Q1 2024 Banco Macro SA Earnings Call

[music].

Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's first quarter 2023 earnings conference call. We would like to inform you that the first quarter 2023 press release is available to download at the Investor Relations website of Banco Macro, at www.macro.com.ar forward slash relaciones dash Inversores, Forward Flash.

Good morning, ladies and gentlemen, and thank you for waiting at this time, we would like to welcome everyone to Banco Macros first quarter 2023 earnings conference call. We would like to inform you that first quarter 2023 press release is available to download at the Investor Relations website.

Banco macro.

At Www dot macro dot com dot a our forward slash relates Xian is.

Yes.

Operator: Also, this event is being recorded, and all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to signal the operator. It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, IR. Now, I will turn the conference over to Mr. Nicolas Torres. You may begin.

In very sore as forward Slash also this event is being recorded and all participants will be in listen only mode. During the Companys presentation. After the company's remarks are completed there will be a question and answer session at that time further instructions will be given should any participant need assistance.

Speaker Change: During this call. Please press star zero to signal the operator. It is now my pleasure to introduce our speakers joining us from Argentina.

Speaker Change: Are Mr. Gustavo Manriquez, Chief Executive Officer, Mr. Jorge <unk>, Chief Financial Officer, and Mr. Nicolas Torres IR now I will turn the conference over to Mr. Nicolas Torres you may begin.

Nicolas Torres: Thank you David Good morning, and welcome to Banco Macros first quarter 2024 conference call any comment with many today may include forward looking statements, which are subject to various conditions and these are in our 20-F, which was filed to the SEC.

Nicolas Torres: Thank you, Dave. Good morning, and welcome to Banco Macro's first quarter 2024 conference call. Any comment we make today may include forward-looking statements, which are subject to various conditions, and these are applied in our 20-F, which was filed with the SEC, and it's available on our website. The First Quarter 2024 press release was distributed on Wednesday, and it's available on our website. All figures are in Argentine pesos and have been restated in terms of the measurement unit current at the end of the reporting period.

Nicolas Torres: At our web site.

Nicolas Torres: First quarter 2024 press release was distributed on Wednesday, and it's available on our website.

Nicolas Torres: Well if you are in Argentine pesos and have been restated in terms of the Mitchell one unit at the end of the reporting period.

Nicolas Torres: As of 2020, the bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29, as established by the central bank. For ease of comparison, periods of previous quarters have been restated, applying IAS 29, to reflect the accumulated effect of the inflation adjustment for each period through March 31st, 2024. I will now briefly comment on the bank's first quarter 2024 financial results. Banco Macro's net income for the quarter was 275.2 billion pesos, 61% or 422 billion pesos lower than in the fourth quarter of 2023, and 626% or 237.3 billion pesos higher than the result posted a year ago. The banks analyzed ROE and ROA of 37.4% and 11.9%, respectively, remained healthy, and showed bank earnings potential.

Nicolas Torres: October 2020, the bank began reporting results applying hyperinflation accounting in accordance with <unk>.

Nicolas Torres: 2019 as established by the Central Bank.

Nicolas Torres: For ease of comparison.

Nicolas Torres: These quarters have been restated applying ias 29.

Nicolas Torres: The accumulated effect of the inflation adjustment for HBO.

Nicolas Torres: Third quarter 2024.

Nicolas Torres: Net operating income before general, administrative, and personal expenses for the first quarter of 2024 was $1.62 trillion, decreasing 19% of 388 billion pesos quarter on quarter. On a yearly basis, net operating income before general and personal expenses increased 149% or 969 billion pesos. In the first quarter of 2024, provision for loan losses totaled 18.9 billion pesos, 32% or 8.7 billion pesos lower than in the previous quarter. On a yearly basis, provision for loan losses increased by 40% or 5.4 billion pesos.

Nicolas Torres: I will now briefly comment on the bank's first quarter 2024 financial results.

Nicolas Torres: Banco macros net income for the quarter was $275 2 billion pesos, 61% or 422 billion pesos lower than in the fourth quarter of 2023.

Nicolas Torres: Entered 26% or $237 3 billion higher than I was hopeful that a year ago.

Nicolas Torres: Annualized ROE MRO 837, 4% and 11, 9%, respectively remains healthy and shows the banks earnings potential.

Nicolas Torres: Net operating income before general and administrative.

Nicolas Torres: And personnel expenses for the first quarter of 2024 was <unk> six two trillion pesos decrease.

19% or 388 billion quarter on quarter.

Nicolas Torres: On a yearly basis net operating income before general and personal expenses increased 149% from 969 billion pesos.

Nicolas Torres: In the first quarter of 2020 for provision for loan losses totaled $18 9 million ambitious, 32% or $8 7 billion, but slower than in the previous quarter on a yearly basis provision for loan losses increased 40% or $5 4 billion pesos.

Nicolas Torres: Operating income after general, administrative, and personal expenses was 1.25 trillion pesos, 20% or 322.7 billion pesos lower than the fourth quarter of 2023, and 211% or 850 billion pesos higher than the first quarter of 2023. In the quarter, net interest income totaled $167.5 billion pesos, 40% or $111 billion pesos lower than the result posted in the fourth quarter of 2023, and 56% or $211.3 billion pesos lower than the result posted one year ago. Interest income decreased 18% while interest expenses decreased 7%.

Nicolas Torres: Operating income after general administrative and.

Nicolas Torres: Unfortunately expenses was $1 25 billion pesos, 20% or $322 7 billion, but slower than the fourth quarter of 2023 and 297%.

Nicolas Torres: I'm 50 billion pesos higher than in the first quarter of 2023.

Nicolas Torres: In the quarter net interest income totaled $167 5 billion pesos, 40% or 111 billion pesos lower than theirs. So posted in the fourth quarter of 2003, and 56% a 211 3 billion, but slower than the result posted one year ago.

Interest income decreased 18%, while interest expense decreased 7%.

