Q4 2020 Grupo Financiero Galicia SA Earnings Call
You're currently holding for this Grupo Financiero Galicia fourth quarter, 2020 earnings release conference. At this time, we are assembling our audience and will be underway and about one minute and we thank you for your patience and holding and I think please remain on the line.
[music].
Welcome to this Grupo Financiero, Galicia fourth quarter, 2020 earnings release Conference call. This call is being recorded and at this time I would like to turn the conference over to Pablo for Vida. Please go ahead Sir.
Thank you Jamie.
Good morning, and welcome to this conference call and will make a short introduction and then we will take your questions.
Some of the statements made during this conference call will be forward looking statements within the meaning of the safe Harbor provisions.
And on Securities laws.
Subject to risk and uncertainty that could cause actual results to differ materially from those expressed.
Okay.
According to prior estimates the Argentine economy recorded at four 6%.
Year over year contraction during the fourth quarter 2020. Consequently, the economy accumulates is a 10% fall during the year on the <unk>.
Primary fiscal deficit reached $6 five per cent of GDP.
The National Consumer price Index recorded an 11, 7% increase during the quarter accumulating 36, 1% and so.
That's true in 2020.
On the monetize from the Hudson.
Central Bank expanded the monetary base by $76 6 billion pesos in the quarter recording a 33% increase and the last 12 months.
And while the year, the monetization and expanded by 10.
$74 9 billion pesos, increasing from eight 8% of GDP and nine.
And nine 1%, but you're right.
Meanwhile, the extra rate exchange rate average $82 72 pesos per dollar in December and nine.
And 1% depreciation against the average for September 2020.
When compared to December 2019, you ought to think peso reported 27, 6% depreciation.
In December you average.
Interest rate on peso denominated private sector time deposits for up to 59 days was 34 and 7% for three percentage points higher than the average recorded last September.
Okay.
Good sector deposits in pesos amounted.
Increasing 10, 4% during the quarter and 84, 6% in 2022.
Transaction on deposits in pesos rose $17 90 per se during the quarter and 19.
1.5% and the year while the.
Peso denominated time deposits increased two five per cent in the fourth quarter and.
181% during 2020.
And it took those deposits and daughters amounted to $16 billion decreasing one 6% during the quarter and 18, 2% and the last 12 months.
And so you end of December.
The loans to private sector amounted to seven.
And seven trillion pesos.
Christine 11, 1% and the quarter and 49, 6% when compared to December 2019, and.
And then you have to do that.
It amounted to $5 3 billion recording a 12, 4% decrease during the quarter.
And almost 50% decrease in the year.
Turning now to Grupo Financiero Galicia, net income for 'twenty, and 'twenty amounted to $56 4 billion pesos.
You bet on percent lower than in the previous year.
Which represented two 6% return on average assets.
And if you think one 8% return on average check hold on.
The profit was mainly due to profits from Banco Galicia for $22 2 billion pesos from.
And Alex.
One 8 billion pesos.
From the <unk> 70 per Formula 151.
One per 1 billion peso, sorry, I'm from you I mean, you're kind of holding for 1.1 B pieces.
And going to the fourth quarter net income amounted to $3 1 billion pesos and how do we have.
Thank you.
And 33% from the year ago quarter, mainly.
And mainly due to profits from Banco Galicia for $2 7 billion pesos from Galicia formulas to hang on.
On 72 million pesos.
From a few topics and that is for.
Hang on 52 million pesos on.
I'm from somebody got a holding for 42 million pesos.
This profit would be 71, 2% annualized return on average assets.
And so on a solid return on average.
All right.
Banco Galicia, two 7 billion pesos net income for the quarter was significantly higher than the 212 million.
And based on sort of a year ago quarter, mainly due to a 37 per cent decrease and admitted.
<unk> expenses.
Net interest income decreased 28% as interest income was down 13% and interest expense you swapped out three per.
Right.
Yeah.
And ladies and gentlemen.
Our presenter has disconnected at this time, please standby, while we work to reconnect him.
Please go ahead.
Thank you.
Sorry for that technical problem, and I will resume with Grupo Financiero Galicia numbers.
