Q2 2026 Banco Macro SA Earnings Call

Speaker #2: Good morning. I welcome you to Banco Macro's second quarter 2026 earnings conference call. Thank you all for joining us today. Banco Macro's second quarter earnings release was distributed yesterday and is available on our investor relations website.

Nicolás Torres: Good morning, and welcome to Banco Macro Q2 2026 earnings conference call. Thank you all for joining us today. Banco Macro Q2 earnings release was distributed yesterday and it is available on our investor relations website. For this quarter's call, we are also introducing an earnings call presentation which will accompany today's remarks. The presentation will be available on our website following the call. Please note that this call may include forward-looking statements, and please refer to our SEC filings for further information. All figures discussed today are in Argentine pesos and have been restated in terms of the measuring unit current at the end of the reporting period in accordance with Central Bank regulations. With that, let me briefly introduce today's speakers.

Speaker #2: For this quarter's call, we are also introducing an earnings call presentation, which will accompany today's seminar. The presentation will be available on our website following the call.

Speaker #2: Please note that this call may include forward-looking statements, and please refer to our SEC filings for further information. All figures discussed today are in our 2020 pesos and have been restated in terms of the measuring unit current at the end of the reporting period.

Speaker #2: In accordance with central bank regulations, let me briefly introduce today's speakers. We have with us today Juan Parma, Chief Executive Officer of Banco Macro; Jorge Calinsi, Chief Financial Officer of Banco Macro; and myself, Nicolas Torres, Investor Relations at Banco Macro.

Nicolás Torres: So we have with us today Juan Parma, Chief Executive Officer of Banco Macro, Jorge Scarinci, Chief Financial Officer of Banco Macro, and myself, Nicolás Torres, Investor Relations from Banco Macro. I will now briefly comment on the Q2 2026 macroeconomic context before moving on to the bank's Q2 2026 financial performance. Economic activity moderated after the first quarter, with April and May economic activity averaging 0.8% below the Q1 2026. Agriculture and mining offset weakness in manufacturing and commerce. Inflation declined throughout the quarter from 2.6% in April to 1.9% in June. On rates, TAMAR declined from 26.3% at the end of March to 22.7% at the end of June. On exchange rate, ARS depreciated 7.3% during the quarter, remaining stable throughout April and May before weakening in June. On credit, growth remained muted. Finally, system asset quality remained under pressure.

Speaker #2: I will now briefly comment on the second-quarter 2026 macroeconomic context before moving on to the bank's second-quarter 2026 financial performance. Economic activity moderated after the first quarter, with April and May economic activity averaging 0.8% below the first quarter of 2026.

Speaker #2: Agriculture and mining offset weakness in manufacturing and commerce. Inflation declined throughout the quarter, from 2.6% in April to 1.9% in June. On rates, TOMORROW declined from 26.3% at the end of March to 22.7% at the end of June.

Speaker #2: The exchange rate specifically decreased to 7.3% during the quarter, remaining stable throughout April and May, before weakening in June. On credit, growth remained muted.

Speaker #2: Finally, systematic quality remained under pressure; system NPLs increased from 7.6% in March to 7.7% in May, which is the latest available data, with household delinquency at 12.8% versus 3.5% for corporates, while coverage declined from 91.1% to 86.3%.

Nicolás Torres: System NPLs increased from 7% in March to 7.7% in May, which is the latest available data, with household delinquency at 12.8% versus 3.5% for corporates. While coverage declined from 90.1% to 86.3%. Turning to our main feeders, starting on the left, Q2 net income totaled ARS 206.8 billion, increasing 39% quarter on quarter and 4% year on year. The improvement was mainly driven by higher results from financial instruments at fair value through P&L and lower allowance provisions and a smaller loss from the net monetary position. Net operating income before administrative expenses reached ARS 1.29 trillion, down 2% quarter on quarter and up 1% year on year. Operating income after administrative expenses was ARS 603.8 billion, down 1% quarter on quarter and up 1% year on year. Moving to the left-hand side, adjusted net income reached ARS 221 billion, implying an adjusted annualized ROE of 14.3%.

Speaker #2: Turning to our main figures, starting on the left, second quarter net income totaled 206.8 billion pesos, increasing 39% quarter-on-quarter and 4% year-on-year.

Speaker #2: The improvement was mainly driven by higher results from financial instruments at fair value pre-NL, lower loan loss provisions, and a smaller loss from the net monetary position.

Speaker #2: Net operating income before administered expenses reached 1.29 trillion pesos, down 2% quarter on quarter and up 1% year on year. Operating income after administered expenses was 603.8 billion pesos, down 1% quarter on quarter and up 1% year on year.

Speaker #2: Moving to the left-hand side, adjusted net income reached $221 billion pesos, implying an adjusted annualized ROE of 14.3%. This excludes $14.2 billion pesos in after-tax restructuring expenses.

Nicolás Torres: This excludes ARS 14.2 billion in after-tax restructuring expense, in line with the restructuring impact that we saw in Q1. On efficiency, our efficiency ratio was 33.9%, stable year on year as we continue to execute on the bank's efficiency transformation. Finally, our reported NPL ratio was 6.25% as of June 2026. This remained below the 7.7% reported for the system as of May 2026. While our coverage ratio stood at 95.4%, above the market's 86.3% of May. Before moving on to the detailed financial performance, let's review the main highlights of the quarter. First, we registered double-digit net income growth, with net income up 39% quarter on quarter to ARS 206.8 billion. This result represents an annualized ROE of 13.4%, while adjusted ROE is still at 14.3%, up 4.4 percentage points from the last quarter. Second, margins remained stable.

Speaker #2: In line with the restructuring impact that we saw in the first quarter. On efficiency, our efficiency ratio was 33.9%, stable year on year, as we continue to execute on the bank's efficiency transformation.

Speaker #2: Finally, our reported NPL ratio was 6.25% as of June 2026. This remained below the 7.7% reported for the system as of May 2026. Meanwhile, our coverage ratio stood at 95.4%, above the market's 86.3% as of May.

Speaker #2: Moving on to the digital financial performance, let's review the main highlights of the quarter. First, we registered double-digit net income growth, with net income up 39% quarter-on-quarter to 206.8 billion pesos.

Speaker #2: This result represented an annual ROE of 13.4%, while adjusted ROE stood at 14.3%, up 4.4% this month from the last quarter. Second, margins remained stable, net interest income remained stable, while deposits continued to represent 76% of liabilities, as the average cost of interest-bearing liabilities fell below 20%.

Nicolás Torres: Net interest income remained stable while deposits continued to represent 76% of liabilities as the average cost of interest-bearing liabilities fell below 20%. Third, we continue executing on efficiency, including another 18 branch closures during the quarter. The after-tax restructuring charges remained almost unchanged quarter over quarter at ARS 14 billion. Four, asset quality continued to overperform the system, with NPLs at 6.25% below the system's 7.7%, and moreover, coverage stood at 95.4%, above the system's 86.3%. Fifth, lending growth remained challenging. Total lending increased 3% quarter on quarter, supported by commercial growth, while on a yearly basis, total financing decreased 5%. Our private sector loan market share remains stable at 8.2%. Sixth, our balance sheets remain strong with a Tier 1 ratio of 28% and ample liquidity, both fundamental for pursuing growth and strategic opportunities. Now let's turn to the quarter on quarter P&L variations breakdown.

Speaker #2: Third, we continue executing on efficiency, including another 18 branch closures during the quarter. The asset tax restructuring charges remained almost unchanged quarter over quarter at 14 billion pesos.

Speaker #2: Fourth, as of the quarter, we continue to outperform the system with NPLs at 6.25%, below the system's 7.7%. Moreover, coverage stood at 95.4%, above the system's 86.3%.

Speaker #2: Fifth, lending growth remained challenging. Total lending increased 3% quarter-on-quarter, supported by commercial growth, while on a yearly basis, total finances decreased 5%.

Speaker #2: Our private sector loan market share remained stable at 8.2%. And sixth, our balance sheet remained strong, with a Tier One ratio of 28% and appropriate liquidity.

Speaker #2: Both fundamentals for pursuing growth and strategic opportunities. Now, let's turn to the quarter-over-quarter P&L variations breakdown. Net income increased 57 billion pesos quarter-on-quarter due to higher income from government securities, lower fair value property loss, lower loan loss provisions, and lower loss from the net monetary position.

Nicolás Torres: Net income increased ARS 57 billion quarter on quarter, due to higher income from government securities for fair value, profit or loss, lower loan loss provisions, and lower loss from the net monetary position. Net interest income decreased 1% of ARS 7.4 billion quarter on quarter, as lower funding costs mostly offset lower loan yields and average lending volumes. Income on securities decreased 18% of ARS 30.5 billion quarter on quarter. In Q1 2026, ARS 71 billion one-off result from the sale of bonds was recorded. Net fee income decreased 2% of ARS 4.6 billion in the quarter as higher mutual funds and securities fees were offset by lower credit and debit card fees, as well as lower conversion services fees. Loan loss provisions decreased 24% for ARS 60.7 billion in the quarter, mainly reflecting lower commercial delinquencies while keeping coverage at an adequate level.

Speaker #2: Net interest income decreased 1% to 7.4 billion pesos quarter-on-quarter, as lower funding costs mostly offset lower loan yields and average lending volumes.

