Q3 2024 Grupo Financiero Galicia SA Earnings Call
79% year over year.
Private sector dollar denominated deposits loans amounted to $7 2 billion.
Recording a 13, 1% quarterly growth.
And 87, 6% annual increase.
Turning now to our results for the quarter net income attributable to Grupo Financiero Galicia amounted to 168 billion pesos.
<unk>, 5% higher from the year ago quarter.
Mainly due to profit from Banco Alicia for 84 billion pesos from the archives 469 billion pesos.
<unk> asset management, $4 17 billion pesos.
Set by <unk> 9 billion loss from <unk> with us.
This profit represented at 314% annualized return on average assets and a $15, 26% return on average shareholders' equity.
We're going to one core Lithia net income for the quarter was 47% lower than in the year ago quarter.
Primarily due to a 50% decrease of the operating income.
Net operating income decreased 39%.
Primarily due to a 37% lower net interest income.
And 84% decrease in the results from gold and foreign currency quotation differences.
Partially offset by a 47% increase in net result from financial instruments.
Average interest, earning assets reached 10, one trillion pesos, 15% lower than in the same quarter of 2023.
Primarily due to a 22% decrease of the portfolio of government securities in pesos and a 43% reduction in the average balance of other interest earning assets in pesos.
In the same period its yield decreased 42 percentage points, reaching 45, 92%.
Interest bearing liabilities decreased 10% from September 2023, amounting to $8 six trillion pesos.
Finally, due to a 50% decrease in time deposits in pesos offset by an increase of the average balance of saving accounts and other deposits in foreign currency.
During this period, it's cost decreased 47 percentage points to 21, 35%.
Net interest income decreased 37% when compared to the third quarter of 2023.
This was the result of a 60% decrease in interest income because of a 66% lower interest on government securities.
On a 41% lower interest on loans and other financing.
Together with a 72% decrease in interest expenses due to a 79% lower interest on time deposits.
Net fee income decreased 9% from September 2023, due to a 27% lower profit from fish abundance of products and a 31% decrease in fees on utility bills collection services.
Net income from financial instruments increased 47% due.
Due to higher results from government securities and derivative financial instruments offset by a lower result from private sector Securities.
Gains from gold and FX potential differences, where 84% lower from the year ago quarter, including the results from foreign currency trading.
Other operating income decreased 52% in the quarter, while provision for loan losses increased 77%.
Most of the growth of the loan portfolio.
Personnel expenses were 6% lower than in the third quarter of 2023, while administrative expenses increased 14% due to higher expenses for fees and compensation for services for maintenance and repair amount of goods.
And for higher administrative services.
Other operating expenses decreased 39% due to a 63% lower turnover tax related to financial operations.
The banks financing to the private sector reached seven four trillion pesos at the end of the quarter up 18% in the last 12 months with peso financing increasing 6% in dollar denominated financing growing 104%.
Wildlife Priceline promissory notes increased 19% on personal loans, 52%.
Net exposure to public sector decreased 39% year over year due to a reduction in exposure to the central bank, which at the end of the quarter was close to zero.
Partially offset by an increase of government securities in pesos at fair value.
This exposure represented 24% of total assets as of the end of the quarter compared to 40% of the year before.
Okay.
Deposits reached $13 two trillion pesos.
14% higher than a year before mainly due to a 295% increase in saving accounts in foreign currency, partially offset by a 37% decrease in time deposits in pesos.
The bank's estimated market share of loans to private sector was 11, 9%.
40 basis points higher than at the end of a year ago quarter and the market share of deposits from the private sector was 10%.
56 basis points higher than in the same quarter of 2023.
The bank's liquid assets represented 76, 4% of transactional deposits and 55, 5% of total deposits compared to 123, 3% and 61, 7% respectively from a year before.
As regards asset quality the ratio of nonperforming loans to total financing ended the quarter at 184% recording a 62 basis points improvement as compared to the 246% of the third quarter of the prior year at.
At the same time the coverage with allowances reached 184, 4% from the 133, 7% recorded a year ago.
As of the end of September 2024, the bank's total regulatory capital ratio reached 26, 4% increase.
