Q2 2024 Banco Macro SA Earnings Call

August 23, 2024

Speaker Change: [music].

Good morning, ladies and gentlemen, and thank you for waiting.

Speaker Change: At this time, we would like to welcome everyone to the Banco macros <unk> 'twenty 'twenty four earnings conference call.

Speaker Change: We would like to inform you that the <unk> 24 press release is available to download at the Investor Relations website of Banco macro at Www Dot macro dotcom dot a R slash really stillness investor base.

Speaker Change: Also this event is being recorded and all participants will be in listen only mode. During the Companys presentation.

Speaker Change: After the company's remarks are completed there will be a question and answer session.

Speaker Change: At that time further instructions will be given.

Speaker Change: Should any participant need assistance during this call. Please press star zero to signal the operator.

Speaker Change: It is now my pleasure to introduce our speakers joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer, Mr. Jorge currency, Chief Financial Officer, and Mr. Nicolas Torres IR.

Now I will turn the conference over to Mr. Nicolas Torres you May begin your conference.

Speaker Change: Thank you Nick.

Good morning, and welcome to Banco Macros second quarter 2024 conference call.

Speaker Change: Any comment we may make today may include forward looking statements, which are subject to various conditions and these are outlined in our 20-F, which was filed with the SEC.

Speaker Change: Arab website.

Speaker Change: Second quarter 'twenty 'twenty four press release was distributed yesterday and it's available at our website.

Speaker Change: Or P works already in Argentine pesos and have been restated in terms of the metering units at the end of the reporting period.

Speaker Change: It's 2020, the bank began reporting results applying hyperinflation accounting in accordance with Ias 29, just published by the Central Bank of Argentina.

Speaker Change: For ease of comparison to previous quarters have been restated applying ias 29 to reflect the cumulative effect of an inflation adjustment for experienced through June 32024.

Speaker Change: I will now briefly comment on the banks second quarter 2020 financial results.

Speaker Change: In the six months ended June 32020 for Banco macros net income totaled $93 1 billion pesos.

Speaker Change: It was 55% or 115.9 billion lower than in the six months of 2023.

Speaker Change: As of the second quarter of 2020 for the accumulated annualized return on average equity and accumulated annualized return on average assets were $5 four and one 7% respectively.

In the six months ended June 32020 for operating income before general administrative and personnel expenses totaled $2 38 trillion pesos, 36% or $628 2 billion pesos higher than in the six months of 2023.

Speaker Change: Net operating income before general and administrative and personnel expenses for the first half of 'twenty 'twenty four.

Speaker Change: 1.9, pretty ambitious English and 41% or $464 7 billion pesos when compared to the first half of 2023.

Speaker Change: Okay.

Speaker Change: But the macros second quarter 2024, net income totaled $233 2 billion peso slots, which was $559 6 billion pesos lower than the previous quarter and $397 3 billion lower year on year, mainly due to the mark to market of government Securities.

Speaker Change: Financial assets at fair value at the profit or loss.

Speaker Change: And nowhere in FX gains registered in the quarter.

It is important to note that government securities, including financial assets at fair value was the profit or loss, namely inflation adjusted bonds. Due in 2027 had been bugging instead I'm on price cost.

Speaker Change: Second quarter 201 important net income would have been kind of in the pipeline 5 billion pesos higher.

Speaker Change: Furthermore, I think there's probably no banco macro recently exercising Uh huh.

Speaker Change: The put options that count on starting construction activities.

Speaker Change: Given the current breakdown of our government securities portfolio, if I estimate that.

Net income would have been around 300 billion pesos higher had the remaining you've taken that drifted securities being valued at amortized cost.

Speaker Change: In the second quarter of FY 'twenty for provision for loan losses totaled $16 5 billion pesos, 26% or $5 9 billion because of slower in the first quarter of 2024 on a yearly basis provision for loan losses decreased 20%.

Speaker Change: Billion pesos.

Speaker Change: Operating income after January.

Speaker Change: <unk> expenses were 20.

Speaker Change: Were $99 1 billion pesos in the second quarter have gone from 493%, a 1.4 pretty ambitious lower than in the first quarter of <unk> 44 and 85%.

Speaker Change: 44 billion pesos lower than a year ago.

Speaker Change: In the quarter net interest income totaled 188 billion pesos, 6% or $12 7 billion pesos lower than the first quarter of 2024, and 53% or $213 1 billion plus of lower year on year.

Speaker Change: Interest income decreased 27%, while interest expense decreased 33%.

Speaker Change: In the second quarter of 2024 interest income totaled $619 7 billion pesos, 21% or $229 8 million pesos lower than the first quarter of 'twenty 'twenty, four and 46% of Franklin on $21 4 billion lower than the second quarter of 2023.

Income from interest on loans and other financing totaled $410 2 billion pesos, 26% or $142 7 billion lower compared with the previous quarter, mainly due to a 25 nine percentage points.

Speaker Change: The decrease in the average lending rate, which was partially upset by a 9% increase in the average volume of private sector loans.

On a yearly basis income from interest on loans decreased 10% or $45 2 billion pesos.

Speaker Change: In the second quarter of 2024 interest on loans represented 66% of total interest income.

Speaker Change: In the second quarter of 2024 income from government and private securities.

Yes.

Increased 40%.

Speaker Change: Haven't been impressive quarter on quarter and decreased 74% or $407 2 billion pesos compared with the same period of last year.

Speaker Change: In the second quarter of 2020 for income from <unk> totaled $48 7 billion pesos 73 per cent for one kind of $31 4 billion, but slower than the previous quarter, and 29% or $19 5 billion peso slower than a year ago.

Speaker Change: In the second quarter of 2024, FX income totaled $25 6 million versus 73% or $69 9 billion lower than the previous quarter and 91% to kind of $56 1 billion pesos lower than a year ago.

Speaker Change: FX income gain was due to the six 3% Argentine peso depreciation against the U S dollar and the bank's long dollar position during the quarter. It is important to notice that the bank's average long dollar position decreased 59% during the quarter.

Speaker Change: In the second quarter of 'twenty 'twenty four interim.

Speaker Change: Totaled $431 7 billion pesos, the question, 33% or $217 1 billion pesos compared to the Bruce quarter, and 42% or $3 3 billion pesos lower when compared to the second quarter of 2023.

Speaker Change: Within interest expense interest on deposits decreased 33%, a $208 8 billion quarter on quarter due to a 25 four percentage points decrease in the average rate paid on deposits, while the average volume of deposits from the private sector increased 16% on.

Speaker Change: On a yearly basis interest on deposits decreased 42% or $304 5 billion pesos.

Speaker Change: In the second quarter of 2024, the bank's net interest margin, including FX was 19, 9% no worse than the 26, 2% posted in the first quarter of 2024, and a 38, 3% posted in the second quarter of 2023.

Speaker Change: In the second quarter of 2020 for Banco macros net income totaled $95 7 billion pesos, 8% or $6 8 billion, which is higher than the first quarter of 'twenty 'twenty, four and was 2% up $2 1 billion, but slower than the same period last year.

Speaker Change: In the second quarter of 2024, net income from financial assets and liabilities at fair value at the profit or loss totaled.

Speaker Change: $121 2 billion pesos gain decreased 92% or $1 39 trillion pesos in the quarter.

Speaker Change: This gain was more due to the negative mark to market of some government securities basically in placement of bonds and.

Speaker Change: [laughter].

Speaker Change: In that the amount of $1 41 freedom takes us.

Speaker Change: In the quarter other operating income totaled $46 2 billion picks up 7% or $3 3 billion pesos lower than the first quarter of done default on a yearly basis. Other operating income increased 62% or $17 8 billion pesos.

Speaker Change: In the second quarter of 'twenty 'twenty, four Banco macros that neither of your expenses plus employee benefits to.

Speaker Change: So kind of around $3 5 billion pesos, 15% or 35, 1 billion pesos lower than the previous quarter due to lower employee benefits, which decreased 14% and lower administrative expenses, which decreased 17% on a yearly basis admin expenses plus employee benefits increased 14% or 25 6 billion pesos.

Speaker Change: That's up in the second quarter of 2020 for the accumulated efficiency ratio reached 22, 2% deteriorating from the 14.7% posted in the first quarter of 10, four and May 22, two posted one year ago.

Speaker Change: In the second quarter of 2024 expenses decreased 14% when net interest income plus fee income profile that operating income decreased seven 7% compared to the first quarter of 2024.

Speaker Change: Yeah.

Speaker Change: In the second quarter of <unk> 20 for the resort.

Speaker Change: From the net monetary position totaled $462 7 billion peso lost 56% or 591 3 million pets is lower and the loss posted in the first quarter fund four and 14% $56 1 billion versus low.

Speaker Change: Nonetheless supposed to be a year ago.

Speaker Change: This result is.

Speaker Change: As a consequence of lowering patients during the quarter inflation was 18, 6% in the second quarter of 2024 compared to the 51, 6% registered in the first quarter of 2024, while the net monetary position remained unchanged.

Speaker Change: In the second quarter of 2024, given the macros negative net income for the quarter no income tax charge what's required.

Part of that information was provided in note 21 to our financial statements.

Speaker Change: In terms of loan growth the bank's total financing 347 trillion fixes, increasing 17% or 504 1 billion quarter on quarter, and 5% a $154 5 billion pesos higher year on year.

Speaker Change: Within commercial loans that went to stand out with a 7% or <unk>.

Speaker Change: $43 6 billion purchasing Bruce when others increased 27% or $158 3 billion pesos.

Speaker Change: Within consumer lending personal loans increased 29% or $111 9 billion pesos was credit card loans increased 11% or 77 8 billion pesos.

Speaker Change: Based on financing increased 20% or $563 8 million pesos in the quarter, while U S dollar financing increased $2 million.

Speaker Change: And it's important to mention that Banco macros market share over private types of loans as of June 2024 reached nine 1%.

Speaker Change: On the funding side total deposits increased 13% or $769 5 billion quarter on quarter totaling $6 74 trillion basis, and increased 5% or $329 3 billion pesos year on year.

Speaker Change: I would take the deposits increased 11% or $591 5 billion prices quarter on quarter, what public sector deposits increased 30% or 100 819 billion.

Speaker Change: Quarter on quarter.

The increase in private sector deposits was led by demand deposits, which increased 23%.

Speaker Change: Maybe $1 5 billion pesos, while time deposits decreased 2%.

Speaker Change: $54 5 billion pesos why don't work.

Speaker Change: Within private sector deposits total deposits increased 17% or $774 6 million basis, while U S. Dollar deposits decreased 6% from 90 $697 million.

Speaker Change: As of June 24th Banco macros transactional accounts represented approximately 52% of total deposits.

Speaker Change: Banco macros market share over private sector deposits as of June 2024, eight.

Speaker Change: Eight 1%.

Speaker Change: In terms of asset quality, Banco macros, non performing to total financing ratio, which $1 23 per cent.

Speaker Change: Brad just ratio measured as total allowance under expected credit losses over a nonperforming loans and the Central Bank rules reached 181, 4%.

Speaker Change: Consumer portfolio nonperforming loans deteriorated five basis points up to 152% from 147% in the previous quarter when commercial portfolio of nonperforming loans deteriorated one basis points in the second quarter was $10 four.

