Q3 2021 Grupo Supervielle SA Earnings Call
Yes.
Speaker 1: We assume no obligation to update or revise any forward looking statement to respect new or change plans for future.
We assume no obligation to update or revise any forward looking statements.
Oh, Thank you Beth.
Yeah.
Speaker 1: Today, Maria Noviglia, our CFO , will start the call discussing our performance as a reporter and our near-term outlook.
So they might be I know easy out I wouldn't see a phone with seismic on discussing all of four months for the sport.
Hum.
Speaker 1: Patrice's o viel, our German ancien, will follow with an adwe on our midterms for the selective education.
But.
Well he is our chairman and CEO is announced.
And I think when I was making sure that she patient.
Speaker 1: Afterwards, Azidella Romaini will provide an overview of the elements of our ESG's collagen repellent program.
After the war.
My knee will provide an overview of the key elements of our trusted chemicals.
Money I know ETF Chief Financial Officer.
Thank you Ana good morning, everyone and thank you for joining us today.
Please turn to slide four of our earnings presentation.
Okay.
Speaker 2: While we saw a rebound in economic activity to pre-pandemic levels this quarter, we continue to operate under challenging market conditions.
But we saw a rebound in economic activity to bring them in at any level. This quarter. We continue to operate under challenging market conditions with high inflation negative real interest rates and industry, those historical lows and growing below inflation.
Speaker 2: high inflation, negative real interest rates, and industry lows, and historical lows, and growing below inflation.
Speaker 2: In addition, central bank regulations continue to weigh on new...
Asia Central Bank regulations continuous away from me.
We delivered sequentially in brokerage sides reporting on a triple jump of adults of 16, New York vessels go to 'twenty, one compared to a 348 pesos to the prior quarter.
Speaker 2: We delivered sequentially improved results, reporting an attributable loss of 60 million vessels in GIRQ21 compared to 348 million vessels in the prior quarter.
This was mainly driven by lower loan loss provisions, reflecting our strong underwriting and collection policy along with a pickup in economic activity.
Speaker 2: was mainly driven by lower loan loss provisions reflecting our strong underwriting and collection policies, along with a pickup in economic activity. Lower operating expenses also contributed to this performance, but we continue to reside our branch network, federate its own efficiencies, and executing our digital and channel transformation strategy.
Operating expenses also contributed to this performance.
Continuing to resize, our French network.
And decency and execute in our digital inventory and channel transformation strategy.
Speaker 2: Our comparable efficiency ratio, excluding non-regarding severance payments and early retirement charges, improved to 71% this quarter from 72% in the second quarter, also significantly impacted by a low revenue base.
Our comparable efficiency ratio, excluding nonrecurring severance payments on early retirement charges improved to 71% this quarter from 72% in the second quarter honestly Nathan did you see anything that's impacted by a lower revenue base.
Speaker 2: Looking at the past nine months of the year and excluding non-recurring charges, expenses were down nearly 7% year on year.
Looking at the first nine months of the ear and excluding nonrecurring charges.
Were down nearly 7% year on year.
We also maintain a solid capital base with tier one ratio of 14, 1%.
Speaker 2: We also maintain a solid capital base with TR1 ratio of 14.1% at quarter end and are strongly
At quarter end and Australia with EV.
Navigate the current environment and implement our strategic transformation.
Speaker 2: Patricio will provide shortly an update of our progress on our digital and channel transformation agenda, followed by Atelio who will present our key E&G milestones and goals. Now please turn to the next slide.
But the easier wins provide shortly and I think our progress on our digital antenna transformation agenda, followed by a C D with pretend or E S key milestones and goals.
Now please turn to slide five.
We expanded our loan book by 5% sequentially growing above industry level and recovering market share.
Speaker 2: We expanded our loan book by 5% sequentially, growing above industry levels and recovering market share.
Speaker 2: Low growth was mainly driven by higher mandatory credit lines to SMEs, which rose to a finance of nearly 20 billion pesos, accounting for over 30% of total lost exporters from a finance of 14 billion pesos in the prior quarter.
The growth was mainly driven by higher mandatory credit life towards the mean, which rose to a balance of nearly 20 pesos accounted for over 30% of total loans. This quarter from the violence of 14 video vessels at the prior quarter.
Short term financing to corporate also contributed to loan growth and all of them.
Speaker 2: Short-term financing to corporate also contributed to loan growth, along with strong origination in personal loans, which reached a record high in October .
This drove originations personal alone, which reached a record high in October.
Speaker 3: U.S. total loans in original currency in turn declined 10% sequentially.
You would have done alone.
T turn declined 10% sequentially.
Okay.
Now moving to funding on slide six.
Speaker 2: The low to the deposit ratio remains relatively stable in water on water at 53% with liquidity at solid levels.
The loan to deposit ratio remained relatively stable quarter on quarter.
3% liquidity at solid levels.
Speaker 2: As a deposit, increasing the high single digits sequentially, driven mainly by institutional funding from liquidity management and corporate checking accounts. Court deposits were stable.
And so therefore, it's increasing the high single digits sequentially, driven mainly by institutional funding from at least management and corporate checking accounts.
Deposits were stable quarter on quarter.
Speaker 2: Donor deposits in original currency were up 1.5% sequentially, accounting for slightly over 11% of total deposits.
So not the full 18 retail apparently were up one 5% sequentially accounting for slightly over 11% total deposit.
Turning to slide seven.
NIM contraction two percentage points to 17 from 19% in the second quarter.
Speaker 2: Lim contracted 2 percentage points to 17 from 19 percent in the second quarter.
Speaker 2: While GDP growth returned to pre-pandemic levels, allowing us to capture some low growth, overall credit demand remained sweet.
Like the GDP broad return to remember they make level, allowing us to capture Osama don't grow over body demand remains weak.
Speaker 2: This, together with a lower yield and inflation-linked mortgage loans, given the desaturation in the price index and regulatory controls, continues to exert pressure on it.
This together with a lower yield on inflation lien mortgages zones, given there'd be such a range I mean, the pricing there's a regulatory controls continue to exert pressure on me.
Turning to asset quality on slide eight.
Speaker 2: Our strong underwriting and collection policies, together with improved economic conditions, allowed us to release a portion of the COVID-19 specific provisions created last year.
Our strong underwriting and collection policies together with improved economic conditions allows us to release a portion of the COVID-19 specific probation I was created last year.
Speaker 2: As a result, long-loss provisions declined to $1.4 billion from $2 billion in the prior quarter.
Nevertheless provisions declined to $1 4 billion from 2 billion in the prior quarter.
Speaker 2: In turn, cost of risk net improved to 3.5% from 5.7% in the second quarter.
Speaker 2: quarter-end COVID-19 anticipatory provisions amounted to 1.6 billion pesos versus 2.4 billion associated with COVID-19.
Speaker 2: Our total provisioning ratio stood at 6.6% in September , above the pre-pandemic level of 6.4% posted in January 2020.
Speaker 2: The total NPR ratio for the quarter increased 20 basis points sequentially to 5.5% but declined after peaking to 5.5% in July .
Speaker 2: The expansion in Greece was mainly driven by consumer final segments.
Speaker 2: Anticipated, we saw an increase in delinquency and installments were due after the expiration of the grace period, with the consumer finance NPR ratio reaching a peak of nearly 21% of quarter end.
Speaker 2: To contain the linguistic, we have time to operate the policies that we do so that new originates along with other vertebrae.
At a better rate.
Speaker 2: To a lesser extent, NPLs also increased to 5.1% from 2.2% at the bank's personal loan segment after the expiration of the grace period and the mandatory regressification of customers performing with Supervient but non-performing with other banks.
To a lesser extent N.
<unk> also increased to five 1% from 2.2% other banks personnel Zelman segment.
So the exploration of a great theater and demand that's already booked with education of customers prefer.
With the Permian nonperforming with other banks.
Speaker 2: By contrast, corporate SMEs and bank credit cards post a consequential improvement in NPR's rating.
By contrast, corporate doesn't mean I'm credit card post Covid, which.
Chinese bromine in M. P S reagents.
Speaker 2: Slide 9. Although cadence remains suspended due to sustained limited disability, on slide 9, we share our views of the main drivers of our business for the remainder of the year and 2020.
Thanks, Ed.
Segment, although guidance remains suspended you to sustain the immediate anybody on slide nine we share our views with the main drivers of our business for the remainder of the year 2020.
I've been with specialty.
Speaker 2: Starting with pressure denominated loans, we expect to see growth in line or below inflation in 2021, both commercial and consumer loans, and above inflation in 2022.
So we expect to see growth in line or below inflation in 2021, both of them, Arizona consumer loan and above inflation in 2022.