Nicolas Torres: In the first quarter of 2024, interest income totaled 714.8 billion pesos, 18% or 154.5 billion pesos lower than in the fourth quarter of 2023, and 19% or 172 billion pesos lower than the previous year. Income from interest on loans and other financing totaled 462 billion pesos, 18% or 192.8 billion pesos lower compared with the previous quarter, mainly due to a 16% decrease in the average volume of private sector loans and a 118 basis points decrease in the average lending rate. On a yearly basis, income from interest on loans increased 39%, or $127.8 billion.

In the first quarter of 'twenty four.

Interest income totaled $714 8 billion pesos, 18% or $154 5 billion lower than in the fourth quarter of 2023, and 19% or 172 billion peso slower than the previous year.

Nicolas Torres: Income from interest on loans and other financing totaled 462 billion pesos, 18% or 108.

Nicolas Torres: 8 billion, but slower compared with the previous quarter, mainly due to a 16% decrease in the average volume.

Nicolas Torres: <unk> loans, and a 118 basis points decrease in the average lending rate.

Nicolas Torres: On a yearly basis income from interest on loans increased 39%.

Nicolas Torres: $129 8 billion pesos.

Nicolas Torres: In the first quarter of 2024, interest amounts represented 65% of total interest income. In the first quarter of 2024, income from government and private securities decreased 42% or 68.3 billion pesos quarter on quarter due to the unwinding of our relief portfolio and decreased 82% or 429.3 billion pesos compared with the same period of last year. In the first quarter of 2024, income from BRIC was 151.9 billion pesos, 24.3 billion pesos higher than the previous quarter and 482%, or 125.8 billion pesos higher than a year ago.

Nicolas Torres: In the first quarter of 'twenty 'twenty four interest on loans represented 65% of total interest income.

Nicolas Torres: First quarter of 2024 income from government and private securities decreased 42% or $68 3 billion pesos quarter on quarter due to the unwinding of our unique portfolio and increased 82% or $429 3 million pesos compared with the same period of last year.

Nicolas Torres: In the fourth quarter of 2020 for income from <unk> totaled $131 9 billion pesos, 19%.

Nicolas Torres: Yeah.

Nicolas Torres: $24 3 million was higher than the previous quarter, and 482% or $125 8 billion pesos higher than a year ago.

Nicolas Torres: In the first quarter of 2024, FX income totaled 80.6 billion pesos, 71% or 196.5 billion pesos lower than the previous quarter, and 43% or 61.6 billion pesos lower than a year ago. The FX income gain was due to the 6.1 Argentine peso depreciation against the U.S. dollar and the bank's long dollar position during the quarter.

In the first quarter of 2024th FX income totaled 86 million pixels, 71% or $196 5 billion lower than the previous quarter, and 43% or $61 6 billion bushel slower than a year ago.

Nicolas Torres: Fixed income gain was due to the $6 one Argentine peso depreciation against the US dollar and the banks long dollar position during the quarter Edison.

Nicolas Torres: It is important to notice that the bank's long dollar position decreased 96% during the quarter. In the first quarter of 2024, InterEx spent a total of $547.3 billion pesos, 7% or $43.5 billion pesos lower compared to the fourth quarter of 2023, and 8% or $39.3 billion pesos higher on a yearly basis. Within interest expenses, interest on deposits decreased 8% of 6.5 billion pesos quarter-on-quarter, mainly driven by a 970 basis points decrease in the average interest rate paid on deposits, while the average volume of private sector deposits increased 5%. On a yearly basis, interest on deposits increased 6% of 31.5 billion pesos. In the first quarter of 2024, interest on deposits represented 96% of the bank's financial expenses.

Nicolas Torres: It is important to note that the banks long dollar position decreased 96% during the quarter.

In the first quarter of 2024.

<unk> totaled $547 3 billion pesos, 7% or $3 5 billion lower compared to the fourth quarter of 2002, and three an 8% or $39 3 million pesos higher on a yearly basis.

Nicolas Torres: Within interest expenses interest on deposits decreased 8% to $6 5 billion pesos quarter on quarter, mainly driven by a 970 basis points decrease in the average interest rate paid on deposits, while the average volume of private sector deposits increased 5%.

Nicolas Torres: On a yearly basis interest on deposits increased 6% or $31 5 billion pesos.

Nicolas Torres: In the first quarter of 2024 interest on deposits represented 96% of the bank's financial expenses.

Nicolas Torres: In the first quarter of 2024, the bank's net interest margin, including FX, was 26% lower than the 52.1% posted in the fourth quarter of 2023 and the 33.6% posted in the first quarter of 2023. In the first quarter of 2024, Banco Macro's net fee income totaled $74.1 billion pesos, 12% or $10.2 billion pesos lower than in the fourth quarter of 2023, and was 13% or $11.4 billion pesos lower than the same period of last year.

Nicolas Torres: In the first quarter of 2024, the bank's net interest margin, including FX was 26% lower than the 52, 1% posted in the fourth quarter of 2023, and <unk> 73, 6% posted in the first quarter of 2023.

Nicolas Torres: In the first quarter of 'twenty four <unk> net fee income totaled $74 1 billion versus 12%, a $10 2 billion pesos lower than the fourth quarter of 2023 and was.

Nicolas Torres: 13% or $11 4 billion lower than the same period last year.

Nicolas Torres: In the first quarter of 2024, net income from financial assets and liabilities at fair value to profit or loss totaled a 1.27 trillion pesos gain, mainly due to the market for some government securities, mainly inflation-adjusted bonds. In the quarter, adult operating income totaled $44.4 billion pesos, increasing 16% or $6.2 billion pesos compared to the fourth quarter of 2023. On a yearly basis, adult operating income increased 100% or $22.2 billion pesos. In the first quarter of 2024, Banco Macro's administrative expenses plus employee benefits totaled 202.3 billion pesos, 12% or 28.9 billion pesos lower than the previous quarter, due to lower employee benefits, which decreased 1%, and lower administrative expenses, which decreased 28%. On a yearly basis, administrative expenses plus temporary benefits increase by 49% or 66.1 billion pesos.

Nicolas Torres: In the first quarter of 2000, <unk> net income from financial assets and liabilities at fair value.