Speaker #2: Income from securities decreased 18% to 30.5 billion pesos quarter-on-quarter. In the first quarter of 2026, a 71 billion pesos one-off result from the Sable Funds was recorded.

Speaker #2: Net income decreased 2% to 4.6 billion pesos in the quarter, as higher mutual fund and securities fees were offset by lower credit and debit card fees, as well as lower corporate services fees.

Speaker #2: Loan loss provisions decreased 24%, or $60.7 billion pesos in the quarter, mainly reflecting lower commercial delinquency, while equity coverage remained at an adequate level. Personnel administered expenses increased $26.6 billion pesos, led by personnel, marketing, and publicity costs, while achieving extraordinary efficiency.

Nicolás Torres: Personal administrative expenses increased 20 from ARS 6 billion, led by personal and marketing and solution costs, while achieving extraordinary efficiency. The other major profit driver of the quarter was the result from the net monetary position. The loss was ARS 102.1 billion smaller than Q1, reflecting the decline in quarterly inflation. Finally, income tax and other items contributed ARS 7 billion to the quarter-on-quarter variations. Lower other operating expenses more than offset the higher income tax rate registered in the quarter. Also, these factors explain the increase in reported ROE from 10% in Q1 to 13.4% in Q2. Slide 8 shows the impact of the restructuring program on reported profitability. Reported net income was ARS 206.8 million during the quarter, with a record ARS 14.2 billion of tax restructuring charges related mainly due to early retirement plans and certain planning provisions.

Speaker #2: The other major profit driver of the quarter was the result from the net monetary position. That loss was 102.1 billion pesos smaller than the first quarter, this reflecting the decline in quarterly inflation.

Speaker #2: Finally, income tax and other items contributed 7 billion pesos to the quarter-on-quarter valuations. Lower other operating expenses more than offset the higher income tax rate registered in the quarter.

Speaker #2: Altogether, these factors explain the increase in reported ROE from 10% in the first quarter to 13.4% in the second quarter. Slide 8 shows the impact of the restructuring program on reported profitability.

Speaker #2: Reported net income was 206.8 billion pesos during the quarter, with 14.2 billion pesos of after-tax restructuring charges recorded. The related variance was due to early retirement plans and certain pending provisions.

Speaker #2: Excluding these charges, adjusted net income would have reached 221 billion pesos, implying an adjusted analyzed ROE of 14.3% and an adjusted ROA of 3.5%. These expenses are part of the efficiency program we have been implementing to create a more agile operating model and a lower structural cost base.

Nicolás Torres: Excluding these charges, adjusted net income would have reached ARS 221 billion to decline an adjusted annualized ROE of 14.3% and adjusted ROA of 3.5%. These expenses are part of the efficiency program we have been implementing to create a more agile operating model at a lower structural cost base. Moving to our Q2 2026 assets and liabilities performance, you can see the evolution of our balance sheet mix and ranking of both assets and liabilities. On the assets side, loans increased 3% at quarter end and represent 45% of total assets, while government securities make up 25% of our assets. Assets here declined 280 basis points quarter on quarter from 44% to 41% in the second quarter, reflecting a 347 basis points decline in the average lending rate, while the average volume of loans decreased 3%. On the liabilities side, deposits continued to represent 76% of total assets.

Speaker #2: Moving to our second quarter 2026 assets and liabilities performance, you can see the evolution of our balance sheet mix and the pricing of both assets and liabilities.

Speaker #2: On the asset side, loans increased 3% at quarter end and represent 45% of total assets, while government securities make up 25% of our assets.

Speaker #2: Assets yield declined 280 basis points quarter on quarter, from 44% to 41% in the second quarter, reflecting a 327 basis points decline in the average lending rate, while the average volume of loans decreased 3%.

Speaker #2: On the liability side, deposits continued to represent 76% of total assets. Total deposits reached 14.7 trillion pesos, down 1% quarter-on-quarter and up 4% year-on-year.

Nicolás Torres: Total deposits reached ARS 14.7 trillion, down 1% quarter on quarter and up 4% year on year. Funding costs declined 550 basis points quarter on quarter from 24% to 19% due to a 310 basis points decline in the average rate paid on deposits, while the average volume of deposits decreased 3%. Funding costs declined faster than the asset yield, driven by lower private sector peso deposit rates. Turning to slide 10, the gross credit portfolio shown on the left resumed growth and totaled ARS 12.6 trillion, increasing 3% quarter on quarter. Commercial lending was the main driver of increase, while consumer lending grew more moderately and represented 31% of the gross portfolio at quarter end, compared with 29% for commercial loans.

Speaker #2: Funding costs declined 550 basis points quarter-on-quarter, from 24% to 19%, due to a 310 basis point decline in the average rate paid on deposits, while the average volume of deposits decreased 3%.

Speaker #2: Funding costs declined faster than the asset yield, driven by lower private sector peso deposit rates. Turning to slide 10, the gross loan portfolio shown on the left grew and totaled 12.6 trillion pesos, increasing 3% quarter on quarter.

Speaker #2: Commercial lending was the main driver of the increase, while consumer lending grew more moderately and represented 71% of the gross portfolio at quarter-end, compared with 29% for commercial loans.

Speaker #2: Loans and other financing reached 11.7 trillion pesos, with private sector financing up 3% quarter on quarter, including 2% growth in peso lending and 1% growth in US dollar lending, while our private sector loan market share remained stable at 8.2%.

Nicolás Torres: Loans and other financing reached ARS 11.7 trillion with private sector financing up 3% quarter on quarter, including 2% growth in peso lending and 1% growth in US dollar lending. While our private sector loan market share remains stable at 8.2%. On the right-hand side, net interest income reached ARS 1.03 trillion, stable compared with the first quarter and 11% above the second quarter of last year. Net interest margin, including FX, declined from 25% to 24%, mainly due to a lower FX contribution. Excluding FX, net interest margin increased 30 basis points from 23.8% in the first quarter to 23.5% in the second quarter. Moving on to asset quality, the left-hand chart shows our reported NPL ratio increasing from 5.4% in the first quarter of 2026 to 6.5% in the second quarter.

Speaker #2: On the right-hand side, net interest income reached 1.03 trillion pesos, stable compared with the first quarter and 11% above the second quarter of last year.

Speaker #2: Net interest margin, including the FX, declined from 25% to 24%, mainly due to a lower FX contribution. Excluding the FX, net interest margin decreased 30 basis points, from 23.8% in the first quarter to 23.5% in the second quarter.

Speaker #2: Moving on to asset quality, the left-hand chart shows our reported NPL ratio increasing from 5.4% in the first quarter of 2026 to 6.25% in the second quarter.

Speaker #2: As we explained last quarter, the reported NPL ratio is affected by mandatory customer classification that takes into account a customer’s behavior across the financial system.

Nicolás Torres: As we explained last quarter, the reported NPL ratio is affected by mandatory customer classification that takes into account a customer's behavior across the financial system. Our Stage 3 loans ratio increased 30 basis points from 3.8% to 4.1%. Our coverage ratio stood at 95.4%. This remained above the 86.3% level for the system as of May 2026. It is important to mention that coverage Stage 3 loans reached 148.8% in the second quarter. The right-hand chart shows the different trend by segments. Commercial NPLs improved to 0.9% from 1.3% in the first quarter and remain well below the system's average 3.5%. Consumer NPLs increased to 8.4%, from 6.9% last quarter, but also remained below the 12.8% reported for the system. Turning to the efficiency, operating expenses shown on the left reached ARS 450 billion in the second quarter.

Speaker #2: Our stage three demonstration increased 30 basis points, from 3.8% to 4.1%. Our coverage ratios stood at 95.4%, remaining above the 86.3% level for the system as of May 2026.

Speaker #2: It is important to mention that coverage of stage three loans reached 148.8% in the second quarter. The rate and chart show the different trend by seconds.

Speaker #2: Commercial NPLs improved to 2.9% from 3.1% in the first quarter, and remained well below the system's average of 3.5%. Consumer NPLs increased to 8.4% from 6.9% last quarter, but also remained below the 12.8% reported for the system.

Speaker #2: Turning to efficiency, operating expenses shown on the left reached 450 billion pesos in the second quarter. Employee benefits increased 7% quarter-on-quarter, and administered expenses increased 8%.

Nicolás Torres: Employee benefits increased 7% quarter on quarter, and administrative expenses increased 8%. As a result, efficiency ratio increased from 32% to 34%. The chart on the right shows the continued streamlining of our operating model. We ended the quarter with 402 branches, 18 fewer than in March, and 89 fewer than one year ago. Headcount declined to 8,180 employees, down 1% quarter on quarter and 8% year on year. These actions are part of the restructuring program with the objective of increasing efficiency and agility while preserving the reach and service capabilities of our franchise. Slide 13 shows the capital and liquidity remaining key strengths. On the left, our Tier 1 capital ratio stood at 28%, compared with an 11.5 regulatory requirement. On the right, the loan-to-deposit ratio increased to 79%, while liquid assets remained equivalent to 74% of our deposits.

Speaker #2: As a result, the efficiency ratio increased from 32% to 34%. The chart on the right shows the continuous streamlining of our operating model.

Speaker #2: We ended the quarter with 402 branches, 18 fewer than in March and 89 fewer than one year ago. Headcount declined to 8,180 employees, down 1% quarter on quarter and 8% year on year.