Speaker 2: We also expect to end the year with deposits growing above inflation, fostered by FX restrictions, and to a lower extent by interest rate and time deposits. We expect deposits to continue growing above inflation, driven by the same trend.
This effect to end the year with deposits growing above inflation.
I'll start by Ethics Brooks Street until I know, what it's been like interest rates rose from time deposits. We expect the baltics continue growing above inflation driven by the same trial.
With respect to water quality anticipated MTR basis, Florida and are expected to remain stable or decline in Florida, Florida.
Speaker 2: With respect to asset quality, as anticipated, MPMs peak this quarter and are expected to remain stable or decline in following quarters. We also expect coverage to decline as COVID-19 provisions are used for rebar.
We don't expect coverage to decline as Covid, 19 provisions or helix or worry about it.
Speaker 2: Cost of real in turn is expected to be below 2020 and 2019 levels, but in line with historical levels of 5 to 6 percent.
It's the right time.
My kids will be below the 2000 22019 levels, but in line with historical levels of 5% to 6%.
Speaker 2: In terms of margins, for the remainder of the year and 2022, we expect NIMS to remain present by higher cost of funds resulting from the impact of the plural interest rate on time deposits and subsidized rates on loans.
In terms of margin for the remainder of the year 2022 we expect them to remain pressured by higher cost of funds, resulting from the impact of the throttle on interest rates on time deposits and subsidize the breaks on logs.
Speaker 2: This would be partially offset by higher inflation, together with credit demand, anticipated to gradually pick up from historical trends.
It wouldn't be partially upset by higher inflation together with credit demand.
Rob why don't you pick up from historical levels.
Personnel and administrative expenses are likely to play.
Sure, while also reflecting additional restructuring in Cogs and offensive athletic head count efficiencies from the execution of our digital channel precisely.
Speaker 2: higher turnover taxes and extension of the turnover tax reached to the leaks and ripples in the city of Buenos Aires will continue to negatively impact expenses.
Higher turnover taxes and the extension of this turnover that's reached with any unreasonable to keep up with.
We continued to negatively affect expenses.
Speaker 2: At the same time, the income is expected to grow in line with inflation.
At the same time the income is expected to grow in line with inflation.
Finally, we continue to expect capital liquidity to remain at comfortable levels supporting the long term sustainability.
Speaker 2: Finally, we continue to expect capital and liquidity to remain at comfortable levels supporting long-term sustainability.
Speaker 2: Not just earlier, 100% of our capital is hedged again in place.
They are 100% of our coffee does catch up and inflation.
Now, let me call turn the call to Brussels, Caribbean, who will provide an update on our strategic journey.
Speaker 4: Now, let me call, turn the call to Professor Sperbiel, who will provide an update on our strategic initiatives. Patricio, please go ahead. Thank you, Mariano.
Please go ahead.
Thank you Mariano.
You heard anybody I know it presents our financial results and views for the remainder of the year in 2022.
Speaker 4: You heard Mariano present our financial results and views for the remainder of the year in 2022.
Speaker 4: In this challenging context, we remain fully focused on advancing our transformation strategy.
In this challenging context, we remain fully focused on advancing our transformation strategy.
Starting with a suppressed formation of our branch channels using best in class technologies to facilitate self service banking and to expand.
Speaker 4: Starting with the transformation of our branch channels, using best in class technologies to facilitate self-service banking and expand SME breach with the vision of everywhere and anytime banking.
<unk> reached the median of everywhere and any time banking.
First digitized customers have increased consistently over the past two years and were up 76% since March last year.
Speaker 4: First, digitized customers have increased consistently over the past two years and were up 76% since March last year.
Second keeping a strong focus on the customer experience. We recently deployed an upgraded version of the bar.
Speaker 4: Second, keeping a strong focus on the customer experience, we recently deployed an upgraded version of the Bank's mobile app rated 4.4 in the Play Store and 4.3 in the App Store. Third, with the successful performance of our virtual hub MVPs for individuals in the province of France and Greece, we're starting to scale this hybrid model to other regions and sectors.
<unk> mobile App rated four four in the place for them for free in the App store.
With the successful performance of our beautiful hop mbps for individuals in the province of fun and we are starting to scale. These hybrid model to other regions and segments and expanding our footprint, while offering a superior customer experience combining the strength of our phase.
Speaker 4: and expanding our footprint while offering a superior customer experience combining the strength of our face-to-face approach with a high efficiency of our virtual hub. This also allows us to expand our footprint through our national territory without needing branches.
To face approach with the high efficiency of our mutual hub.
This also allow us to expound a footprint through a national territory without visiting branches.
Fourth.
In the past four months, we modernized and expanded services to western music related segments and 11 branches that were previously sold as he indicated to senior citizens.
Speaker 4: In the past four months, we modernized and expanded services to SMEs and related segments in 11 branches that were previously solely dedicated to SMEs.
Speaker 4: and we expect to convert four additional branches to multi-segment format before year-end. Now please.
We expect to convert four additional branches to move to the second point format before year end.
Now please turn to slide 11.
At the same time, we have been introducing technological innovation about senior citizens fractious facility. It didn't self service banking for these customer segments, which was at least advanced in terms of digital adoption.
Speaker 4: At the same time, we have been introducing technological innovation at our senior citizen branches facilitated in self-service banking for this customer segment, which was the least advanced in terms of digital adoption. Let me share some examples of the success of these.
Let me share some examples of the success of these initiatives.
To allow for extended banking hours and high efficiencies when Dodge.
Speaker 4: To allow for extended banking hours and higher efficiencies, we enlarged our 24-hour lobbies, increasing the number of biometric cash dispensers located in these lobbies.
For our lobbies, increasing the number of biometric cash dispensers located in these companies.
Speaker 4: As of September , cash dispensers in our 24 hour lobbies accounted for 53% of total cash dispensers, which have put around 24% before the pandemic and nearly 40% a year ago.
As of September December dispensers in 'twenty, four and obese 30, followed it'll be accounted for 53%.
Total cash expenses up around 24% before the pandemic and nearly 40% a year ago.
Speaker 4: As a result, the number of transactions of human traders declined sharply to 2% of total transactions from 11% a year ago and 22% before the pandemic.
As a result, the number of transactions that humans try this decline sharply to 2% of total transactions from 11% a year ago and 22% before the pandemic.
Speaker 5: We are also seeing continued adoption of our digital app, dedicated to senior citizens, 90 days logged in customers through the app, increasing over 144% when compared to first 2020.
We are also seeing continued adoption of our digital digital up dedicated in the system.
90 days locked in customers' true, yeah, increasing over 144% when compared to first Q 'twenty.
Please turn to slide 12, as you can see.
Speaker 4: We are also advancing on the right sizing of our branch network.
We are also advancing the right sizing of our branch network.
Speaker 4: The introduction of best-in-class technologies to extend service hours, facilitating self-service banking in some branches, while converting others to full-service format is allowing us to enhance customer service and productivity.
The introduction of best in class technologies to extend service hours facilitating self service banking in some branches, while converting other food service format is allowing us to enhance.
Customer service and productivity.
As a result, we closed one branch in the second quarter and plan to close another 16.
Speaker 4: the result. We closed one branch in second quarter and then closed another 16.
Speaker 4: between the remainder of 2021 and next year, subject to central bank authorization.
Between the remainder of 2021, the next year subject to Central Bank authorization.
Speaker 4: These initiatives have allowed us to lower headcount by nearly 6% year-on-year.
These initiatives allow us.
Two lower head count by nearly 6% year on year.
Please now turn to.
Speaker 4: Please now turn to slide 13.
Slide 13.
Speaker 4: Our IT infrastructure strategy includes creating an API environment.
Our IP infrastructure strategy includes creating.
API environment to accelerate service development and time to market confirmed our customer journey.
Speaker 4: to accelerate service development and time to market to inform our customer journey. In the first nine months of the year, we added a total of 95 APIs and plan to add another 150 free by the end of 2020.
During the first nine months of the Europe, we added a total of 95 Apis and.
Plan to add another 153 by the end of 2022.
Speaker 4: We're also advancing on implementation of a data lake to become a data-driven enterprise while migrating technology to a hybrid multi-cloud to provide the flexibility to grow efficiently.
We are also advancing an implementation of a data lake to become a data driven enterprise 12 integrated technology to a hybrid multi cloud to provide the flexibility to grow efficiency.
By October 20 out of October with 20% of our technology was already already migrated to the cloud and we expect to reach 30% by year end.
Speaker 4: And by October , 20% of our technology was already migrated to the cloud, and we expect to reach 30% by year end, with 70% of our technology anticipated to be migrated to the cloud by the end of year 2024. Please.