And net income for 2020 amounted to $26 4 billion pesos, 11% lower than the previous year, which represented a two 6% return on average assets and a 15, 8% return on average shareholders' equity.
And the profit was mainly due to profit from Banco Galicia for 'twenty 2 billion pesos from Pakistan and Alice for $1 8 billion pesos from Galicia Formula for $1 1 billion pesos and.
And you kind of holding also from one 1 billion pieces.
Going through the fourth quarter net income amounted to $3 1 billion pesos.
How do we have a 33% from the year ago quarter.
Mainly due to profits from Banco Galicia for $2 7 billion pesos from Galicia, and at our Formula for 272 million pesos from Talcott that accumulates for how many up 52 million pesos and from slot, maybe kind of holding for 42 million pesos.
This profit represented a one 2% annualized return on average assets and.
The 7% return on average shareholders' equity.
Banco Galicia, and two 7 billion peso net income for the quarter was significantly higher than the 212 million piece of the year ago quarter.
Due to a 37 per cent decrease and that makes up the expenses.
Net interest income decreased 58% as interest income was down 13% and interest expenses were down 3%.
Average interest, earning assets increased 86 billion pesos or 16% year over year, mainly due to the 33% growth of peso denominated loans and <unk>.
91% of peso denominated golar rate securities, partially offset by a 59% decrease of dollar denominated loans and he said.
93 per cent decrease of dollar denominated Golar and securities.
And the same tier its yield decreased 507, and 30 basis points, primarily due to lower yields on peso denominated government securities and loan.
Interest bearing liabilities increased 63 billion pesos from the fourth quarter of 2019.
Primarily due to an increase in the average balance of peso denominated saving accounts and time deposits offset by a decrease in dollar denominated sitting at palace and its cost decreased 350.
And basis points, mainly as a result of a lower interest rate on peso denominated time deposits.
Net fee income decreased 6% and the last 12 months, mainly due to lower fees on deposit accounts.
Net income from financial instruments increased 47%.
Due to a 322% increase and result from other government securities.
And now 260% from private sector Securities, which includes results from devaluation of free snack maybe of the power.
Gains from growth and foreign currency quotation defense were down 68% from the year ago quarter rate.
Tier one 5 billion pesos.
Moving a ninth Henry on 33 million pesos.
And from foreign currency trading.
Provision for loan losses was 109% higher and the same quarter of the prior year.
During the quarter the provision for possible losses as a consequence of the context of Covid consider in other operating expenses. What's included in the expected credit loss model.
First one on expenses decreased 26% from the same quarter of 2019.
Mainly due to a 6% decrease and stuff, although more charges for severance payments.
And Mr. <unk> expenses decreased 26% as compared to a year before.
As a consequence of lower maintenance and repair enough goods on a T and.
Lower fees and compensation for services due to the reimbursement of expenses.
Other operating expenses for the quarter resulted in a 1 billion pesos gain.
As a consequence of the incorporation of the provision for Covid to the expected credit loss model.
The advanced financing to private sector reached 497 billion pesos at the end of the quarter up 3% in the last 12 months.
Mainly due to an increase of launching pesos, partially offset by a decrease of dollar denominated loans.
Net exposure to the public sector increased 58% year over year, and excuse me and the leaks each represented 5% of total assets compared to 4% at the end.
And of the fourth quarter of 2019.
Deposits reached 678 billion pesos up 25% in a year is peso denominated deposits increased 49%, while total deposits fell 16 per se.
The bank's estimated market share of loans to pay and take the wharf, 13% Henry on 53 basis points higher than at the end of a year ago quarter and the market share of deposits from the private sector was 10% 15 basis points higher debt in the same quarter of 2019.
As regards asset quality the ratio of non performing loans to total financing ended the quarter at one 3% recording a 288 basis point improvement as compared with the four point, 15% of the fourth quarter of the prior year on.
And the coverage with the level of fees reached 500 on 1% upfront and it has been on 10%, albeit from a year ago.
As of the end of December 2020 day, Vance consolidated computable capital.
She rate by 100 on 1 billion pesos has and 80%.
<unk> billion pesos minimum capital requirement and.
And the total regulatory capital ratio reached 22, 9%.