Increasing 135 basis points from the end of the same quarter of 2023.
In summary <unk>.
Challenging and volatile political and macro environment, Grupo Financiero, Galicia was able to keep asset quality liquidity solvency and profitability metrics at very healthy levels.
We are now ready to answer the questions that you may have thank you.
Okay.
Speaker Change: We are going to start our question and answer session for investors and analysts.
Wish to ask a question please click on rates.
Speaker Change: If your question has already been answering you can leave the keel by clicking on what handout.
Speaker Change: Our first question comes from Adam <unk> with Bank of America.
You can obtain your microphone.
Adam: Thank you hi, good afternoon, Pablo Thanks for the opportunity to ask questions.
Adam: My first question will be on your expectations for loan growth for this and next year.
And what would be the macro assumptions behind it in terms of GDP inflation and interest rates.
Speaker Change: And then my second question will be on your HSBC acquisition.
Speaker Change: So from what I have been low.
Speaker Change: Looking into your press releases.
Speaker Change: Thank you can issue at most 162 million shares to acquire HSBC, which is.
Roughly 11%.
Speaker Change: Shares outstanding.
Speaker Change: But how much net income would be.
Speaker Change: With HSBC be adding two galleys, yes operation.
Speaker Change: And when do you think you can communicate like some pro forma details on the transaction.
Do you think this could be more known.
Speaker Change: December or maybe during the next quarter.
Speaker Change: Any color on this will be very helpful.
Speaker Change: And my last question is on your ROE expectations.
Speaker Change: Just wondering if you continue to see.
Speaker Change: ROE levels between 25, 30% this year.
Speaker Change: And how much are we can we expect.
Expect for next year.
Speaker Change: And maybe adding to the second question is.
Speaker Change: Is there is like kind of visibility on how much additional basis points could add the HSBC acquisition.
Speaker Change: The consolidated ROE.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you Ernesto.
Speaker Change: First.
Speaker Change: We go into the loan book.
Evolution.
Speaker Change: You have seen.
An important real.
Speaker Change: Growth in the third quarter and actually if you consider the end of December.
Speaker Change: And in the end of September end of December last year end of September this year, the accumulated real growth was around 35%.
Speaker Change: So significant growth.
Speaker Change:
Speaker Change: The fourth quarter.
Speaker Change:
Speaker Change: Finishes as it is today, we could be ending the year with the VA with a loan growth of roughly 55% in real terms.
Speaker Change: So.
Speaker Change:
Speaker Change: Despite the macroeconomic situation as you said.
Speaker Change: This year, the GDP will be contracting.
Speaker Change: In the first or in the previous quarter, we were forecasting a three 8% GDP contraction. These days most of the economists are saying that the contraction could be lower than that so perhaps three four or so.
And most of the economists are forecasting a 5% GDP recovery for next year.
Speaker Change: So that gives us a good base to seeing that.
Speaker Change: The next year loans could be growing in the area of 50% in real terms of course.
Speaker Change: It's harder to grow.
Speaker Change: This type of percentages after the rebound we saw but we are comfortable with that with the lower inflation and therefore, lower interest rates and GDP recovering a loan demand.
Speaker Change: We will keep on growing at these very high levels.
Speaker Change: To give you an idea.
With the monthly inflation of 3%.
In October or around.
Speaker Change: Loans are growing in real terms almost 8% so.
Speaker Change: The growth is already in the system.
Speaker Change: Next year inflation I didn't mention we are forecasting right now around 37%.
Speaker Change: That is a moving target, but likely these going down.
Speaker Change: Also interest rates are going down.
Speaker Change: In monetary policy rate.
Speaker Change: <unk>.
To reduce last week, plus that Friday from 40% to 35% and therefore, all the interest rates in the system are going down not only 10 deposits, but also.
Speaker Change: The interest rates, we charge on loans.
Speaker Change: There is a lag so in terms of NIM.
Speaker Change: It's better for us so we are more.
Speaker Change: <unk> sensitive and in that respect.
Speaker Change: Perhaps we can jump to the third question in a row.
Speaker Change: And then speak a little bit more about the HSBC.