70% of our technology and anticipate it to be migrated to the cloud.
At the end of year 2024.
Please.
Turn to page 14.
Speaker 4: We are also making progress on deploying our growth strategy for UDO and UDO Servicios.
We are also making progress on deploying our growth structure for you do introduce her vcs.
Next week, we're formally launching you do mobile retail digital safety.
Speaker 4: Next week, we are formally launching UDO Mobile, retail, digital savings accounts that will enable us to grow our current ways and attract low-cost funding at this subsidiary. After a successful soft launch in last August , UDO has already opened 230,000 accounts among current customers.
This will enable us to grow our client base and attract low cost and low cost funding.
After a successful soft launch last August you do have already opened 230000 accounts among current customers.
Speaker 4: You, too, clients, also have access to a wide range of digital banking services, insurance, and wellness offerings. And we will continue adding new features and services in the coming months.
You do also have access to a wide range of digital banking services insurance and wellness offerings.
We'll continue adding new features and services in the coming months.
We also have made progress in our goal of diversifying revenue origination beyond Argentina by deploying welding and health services under the B to C or b to B to C format in certain countries in Latam, excluding Brazil, we are in this sense advancing with grew.
Speaker 4: We also have made progress in our goal of diversifying revenue origination beyond Argentina by deploying well-being and health services under the B2C or P2B2C format in certain countries in LATAM, excluding Brazil. We are in this sense advancing with Grupo Assistive and Europe Assistive.
Quasi Steve.
Europe assistance.
Speaker 4: to implement in second quarter 2022 B2C well-being and health services in Paraguay. The offering will consist of health, dentistry, pharmacy, medical emergency and veterinary services.
To implement in second quarter 2020 to be to see well being and health services in Paraguay, the offering will consist of health dentistry pharmacy medical emergency in proteinuria.
Veterinary services.
Services will be marketed through there you do wellness marketplace, which will host of arrival variety of wellness services under one platform offering customers, a simple and convenient and seamless experience.
Speaker 4: Services will be marketed through the YouDo Wellness Marketplace, which will host a variety of wellness services on the one platform, offering customers a simple and convenient and seamless experience.
Additional information that the progress of our digital Kpis.
Speaker 4: Additional information on the progress of our digital KPIs and a more detailed description of all these initiatives and timelines can be found at the back of our earnings call presentation.
And more.
A more detailed description of all these initiatives and timeline can be found in the back of our earnings call presentation.
In summary.
We will.
While we saw improved activity in the quarter near term profitability is expected to remain impacted by the overall weak.
Credit demand pressure on nims, together with our costs and investments required to continue building, our ecosystem and execute our transformation strategy.
Speaker 4: This strategy position has to retain and enhance our current customer relationship.
This structure to position us to retain and enhance.
Our customer relationships are our current customer relationships, while attracting new digital clients and driving operation decreases as longer term when demand resumes.
Speaker 4: while attracting new digital times and driving operation efficiency longer term when demand resumes.
Now before opening the call to Q&A, Let me turn the call to appeal it or one of our board members are responsible for leading our EC ESG strategy.
Speaker 4: Now before opening the call to Q&A, let me turn the call to Atelio De Loro, one of our board members and responsible for leading our ESG strategy, who will provide an update on our initiatives and ambitions on this front. Atelio, please go ahead.
Provide an update on our initiatives and ambitions on these fronts.
Peter Please go ahead.
Speaker 6: Thank you, Patricio. At Grupo Superviejo, we understand the need for a more long-term and more sustainable view of shareholder value creation.
Thank you Fabrizio and Rupert to Bermuda, we understand the need for more long term on more sustainable do a fairer proposal value creation.
I'm, so not long ago, a more philanthropic vision preventative.
Speaker 6: until not long ago a more philanthropic vision prevailed in our corporate social responsibility model.
Our corporate social responsibility model.
As of 2019 CSR is integrated into the group's core business through a responsible management model oriented towards sustainability CSR is no longer our goal.
Traditional per year or two and it is our way of doing business. We believe that how not just what matters is the business value creation process.
Speaker 6: It is a way of doing business. We believe that how, not just what, matters in the business value creation process.
Speaker 6: In this new phase, we have assumed a commitment to grow sustainably, protecting the environment and pursuing our business strategy in a socially responsible manner.
In this new phase, we have assumed a commitment to grow sustainably.
And the environment and pursue our business strategy in a socially responsible manner.
Speaker 6: We believe that enhanced disclosure of non-financial information such as environmental, social, and governance-related factors satisfies the growing demand for an alignment of corporate's financial performance with the company's performance in non-financial factors.
We believe that enhanced disclosure of nonfinancial information, such as environmental social and governance related prospectus satisfies the growing demand for a lot of alignment of course financial performance with our company's performance in non fund national factors.
Yes.
So we will develop our ESG strategy, we have defined.
Speaker 6: To develop our EST strategy, we have defined our pillars and commitments shown on slide 15.
Commitments shown on slide 15.
And on Slide 16, we present, our ESG research and most relevant timeframes.
Speaker 6: In slide 16, we present our ESG recent and most relevant highlights.
Speaker 6: In terms of our environmental responsibility, we work to reduce the impact of our operations on the environment by implementing our responsible environmental management system.
In terms of environmental responsibility, we work to reduce the impact of our operations on the environment by implementing a responsible environmental management system.
Speaker 6: We have been measuring our carbon footprint since 2019, and we compensate our greenhouse emissions to protect forest ecosystems.
We have been measuring carbon footprint since 2000.
19, and we compensate our greenhouse emissions to protect forest ecosystems.
Speaker 6: Renewable energy represents 14.4% of total energy consumption in our building.
Energy represents 14, 4% of total energy consumption in our budgets in.
Speaker 6: In addition, we have implemented a plastic waste management program to eliminate single-use plastic.
In addition, we have implemented a plastic waste management program to eliminate single use plastics and we have reduced paper consumption by four to six.
Speaker 6: and we have reduced paper consumption by 46 percent compared with 2019.
<unk> comparable with 2019.
Speaker 6: Note that 75% of the paper consumed internally is responsibly sold paper to protect forest people.
Note that 75% of the paper concerned maternity as responsibly sourced faithful to protect forest ecosystems.
Speaker 6: In connection with social responsibility, we focus on financial education, which is the gear shift of financial inclusion.
In connection with social responsibility, if we focus on financial education, which is the PFS of.
Financial inclusion.
Speaker 6: More than 88,000 senior citizens' clients attended digital literacy and financial education programs conducted in alliance with 21 universities in Southern Province and the City of Buenos Aires.
Then 88000 and senior citizens clients attended digital literacy and finance application programs conducted in alliance with 21 of universities in <unk> progress and the city of Florida Science.
Speaker 6: 95% of transactions are conducted through our digital and automated channels.
95% of transactions are conducted through our digital and automatic channels.
Speaker 6: Diversity is also a key aspect of our social responsibility. In 2021, we launched a comprehensive program to promote a diverse and inclusive work culture.
Diversity is also a key aspect of our social responsibility and frankly 'twenty. One we launched a comprehensive program to promote a diverse and inclusive work culture.
Speaker 6: We also work on more than 26 corporate philanthropy programs with focus on education, childhood, senior people, and civic strengthening initiatives.
We also work on more than 26 cohorts.
Natural fee programs that focus on education charge senior people and civic strengthening initiatives.
Speaker 4: With respect to our responsibility with good governance, we believe a robust corporate finance.
With respect to our responsibility with good governance, we believe our robust corporate finance.
Speaker 6: is key for guaranteeing a sustainable business model over the long term.
Is.
Is key for Garanti and a sustainable business model over the long term.
Speaker 6: Elsan Young recently conducted a risk regulatory assessment and verified 97% compliance with the inventory of obligations.
And some young recently conducted a risk regulatory assessment embedded 597% compliance with the inventory of obligations on topic of glucose.
Yes.
Speaker 6: The area of compliance monitors the correction prevention program and our whistle-loying hotline allows employees, suppliers, and clients to report any malpractice, unlawful, or unethical behavior.
The area of compliance.
It took us a correction prevention program.
With the slowing top line allows employees suppliers and clients.
We report any more practice unlawful unethical behavior.
We haven't defined quantifiable metrics for our sustainability initiatives.
Speaker 6: We have defined quantifiable metrics for our sustainability initiative.
Speaker 4: On slide 17, you will see the key and most relevant ESG goals for 2024.
On Slide 17, you will see the key and most prevalent ESG goals for 2020 before.
Speaker 6: in relation to our environmental responsibility, we have set the following goal.
