Q2 2023 Grupo Supervielle SA Earnings Call
Speaker 3: I.
Speaker 3: ["ids and
Speaker 3: kid
Speaker 3: ? Thank you.
Speaker 3: … you
Lastly, other income losses declined nearly 6% or 736 medium vessels, reflecting the drop through credit card benefits together with Delaware turnover taxes state.
Now for a quick update on turnover.
Theres more detail provided in our Arnold's with his team.
Turning to anyone still qualifiers, starting to tax income from the linked some repos with the central Bank and.
These totaled 23, the provenance of and also happy to say with me before.
Before this instrument where acceptance.
Speaker 4: against the tax authorities from Buenos Aires and Mendoza, alleging that the legal monetary policy instrument used by the National Monetary Authority that can be interfered with by a local government.
Speaker 4: In addition, both banking associations, AVEBA and AVA, and the majority of financial institutions operating in this region.
Speaker 4: This chance followed suit.
Speaker 4: Accordingly, we are not taxing the leaks in Buenos Aires and Mendocia since April and generally DCR respectively.
Speaker 4: following the opinion of our internal and external legal advisors.
Speaker 4: Savings in turnover tax for second year to three accounted for approximately 500
Speaker 4: This is in line with the central bank's claim for the constitutionality of this tax and I believe it is in the best interest of our stakeholders.
Speaker 4: These contributions to profitability were partially obsessed by higher tax abatement and exposure of deferred tax assets to inflation.
Speaker 4: Now looking at our performance for the second quarter starting with slide 7.
Speaker 4: Total assets increase sequentially above inflation and significantly above industry growth, with deposits also expanding considerably above the industry trend.
Speaker 4: Perfective asset and liability management allows us to leverage the higher spread of short-term central bank securities and maximize name in an increasingly volatilized environment.
Speaker 4: Our short-term central bank securities portfolio increased to nearly 43 percent of total assets at quarter end, up from 31 percent in the prior quarter, while the share of government securities declined to 8 percent this quarter, from nearly 11 percent in the first quarter. With this, much of our capital ConsciousAMES move forward in the move toward prime.
Speaker 4: In turn, petal deposits increase 16% sequentially, driven by growth in public-sector deposits corporates at a positive impact from the 13th salary.
Speaker 5: Moving on to slide 8.
Speaker 4: Total lending, life inflation, and industry trends reflecting our present approach.
Speaker 4: Together with over a week credit demand. As a result, total lending fell 5% in question. Starting this quarter with total lending, we are providing info on off-balance sheet guarantees granted to corporate customers.
Speaker 4: This is a product area that has been growing rapidly this year.
Speaker 4: Assume on the chart to the right
Speaker 4: As we continue to prioritize high-value customers, particularly loans to payroll, SMEs, and middle-market customers, consumer finance customers continue to see the share of total loans. Thank you very much. Thank you.
Speaker 5: Moving on to slide 9.
Speaker 4: Total MPL ratio declined to 2.5 percent in the quarter, one of the lowest levels ever as we maintained five credit scoring criteria and healthier loan myths as I mentioned earlier. Early delinquency in turn improved sequentially. All segments contributed to the lower MPL ratio. Moreover, the sale of a delinquent consumer loan portfolio together with the upgrade of corporate customers to stage two from stage three contributed to bringing the coverage ratio to 148 percent up from 116 percent in the prior quarters.
Speaker 4: That financial market increased 20 percent sequentially to over 48 billion pesos in the quarter. Higher investment portfolio volumes, along with increased returns driven by sustained industry hype following rising inflation, contributed to higher names in the quarter. In 470 basis points sequentially and 780 basis points year-on-year to 26.6 percent.
Speaker 4: This high level of NIMS continues into July and August . As shown on slide 11,
Speaker 4: The efficiency ratio for the quarter improved to 62.5 percent from nearly 72 percent in the prior quarter and just over 81 percent a year ago.
Speaker 4: This point in improvement reflects revenue growth of over 16% coupled with a 7.6% increase in expenses.
Speaker 4: Note that personal expenses were up 12% in the period. A salary in June was adjusted ahead of inflation.
Speaker 4: Expenses for the first half of the year decreased.
Speaker 4: to close to 7% while revenues were up 9%.
