question is on expenses. I understand it's difficult to give any expectation on revenue since drilling out of you, but do you -- I assume you can control to an extent your expenses. We saw a fairly fast growth this quarter. What could we expect for the rest of the year and for next year, if you have any visibility?

[Ramón Sarre, executive]

Gilberto, thank you for the question. For expenses, we have no specific seasonality. I think most of our projects are on the way. So probably the best -- the best thing to do to project would be to take and then we replicate that for the next 2 quarters. For next year, we'll be beginning our budgeting process too. But as you know, we're currently not giving guidance and lease default for with such advance -- but that would be my best recommendation for forecasting expenses. We do not have any special things projected other than the projects we already have implemented.

[Operator]

Thank you. At this time, I'd like to turn the floor back over to Mr. Bosch for closing comments.

[José-Oriol Par, executive]

Okay. Thank you very much to all of you for attending our quarter conference call. Thank you very much for the interest and your questions. And if you need anything else, we'll be very glad to talk to you. Thank you very much, and have a great day.

[Operator]

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines at this time, and enjoy the rest of your day.