In relation to our environmental responsibility, we have tempered following goals.
Speaker 6: We will continue to measure our carbon footprint setting a goal of 6% reduction and 50% carbon compensation to protect millinery forests.
We will continue to measure our powerpoint footprint setting a goal of 6% reduction.
And 50% carnivore compensation tubular mill.
Military forces.
Speaker 6: And on the other hand, a target of 45% of our total portfolio screened and analyzed through our environmental and social response.
And the other half target.
Target of 45% of our total portfolio screamed analyzed through our environmental and social risk policy.
Speaker 6: With respect to our social responsibility, we have set the following goals. 33% of women in senior executive positions by 2024 and 120,000 people attending our financial education program.
With respect to our social responsibility, we have set the following goals, 33% of women in senior executive positions by 2020 before mm 120000 people attending our financial execution programs.
Speaker 6: Finally, our responsibility with good governance goals include...
Finally.
Our sponsor ability with good governance goes include pop.
Speaker 6: publishing fully integrated sustainability reports by 2023 prepared according to the global reporting initiative and in addition we aim to have 100% of our strategic suppliers submitting a self-evaluation form assessing compliance with our policies related to human rights diversity and governance.
Publishing fully integrated sustainability report by 2023 preparing according with the global reporting initiative.
And in addition, we aim to have 100% of our.
Strategic suppliers submitting a SIFI regulation for assessing compliance with our policies related to human rights.
On governance practice.
Thank you.
Speaker 1: Thank you, Atelio. At this time, we will be conducting the question and answer session. As a reminder, to ask a question, you need to be connected to the Zoom platform. We will not be able to take your questions if you are connected from a phone line. To ask a question by voice, please press or raise your hand button and press it again to withdraw your question. You can also send your questions in written form via the Q&A box.
I am fully come back.
Tom.
As a reminder to ask a question you need to be connected.
Last fall.
We will not be able to think you'll find companies that are next in line to ask a question by me.
Please pray to Raytheon.
And thanks to Tony to withdraw.
And when something will go down.
Yes, Thank you I know opex.
Speaker 7: We will ask you to limit your show to one question and follow-up after the session. One moment.
We'll ask you to limit yourself to one question and that's like a lap.
Hi.
Lynn Ledwith by default.
Okay.
Yeah.
<unk> question comes from Anthony.
Speaker 8: The first question comes from Ernesto Gamilondo at Bank of America. Please go ahead.
No.
Bank of America.
Please go ahead.
Speaker 9: Thank you, Anna. Good morning, Patricio, Mariano, Batilio. Good morning, everyone. Thank you for your presentation and for the opportunity.
Thank you Anna.
Morning, Patricio Mariano until deal.
Morning, everyone.
Thank you for your presentation for the opportunity.
Speaker 9: My first question is on the political outlook in Argentina. After the midterm elections, I would like to know, which do you think are the key challenges ahead?
My first question is on the political outlook in Argentina.
After the mid term elections.
I would like to know, which do you think are the key challenges ahead.
Speaker 9: And if you think there are like potential key dates that we should be following so that that's my first question
And if you think like potential key dates.
We should be following so that's my first question.
Speaker 4: Well, first of all, there was a clear win of the opposition.
Well first of all.
There was a clear.
Still win of the opposition and.
But.
Speaker 6: I believe that, I mean, the president has announced that in December , this December , they will present a multi-year economic program.
I believe that Ah I mean, the president has announced that in December.
This December it would present a multiyear.
Economic program.
Speaker 4: in order to have the approval of Congress.
In order to.
Throughout the approval of Congress and.
Speaker 4: And what we expect, I mean, we know that there is a deadline with the IMF, so the...
What we expect.
I mean, we know that there is a deadline with the IMF. So.
Yeah.
There is.
Speaker 4: a short time frame for the government to negotiate this multi-year plan in order to make it to have more sustainable fiscal policies, effects more realistic also effects levels in order to enhance export-oriented industries and to strengthen the reserves of the central bank.
The short timeframe.
For the government to negotiate this multiyear plan in order to make it to.
To a more sustainable fiscal policies.
<unk> more more realistic also FX.
Levels in order to.
Export oriented industries and to strengthen.
The reserve so the central Bank.
Speaker 4: What is not yet really clear is whether there is a clear line in the government in order to...
What is not yet.
Really clear is whether.
There is a clear line.
And the government in order to.
Speaker 4: to make this, let's say, a commitment for this economic plan, we will see, it's going to be an interesting period.
To make this a let's say a commitment for these.
Economic plan, we would see this is a very it's going to be an interesting period.
Speaker 4: But I think also the attitude, what is important is the attitude of the IMF, whether they will, let's say,
But.
I think also the attitude what is important is you can do with you of the IMF, whether they will let's say.
Speaker 4: allow for sort of a model through economic policy until 2023, or they will be strict in the sense that they want to have lessening of public expenditures and reduction of subsidies and so on. So this is, I think, what we are looking for. I don't know if you want to add something, Alejandro, on that.
Allow for.
Sort of.
Muddle through.
Economic policy until 2020 free or there will be street in the sense that they wanted to have.
Lessening of expenditures.
Bandages and reduction of subsidies and so on so that's what this is going to be.
What we are looking for I don't know if you.
Want to add something.
Speaker 4: I think you've hit on most of the points, Patricia. As you said, it's key to understand.
Alright. Thank you hit on most of the points of Asia as you said, it's key to understand.
Speaker 6: what the scope and the depth of the agreement with the IMF will be and going back to Nectar's question as to date, I think that you should follow carefully these talks to be able to establish when an agreement is reached.
The scope and the depth of the agreement with the IMF.
Going back to <unk> question as two days I think that you should follow carefully.
These talks to be able to establish when an agreement is reached.
Perfect. Thank you so much and then just asked it.
Speaker 9: Perfect, thank you so much. Then just a second question on the fintech competitive landscape. I would appreciate it if you can share with us who you see as the main players. The one I have on top of my mind is Oalla. And how do you think Yuval and your new digital initiatives are against the other fintechs?
Question on the Fintech.
Competitive landscape.
I will appreciate if you can share with us.
Do you see as the main players.
One I have on top of my mind is one.
And how do you think you, though on your new digital initiatives and again there's index.
Speaker 4: OK, I think that Walla basically is focusing on providing solutions for people who don't have bank accounts and they are giving a value proposition on that.
Okay.
I think that.
I mean, one basically is focusing on.
On providing solutions for people who don't.
Bank accounts.
And given our value proposition on that.
Speaker 4: The main problem is that they don't have deposits. This is the reason why they are applying for a banking license. In order to reach scale in Argentina, you need to have a license to get deposits.
And.
But.
The main the main problem is that they don't have deposits. No. This is the reason why now.
<unk> Corp.
Banking license in order to.
To reach scale in Argentina.
You need to have a license to get deposits.
Speaker 6: And you can see this, for instance, if you look at the size of the funds that were collected by Barcado Pago in...
You can see this for instance, if you look at the size of.
The funds that were collected by the.
Bye Bye bye bye all.
In relation to the the fund industry is.
Speaker 4: relation to the fund industry is...
Yes.
Speaker 4: nearly irrelevant, and they've been working on this. So this is an extreme example that the, let's say, only working with transactionality as a fintech pay in Argentina is not.
Nearly irrelevant and they've been working on this so.
So this is I think this is an extreme example.
The net.
They already are working with our transactional.
As a free to play in Argentina is not.
Speaker 4: They are not able to reach, they need to have a bank license in order to become a player in Argentina because of the restrictions we have in Argentina.
It's not.
They don't they're not able to to reach.
They need to have that say this is a bank a bank license in order to become a player in Argentina because of the restrictions we have in Argentina.
Speaker 4: In the case of Udo, Udo is transforming itself.
In the case of Youtube.
<unk> is a is.
<unk> is transforming itself from a consumer finance operation.
Speaker 4: from a consumer finance operation fully, almost fully focused in providing financial services, credit cards and personal loans to people, customers who come to the Walmart, Changoma supermarket stores to what's now a full digital service.
D or almost fully focused in.
In providing a financial services credit card and personal loans to people customers who.
Who come to tango, two the Walnut triangle mass.
Supermarket stores.
No.
For a full digital charges and we.
Speaker 4: Our main goal now will be to attract retail deposits, and this will have a significant impact for us, I believe, to lower our cost of funds and to have a much more sustainable business. And I think it will impact a lot in the overall net income revenue and capital creation of Grupa Super BL.
Our main goal no no it will be to attract deposits retail deposits and this will have a significant impact for us at too.
I believe you too.