Nicolas Torres: <unk> totaled $1 27 trillion pesos gain mainly due to the mark to market of some government securities mainly inflation adjusted bonds.

Nicolas Torres: In the quarter other operating income totaled $44 4 million, increasing 16% or $6 2 billion pesos compared to the fourth quarter of 2023 on a yearly basis. Other operating income increased to 100% of $22 2 billion pesos.

Speaker Change: In the first quarter of 2020 for Microsoft nuclear expenses, plus employee benefits totaled $202 3 billion pesos, 12% or $28 9 billion pesos lower than the previous quarter due to lower employee benefits, which decreased 1% and lower admin expenses, which decreased 28%.

Speaker Change: On a yearly basis administrative expenses Brooks employee benefits increased 49% or $66 1 billion pesos.

Nicolas Torres: As of the first quarter of 2024, the efficiency ratio reached 14.7%, improving substantially from the 18.6% posted in the fourth quarter of 2003 and the 25.5% posted one year ago. In the first quarter of 2024, expenses decreased 13%, while net interest income plus net fee income plus other operating income decreased 11% compared to the fourth quarter of 2023. In the first quarter of 2024, the result from the net monetary position totaled a $889 billion pesos loss, 12% or $92 billion pesos higher than the loss posted in the fourth quarter of 2023, and 159% or $546.2 billion pesos higher than the loss posted one year ago. Our net monetary position increased 84% during the quarter, while lower inflation was observed in the first quarter of 2024. 167 basis points below.

Speaker Change: Although the first quarter of 2020 for the efficiency ratio reached 14, 7% improved substantially from the $18, 6% posted in the fourth quarter of 2003, and a 25, 5% posted one year ago and the <unk>.

Speaker Change: First quarter of 2024 expenses decreased 13%, while net interest income plus net fee income from other operating income decreased 11% compared to the fourth quarter of 2023.

Speaker Change: In the fourth in the first quarter of 2024. The result from the net monetary position totaled at 889 billion bushels, plus 12% from 92 billion versus higher Nonetheless posted in the fourth quarter of 2003, and 159% or $546 2 billion versus higher and the loss posted one year ago, our net monetary position increased 84%.

Speaker Change: During the quarter, while opening patient was observed in the first quarter of 24.

Speaker Change: 167 basis points below <unk>.

Nicolas Torres: Inflation was 51.6% in the first quarter of 2024 compared to 53.3% in the fourth quarter of 2020. In the first quarter of 2024, Banco Macro's effective tax rate was 24.5%, lower than the 31.4% registered in the fourth quarter of 2003. Further information is provided in Note 21 to our financial statement.

Speaker Change: Inflation.

Speaker Change: Registered in the fourth quarter of 2023 inflation was 51 six in the first quarter of.

Speaker Change: <unk> 24, compared to 53, 3% in the fourth quarter of 2003.

Speaker Change: In the first quarter of 2024 effective tax rate was 24, 5% lower than the 31 four registered in the fourth quarter printed Street.

Speaker Change: Other information is provided in note 21 to our financial statements.

Nicolas Torres: In terms of loan growth, the bank's total financials reached $2.5 trillion pesos, increasing 10% or $279.6 billion pesos quarter-on-quarter and 8% or $205.9 billion pesos lower year-on-year. Within commercial loans, overdrafts stand out with a 21% or 92.6 million pesos decrease. Documents decreased 21% or 10 million pesos, while others increased 2% or 9.3 million pesos. Within consumer lending, personal loans decreased 12% of 44.8 billion pesos, while credit card loans decreased 18% of 132.1 billion pesos. Peso financing decreased 20% to 513.9 billion pesos, while U.S. dollar financing increased 75% to 254 million dollars.

Speaker Change: In terms of loan growth the bank's total financial of which $2 five trillion pesos, increasing 10% or $279 6 million basis quarter over quarter, and 8% a $205 9 billion pesos lower year on year within commercial loans overdrafts standout would have 21% or $92 6 million pets, a decrease documents decreased 21%.

Speaker Change: There can be an ambitious one others increased 2% or $9 3 billion pesos.

Speaker Change: Within consumer lending personal loans decreased 4% or $44 8 billion puts us with great credit card loans decreased 18% or $132 1 billion pesos.

Speaker Change: With the financing decreased 20% or $513 9 billion pesos, when you're a seller financing increased 75% or $254 million.

Nicolas Torres: It is important to mention that Banco Macro's market share over private sector loans as of March 2024 reached 9.4%. On the funding side, total deposits decreased 1% or 74.3 billion pesos quarter on quarter, totaling 5 trillion pesos, and decreased 11% or 644 billion pesos year on year. Private sector deposits decreased 6% or 291.2 billion pesos quarter on quarter, while private sector deposits increased 83% or 234.2 trillion pesos in the quarter. The decrease in private sector deposits was led by demand deposits, which decreased 26% or 777.3 billion pesos quarter on quarter, while time deposits increased 27% or 422.6 billion pesos. Within private sector deposits, peso deposits increased 10% or $365.2 billion pesos, while used dollar deposits decreased 32% or $622 million.

It is important to mention that Banco macro <unk> market share over private sector loans as of March 24 reached nine 4% on.

On the funding side total deposits decreased 1% or $74 3 billion quarter on quarter totaling type III ambitious and decreased 11% or 644 billion year on year private sector deposits decreased 6% or $291 2 billion quarter on quarter, while private sector deposits increased 83% a $234 two trillion.

Speaker Change: In the quarter.

Speaker Change: The decrease in private sector deposits was led by demand deposits, which decreased 26% or 773 billion puts us quarter on quarter, while time deposits increased 27% a 400.

Speaker Change: $22 6 billion pesos.

Speaker Change: Within private sector deposits peso deposits increased 10% or $365 2 billion pesos, while you'll start deposits decreased 32% or $622 million.