In terms of capitalization Banco macro accounted an excess capital of $2 36 billion pesos, which represented our company on delinquency ratio of 35, 7% and a tier one ratio of 34%. The bank's aim is to make the best use of this excess capital.

Speaker Change: Last liquidity remained more than appropriate liquid assets to total deposit ratio reached 98% in the second quarter and 24.

Speaker Change: Overall, we have accounted for a part of the first half of 'twenty 'twenty four we continue showing a solid financial position asset quality remain under control.

Speaker Change: Controlling close monitor we keep on working to improve more our efficiency standards and we'll keep a well optimized deposit base.

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

Speaker Change: 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 then one on your Touchtone phone to withdraw your question. Please press Star then two.

Speaker Change: One moment, please while we poll for the first question.

And our first question today will come from Ernesto <unk> with Bank of America. Please go ahead.

Ernesto <unk>: Thank you hi, good morning, Okay cool, thanks for the opportunity to ask questions.

Speaker Change: My first question will be on your long road.

Speaker Change: Quality expectation for this next year.

Speaker Change: And then my second question is if you can elaborate a little bit more on.

Speaker Change: On the boots at macro executed with the Central Bank.

Speaker Change: Also in general the timeline.

Speaker Change: All right the Central Bank is proposing.

Speaker Change: And also can you remind us how much is your acquisition unsecured is linked to inflation.

Speaker Change: What would be your strategy going forward what are we dish instrument.

Speaker Change: And finally my last question is on <unk>, how do you see it for the end of the year.

Speaker Change: And what do you think will be the sustainable level. Thank you.

Speaker Change: B G.

Speaker Change: Well just speaking how are you.

Speaker Change: <unk>.

Speaker Change: Your first question in terms of asset quality.

Speaker Change: I think that when the Liberals are doing are showing extremely groups.

Speaker Change: No I think I'd say going forward to be Coleman economy will recover.

Speaker Change: For 2025.

Speaker Change: We are going to be a bit more aggressive in growing in lending and therefore.

Delinquency could be.

Speaker Change: But to many manageable levels.

Speaker Change: Again, I think that's been.

Speaker Change: Really commented before but since 2008, the peak that we had in our delinquency rate was 3% in 2009.

Speaker Change: So I think that without any problems.

Speaker Change: Right and do you see the current ratio of two levels between two and two <unk>.

Speaker Change: Berlin.

Speaker Change: Lynn indicated we become more aggressive in lending.

Speaker Change: I will go to your third question. Your second question for for the last one that sort of question about I would say.

Speaker Change: The bonds that we probably.

Speaker Change: Our adjusted Q.

Speaker Change: Currently about <unk>, three 7 billion pesos or.

Speaker Change: Trillion pesos.

Speaker Change: Our bonds, which are tied to inflation.

Speaker Change: <unk> approximately 120% of the equity I mean.

Speaker Change: 210%, albeit monetary position the monetary policy the one that each.

Speaker Change: Basically that's the one that adjusted when you got a statement.

Speaker Change: To inflation in that sense, we are.

Speaker Change: A link to hedge against inflation.

Speaker Change: Going forward I think that depending on what somebody will be inflation rates.

Speaker Change: And last month was 4% so on a monthly basis.

And we believe that.

Speaker Change: Later, he is going to continue the downward trend. However, we are.

Speaker Change: According to the economy.

Speaker Change: Well listen they are not expecting inflation to become below the 2%.

Speaker Change: And in November December and the probability of that.

Speaker Change: Maybe the order of 50% so for the moment, we're going to keep the.

Speaker Change: Portfolio.

Speaker Change: <unk> inflation.

Speaker Change: Market conditions changed we are going to at some point maybe exercise.

Speaker Change: The adoption or make a swap into fixed rate notes depending on market conditions.

In terms of your question in terms of apparel.

Speaker Change: George.

Speaker Change: 'twenty 'twenty four we think that we would be ranging between.

Speaker Change: Karen on 13%, we lead times.

Speaker Change: Tom's going forward on a more sustainable level, we think that we could be deliberate and between 15% to 20% Roe.

Speaker Change: We at times.

Speaker Change:

Speaker Change: On your second question about too big for the exercise of debt reduction that we need the first of July.

Basically.

Speaker Change: In the article decided to execute.

Speaker Change: Proceeds of the bonds that we have tied to inflation.

Speaker Change: After the conference that the country needs around the Brexit and other central banks.

Speaker Change: Showing that the amount of pay itself was going to be.

Speaker Change: In the market.

Speaker Change: Therefore, we decided to keep that position.

Speaker Change: So liquidity.

Speaker Change: And to have more elements in order to be more aggressive in future lending.

Speaker Change: Although the repos.

Speaker Change: Doug.

Speaker Change: The central bank and suffering I mean that would be for bonds.

Some.

Speaker Change: So in theory liquidity problems I can be okay. In our case, we are extremely liquid.

Our knowledge of.

Speaker Change: Using the LIFO.

Speaker Change: The results are.

Speaker Change: The casino is there.

Speaker Change: The only thing at least new ink is that.

Speaker Change: Central Bank with us.

Speaker Change: Integrate on the repos.

So a level of 48% so to make it more accessible for balance sheet too.

Speaker Change: <unk>.

Speaker Change: Sure.

Speaker Change: The question I'm, sorry, yes, yes. Thank you very much wanted to just follow up the first one is.

Speaker Change: Well two follow ups, one in terms of the loan growth.

So any color on what could be the pace of loan growth for this year and for next year.

Speaker Change: Then the other follow up.

Speaker Change: And shouldn't that you executed hassle.

Speaker Change: So can you guys remind us how was the amount of all of those securities that you killed before.

Speaker Change: Yeah and Tim.

Speaker Change: So.

Speaker Change: Let's go to your second question, Yes, Richard you can talk about that.

Speaker Change: Options without was like two trillion pesos in bonds that do we.

Speaker Change: Exercise and said to the Central Bank.

Speaker Change: The amount of pesos when did you get that extra liquidity.

Speaker Change: I'm currently we hold another <unk> or sorry, two trillion pesos in food options and taste that we want to exercise the same installation.

Inflation in bonds to the central block.

Speaker Change: Going to the loan growth for 2020 for stage two.

Speaker Change:

Speaker Change: Policy debates in the order of maybe 15% area for 2024.

Speaker Change: We believe that we have recovery of GDP in 2025, we could be.

Carlos Gomez: Carlos Gomez, Jorge Scarinci, Nicolas Riva, Ernesto Mrquez Good morning, ladies and gentlemen, and thank you for waiting.

Carlos Gomez: Carlos Gomez, Jorge Scarinci, Nicolas Riva, Ernesto Mrquez Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to the Banco Macros 2Q 2024 earnings conference call. We would like to inform you that the 2Q 24 press release is available to download at the Investor Relations website of Banco Macro at www.macro.com.ar-relationes-invisoreses. Also, this event is being recorded and all participants will be in listen only mode during the company's presentation.

Speaker Change: At least 70, 75% policy debate, so well known for next year.

Speaker Change: Okay and then thank you very much okay.

Operator: At this time, we would like to welcome everyone to the Banco Macros 2Q 2024 earnings conference call.

Speaker Change: We've done all that stuff.

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

Operator: We would like to inform you that the 2Q 24 press release is available to download at the Investor Relations website of Banco Macro at www.macro.com.ar-relationes-invisoreses.

Speaker Change: Hey, Hi, Jorge Nikola something.

Speaker Change: Thank you very much for the opportunity and I wanted to ask one on nims right because as you say and.

Repos are still helping but I think the average earned yield sort of decreasing also you have some relief on the deposit base.

Operator: Also, this event is being recorded and all participants will be in listen only mode during the company's presentation.

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.

Carlos Gomez: 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.

Speaker Change: Well I don't think it's a very hard question right because it's a very fluid environment, but when do you think it means good good stabilized I think that's my first question and then in the second quarter, Juan you mentioned capital right.

Juan: Do you have any any updates on any regulatory changes that would allow you to distribute the maybe higher dividend yields going forward. Thank you.

Operator: It is now my pleasure to introduce our speakers.

Nicolas Torres: It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Gustavo Maniquez, 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 your conference. Thank you, Nico. Good morning and welcome to the Banco Macros 2Q 2024 conference call. Any comment we may make today may include forward looking statements which are subject to various conditions, and these are outlined in our 20th, which was filed to the SEC and it's available at our website.

Operator: Joining us from Argentina are Mr. Gustavo Maniquez, Chief Executive Officer, Mr. Jorge Scarinci, Chief Financial Officer, and Mr. Nicolas Torres, IR.

Nicolas Torres: Now I will turn the conference over to Mr. Nicolas Torres. You may begin your conference. Thank you, Nico. Good morning and welcome to the Banco Macros 2Q 2024 conference call. Any comment we may make today may include forward looking statements which are subject to various conditions, and these are outlined in our 20th, which was filed to the SEC and it's available at our website. 2Q 2024 press release was distributed yesterday and it's available at our website.

Speaker Change: Hey, Brian how are you.

Speaker Change: In terms of your second question first.

Speaker Change: I mean, we have to wait till next year for the moment, we haven't seen any new information coming remember that's a.

Operator: After the company's remarks are completed, there will be a question and answer session. At that time, further instructions will be given.

Operator: Should any participant need assistance during this call, please press star zero to signal the operator.

Speaker Change: When we have to pay dividends.

Speaker Change: The board propose to the shareholders' meeting the payment of dividends you've seen in March so we have to wait till next year.

Operator: It is now my pleasure to introduce our speakers.

Nicolas Torres: 2Q 2024 press release was distributed yesterday and it's available at our website. All figures are already in Argentina and Texas and have been restated in terms of the major and unit current at the end of the reporting period. As of 2020, the Banco began reporting results, applying high pre-inflation accounting, in accordance with IFRS IIS 29 as established by the Center Bank of Argentina. For ease of comparison, viewers of previous quarters have been restated, applying IIS 29 to reflect the accumulated effect of the inflation adjustment for each period through June 30, 2024.

Operator: Joining us from Argentina are Mr. Gustavo Maniquez, Chief Executive Officer, Mr. Jorge Scarinci, Chief Financial Officer, and Mr. Nicolas Torres, IR.

Nicolas Torres: All figures are already in Argentina and Texas and have been restated in terms of the major and unit current at the end of the reporting period. As of 2020, the Banco began reporting results, applying high pre-inflation accounting, in accordance with IFRS IIS 29 as established by the Center Bank of Argentina. For ease of comparison, viewers of previous quarters have been restated, applying IIS 29 to reflect the accumulated effect of the inflation adjustment for each period through June 30, 2024.

Speaker Change: I bet Chumney basically when the central Bank always stood up new origination on the amount of these end up making it could be the nuclear on the monthly installments remember that now.

Speaker Change: Last year.

Speaker Change: The total was six this year the number it's domains, where we used to Tony.

Speaker Change: I think that we are also giving the in a way that each.

Speaker Change: The economy conditions improve.

Nicolas Torres: Now I will turn the conference over to Mr. Nicolas Torres.