Speaker 4: Moving on to capitalization on slide 12, we continue to build capital in the water with our tier 1 ratio increasing 1% 1% point sequentially to 15.7%.
Speaker 4: This increase is mainly explained by positive banks net results together with the business received at the hosting company level from other associations.
Speaker 4: Also, risk-based assets increase low inflation in the border, reflecting long portfolio construction in real time.
Speaker 4: Before opening for Q&A, please turn to slide 13 to review our prospectus for the full year of 2023.
Speaker 4: into account the recent microtransit is qua- by Patricio, we have revised our perspective of the flow in line item.
Speaker 4: With respect to audit quality, although NBL is at very low levels, we now anticipate net cost of risk for 2023 to range between 4.5 to 5%.
Speaker 4: This is about the cost of risk for first half of 23, but inflation is most likely to rise sharply in the third and fourth quarters, eroding individual disposable income and impacting certain commercial distance.
Speaker 4: Additionally, we now expect the MDR ratio at year end to range between 2.5 and 3%. Where before we anticipated closing the year with an MDR ratio at a higher level ranging between those observed during the form Water 22 and first water 23.
Speaker 4: In a higher interest rate environment and given the good year to date NIM performance of 24 percent, we expect NIM for the year to remain similar to the level reported in the first half. In a higher interest rate environment and given the good year to date NIM for the year
Speaker 4: In terms of fees in the current context we never expect softer insurance fees in real terms than early any day in the year.
Speaker 4: By contrast, brokerage fees will be higher this year, and this business benefits from higher volatility.
Speaker 4: Our view on the bulk of bank fees to individuals remains unchanged with these fees expected to reapply in line with inflation.
Speaker 4: With respect to profitability, we now anticipate ROE to remain at levels observed in the past half of the year, where before we expected a positive but lower ROE.
Speaker 4: Note that while ROE reported in the second quarter 23 benefited from extraordinary spreads and volumes in our investment portfolio, performance has been good in July and August today.
Speaker 4: We are also increasing our TM1 ratio expectations in the range of 14 to 16% by ERM, up from 13 to 14% before. As a reminder, 100% of our capital remains hedged against inflation.
Speaker 4: Beyond these changes, our 2020 expectations for all other metrics remain unchanged from our prior quarter views.
Speaker 4: Now we are ready to open the floor for questions. Anna, please go ahead.
Speaker 6: Thank you, Mariano. At this time we will be conducting the Q&A session.
Speaker 6: As a reminder, to ask a question you need to be connected to the Zoom platform.
Speaker 6: And first you need to raise your hand and press again to destroy your breast. You can also turn your buttons via the Q&A box.
Speaker 6: We would like you to limit yourself to one question and then you can raise your hand by raising another problem.
Speaker 6: One moment while we call for questions.
Speaker 3: Thank you.
Speaker 6: Our first question comes from Ernesto Arredondo, at Bank of America. All right, I'll just say you've come up with something new right. So let me change you.
Speaker 7: Hi, Anestó. How are you? Hi, Ana. Thank you very much. Hi, good morning, Patricio, Alejandro, and Mariano. Congrats on your results and thanks for the opportunity. My question will be on your impressions on the economic and political outlook.
Speaker 7: After the primaries we have seen Millet got the preference on the voters.
Speaker 7: So, I would like to hear your thoughts. If Milay is elected president, he will likely need to make agreements to pass some of his campaign proposals, which I think could prevent a fast polarization of the economy or to protect the central bank.
Speaker 7: However, at the same time, it could be a challenge to get into agreements to approve structural reforms which I think are highly needed, especially when Argentina has inflation and interest rates above 100%.
Speaker 7: So, I would like to hear your views on what are your first impressions on the economic and the political outlook going forward.
Speaker 4: Thank you, Nito. I will refer the answer to Alejandro. Simply, I would like first to start by saying that of course these results were sort of a surprise for all of us and we did not expect a one-third scenario which … Alright, that's it.
Speaker 8: for each candidate more or less.
Speaker 8: reflects uncertainty but at the same time, the majority of our times are demanding a change towards a lower size of government, lower taxes.
Speaker 8: and more of a private economy creating jobs. So this is good. But as you well said, the next government will need teams, will need to make agreements because there are many structural changes that need to be done in the country and this is quite a challenging scenario for next government.