Increasing by 535 basis.
From the end of the same quarter of 2019.
In summary in a very challenging and volatile macro environment.
And on SEDAR and ECS has shown good results and I will say that to keep asset quality liquidity solvency and profitability metrics and good levels. We.
We are now ready to answer the questions that you may have.
Yeah.
Thank you if you would like to ask a question. Please press star one on your telephone.
Pat.
And if you're using a speaker phone, please make sure Jimmy and function and it was turned off to allow your signal to reach our equipment and then press star one to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal for questions.
And we will go first to Juan recall day of Scotia Bank.
Hi, Good morning. Thank you for taking my question I have two questions. One is related to the profitability outlook in 2020, one and the second one related to that.
Hello provisions.
And that happened.
But based on the quarter. So the first question on related to that.
And it really did so in place and is expected to increase and 'twenty 'twenty, one b and goodwill is around 36% and 2020.
And I really and inflationary adjusted terms was around 16% and journey.
No inflation is expected to pick up too.
And around 48% and 20 to anyone.
So I wonder what the early outlook for 2020 one what's your early expectation do you expect it to be no.
And we're down in 'twenty, and 'twenty or look to improve.
And the second question related to the added per lesions that are booked in.
And our operating expenses.
I saw on everywhere.
$5 5 billion.
Research and the fourth quarter can you provide any color on this and what are those police L. B.
And included in the loan loss provisions so any color there would be sales group.
Yes.
Thank you Juan.
As you mentioned inflation for 2020 will sell on 36%.
And our Ria level was 16%.
Our current estimate for 2020, one inflation is 45 per cent.
And revisit.
And <unk>.
And changed the and the.
<unk> made recently.
Of course, this is a moving target.
And keeping everything constant.
The higher the inflation the lower yellow.
We are seeing is that typically.
When the inflation and growth interest rate and term.
And two to grow perhaps and.
And with a lag on.
So we adjust it for Ice's wherever.
We can in products that are not regular.
And so it's not that direct to consumer debt.
And many of higher inflation will mean necessarily.
Lower profitability in the same proportion and.
And but.
We kind of assume debt if inflation is 45%.
And our ROE could be something lower.
And I would say between 10 and 15 lowered that in 16 and.
And then that's why range that I'm, giving you of course, and we had also many and regulations that affect margins and income.
First rate floors on time deposits and also on maximum or minimum rate.
And for different lending and so.
And we've got we met CE, how they pass through to some costs on.
On the interest rates, we can attack.
Yes.
And feasible, but and this is the kind of.
Profitability, we see.
In terms of provisions.
In the second quarter of 2020.
And the bank and Bill.
And a provision.
For certain accounts that were off balance sheet may mainly guarantees granted and and use and.
Amounts.
And checking accounts and also a great card limits. So these type of accounts balance sheet accounts and.
And.
And that's had a provision.
Finally within other operating expenses.
In the fourth quarter and we.
It had a reclassification.
So we changed the we reduced the other provisions accounts Ah we increased the allowance for loan losses.
But if you look at debt.
And consolidated cost of risk on.
Off a Grupo Financiero Galicia in terms of total financing you will see that and.
Change is hard enough.
And that's important I would say they are big the reclassifications.
Efficacious and.
And is not seen and you can see that the cost of risk.
Increase.
<unk> four and 7%.
And.
And that's wrong.
We did not occur.
And I don't know if that was clear enough.
Yes that was very clear thank you.
Youre welcome.
And we'll go to our next question from Ernesto on it.
Bank of America.
Hi, good morning, Pablo and again, thanks a lot.
The opportunity.
My question is on your expectations for the day can become.
And we're all good.
<unk> heard portfolio one Glenn.
Great.
And also how much the person grudge.
And there are great.
Your card.
And what was the amount.
From burden.
Related to COVID-19, and.
And Brad deal.
Last year.
Okay Hi.
And in April.
And our if we consider our differ.
Volumes basically installment of personal loans and that's our client chose to defer.
The deferral or I would say refinancing of credit card debt.
And basically has.
Moment, one in Asia.
And the other in September.
This considering both the installed and then of course on homes and.
This credit card.
As of December represented four 2% of total loans.