Lower Cogs cost of funds and to have a more much more sustainable business.
I think it will impact a lot.
In view overall and net net income revenue of.
On capital creation of glucose with Brookdale.
Speaker 5: I don't know if you want to add something on the theme text, Alejandro.
I know if you want to add something.
Speaker 10: I think you mentioned the key issue of funding and access to funding. I also think that Kudu has done a terrific job at enhancing customer experience and putting together a very superior product offering. And I think those two things combined with the strength of the funding capability will make a very strong positioning in the market in the next quarter.
I think I think you mentioned the key issue of funding and access to funding and I also think that Q2 has done a terrific job.
Enhancing customer experience and putting together, a very superior product offering and I think those two things combined with the strength of the funding capability would make a very strong.
<unk> positioning in the market in the next quarters.
Speaker 9: Thank you, Patricio and Alejandro, very helpful.
Thank you Patricia and I'll hand, it all very helpful.
Thank you.
Speaker 8: Thank you Ernesto. Our next question comes from Gabriel Nobrega at Citi. Hello, good morning Gabriel. Please go ahead.
<unk>.
Our next question comes from navigating already huh.
And what's the morning happening. Please go ahead.
Yeah.
Speaker 11: Sorry about that. I'm having some technical difficulties. So thank you for the opportunity to ask questions. My first question is actually on loan demand. If you could elaborate further what's driving this higher demand which we're seeing. That you're seeing in your press release that it's undue to the government programs.
Sorry about that.
Something I would call mid Twenty's. So thank you for the opportunity to ask questions. My first question was actually on the loan demand.
Elaborate further.
Driving some higher demand, which we're seeing my known that you're seeing in your press release that it.
Some do.
The government programs.
Speaker 11: focused on SMEs, but I just wanted to understand if you think that we are at an inflection point where loan demand isn't going to start increasing, and how are you going to be able to control your adverse selection in this scenario, and I'll ask a second question afterwards. Thank you.
Focused on him Sme's, but I just wanted to understand if you think that we are at an inflection point, where loan demand isn't going to start increasing and how are you going to be able to control your adverse.
Election in this.
Scenario and ask a second question afterwards, thank you.
Okay.
Speaker 4: Okay, I mean, Gabriel, it's real that we are in a very low point of low demand, credit loan demand.
I mean, it's real that we are in a very low point of load of low demand credit loan demand.
Speaker 4: And we believe that it has mainly to do with the lack of business confidence and also consumer confidence.
And we believe that it has.
Mainly to do with the lack of.
<unk> business.
This confidence.
Also consumer confidence.
Speaker 4: So, we need these signals to reignite the loan demand. Having said that, there are certain particular enterprises that are export-oriented, and they continue to perform well in the economy.
So.
We need these signals to reignite the.
The loan demand, having having said that there are certain.
In particular enterprises desktop export oriented.
And the continued to perform well in the economy.
They the IRS I mean the.
Speaker 4: We continue to serve them with different lines of credit, particularly pre-export finance.
We continue to serve them.
It does.
Ninth of credits, particularly pre export financing.
Speaker 4: Also, there are enterprises that take advantage of subsidized loans to take leasing lines, where we are very strong in leasing, in order to replace equipment.
Also.
There are enterprises that take advantage of subsidized films too to take leasing lines. While we are very strong in leasing in order to replace equipment.
Speaker 4: And for individuals, I think it's the same problem, a lack of appetite for long demands.
But.
And for individuals.
I think it's the same program.
Very very very low.
I mean lack of offer.
Appetite for loan demand.
Speaker 4: What we see eventually is an interest in car financing.
What we see.
Sure.
Eventually he is.
And interestingly in car financing because people see Argentina, Argentina to get cars to be a protection of value so used car financing.
Speaker 4: because people see in Argentina today, cars to be a protection of value. So you start financing is driving some certain number of loans in a bank at the bank level and also you do.
Driving.
Some.
On a certain number of loans.
<unk>.
At the bank level and also what you do.
Speaker 12: I don't know if you want to add on that, Alejandro. Oh, basically, I would mention that what we've seen during most of the pandemic, until there was a turning point in which the economy started to pick up, was that the working capital of most of SMEs and corporates had been going down. So there is an effect of replenishing working capital as the economy picks up, and that's basically what we are supporting.
Well to us.
Hello.
Basically I would I would mention that's what we've seen during most of the things that make until there was a turning point in which the economy is starting to pick up.
The working capital most of of Smes and corporates have been going down. So there is an effect of replenishing working capital as the economy picks up and that's.
What we are supporting in terms of the adverse selection of whichever is the second part of your question we are focusing on.
Speaker 12: In terms of the adverse selection, which I believe is the second part of your question, we are focusing first on our own clients and helping them take off and regain much of the economic activity and in many sectors we're seeing that the level of economic activity is back to pre-pandemic levels and in some sectors even beyond that.
First on our own clients and helping them.
Take off.
Regained much of the economic activity.
These factors were seeing that the level of economic activity is back to pre pandemic levels I mean some sectors.
So the first focus is on trends that we know of Texas, which we operated on and the value chains that we've worked at the other focus is really supporting a pick up in some.
Speaker 12: So the first focus is on clients that we know, on sectors which we've operated on, and the value chains that we've worked.
Speaker 12: The other focus is really supporting a pickup in some export-oriented sectors.
Export oriented sectors. For example, many packaging, which are really picking up and Australia. Good progress.
Speaker 12: For example, meat packing, which are really picking up and are showing good progress, too. So we believe that there is significant room for growth from, as Aditya pointed out, very low credit penetration levels.
So we believe that there is significant room.
Growth from as you pointed out very low credit penetration levels.
Speaker 4: In addition, in order to control credit risk, also a large substantial part of our personal loans are given to individuals that collect their salaries in the bank.
In addition.
Another 12 to control.
Let's take a cogs.
Credit risk also.
Not substantial part of our India for instance, in the case of individuals substantial budget of our personal loans.
Or given to individuals that protect our salaries in the bank.
Speaker 4: around 70% of all personal financing is with debiting their accounts at the bank. So this also lowers, let's say, an adverse selection, and for enterprises, for corporations
Around 70% of all especially in personal financing.
It is.
As with our you know with that.
Leveraging the their.
There are accounts of the bank. So this is also lowers let's say an adverse selection and for enterprise physical corporations.
Speaker 4: I also said, in addition, in complement to what Alejandro mentioned, is that we continue to do a lot of cash flow-based financing, which is...
I also say in addition to complement to what Alejandro mentioned is that we continue to do a lot of cash.
Cash flow.
Cash flow base financing, which is.
Speaker 4: by itself, you know, it's a way of controlling risks.
By itself.
You know either.
It's a way of controlling risks.
Speaker 4: But infection point, I think we need to wait a truly inflection point. I think we will reach it in 2023 with a political change is my opinion.
But infection point, I think we need to wait.
Truly inflection point I think we'll we will Richardson 2022 'twenty 'twenty three with a predicted political change is my opinion.
Speaker 11: All right, that's very clear. Thank you. And I actually have a follow up from from the previous question on the fender landscape. I understand you talked about Walla. And what I wanted to understand is that you will show this.
Alright, alright, that's very clear thank you and actually have a follow up from from the previous question on the center.
Landscape.
I understand you won't talk about the Waller.
When they want them to understand.
Is that.
You I'm sure that you have around 500000.
Speaker 11: that you have around 500,000 digital customers, but when you compare with Amala, they already issued more than 2 million prepaid cards. And so I wanted to understand here, is there a strategy from you to grow slower the number of clients, maybe try to monetize them faster, or are you still aiming at adding clients in a faster manner in the coming quarters?
Digital customers.
When you compare with the Mueller, they already issued more than $2 million.
On prepaid cards, and so I wanted to understand in Europe.
Strategy from from you to them some grows lower the number of clients some maybe try to monetize them faster.
Or are you still aiming at.
Adding clients in a faster manner in the coming quarters.
Right.
Speaker 12: Yes, you know, one thing that you have to bear in mind when you look at these figures, Gabriel, is whether these operations are making money or not, and how long it will take to monetize all this customer acquisition.
Yes.
Do you have to bear in mind when you look at these these figure out of scope.
It's whether these operations are making money on logs and how long it would take to monetize all this customer acquisition.
Speaker 12: What we've seen in financial services is just recruiting clients is not enough to be able to have a sustainable strategy over time. This is why we emphasize in our strategy.
What we've seen in financial services is just.
Recruiting trends.
Not enough to be able to have a sustainable strategy over time and this is why we.
We emphasize our strategy the ability of having the right funding, particularly appealing to the type of environment and secondly, trying to have.