Nicolas Torres: As of March 2024, Banco Macro's transactional accounts represented approximately 46% of the world's bonds. Banco Macro's market share over private sector deposits as of March 2024 totaled 7.5%. In terms of asset quality, Banco Macro's non-performing total financial ratio reached 1.14%, and the coverage ratio, measured as total allowances under expected credit losses over non-performing loans under certain bank rules, reached 222.7%. Consumer Portfolio Non-Performing Loans deteriorated 12 basis points, up to 147% from 135% the previous quarter, while Commercial Portfolio Non-Performing Loans improved 49 basis points in the first quarter of 2024, down to 0.72% from 1.2% in the last quarter.

Speaker Change: As of March 2020 for Banco macros transactional accounts represented approximately 46% of children buses.

Speaker Change: Banco macros market share over private sector deposits at March 24th totaled seven 5%.

Speaker Change: In terms of asset quality, Banco macros nonperforming total financial ratio reached.

Speaker Change: 114% and the coverage ratio measured as total allowances and the expected credit loss or nonperforming loans and the surgeon by growth reached two <unk>.

Speaker Change: Third 22, 7%.

Speaker Change: <unk> portfolio of nonperforming loans deteriorated 12 basis points up to 147% from 135 bring this quarter, while commercial portfolio nonperforming loans improved 49 basis points in the first.

Speaker Change: Quarter, four down to 72% from one 2% in the last quarter.

Nicolas Torres: In terms of capitalization, Banco Macro has accounted for an excess capital of 2.59 trillion pesos, which represents a capital adequacy ratio of 46.5% and a Tier 1 ratio of 44.5%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remains more than adequate. The total deposit ratio reached 124%. Overall, we have accounted for another positive quarter, and we continue to show a solid financial position. Asset quality remains under control and closely monitored, and we keep on working to improve more RFE standards, and we keep a well-atomized deposit base. At this time, we would like to take the questions you may have.

Speaker Change: In terms of capitalization Banco macro accounted an excess capital of $2 59 billion pesos, which represented in our capital adequacy ratio of 46, 5% and a tier one ratio of 44, 5%.

Speaker Change: The bank's aim is to make the best use of this excess capital the bank's liquidity remained more than appropriate liquid assets to total deposit ratio reached.

Speaker Change: 124% overall, we have accounted for another positive quarter, we continued showing a solid financial position asset quality remain under control and close monitor and we'll keep on working to improve more RP can standards and we keep our <unk> deposit base at.

Speaker Change: At this time, we would like to take the questions you may have.

Operator: Okay, at this time, we're going to open it up for questions and answers. If you would like to ask a question, please press star one on your touchtone phone. Please unmute your phone and record your name clearly when prompted. One moment, please for the first question. Our first question comes from Ernesto Gavilando with Bank of America. Please go ahead. Thank you.

Speaker Change: Okay. At this time, we're going to open it up for questions and answers. If you would like to ask a question. Please press star one on your Touchtone phone. Please on mute your phone and <unk>.

Speaker Change: Your name clearly when prompted one moment. Please for the first question.

Speaker Change: Our first question comes from Ernesto <unk>.

Speaker Change: Gaba Lando with Bank of America. Please go ahead.

Ernesto Mara Gabilondo Mrquez: Hi, good morning Gustavo, Jorge, and Nicolas, and thanks for the opportunity. My first question will be on your long-term expectations and also if you can provide us with what will be behind that in terms of GDP for this and next year, inflation levels, and interest rates. And then my second question will be on your evolution of your loan-to-deposit ratio, given that Argentine banks are starting to resume loan growth.

Speaker Change: Thank you.

Speaker Change: Hi, good morning.

Speaker Change: Thanks for the opportunity.

Speaker Change: My first question will be on your long load expectations and also if you can provide us what will be behind us.

Speaker Change: In terms of GDP for diesel next year.

Speaker Change: <unk> levels and interest rates.

Speaker Change: And then my second question will be.

Speaker Change: The new channels.

Speaker Change: I'll keep it positive ratio given that you are just buying bonds.

Speaker Change: Q1 growth how would you see this ratio.

Speaker Change: In the next few years.

Ernesto Mara Gabilondo Mrquez: And finally, I would like to ask you about your ROE expectations, how you see the ROE for the year, and also if you can provide us with some color on how we should see the evolution of the ROE during the year. First quarter was a kind of high ROE, so how do you think about the second quarter and then the second half for the ROE? Thank you.

Speaker Change: And finally I will.

Speaker Change: I'd like to ask you about your auto.

Speaker Change: <unk>.

Speaker Change: How do you see the alloy for the year.

Speaker Change: Also if you can provide us some color on how should we see the evolution of the arrow.

Speaker Change: During the year.

Speaker Change: Quarter.

Speaker Change: Hi, I believe so.

How should we think about second quarter and then as you can have portfolio. Thank you.

Speaker Change: Yeah.

Jorge Francisco Scarinci: Ernesto, how are you? This is Jorge Scarinci. Well, there are a bunch of questions. Let's start with the first one.

Speaker Change: So how are ya disease cutting team.

<unk>.

Jorge Francisco Scarinci: In terms of long growth, we're expecting some positive long growth for this fiscal year 2024. What we are seeing is basically that the first quarter, which is the seasonally lowest quarter in Argentina, we posted some negative growth in real terms. However, in the second quarter, and we think that in the second half of the year, the trend of a pickup in loan demand, as a consequence of a decline in inflation, inflation expectations, and, of course, nominal interest rates.

Speaker Change: Well, there's a bunch of questions, let's start for the first one in terms of loan growth.

Speaker Change: <unk> seen some positive.

Speaker Change: Loan growth for the fiscal year 2024.

What we're seeing is basically the first quarter of VCA seasonally lowest quarter in Argentina.

We boasted.

Speaker Change: Negative growth.

Speaker Change: Real terms, however, in the second quarter, and we think that in the second half of the year that trend of pick up in loan demand.

Speaker Change: As a consequence of a declining inflation inflation expectations.

Speaker Change: <unk> nominal interest rates.

Jorge Francisco Scarinci: We're going to finish the year with a positive in the area of 10 to 15% loan growth. Inflation, according to the market consensus, is expected to keep on going in the downward trend. May is expected to be between 5 and 6.

Speaker Change: We're going to finish the year, we'd have Brooks.