And we have a question from Sutton and Sam.
And on different analysts and Y number of banks and defer and.
<unk>.
And so it would be that.
Depending what the different balance cause.
As a defer that and.
Some of our peers considerate and not just the amount of debt installments that were deferred but also the total outstanding debt capital the personnel level. So if the outstanding.
Capital of the personnel only 600000 pesos and.
And they not pay installment is 20000.
And just close to the 20000 not the total amount on basically because the client has.
And the possibility to defer around nine monthly installment and in most of the cases.
The clients day, one two or three installments.
Basically in the months, which.
And the the acquirer and Titan was very street.
And and and we have a big coverage.
And you've seen the expected loss model.
So the big day coverage stands at around 500 per se.
And when we look at the total provisions around 31 billion pesos.
Out of debt amount roughly.
11 billion are related to.
Prohibitions and.
And.
Of COVID-19.
Alright, and so.
Thank you best in class.
Richard Congrats range Youre 11.
<unk>.
And so that.
You created last year.
And if you are oberg per reinsurer on considering.
You've heard of 172, 4%, let's go to loans.
Well with the and with our model and inflammation and we have today and.
And we think debt.
During 2021.
And the cost of risk will go down on the.
Coverage will go down and we.
We feel that.
And we have a coverage that is enough for I would say different scenarios that we project, but we are very comfortable with the provisioning level.
That we built during 2020.
Perfect and do you have like a guidance range for the year.
Early deal soon to predict.
Well in the fourth quarter and the consolidated cost of risk and.
And.
It was four and 7% in the third quarter was a four 8%.
In the fourth quarter fourth quarter of 2019 was in the three 6% level.
Right now we are thinking that perhaps.
For the full year could be around four per se.
And we are experiencing growth.
Good day.
And with quality metrics.
And not only in the balance, but also and even more I would say even surprisingly in net.
And so and and also we have to consider that.
Yeah as I mentioned in my previous speech.
<unk> contracted 10% and for this year, we are forecasting a rebound of between six to six 5%.
So asset quality should.
Despite this.
For variance from the Central Bank.
In the asset quality.
It should be I would say healthy or better.
In the previous year.
Okay, perfect and just what that means.
And we make a second.
Second question on in terms of needs.
Hum.
The evolution of means considers the true cei's on loans.
Cap rates on Greek gods.
Do you think that the economic recovery and should be resolved.
That's great.
Free cash flow.
And <unk> what are your free.
We will be the driver or the rate.
Yes.
Yes.
It means a.
Were lower and in the fourth quarter, our net debt in the average or the total NIM for 2020.
For the year, it was around 20% and in and in the fourth quarter was 17%.
And the fourth quarter, we saw.
I would say all of the impacts.
Off the minimum interest rate on term deposits and the maximum interest rate.
And I would tell you directly lending.
So we think that NIM.
<unk> could be similar to the fourth quarter of 2020.
And.
We are as always.
Many variables that play in different directions, but.
Our current estimate we think it can be stable at around 17%.
Okay perfect. So it will be payable when compared to the fourth quarter and zone.
<unk> ratio when compared to channel.
All right.
Exactly.
Okay perfect. Thank you very much from.
Youre welcome and write offs.
Yeah.
And we'll move to our next question from Gabriel Nobrega of Citi.
Oh, Hi, Pablo good afternoon and thank.
Thank you.
Awesome.
Follow up here, So you guys re class.
Hi.
And those additional provision debt.
But you're right.
Operating.
And the provision.
This quarter, so if I'm not mistaken per.
And what has been around.
For building and purples and.
Great.
Correct.
One is on this fall, which you ended up generating additional provisions related to COVID-19 or related from clients here and a lot.
And second question afterwards, thank you.
Hi.
And basically it was a reclassification.
Of the provision that we have.
Other operating expenses as a provisions of around $5 5 billion pesos debt.
Now you've seen the allowance for loan losses.
Basically and.
Because we had built that provision in the second quarter related to off balance sheet accounts and due to central Bank accounting rules when you have it.
The provision and.
Related to off balance sheet accounts, you have two included nuts.
Within the the.
And the value and and I would tell you off the cash.
Cost of risk.