Nicolas Torres: I will now briefly comment on the Banco second quarter 2024 financial results. In the 6 month ended June 30, 2024, the Banco Macros net income total 93.1 billion pesos. This result was 55% or 115.9 billion pesos lower than in the 6 months of 2023. As of the second quarter of 2024, the accumulated annualized return on average equity and the accumulated annualized return on average assets were 5.4 and 1.7% respectively. In the 6 months ended June 30, 2024, operating income before general admission and personal expenses total 2.38 trillion pesos.

Speaker Change: And then central bonds, which obviously increase going forward.

Nicolas Torres: You may begin your conference.

Speaker Change: We are proceeding well.

Could be allowed to pay dividends, maybe why installments on that would be positive.

Nicolas Torres: Thank you, Nico.

Speaker Change: In terms of your first questions on <unk>.

Speaker Change: <unk>.

Speaker Change: Do you have a chance to go through there in Brazil.

Nicolas Torres: Good morning and welcome to the Banco Macros 2Q 2024 conference call.

Speaker Change: Liam baseball shake increase of expanding <unk>.

Speaker Change:

Speaker Change: Basically you're right there were some little increase in the cost of funds.

Speaker Change: Remember that in.

Speaker Change: In our case.

Speaker Change: The amount of transactional deposits, where we paid almost 80% they are each almost 45% total deposits and on the time deposit side.

Beijing in those that we are.

Nicolas Torres: 36% or 628.3 billion pesos higher than in the 6 months of 2023. Net Operating Is Income, before General Ernesto's first and the first half of 2024, where 1.59 trillion pesos, increasing 41% or 464.7 billion pesos, when compared to the first half of 2023. Banco Macro's second quarter, 2024 net income total at 233.2 billion pesos lost, which was 559.6 billion pesos lower than the previous quarter and 397.3 billion pesos lower year-on-year, mainly due to the market market of government securities.

Speaker Change: The financial the agents of default provinces, we could be slightly below average interest rates. So the beach.

Speaker Change: Does that kind of slide competitor advantage.

Speaker Change: To continue expanding a little bit the nims on going forward, we think that the means are going to remain pretty stable. So the increasing in.

Nicolas Torres: Any comment we may make today may include forward looking statements which are subject to various conditions, and these are outlined in our 20th, which was filed to the SEC and it's available at our website.

Speaker Change: In the net interest income is going to come through the increase in lending.

Speaker Change: All hand in hand with increasing the funding.

Nicolas Torres: Financial assets at fair value to profit are lost and lower effects gains registered in the quarter. It is important to note that if government securities, including financial assets at fair value to profit are lost, namely inflation adjusted bonds due in 2027 have been valued instead at Amapace cost to second quarter 2024 net income would have been 505.5 billion pesos higher. Furthermore, as it is probably known, Banco Macro recently exercised about half of some of the poor options that it held on certain inflation adjusted securities.

Speaker Change: Perfect. If I can follow up just with your last comment.

Speaker Change: And how is demand evolving where do you think or what do you see the biggest opportunities to grow your loan book right now.

Speaker Change: I mean they.

Speaker Change: We're also decreasing interest rates.

Speaker Change: That was a consequence of a reduction in inflation.

Speaker Change: It would seem that there was a recovery in lending.

Speaker Change: Most of the areas basically if it needs.

Speaker Change: Some consumer going forward within that budget.

Nicolas Torres: Given the current breakdown of our government securities portfolio, the bank estimates that net income could have been around 300 billion pesos higher had the remaining inflation adjusted securities been valued at Amapace cost. In the second quarter of 2024, provision for loan losses total 16.5 billion pesos, 26% or 5.9 billion pesos lower than the first quarter of 2024. On a yearly basis, provision for loan losses decreased 20% of 4 billion pesos. Operating income after general analysis of personal expenses were 99.1 billion pesos in the second quarter of 2024, 93% or 1.4 billion pesos lower than in the first quarter of 2024 and 85% or 544 billion pesos lower than a year ago.

Speaker Change: We see some recovery in the real levels of salaries.

Speaker Change: See consumption pushing a little harder and also we are having these.

Speaker Change: New investment and so on.

Nicolas Torres: 2Q 2024 press release was distributed yesterday and it's available at our website.

Speaker Change: In different areas.

Speaker Change: And as a consequence Alfred needs, we broke them up to local companies.

Speaker Change: We are going to see also corporate some companies also demanding for a new language. So is this going to be across the board we're thinking 2025.

Nicolas Torres: All figures are already in Argentina and Texas and have been restated in terms of the major and unit current at the end of the reporting period.

Nicolas Torres: As of 2020, the Banco began reporting results, applying high pre-inflation accounting, in accordance with IFRS IIS 29 as established by the Center Bank of Argentina. For ease of comparison, viewers of previous quarters have been restated, applying IIS 29 to reflect the accumulated effect of the inflation adjustment for each period through June 30, 2024.

Speaker Change: I think that the level of plan, namely that we have.

Speaker Change: It's pretty pretty sluggish a breach is always around 6% of loans to GDP. So we think that the.

Speaker Change: The potential growth here is huge.

Speaker Change: Okay. Thank you.

Nicolas Torres: In the quarter net income total 188 billion pesos, 6% or 12.7 billion pesos lower than in the first quarter of 2024 and 53% or 213.1 billion pesos lower year and year. Interest income decreased 27% while interest expenses decreased 33%. In the second quarter of 2024, interest income total 619.7 billion pesos, 27% or 229.8 billion pesos lower than in the first quarter of 2024 and 46% or 521.4 billion pesos lower than in the second quarter of 2023.

Speaker Change: Well welcome Brian.

Speaker Change: The next question comes from Marine on returns with Aladdin Security. Please go ahead.

Speaker Change: Hi, good morning, and thanks for taking my question. So in the last in the previous two quarters as we said, it's largely done by the strong performance in this portfolio, which was which is the trend reversed this quarter and now he hasn't really impacted results.

Speaker Change: And I think it is part of what he has to keep on driving and restarting them in linear yeah.

Nicolas Torres: Income from interest loan and other financing total 432 billion pesos, 26% or 142.7 billion pesos lower compared with the previous quarter, many due to a 25.9 percentage point decreased in average lending rate, which was partly upset by a 9% increase in the average volume of private sector loans. On a yearly basis, income from interest loan loans decreased 10% of 45.2 billion pesos. In the second quarter of 2024, interest loans represented 66% of total interest income.

Speaker Change: So do we expect to see increasing at all to have a more relevant impact on our results.

Speaker Change:

Speaker Change: Hi, how are you.

Speaker Change: I mean in terms of.

Speaker Change: Income coming from the bond portfolio as we stated in our press release.

Speaker Change: Yeah.

Speaker Change: After executing or exercising half off well.

Speaker Change: Our bond portfolio.

Speaker Change: Okay.

Speaker Change: On the bond portfolio.

Speaker Change: Finally half.

Nicolas Torres: In the second quarter of 2024, income from government and private sector Jesus Christ, 40% of 4.7 billion pesos, quarter and quarter and decreased 74% of 177.2 billion pesos compared with the same period of last year. In the second quarter of 2024, income from 3% to 48.7 billion pesos, 73% to 131.4 billion pesos lower than the previous quarter and 29% or 19.5 billion pesos lower than a year ago. In the second quarter of 2024, effects income from 25.6 billion pesos, 73% or 69.9 billion pesos lower than the previous quarter, and 91% or 256.1 billion pesos lower than a year ago.

Speaker Change: Well done.

Speaker Change: Sure.

Speaker Change: The Alco decided to accounted on the cost plus.

Speaker Change: Yeah.

Speaker Change: Got you.

Speaker Change: Instead of having mark to market, so going forward in coming quarters, we are going to see more stability in the results coming from our bonds.

Speaker Change: We think that with a pickup in lending we are going to start seeing that loans or in this case interest income from loans are going to start having a bit more.

Speaker Change: Well better performance in the in the income statement.

Speaker Change: Yeah.

Speaker Change: Great. Thank you very much.

Speaker Change: Youre welcome.

Nicolas Torres: Effect income gain was due to the 6.3% Argentine pesos depreciation against the US dollar and the bank's dollar position during the quarter. It is important to notice that the bank's average loan dollar position decreased 59% during the quarter. In the second quarter of 2024, income expense total 431.7 billion pesos, decreasing 33% or 217.1 billion pesos, compared to the previous quarter and 42% or 38.3 billion pesos lower than compared to the second quarter of 2023.

Speaker Change: The next question comes from Yuri Fernandes with JP Morgan. Please go ahead.

Speaker Change: Thank you guys for the opportunity of asking question just one on these loans versus securities snakes right Andy.

And even on the Securities mix right you have the news I think is lessee are these new instruments. There is a one year.

Speaker Change: Basically my question is I like almost and on these lessee.

Speaker Change: Maybe you are increasing the duration right Oh, sorry, yes, I see.

Speaker Change: The Peace Corps liquidity ladder is a one year, although you'll have the puts you can sell it is but I think like.

Nicolas Torres: Within interest expense, interest on deposits decreased 33% or 208.8 billion pesos, quarter and a quarter, due to a 25.4% decrease in the average rate paid on the deposits, while the average volume of deposits from the private sector increased 16%. On a yearly basis, interest on deposits decreased 42% or 345 billion pesos. In the second quarter of 2024, the bank's net interest margin, including effects, was 19.9%. Lower than the 26.2% posted in the first quarter of 2024 and the 38.3% posted in the second quarter of 2023.

Our ear term kind of instrument you are growing more your loss. So trying to think about the your net monetary results like inflation will be lower so this should be so it would be a tailwind, but having more laws and having less I would say and playful encode secured.

How do you think about your balance sheets vessels inflation, because inflation is wrong and installation start accelerating.

Speaker Change: He is the balance sheet getting leased here at some degree because you'll have more longer term maturity. Yes. It's been than you used to have in the past when you'll have more short term instruments. That's my my first question.

Nicolas Torres: I will now briefly comment on the Banco second quarter 2024 financial results. In the 6 month ended June 30, 2024, the Banco Macros net income total 93.1 billion pesos.

Nicolas Torres: In the second quarter of 2024, the bank's net income total 95.7 billion pesos, 8% or 6.8 billion pesos higher than the first quarter of 2024, and was 2% or 2.1 billion pesos lower than the same period of last year. In the second quarter of 2024, net income from financial assets and the average at Fairband is the profit of a loss, total at 121.2 billion pesos gained, decreasing 92% or 139 trillion pesos in the quarter.

Speaker Change: My second question is regarding a further M&A is right you just had ito.

Speaker Change: I think there is still consolidation shall happen in Argentina. So I just would like to know the appetite of Bronco Mach prefer for new new opportunities. If your message is well, let's digest. It all let's keep working on what we have or are no oh, we have a lot of excess capital and we are still.

Nicolas Torres: This result was 55% or 115.9 billion pesos lower than in the 6 months of 2023.

Nicolas Torres: This game was smaller due to the negative mark market of some government securities, basically invading just bonds and in the amount of 1.41 trillion pesos. In the quarter, other operating income total 46.2 billion pesos, 7% or 3.3 billion pesos lower than the first quarter of 2024. On a yearly basis, other operating income increased 62% or 17.8 billion pesos. In the second quarter of 2024, bank of market administrative expenses plus employee benefits total 203.5 billion pesos, 15% or 35.3 billion pesos lower than the previous quarter.