Speaker Change: In the area of 10% to 15%.

Loan growth.

Speaker Change: And inflation. According to the market consensus is expected to keep on growing in the downward trend.

Speaker Change: <unk> is expected to be between five and six.

Jorge Francisco Scarinci: The market is expecting that the CPI index could reach 3 or below 3 monthly numbers for the last quarter of the year. And as a consequence of that, what we think is that we are going to start seeing positive real interest rates in the fourth quarter of this year. In terms of loans to deposit ratio, I think that yes, we are in not only macro, but I think Argentina's banks are pretty under-leveraged.

Speaker Change: The market is expecting that the CPA index could reach three <unk> three monthly number for the last quarter of the year.

Speaker Change: And as a quantitative ways off Thats, what we think is that we're going to start seeing positive.

Speaker Change: Interest rates in the fourth quarter of 2024.

In terms of.

Speaker Change: Loans to deposit ratio I think that yes, we are in Tony macro wise I think in Argentina amongst.

Jorge Francisco Scarinci: This is the consequence of many quarters of sluggish loan demand, and, of course, liquidity still went into the banking sector, and we have to find other sources of allocation of those funds. Going forward, we think that maybe not this year, we're not going to see a big change in the loans to deposit ratio this year, but if the trends continue, without any doubt, we could reach 60-65% of the loans to deposit ratio in the next couple of years, and... ROE Guidance As you mentioned, yes, the first quarter was pretty good, pretty high. We think that...

Speaker Change: Our <unk> on the leverage.

Speaker Change: This is a consequence of.

Speaker Change: Many quarters off.

Speaker Change: Sluggish loan demand than of course.

Speaker Change: Liquidity.

Speaker Change: It went into the banking sector.

Speaker Change: We have to find other sources will follow up the allocation of those funds.

Going forward, we think that.

Maybe not this year, we're not going to see a big change in the loans to deposit ratio this year, but if the trends continue.

Speaker Change: Without any doubt we could reach 60, 65% of loans to deposit ratio in the next couple of years.

Speaker Change:

ROE guidance.

Speaker Change: As you mentioned, yes, the first quarter ROE was pretty good pretty high we think.

Jorge Francisco Scarinci: The trend is going to go a bit downwards in the coming quarters. Remember that what happened in the fourth quarter of last year and also in the first quarter of this year was a consequence of a boot, a record in bond prices. What we are seeing in the second quarter is that bond prices are not growing that much. Therefore, we think that we could be finishing this fiscal year 2024 with an approach of 20% ROE on average for the year.

Speaker Change: The training is going to go up and downwards in the coming quarters.

Speaker Change: Remember, Doug with having the fourth quarter of last year and hopefully in the first quarter of this year was accounts. It was all very good.

Speaker Change: Our track record in bond prices, what we have seen in the second quarter is at bond prices are not growing that much and therefore, we think that we could be finishing this fiscal year 2024, and our broker <unk>.

Speaker Change: 20% Roe.

Speaker Change: On average for the year.

Speaker Change: Thank you very much.

Ernesto Mara Gabilondo Mrquez: Thank you very much. Yeah, yeah, tell me. Donald, thank you. Thank you very much, Jorge. Just to follow up on your macro expectations, so can you repeat again what you're expecting for GDP growth for this next year, inflation for this next year, and rates for this next year?

Speaker Change: Yes definitely.

Speaker Change: Hello. Thank you. Thank you very much.

Jorge Francisco Scarinci: Well, GDP for this year is expected to be down between 2.8 and 3 percent. Of course, we're going to see a recovery in the second half of the year, and that would imply that for 2025, the market is expecting positive real growth in GDP of around six percent. Inflation, the market is expecting between 150 to 170 percent inflation this year. For next year, of course, the trend is much lower, between 35 and 55 percent inflation for next year.

Speaker Change: And just a follow up on the macro expectation so.

Speaker Change: Can you repeat again, how are you thinking for GDP growth next.

Speaker Change: Next year inflation for next year.

Speaker Change: Rates would be to next year.

Speaker Change: Well GDP for this year is expected to be down between two eight and 3%.

Speaker Change: Of course, we're going to see a recovery in the second half of the year.

Speaker Change: It would imply that for 2025 the market is taking a positive.

Speaker Change: We have growth in GDP of around 6%.

Speaker Change: Inflation the market is expecting between 150% to 170% inflation. This year for next year of course, the trainees much downward between.

Speaker Change: 35, and 55% inflation for next year.

Speaker Change:

Jorge Francisco Scarinci: Um, in Des Moines, Washington, D.C., not that easy to forecast. But again, let me not give you some nominal levels but give you some real levels. We think that we are going to see in the area of two to three percentage points of real interest rates on a monthly basis starting in the fall quarter of this year.

Speaker Change: Interest rate I think DC.

Speaker Change: Not that easy to forecast.

Speaker Change: But again, let me now give you some nominal levels, but to give you some real levels, we think that we have.

Speaker Change: Going to see in <unk>.

Speaker Change: The area of two to three percentage point really does rate on a monthly basis, starting in the fourth quarter of this year.

Ernesto Mara Gabilondo Mrquez: Excellent, excellent. And just one last... Assumption, in terms of VFX, what are you expecting this year?

Speaker Change: Excellent excellent and yes.

Speaker Change: One last.

Speaker Change: Macro assumption in terms of logistics.

Speaker Change: For the year.

Speaker Change: I mean.

Jorge Francisco Scarinci: We think that the effects, of course, are going to keep on going with a crawling of 2%. We are seeing for the end of the year the effect, which is between $1,150 and $1,200, approximately. That is what we think that the effects could be by the end of the year. Thank you.

Speaker Change: We think that the effects of course is going to keep on going with a <unk> 2%.

Speaker Change: We are seeing for the end of the year.

Speaker Change: The FX.

Speaker Change: Reaching between.

Speaker Change: 1000, and 150 on that 1200 Approx.

Speaker Change: Yeah.

Speaker Change: That is what we think that the FX could be by the end of the day, yes.

Ernesto Mara Gabilondo Mrquez: Perfect. Excellent. Thank you very much.