Speaker 8: Alejandro, do you want to add? Yes, good morning, thank you for your question.
Speaker 8: I think that basically the surprise in the actual outcome
Speaker 8: has introduced a greater degree of volatility than we've seen in the markets.
Speaker 8: However, having said that, the levels of deposits in pesos and dollars have remained pretty stable.
Speaker 9: and the devaluation of 22% in the official exchange rate.
Speaker 9: followed by an increase from 97% to 118% in the reference BIS or interest rate.
Speaker 10: Thank you.
Speaker 9: are trying to anchor future expectations of inflation.
Speaker 9: judging by the raw fixed contracts we saw as of yesterday
Speaker 9: This could hold up to some point in September or the middle of October . That is, that after an initial turbulence, the...
Speaker 9: The guidelines of the government by which with these two movements they would try to anchor the future devaluations and future increases in interest rates up to October seem to be as of now reasonably in line with what the government would like to happen.
Speaker 9: Having said that, what we saw is that the gap with the financial exchange rate moved and maintained the 100% gap, and this will create a pass-through situation, and therefore we are expecting inflation over the next months to go into the double-digit zone for August . In our next report, we'll see how the
Speaker 9: is that the gap with the financial exchange rate moved up, moved and maintained the 100% gap and this will create a pass-through situation and therefore we are expecting inflation over the next month to go into the double-digit zone for August and September for sure.
Speaker 9: Now, going back to – that's overall what we see going on with the macro, if you extend that beyond October , we think that the government will do everything in its hand, in its reach to avoid further devaluations.
Speaker 9: and having reached an agreement with the IMF and having some boost.
Speaker 9: even if used to pay back debt in our central bank reserves, is a help in that direction.
Speaker 9: And therefore we think that we will try to definitely avoid further evaluations after October , but there is a chance that that might happen when you look at the rate of inflation that we expect.
Speaker 9: In terms of what would happen with Milay becoming elected, I think you're quite right in terms of alliances.
Speaker 9: if his performance at the ballot box
Speaker 9: in October was similar to the one he had on August 13, he would get roughly 40 representatives in the House of Representatives and 8 senators. And that clearly is very far from the majorities needed to pass the legislation. Therefore, he would go into alliances, which would probably make it more difficult to move too quickly into tolerization or changing the charter or even eliminating the central back.
Speaker 9: We think that he probably prioritized together with his allies a very quick devaluation and stabilization plan with strict fiscal and monetary policy. You would initially have significant inflation and then it should be going down towards the second half of 2024.
Speaker 9: Definitely it will be a challenge for him to create these alliances and to create support for the legislation that he wants to pass through Congress. We think that on many areas, for example labor reform, there will be a consensus in moving forward and probably the most radical of his proposals will take longer. It is that he and his team more recently have been acknowledging that will take a little bit more time and require a little bit more of understanding of the situation they get before they change government.
Speaker 9: and understand what the situation that they are receiving is. I hope I have given you a broad brush answer to a rather complex topic.
Speaker 7: Yes, no, no, thank you very much. Just kind of a
Speaker 7: follow up in terms of a potential dollarization of the economy. I believe that Bullrich is also proposing to dollarize the economy, but at a much lengthier pace when compared to Millet, but I think both of the candidates are going into that direction. So, if we go into this dollarized economy, what could be the impact for the Argentine dollar, which is income taxpayers, and then in disinvest TaSC arms and schools instead
Speaker 7: and what is your current strategy in paper linked to inflation and dollars at the moment.
Speaker 9: I can take a shot and then let's see if Luca and Mariano can answer.
Speaker 9: First of all, our information about what the Woolridge team is looking into, they've been talking more about by monetary economy rather than going full-fledged to dollarization. At least that's the information we have so far. Now, in terms of what the impact of dollarization would be on banks, we have seen that the
Speaker 9: We see positive and negative effects. On the positive side, what you would very quickly see is a sharp decline in interest rates and therefore this sharp decline would probably create significant demand, credit demand. Remember that currently the credit to private sector at a percentage of GDP is close to all-time lows at around 7.5%.
Speaker 9: If you would like to have a proxy of what the upside could be, you could go back to the convertibility where it was close to 25%.
Speaker 9: So a sharp decline in interest rates would probably boost demand and increase significantly from current levels credit demand of the private sector.