Speaker Change: In the first nine months the accumulated ROE stands at 30%.
Speaker Change: No.
Speaker Change: Good.
Speaker Change: <unk>.
Speaker Change: Fourth quarter that is likely to be better than the third one we could be in the area that you mentioned between 25 and 30% annual real Roe.
Speaker Change: And for next year.
Speaker Change: <unk>.
Speaker Change: I would say without taking.
Speaker Change: Into consideration HSBC and also speaking about the fourth quarter, So bond coalition Grupo Financiero Galicia standing alone without the effects of the acquisition.
Speaker Change: Could be thinking.
Speaker Change: 15 to higher teens level.
Speaker Change: Now we must go to the issue of HSBC.
Speaker Change: To make some history, we announced.
The deal.
Speaker Change: The agreement with HSBC back in April this year.
Speaker Change: We got the approval from the Central Bank in mid September and we think we are going to have the closing in early December this year. So there we will see the effects in the accounting all the numbers.
Speaker Change: They are there.
Speaker Change: Many considerations.
Speaker Change: First in the bank it will be the one that will be a purchasing 58%.
Speaker Change: <unk> of the shares while the group the holding company will be purchasing.
Speaker Change: 42%.
Speaker Change: Also the group will be.
Speaker Change: Buying a subordinated debt issued by HSBC Bank.
Speaker Change: That is currently in the hands of some vehicle in the UK.
Speaker Change: And therefore for the.
Speaker Change: Grupo Financiero at least a portion this 42% of the shares plus the subordinated debt that youre going to issue of Grupo will be issuing shares.
Speaker Change: In the order of 140.
Speaker Change: 2014.
Speaker Change: <unk> shares so 11 4 million <unk>.
Speaker Change: And the shareholders' meeting approved up to 115.
Speaker Change: And then and that will take place.
Speaker Change: Also in early December once we do a closing the HSBC will receive this <unk> and <unk>.
Speaker Change: The bank will pay in cash $275 million that basically will be.
Speaker Change: <unk> coming or the origin is the bond that we should we run core leisure at the beginning of October we issued $325 million.
Speaker Change: Going to the accounting.
Speaker Change: The impact we need to see from a third party independent.
Speaker Change: Consultant, which is the fair value of what we purchase.
Speaker Change: And compare it with the price.
Speaker Change: Therefore, we will have.
Speaker Change: One off positive effect.
Speaker Change: We could also be having some.
Speaker Change:
Speaker Change: I would say.
Speaker Change: The two parts.
Speaker Change: One off.
Speaker Change: It sounds not very irrational, but perhaps part of the positive effect is.
Speaker Change: Also in the first quarter of next year as we are going to have some price adjustment.
Speaker Change: And we will.
Speaker Change: That will happen.
Speaker Change: January or even February.
Speaker Change: And we also have to see if we provision some expenses due to the restructuring process in terms of certain.
Speaker Change: Executives or.
Speaker Change: Also some.
Speaker Change: Gain of synergies with the branches and so on.
Speaker Change: So still we are not.
Speaker Change: Prepare to speak about.
Speaker Change: The net net accounting results.
Speaker Change: But remember that we paid 40% of book value. So.
Speaker Change: It will be a positive.
Speaker Change: If we think in.
Speaker Change: <unk>.
Speaker Change: HSBC Roe.
Speaker Change: I would say that in the last couple of years most of the ones who are making.
Speaker Change: High levels.
Speaker Change: Our high level of ROE.
Speaker Change: And.
Speaker Change: In absolute terms HSBC is roughly 30%.
Speaker Change: The size of Bank coalition at Grupo of the bank.
Speaker Change: So you can assume that net income.
Speaker Change: HSBC could be roughly 30% of the bank's net income then that will come the synergies that is something that we didn't include in the price. We offered when we got the approval for the agreement more than <unk> in April this year.
Speaker Change:
Speaker Change: So.
Speaker Change: Fourth quarter numbers, we will show.
Speaker Change: So a lot of these impacts.
Speaker Change: And the next.
Speaker Change: Quarter of results.
Speaker Change: Would be issued.