Speaker #2: These actions are part of the restructuring program, with the objective of increasing efficiency and agility while preserving the reach and service capabilities of our franchise.

Speaker #2: Slide 13 shows that capital and liquidity remain key strengths. On the left, our Tier One capital ratios stood at 28%, compared with an 11.5% regulatory requirement.

Speaker #2: On the right, the loan-to-deposit ratio increased to 79%, while liquid assets remained equivalent to 74% of deposits. Our capital and liquidity positions therefore continue to provide significant capacity to support growth and elevate strategic opportunities.

Nicolás Torres: Our capital and liquidity positions, therefore, continue to provide significant capacities to support growth and generate strategic opportunities. Before opening the call for questions, I would like to spend a few minutes discussing our term transformation. I will now let Juan Parma, our CEO, to comment on strategy.

Speaker #2: Before opening the call for questions, I would like to spend a few minutes introducing our longer-term transformation. So I will now ask Juan Parma, our CEO, to comment on strategy.

Speaker #1: Good morning, everyone. Pleased to be here with you. I'm going to quickly cover a couple of slides regarding our trajectory to 2030—basically, the execution of our strategic plan that we presented back in December last year.

Juan Parma: Good morning, everyone. Pleased to be here with you. I am going to cover quickly a couple of slides of our trajectory to 2030, basically the execution of our strategic plan that we presented back in December last year. As a recap, our purpose is to be the leading bank for a thriving Argentina, recognized for excellence in customer service and value proposition, with four strategic pillars and four enablers. The four strategic pillars are simplicity, which means providing customers with simple, intuitive, and increasingly digital day-to-day effective experiences. That takes us to the next phase, which is once customers find us simple to operate, they will give us our primacy. As we know, primary customers are eight to nine times more profitable than non-primary ones. It is critical to move to the second pillar, which is moving customers from non-primary to primary. The third one is development.

Speaker #1: So, as a recap, our purpose is to be the leading bank for a thriving Argentina, recognized for excellence in customer service and value proposition, with four strategic pillars and four enablers.

Speaker #1: The four strategic pillars are simplicity, which means providing customers with simple, intuitive, and increasingly digital day-to-day effective experiences. That takes us to the next phase: once customers find it simple to operate, they will give us their primacy. As we know, primary customers are eight to nine times more profitable than non-primary ones.

Speaker #1: So it's critical to move to the second pillar, which is moving customers from non-primary to primary. The third one is development, which has to do with helping and supporting our customers to develop into the future with wealth management, with long-term lending, and with insurance to protect their wealth, their families, and their lives.

Juan Parma: That has to do with helping and supporting our customers to develop into the future with wealth management, with long-term lending, with insurance to protect their wealth, and their families, and their lives. We multiply the value of our customers with more cross-sell, with future-looking value propositions. Finally, what has to do with how do we service our customers, which has to do with the application of data technology, internet, artificial intelligence in our distribution models, while keeping the human touch. That is digital plus human. Of course, as enablers take data and AI, our talent, efficiency to fund our investment in strategic areas. We need to reduce our physical structure, our less value-adding expenses to fund our investment into the growth areas, and financial risk management to make our results sustainable into the future.

Speaker #1: So, we multiply the value of our customers with more cross-sell opportunities and future-looking value propositions. And finally, regarding how we service our customers.

Speaker #1: This has to do with the application of data technology and artificial intelligence in our distribution models, while keeping the human touch—that's digital plus human.

Speaker #1: And of course, as enablers, take data and AI, our talent, and efficiency to fund our investment in strategic areas. We need to reduce our physical structure.

Speaker #1: Our less value-adding expenses will fund our investment into the growth areas. And finally, risk management will make our results sustainable into the future. The good thing is that this is our first year of the execution of the five-year plan, and it's under execution.

Juan Parma: The good thing is that this is our first year of the execution of the five-year plan, and it is under execution. We are moving ahead with the transformation of the bank following these four strategic pillars. For example, and this is just example, this is not taxative, it is just some examples of the things that the bank has deployed across this Q2 of the year. With a pillar of simplicity, for example, we have almost completed the deployment of the new retail banking app. We have unified all onboarding, digital onboarding processes for retail customers. We have launched extended hours to operate during the weekend, through the weekends for commercial customers, and much more on primacy. We have launched a first-mover loyalty program. We are the first bank using loyalty programs as the ones that airlines or some well-advanced fintechs and digital banks use globally.

Speaker #1: We are moving ahead with the transformation of the bank, following these four strategic pillars. For example—and this is just an example, this is not exhaustive, it's just some examples of the things that the bank has deployed across this second quarter of the year—within the pillar of simplicity, for example, we have almost completed the deployment of the new retail banking app. We have unified all digital onboarding processes for retail customers. We've launched extended hours to operate during the weekends for commercial customers, and much more on primacy.

Speaker #1: We've launched a first-mover loyalty program. We're the first bank using loyalty programs like the ones that airlines or some well-advanced fintechs and digital banks use globally.

Speaker #1: We're the first bank in Argentina to do this. This will help—this will create the platform for us to move, at scale, customers from non-primary to primary.

Juan Parma: We are the first bank in Argentina to do this. This will create a platform for us to move upscale customers from non-primary to primary. We are moving also with a relationship pricing facility to be sure that we price each customer according to their profitability potential, their risk, and their loyalty. We are moving ahead with one of the initiatives of the strategic plan that will help primacy with commercial customers, which is the launch of our acquiring platform. On development, many things here as well. Our wealth management app is live. Insurance was an area that we had underdeveloped in the bank, and we have launched auto insurance across the network, which will be a driver of future fee income growth.

Speaker #1: We are also moving forward with a relationship pricing facility to ensure that we price each customer according to their profitability potential, their risk, and their loyalty.

Speaker #1: We're moving ahead with one of the initiatives of the strategic plan that will help primacy with commercial customers, which is the launch of our acquiring platform.

Speaker #1: On development, many things here as well. Our wealth management app is live. Insurance was an area that we had underdeveloped in the bank, and we have launched auto insurance across the network, which will be a driver of future thinking and growth.

Speaker #1: And we are preparing for the launch of Banco Macro's private bank proposition and hiring, but also preparing our talent with a cutting-edge, innovative Wealth Private Banking Academy for our people.

Juan Parma: We are preparing for the launch of a Banco Macro private bank proposition, and are hiring, but also preparing our talent with a cutting-edge innovative wealth private banking academy for our people. Finally, on digital plus human, another breakthrough of the quarter is that we launched the first conversational banking WhatsApp channel in the industry. 6 million customers can operate with the bank intuitively, using day-to-day language, sending us audios, sending us images, sending us text in day-to-day language, and our AI agent can respond. No other bank is doing this at this scale in Argentina, so this is also giving us a competitive differentiation, using and making the use of AI in banking in Argentina real. We continue with the transformation of the physical network, reducing our number of branches, but also modernizing and investing in the wealth centers, in the commercial centers, in what we call hubs.

Speaker #1: Finally, on digital plus human, another breakthrough of the quarter is that we launched the first conversational banking WhatsApp channel in the industry. You can customers can have a six million customers can operate with the bank intuitively using day-to-day language sending us audios, sending us images, sending us text, in day-to-day language, and our AI agent can respond.

Speaker #1: No other bank is doing this at this scale in Argentina. So, this is also giving us a competitive differentiation, using and making the use of AI in banking in Argentina real.

Speaker #1: We continue with the transformation of the physical network, reducing our number of branches, but also modernizing and investing in the wealth centers, in the commercial centers, in what we call hubs. So we are reducing square footage.

Juan Parma: We are reducing square footage, we are reducing numbers of branches, but at the same time, investing in these customer service centers to service the segments that are most profitable for the bank. This is basically what is going on. There is much more under execution. We expect to continue bringing to these calls quarter by quarter, the progress that we are making on our way to 2030. Of course, there are some variables in the macroeconomic context and the political context that are not in our control. We will continue navigating the situation in this pre-electoral year, but we remain confident of the future of Argentina, and that is why we will continue doing our job in building the bank of the future for a thriving Argentina. Thank you, Austin.

Speaker #1: We are reducing the number of branches, but at the same time investing in these customer service centers to serve the segments that are most profitable for the bank.

Speaker #1: So, this is basically what is going on. There's much more under execution. We expect to continue bringing to these calls, quarter by quarter, the progress that we are making on our way to 2030.

Speaker #1: Of course, there are some variables in the macroeconomic context and the political context that are not in our control. We will continue navigating the situation in this pre-electoral year, but we remain confident in the future of Argentina, and that's why we will continue doing our job in building the bank of the future for a thriving Argentina.

Speaker #1: Thank you.

Speaker #2: Thank you, Juan. This concludes our prepared remarks. At this time, we would like to take any questions you may have. Operator, please open the line for Q&A.

Nicolás Torres: Thank you, Juan. This concludes our prepared remarks. At this time, we would like to take the questions you may have. Operator, please open the line for Q&A.

Speaker #3: Okay. At this time, we are going to open it up for questions and answers. If you would like to ask a question, please press the Q&A button at the bottom of the screen, or to ask a question via audio, click on "Raise Hand."

Operator 2: Okay. At this time, we are going to open it up for questions and answers. If you would like to ask a question, please press the Q&A button at the bottom of the screen. Or to ask a question audio, click on Raise Hand. We will then receive a request to activate your microphone. One moment please, for the first question. Our first question comes from Yuri Fernandes with J.P. Morgan.