Speaker 9: You'll also see a very likely an extension of durations in these levels.
Speaker 9: And you would also see a much better functioning of the capital markets to provide long-term financing both to the market and to the banks.
Speaker 9: So all these would be actually very good effects, very positive effects. On the negative effects, one very important difference is that you lose the lender of last resort and the role of the lender of last resort in case of a financial crisis. And this would probably make banks, at least initially, very prudent in the policies that they have to whom and under what conditions they extend credit.
Speaker 8: I think that's like a broad brush summary of positive and negative effects. I don't know if Mariano or Patricia would like to add. I would like to add a few other positive effects, but I of course am building on what Alejandro said. I think another positive effect would be that the dollarization would imply also more liquidity for the banking system in the sense of a potential growth in deposits.
Speaker 8: because Argentines have the custom of saving part of their wealth abroad and then they will have the opportunity to invest in the deposits in Argentine banks.
Speaker 8: There's another thing also important. I think that with the polarization you remove the currency risk for foreign investments so potentially it could be a booster for foreign investments in the country that would be good for the banks and also for the economy as a whole. And finally I think also that the polarization could trigger at a set point in time a consolidation because
Speaker 8: I think if you look at what happens in the past 25 years, the only moment of consolidation, the real moment of consolidation was when there was a crisis in 2002, a big financial crisis. In the past 25 years, the real moment of consolidation was when there was a crisis in 2002, a big
Speaker 8: Then afterwards there were just some transactions in terms of M&A but there were only a few of them. There was not a drive of consolidation and I think it has to do a lot with a risk sensation from management of banks towards making them.
Speaker 8: potential moves, when you remove the currency effect and you have let's say dollar deposits, I think it's a major change and that major change could lead to a consolidation at a certain point in time, which I think is very good.
Speaker 7: Excellent. I think you made very interesting points. Just thinking, we have this dollarized economy, as you mentioned, that could help to have lower rates and to improve the lending activity in Argentina. How should we think about next year if that happens considering that this year most of the Argentine banks have benefited a lot?
Speaker 7: from the asset liability management and investing in the leaks passes in government paper. So how do you think that will be sustainable for next year?
Speaker 8: I think that with consolidation at a certain point in time there will be – I'm sorry, with fiscal consolidation and fiscal normalization at a certain point in time there will be a pickup in loan demand and then the – YouTube video, I'll just repeat the presentation after now.
Speaker 8: The assets that banks have today, particularly on central bank securities, they will be transformed to loans.
Speaker 8: which is very healthy by the way.
Speaker 4: You know this answer yes
Speaker 4: I think for next year we'll see at the beginning more or less what is happening now until the macro stabilizers we will most probably see high levels of inflation, high levels of interest rates and then decreasing in theAll the
Speaker 4: inflation finally goes down which is what we expect after the 600-bit hit.
Speaker 4: is reduced and certain calories and other prices are fixed.
Speaker 4: So in that context what we believe is that we will see a pickup in low demand first from the most probably from the corporate sector and then from individuals.
Speaker 4: which will in turn replace the lift which is our main asset class today. So that will allow us to replace the financial margin generated or obtained from central bank notes to financial margin obtained from loans.
Speaker 4: should be our main business. Remember that in the past we used to have a higher NIM than the industry. Now our NIM although it's at very high levels it's similar to the industry because all banks are doing the same. We are capturing deposits and investing in the lakes and treasury bonds. So what we expect for the mid term is that the lakes and...
Speaker 4: Most central bank instruments, the Econ repos will be finally replaced by a growth in the low portfolio and having a more sustainable long term mean.
Speaker 7: Thank you very much.
Speaker 11: Thank you very much.
Speaker 6: Thank you. We have a second question now from a new person from Carlo. Hi, Carlo. How are you? Please come and go ahead.
Speaker 12: Hello. Good morning. Can you hear me?
Speaker 13: Yes, okay. Very good. Thank you. So.
Speaker 12: You talked about the surprise in the past elections. I've been surprised by the good results of the banks in this second quarter. And I was wondering, and it applies to all the banks, right? All of you have had a particularly good second quarter. If we do understand that there is some element of...