Speaker Change: In late February or early March so we will still need three more months to see more detailed the positive impacts.
Speaker Change: No. This is super Super helpful very detail just a follow up in terms of the <unk> for next year.
Speaker Change: So you said it could be around 20%.
Speaker Change: I said without considering any extraordinary effect from HSBC.
Speaker Change: 15% would be.
Speaker Change: Teens, so lets say between 15 and 19.
Speaker Change: Okay and this is conservative considering that the loan book is taking off and you should also have.
Speaker Change: While a lower losses and the net monetary position.
Speaker Change: These assumptions to be kind of conservative.
Speaker Change: Well.
Speaker Change: It could be seen as conservative because as you said.
Speaker Change: Loan book is going to grow a lot.
Speaker Change: Any NIM compression in my opinion will be much less.
Speaker Change: Softer than than the one we saw we saw in this third quarter.
Speaker Change: And also depending on some.
Speaker Change: <unk> is in regulation, we could be having additional income for example in what we call.
Speaker Change: Foreign threat.
Speaker Change: Sorry.
Speaker Change: Foreign exchange.
Speaker Change: Basically selling in purchasing orders from our clients.
Speaker Change: Also foreign trade due to more exports and imports, but basically.
Speaker Change: On other fee.
Speaker Change: Related.
Speaker Change: Revenues or or services.
Speaker Change: But again.
Speaker Change: As we are we will be in the middle of.
Speaker Change: Adding.
Speaker Change: And equity participation at <unk>.
Speaker Change: Lower price than the fair value and having extraordinary one off gains on.
Speaker Change: Provisions on adding two different banks.
Speaker Change: It will be hard to really.
Speaker Change: Yeah.
Speaker Change: See if this.
Speaker Change: Materialize now this is again standing alone.
Speaker Change: Okay excellent excellent. Thank you very much Pablo you will.
Speaker Change: Amit.
Speaker Change: Our next question comes from Brian Flores with City, you can open your microphone.
Brian Flores: Hi, Paul and team. Thank you for the opportunity.
Brian Flores: I have two questions.
Brian Flores: The first one is on capital right now.
Brian Flores: You have.
Brian Flores: <unk> been consuming capital very strongly.
Speaker Change: And also funding is increasing which.
Speaker Change: Theories helpful, but I know.
Speaker Change: But the main driver of this growth is USD deposits, which are restricted if I'm not mistaken maybe this has changed and if it has.
Speaker Change: Please let me know what I think.
Brian Flores: Inc.
Brian Flores: Let's say the multiplier that is in embedded on these deposits our USD denominated is not as large of peso denominated ones.
Brian Flores: We also have as you mentioned the acquisition of HSBC.
Speaker Change: Actually this should bring also some capital right.
Speaker Change: <unk>.
Speaker Change: In the acquisition and the consolidation.
Speaker Change: You are consuming capital very fast right. Because you are growing in let's say very dense in terms of risk assets right youre growing in SME you're going in.
Speaker Change: Credit cards, which is obviously, where you are very strong. So I think this is natural so just can you. The first question is can you guide us through capital consumption.
Speaker Change: At any point in 2025, you're already thinking about maybe raising capital.
Speaker Change: How how can we think about this because.
Speaker Change: What we can see.
Speaker Change: Capital consumption is going to be very strong and then on my second question. Thank you.
Speaker Change: Hi, Brian while firsthand common comments on it.
Speaker Change: Denominated deposits.
Speaker Change: We are about to finish a tax amnesty program.
Speaker Change: <unk>.
Speaker Change: Organized by the government it was zero at the beginning at the end of September than it was postponed till the end of October now till the end of this week.
Speaker Change: You can see that.
Speaker Change: Back at the end of June roughly our dollar denominated deposits were $2.8 billion and at the end of September around six five so in that growth was.
Speaker Change: For all the system, but our market share and dollar denominated deposits. It's even higher one thing that is important to have in mind is that this tax amnesty plan.
Speaker Change: The main objective is to foster the economy basically once people declare their dollars.
Speaker Change: They can or are able to purchase an apartment or.
Speaker Change: Our car or even a corporate bond so the.