Speaker Change: Excellent. Thank you very much.

Speaker Change: So I'll work of Alaska.

Speaker Change: Yes.

Operator: The next question comes from Brian Flores with Citibank.

Speaker Change: The next question comes from Brian Flores with Citibank. Please go ahead.

Brian Flores: Hi team, thank you for the opportunity to ask questions. I have two.

Brian Flores: Hi team. Thank you for the opportunity to ask questions I have two the first one.

Jorge Francisco Scarinci: The first one is, I mean, we're already finishing May. And I just wanted to get a sense of how consumers and companies are feeling after this really strong shock, right? We have seen some improvements in fiscal accounts. The Millet administration has been showing some positive signs. However, the trade-off is a big shock to the economy, right?

Speaker Change: I mean, we're really finishing mei.

Speaker Change: And just wanted to get a sense on how are you sensing consumer companies.

Speaker Change: After these really strong shock right.

We have seen some improvements in fiscal accounts.

The malaise administration, which has been showing some positive signs however, the greater vis a big chunk to the accordingly right. So.

Speaker Change: No we're talking about finishing the year.

Brian Flores: So I know we're talking about finishing the year on a strong note in real terms regarding growth, but can you talk a little bit about how you are feeling about your clients, both on the corporate side and the consumer side, with regard to demand so far in this quarter? And where are you going to prioritize growth? Is it going to be with companies or with consumers? And then I'll ask my second question. Thank you.

Speaker Change: On a strong note in real terms regarding growth can you talk a little bit on how are you sensing your clients both on the corporate side on the consumer side with regards to demand.

Speaker Change: So far in this quarter.

Speaker Change: And where are you going to prioritize growth is going to be with companies or with consumers and then I'll ask my second question. Thank you.

Speaker Change: Yeah.

Brian Flores: Hi, Brian.

Jorge Francisco Scarinci: Now, what we are seeing is that commercial lending is starting to pick up earlier than consumer lending. What we think is that consumer lending is going to catch up with commercial lending growth maybe by the end of the year, more so in 2025 when we expect to see some recovery in real wages. So we think that companies are going, what we are seeing right now is companies are starting to demand new loans and more loans, and we are going to focus on that. We are a universal bank, and therefore, we focus on all the segments throughout the country.

Brian Flores: What we're seeing is that the commercial lending is starting to.

Speaker Change: Got it.

Speaker Change: Pick up.

Speaker Change: Earlier than consumer.

Speaker Change: And.

What we're seeing is that consumer lending is going to catch up the commercial lending growth may be at the end of the year.

Speaker Change: More in 2025, one way and we expect to see some recovery in that way.

Speaker Change: Wages.

Speaker Change: So we think Thats a company category, what we're seeing right now as companies are starting to demand for new loans on more loans.

Speaker Change: And we are going to focus we are a universal bank. Therefore, we focus in all the segments.

Brian Flores: So if the demand is coming from the commercial side, we are going there. When the demand comes from the consumer, we are ready to go for them also. So we have the liquidity, and the excess capital to tackle any potential long-term demand.

Speaker Change: All of the country. So if the demand is coming from the commercial we are all in there when the demand comes from the consumer we are ready to go for them also so.

Speaker Change: We have the liquidity and excess capital to detect any potential loan demand coming so.

Jorge Francisco Scarinci: So the sooner that recovery, the better for us. OK. I just wanted to ask, I mean, at the beginning of Millet's administration, we heard, you know, there were some meetings with banks, etc. I just wanted to get a sense of how you are feeling about Millet's administration now. Are they receiving your feedback? Are they open? How technical these discussions have been? Just any color you can share with us, it would be very, very important.

Speaker Change: The sooner that recovery the better for us.

Speaker Change: Okay.

Speaker Change: I just wanted to ask I mean at the beginning of release administration.

Speaker Change: We heard there were some meetings with banks et cetera, I just wanted to get a sense on.

Speaker Change: How are you sensing related nutrition now are they receiving your feedback are they open how technical discussions have been just any any color you can share with us it would be very very important. Thank you.

Speaker Change: Okay.

Brian Flores: Thank you. Yes, what we are seeing is that the current administration and those related to our business, that is to say the central bank and the economy ministry. Both are very receptive, and we have fluent communications with them. They want our feedback on how we are seeing the market, maybe regulations that should be..., deleted, etc. etc. So I think that they are very receptive and would have good communication with the two areas, and I think that is very important for all the changes and the challenges that we have in front of us. So I think that it is very possible. Perfect. And then maybe just the final one, and I promise this is the real final one.

Yes.

Speaker Change: We are seeing is that the current administration.

Speaker Change: And.

Speaker Change: On those areas.

Speaker Change: Our related to our business that is to say that central bank on the economy industry.

Both are very receptive.

Speaker Change: <unk>.

Drew in communications with them they want our feedback on how well we are seeing the market in maybe regulations that should be.

Speaker Change: Sure.

Speaker Change: The rays etcetera, etcetera, so I think that they are very receptive.

Speaker Change: We have.

Speaker Change: Communication with the two areas I think that that is very important for all of the big changes are the challenges that we're traveling from so I think that is very positive.

Speaker Change: Okay, Perfect and then maybe just a final one and I.

Speaker Change: I promise this is the real final one.

Jorge Francisco Scarinci: On dividends, I know you said capital is very strong. So do you think we should continue seeing, let's say, a dividend shareholder-friendly policy going forward? Or are you going to prioritize growth and maybe limit dividends in the short term? Thank you.

Speaker Change: On dividend.

Speaker Change: You said capital.

Speaker Change: Capital is very strong. So do you think we should continue seeing.

Speaker Change: Let's say you do.

Speaker Change: <unk> shareholder friendly.

Speaker Change: Policy going forward or are you going to prioritize growth and maybe limit divisions in the short term. Thank you.