Speaker 12: you know, either the interest rates or the inflation involving in a particular way, this quarter, which is different from the first, perhaps different from the third, can we really extrapolate this second quarter or this first half of the year into the second half? I understand there's a lot of uncertainty. We don't know what is going to happen, but that would be my general question. Is this where social other election unified have abee
Speaker 12: Doesn't this feel a bit extraordinary and with the normal profitability lower than this? Thank you so much.
Speaker 8: Thank you.
Speaker 8: Thank you.
Speaker 4: for your question. Yes, sure as you said this water was somehow extraordinary but nonetheless we are seeing a similar means and spread during July and the last time of August . So we will probably see a third water still probably in line with the second cube but more broadly stabilizing in the fourth quarter.
Speaker 8: Maybe this is not a level of a spread that we expect for a mean or longer term, but it still has some time to run, particularly into the third quarter. Okay. I would also like to add that the swing factor that you see, that you have seen in our case, it also reflects all the structural changes.
Speaker 8: consolidations that we have been conducting over the past year by basically benefiting from the fact that the consumer finance business, which was a lagging factor for us, is no longer there. And also, we've been doing I think a pretty good job in terms of consolidating branches that are one close to the other. And we have built digital capabilities today that expand the footprint and we can open individual accounts or enterprise accounts out of our branch network. And so we are very happy on that. And so we are sort of – we are preparing the company for the next stabilized economy and preparing for growth again.
Speaker 12: Okay, thank you. And no, it is true. The gap in profitability with the other banks is narrower. So again, my question will refer to all the industry because all the industry has been quite profitable, but you're right. Your super bill has gotten closer to the other banks. There's no question about that. If I can follow up a little bit, going into 2024 and 2025, and I know that you wish you knew, like all of us did.
Speaker 12: But realistically, I mean, it seems reasonable to expect that there has to be some type of adjustment, of real adjustment, of the variables becoming more real, the foreign exchange, the tariffs, everything has to adjust, has to go back to normal level. From the outside, that would seem contractionary. And therefore, that the next, I would say, year, year and a half.
Speaker 12: might be tough. Now, that's one perspective. How do you see it and how are you positioning the bank for the next two years?
Speaker 9: There is no question Carlos that we will see volatility in the next year, year and a half.
Speaker 9: Having said that, in terms of the banking strategy, we're not changing our strategy. We're still targeting our key market segments. We are focusing on middle to high-income individuals on one hand and trying to give them the best digital experience. We are also focusing on SMEs and we're making good progress there as we do significant cross-sell and innovation in those parts.
Speaker 9: strategy. We're not changing our strategy. We're still targeting our key market segments. We are focusing on middle to high income individuals on one hand and trying to give them the best digital experience. We are also focusing on SMEs and we're making good progress there as we do significant cross-sell and innovation on those in those parts. Now in terms of the impacts of
Speaker 9: The stabilization plan, we think that initially it will be recessionary. We are imagining 2024 with a decline in GDP of roughly 2.5%, 2.3% and that will probably affect certain customer segments that are linked to consumption. But at the same time, two or three very positive things will be happening in the Argentine economy, sectors to which we are exposed.
Speaker 9: One is a significant change in the commercial balance for the energy sector. As you are probably aware, we are going from a deficit in our energy trade to a very significant surplus, which will probably be heightened towards the second half of next year.
Speaker 9: and we also have significant growth and investment in mining and at the same time the impact of the drought will have gone so you're likely to have a big swing also that will help you in terms of central bank reserves
Speaker 9: creating a difference estimated by some economists at around $20,000 million. All this will have
Speaker 9: an extremely positive effect towards the second half of the year on these sectors to which we are exposed. So the answer would be 2024 is going to be a very binary year. You're going to see a very complicated first half with high inflation and deep recession and interest rates go up probably to control as best as possible this inflation. But then a second half with a significant change in expectations and being exposed to some of these sectors I mentioned should help us drive growth in the direction we want it because these are export oriented segments that will have a significant advantage after the stabilization and the foreign currency adjustment. I would like to add on what Alejandro said.