Speaker #3: We will then receive a request to activate your microphone. One moment, please, for the first question. Our first question comes from Yuri Fernandez with J.P. Morgan.

Speaker #4: Hi, all. Good morning, and thank you for the opportunity to ask questions. I have a follow-up on asset quality, and thank you for the slide presenting some of the metrics.

Yuri Fernandes: Hi, all. Good morning, and thank you for the opportunity of asking questions. I have a follow-up on asset quality, and thank you for the slide presenting some of the metrics. It is clear that it was this model update, that drove some adjustments here. But still, there was an ongoing worsening and a drop on your coverage ratio. If you can give us just some outlook on how do you see cost of risk, how do you see NPLs evolving for the H2. Regarding the coverage, if this would be the minimum, because I know Macro still has a good level when we compare to some peers. But the delta narrow now this quarter. If you can also give us a message regarding the coverage ratio. Thank you.

Speaker #4: It is clear that it was this model update, right, that drove some adjustments here. But still, there was an ongoing worsening and a drop in your coverage ratio, right?

Speaker #4: So, if you could give us just some outlook on how you see the cost of risk, how you see NPLs evolving for the second half, and regarding the coverage—if this should be like the minimum—because I know Macro still has a good level when we compare to some peers, but the delta narrowed now, right, this quarter.

Speaker #4: So, if you can also give us a message regarding the coverage ratio. Thank you.

Speaker #2: Thank you. This is Jorge Cadinski. Thanks for your question. Yes, in terms of asset quality, I think across the board, the second quarter for the Argentine market was about the worst in terms of asset quality deterioration in NPLs.

Juan Parma: Hi, Yuri. This is Jorge Scarinci. Thanks for your question. Yes, in terms of asset quality, I think across the board, the Q2 in the Argentine market was about a quarter in terms of asset quality deterioration in NPLs. Basically, what we saw at some point is that the deterioration on the consumer portfolio continue, maybe at a lower pace than the one that we saw in the Q1. There were some also pickup in the rhythm of deterioration on the company's portfolio. I could say that in terms of NPLs, and I will put that it is very important to make the difference between our own risk customers and the contagion of our own customers with being non-recurrent in other banks or digital wallets here.

Speaker #2: Basically, what we saw at some point is that the deterioration on the consumer portfolio continued, maybe at a lower pace than the one that we saw in the first quarter.

Speaker #2: There was also some pickup in the rhythm of deterioration on the company's portfolio. I could say that in terms of MPLs, and we put that it is very important to make the difference between our own risk customers and the ones who have contagion, meaning our own customers being non-recurrent in other banks or digital wallets here.

Speaker #2: So, it is very important to highlight the difference between the 4.1 in our own risk and the 6.3 with the contagion there. Also, we posted something similar on coverage ratios. Both looking at stage three, the coverage ratio is almost 149%.

Jorge Scarinci: So it is very important to highlight there the difference between the 4.1 in our own risk and the 6.3 with the contagions there. Also, we both see similar on coverage ratios, both looking at Stage 3, the coverage ratio is almost 149%. That is something that we are cautiously looking at, of course, it is looking very healthy. In terms of the 95.4 that is coming down from the 109.8% total coverage compared to the previous quarter. That is something that we were questioning because we were the only bank being above the 100% level before. The rest of the system was going downwards. We did the same, but always

Speaker #2: That is something that we are cautiously looking at. Of course, it’s looking very healthy. In terms of the 95.4%, that is coming down from the 109.8% total coverage compared to the previous quarter. That is something that we were questioning because we were kind of the only bank being above the 100% level before.

Speaker #2: The rest of the system was going downwards, so we did the same, but always keeping an eye on the Stage Three coverage ratio, which is very important for us.

Jorge Scarinci: keeping an eye on the Stage 3 coverage ratio. That is very important for us. That being said, I would say that for the end of the year, we think that cost of risk that was down in this quarter, compared to the previous one, we are thinking to be between 6.5% and 7% cost of risk by the end of 2026, and NPLs to be ranging between 5.5% and 6%. Those are in terms of NPLs, about talking about the total portfolio, not Stage 3. Stage 3, of course, we are looking to be below 4% by far by the end of 2026. In terms of coverage ratio, Yuri, again, for the moment, we are not seeing the total coverage ratio going below 90%. We have to see what is going on in the industry going forward.

Speaker #2: So, that being said, I would say that for the end of the year, we think that cost of risk, which was down this quarter compared to the previous one, we are expecting to be between 6.5% and 7% cost of risk by the end of '26, and NPLs to be ranging between 5.5% and 6%.

Speaker #2: Those are in terms of MPLs, about talking about the total portfolio, not Stage 3. Stage 3, of course, we are looking to be well below 4% by the end of '26.

Speaker #2: And in terms of coverage ratio, Yuri, again, we for the moment, we are not seeing the total coverage ratio going below 90. We have to see what's going on in the industry going forward, but that is something that we that number, we have it as a not as a barrier, but a kind of a target.

Jorge Scarinci: But that is something that we, that number, we have it as a, not a barrier, but a kind of a target. But of course, the important one is the Stage 3, that for sure is going to continue well above the 100% level by the end of the year.

Speaker #2: But of course, the important one is stage three, which for sure is going to continue well above the 100% level by the end of the year.

Speaker #4: Not super clear, Jorge. Thank you for the numbers. And if I may, a second question, just on growth. I think last week there was a measure to flexibilize a little bit again the dollar lending, right?

Yuri Fernandes: No, super clear, Jorge. Thank you for the numbers. If I may, a second one, just on growth. I think last week there was a measure to flexibilize a little bit again, the dollar lending, right? I think there is a cap on 15% of your deposits. I know Macro, you were already lending in dollars with your own resources. How you see this measure, Jorge? Also the loan outlook. Should we see an acceleration from here? How are you seeing overall? I guess your former guidance of 15% to 20% on real growth may be a little bit challenging. I do not know if with this new measure, maybe we can see better dynamism for growth in Argentina. Thank you.

Speaker #4: I think there is a cap at 15% of your deposits. I know, Macro, you were already lending in dollars with your own resources. How do you see this measure?

Speaker #4: Jorge, and also the loan outlook—you know, should we see an acceleration from here? How are you seeing overall, you know, I guess your former guidance of 15 to 20% on real growth—maybe a little bit challenging.

Speaker #4: So, I don't know if with this new measure, maybe we can see, you know, better dynamism for growth in Argentina. Thank you.

Speaker #2: Yes, Yuri. What we are seeing is something that relates to what Juan Palma commented before. We are still at the beginning of the pre-electoral year, and of course, this government has been very precise and has put a lot of focus on maintaining inflation under control.

Jorge Scarinci: Yes, Yuri. What we are seeing is something that is related to what Juan Pablo commented before. We are just in the beginning of the pre-electoral year, and of course, this government has been very precise and making a lot of focus on maintaining inflation under control. What we are seeing that is have an impact on what we are seeing nowadays in the domestic interest rates that have increased a little bit compared to what happened in Q2. That is why our forecast for loan growth is being reduced to level of around 5% in real terms and maybe slightly downwards. This makes a range between 2% and 5% in real terms for the whole portfolio. Here we are assuming that the peso loans will grow until the end of the year in a similar rate than the monthly inflation figure.

Speaker #2: And what we are seeing is that it has had an impact on what we are seeing nowadays in the domestic interest rate, which has increased a little bit compared to what happened in the second quarter.

Speaker #2: So that's why our forecast for long growth is being reduced to a level of around 5% in real terms, and maybe slightly downwards. So let's make a range between 2% and 5% in real terms for the whole portfolio.

Speaker #2: And here we are assuming that the peso loans will grow until the end of the year, at a similar rate to the monthly inflation figure.

Speaker #2: In terms of the dollar-denominated loans, we are also assuming that they will grow at 2 or 2.5% a month, and we are also assuming that there's going to be a slight devaluation of the peso between June and December of around 12 or 13%.

Jorge Scarinci: In terms of the dollar-denominated loans, we are also assuming that they will grow at a 2%, 2.5% a month. Also we are assuming that it is going to be a slight devaluation of the peso between June and December of around 12%, 13%. If you do the math there, you can get to the level of between 2% and 5% real terms that we are talking to. In relation to the new regulation, new measure that the Central Bank of the Argentine Republic announced, where banks cannot lend up to 15% of US dollar deposits to those companies that are not generating US dollars. We think that is something that will bring some growth to the portfolio. For the moment, we are not expecting a boom or a huge increase in the near term, but this is something that maybe could have more impact in 2027.

Speaker #2: So, if you do the math there, you can get to the level of between 2% and 5% in real terms that we are talking about.

Speaker #2: In relation to the new regulation, the new measure that the central bank announced, where banks cannot lend up to 15% of domestic—sorry, of US dollar deposits—to those companies that are not generating US dollars, we think that that is something that will bring some growth to the portfolio.

Speaker #2: For the moment, we are not expecting a boom or a huge increase in the near term, but this is something that maybe could have more impact in 2027.

Speaker #2: But we see this measure as a positive for the system, and of course for the country.

Jorge Scarinci: But we see this measure as a positive for the system and of course, for the country.

Speaker #4: No, super clear. Thank you very much.