What we did was this reclassification debt and.
And basically it had to do with the new calculation of the expected loss model, So now and.
You can see and.
And the provisioning.
For our financing within the allowance for loan losses.
Provision.
And as I mentioned earlier, the key I would say number.
The cost of risk off and.
Grupo Financiero Galicia.
Considering.
The and I would say not only for our ratio is off.
On on loans, but also on other financing so that includes.
Tori cleaner on not only in the fourth quarter, but also on the previous quarter's a both a provisions.
That's a I would say clean defect of this reclassification.
Okay.
And then.
That's from my second question.
When we start looking at the NPL all of them.
Perfect.
Alright.
And it has already decreased from a high of around 14% from 2000.
And now, it's let's say around one 8% range.
We have actually been.
That should continue to accelerate our write offs and the fourth quarter and then the probe card and so I'm here.
I'm just wondering two things actually it's free.
And it's.
This improvement.
And the NGL on a.
It does come from all of these write offs.
Do you have.
And then the other part of it.
And we have great one on a percent of Npls.
More confident.
To continue accelerating and originating more and this segment. Thank you.
Well and.
Net income or in capital regionally and.
Many things and cost the NPL ratio to go down to $1 75 per se.
And.
One thing is that we changed the charge off policy and and now ones.
And the Npls are at 301 year basically and non.
Performing we write offs in the past we have additional months.
This non performing loans within our balance sheet. So that is why the write offs.
And <unk>.
But also and then.
All day collection efforts.
And.
And all day, and I would say day behavior off of the clientele.
<unk> growth.
One additional reason and could be debt in the case of a banking card.
Clients with deferred payments.
Could also differ.
Personal loans and installments in the case of net and they didn't have that ability. So they've paid the net add.
Statement.
Also and that and how your stronger interior of Argentina.
There is every card sales sector behave.
Better and also the lockdown due to Covid was shorter and notes so streak.
So and also a.
And then the loan book grew.
In the fourth quarter. So all these reasons explain the one point 75%.
Percent NPL ratio.
If we do not consider the and the additional 60 days.
And.
Net from 90 to 150 days to go see their loan non performing even in that scenario.
<unk> ratio would have been two 3% so really.
Very low and.
And going forward.
We feel that there should be some deterioration.
Asian, basically because he's had historically a very very low levels, but we are.
Go on to vote comfortable also with the level of coverage, we have our own 300 per cent.
And then Joe from Paul up here.
ROE levels and.
Apparently comfortable coverage.
Do you expect to maybe accelerate more and this segment throughout 2024 argues for a bit more conservative.
In terms of loan growth on net aircraft sorry.
Yes.
And definitely during 'twenty 'twenty and.
I was very conservative.
And mainly.
Because of Covid.
And we thought that asset quality was going to b.
And the much worse than that.
Actually it happened.
And and that I have basically didn't and.
And.
Change the limits.
And for expenses and payments and install them and so the loan book.
And grow for this year, we are thinking that the loan book and it could grow at around inflation plus five percentage points.
And of course.
Being and conservative, but net of conservative or cautious I think as it was the case in 2020.
Okay.
Alright, Thank you for my follow up.
You'll walk out and Guardian.
And we'll move next to along for Garcia of Credit Suisse.
Hello, Good morning, everyone. Thank you for taking my question. My first question is regarding please I mean, they declined 4% and real times last year and.
So what do you expect for this year I mean are you seeing room for increasing prices and even some of your brookes already or just not yet and.
And second.
Regarding cash.
And then on how we saw a very sharp increase in loan growth and in the fourth quarter and Clos.
230% and so.
Just wanted to check if this was related to seasonality and you probably some pent up demand from customers where it is.
There was something special and driving growth in the quarter and and in that sense, what kind of loan growth do you expect for <unk> four.
For a four day banking.
And at the Hong Alicia and 2021 thank you.
Thank you Alonso.
Well, a piece and left here and.
And we were we were not able to race and pre.
This is on most of our products.
For this year, the central bank allowed some price increases and.
In two stages and a 9% each on.
Regulated product for the rest of the products and we would it be a rising prices in order to catch up the inflation of course.
Looking at our and compete.