Speaker Change: It is not to increase tax revenues, but on the other hand to move the economy to foster the economy. So.
Speaker Change: These deposits in dollars gradually we'll be.
Speaker Change: Converting to pesos in the economy and the banks will be.
Speaker Change: Yeah.
Speaker Change: Increasing this multiplier.
Speaker Change: The factor.
Speaker Change: You are right that dollar denominated deposits if they stay in dollars.
Speaker Change: They can just be lent to exporters.
Speaker Change: We increased the loan book too, but they are the nims are.
Speaker Change: Much slower.
Speaker Change: Cost is zero, but the yield we charged or the yields for interest rates, which are also very low.
Speaker Change: And therefore nims are low because loan to deposit.
Speaker Change: <unk>.
Speaker Change: Ratio in dollars is about.
Speaker Change: 20%, 18%, 20%. So there is a lot of a supplier of dollars and lack of <unk>.
Speaker Change: <unk>.
Speaker Change: That's one thing the other thing is the capital ratio.
Speaker Change: We grew cigna.
Speaker Change: Significantly in the third quarter, but we also.
Speaker Change: Build capital with positive results in the.
Speaker Change: Total capital ratio of stance or 26, 4%.
Speaker Change: The positive effects on due to the purchase of HSBC and this will increase and with the.
Speaker Change: Assumption or what we're seeing loan book evolution will.
Speaker Change: How the loan book will evolve next year, we could be thinking in a capital ratio at the end of 2025 off <unk>.
Speaker Change: 19% to 20%. This is the order of magnitude we are having today, we are not at all thinking in any.
Speaker Change: Capital increase.
Speaker Change: Next year and even if you ask me is it twice I would say not even in 2026.
Speaker Change: But yes definitely as we are reducing our government bonds.
Speaker Change: The book and increasing the private sector lending.
Speaker Change: The capital ratio will be going down, but again from very very high levels too high levels.
Speaker Change: Super clear Pablo So my other question.
Speaker Change: Watson on just confirming what you mentioned to to a next question on loan growth right because.
Speaker Change: I understood that for this year, sorry, 2020, how would you reiterate that maybe 50%, but I didn't understand.
Speaker Change: 2024 was actually revised upwards I think you were mentioning in the second call second quarter conference call between 35, and 14 real terms are you seeing a slight pick up for 'twenty 'twenty four.
Speaker Change: Yes.
Speaker Change: Actually what I said is that if you consider.
Speaker Change: Of course in homogeneous currency. The September the end of September loan book of the bank.
Speaker Change: And at the end of December last year, the growth was around 35%. So we could be ending this year with numbers between 50, and 55% real loan growth.
Speaker Change: In the fourth quarter of last year, there was a reduction in real terms of loans.
Speaker Change: So, yes, 2024, there would be a grow.
Speaker Change: The final number would be higher than we expected three months ago.
Speaker Change: A perfect I'm, probably just a very final follow up on what you mentioned on capital right I think the last time.
Speaker Change: There was a capital raises across Argentine banks.
Speaker Change: Our 2017% to 18 I don't know if you could just remind us at what level did you decide in terms of core equity tier one to raise capital to seize this beneficial market conditions back then.
Speaker Change: Yes.
Speaker Change: In 2017, we raised $630 million.
Speaker Change: And at that moment, the capital ratio will surround.
Speaker Change: Sorry.
Speaker Change: Sorry, if I'm not very precise and this number is it was around 12, 5% or so and we were seeing.
Speaker Change: Strong loan demand.
Speaker Change: At that time, I remember that all our peers.
Speaker Change: With listed shares also.
Speaker Change: Raised capital.
Speaker Change: And then.
Speaker Change: While in 2018.
Speaker Change: The macroeconomic conditions change or the.
Speaker Change: And then the political scenario changed so there was.
Speaker Change: No need for these capital or.
Speaker Change: And actually then the central Bank.
Speaker Change: Deanna allow banks to pay dividends and that's why we build most of the banks the sky capital ratios.
Speaker Change: That was the order in August.
Speaker Change: Capital ratio back in September.