Yuri Fernandes: No, super clear. Thank you very much.

Speaker #2: You're welcome.

Jorge Scarinci: You are welcome.

Speaker #1: Our next question comes from Juliano Jara with Goldman Sachs.

Operator 2: Our next question comes from Juliana O'Hara with Goldman Sachs.

Speaker #5: Hi everyone, good morning, and thank you for taking my questions. I just have two follow-ups. I think one is on your asset quality. I was just wondering if you could share some more color on how your write-offs and your recovery trends are going, and how you expect them to trend going forward.

Juliana O'Hara: Hi, everyone. Good morning, and thank you for taking my questions. I just have two follow-ups. I think one is on your asset quality. I was wondering if you could share some more color on how your write-offs and your recovery trends are going, and how you expect it to trend going forward. The second one is on loan growth. Next year, you have an election year, and I think loan growth this year should be a little bit more muted than we expected. How do you think, and if you could share already some broad expectations for loan growth next year, would be super great. Thank you.

Speaker #5: And the second one is on loan growth. Next year, you have an election year, and I think loan growth this year should be a little bit more muted than we expected.

Speaker #5: So, how do you think, and if you could share already some broad expectations for loan growth next year, that would be super great. Thank you.

Speaker #2: Hi Juliana. In terms of the first question, the write-off policy is when the debt or the client reaches category five, and it's a 100% provision. We do a write-off there.

Jorge Scarinci: Hi, Juliana. In terms of your first question, write-off policy is when the debtor or the client reach Category 5, and it is a provision 100%, we do a write-off there. That is something that we have been carrying out this policy for many years, and we continue with the same one, and that is going to be the policy going forward. In terms of recoveries, for the moment, we are seeing some little recoveries on the loans that have been written off. We think that recoveries are going to be slightly bigger in 2027, when we think that the cycle is going to enter into a more positive phase. In terms of your second question, honestly, I think it is a bit early to make a guidance for loan growth for 2027.

Speaker #2: That is something that we have been carrying out as policy for many years, and we continue with the same one. That is going to be the policy going forward.

Speaker #2: In terms of recoveries, for the moment, we are seeing some small recoveries on the loans that have been written off. We think that recoveries are going to be slightly bigger in 2027, when we believe the cycle is going to enter into a more positive phase.

Speaker #2: In terms of your second question, honestly, I think it's a bit early to provide guidance for loan growth for 2027. Honestly, we would like to see how we finish 2026, but also consider the macroeconomic variables in 2027.

Jorge Scarinci: Honestly, we would like to see how we finish 2026, but also the macroeconomic variables in 2027. For the moment, we are having very preliminary guidance from the economies that we work with. Just give me at least one more quarter to give the 2027 guidance for loan growth.

Speaker #2: At the moment, we are receiving very preliminary guidance from the economists that we work with. So, please give me at least one more quarter before I can provide the 2027 guidance for loan growth.

Speaker #1: Our next question comes from Ernesto Gabilondo with Bank of America.

Operator 2: Our next question comes from Ernesto Gabilondo with Bank of America.

Speaker #6: Thank you. Hi, good morning, Juan, Jorge, and Nicolas. Thanks for the opportunity to ask questions. My first question will be on the political side.

Ernesto Gabilondo: Thank you. Hi, good morning, Juan, Jorge, and Nicolás. Thanks for the opportunity to ask questions. My first question will be on the political side. We have started to see some kind of surveys or initial polls ahead of the presidential election. I think it is too soon, but we are starting to see them. Can you provide us, what are you seeing on your side? How is the business sentiment? How is the consumer confidence ahead of the election? For my second question is on your earnings expectations and ROE evolution throughout the rest of the year. Your recurring ROE, the adjusted ROE is already at a double digit. How should we think about the evolution of this ROE that in Q2, the adjusted one was at 14%? How should we think for the H2 and for the full year? Thank you.

Speaker #6: We have started to see some kinds of surveys or initial polls ahead of the presidential election. I think it's too soon, but we are starting to see them.

Speaker #6: So, can you provide us with what you are seeing on your side? How is the business sentiment? How is consumer confidence ahead of the election?

Speaker #6: And for my second question, it is on your earnings expectations and RWE evolution throughout the rest of the year. Your recurring ROE, the adjusted ROE, is already in the double digits.

Speaker #6: So how should we think about the evolution of this ROE? In the second quarter, the adjusted one was at 14%. How should we think about it for the second half and for the full year?

Speaker #6: Thank you.

Speaker #2: Maybe I can take the first question on the political side. As you can imagine, we try to avoid making forward-looking statements or predictions in terms of politics.

Juan Parma: Maybe I can take the first question. On the political side, as you can imagine, we try to avoid making forward-looking statements or predictions in terms of politics. Having said that, it is clear, as Jorge mentioned, that this is a pre-electoral year, and that as the election year approaches, unless there is a super clear winner coming to the polls, that creates a bit more chances of volatility. The Central Bank of the Argentine Republic has been preparing for that from a fiscal standpoint, from an FX standpoint, from an FX reserve standpoint, which I think is welcome. Preparing for what will likely happen, which is that we will see some more volatility. However, I must say that comparing this pre-electoral year with other pre-electoral years in the past, the good sign is that USD deposits remain at record highs, which is a good sense of confidence from the public.

Speaker #2: Having said that, it is clear, as Jorge mentioned, that this is a pre-electoral year. And as the election year approaches, unless there is a super clear winner coming through the polls, that creates a bit more chance of volatility.

Speaker #2: The government and the central bank have been preparing for that from a fiscal standpoint, from an FX standpoint, from an FX reserve standpoint, which I think is welcome.

Speaker #2: Preparing for what will likely happen, which is that we will see some more volatility. However, I must say that comparing this pre-electoral year with other pre-electoral years in the past, the good sign is that U.S. dollar deposits remain at record highs.

Speaker #2: Which is a good sense of confidence from the public. But it is what it is. It's a pre-electoral year, and we will have some more volatility as usual.

Jorge Scarinci: But it's what it is. It's a pre-electoral year, and we will have some more volatility, as usual. Again, that said, we believe that the government is preparing well for that, and much better than in previous years. Thanks, Juan. Ernesto, in terms of ROE, yes, we are increasing our ROE for 2026. The previous level for the adjusted ROE was in the area of 8%. Now we are moving up this guidance to the area of 12% for the average for 2026. Basically, there was a good H1 in terms of margins. Margins remain much better than expected. We believe that going forward, it will maintain this trend. So that's where we are increasing the ROE or the adjusted ROE target from 8 to area of 12%.

Speaker #2: But again, that said, we believe that the government is preparing well for that and much better than in previous years. Thanks, Juan. And Ernesto, in terms of ROE, yes, we are increasing our ROE for 2026.

Speaker #2: The previous level for the adjusted ROE was in the area of 8%. Now, we are moving up this guidance to the area of 12% for the average for 2026.

Speaker #2: Basically, there was a good first half in terms of margins; margins remain much better than expected. We believe that, going forward, it will maintain this trend.

Speaker #2: So that's where we are increasing the ROE, or the adjusted ROE target, from 8 to the area of 12%.

Speaker #6: Perfect. I was super careful. Thank you very much, Juan and Jorge.

Ernesto Gabilondo: Perfect. No, super helpful. Thank you very much, Juan and Jorge.

Speaker #2: You're welcome. Welcome.

Jorge Scarinci: You are welcome. Welcome.

Speaker #1: Our next question comes from Brian Flores with Citi.

Operator 2: Our next question comes from Brian Flores with Citi.

Speaker #7: Hi team, good morning. Thank you for the opportunity. I wanted to ask you two things. The first one is, looking at your 2030 strategic plan, I just wanted to check which levers should drive the ROE to your midterm target.

Brian Flores: Hi, team. Good morning. Thank you for the opportunity. I wanted to ask you two things. The first one is looking at your 2030 strategic plans. Just wanted to check which levers should drive the ROE to your midterm targets. First, obviously, if you can disclose it, where do you see the bank in terms of real ROE? Then what could drive it? I am asking this because, as Jorge was mentioning, it seems that NIMs should structurally come down, right? Maybe to be compensated with higher volumes. You are running at an efficiency ratio that seems historically good for you. But also you will need to be investing into this new, I would say, customer acquisition strategies, right?

Speaker #7: And first, obviously, if you can disclose it, where do you see the bank in terms of real ROE? And then, what could drive it?

Speaker #7: I'm asking this because, as Jorge was mentioning, it seems that NIMs should structurally come down, right? Maybe to be compensated with higher volumes. And you're running at an efficiency ratio that seems historically good for you.

Speaker #7: But also, you will need to be investing in these new, I would say, customer acquisition strategies, right? So I just wanted to check, in your view, what levels of ROE are you looking for on a sustainable basis?

Brian Flores: Just wanted to check, in your view, what levels of ROE are you looking in a sustainable basis? Then what are the key levers that will get you there? Then my second question is more of a sentiment one. Maybe this is something that we on the sales side, we are scratching our heads with. Maybe you, obviously you can help us here. Maybe we can scratch our heads together. But we are wondering here, you are revising upwards ROE. I think the industry as a whole is turning around in terms of unit economics. However, valuation seems to be coming down in a very, I would say, sharp way, right? Clearly the market is worried about something.