Speaker Change: Open for new opportunities and a third question more on a regulatory approved dates right does this still I think an important topic. If you can remind us what can be the next.

Speaker Change: Central Bank regulatory changes that can benefit the <unk>.

Thanks, I think there were many moving parts on rates and reserve requirements.

Speaker Change: What should we expect for the future on DAYBREAK will outdoor small to be a tailwind for you.

Speaker Change: Yeah.

Speaker Change: Hi, Judy in terms of your first question.

Nicolas Torres: Each lower employee benefits, which decrease 14% and lower administrative expenses, which decrease 17%. On a yearly basis, administrative expenses plus employee benefits increased 14% or 25.6 billion pesos. As of the second quarter of 2024, the accumulated efficiency ratio, which 22.2% deteriorated from the 14.7% posted in the first quarter of 2024 and the 22.2% posted one year ago. In the second quarter of 2024, expenses decreased 14% when an interest income plus net income plus other operating income decreased 77% compared to the first quarter of 2024.

<unk>.

Speaker Change: Holding beach inflation, leading securities we are hedging our balance sheet against the.

Speaker Change: The adjustments for inflation.

Speaker Change: Monetary position.

Nicolas Torres: As of the second quarter of 2024, the accumulated annualized return on average equity and the accumulated annualized return on average assets were 5.4 and 1.7% respectively.

Speaker Change: So.

Speaker Change: By increasing the leach the duration of our loan book.

Speaker Change: And always having Portuguese.

Speaker Change: We are rates are.

Speaker Change: The impact on the on the balance sheet on the impact on the.

Nicolas Torres: In the 6 months ended June 30, 2024, operating income before general admission and personal expenses total 2.38 trillion pesos.

Speaker Change: Inflation.

Speaker Change: Just any kind of same thing is going to be bought.

Speaker Change: So.

We have not seen any any challenge or any damage.

Nicolas Torres: In the second quarter of 2024, the result from the net monetary position totaled 462.12 billion pesos lost, 56% or 591.3 billion pesos lower than the lowest posted in the first quarter of 2024 and 14% 56.1 billion pesos higher than the lowest posted a year ago. The result is a consequence of lower inflation during the quarter. Inflation was 18.6% in the second quarter of 2024 compared to the 51.6% registered in the first quarter of 2024.

Speaker Change: Oh yeah.

Speaker Change: And so.

Speaker Change: It doesn't mean that if.

Speaker Change: Increasing duration is going to make a few we affect our exposure to inflation.

Speaker Change: On your second question about <unk>.

Speaker Change: And money opportunities, yes. It is.

Speaker Change: We are going to complete that.

Speaker Change: Legal large will detail.

Speaker Change: In the fourth quarter of this year. So by December of this year everything is going to be under Banco macros umbrella.

Nicolas Torres: While the net monetary position remained unchanged. In the second quarter of 2024, given macros net income for the quarter, no income tax charge was recorded. Part of the information is provided in no 21 to our financial statements. In terms of long growth, the bank's total financial reached 347 trillion pesos, increasing 75% or 510.1 billion pesos quarter and 5% or 154.5 billion pesos higher year and year. Within commercial loans, the document stands out with a 7% or 43.6 billion pesos increase when others increase 27% or 158.3 billion pesos.

Speaker Change: Going forward.

Speaker Change: Yeah.

Speaker Change: We will be keeping a close eye to any opportunity that might happen in the banking sector.

Speaker Change: We think that we are.

Speaker Change: One of the only buyers here.

Speaker Change: Here so.

Speaker Change: Any potential players.

Speaker Change: Could be leaving I think that is going to now our door.

Speaker Change: So we want to be keeping a close eye got as I mentioned before there.

Speaker Change: While we have a third question on Central Bank regulation that could.

Speaker Change: It improved a little bit the banking industry I think that there are many.

Nicolas Torres: Within consumer lending, personal loans increased 29% or 119 billion pesos while credit card loans increased 11% or 77.8 billion pesos. Basic financing increased 20% or 560.8 billion pesos in the quarter while US dollar financing increased $2 million. It is important to mention that bank macros market share over private sector loans as of June 2024, which 9.1%. On the funding side, total deposits increased 13% or 769.5 billion pesos quarter on quarter, 26.74 trillion pesos and increased 5% or 329.3 billion pesos year and year.

Speaker Change:

Speaker Change: I think the little by little the Central Bank is working.

Speaker Change: On different regulation.

Speaker Change: To be they want to go very slowly they do want to make any mistakes.

Speaker Change: If you take a make sure Doug.

Speaker Change: After two weeks.

Speaker Change: To go into round.

Speaker Change: No I think that's it.

Speaker Change: They are reasonably be moving removing the gaps on <unk>.

Speaker Change: Interest rates are multiple.

Speaker Change: The Florida Baku grades.

Speaker Change: So I think that the central bank is working really good here going very slowly because the reason compete bunch of us.

Speaker Change: Regulation that need to be removed, but carefully so going forward I think that's in.

Nicolas Torres: Private sector deposits increased 11% or 519.1.5 billion pesos quarter on quarter, but private sector deposits increased 30% or 108.1.9 billion pesos quarter on quarter. The increased in private sector deposits was led by D1 deposits, which increased 23% or by 111.5 billion pesos, by 10 deposits increased 2% of 50% or 5 billion pesos quarter on quarter. Within private sector deposits, 5% or 174.6 billion pesos, while US dollar deposits increased 6% or 97 million dollars.

They are going to have these new regulations on the positive for the for the banking sector in order to be retro naturally going to Egypt.

Speaker Change: That is going to be.

Speaker Change: You also need for the big players ourselves Banco Marco.

Speaker Change: Super clear thank you very much.

Speaker Change: Welcome.

Speaker Change: Again, if you have a question. Please press Star then one the next question comes from Carlos Gomez with HSBC. Please go ahead.

Speaker Change #100: Hello, Good morning.

Speaker Change #101: Two questions. The first one is if you could explain in simple terms for us what happened to the bond portfolio this quarter.

Nicolas Torres: As of June 2024, bank macros transaction accounts represented approximately 52% of those deposits. Bank macros market share over private sector deposits as of June 2024, total 8.1%. In terms of asset quality, bank macros non-performing to total financial ratio, which 1.23%. The covered ratio measured a total allowance under expected credit losses over non-performing loans under central bank rules, which 181.4%. Consumers for your non-performing loans deteriorated 5 basis points, up to 122% from 147% in the previous quarter, one commercial for your non-performing loans deteriorated 1 basis points in the second quarter of 1224.

Carlos Gomez: What is that in contrast to the previous quarters and what we should expect in the end.

Carlos Gomez: In the company in the coming quarter, because well what should be the normal.

Carlos Gomez: The ability to yield on securities that we might expect.

Carlos Gomez:

Carlos Gomez: And then.

Carlos Gomez: Yes and.

Carlos Gomez: Yeah.

Carlos Gomez: <unk>.

Carlos Gomez: Well no I mean in a.

Carlos Gomez: As also.

Carlos Gomez: As of June.

Carlos Gomez: I mean would you would you say to execute.

Nicolas Torres: In terms of capitalization, Banco Macro accounted an excess capital of 2.36 trillion pesos, which represented a capital of equal to 35.7% and a tier 1 ratio of 34%. The bank's aim is to make the best use of this excess capital. The banks' liquidity remained more than appropriate, liquid assets to total deposit ratio, which 90% in the second quarter of 1224. Overall, we have accounted for a positive first half of the 2024, we continue to show an accelerated financial position, asset quality remained under control and closed the monitor.

Carlos Gomez: Or do you exercise the put on top of the hour position and that happened in June.

Carlos Gomez: July.

Carlos Gomez: So at.

Carlos Gomez: At the end of these.

Carlos Gomez: Second quarter.

Carlos Gomez: That's why the portfolio remains.

Carlos Gomez: In terms of the amount of bonds that we have remained the same in the third quarter.

Nicolas Torres: 36% or 628.3 billion pesos higher than in the 6 months of 2023.

Nicolas Torres: Overall, we have accounted for a positive first half of the 2024, we continue to show an accelerated financial position, asset quality remained under control and closed the monitor. We keep on working to improve more our future standards and we keep our well-atomized deposit base.

Carlos Gomez: Youre going to see the impact on the execution of the exercise of the groups that we've got.

Carlos Gomez: Actually in.

Nicolas Torres: Net Operating Is Income, before General Ernesto's first and the first half of 2024, where 1.59 trillion pesos, increasing 41% or 464.7 billion pesos, when compared to the first half of 2023.

Nicolas Torres: We keep on working to improve more our future standards and we keep our well-atomized deposit base. At this time, we would like to take the questions you may have. 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 then one on your touch-tone phone. To withdraw your question, please press star then two. One moment, please, while we pull for the first question.

Carlos Gomez: In the bond portfolio.

Carlos Gomez: And again I'm going to take to make a change in the accounting it says up having mark to market is going to be up at cost plus plus deal.

Nicolas Torres: Banco Macro's second quarter, 2024 net income total at 233.2 billion pesos lost, which was 559.6 billion pesos lower than the previous quarter and 397.3 billion pesos lower year-on-year, mainly due to the market market of government securities.

Operator: At this time, we would like to take the questions you may have. 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 then one on your touch-tone phone. To withdraw your question, please press star then two. One moment, please, while we pull for the first question.

Carlos Gomez: So going forward.

Maintaining these amount of bonds are more reasonable 11 four date.

Carlos Gomez: Income from the bond portfolio is going to be in the area of between 30 to 50 trillion pesos on a quarterly basis.

Ernesto Gabriondo: And our first question today will come from Ernesto Gabriondo with Bank of America. Please go ahead. Thank you. Hi. Good morning, Jorge, Anico, thanks for the opportunity to ask questions. My first question will be on the long road and asset quality expectations for this next year.

Okay, and the precision that you exercise you have it now in CPI linker correct.

Jorge Scarinci: And my second question is, if you can elaborate a little bit more on the puts at macro executed with a central bank, and also, if you know, the timeline and the implications of the repost that the central bank is proposing, and also can you remind us how much your position on secured this link to inflation on what will be your strategy going forward with this instrument. And finally, my last question is on how do you see it for the end of the year, and what do you think will be the sustainable level?

Carlos Gomez: Yes.

Carlos Gomez: Okay very good.

Nicolas Torres: Financial assets at fair value to profit are lost and lower effects gains registered in the quarter.

Jorge Scarinci: My first question will be on the long road and asset quality expectations for this next year. And my second question is, if you can elaborate a little bit more on the puts at macro executed with a central bank, and also, if you know, the timeline and the implications of the repost that the central bank is proposing, and also can you remind us how much your position on secured this link to inflation on what will be your strategy going forward with this instrument.

Carlos Gomez: And then my second question is whether it'd be a nice before is regarding your capital and the fact that you painted with TV I mean, the prospects have changed.

Carlos Gomez: Doing M&A.

Carlos Gomez: Denise loan growth in the system.

Carlos Gomez: <unk>.

Would you review I mean, we know that you have enough capital.

Carlos Gomez: We could see a little bit consumed because rapidly Isa numbers.