Speaker Change: 2017.
Speaker Change: Super clear thank you.
Speaker Change: Youre welcome.
Speaker Change: Next question from Selman <unk> with J P. Morgan you cannot opinion microphone.
Speaker Change: Thank you and good afternoon, I would like to explore a little bit the loan yields when we go to their margins, which has been coming down and again I guess there is no surprise, but let me go to the interest income on loans, we see some decrease so published you can explain what should expect were you mentioning are prevalent.
Speaker Change: We're seeing something like.
Speaker Change: This could be the weakest quieter, maybe the loan yields may recover.
Speaker Change: Whatever you can provide on different product dynamics, how do you think about the yields.
Speaker Change: And on the pause, it's just a follow up on the previous questions from Brian.
Speaker Change: Your your deposits are growing fine you're right like what a 40% parts are required for these above loans, but as Brian said this is mostly coming from falling deposits right. The local local peso denominated deposits are up 6% quarter required. So I'll try to check deposits because capital is part of the equation, but diabetes also Mr. Saracen.
Speaker Change: How true to bring in more deposits for debate. Thank you.
Speaker Change: Hi.
Speaker Change: Well first on yields.
Speaker Change: And it's of course very different.
Speaker Change: The interest rate, we have in pesos and in dollars and therefore nims.
Speaker Change: If you look at one specific charts.
Speaker Change: In our press release Lydney over it quickly.
Speaker Change: You will see that.
Speaker Change: The in the third quarter the yield average yield on loans was in pesos was 48, 5%.
Speaker Change: While in dollars was 6%.
Speaker Change: And the same happens with the interest bearing liabilities and therefore if.
Speaker Change: If you look at the NIM in pesos is around 31% in dollars.
Speaker Change: One 4%.
Speaker Change:
Speaker Change: We.
Speaker Change: Im speaking just about the band's not including net anchor we can comment something about them that anchor later.
Speaker Change: We saw.
Speaker Change: In November.
Speaker Change: Early November a reduction in interest rate.
Speaker Change: Monetary policy rate from 40.
Speaker Change: 235% debt.
Speaker Change: Helps us at the beginning at least in the sense that the liabilities go lower.
Speaker Change: Quicker than the assets so for Nims is good.
Speaker Change: Also as interest rates.
Speaker Change: Well go down.
Speaker Change: And that is that is mainly because the central bank ceased the monthly inflation going down also many government bonds are or have been.
Speaker Change: Rising their prices so.
Speaker Change: It's good for our results so we.
Speaker Change: We are seeing.
Speaker Change: Good yields.
Speaker Change: For the fourth quarter in pesos in dollars varies.
Speaker Change: Less upside in that respect because of the such.
Speaker Change: Such a big amount of dollar denominated deposits.
Speaker Change: And of course, we want to.
Speaker Change: Foster or have more intermediation in pesos and in dollars.
Speaker Change: As I said part of these orders will be in some way convert into pesos once the economy.
Speaker Change: It begins to grow.
Speaker Change: Actually it has already begun to grow.
Speaker Change: And in.
Speaker Change: Not only depend on deposits in order to satisfy the loan demand we also.
Speaker Change: Our reducing short term government bonds.
Speaker Change: In order to satisfy that.
Speaker Change: And one more idea in order to have more deposits on mainly transactional deposits.
Speaker Change: You have to have many clients and very good.
Speaker Change: Women and collection capabilities.
Speaker Change: So we are.
Speaker Change:
Speaker Change: Very good at that and I think that the economy of scale.
Speaker Change: With HSBC will also help to have.
Speaker Change: More deposits and more raw material.
Speaker Change: Two world.
Speaker Change: So strictly a Pablo I remember in the past you mentioned nice expectations going through Mitch Duane is like 25%.
Speaker Change: You do a good proxy for near term anything you can share on total niche.
Speaker Change: Considering.
Speaker Change: Resource.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: We have to see how this a breakdown between pesos and dollars.
Speaker Change: Gradually changed because in my opinion this third quarter is the peak.
Speaker Change: In between.
Speaker Change: This $1, meaning that $8 and mainly looking at deposits.