Speaker #7: And then, what are the key levers that will get you there? And then, my second question is more of a sentiment one, and maybe this is something that we on the sell side are scratching our heads with, and maybe you—obviously—you can help us here.

Speaker #7: Maybe we can put our heads together. But we're wondering here—you’re revising upwards ROE, and I think the industry as a whole is turning around in terms of unit economics.

Speaker #7: However, valuation seems to be coming down in a very, I would say, sharp way, right? So, clearly, the market is worried about something. I just wanted to check with you, in your view, if it could be the level of growth that, as you were mentioning in your own guidance, is coming down—maybe the perspectives have shifted—or do you think it might be on the political side, as Ernesto was saying, in terms of big uncertainties in 2027 and forward, right?

Brian Flores: Just wanted to check with you, in your view, if it could be the level of growth that, as you were mentioning in your own guidance, is coming down. Maybe the perspectives have shifted. Or is it, do you think maybe on the political side, as Ernesto was saying, in terms of big uncertainties in 2027 and forward, right? I know it is a tough question, but any insights here, I think it is great. Thank you.

Speaker #7: I know it's a tough question, but any insights here I think are great. Thank you.

Speaker #2: Hi, Brian. Let's start with the last part, the last question in terms of ROE and valuations. Of course, from a corporate perspective, we are increasing ROE from the 8% adjusted level that we mentioned before to the area of 12%.

Jorge Scarinci: Hi, Brian. Let us start with the last part, with the last question in terms of the ROE and the valuations. Of course, our view from a corporate perspective, we are increasing ROE from the 8% adjusted level that we mentioned before to the area of 12%. It is pretty clear that the H1 was much better than what we had expected. We think that the trend at some point will be maintained in the coming two quarters. I agree with you that valuations or stock prices, not only for the banking sector, but for the whole Argentine universe, are down when you look at on a year-to-date basis. I think that that is basically of, at some point, not only, let me say, local risk, but at some point, I think that the international scenario is becoming a bit more scary. Let us put it in that way.

Speaker #2: And it's pretty clear that the first half was much better than what we had expected. And we think that the trend, at some point, will be maintained in the coming two quarters.

Speaker #2: I agree with you that valuations, or stock prices, not only for the banking sector but for the whole Argentine universe, are down when you look at it on a year-to-date basis.

Speaker #2: And I think that is basically, at some point, not only, let's say, a local risk, but at some point I think that the international scenario is becoming a bit more scary, let's put it that way. When you look at US 10-year or 30-year interest rates, they are up.

Jorge Scarinci: When you look at US 10-year or 30-year interest rates, they are up. When you look at the US financial fiscal deficit, it is huge. The amount of the debt is very high. So at some point, I think that investors are trying to move into a more safety assets. You are seeing now gold prices are going up. I think that at some point it's not only local risk, I think that the world's markets are a bit volatile and trying to find the best place to allocate assets. It's related to that according to our view. In terms of the first part of your question, in terms of your 2030 strategy, I will let Juan to comment on that.

Speaker #2: When you look at the US fiscal deficit, it is huge. The amount of debt is very high, so at some point, I think that investors are trying to move into safer assets.

Speaker #2: You are seeing now that gold prices are going up. So I think that, at some point, it's not only local risk. I think that the world’s markets are a bit volatile and are trying to find the best place to allocate assets.

Speaker #2: It's related to that, according to our view. In terms of the first part of your question, regarding your 2030 strategy, I will let Juan comment on that.

Speaker #3: Yeah, sure. I would add to the previous comments that Jorge made on valuations, that adding to the global term, it's also the fact, as we mentioned before, that we are navigating a pre-electoral year.

Juan Parma: Yeah, sure. I would add to the previous comments that Jorge made on valuations, that adding to the global turmoil, it's also the fact, as we mentioned before, that we are navigating a pre-electoral year. So part of what you're seeing in the valuations not only of banks, but in general of Argentinian assets has to do with that. So we don't see it as a long-term concern, but something that should be cleared out once we pass next year elections and the political outlook becomes more clear for the next four-year term. In terms of the levers to achieve long-term ROE, you're right.

Speaker #3: So, part of what we are seeing in the valuations—not only of banks, but in general, of Argentina and its assets—has to do with that.

Speaker #3: So we don't see it as a long-term concern, but rather as something that should be cleared up once we get past next year's elections and the political outlook becomes more clear for the next four-year term.

Speaker #3: In terms of the levers to achieve long-term ROE, you're right. If we believe that the central scenario is one where Argentina continues its stabilization process, and inflation continues going down and rates continue going down, there will be a trade-off. On one hand, margins will continue compressing, and on the other hand, the financial system will expand, where volumes should, in the long term, more than compensate for the reduction in margins.

Juan Parma: If we believe that the central scenario is one where Argentina continues its stabilization process, and inflation continues going down and rates continue going down, there will be a trade-off with, on one hand, margins continue compressing, and on the other hand, the financial system expanding, where volumes should long-term more than compensate for the reduction in margins. But short-term is the opposite. Typically, margins compress before the volume comes. So that's the transition that we see for the next five years in Argentina in this central scenario. Margins compressing as inflation rates go down, and volumes, as we harvest the opportunity of moving loans to GDP, which today stand at 11%, to regional averages of 30%, 40%, 50%. That's the macro context for the industry. In our case, the levers are capturing that growth and above, so growing market share, growing volumes, growing scale.

Speaker #3: But in the short term, it's the opposite. Typically, margins compress before the volume comes. So that's the transition that we see for the next five years in Argentina, in this central scenario.

Speaker #3: Margins compress as inflation and rates go down, and volumes increase as we harvest the opportunity of moving loans to GDP, which is, by today’s standard, 11%, toward regional averages of 30%, 40%, 50%.

Speaker #3: That's the macro context for the industry. In our case, the levers are capturing that growth and more—so, growing market share, growing volumes, and growing scale.

Speaker #3: But also, moving, harvesting that from not only acquiring new customers, but also moving primary customers up—the primary customers are at 30%. We expect to end our strategic planning period with 50%.

Juan Parma: But also harvesting that from not only acquiring new customers but also moving primary customers up. Today, primary customers are 30%. We expect to end our strategic planning period with 50%, and that's a significant driver of profitability, efficiency, and market share. The other lever is fee income, which is really important. As Argentina starts reducing poverty and increasing its middle class and its affluent class, capturing fee revenue from insurance, from wealth management will be crucial, and that's not subject to margin compression. That's why you saw us talking about development, about insurance, about wealth management, about private banking and everything that we are planting to be prepared to lead in harvesting that opportunity.

Speaker #3: And that's a significant driver of profitability, efficiency, and market share. The other lever is fee income, which is really important. And as Argentina starts reducing poverty and increasing its middle class and its affluent class, capturing fee revenue from insurance and from wealth management will be crucial.

Speaker #3: And that's not subject to margin compression. That's why you saw us talking about development, about insurance, about wealth management, about private banking, and everything that we are planting to be prepared to lead in harvesting that opportunity.

Speaker #3: And third lever is efficiency. You mentioned how we will fund our investments in these growth areas while maintaining our efficiency. Well, the good news is that we still have a big physical network.

Juan Parma: The third lever is efficiency. You mentioned how we will fund our investments in these growth areas while maintaining our efficiency. Well, the good news is that we still have a big physical network. We still have opportunities to recycle costs from non-productive costs to more value-adding investments. That is what we have been doing. This is not just the plan, this is real. As Jorge mentioned, we have been reducing significantly our branches network and our FTE, and that is what we are using to fund growth initiatives while keeping our efficiency ratio in good levels.

Speaker #3: We still have opportunities to recycle costs from non-productive areas to more value-adding investments. And that's what we've been doing—this is not just the plan.

Speaker #3: This is real. As Jorge mentioned, we've been significantly reducing our branch network and our FTE. That's what we're using to fund growth initiatives while keeping our efficiency ratio at good levels.

Speaker #1: No, super clear. Jorge and Juan, if I may, just a follow-up on the level that you envision in 2030 as the sustainable levels of ROE. Do you have a specific target in mind?

Brian Flores: No, super clear, Jorge and Juan. If I may just follow up on the level that you envision in 2030 as the sustainable levels of ROE. Do you have a specific target in mind?

Speaker #2: Yes. I mean, going forward—and of course, sustainable implies—I mean, with Argentina's inflation going into single digits, and at some point, if we continue like this, we assume that in 2028, Argentina will leave aside inflation accounting. So the ROE reported in 2030 should be nominal.

Jorge Scarinci: Yes. Going forward, and of course, sustainable implies, with Argentina inflation going into single digits at some point, if we continue like this, we assume that in 2028, Argentina will leave aside the inflation accounting. So the ROE reported in 2030 should be nominal. So we are expecting to be in the area of about 20% ROE by 2030.

Speaker #2: So, we are expecting to be in the area of about 20% ROE by 2030.

Speaker #1: Super clear. Thank you.

Brian Flores: Super clear. Thank you.

Speaker #2: You're welcome.

Jorge Scarinci: You are welcome.

Speaker #1: Our next question comes from Pedro Leduc with Itaú BBA.

Operator 2: Our next question comes from Pedro Leduc with Itaú BBA.

Speaker #4: Hello everybody. Thank you for the call and for taking my question. Can we explore that part a little bit more? I know it will come down to efficiency, but you've been making a lot of changes in the footprint, and also modernizing the tech and consumer-facing stack.