Carlos Gomez: Goes up.

Speaker Change #103: Bill do you consider that for the coming years, perhaps you want to retain more capital rather than pay mortgage.

Speaker Change #103: Yes.

Speaker Change #103: I mean, if you see that reduction.

Speaker Change #104: In the capital ratios from wanting to put in the first quarter to the second you can see that.

Jorge Scarinci: And finally, my last question is on how do you see it for the end of the year, and what do you think will be the sustainable level? Thank you. Hi, Ernesto Gabriondo, what is your first question in terms of asset quality? I think that, on the level that we are showing is extremely good and low. I think that, say, going forward is becoming economy will be covered, as is 34, 20, 25.

Speaker Change #104: What's a reduction.

Speaker Change #106: Wanted to get a tier one worth from $44, 5% to 34%. So a 10 percentage point, there because of the payment of dividends.

Speaker Change #104: And going forward.

Speaker Change #107: We agree on of course, we would like to have a more normalized level of success copied but the combination of organic growth that we think that we are going to need for future years, plus some M&A opportunities that might have been the bonds that we think that that would that be or some other.

Jorge Scarinci: Thank you. Hi, Ernesto Gabriondo, what is your first question in terms of asset quality? I think that, on the level that we are showing is extremely good and low. I think that, say, going forward is becoming economy will be covered, as is 34, 20, 25. We are going to be a bit more aggressive in growing and lending, and therefore the link we see could rise a little bit, but to manage the levels, again, I think that this is really commented before, but since 2008, the peak that we had in our inequality rate was 3% in 2009.

Jorge Scarinci: So I think that without any problems, we could be writing these, the current ratio to levels of between two and two and a half without any problem in the case that we become more aggressive in lending.

Speaker Change #107: Banks want you to leave Argentina.

Okay.

Jorge Scarinci: We are going to be a bit more aggressive in growing and lending, and therefore the link we see could rise a little bit, but to manage the levels, again, I think that this is really commented before, but since 2008, the peak that we had in our inequality rate was 3% in 2009. So I think that without any problems, we could be writing these, the current ratio to levels of between two and two and a half without any problem in the case that we become more aggressive in lending.

Speaker Change #107: Yes, you have to continue to pay attractive dividends.

Speaker Change #107: I think that does is it means that we want to maintain so.

Speaker Change #107: Going forward.

A more sustainable rate of false Rachel for copies out in the future for market could be the area of 18% to 22% tier one not the covenant level. So that is going to be consumed through organic growth plus.

Speaker Change #107: Cash dividends.

Speaker Change #108: First and then the opportunity for another M&A so going forward between 19 to 22, she is more reasonable for us.

Jorge Scarinci: I will go to your third question. I will leave your second question for the last one. The third question about the bonds that we have that are adjusted to inflation currently you have a level of 3.7 billion pesos or in your case it's two billion pesos of bonds that are tied to inflation. This is approximately 120 percent of the equity and it's also 110 percent of the monetary position the monetary position is the one that is basically the one that adjusts the awareness statement to inflation and in that sense we are linked to hedge against inflation.

Nice to have in the future.

Speaker Change #109: Maybe higher.

Nicolas Torres: It is important to note that if government securities, including financial assets at fair value to profit are lost, namely inflation adjusted bonds due in 2027 have been valued instead at Amapace cost to second quarter 2024 net income would have been 505.5 billion pesos higher.

Speaker Change #109: Market share performance in the season.

Speaker Change #110: And to go back to the M&A and we understand you are open to all possibilities.

Is there anything in the works or anything that would.

Speaker Change #110: Would you anticipate that you might be.

Speaker Change #110: Considering that a lot of transaction, let's say in the next three or four quarters.

Speaker Change #110: No honestly, we aren't we're not looking to do anything for the moment.

Speaker Change #110: I think that it does.

Speaker Change #110: Something happens could be next year.

Speaker Change #110: I know exactly which how many quarters that next year or jointly journey from the cheeks.

Jorge Scarinci: Going forward I think that depending on what's happening with the inflation rate that in last month it was 4 percent or a monthly basis and we believe that inflation is going to continue in the network trend however we are according to the kind of what we listen they are not expecting inflation to become below the 2 percent and late until November December and the probability of that is maybe 50 percent. So for the moment we are going to keep this portfolio type inflation and if market conditions change we are going to at some point maybe exercise and the adoption or make it to a swap into a fixed rate notes depending on market conditions.

Speaker Change #110: Okay. Thank you.

Carlos Gomez: Thank you Carlos.

Speaker Change #111: There are no more questions at this time. This concludes our question and answer session I will now turn the call over to Mr. Nicolas Torres for final considerations.

Speaker Change #112: Thank you all for your interest in Banco macro we appreciate your time and look forward to speaking with you again have a good day.

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

Speaker Change #112: Okay.

Speaker Change #112: [music].

Jorge Scarinci: In terms of your fourth question in terms of are we going forward? For 2024 we think that we would be ranging between 10 to 13 percent and we are going forward and in a more sustainable level we think that we could be delivered between 15 to 20 percent are we in real terms. I'm your second question about the exercise of the production that we need the first of July basically the alcohol decided to execute so half of the position of the bond that we have tied to inflation after the conference that the colonizer and the president of the central bank shared saying that the amount of pesos was going to be fixed in the market.

Nicolas Torres: Furthermore, as it is probably known, Banco Macro recently exercised about half of some of the poor options that it held on certain inflation adjusted securities.

Jorge Scarinci: Therefore we decided to execute that position of to get extra liquidity and to have more elements in order to be more aggressive in future lending. One of the reports that the the central bank is offering I mean that is for banks we would have some transition liquidity problems I think they are okay in our case we are actually liquid we are not of course using those reports but the reports are always there they have been always there and the only thing is new is that the central bank reviews they integrate on the reports to a level of 48 percent so to make it more accessible to the bank you know to the extra liquidity. Thank you very much, Jorge.

Nicolas Torres: In the second quarter of 2024, provision for loan losses total 16.5 billion pesos, 26% or 5.9 billion pesos lower than the first quarter of 2024.

Jorge Scarinci: Thank you very much, Jorge. Just to follow up, the first one is two follow ups, one in terms of the long road. So any color on what could be the pace of long road for this year and for next year. And then the other follow up, you were mentioning that you executed half of the goods. So can you as remind us how how was the amount of those securities that you held before?

Ernesto Gabriondo: Just to follow up, the first one is two follow ups, one in terms of the long road. So any color on what could be the pace of long road for this year and for next year. And then the other follow up, you were mentioning that you executed half of the goods. So can you as remind us how how was the amount of those securities that you held before? Yeah, in terms of, let's go to your second question.

Jorge Scarinci: Yeah, in terms of, let's go to your second question. Yeah, it was to the top of the food options that we had. It was like two trillion pesos in bonds that we exercise and set to the central bank. And that amount of pesos we received at the extra liquidity. And currently we hold another two billion, sorry, two trillion pesos in food options in place that we want to exercise this inflation in bonds to the central bank.

Ernesto Gabriondo: Yeah, it was to the top of the food options that we had. It was like two trillion pesos in bonds that we exercise and set to the central bank. And that amount of pesos we received at the extra liquidity. And currently we hold another two billion, sorry, two trillion pesos in food options in place that we want to exercise this inflation in bonds to the central bank.

Jorge Scarinci: Going to the long road for 2024, we expect to have positive rates in the order of maybe 15% area for 2024. And we believe that we have recovery on GDP in 2025. We could be at least 35%, positive rates of growth in long for next year. Okay, so then, thank you very much, Jorge.

Jorge Scarinci: Okay, so then, thank you very much, Jorge.

Brian Flores: The next question comes from Brian Flores with Citibank. Please go ahead. Hi, Jorge and Colossan team. Thank you very much for the opportunity. One of the last are decreasing. Also, you have some relief on the deposit base. And I know this is a very hard question, right? Because it's a very fluid environment. But when do you think names could stabilize? I think that's my first question. And then on a second one, you mentioned capital, right?

Nicolas Torres: On a yearly basis, provision for loan losses decreased 20% of 4 billion pesos.

Nicolas Torres: Operating income after general analysis of personal expenses were 99.1 billion pesos in the second quarter of 2024, 93% or 1.4 billion pesos lower than in the first quarter of 2024 and 85% or 544 billion pesos lower than a year ago.

Brian Flores: Do you have any updates on any regulatory changes that would allow you to distribute maybe higher dividend yields will forward? Thank you. Brian, how are you? In terms of the second question first, I mean, we have to wait to next year. For the moment, we can't see any new regulation coming. We remember that when we have to pay dividends in the board, proposed to the shareholders meeting, the payment of dividends is in March.

Brian Flores: So we have to wait to next year. At that time, it's basically when the central bank always put a new regulation on the amount of dividends that could be the neighboring amount of installments. Remember that last year, the number of installments were six this year. The number of installments were used to three. So I think that we are positive in the way that the economy conditions improved. And then central banks, we serve to increase going forward.

Jorge Scarinci: In terms of the second question first, I mean, we have to wait to next year. For the moment, we can't see any new regulation coming. We remember that when we have to pay dividends in the board, proposed to the shareholders meeting, the payment of dividends is in March. So we have to wait to next year. At that time, it's basically when the central bank always put a new regulation on the amount of dividends that could be the neighboring amount of installments.

Jorge Scarinci: Remember that last year, the number of installments were six this year. The number of installments were used to three. So I think that we are positive in the way that the economy conditions improved. And then central banks, we serve to increase going forward. We have positive that we could be allowed to pay dividends, maybe only why installments, and that it would be possible.

Brian Flores: We have positive that we could be allowed to pay dividends, maybe only why installments, and that it would be possible. In terms of your first questions and means, we have a chance to go through the president, the meaning in terms of inquiries or expandability. Basically, you write there were some really increasing the cost of funds. Remember that in our case, the amount of transaction deposit, where we paid almost 0%, there is almost 45% of total deposits.

Jorge Scarinci: In terms of your first questions and means, we have a chance to go through the president, the meaning in terms of inquiries or expandability. Basically, you write there were some really increasing the cost of funds. Remember that in our case, the amount of transaction deposit, where we paid almost 0%, there is almost 45% of total deposits. And on the time deposit side, basically, in those that we are the financial agents of the poor provinces, we could be paying slightly below average interest rates.

Brian Flores: And on the time deposit side, basically, in those that we are the financial agents of the poor provinces, we could be paying slightly below average interest rates. So these give us a kind of slight competitive advantage in order to continue expanding a little the means. And going forward, we think that the means are going to remain pretty stable. So the increasing the net interest income is going to come through the increasing in lending through all honey, honey increasing in the funding.

Jorge Scarinci: So these give us a kind of slight competitive advantage in order to continue expanding a little the means. And going forward, we think that the means are going to remain pretty stable. So the increasing the net interest income is going to come through the increasing in lending through all honey, honey increasing in the funding. Perfect.

Brian Flores: Perfect. If I can follow up here with your last comment, how is the money evolving? What do you see the biggest opportunities to grow your own book right now? I mean, there was a bit increasing in interest rates in the system that was a consequence of the reduction in inflation. And we think that there was a recovery in lending in most of the areas, basically SMEs and some consumer going forward within that we see some recovery in the real levels of salaries.