Speaker 9: an extremely positive effect towards the second half of the year on these sectors to which we are exposed. So the answer would be 2024 is going to be a very binary year. You're going to see a very complicated first half with high inflation and deep recession and interest rates go up probably to control as best as possible this inflation. But then a second half with a significant change in expectations and being exposed to some of these sectors I mentioned should help us drive growth in the direction we want it because these are export oriented segments that will have a significant advantage after the stabilization and the foreign currency adjustment. I would like to add on what Alejandro said. In all the sectors that Alejandro mentioned
Speaker 8: We are starting – we have started to grow more aggressively and we see also today already results that we are going above the market. So the decline that you were seeing in the first two quarters, we want to change this to grow in terms of market share. And also the other thing is that we have – if you look into our past history a large part of the high needs was due to a big percentage of market share in personal loans due to large segments of individuals that get their salaries or their pensions, particularly senior citizens. When inflation goes down we will start to see again the effect of high needs in personal loans.
Speaker 8: probably in the second half of 2024. And that will help us to resume growth to get repeatability from that side also. I wanted to – I think it's – I don't know. You want to add something? I can maybe just a brief summary on the very short-term view. So how we are positioned to go through this upcoming month is when we for sure are going to see a lot of volatility.
Speaker 4: Right now we are very liquid to Port Antohela that we are very liquid both in petals and US dollar. After the elections we didn't see any reduction in deposits. In particular solar deposits were very stable but we keep them considered a scientists as well as a geiger counter forard.
Speaker 4: with levels of liquidity of about 70% and also in pesos because our 40% of our assets is in the leagues, the leagues of ripples with the central bank. Ripples are one day.
Speaker 4: The leaks are 28 days, but they are issued every week, so they have a schedule of about 14 days on average.
Speaker 4: So that and having cash and very short term loans makes us have a very short term balance with high liquidity, again both in pesos and dollars. Then we are 100 percent hedging in inflation. There we have real estate, we have mortgages that are just by UVA and we have treasury bonds that are just by the inflation index. And then on top of that we have also position in treasury bonds that is more tactical where we can be long in US dollars. Remember that our position in US dollars must be net, that's a net position of zero but we can go long through dollar-link bonds or dual bonds which pay the higher inflation or dollar. I support was.
Speaker 12: So, that's how we position for the short term to have liquidity and also make some profitability that will allow us to build capital for growth. Okay. A technical question, the dual bonds, as you said, you can receive your payment in dollars or in pesos. They are counted as foreign currency or as local currency?
Speaker 4: No, they are paying in pesos. If the valuation is higher than inflation, they pay the difference in the exchange rate, but they are paying in pesos. And they don't count for the foreign currency position. So that's why we don't have a limit on those bonds because they are accounted for as if there were 100 percent pesos. So effectively you can go long dollars through the dual bonds.
Speaker 4: If we can go up to 30% with total link bonds and beyond that because they don't count in the foreign exchange position through dual bonds.
Speaker 12: Is there a limit to the urbans?
Speaker 4: No, there's no limit. Of course we have our internal policy risk limit, but there's no limit on the foreign currency exposure side.
Speaker 12: Thank you so much and congratulations again.
Speaker 4: Thank you, Carlos. We have a question from Rodrigo Nistor at Latin Security. Hi, Rodrigo, please go ahead. Hi, good morning everyone. In light of the prevailing inflationary environment we have seen a raise in terms of deposits as a proportion of the banking sector funding base and some deposits moving to the money market funds. French
Speaker 4: So I also was thinking of Patricia's comment before. So do you think this can limit your margins once exposure to the public sector reduces?
Speaker 4: And then if you can provide us with a brief comment on competition if platforms like Walla and Mercalpado are impacting our only in your funding availability. Thank you.
Speaker 4: And then if you can provide us with a brief comment on competition if platforms like WALA and Marcalpado are impacting our role in your funding availability. Thank you. We won't answer the question.
Speaker 4: Okay, yes. The first part, regarding funding, as you said, more funds are being allocated by corporate and individuals to mutual funds or mainly money market funds. So that's why savings accounts and current accounts in the industry, not only in our markets, are going below inflation because we...
Speaker 4: Okay, yes, the first part regarding funding, as you said, more funds are being allocated by corporate and individuals to mutual funds or mainly money market funds. So that's why savings accounts and current accounts in the industry not only are going below inflation because with so high rates of inflation.
Speaker 4: companies will allocate more funds to interest assets that accrue some interest. But on the other hand, we see growth in deposits also from the institutional side. Music Music
Speaker 4: So, that partially offsets the extremely high mean that we will have if all funds will stay in saving accounts or current accounts. But as deposits are growing more or less in the length of inflation we expect it to grow a bit less, maybe five to ten percent less but with an inflation of more than 100 percent..