Speaker 12: the ability of having the right funding, particularly in the Argentine environment, and secondly, trying to have a principle or an integral relationship, cross-selling several products. We approach this segment with this more comprehensive view, and we aim absolutely at having this relationship of, you know, several products.
Our principal or and then get grow that relationship.
Selling several products.
We approach this.
This segment was this more comprehensive view.
And we aim absolutely at having this relationship.
Several of the products with the right funding to be able to drive.
Speaker 12: with the right funding to be able to drive growth.
Growth, we believe that the cost to income profile.
Speaker 12: We believe that the cost-to-income proportion will be much better, and that the leverage we can have on our capital over the deposit base that we will capture will allow us to scale adequately with a very efficient model.
Proportion would be much better and that the leverage we could have on our capex overall deposit base that we would capture will allow us to scale adequately with with a very.
Sure.
Alright, thank you so much.
Speaker 13: Thank you, Gabriel. Our next questions come from Rodrigo Nestor from our department. Hello Rodrigo, go ahead. Good morning and thank you for the opportunity. I have a question regarding the income tax rate. If you could explain further the reasons behind the highly effective tax rate and what should we expect going forward and then have a follow-up.
Thank you and our next question comes from Todd.
<unk> found that about two months.
Let me I'll, let Ted.
Hi, good morning, and thank you for the opportunity.
I have a question regarding the income tax rate if you could explain part of the reasons behind the higher effective tax rate then what should we expect going forward and they have a pull.
Sure.
Marty I don't do you want to go.
Speaker 3: Yeah, I can comment on that. Hello, Rodrigo.
Yeah.
I can comment on that.
For the income tax.
Speaker 2: For the income tax rate, we have a...
Right.
We have.
Speaker 4: too many sources that increase the effective tax rate. You know, the statutory income tax rate is 35%, but there are certain differences between the statutory income statement and the income statement for tax return. The main differences arise from the value of fixed assets acquired before 2016.
Two main sources.
Great.
Our next rate case.
Sorry.
Explain it 35%.
The differences between the.
Statutory income statement.
At no extra cost.
The main differences arising from the value of our fixed assets acquired before 2019.
Speaker 3: that defense are permanent, so they create an increasing cost as the income for income tax purposes is higher than our profit for income tax in our statutory income state.
That's perfect.
Yeah.
So they create a.
It will cost.
At the FTE count.
Or was it higher.
Higher.
And our appropriate point in time.
Yes.
Terry.
Segment.
Speaker 2: The second and probably more important has to do with tax assets and tax losses carried forward.
On a second.
Probably more important.
It has to do with.
At this time.
I'm supposed to carry forward.
Speaker 2: which they are not, according to the income tax law, they are not adjusted and they don't accrue any interest. So we have mainly a to-do, we have.
With Dave.
According to the income tax law.
Not just as they are.
Don't accrue.
So we have mainly as you do we have.
Speaker 3: 1.2 billion pesos in deferred tax assets and tax costs carried forward and these assets lose value over time with inflation.
I'm going to be on vessels.
But that's assets.
Going forward and these are just a little.
Bayou.
Our time with it.
Sure.
Speaker 2: So that loss of value as it relates to income tax according to IFRS is recognized in the income tax line.
So that is also part of it relates to income tax according to Ifr is recognized.
Income tax line item.
Speaker 3: that increases the charge in the income tax fine item and creates in turn a higher effective tax.
So that will create a charter income line item I will create will turn.
Higher.
That's great.
Speaker 2: Both types have a larger impact when profit-before-income tax is lower. As we had last year, a profit-before-income tax of 4 billion pesos, this impact would only increase the tax rate maybe from 35% to 40%. But when profit-before-income tax is lower, it has a greater impact and it can turn it up to 100%.
Both effects.
A larger impact when profit before income tax slower how we had last year and profit before income tax on our behalf peso this impact without it being tough to estimate at 35% to 40% when profit before income tax is slower.
We're adding back any attorneys are up to a 100% you mentioned.
Okay. Thank you.
Speaker 13: Thank you. And then if I may have a more strategic question, and maybe to do but ratio, I would like to know very briefly, what makes him more enthusiastic about the future of the industry and what concerns him the most about today's Argentina banking system.
And then if I may I have a more strategic question and maybe to talk about the issue.
No very briefly what makes you more enthusiastic about the future of the industry and what consensus amongst Hello, Denise Argentina banking system.
Well I think that.
Speaker 4: Well, I think that the financial industry is bearing the cost of...
The financials.
The industry is bearing.
He is bearing the let's say the cost of the.
Yes.
Speaker 6: an economy which is not in equilibrium, but of course what worries me is that
An economy, which is not in a clean room and.
But of course, what worries me is that.
Let's say.
Our main business, which is providing loans to the private sector.
Speaker 4: main business, which is providing loans to the private sector.
Speaker 4: has diminished over the last three years and you can see this in the loan to deposit ratio which is a minimum in historic levels and I think it reflects what is happening in the financial industry as a whole. There is lack of demand and also there's another aspect which also worries me is there is lack of savings.
Uh huh.
Diminished over the last three years.
And you can see these in the loan to deposit ratio, which is a minimum.
Storage levels.
I think it reflects what is happening in your financials in St.
Oh goodness.
There is a lack of demand.
And.
And also.
There's another aspect, which holds the worries me is there is lot of savings.
Speaker 4: So the lack of savings has also to do with an absolute lack of confidence in our currency. We have a confidence problem.
<unk>.
And the lack of savings is it also to do with with.
So the lack of confidence in our currency.
We have a we have a confidence problem, we need to get here.
Speaker 4: get clear signals for investments, clear signals for deregulation, clear signals for export industries, clear signals for having an equilibrium in monetary policies in order to have a currency that basically gets to lower inflation.
Sequence for investments is sickness sequels, where would you read the regulation.
Clear signals for exports industries, just thickness for pulp for having an equilibrium.
In the morning, Terry I mean in the monetary.
Policies in order to have a currency that I.
I mean, basically it gets too low inflation.
Okay.
The bulk of them enthusiastic.
Pardon me.
Speaker 4: The first question was, what makes you enthusiastic? Well, what makes me enthusiastic is basically, I mean, my enthusiasm, I think, has basically is related to, let's say, if, I think, if there is a, what we have seen on the political side now is, I think, is that a request of the society to have a more pro-market.
The first question was what makes you <unk> what am I missing because you have to take it.
<unk> is basically I mean, my enthusiasm I think has to has basically.
<unk> is related to let's say.
If I think if the reason what we have seen on the political side. Now is I think is a request of the society to have a more pro market.
Speaker 4: a political economy, and I hope that they will, I mean, the government will hear this.
Political economy, and and I hope that they will I mean the government.
Or are these requests.
Speaker 4: of the society to have a more pro-market stance.
Okay.
The society to more pro market expands.
Thank you very much.
Speaker 8: Thank you Rodrigo. Our next question comes from Juan Ricardo. Good morning Juan, go ahead.
Thank you and our next question comes from quantify.
At Scotiabank.
In one go ahead.
Speaker 14: Hi, good morning everyone. Thank you for taking my question. I have two questions. One is related to NIM and the second one related to the international expansion. So in terms of NIM, you mentioned that you expect NIM pressure to continue given the
Hi, Good morning, everyone. Thank you for taking my question I have two questions one is related to NIM.
Second one related to the international expansion.
So in terms of NIM you mentioned Bob.
You expect NIM pressure to continue in <unk>.
Speaker 14: low loan demand and regulations. So my question there is, does this quarter reflect the full regulatory pressure or can we expect NIM to go down in the coming quarters? And related to that, how is the bank working to limit the NIM pressure?
No.
Loan demand and regulations.
So my question there is.
Thus this quarter reflect the full regulate regulatory pressure or can we expect NIM to continue to go down in the in the coming quarters.
Related to that how is how is the bank working to limit the NIM pressure.
Speaker 14: And the second question related to international expansion. Can you help us understand the strategy for expanding outside Argentina?
And the second question related to international expansion can you help us understand the strategy for expanding outside Argentina.
Speaker 14: Are there any goals that you can share with us and also can the bank, can the group freely move capital outside the country with the current regulations?
Are there any goals that you can share with us.
Also timing.
Can the bank frequently group freely move capital outside the country with the current regulations.
Speaker 4: Okay, let's first answer about the NIMS. Mariano will help, but simply I would like to state that there is a continuous pressure of NIMS, mainly to do with the punitive regulations of the Central Bank, but also it has a lot to do with the lack of demand of loans.
Okay.
Okay.
That's first.
And so those are all the names.
Marty I know will help but I would like to state that.