Jorge Scarinci: If I can follow up here with your last comment, how is the money evolving? What do you see the biggest opportunities to grow your own book right now? I mean, there was a bit increasing in interest rates in the system that was a consequence of the reduction in inflation. And we think that there was a recovery in lending in most of the areas, basically SMEs and some consumer going forward within that we see some recovery in the real levels of salaries.

Brian Flores: We are going to see consumption pushing a little harder. And also we are having these new investments on independent areas as a consequence of this really program approved for companies. We are going to see also corporates of companies also demanding for new lending. So it is going to be possible within 2025. Imagine that the level of lending that we have is pretty low around 6% of loans to GDP. So we think that the potential growth here is huge. Look here, thank you.

Jorge Scarinci: We are going to see consumption pushing a little harder. And also we are having these new investments on independent areas as a consequence of this really program approved for companies. We are going to see also corporates of companies also demanding for new lending. So it is going to be possible within 2025. Imagine that the level of lending that we have is pretty low around 6% of loans to GDP. So we think that the potential growth here is huge.

Operator: What will come right here?

Operator: Look here, thank you. What will come right here?

Marina Mertens: The next question comes from Marina Mertens with Latin Security. Please go ahead. Hi, good morning. Thanks for taking my question. So in the last, in the previous two quarters, results were driven by the strong performance in the securities portfolio, which was the trend reversed this quarter and negatively impacted results. Do you expect the securities portfolio to keep on driving results in the remainder of the year or when should we expect to see the increasing loans to have a more relevant impact on results?

Nicolas Torres: In the quarter net income total 188 billion pesos, 6% or 12.7 billion pesos lower than in the first quarter of 2024 and 53% or 213.1 billion pesos lower year and year.

Nicolas Torres: Interest income decreased 27% while interest expenses decreased 33%. In the second quarter of 2024, interest income total 619.7 billion pesos, 27% or 229.8 billion pesos lower than in the first quarter of 2024 and 46% or 521.4 billion pesos lower than in the second quarter of 2023.

Marina Mertens: Thank you. Hi, how are you? I mean, in terms of income counted from the bond portfolio as we state in the present days, after executing or exercising half of our bond portfolio, or the puts that we know from the bond portfolio, the remaining half of that. The alcohol decided to account it on the cost plus material instead of having market to market. So going forward and coming quarter, we are going to see more stability in the result coming from bonds and we think that with the pickup in lending, we are going to start seeing that loans or in this case, interesting come from loans are going to. We are going to start having a bit more, what better performance in the income segment then. Great, thank you very much. You're welcome.

Nicolas Torres: On a yearly basis, income from interest loan loans decreased 10% of 45.2 billion pesos.

Nicolas Torres: In the second quarter of 2024, interest loans represented 66% of total interest income.

Yuri Fernandes: The next question comes from Yuri Fernandes with JP Morgan, please go ahead. Thank you guys for the opportunity of asking question. Just one of these loans versus secure it's mix, right? And even on the future to mix, right, you have this, I think it's laughing at this new instrument that is a one year. Basically, my question is, I like on loans and on these lessons, maybe you are increasing the duration, right, of the assets.

Nicolas Torres: In the second quarter of 2024, income from 3% to 48.7 billion pesos, 73% to 131.4 billion pesos lower than the previous quarter and 29% or 19.5 billion pesos lower than a year ago.

Nicolas Torres: In the second quarter of 2024, effects income from 25.6 billion pesos, 73% or 69.9 billion pesos lower than the previous quarter, and 91% or 256.1 billion pesos lower than a year ago.

Nicolas Torres: Effect income gain was due to the 6.3% Argentine pesos depreciation against the US dollar and the bank's dollar position during the quarter.

Nicolas Torres: It is important to notice that the bank's average loan dollar position decreased 59% during the quarter.

Yuri Fernandes: I think the fiscal liquidity letter is a one year, although you have the put you can sell this, but I think like it to a one year term kind of instrument, you are growing more your loans. So trying to think about the your net monetary results like inflation is moving lower, so this should be, should be a tailwind. But having more loans and having less, I would say inflation in particular, how to think about your balance sheets versus inflation, right, it's inflation is wrong and inflation starts accelerating.

Nicolas Torres: In the second quarter of 2024, income expense total 431.7 billion pesos, decreasing 33% or 217.1 billion pesos, compared to the previous quarter and 42% or 38.3 billion pesos lower than compared to the second quarter of 2023. Within interest expense, interest on deposits decreased 33% or 208.8 billion pesos, quarter and a quarter, due to a 25.4% decrease in the average rate paid on the deposits, while the average volume of deposits from the private sector increased 16%.

Nicolas Torres: On a yearly basis, interest on deposits decreased 42% or 345 billion pesos.

Yuri Fernandes: Is the balance sheet getting riskier at some degree because you have more, you know, longer term maturity assets than you used to have in the past, when you have more short term easements, that's my first question. My second question is regarding further emanates, right, you just had it, I think that is to consolidation to happen in Argentina. So I just would like to know the appetite of Bunko macro for for new new opportunities, if your message as well, let's digest it, I will let's keep working on what we have or or no, we have a lot of excess capital and we are still, you know, open for new opportunities.

Yuri Fernandes: My second question is regarding further emanates, right, you just had it, I think that is to consolidation to happen in Argentina. So I just would like to know the appetite of Bunko macro for for new new opportunities, if your message as well, let's digest it, I will let's keep working on what we have or or no, we have a lot of excess capital and we are still, you know, open for new opportunities.

Yuri Fernandes: And a third question, more on regulatory updates, right, this is still I think an important topic if you can remind us what can be the next central bank regulatory change that can benefit the banks. I think there were many moving parts on on rates and reserve requirements, what should we expect for the future on the regulatory front to be a tailwind for you. Hi, Julie. In terms of your first question, I mean, holding these inflation leading securities, we are hedging our balance against the adjacent formation on the monetary position.

Jorge Scarinci: Hi, Julie. In terms of your first question, I mean, holding these inflation leading securities, we are hedging our balance against the adjacent formation on the monetary position. So by increasing a little bit the duration of our loan book, always having positive real rates, the impact on the on the on the balance is on the impact on the inflation. Adjection in concept is going to be positive. So we are not seeing any any challenge or any damage or risk there. So if that's in mean that the increasing duration is going to negative effect on exposure to inflation now.

Nicolas Torres: In the second quarter of 2024, the bank's net interest margin, including effects, was 19.9%. Lower than the 26.2% posted in the first quarter of 2024 and the 38.3% posted in the second quarter of 2023.

Yuri Fernandes: So by increasing a little bit the duration of our loan book, always having positive real rates, the impact on the on the on the balance is on the impact on the inflation. Adjection in concept is going to be positive. So we are not seeing any any challenge or any damage or risk there. So if that's in mean that the increasing duration is going to negative effect on exposure to inflation now. So on the second question about the money opportunities, yes, we are going to complete the legal knowledge with it, who in the fourth quarter of this year.

Jorge Scarinci: So on the second question about the money opportunities, yes, we are going to complete the legal knowledge with it, who in the fourth quarter of this year. So by December of this year, everything is going to be under Banco Macro umbrella going forward. I mean, we would be keeping a close eye to any opportunity that might happen in the banking sector. We think that we are one of the only buyers here. So any potential player that could be anything on living, I think that is going to knock our door. So we want to be keeping a close eye that's mentioned before there.

Yuri Fernandes: So by December of this year, everything is going to be under Banco Macro umbrella going forward. I mean, we would be keeping a close eye to any opportunity that might happen in the banking sector. We think that we are one of the only buyers here. So any potential player that could be anything on living, I think that is going to knock our door. So we want to be keeping a close eye that's mentioned before there.

Yuri Fernandes: On the third question, central bank relation that could improve a little bit the banking industry, I think that there are many. I think that little by little the central bank is working on different regulation, but to be they want to go very slowly. They do not want to make any mistakes and to have to take a measure that after two weeks, they had to find it around. So I think that they are a little moving, removing the gaps on on interest rates of the removal of the floor on the deposit rates.

Jorge Scarinci: On the third question, central bank relation that could improve a little bit the banking industry, I think that there are many. I think that little by little the central bank is working on different regulation, but to be they want to go very slowly. They do not want to make any mistakes and to have to take a measure that after two weeks, they had to find it around. So I think that they are a little moving, removing the gaps on on interest rates of the removal of the floor on the deposit rates.

Yuri Fernandes: So I think that the central bank is working really good here going very slowly because there is a complete bunch of regulation that need to be removed but carefully. So going forward, I think that they are going to have these new regulations on the positive for the banking sector in order to be less regulated. And that is going to be in our view, positive for the big player yourselves as bank worker.

Jorge Scarinci: So I think that the central bank is working really good here going very slowly because there is a complete bunch of regulation that need to be removed but carefully. So going forward, I think that they are going to have these new regulations on the positive for the banking sector in order to be less regulated. And that is going to be in our view, positive for the big player yourselves as bank worker.

Operator: So super clear, thank you very much. Again, if you have a question, please press star then one.

Yuri Fernandes: So super clear, thank you very much.

Operator: Again, if you have a question, please press star then one.

Carlos Gomez: The next question comes from Carlos Gomez with HSBC. Please go ahead.

Carlos Gomez: The next question comes from Carlos Gomez with HSBC. Please go ahead. Hello, good morning.

Jorge Scarinci: Hello, good morning. Two questions. The first one is if you could explain in simple terms for us, what happened to the bumper foil of this quarter, what is that in contrast to the previous quarters, and what we should expect in the coming quarters, what should be the normal profitability yield on securities to be my respect? Yes, and in the WPT, yeah. I mean, as of June, I mean, we decided to execute or to exercise the puts on half of our position, and that happened the first of July.

Jorge Scarinci: Two questions. The first one is if you could explain in simple terms for us, what happened to the bumper foil of this quarter, what is that in contrast to the previous quarters, and what we should expect in the coming quarters, what should be the normal profitability yield on securities to be my respect? Yes, and in the WPT, yeah. I mean, as of June, I mean, we decided to execute or to exercise the puts on half of our position, and that happened the first of July.

Nicolas Torres: In the second quarter of 2024, net income from financial assets and the average at Fairband is the profit of a loss, total at 121.2 billion pesos gained, decreasing 92% or 139 trillion pesos in the quarter.

Nicolas Torres: This game was smaller due to the negative mark market of some government securities, basically invading just bonds and in the amount of 1.41 trillion pesos.

Nicolas Torres: In the quarter, other operating income total 46.2 billion pesos, 7% or 3.3 billion pesos lower than the first quarter of 2024.

Jorge Scarinci: So at the end of the second quarter, that's why the portfolio remains in terms of the amount of bonds that we have remained the same. In the third quarter, you're going to see the impact on the exercise of the puts and the reduction in the bond portfolio. And again, I'm going to say to make a change in the accounting instead of having market market is going to be at a cost plus deal mechanism.

Nicolas Torres: On a yearly basis, other operating income increased 62% or 17.8 billion pesos.

Nicolas Torres: In the second quarter of 2024, bank of market administrative expenses plus employee benefits total 203.5 billion pesos, 15% or 35.3 billion pesos lower than the previous quarter.