Pedro Leduc: Hello, everybody. Thank you for the call, and thank you for my question. Can we explore a little bit more that part? I know it will come out to efficiency, but you have been doing a lot of changes in the footprint, but also modernizing the tech and consumer-facing stack. I am trying to square it out when I am modeling it forward as well. Thinking less about efficiency, because top line moves a lot, but more on maybe on real terms, just to see where we are with the balance of savings and investments that you are doing. Thank you.

Speaker #4: And I'm trying to square it out when I'm modeling it forward as well. Thinking less about efficiency, because top line moves a lot, but maybe more in real terms, just to see where we are with the balance of savings and investments that you're doing.

Speaker #4: Thank you.

Jorge Scarinci: Hi, Pedro. Yes, as Juan was commenting before, the idea in terms of branches, by the end of the year, we should be in the area of 370 houses and employees below 8,000 employees. At the same time, of course, as Juan was also commenting, we are investing in technology, in different sectors of the bank in order to modernize systems and so on. I would say that going forward, we are going to see, nominally speaking, maybe similar levels of expenses. In the middle, you will have, of course, a decline in remunerations of employees because we are going to have less employees. We are going to see increasing in software expenses. But of course, going forward, the idea is to dilute this nominal level of expenses within a higher volume of net interest and fee income.

Speaker #3: Hi, Pedro. Yes, I mean, as Juan was commenting before, the idea in terms of branches is that by the end of the year, we should be in the area of 370 houses.

Speaker #3: And employees below 8,000 employees. At the same time, of course, as Juan was also commenting, we are investing in technology in different sectors of the bank in order to modernize systems, and so on.

Speaker #3: So, I would say that, going forward, we are going to see, maybe nominally speaking, maybe similar levels of expenses. In the middle, you will have, of course, a decline in remunerations of employees because we are going to have less employees.

Speaker #3: We are going to see an increase in software expenses. But of course, going forward, the idea is to dilute this nominal level of expenses within a higher volume of net interest and fee income.

Speaker #3: So the idea, going forward, is to work on both sides of the equation: expenses, and the generation of interest and fee income.

Jorge Scarinci: The idea going forward is to work there in both sides of the equation, expenses, and the generation of interest and fee income.

Speaker #4: That's useful. Thank you.

Pedro Leduc: That's useful. Thank you.

Speaker #3: You're welcome.

Jorge Scarinci: You're welcome.

Speaker #1: Our next question comes from Mario Estrella with Itaú.

Operator 2: Our next question comes from Mario Estela with Itaú.

Speaker #5: Hey guys, good morning. Just one question on margins. What we saw this quarter is that funding trends actually went down, but all of that was offset by lower asset yields.

Mario Estela: Hey, guys. Good morning. Just one question on margins. We saw this quarter, what we saw is that funding costs actually went down, but all of that was offset by lower asset yields. What we've seen at the beginning of Q3 is that a little bit more volatility in the local rates. So I was wondering, the evolution of the margins for the rest of the year can be a little bit more challenging given that cost of funds can kind of reverse. At the same time, that asset yields keep on having the pressure that we saw in Q2. So what's the danger here for the evolution of margins in the remainder of the year and for the guidance, for that matter?

Speaker #5: So, what we've seen at the beginning of the third quarter is a little bit more volatility in the local rates. So I was wondering, I mean, the evolution of the margins for the rest of the year can be a little bit more challenging, given that cost of funds can kind of reverse at the same time that asset yields keep on having the pressure that we saw in the second quarter.

Speaker #5: So, what's the danger here for the evolution of margins in the remainder of the year, and for the guidance, for that matter?

Speaker #3: Hi, Mario. I commented this before. I think that the margins the net interest margins that we saw in the first half of the year were slightly wider than the ones that we had expected.

Jorge Scarinci: Hi, Mario. I commented this before. I think that the net interest margins that we saw in H1 of the year were slightly wider than the one that we had expected. We believe that going forward, this level of margins would be maintained. At the beginning of the year, we were expecting to have a net interest margin in the area of 20% as a guidance. Now after H1, I will have to say that we should be about the 20% net interest margin guidance. So, the idea is to relatively maintain the margins in the couple of the next quarters.

Speaker #3: We believe that, going forward, this level of margins will be maintained. I mean, at the beginning of the year, we were expecting to have net interest margin in the area of 20% as guidance.

Speaker #3: Now, after the first half, I will have to say that we should be above the 20% net interest margin guidance. So, the idea is to relatively maintain the margins in the next couple of quarters.

Speaker #5: Okay, that's perfect. And just to confirm what you mentioned about loan growth and the guidance, I believe it was between 15% and 20%.

Mario Estela: Okay, that's perfect. Just to confirm what you mentioned about loan growth. The guidance, I believe, was between 15% and 20%. Do you maintain that guidance or?

Speaker #5: Do you maintain that guidance, or...?

Speaker #3: No, Mario, I mean, that guidance was two quarters ago. Now, the new one is between 2 and 5 in real terms. And I explained the evolution of the peso and dollar loss before.

Jorge Scarinci: No, Mario, that guidance was two quarters ago. Now, the new one is between 2% and 5% in real terms, and I explained the evolution of the peso and dollar loans before.

Speaker #5: Yeah, yeah. That was pretty clear. I was just trying to confirm that. Okay, thank you. Thank you so much.

Mario Estela: Yeah. That was pretty clear. I was trying to confirm that. Okay. Thank you. Thanks so much.

Speaker #3: Welcome, Mario.

Jorge Scarinci: Welcome, Mario.

Speaker #1: Our next question comes from Camila Zevedo with UBS.

Operator 2: Our next question comes from Camila Azevedo with UBS.

Camila Azevedo: Hi, everyone. Thanks for taking my question. I have two questions from my end, two follow-ups. First on growth. I just wanted to get your sense on recent performance of the last month and August, starting August. Also, in Q2 by economic sector or customer segments, and which would be the main drivers behind growth that you are mainly expected by sector as well. Also, how are you seeing retail demand currently? In terms of demand, yes, that's another follow-up in terms of we are seeing the higher spreads, right? Given these higher spreads, how are you seeing demand, and how should we expect demand to evolve in H2 of this year? Thank you.

Speaker #6: Hi everyone, thanks for taking my question. I have two questions from my end, two follow-ups. So, first on growth: I just wanted to get your sense on the recent performance over the last month, and starting August.

Speaker #6: Also, sorry, in the second quarter, could you break down the figures by economic sector or customer segments? Which would be the main drivers behind growth that you are mainly expecting by sector as well?

Speaker #6: And also, how are you seeing retail demand currently? So, in terms of demand, I just wanted—yes, that's another follow-up. In terms of—we are seeing the higher spreads, right?

Speaker #6: So, given these higher spreads, how are you seeing demand, and how should we expect demand to evolve in the second half of this year?

Speaker #6: Thank you.

Speaker #3: Hi, Camila. In terms of growth, what we are seeing, or what we will be seeing in the coming two quarters, is that commercial lending should be outpacing consumer lending.

Jorge Scarinci: Hi, Camila. In terms of growth, what we are seeing, or what we will be seeing in the 2 coming quarters is that commercial lending should be outpacing consumer lending. At some point, the consumer growth is slightly below inflation, and commercial lending is below inflation levels, monthly speaking. We expect that this will continue at least in the next 2 quarters. The sectors, what we are seeing demand are the ones that are the winners within this economic model, which are basically mining, oil, gas, agribusiness. We expect to see some pickup maybe in construction, in the next couple of quarters. We assume that massive consumption sectors, automobile, are kind of the losers within this economic model. So we are not seeing big demand coming from that. That is the idea.

Speaker #3: At some point, the consumer growth is slightly below inflation, and commercial lending is close to inflation levels, speaking on a monthly basis. We expect that this will continue at least for the next two quarters.

Speaker #3: I mean, the sectors where we are seeing demand are the ones that are the winners within this economic model, which are basically mining, oil, gas, and agribusiness.

Speaker #3: We expect to see some pickup, maybe in construction, in the next couple of quarters. And we assume that massive consumption sectors—automobile, for example—are kind of losers within this economic model.

Speaker #3: So, we are not seeing big demand coming from them. So, that is the idea. And within your high-level view of the margins, I think that's something to keep an eye on also. When you look at the net interest margin, we are including interest rates there, but also income coming from the bond portfolio on FX.

Jorge Scarinci: Within your high level of margins, I think that is something to keep an eye on also is that when you look at the net interest margin, we are including interest rates there, but also income coming from the bond portfolio and on effects. So at some point, if you want to dig in that number, you will see at some point that intermediation rates should narrow a little bit. On the other hand, you will have income from bond and on effects compensating that decline on the intermediation spread. That is why we are forecasting some stability in the net interest margin.

Speaker #3: So, at some point, if you want to dig into that number, you will see that intermediation rates should narrow a little bit.

Speaker #3: On the other hand, you will have income from bonds on FX compensating that decline in the intermediation spread. So that's why we are forecasting some stability in the net interest margin.

Speaker #6: Yes, that's super clear. Thank you very much.

Camila Azevedo: Yeah. That is super clear. Thank you very much.

Speaker #3: Welcome.

Jorge Scarinci: Welcome.

Speaker #1: Our next question comes from Pedro of Hainan with Latin Securities.

Operator 2: Our next question comes from Pedro Hoffenhaiden with Latin Securities.