Speaker 4: That's not a big difference. So that growth in deposits allows us to keep margins quite at high levels.
Speaker 4: I don't know if I answered the first part of the question.
Speaker 8: So maybe Elisadore or Bastisio want to comment on the second part. Yeah, I mean I think you raised a point of savings and deposits moving to money market funds and you mentioned a couple of things. basically I think that when inflation is...
Speaker 8: over 100 percent people, Argentines, they want to have their certain protection for their money because of the losing of purchasing power with inflation. And we believe that there is a threat.
Speaker 8: particularly yes on FinTechs because they offer a very simple way of protecting their savings or salaries or whatever. So what we have done is the reason why we were first back in Argentina to have a simple way of investing in Centennial in a way, in a very rapid way, seven days a week you can invest or remove the funds from your investment any day of the week at any time. And this is a way of protecting because it is actually what the Fintechs were doing and the Fintechs are now buying invest in the Fintechs and from an investment standpoint
Speaker 8: particularly yes on FinTechs because they offer a very simple way of protecting their savings or salaries, whatever. So what we have done is the reason why we were first back in Argentina to have a simple way of investing in Centennial in a very rapid way, seven days a week. You can invest or remove the funds from your investment any day of the week at any time. And this is a way of protecting because it is actually what the Fintechs were doing and business will have a.....
Speaker 8: kind of strange that you don't see the bulk of banks reacting to that but I think that there will be changes. What we have done probably will be copyrighted by others at a certain point in time. I don't know if it was followed. I was thinking it was just here. That was really helpful. Thank you. Thank you Rodrigo. We have a question in the Q&A box from Lido Isuciu at Alalia. First it says which will be the turnover tax thing in Turkey considering you are not paying anymore.
Speaker 4: And what can we expect for the second half of this week in several segments and early with climate challenges? Yes, Mariano, do you want to answer those questions? Thank you. Yes, thank you for the question, Guido. I haven't really except me but …
Speaker 4: the part of the turnover tax. First I would like to point out that it's not that we are not paying turnover taxes, we are not paying only in regards to the leaks and central bank instruments.
Speaker 4: As we explained during the presentation, these are monetary policy instruments from the central bank. So the central bank claims that they cannot be taxed or interfer with by local governments. So that's why we stopped paying since April . But we keep paying turnover tax on all other tax-able income, which is basically interest from loans, for instance. So that's why we stopped paying.
Speaker 4: Remember that treasury bonds are not taxed so we base on the interest earned on the loan portfolio and of course on commissions and Monetary Revolution You don't have to go November them
Speaker 4: Treasury bonds are not taxed. So we pay on the interest earned on the loan portfolio and of course on commissions and other sources of revenue.
Speaker 4: So, the tax revenue charged for the third quarter could be in line with the second quarter where we have already paid on the lease. So, the tax revenue charged for the third quarter could be in line with the third quarter
Speaker 4: increase our revenues, also increase, remember for this tax you don't net the inflation charge, you will pay for the revenues even if interest rates are...
Speaker 4: more positive or negative in real terms. You're paying only on the revenue side, so with higher interest rates we would probably increase the charge of the turnover tax. So for the second quarter, the turnover tax charge was 5.7 billion, so we could expect a bit more, slightly higher in the third quarter.
Speaker 4: And regarding several statements on early retirement charges, we decreased the charges in the first half of the year. But as we continue to find sources of efficiency, we will probably increase a bit during the second half of the year because we keep through the merge of branches.
Speaker 4: and all the capabilities developed through digital processes that allow us to work more efficiently even with more customers. We can reduce our headcount of course not at the level of last year where we reduced 20 percent the group's headcount because we were merging with the bank. But we still continue at a rate that I would say around 5 percent per year that our target you will see some increase in several costs for the second half. So this was the last question. We have reached the end of today's Q&A session.
Speaker 6: Thank you for joining us today. We appreciate your interest in our company. We look forward to meeting more of you over the coming months and providing more information about your company.
Speaker 6: Financial and business updates next quarter. In the interim, we remain available to answer any questions that you may have. Have a good day.
Speaker 1: The recording has stopped.