Nicolas Torres: Each lower employee benefits, which decrease 14% and lower administrative expenses, which decrease 17%.

Nicolas Torres: On a yearly basis, administrative expenses plus employee benefits increased 14% or 25.6 billion pesos.

Jorge Scarinci: So going forward, if we are maintaining this amount of bonds, a more reasonable level for the income from the bond portfolio is going to be in the area between 30 to 50 trillion pesos on a quarter basis. Okay, and the position that you exercise, you have it now in CPI linkers, right? Yes.

Nicolas Torres: As of the second quarter of 2024, the accumulated efficiency ratio, which 22.2% deteriorated from the 14.7% posted in the first quarter of 2024 and the 22.2% posted one year ago.

Jorge Scarinci: Okay, very good. And then my second question is already nice before, is we're going to your capital, in the fact that you're paying a bit of it. I mean, the prospects have changed. You are doing M&A, there is long growth in the system. Would you review? I mean, we know that you have a lot of access capital, but I mean, we could see a lot of it consumed pretty rapidly if long growth indeed goes up.

Jorge Scarinci: And then my second question is already nice before, is we're going to your capital, in the fact that you're paying a bit of it. I mean, the prospects have changed. You are doing M&A, there is long growth in the system. Would you review? I mean, we know that you have a lot of access capital, but I mean, we could see a lot of it consumed pretty rapidly if long growth indeed goes up.

Jorge Scarinci: Would you consider for the coming years perhaps you want to retain more capital, rather than pay more dividends? Yes. I mean, if you see the reduction in the capital ratio from one, from the first quarter to the second, you can see that it was a reduction from tier one, looking at tier one, we're from 44 and a half to 34%, so 10% each point there, because of the payment of dividends. And going forward, we agree, and of course, we would like to have a more normal level of success capital, but the combination of organic growth that we think that we are going to need for three, three years plus some M&A opportunities that might have in the past that we think that would appear some other banks wanting to leave Argentina.

Nicolas Torres: In the second quarter of 2024, expenses decreased 14% when an interest income plus net income plus other operating income decreased 77% compared to the first quarter of 2024.

Nicolas Torres: Inflation was 18.6% in the second quarter of 2024 compared to the 51.6% registered in the first quarter of 2024.

Nicolas Torres: While the net monetary position remained unchanged.

Jorge Scarinci: The idea to continue to pay attractive dividends, I think that that is the means that we want to maintain. So going forward, a more sustainable rate of capital in the future for macro could be the area of 18 to 22% tier one, not the current level. So that is going to be consumed through organic growth plus cash dividends. First, and then, the opportunity for another M&A. So going forward between 19 to 22 is more reasonable for us.

Nicolas Torres: In the second quarter of 2024, given macros net income for the quarter, no income tax charge was recorded.

Nicolas Torres: Part of the information is provided in no 21 to our financial statements.

Nicolas Torres: In terms of long growth, the bank's total financial reached 347 trillion pesos, increasing 75% or 510.1 billion pesos quarter and 5% or 154.5 billion pesos higher year and year.

Nicolas Torres: Within commercial loans, the document stands out with a 7% or 43.6 billion pesos increase when others increase 27% or 158.3 billion pesos.

Nicolas Torres: Within consumer lending, personal loans increased 29% or 119 billion pesos while credit card loans increased 11% or 77.8 billion pesos.

Nicolas Torres: Basic financing increased 20% or 560.8 billion pesos in the quarter while US dollar financing increased $2 million.

Jorge Scarinci: But it will make you have in the future with maybe higher market share performance in the season. And to go back to the M&A, and we understand you are open to possibilities. Is there anything in the works or anything that, you know, would you anticipate that you might be considering another transaction, let's say, in the next three or four quarters? Now, honestly, we are not looking to anything for the moment. I think that something happens could be next year.

Jorge Scarinci: I don't know exactly which, how many quarters that next year or 20, 20, 20, 26.

Carlos Gomez: Is there anything in the works or anything that, you know, would you anticipate that you might be considering another transaction, let's say, in the next three or four quarters? Now, honestly, we are not looking to anything for the moment. I think that something happens could be next year. I don't know exactly which, how many quarters that next year or 20, 20, 20, 26.

Carlos Gomez: Okay, that's it.

Carlos Gomez: Okay, that's it. Thank you. Thank you, Carlos.

Operator: Thank you. Thank you, Carlos. There are no more questions at this time.

Operator: There are no more questions at this time.

Nicolas Torres: This concludes the question and answer session.

Operator: This concludes the question and answer session.

Nicolas Torres: I will now turn the call over to Mr. Nicholas Torres for final considerations. Thank you all for your interest in Banco Macro. We have received your time and look forward speaking with you again.

Nicolas Torres: It is important to mention that bank macros market share over private sector loans as of June 2024, which 9.1%.

Operator: Have a good day. The conference is now concluded. Thank you for attending today's presentation.

Operator: Have a good day.

Operator: You may now disconnect.

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

Nicolas Torres: On the funding side, total deposits increased 13% or 769.5 billion pesos quarter on quarter, 26.74 trillion pesos and increased 5% or 329.3 billion pesos year and year.

You may now disconnect.

Nicolas Torres: Private sector deposits increased 11% or 519.1.5 billion pesos quarter on quarter, but private sector deposits increased 30% or 108.1.9 billion pesos quarter on quarter.

Nicolas Torres: The increased in private sector deposits was led by D1 deposits, which increased 23% or by 111.5 billion pesos, by 10 deposits increased 2% of 50% or 5 billion pesos quarter on quarter.

Nicolas Torres: Within private sector deposits, 5% or 174.6 billion pesos, while US dollar deposits increased 6% or 97 million dollars.

Nicolas Torres: In terms of asset quality, bank macros non-performing to total financial ratio, which 1.23%. The covered ratio measured a total allowance under expected credit losses over non-performing loans under central bank rules, which 181.4%.

Nicolas Torres: Consumers for your non-performing loans deteriorated 5 basis points, up to 122% from 147% in the previous quarter, one commercial for your non-performing loans deteriorated 1 basis points in the second quarter of 1224.

Nicolas Torres: In terms of capitalization, Banco Macro accounted an excess capital of 2.36 trillion pesos, which represented a capital of equal to 35.7% and a tier 1 ratio of 34%.

Nicolas Torres: The bank's aim is to make the best use of this excess capital.

Nicolas Torres: The banks' liquidity remained more than appropriate, liquid assets to total deposit ratio, which 90% in the second quarter of 1224.

Nicolas Torres: We keep on working to improve more our future standards and we keep our well-atomized deposit base.

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

Operator: At this time, we're going to open it up for questions and answers.

Operator: If you would like to ask a question, please press star then one on your touch-tone phone. To withdraw your question, please press star then two.

Operator: One moment, please, while we pull for the first question.

Ernesto Mrquez: And our first question today will come from Ernesto Gabriondo with Bank of America.

Ernesto Mrquez: Please go ahead.

Ernesto Mrquez: Thank you.

Ernesto Mrquez: Hi.

Ernesto Mrquez: Good morning, Jorge, Anico, thanks for the opportunity to ask questions.

Ernesto Mrquez: My first question will be on the long road and asset quality expectations for this next year.

Ernesto Mrquez: And my second question is, if you can elaborate a little bit more on the puts at macro executed with a central bank, and also, if you know, the timeline and the implications of the repost that the central bank is proposing, and also can you remind us how much your position on secured this link to inflation on what will be your strategy going forward with this instrument.

Ernesto Mrquez: And finally, my last question is on how do you see it for the end of the year, and what do you think will be the sustainable level?

Ernesto Mrquez: Thank you.

Jorge Scarinci: Hi, Ernesto Gabriondo, what is your first question in terms of asset quality?

Jorge Scarinci: I think that, on the level that we are showing is extremely good and low.

Jorge Scarinci: I think that, say, going forward is becoming economy will be covered, as is 34, 20, 25.

Jorge Scarinci: I will go to your third question.

Jorge Scarinci: I will leave your second question for the last one.

Jorge Scarinci: The third question about the bonds that we have that are adjusted to inflation currently you have a level of 3.7 billion pesos or in your case it's two billion pesos of bonds that are tied to inflation.

Jorge Scarinci: This is approximately 120 percent of the equity and it's also 110 percent of the monetary position the monetary position is the one that is basically the one that adjusts the awareness statement to inflation and in that sense we are linked to hedge against inflation.

Jorge Scarinci: So for the moment we are going to keep this portfolio type inflation and if market conditions change we are going to at some point maybe exercise and the adoption or make it to a swap into a fixed rate notes depending on market conditions.

Jorge Scarinci: In terms of your fourth question in terms of are we going forward?

Jorge Scarinci: For 2024 we think that we would be ranging between 10 to 13 percent and we are going forward and in a more sustainable level we think that we could be delivered between 15 to 20 percent are we in real terms.

Jorge Scarinci: I'm your second question about the exercise of the production that we need the first of July basically the alcohol decided to execute so half of the position of the bond that we have tied to inflation after the conference that the colonizer and the president of the central bank shared saying that the amount of pesos was going to be fixed in the market.

Jorge Scarinci: Therefore we decided to execute that position of to get extra liquidity and to have more elements in order to be more aggressive in future lending.

Jorge Scarinci: One of the reports that the the central bank is offering I mean that is for banks we would have some transition liquidity problems I think they are okay in our case we are actually liquid we are not of course using those reports but the reports are always there they have been always there and the only thing is new is that the central bank reviews they integrate on the reports to a level of 48 percent so to make it more accessible to the bank you know to the extra liquidity.

Ernesto Mrquez: Thank you very much, Jorge.

Ernesto Mrquez: Just to follow up, the first one is two follow ups, one in terms of the long road.

Ernesto Mrquez: So any color on what could be the pace of long road for this year and for next year.

Ernesto Mrquez: And then the other follow up, you were mentioning that you executed half of the goods.

Ernesto Mrquez: So can you as remind us how how was the amount of those securities that you held before?

Jorge Scarinci: Yeah, in terms of, let's go to your second question.

Jorge Scarinci: Yeah, it was to the top of the food options that we had.

Jorge Scarinci: It was like two trillion pesos in bonds that we exercise and set to the central bank.

Jorge Scarinci: And that amount of pesos we received at the extra liquidity.

Jorge Scarinci: And currently we hold another two billion, sorry, two trillion pesos in food options in place that we want to exercise this inflation in bonds to the central bank.

Jorge Scarinci: Going to the long road for 2024, we expect to have positive rates in the order of maybe 15% area for 2024.

Jorge Scarinci: And we believe that we have recovery on GDP in 2025.

Jorge Scarinci: We could be at least 35%, positive rates of growth in long for next year.

Ernesto Mrquez: Okay, so then, thank you very much, Jorge.

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

Brian Flores: Please go ahead.

Brian Flores: Hi, Jorge and Colossan team.

Brian Flores: Thank you very much for the opportunity.

Brian Flores: One of the last are decreasing.

Brian Flores: Also, you have some relief on the deposit base.

Brian Flores: And I know this is a very hard question, right?

Brian Flores: Because it's a very fluid environment.

Brian Flores: But when do you think names could stabilize?

Brian Flores: I think that's my first question.