Compared to competitors.
And what is important and I would say to have in mind is this and evolution.
Fees and must be a comparable would be evolution of.
Administrative expenses, our target is to have.
And the difference between and fees and expenses to be positive basically debt and <unk>.
Efficiency improves.
Why because perhaps.
And will not be able to grow this year above inflation.
Perhaps and inflation and less a couple of percentage points, but our target is to grow or at least that your expenses.
Les in terms of percentage points that will be and.
And saving in that.
Question.
In terms of net.
And.
And well in the first three quarters SA.
And as said and that I thought was more conservative Davies and.
Right.
Spending limits in the fourth quarter.
And many limits were updated.
For the <unk> 'twenty 'twenty, one and.
We expect that net loan book could grow.
And between or around inflation, plus five percentage points. So if inflation is 45 per cent as I mentioned, perhaps 50% in nominal terms.
Similar to the zone growth, we are forecasting for the bank in pesos.
B R E.
Our and I would say guidance and.
And the calculations on and.
On our loans are basically in pesos day.
The dollar bucket, both in dollars and both in deposits and loans and just kind of stable.
At the levels of December so they are not.
And either growing or shrinking.
Drinking as it was the case during 2019 or 2020.
These are the loans.
Loan growth we are forecasting.
Perfect. Thank you very much on.
Youre welcome.
And well next go to Carlos Gomez with HSBC.
Yeah.
Hello, Pablo good morning.
Three brief questions. The first one to clarify on the provisions that you classified it was five point.
And if I recall correctly.
And what are you generally I think you had made about seven 2 billion. So has the entire balance either being used or being transferred to loan loss provisions or is there something that we just couldn't be reclassified in the future.
The second risk first the tax rate, which was quite elevated throughout the year, we understand that ultra hospital with day.
Listen on adjustment and deposits that you cannot take full.
Non pizza.
Do you expect for next year.
And finally per.
Kelly's us and the ramp so good.
[laughter] wrapped up and sell more.
Capital currently hot.
One of almost 19%.
And we know that your constraint and the ability to breakeven and that's what did you obtain from you.
See there either.
And this one.
Hey, Hey, Carlos.
And regarding the first question on.
On provisions.
Yes, we reclassified.
Around $5 5 billion pesos.
And the Arris.
And there is still some and.
And.
Other provisions in that.
Account.
Basically related to guarantees grantees on also shut down and.
And financing off balance sheet.
And regarding tax rate as you said the inflation adjustment on taxes each day.
And from the accounting one and also the main difference is that.
The cost of risk on.
And the I would say the loan loss and.
And we.
We have an hour.
And our P&L.
B taken us.
And if you'd actable expense for tax reasons and.
And so that is basically the difference.
And then I would say the nominal income tax rate is 30%, but it's really very hard to.
To estimate what will be the effective tax rate.
This year.
Because of this.
The difference is between the.
The tax accounting and the reported.
The accounting.
And the last one.
And I'm sorry, what's the third one was related to.
Yeah, the use of capital.
And therefore buybacks or acquisitions.
Yes.
Kelly and the results from the.
Exposition two to inflation.
And it was sky was around 11 billion pesos.
In the quarter, because our liquid net worth is sky of course.
And prefer to be able to pay dividends.
And.
There's not too much alternative in order to protect from that of course, we have real estate, but we are not willing to to increase.
And real estate.
And we analyzed the friend.
And she does serve a bonds, although lagging bombs or uba products and.
And we.
We are.
The assets.
Liability management committee and he's working on that but definitely.
And the inflation or the inflated the high inflation.
It's all on real profitability.
And how about a quotation for products.
Sorry, I Couldnt hear you properly.
Yes, but you can see that any possible acquisitions from from banks or branch.
Yeah.
Well there and.
The answer tends to be the same.
And all the the ear.
And since we met and many years ago.
Basically we are always open to analyze any came on.
And your opportunity that is and the market right now there is nothing.
Perhaps.
And then in the last call.
From a fear the quick.
And could be if it's worth it.
And acquiring a typical.
Bank or perhaps some.
Fintech that could complement.
Some parts of our business our processes, but yes, we are always open to M&A, but again, we have nothing and in the pipeline.