Operator: Well, the next dividend to be paid is going to happen next year, in one year, so I would say that the board is going to consider macroeconomic conditions at that time, future expectations for the economy, and we are, I think that the board is going to evaluate the better division policy at that time in order to find an equilibrium on the dividend, the organic growth, and, of course, going forward. You cannot say that another inorganic opportunity could be appearing on the horizon. [inaudible] Those conditions are going to be on the table in March and April of next year. With those elements, the board is going to decide the dividend.

Speaker Change: Well the next dividend to be paid is it going to happen next year in one year. So.

Speaker Change: I would say that the board is going to consider.

Speaker Change: Macroeconomic conditions at that time.

Speaker Change:

Speaker Change: Future expectations on the economy, and we are I think thats the vantage point to evaluate.

Speaker Change: Yeah.

Speaker Change: <unk> dividend policy at that time in order to have.

Speaker Change: By now on Actelion room on the dividend.

Speaker Change: The organic growth and of course going forward.

We cannot say that.

Speaker Change: Another inorganic opportunities could be up in the high <unk>.

Speaker Change: Hey.

Speaker Change: Those conditions are going to be on the table in March April next year.

Speaker Change: With those elements the body's went to the size of the dividend.

Speaker Change: Perfect. Thank you.

Speaker Change: You're welcome.

Marina Mertens: The next question comes from Marina Mertens with Latin Securities. Please go ahead.

Speaker Change: The next question comes from Marina Mertens with <unk> Securities. Please go ahead.

Jorge Francisco Scarinci: Hi, good morning, and thank you for the opportunity to ask the question. So the fourth and first quarter results were mainly driven by gains from your security portfolio. You've been decreasing your exposure to central bank instruments by shifting towards dual bonds and CPI linkers. With the Treasury now issuing more fixed-rate instruments, can we expect to see a change in your portfolio in the second quarter towards LECAPS? And also, do you think these securities will continue to be the main earnings driver in the following quarters? Thank you.

Marina Mertens: Hi, good morning, and thank you find the opportunity to ask a question. So the fourth and first quarter results were mainly driven by gains from here I think do you think people finding out youll bean and decreasing your exposure to the central bank influenced by shifting to like do I bond from CPI linker.

Speaker Change: We did eventually now we've seen more fixed rate instrument can we expect to see a change in your portfolio in the second quarter annualized <unk> and also do you think decent guarantees will continue to be the name any China, India following quarter guys.

Marina Mertens: You.

Jorge Francisco Scarinci: Hi Marina, We're evaluating on, we have invested a bunch of money in some of the fixed rate makeups, but, Something that is important to consider is that we have to care about how we hedge the equity of the bank against inflation, and inflation is running, for the moment, nine percent, or, according to April's numbers, nine percent a month. That is still above the three point 5, 3.7% of what the daily cap is delivering.

Speaker Change: Hi Medina.

Speaker Change: <unk>.

Speaker Change: We are evaluating on a recurring basis.

Speaker Change: A bunch of money in some of the Kinks array black ops.

Speaker Change: But.

Speaker Change: Something that is important to consider is that we have to care about.

Speaker Change: How we hedge the equity of the bank against inflation and inflation is running for the moment.

Speaker Change: 9%.

Speaker Change: According to the April numbers, 9%.

Speaker Change: That is still about the three volume 537% of what the World Cup.

Speaker Change: East delivering.

Jorge Francisco Scarinci: So for the moment, we think that we have to cover the equity, we have to hedge the equity, and on the excess of that, we are evaluating where to allocate that. So that is something that we are constantly monitoring the markets, basically. We haven't made a decision yet.

Speaker Change: So for the moment, we think that we have to cover the equity we have to finish the equity.

Speaker Change: All in basis of that we are evaluating where to allocate that.

Speaker Change: Yes.

Speaker Change: The amount of money that we had coverage sort of hedging the equity.

So that is something that we are constantly monitoring the markets basically so we have a.

Speaker Change: A decision yet.

Speaker Change:

Jorge Francisco Scarinci: Your second question is, I mean, for the moment, I think that the second and third quarters. The bottom line is going to be highly affected by bond prices, basically because our bond portfolio is quite high, and the economic conditions change in a deeper way than we are expecting. I think that the second and third quarters, at least, the bottom line, are going to be governed by bond prices.

Speaker Change: Second question is.

Speaker Change: I mean for the moment I think that second and third quarter.

Speaker Change: The bottomline is going to be affected by bond prices basically because our bond portfolio is quite high so I think thats unless.

Speaker Change: The economic conditions change.

Speaker Change: In a deeper way.

Speaker Change: And what we are expecting I think the second and third quarters at least bottom lines are going to be governed by our bond prices.

Thank you.

Speaker Change: Welcome Arena.

Operator: and the next question comes from Carlos Gomez with HSBC. Please go ahead.

Speaker Change: And the next question comes from Carlos Gomez with <unk> SBC. Please go ahead.

Carlos Gomez: Hello, good afternoon, and congratulations on the results. I want to ask you whether you could give us an update on the integration of your ETAU acquisition and whether you judge that you have the capacity to undertake another inorganic acquisition in the short or medium term.

Hello, Good afternoon, and congratulations on the results.

Carlos Gomez: I want to ask about.

Speaker Change: Ill.

Speaker Change: Did you guys give us an update on the integration of <unk>.

Speaker Change: A question.

Speaker Change: And with that you judge that you'll have the capacity to undertake.

Speaker Change: Another inorganic acquisition in the short term medium term. Thank you.

Speaker Change: Okay.

Jorge Francisco Scarinci: Hi Carlos, how are you? Good to hear from you. We are finishing the legal integration with the local branches of Ita by August of this year. Yes, going forward, I think that we're in very good shape in order to undertake another, another local target, something on the horizon. For the moment, we are not working on any transaction, but if in the future, something appears, we are going to consider it without any problem.

Speaker Change: Thank you Carlos how are you able to hear you.

Speaker Change: <unk>.

Speaker Change: We are finishing the legal integration.

Speaker Change: The local franchise <unk>.

Speaker Change: By all of this year.

Speaker Change: Yeah.

Speaker Change: Yes, going forward I think that.

Speaker Change: We're in very good shape in order to undertake another.

Speaker Change: Another local target Ebit's.