Speaker Change: Our like 50, 50, and it used to be 80 20, not many quarters ago. So I think dollars should be converted into pesos in a way.
Speaker Change: Also some dollars.
Speaker Change: And are going back to.
Speaker Change: The typical saving account in dollars not the biggest further this tax amnesty plan.
Speaker Change: The clients have to open a new special accounts, what we are seeing is some kind of.
Speaker Change: <unk> moved from this special accounts to the typical saving accounts and also some people are taking out some dollars in order to sell them on.
Speaker Change: And spend the money.
Speaker Change: In pesos. So we think that we will gradually change.
Speaker Change: But.
Speaker Change: Yes.
Speaker Change: 25% could be.
Speaker Change: They would meet a point and if inflation keeps on going down perhaps we can get to 20% level in I don't know.
Speaker Change: One year and a half or so.
Speaker Change: Many times.
Speaker Change: If we look at the 2017 or 18.
Speaker Change: The numbers could be where we could be getting in a couple of years. This is a kind of a pendulum.
Speaker Change: Also when we look at the breakdown of assets and liabilities. If we look at the 2017 or 18.
Speaker Change: <unk> numbers.
Speaker Change: We can have.
Speaker Change: Kind of idea, where the trends could be going basically when we look at loans to total assets used to be 65% to 70% right now we are.
Speaker Change: Below 40, so that but much higher than the previous quarter. So.
Speaker Change: This should be the type of numbers, we will see in the coming quarters.
Speaker Change: Thank you very much Pablo.
Speaker Change: Youre welcome.
Speaker Change: Next question from Walter <unk> with Santander.
Speaker Change: You can open your microphone.
Speaker Change: Yes, hi.
Speaker Change: Thank you for answering the question.
Walter: Most of the question that I have.
Speaker Change: And you already answered, but I would like to plus your two question one is related to the inflation not just lost.
Speaker Change: That is a percentage of the operating result was quite high you are.
Speaker Change: In the previous quarter, despite that inflation was actually lower.
Speaker Change: So is there any way that you can see here that we should use to estimate that looking for or why that's happening this quarter.
Speaker Change: This is one that is one question and secondly.
Speaker Change: The book value of Grupo increase quite more than what the results of the quarter. Our suggests even despite that you distributed during the quarter.
Speaker Change: Hum.
Speaker Change: I don't find the reason for that C suite in some others.
Speaker Change: That's all I have ADT, if you could.
Speaker Change: Give a hint or or in a deal why.
Speaker Change: Yeah, the equity of the group or increase more than the what the reserve results suggest did you end the quarter those are my two questions.
Speaker Change: Hi, Walter.
Speaker Change: The first one is.
Speaker Change: They're hard to project is something.
Speaker Change: <unk>.
Speaker Change: It depends on the.
Speaker Change: Not only on the quarterly inflation, but how in place each month and also what is the.
Speaker Change: What we call the leak with.
Speaker Change: Net worth.
Speaker Change: But what is.
Speaker Change: And definitely.
Speaker Change: Better.
Speaker Change: Or any banks balance sheet is the lower the inflation the lower this monetary loss, but.
Speaker Change: In order to projected.
Speaker Change: We share with you the difficulty.
Speaker Change: And it's a result, we get each quarter.
Speaker Change: And Luckily I cannot help you much.
Speaker Change: Doug.
Speaker Change: Regarding the increase in a group or a book value.
Speaker Change: I think it's the result of the other of the Cups basically the bonds there are.
Speaker Change: Are the results that are within other comprehensive income more than the pure and net income.
Speaker Change: And as you said there were payments of dividends, but they were.
Speaker Change: Mostly.
Speaker Change: And then in the second quarter.
Speaker Change: We can see perhaps in detail.
Speaker Change: Later, if you want to specifically send me the numbers if this answer doesn't.
Speaker Change: Mature.
Speaker Change: <unk>.
Speaker Change: Yes, I would appreciate that so you think it comes from.
Speaker Change: Some accounting related to the bonds.
Speaker Change: And the reason why didn't the average increase.
Speaker Change: More than one would have suggested.
Speaker Change: Right.