Thank you very much.
Youre welcome and Carlos.
And Mr. From me here do we have time for any further questions.
Okay, if we have a.
No more questions.
I would just come from and we have two more questions on the queue do we have time to take them Sir.
Yes sure sure.
Oh, well, we will go to Yuri Fernandes with JP Morgan.
Hi, Pablo it yet and I. Thank you.
First one regarding expenses I guess, you already touched a little bit on that topic. When you were discussing.
Just to add some sales so basically the idea is for both fees and expenses to grow below inflation in 2021 regarding expense how much more room, you see for optimization because the data for this quarter was very good right like you will have the the head count reduction so.
Just confirm that those numbers are right like should be below inflation rate.
And if you can provide the number I guess debt would be helpful or some kind of range would be would be nice and where you want to cut expenses you plan to keep reducing head count start to close more branches because they think the number of breaches and b.
More and more stable what's the does.
The strategy to deliver on cost and my second question is regarding asset quality, just a follow up I understood from Ernesto <unk> questions I think that's four 2%.
Your portfolio is under relief, but debt number only includes installments does not include the full balance of debt quite so my question is is this correct and can you provide the balance on total balance like the total exposure.
And I guess the concern here is debt credit card has some more automatic kind of release and youll have like a bigger exposure to credit card and it goes logos go bad I guess, it's not only the stall and that's right the tax rate npls going to be the full balance. So he can provide some color on on like the total exposure per release.
Considering the full balance and.
And also the Peacock and he feels like when do you plan to see relief and the like the Npls, peaking because this quarter like you had many helps right that as you said charge offs were Super High you had like mobile and consider achy. So when do you see NPL speaking and if you can provide a number for us I got the math you've got assets quality.
And then you expected, but just whereas true should know about your expectations on the peak.
Okay.
And the first aid.
Cost reduction and.
It was very significant in fourth quarter compared with fourth quarter of the previous year.
And if we close either a fall 2020 compared with 2019.
I would say, it's I would say more free are poor comparison and there you can see that the saving and what's wrong.
5% in real terms. This is a kind of a saving we could see in 2021 and.
And we try to to safe and many different lines not only.
In terms of number of people that basically.
And the people retire people change jobs and.
And we try not to replace these people that is why you can see that in the last couple of years.
And the number of people going down around 5% per year.
And the objective is to.
And.
As well, we will have fees growing a couple of percentage points below inflation that is our estimate for this year than the saving and cost will offset that reduction and peace.
In terms of asset quality and yet the day and refinancing of the payments of credit card.
In April and September.
Plus the debt installments and personal loans and that's why defer represents four 2% of total loans as of the end of December.
We constantly work to consider all of the outstanding personal and launch of new clients. This number will grow to net.
Also additional debt.
Great.
And the number will grow could grow to levels of 8%, but this is a site.
And try to explain and not fair B.
Because after the clients and defer certain payments of credit card.
And also.
Third and installments on personal loans, they were paying the neck and <unk>.
Thomas and also.
And they accumulate and.
And that they and.
Lose the limit and they cannot use their credit card anymore, so and.
And you can consume the worst case scenarios.
And we feel comfortable with the coverage.
We had.
Regarding the third question on Mpls and.
And as you said they are there the information is not so.
And easy to analyze and because of this and.
Deferral of some forbearance.
And we'll set up and being one three a day bank without the.
And the additional.
60 day would have been two 2% and the case of net ARPA from 818 to two 3%.
And but if there are no and.
Yeah.
And at our regulatory affairs, we are estimating that the peak could be around July.
In July this year.
Coming from these levels that I mentioned of 2223 that are the B O T. The D or the ones with the without the forbearance.
Good growth levels off 4%, but this of course is a very.
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Dynamic.
And let me say a growth estimate we are having and our models.
No Super clear.
Pablo very very helpful. Thank you.
Okay. Thank you.
And we'll go to Nicolas Riva with Bank of America.
Thanks for taking my questions I have two quick questions I'm more than anything to confirm things.
You are now reported in place and adjusted EBITDA.
By now and Charlotte and I wanted to confirm for the loan book.