Brian Flores: And then on a second one, you mentioned capital, right?

Brian Flores: Do you have any updates on any regulatory changes that would allow you to distribute maybe higher dividend yields will forward?

Brian Flores: Thank you.

Brian Flores: Brian, how are you?

Jorge Scarinci: In terms of the second question first, I mean, we have to wait to next year.

Jorge Scarinci: For the moment, we can't see any new regulation coming.

Jorge Scarinci: We remember that when we have to pay dividends in the board, proposed to the shareholders meeting, the payment of dividends is in March.

Jorge Scarinci: So we have to wait to next year.

Jorge Scarinci: At that time, it's basically when the central bank always put a new regulation on the amount of dividends that could be the neighboring amount of installments.

Jorge Scarinci: Remember that last year, the number of installments were six this year.

Jorge Scarinci: The number of installments were used to three.

Jorge Scarinci: So I think that we are positive in the way that the economy conditions improved.

Jorge Scarinci: And then central banks, we serve to increase going forward.

Jorge Scarinci: We have positive that we could be allowed to pay dividends, maybe only why installments, and that it would be possible.

Jorge Scarinci: In terms of your first questions and means, we have a chance to go through the president, the meaning in terms of inquiries or expandability.

Jorge Scarinci: Basically, you write there were some really increasing the cost of funds.

Jorge Scarinci: Remember that in our case, the amount of transaction deposit, where we paid almost 0%, there is almost 45% of total deposits.

Jorge Scarinci: And on the time deposit side, basically, in those that we are the financial agents of the poor provinces, we could be paying slightly below average interest rates.

Jorge Scarinci: So these give us a kind of slight competitive advantage in order to continue expanding a little the means.

Jorge Scarinci: And going forward, we think that the means are going to remain pretty stable. So the increasing the net interest income is going to come through the increasing in lending through all honey, honey increasing in the funding.

Brian Flores: Perfect.

Brian Flores: If I can follow up here with your last comment, how is the money evolving?

Brian Flores: What do you see the biggest opportunities to grow your own book right now?

Brian Flores: I mean, there was a bit increasing in interest rates in the system that was a consequence of the reduction in inflation.

Brian Flores: And we think that there was a recovery in lending in most of the areas, basically SMEs and some consumer going forward within that we see some recovery in the real levels of salaries.

Brian Flores: We are going to see consumption pushing a little harder.

Brian Flores: And also we are having these new investments on independent areas as a consequence of this really program approved for companies.

Brian Flores: We are going to see also corporates of companies also demanding for new lending.

Brian Flores: So it is going to be possible within 2025.

Brian Flores: Imagine that the level of lending that we have is pretty low around 6% of loans to GDP.

Brian Flores: So we think that the potential growth here is huge.

Brian Flores: Look here, thank you.

Brian Flores: What will come right here?

Marina Mertens: The next question comes from Marina Mertens with Latin Security.

Marina Mertens: Please go ahead.

Marina Mertens: Hi, good morning.

Marina Mertens: Thanks for taking my question.

Marina Mertens: So in the last, in the previous two quarters, results were driven by the strong performance in the securities portfolio, which was the trend reversed this quarter and negatively impacted results.

Marina Mertens: Do you expect the securities portfolio to keep on driving results in the remainder of the year or when should we expect to see the increasing loans to have a more relevant impact on results?

Marina Mertens: Thank you.

Marina Mertens: Hi, how are you?

Nicolas Torres: I mean, in terms of income counted from the bond portfolio as we state in the present days, after executing or exercising half of our bond portfolio, or the puts that we know from the bond portfolio, the remaining half of that.

Nicolas Torres: The alcohol decided to account it on the cost plus material instead of having market to market.

Nicolas Torres: So going forward and coming quarter, we are going to see more stability in the result coming from bonds and we think that with the pickup in lending, we are going to start seeing that loans or in this case, interesting come from loans are going to.

Nicolas Torres: We are going to start having a bit more, what better performance in the income segment then.

Nicolas Torres: Great, thank you very much.

Nicolas Torres: You're welcome.

Yuri Fernandes: The next question comes from Yuri Fernandes with JP Morgan, please go ahead.

Yuri Fernandes: Thank you guys for the opportunity of asking question.

Yuri Fernandes: Just one of these loans versus secure it's mix, right?

Yuri Fernandes: And even on the future to mix, right, you have this, I think it's laughing at this new instrument that is a one year.

Yuri Fernandes: Basically, my question is, I like on loans and on these lessons, maybe you are increasing the duration, right, of the assets.

Yuri Fernandes: So trying to think about the your net monetary results like inflation is moving lower, so this should be, should be a tailwind.

Yuri Fernandes: But having more loans and having less, I would say inflation in particular, how to think about your balance sheets versus inflation, right, it's inflation is wrong and inflation starts accelerating.

Yuri Fernandes: My second question is regarding further emanates, right, you just had it, I think that is to consolidation to happen in Argentina.

Yuri Fernandes: So I just would like to know the appetite of Bunko macro for for new new opportunities, if your message as well, let's digest it, I will let's keep working on what we have or or no, we have a lot of excess capital and we are still, you know, open for new opportunities.

Yuri Fernandes: I think there were many moving parts on on rates and reserve requirements, what should we expect for the future on the regulatory front to be a tailwind for you.

Jorge Scarinci: Hi, Julie.

Jorge Scarinci: In terms of your first question, I mean, holding these inflation leading securities, we are hedging our balance against the adjacent formation on the monetary position.

Jorge Scarinci: So by increasing a little bit the duration of our loan book, always having positive real rates, the impact on the on the on the balance is on the impact on the inflation.

Jorge Scarinci: Adjection in concept is going to be positive.

Jorge Scarinci: So we are not seeing any any challenge or any damage or risk there.

Jorge Scarinci: So if that's in mean that the increasing duration is going to negative effect on exposure to inflation now.

Jorge Scarinci: So on the second question about the money opportunities, yes, we are going to complete the legal knowledge with it, who in the fourth quarter of this year.

Jorge Scarinci: So by December of this year, everything is going to be under Banco Macro umbrella going forward.

Jorge Scarinci: I mean, we would be keeping a close eye to any opportunity that might happen in the banking sector.

Jorge Scarinci: We think that we are one of the only buyers here.

Jorge Scarinci: So any potential player that could be anything on living, I think that is going to knock our door.

Jorge Scarinci: So we want to be keeping a close eye that's mentioned before there.

Jorge Scarinci: On the third question, central bank relation that could improve a little bit the banking industry, I think that there are many.

Jorge Scarinci: I think that little by little the central bank is working on different regulation, but to be they want to go very slowly.

Jorge Scarinci: They do not want to make any mistakes and to have to take a measure that after two weeks, they had to find it around.

Jorge Scarinci: So I think that they are a little moving, removing the gaps on on interest rates of the removal of the floor on the deposit rates.

Jorge Scarinci: So I think that the central bank is working really good here going very slowly because there is a complete bunch of regulation that need to be removed but carefully.

Jorge Scarinci: So going forward, I think that they are going to have these new regulations on the positive for the banking sector in order to be less regulated.

Jorge Scarinci: And that is going to be in our view, positive for the big player yourselves as bank worker.

Jorge Scarinci: So super clear, thank you very much.

Operator: Again, if you have a question, please press star then one.

Carlos Gomez: The next question comes from Carlos Gomez with HSBC.

Carlos Gomez: Please go ahead.

Carlos Gomez: Hello, good morning.

Carlos Gomez: Two questions.

Carlos Gomez: The first one is if you could explain in simple terms for us, what happened to the bumper foil of this quarter, what is that in contrast to the previous quarters, and what we should expect in the coming quarters, what should be the normal profitability yield on securities to be my respect?

Carlos Gomez: Yes, and in the WPT, yeah.

Carlos Gomez: I mean, as of June, I mean, we decided to execute or to exercise the puts on half of our position, and that happened the first of July.

Carlos Gomez: So at the end of the second quarter, that's why the portfolio remains in terms of the amount of bonds that we have remained the same.

Carlos Gomez: In the third quarter, you're going to see the impact on the exercise of the puts and the reduction in the bond portfolio.

Carlos Gomez: And again, I'm going to say to make a change in the accounting instead of having market market is going to be at a cost plus deal mechanism.

Carlos Gomez: So going forward, if we are maintaining this amount of bonds, a more reasonable level for the income from the bond portfolio is going to be in the area between 30 to 50 trillion pesos on a quarter basis.

Carlos Gomez: Okay, and the position that you exercise, you have it now in CPI linkers, right?

Carlos Gomez: Yes.

Carlos Gomez: Okay, very good.

Carlos Gomez: And then my second question is already nice before, is we're going to your capital, in the fact that you're paying a bit of it.

Carlos Gomez: I mean, the prospects have changed.

Carlos Gomez: You are doing M&A, there is long growth in the system.

Carlos Gomez: Would you review?

Carlos Gomez: I mean, we know that you have a lot of access capital, but I mean, we could see a lot of it consumed pretty rapidly if long growth indeed goes up.

Carlos Gomez: Would you consider for the coming years perhaps you want to retain more capital, rather than pay more dividends?

Carlos Gomez: Yes.

Carlos Gomez: I mean, if you see the reduction in the capital ratio from one, from the first quarter to the second, you can see that it was a reduction from tier one, looking at tier one, we're from 44 and a half to 34%, so 10% each point there, because of the payment of dividends.

Carlos Gomez: And going forward, we agree, and of course, we would like to have a more normal level of success capital, but the combination of organic growth that we think that we are going to need for three, three years plus some M&A opportunities that might have in the past that we think that would appear some other banks wanting to leave Argentina.

Carlos Gomez: The idea to continue to pay attractive dividends, I think that that is the means that we want to maintain.

Carlos Gomez: So going forward, a more sustainable rate of capital in the future for macro could be the area of 18 to 22% tier one, not the current level.

Carlos Gomez: So that is going to be consumed through organic growth plus cash dividends.

Carlos Gomez: First, and then, the opportunity for another M&A.

Carlos Gomez: So going forward between 19 to 22 is more reasonable for us.

Carlos Gomez: But it will make you have in the future with maybe higher market share performance in the season.

Carlos Gomez: And to go back to the M&A, and we understand you are open to possibilities.

Carlos Gomez: Is there anything in the works or anything that, you know, would you anticipate that you might be considering another transaction, let's say, in the next three or four quarters?

Carlos Gomez: Now, honestly, we are not looking to anything for the moment.

Carlos Gomez: I think that something happens could be next year.

Carlos Gomez: I don't know exactly which, how many quarters that next year or 20, 20, 20, 26.

Carlos Gomez: Okay, that's it.

Carlos Gomez: Thank you.

Carlos Gomez: Thank you, Carlos.

Operator: There are no more questions at this time.

Operator: This concludes the question and answer session.

Nicolas Torres: I will now turn the call over to Mr. Nicholas Torres for final considerations.

Nicolas Torres: Thank you all for your interest in Banco Macro.

Nicolas Torres: We have received your time and look forward speaking with you again.

Nicolas Torres: Have a good day.

Operator: The conference is now concluded.

Operator: Thank you for attending today's presentation.

Operator: You may now disconnect.

Q2 2024 Banco Macro SA Earnings Call

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