Speaker Change: Yes, alright, okay.
Speaker Change: Okay. Thank you very much Pablo.
Pablo: Youre welcome.
Speaker Change: Next question from Martino, Mezz things with Latin Securities you can open your microphone.
Speaker Change: Hi, Hi, good afternoon.
Martino: I have a question about <unk> portfolio composition, So how do you see it evolving and moving forward with and also with the recent rally in like apps do you expect this to be a relevant considering anti tau their first quarter results.
Pablo: Hi Marina.
Speaker Change: Well the securities portfolio.
Speaker Change: Dynamic.
Speaker Change: Typically we have a portion that is.
Speaker Change: At fair value or mark to market than.
Pablo: Then we have another.
Pablo: Other portion a percentage that is cost plus yield that basically in the past.
Pablo: Was made by all the CPI lingers.
Pablo: Once that adjusted by inflation that we're in.
Pablo: Our books in order to hedge against inflation.
Pablo: That portfolio should gradually a change because we are now in a scenario of a positive interest rates in real terms.
Pablo: In the past when we had negative interest rates in real terms, we have to to protect our.
Pablo: Basically our networks our liquid network.
Pablo: And.
Pablo: Then we have lockups.
Pablo: Very short term instrument for our liquidity.
Pablo: And yes, there was a rally in.
Pablo: Well, we should wait till the end of December to see if the prices stay at this level.
Speaker Change: If I had to say today, yes.
Speaker Change: Definitely it.
Speaker Change: It will they will have or they have a positive impact.
Speaker Change: Okay. Thank you.
Speaker Change: Youre welcome Marina.
Speaker Change: Next question from Nicolas Riva with Bank of America.
Speaker Change: And your microphone.
Nicolas Riva: Thanks, very much for the chance to ask questions. You mentioned that I felt at the end of the quarter you issued the 2020 debt the senior bond.
Speaker Change: There will also be used to pay for the acquisition of HSBC, Argentina, but you also have the 2026.
Speaker Change: Tier twos, and I know that you read and exercise the call option back in 2021, I don't think you would be able to fully redeem at par now those bonds, but given the only count $50 million as tier two capital My question would be.
Speaker Change: If theres any restrictions for you to do a tender offer.
Speaker Change: On these bonds and at the same time to issue.
Speaker Change: New tier twos.
Speaker Change: So I'll talk to you said the loss rates with the new territories towards Laettner off on the 26th.
Speaker Change: Hi, Nicolas.
Speaker Change: Well.
Speaker Change: If you asked me what is in our minds today is to wait till July 2026 and pay.
Speaker Change: But the bond the $250 million subordinated bonds once they come due the call was just one day as you said in 'twenty, one and we via an exercise it at the moment.
Speaker Change: The bonds.
Speaker Change: Uh huh.
Speaker Change: <unk> had a full capacity in terms of tier two now with <unk>.
Speaker Change: 3%.
Speaker Change: Portion so it's not very relevant and we are not really considering.
Speaker Change:
Speaker Change: Issuing another tier two bonds.
Speaker Change: So.
Speaker Change: After the issuance of the senior bond at $325 million.
Speaker Change: Really we don't see the need to.
Speaker Change: To raise more money in.
Speaker Change: This bond really is yielding.
Speaker Change: Barry.
Speaker Change: The yield is very low so really replacing it with another one perhaps it doesn't make sense. So.
Speaker Change: No really the answer would be no.
Speaker Change: And the most likely scenario will be to paid.
Speaker Change: In July 2026.
Barry: Okay. Thanks, very much Paula.
Paula: Youre welcome.
Speaker Change: Nicole.
Speaker Change: <unk>.
Speaker Change: I don't see anybody else on the queue.
Speaker Change: If that is all.
Speaker Change: All right.
Speaker Change: Well I will close of course, saying thank you all for attending this call.
Speaker Change: And of course, if you have any further questions. Please do not hesitate to contact us.
Speaker Change: Good afternoon. Thank you.
Speaker Change: Therefore, financiero Galicia conference is now close we thank you for your participation and wish you a nice day.
Speaker Change: [music].