There is a pressure to the continuous pressure on nims.
It's mainly to do.
We are the plaintiff regulations of the Central Bank.
But also it has.
A lot to do with the lack of demand of loans.
Speaker 4: When loans resume, it will help us, definitely, to, let's say, to have better needs.
Loans resumes it will help us.
Let's say, it's about better needs.
Speaker 5: But if you want to, if you want to answer the first question, I'll...
It is going to do you want to answer the first question on.
Speaker 3: Sure, Patricio. Hello everyone. Well, in effect, this quarter we are seeing a full impact of central bank regulations and also an adverse macroeconomic environment. So we have very negative interest rates, with the index paying a 30% interest rate, repo is 36%.
Sure, but if you.
<unk> one.
In effect this quarter, we are seeing at the full year.
Of our two private bank regulations.
At birth.
Macroeconomic environment, So we have.
You mean, just interest rates.
Sandy.
<unk>.
The 30% interest rate.
Repo five.
Speaker 15: And that compares with an inflation of more than 50% last 12 months. So this leads also to a very low credit demand.
And that compares with any inflation.
More than 54 times last 12 months.
So so this is.
<unk> also to a very low credit demand.
That's.
Speaker 15: In that environment, we have regulated floors for time deposits because we would normally lower the interest rate as we pay on time deposits, so we make positive spreads.
That's environment without regulated.
Ross for time deposits.
We would normally lower interest rates.
So.
Particular Fred.
Speaker 15: So it's a very challenging environment, and we are seeing definitely the pulling back of it in this quarter, where, as you can see, we have the lowest NIM in the last five quarters. So regarding the second part of your questions, what we can do to sustain and increase that NIM in the future.
So, it's a very challenging environment and we all see.
Anthony.
In this quarter, whereas you can see that we have that.
In the last quarter.
Sure.
So regarding the second part of your question.
What we can do into sustainable liquidity doesn't mean that in the future.
Speaker 15: We aim to grow in deposits, not regulated time deposits, but on mainly, for instance, in savings accounts and corporate current accounts. We have increased the average volume of corporate current accounts.
We aim to grow in.
Partly it's not.
Regulated time deposits by far.
Maybe one kind of thing.
Savings account.
Current accounts.
We have raised the average body overall.
I went to accounts in Florida, we are seeing that also.
Speaker 15: And we are seeing that also in the first month of the fourth quarter.
In the first month of the quarter totaled so that is a very important.
Speaker 15: So that is very important. Also then, we need to increase our loan portfolio as great demand resumes. We've seen in the last quarter, particularly the third year.
Also then.
We need to increase our loan portfolio earthquake three months he met with the team.
And the last quarter, particularly.
Thank you.
Speaker 15: We saw a growth of 5% in real terms, so we're getting a bit of a market share there. And still, in the SMEs programs, they subsidize loans that are mandatory, so it doesn't have still a very large positive income in NIM.
Yeah, I think we saw a growth of 5% real terms.
Until we gain.
Market share out there.
It's still.
As any programs to subsidize.
That's all we have a few that.
Or allowed US also to the King County.
But.
Speaker 15: It's still a long road where we replace central bank instruments by loans to the private sector. And that's what we intend to do in the future. And we expect 2022 to be a year where we resume growth above inflation. And that will lead us to in the beginning.
It's still a low Roe.
We have replaced.
Central bank instruments by loans to the private sector and that's what we intend to bring that to your door and we expect.
We expect 2022 area, we resumed growth above inflation.
And that will lead us to between really cool.
Speaker 4: In terms of the international expansion that we want to pursue beyond Argentina, I mean recreating revenues beyond Argentina, at U.S.
In terms of the international expansion that we want to pursue beyond Doug.
Okay.
Creating revenue beyond Argentina.
Yuzu set of issues.
Speaker 5: which is basically a platform to deliver health services and also well-being services to individuals.
He's basically.
Our platform to deliver.
Our house Health services, and ultra services, well being services to individuals.
Speaker 5: We will start deploying. We've reached agreements with two companies. Europe Assistance and Assistive is an Argentine company that provides health services.
We will.
We will start.
We have reached agreements with two companies.
Europe assistance.
Steve is a magic time company.
Providing health services and.
Speaker 4: and Europa Systems is more geared to well-being services in the home of an individual. So with both companies, we reached an agreement to start deploying
Europe as he assumes his mortgage to well being services in the home.
It needs to be built so with both companies we reached an agreement to start deploying in Paraguay.
Speaker 4: in Paraguay as of the second quarter of 2022, and basically what they are doing is they will be funding, they will be providing that commercial, I mean, commercial funding which
And as all of us in the second quarter of <unk>.
Of 2022, and basically what we are doing these days it will be funding it will be providing that.
Commercial I mean commercial funding.
Which.
This.
Speaker 4: We will use this funding in order to deploy digital marketing in order to attract customers.
This is basically what you will see funding in order to deploy.
Digital marketing in order to attract customers.
Speaker 4: And it's going to be like our first bridgehead in Latin America beyond Argentina. And from there on, we plan to continue to go to other countries.
And it's gonna be like like.
Our first reached.
Bridgehead in Latin America beyond Argentina them from their own we can we've got to continue to look to other countries.
Speaker 4: It's a business that, I mean, our goal, our goal in Yuzuru Servicios is in three years from now to, let's say, to have 200,000 customers in five countries.
It's a business that said I mean, our goals are evolving and you lose the ratios is spot.
Three years from now to two two let's say two.
200000 customers in in.
In five countries.
Speaker 4: So, this will give us...
So this will give us.
Speaker 4: a million customers in three years is what we plan to get, and this is basically, just to give you an idea, in Argentina, with the same lines of businesses, we already have 320,000 customers that we developed providing these services. So we believe that we can reach that and get revenue beyond Argentina.
It's a million customers in three years. This is what we've got to get and and.
This is basically.
Just to give you an idea in Argentina with the same lines of business as we already have 320000 320000 customers that we developed providing these services. So we believe that we can reach that and and.
Get the revenues beyond Argentina.
<unk>.
Speaker 4: Then for inverting online, inverting online is.
And then.
Four invest in online.
In fact in online is a is.
Speaker 4: We are working on a business plan and we already said that we request an authorization in the Central Bank of Uruguay to
We are working on that on our on our business plan, we already said that we requested authorization.
The central bank of Eurobond, two to pursue them.
Speaker 4: to pursue a regional, to provide regional investment.
Hum.
Our regional to provide regional.
Investment services for them.
Speaker 4: for in Latin America, excluding Brazil, particularly for providing investment services in the US market.
In Latin America, excluding Brazil.
Particularly for the and providing services for investment services in the U S market.
Speaker 4: And so we are working on the technology, technological platform to deliver this from Uruguay, with this license, proper license in Uruguay.
And so we are working on on the on the technology technological.
Platform to deliver these.
From Uruguay problem with this license broker.
Broker license in Uruguay.
Speaker 4: And in addition, in order to start our deployment, we already have secured around $5 million that are already in a holding out of Argentina. It's basically...
And in addition to these and.
Another two to start the <unk>.
We already have secured.
Hum.
<unk>.
$5 million that are already in I E.
And are holding out of Argentina, because it basically.
Speaker 4: that were paid from Invertir Online Argentina, and basically they are in a holding outside of Argentina. We will start deploying this.
Dividends were paid from from <unk>.
But you might see it online Argentina, and if they were based on basically the army or not.
No holding outside of Argentina, we would start with going east.
Yes.
Capital.
That's helpful. Thank you.
Thank you all are paying clients. Our next question comes from Scott has that under 80 al.
Speaker 8: Thank you, Juan. Our next question comes from Alejandra Aranda at ITAU. Hello, good morning, Alejandra.
The market hasn't come to that.
Speaker 16: Hi, good morning, and thank you for the opportunity. I have two questions, if I may. The first one is related to the cost. I mean, I was positively surprised by the performance this quarter, and given that the outlook is challenging on the income side, I was wondering what to expect going forward, especially given the right pricing that you've been doing.
Hi, good morning, and thank you for the opportunity.
I have two questions. If I may the first one is related to the close I mean I was positively surprised by the performance this quarter.
And given.
The outlook is challenging on the income side I was wondering what to expect going forward, especially given the right sizing that you've that you've been doing.
Okay.
Speaker 10: OK, do you want to go on that, Mariano? Or you prefer? I can start on that, Mariano, if correct. Aloha, Alejandra.
Do you want to go on that somebody I do hope you prefer I can start on this.
Correct.
Hello, when it comes to that.
Speaker 12: We see lots of opportunities for enhancing our efficiency. Many have been triggered by the acceleration of the adoption of digital and automated channels throughout our branch network.