Reported 5% loan growth last year I assume the loan book is not adjusted for inflation and so I assume this was 5% loan growth in nominal terms, which compares to 36% inflation and approximately in 2020 part of the country, but I wanted to confirm that and also that.
And the income statement, but the impact from inflation and only reflected in day in that line that results from monetary position. So that net interest income being on all of those figures out what on firm dose.
And in terms you know it because they don't need to be adjusted but I wanted to confirm and second.
On the FX restrictions, we saw that the central bank extended debt the restrictions to buy dollars to pay dollar debt until the end of D. C. R. I believe for you. There is no impact because you don't have any dollar bonds coming due and D. C. R.
I know that you can pull the 2020 six bond B C or I would assume you are not and I called that at but I wanted to confirm that with you on that there was no impact from gift card restrictions are ya. Thanks, Bob.
And you're all welcome Nicolas.
Nicolas and.
And.
First the.
And in the speech when I when I spoke about the growth rate of the system of the financial sheets and lots of coal.
These are nominal figures without adjustment because it's not.
And and accounting.
And the figure.
In our press release, when you look at the charts within the level of activity part of the press release.
These are accounting numbers and yes they are.
And adjusted by inflation and so the growth rates are real and.
And actually are similar to the growth rate.
We thought we were going to have when we spoke perhaps one year ago, So and.
One more thing regarding debt quite.
A question and.
And of course, the the b favor between the peso loans or deposits are very different from the golar loans or deposits. So and yes, we are seeing important a nominal.
Growth rate and pace of both in deposits and then.
And loans nuts, and it's not.
The case for the dollar part, but you can see the breakdown in the different charts.
Regarding the monetary monetary position or the day.
The effect of inflation in our accounting I would tell you that most of it is within the monetary and deadline, reflecting and the monetary position. There is you know what.
Our case is tiny.
The impact within other comprehensive income.
And in the case of other peers.
And in recent quarters.
They haven't we.
Within the result from monetary position, even a positive result, and.
Because they have a big impact within other comprehensive income.
Now the Central Bank and said that all of the impact of the monetary position with B a must be reflected in the P&L and.
And that to be.
And precise and the answer you can assume debt in our case most.
Of the result from inflation is in debt right.
And regarding the restrictions to purchase orders to pay and financial debt.
As you said, we have a call on our subordinated bonds.
In July this year and.
Also in that day, we have a reset on the interest rate we pay.
With information from all the numbers, we have today, the coupon should be lower than the current one.
And so.
Really chose and makes sense to call that bond and.
With the restrictions they are perhaps even impossible. So it's likely of course.
And I cannot say this is hal.
100% and true statement, it's likely that day subordinated bond.
There will be a.
Paid and its maturity in 2020 six so perhaps it's slightly that we will not be able to call. It.
Of course and.
And from 'twenty to 'twenty, one to 2026.
And could be.
The purchasing or buying back part of those bumps if regulations and permitted and also taking into account that each year in the last five years, we can compute and decreasing percentage of the subordinated bonds.
As tier two capital.
Okay. Thank you very much Carlos.
Youre welcome Nicolas.
And we do have one more question and the Q do we have time to take it Sir.
Yes, yes, well go to that last question on the queue.
And that's from January Euribor Inter-american advisors.
Hi, My question is about the capital restrictions don't they affect the net had been on IHOP amortization and April.
Okay.
Hello.
And the net income.
Financial team is working on that day.
The last information I have is that they will not have any.
Problem and we've got a bump.
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I should have to double check if there is.
Any and more recently information and.
And.
As far as I know and they were.
We'll be able to face, but we can.
Peak and perhaps later in the day to do.
Check.
Okay. Thank you.
Okay.
Thank you I'm, sorry for not having had any per center.
Sure.
And there are no other questions from the queue I'll turn the call back to you I'm sure Brittany.
For any additional comments.
Okay, and Jenny just to say thank you for everybody for attending this call and if anybody has any further questions and we are more than happy to tuan.
And so them and do that because it day to contact us and.
Good morning, and good afternoon.
Bye bye.
And so that does conclude the call we would like to thank everyone for your participation and you may now disconnect.
Okay.
Yeah.
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Okay.
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