Speaker Change: Something on the Horizon I mean.

Speaker Change: The moment, we are not working on any transaction, but it is.

Speaker Change: In the future something appears of course, we are going to consider it without any problem.

Speaker Change: Yes.

Carlos Gomez: Okay, and then a follow-up. Part of your personal loan portfolio has traditionally been payroll loans. We understand that, you know, real wages and pensions have another pressure in real terms with high inflation. Has that had any effect on asset quality so far, or has that, you know, made you more cautious when it comes to lending in those segments?

Speaker Change: Okay, and then a follow up.

Speaker Change: Part of your personal loan portfolio has traditionally been payroll loans.

We understand that.

Real wages.

<unk>.

Speaker Change: Having a depression in real terms with the high inflation.

Speaker Change: Had any effect on the asset quality, so far or has that.

Speaker Change: Make you more cautious when it comes to lending and depth in those segments.

Jorge Francisco Scarinci: I think that, well, the level of asset quality is extremely good. I mean, the ratio is at one of the lowest levels we've seen in the last, I don't know, 15 to 18 years, years. But in the second quarter, we are not seeing, honestly, big changes in the numbers on delinquency ratios. What we are seeing is that less demand is coming from consumers basically, and there were some, of course, there were declines in nominal interest rates, so that helped. [inaudible] I mean, we continue to maintain the risk policy. We have not become more aggressive or more risk-averse for the moment on the consumer. We continue to maintain the same policy or lending policy.

Speaker Change: Well I think that well.

Speaker Change: The level of asset quality is extremely good.

Speaker Change: The ratio is.

Speaker Change: The one of the lowest levels, we've seen in the lab.

Speaker Change: 15% to 18.

Speaker Change: Yes.

Speaker Change: But in the second quarter, we have not seen honestly.

Speaker Change: Changes on.

Speaker Change: On the delinquency.

Speaker Change: <unk>, what we are seeing that less demand coming from the consumers basically on.

Speaker Change: There were some of course, there were declines in in nominal interest rates so that helps.

Speaker Change:

Speaker Change: I mean.

Speaker Change: We continue to maintain the debt risk policy, we have not become more aggressive.

Speaker Change: More with adverse for the moment on the consumer we continue to maintain the same quality or lending policy.

Speaker Change: Yes.

Carlos Gomez: And you say that you are seeing some weakness in consumer demand, presumably that is offset by strengthening corporate demand? Yes, yes. I mean, you compare the two.

Speaker Change: Can you say that youre seeing.

Speaker Change: Weakness in consumer demand, presumably there is offset by strength theme.

Speaker Change: Corporate at two months.

Jorge Francisco Scarinci: Yes, yes, I mean, when you compare both, the corporate one is more active than the consumer.

Speaker Change: Yes, yes, I mean, new comparable.

Speaker Change: Corporate is more active than consumer.

Speaker Change: Thank you so much.

Yeah.

Speaker Change: What kind of levels.

Operator: And the next question comes from David Pardo with Puento Hermanos. Please go ahead.

Speaker Change: And the next question comes from David Pardo with Quinto Harmonics. Please go ahead.

David Pardo: Well, hello Jorge and hello team. Congratulations. I have just one question, maybe hypothetical, but... Let's say consumer loan or rather loan demand starts to recover in the second half of the year. Supposedly, I mean, we should see a recovery of the economy first, but I'd like to maybe, get a sense of maybe which lines or rather which segments are going to be like the triggers of a long-term demand recovery, let's say corporate or commercial and which materials, maybe Many are working capital as the economy recovers, but that's my view. I'd like, maybe, if you could give us your view on how that recovery could look.

Okay.

Speaker Change: Nathan.

Nathan: On another strong quarter.

Just one question.

Speaker Change: Maybe having a technical.

Speaker Change: Let's say.

Consumer loan.

Speaker Change: Loan demand starts to recover in the second half of the year out both mediums and we should see.

Speaker Change: I mean company as an economy.

Speaker Change: Maybe.

Speaker Change: Samsung, maybe which lines, rather which segments are going to meet trainees.

Speaker Change: Columbia Mountain recovery, maintaining core brand or commercial.

Speaker Change: Which material savings.

Speaker Change: He will be my assumptions would be commercial maybe Manny.

Speaker Change: Working capital as the economy recovers, but that's five years going back to school, maybe if you could give us your view on how a recovery could look like.

Speaker Change: Okay.

Jorge Francisco Scarinci: Hi David. Yes, as I mentioned before, we are seeing some pick-up in commercial lending. I would say that the sectors that are starting to be more active are agribusiness, energy, and mining. Those are the three, for the moment, most active sectors starting to pick up in loan demand. Again, as I mentioned before, we think that this might be the trend for the rest of the year. And for next year, we are going to start seeing a catch-up in consumer loan demand. So that is, for the moment, how we are seeing the next quarter in terms of loan demand with the commercial or corporate sector demanding first-time consumers.

Jorge Francisco Scarinci: Thank you. Hi David. Yes.

David: Hi, David Yes, as I mentioned before.

David: We are seeing some pickup in.

David: Commercial lending I would say that.

The sectors that are starting to be more active our agribusiness energy.

David: The mining.

David: Those are the three for the moment, most active sector starting to pick up in loan demand.

David: Again as I mentioned before we think that this might be the trend for the rest of the year and for next year, we're going to start seeing a catch up in consumer.

David: Loan demand so that is for the moment. So we are seeing the next quarters.

David: Terms of loan demand with a commercial or corporate demanding first Don consumers.

Speaker Change: Perfect. Thank you.

Youre welcome.

Operator: There are no more questions at this time. This concludes the question and answer session. I will now turn the matter over to Mr. Nicolas Torres for final consideration. Thank you all for your interest in Banco Macro.

Speaker Change: There are no more questions at this time.

Speaker Change: This concludes the question and answer session I will now turn over to Mr. Nicolas Torres for final considerations.

Nicolas Torres: Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Good day.

Speaker Change: Okay.

Thank you all for your interest in Banco macro we appreciate your time and look forward to speaking with you again good day.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Okay.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.