We see lots of opportunities for <unk>.
Enhancing our efficiency many has been triggered by the acceleration of the adoption of digital and automated channels throughout our branch network.
Speaker 12: The others come from the digital transformation process we've been discussing over the large quarters and all these boil down to a reduction in the total amount of headcount we need to operate and a reduction in the total amount of branches.
The other is coming from the digital transformation process, we've been discussing over the larger quarters and all of these boil down tool.
Reduction in the total amount of head count we incorporate.
And a reduction in the total amount of approaches we also see opportunities on the revenue side, because the digital capabilities, giving us an opportunity to expand our footprint without actually having to deploy.
Speaker 12: We also see opportunities on the revenue side because the digital capabilities are giving us an opportunity to expand our footprint without actually having to deploy a physical branch network.
Physical branch network. So this combination is helping as you noticed and we foresee this trend to continue throughout 2022.
Speaker 12: So this combination is helping, as you've noticed, and we foresee this trend to continue throughout 2022.
Okay, but in terms of the level of efficiencies that we should be looking out for the next couple of quarters.
Speaker 16: Okay, but in terms of a level of efficiencies that we should be looking at for the next couple of quarters?
Speaker 10: Well, you know, you've seen a 6% increase, sorry, decrease in head count, and I think that we will probably be around that level moving forward. Okay.
Well.
You've seen them.
6%.
<unk>, sorry, a decrease in head count.
And I think that we would probably be around that level moving forward.
Okay.
Okay.
Yes.
Speaker 4: Yes, Alejandra also, too.
And also too.
Two.
Speaker 4: complement what Alejandro said also at U2, U2 is also in the middle of a huge transformation.
Complement what I think I understand also.
You too.
Youtube is he's also in the middle of a huge transformation from a consumer finance company.
Speaker 4: from a consumer finance company where business was done mainly in the traffic of supermarkets.
There is disclosed on that mainly in the traffic off of supermarkets.
Speaker 4: and towards a full digital banking service. And that entails...
And to us.
Hum.
Banking full digital banking surveys and that entails a change also the way we do business even in the.
Speaker 4: a change of the way we do business, even in the, for instance, the case of the supermarket, the people that are in the supermarket, we will foster a much more, let's say,
This is a case of supermarket.
The people that are in the supermarket.
We will foster a much more.
Let's say.
Speaker 4: The way clients interact will be much more digital, and so we will see in 2022 a substantial efficiency in terms of headcount also at YouTube.
The way science, they interact will leave bunch more detail and so this is.
We will see.
In 2022.
A substantial efficiency in terms of head count post floods due to because.
Speaker 4: Because of this transformation that we are working.
Because of these transformations that we are working on.
Speaker 5: And so, you will see this in, you know, overall group of SuperEL, we have a significant reduction of headcount in 2022.
And so you will see these skin overall group of Super meal.
Hum.
Significant reduction of headcount in 2022 besides the bank.
Thank you.
Speaker 16: Thank you. If I may follow up on that, I mean, there's a huge demand for digital jobs and digitally native.
Finally, I spun them off quite a lot from that.
Sure.
I mean, there's a huge demand for digital drops.
Native.
Speaker 16: workers. How are you seeing the market there? How are you competing with the fintechs and also with the so-called blue labor with other companies from abroad coming and taking the opportunity to hire people at the blue chip swap?
Workers.
How are you how are you seeing.
The market there how are you competing with <unk> and also with that.
So called Blue label.
Other companies from abroad coming on.
Taking the opportunity to hire.
Higher people.
And we keep swap.
Speaker 10: All right, it's a very good question. Alejandro, you want to ask on retention of talent, basically? Yes, you're quite right, Alejandro. It's becoming more and more challenging, and yes,
Alright, very good question.
Bill you want to.
To us some retention of talent.
You're quite right in terms of covenants, it's becoming more and more challenging and yes, we are competing with Fedex with big Tex and also with international companies that are hiring Argentine talents.
Speaker 10: We are competing with fintechs, with big techs, and also with international companies that are hiring Argentine talent for work.
For work abroad. So so it is becoming challenging what we've done is basically.
Speaker 12: So it is becoming challenging. What we've done is basically.
Speaker 10: First, focus on the key areas where we're getting most attrition. This is basically digital talent, as you pointed out. We're working there on value proposition, and there are several aspects of the way that we work and the ability to address different needs that our workforce has under these challenging times.
First.
Focus on the key areas, where we're getting most of accretion. This is basically a digital childhood talent as you pointed out we're working there.
New proposition and there are.
Several aspects of the way that we work and the ability to.
Address the different needs.
Our workforce has under these challenging times so part of it has to do with adjusting the way we work at the workplace second as I mentioned before the value proposition adjusting it to markets keeping prior to Covid on these changes, but also introducing us.
Speaker 10: So part of it has to do with adjusting the way we work at the workplace. Second, as I mentioned before, the value proposition, adjusting it to market, keeping track on these changes, but also introducing other...
Either.
Speaker 12: different alternatives in the way in which we compensate and in the way that we motivate.
Different alternatives and the way in which we compensate in the way that we market.
Speaker 10: Some of these are basically out-of-focus groups that we do with the teams and also require a greater involvement in the digital transformation of some of the seniors of the organization to help the new talent navigate.
Some of these.
Our.
Basically alka focal focus groups that we do it with the teams.
And also require a greater involvement.
In the digital transformation of some of the seniors of the organization to help.
New talent navigate and so.
Speaker 4: So, we think that this problem will actually become greater over time because the transformation we're doing at Superior is getting more and more visibility. So we are getting prepared for it and we are having, so far, good success in retaining some of the cases that have been brought forward, but it is getting tougher going forward. Okay.
We think that this program will actually become a greater overtime because the transformation we're drilling until it is getting more and more visibility. So we are getting prepared for it and we are having.
So far.
Good success in retaining some of the cases.
How can you pull forward, but it is getting tougher going forward.
Okay. Thank you.
Men, who have started one.
Speaker 16: Yes, sure. Short one, what's the minimum level that you feel comfortable in terms of coverage?
Yes sure.
Short ones.
What's the minimum level that you feel comfortable in terms of coverage.
Okay.
Speaker 3: Yes, Alejandro, I can comment on that. As you know, we work with effective loss models according to IFRS. So there's not like a magic percentage, like to say 100% or 150. It will depend on the loan portfolio.
Yeah.
Yes, I know I can't comment on that as you know we work with an expected loss model according to our infrared.
So that's known.
Imagine a person that likes to say, 100% or what kind of a 50.
It will depend.
Or the loan portfolio.
Speaker 15: of the mix of that portfolio, the outlook, looking forward.
The mix of that portfolio.
The outlook looking forward.
Speaker 15: you know, that there's also a component of expected loss that is the forward-looking part of the model. So we are comfortable with the level we have right now. We think it's adequate. We thought it was adequate to have a larger coverage.
That's also a component of us expected.
And that is the port.
We're looking at.
Right.
So we are we're comfortable with that.
Now our waitlist.
We thought it was the other ways to have a larger coverage.
Speaker 15: in the past where we had less disability.
But why.
While we had less ADT.
Speaker 2: and also the automatic crystalline was in place. So moving forward, I will.
And also the scale somatic BRCA coding place.
So looking forward I would expect to regularly.
Speaker 15: regularly increase coverage as we
Lease coverage.
We feel.
Speaker 15: we feel comfortable.
Comfort level.
Speaker 4: using the COVID-specific provisions that we created during last year. Last quarter, we have 2.4 billion COVID-specific provisions. Now they decreased to 1.6 million, and that should decrease in the future. Of course, always that the situation gets back to normal.
You'll see that the Covid specific provisions that were created last year.
Last quarter, we had a 2.42 for video.
We expect these provisions now Eddie Gray to Wifi, six medium and that shortly.
A decrease in the futures of course with that situation.
It gets back to normal.
Okay.
Okay. Thank you.
So whatever.
Speaker 1: Thank you, Alexandra. Thanks for all your questions as well.
Thank you I think I'm.
Thank you for your questions. This winter.
Speaker 1: We have reached today's question and answer session.
We have links to me a question answer session. Thank you for joining us today. Thank you.
Speaker 8: Thank you for joining us today. Thank you for the interest in our company. We look forward to meeting more of you over the coming months and providing financial and business updates next quarter. In the interim, we remain available to answer any questions that you may have. Thank you and stay safe.
In clean Technology company, we look forward to meet the memorials.
I'm, providing tightness in that business.
Thank God.
Named name will remain available to answer any questions.
Thank you.
Yes.
Okay.