Speaker #7: Hello, Juan Jorge Nicolás. Thank you for taking the call. I wanted to ask, when you look at the MPLs and loan trends, are you seeing any meaningful difference in credit behavior between the interior of the country and the city or province of Buenos Aires?

Pedro Hoffenhaiden: Hello, Juan, Jorge, Nicolás. Thank you for taking the call. I wanted to ask, when you look at the NPLs and loan trends, are you seeing any meaningful difference in credit behavior between the interior of the country and the city or province of Buenos Aires, either in terms of credit demand or delinquency trends?

Speaker #7: Either in terms of credit demand or delinquency trends?

Speaker #3: Hi, Pedro. Well, I mean, because our footprint is more in the interior and less exposed in VA, I think that it's important to look at those banks with more presence in VA to see the trend.

Jorge Scarinci: Hi, Pedro. Well, because our footprint is more in interior and less exposure is in BA, I think that it is important to look at those banks with more presence in BA to see the trend. I think that when you look into our numbers and when you look at our own risk, that is the Stage 3, they are behaving much better than what we could be seeing in terms of the BA clients. But I would say that this is not only a geographic reason, but also is because Banco Macro on its own has a more, let's say, cautious streak, deep insight on the credit policy. So that is also helping, not only the geographic location of the customers.

Speaker #3: I think that when you look into our numbers, and when you look at our own risk—that is, the Stage 3—they are behaving much better than what we could be seeing in terms of the VA clients.

Speaker #3: But I would say that this is not only a geographic reason, but also it's because Banco Macro on its own has a more, I would say, let's say, cautious, strict, deep insight on the credit policy.

Speaker #3: So that is also helping, not only the geographic location of the customers.

Speaker #7: Okay. Thank you, Jorge.

Pedro Hoffenhaiden: Okay. Thank you, Jorge.

Speaker #3: You're welcome.

Jorge Scarinci: You're welcome.

Speaker #1: The next question comes from Federico Cavelli with Edcap.

Operator 2: The next question comes from Federico Cervellino with AdCap.

Speaker #7: Hello everyone. Thanks for taking my question. I want to ask regarding your restructuring plan, if we should expect these expenses to continue in the second half of the year and in 2027.

Federico Cervellino: Hello, everyone. Thanks for taking my question. I want to ask regarding your restructuring plan, if we should expect these expenses to continue in the H2 and in 2027. You guided ROEs

Speaker #7: And you guided ROEs at 12% for the year. How will these expenses impact your reported ROE guidance for the year?

Juan Parma: in 12% for the year, how these expenses will impact ROE and what is your reported ROE guidance for the year?

Speaker #3: Hi, Federico. I mean, yes, the restructuring will continue as we were commenting before. In terms of closing additional branches and some reduction in FTEs, what we are going to see through 2026, you will see, of course, the impact on those costs of layoffs.

Jorge Scarinci: Hi, Federico. Yes, the restructuring will continue as we were commenting before, in order of closing additional branches and some reduction on FTEs. What we are going to see along 2026, you will see, of course, the impact on those costs of layoffs. Of course, in 2027, we are going to see all the savings on this less FTE number and lower number of branches. The adjusted ROE that we forecast of 12% area that we were commenting, I would say that the reported ROE should be ranging in the area of between 9% and 10% approach. Again, we look at the adjusted because it is allowing us to see the impact on, let's say, the clean P&L without the one-time charges.

Speaker #3: And of course, in 2027, we are going to see all the savings on this lower FTE number and lower number of branches. Including the adjusted ROE that we forecast in the 12% area that we were commenting on.

Speaker #3: I would say that the reported ROE should be ranging in the area of between 9 and 10 percent. But again, we look at the adjusted because it's allowing us to see the impact on, let's say, the clean P&L without the one-time charges.

Speaker #7: Okay. Thank you very much.

Federico Cervellino: Okay. Thank you very much.

Speaker #3: Welcome.

Jorge Scarinci: Welcome.

Speaker #1: The next question comes from Titola Barta with Goldman Sachs.

Operator 2: The next question comes from Tito Labarta with Goldman Sachs.

Tito Labarta: Hi. Good morning, Jorge, Juan and Nicolas. Thanks for the call taking my question. Just to follow up a little bit, just to understand, how do you see the health of the consumer? Because we are still seeing NPLs rising, there is a bit of a recovery, but unemployment is still somewhat high. Just on the capacity for consumers to repay these loans, are you just writing off these loans? Are you able to work with some of these consumers? Just to think about your ability to accelerate consumer loan growth, maybe going into next year, just given where the economy is and where the health of the consumer is. Any color on that would be very helpful. Thank you.

Speaker #5: Hi, good morning. Jorge, Juan, and Nicolás, thanks for the call. Thank you. My question is just a follow-up, a little bit, just to understand: how do you see the health of the consumer, right?

Speaker #5: I mean, we're still seeing NPLs rising. There's a bit of a recovery, but unemployment is still somewhat high. Just on the capacity for consumers to repay these loans, are you just writing off these loans?

Speaker #5: Are you able to work with some of these consumers? Just to think about your ability to accelerate consumer loan growth, maybe going into next year, just given where the economy is and where the health of the consumer is. If you can, any color on that would be very helpful.

Speaker #5: Thank you.

Speaker #3: Hi, Tito. How are you? I think that the consumption sentiment for the moment is a bit sluggish. We think that going forward, if we see inflation cooling down, that will be the main driver to see the real wages recovery.

Jorge Scarinci: Hi, Tito. How are you? I think that the consumption sentiment for the moment is a bit sluggish. We think that going forward, if we see inflation cooling down, that will be the main driver to see the real wages recovery, and at some point, we could see in 2027 some recovery on consumption demand. For the rest of the year, again, we are seeing these loans maybe growing in similar levels than inflation. We are not seeing that pickup in 2026, at least on these consumer loans.

Speaker #3: And at some point, we could see, in 2027, some recovery in consumption demand. For the rest of the year, again, we are seeing these loans maybe growing at similar levels to inflation.

Speaker #3: We are not seeing that pickup in 2026, at least on these consumer loans. The only thing that I would add, Jorge, and Alessandro, to your question, is that even in this context, until real wages start to improve and lending capacity from consumers starts to increase, what we are doing internally is recycling our portfolio with better quality—even in this more, if you wish, restrictive scenario for consumers.

Juan Parma: The only thing that I would add, Jorge, and Sandro, to your question, is that even in this context, until real wages start to improve and lending capacity from consumers starts to increase, what we are doing internally is recycling our portfolio with better quality, even in this more, if you wish, restrictive scenario for consumers. For personal loans, for example, 50% of the portfolio is already originated from vintages from around May last year forward, which is when we introduced the first restrictions in our credit policy and became more stringent. My point is, the improvement in NPLs at this point not only depends on the external macroeconomic conditions to improve, but also depends on our own actions.

Speaker #3: For personal loans, for example, 50% of the portfolio is already originated from vintages from around May last year forward, which is when we introduced the first restrictions in our credit policy and became more stringent.

Speaker #3: So my point is, the improvement in NPLs at this point not only depends on the external macroeconomic conditions improving, but also depends on our own actions.

Speaker #3: And that's why we are confident, as Jorge explained before, that we are stabilizing the NPLs when we see the month-by-month performance from May to June, and already June to July.

Juan Parma: That is why we are confident, as Jorge explained before, that we are stabilizing the NPLs when we see the month-by-month performance from May to June and already June to July. That will continue going forward because we already are seeing these new vintages with much better quality starting to impact the books. That is separate or irrespective of potential improvements in consumer purchasing power from mere salary recovery.

Speaker #3: And that will continue going forward because we are already seeing these new vintages, with much better quality, starting to impact the books. And that is separate from, or irrespective of, potential improvements in consumer purchasing power from recovery by our sellers.

Speaker #7: Okay, that's perfect. Thank you very much.

Tito Labarta: Okay, that is perfect. Thank you very much.

Speaker #3: Welcome, Tito.

Jorge Scarinci: Welcome, Tito.

Speaker #1: The next question comes from Lisandro Loveras with 1618. Sorry, you can open your microphone.

Operator 2: The next question comes from Lisandro Lovera with 1618. Sir, you can open a microphone.

Speaker #7: Yes. Can you hear me?

Lisandro Lovera: Yes. Can you hear me?

Speaker #3: Yes. Yes.

Jorge Scarinci: Yes.

Speaker #7: Okay. Congratulations on your results. We saw a 1% decrease in deposits and sharply lower loan guidance. Can you provide an update regarding deposit guidance for the full year?

Lisandro Lovera: Well, congratulations on the results. We saw a 1% decrease in deposits and a sharply lowering loan guidance. Can you provide a printer regarding deposits guidance for the full year? Is it updated? Thanks.

Speaker #7: Is it updated? Thanks.

Speaker #3: Alessandro, yes. I think we are also reducing a little bit the deposit growth for the year to put it in the 10% real area.

Jorge Scarinci: Alessandro, yes. I think we are also traditionally beat the deposits growth for the year to put it in the 10% real area. Basically, again, we are seeing maybe peso deposits not growing or similar levels than inflation. On the other hand, we are seeing dollar deposits maybe peaking or moving upwards slightly above the rhythm of the peso-denominated deposits.

Speaker #3: Basically, again, we are seeing maybe peso deposits not growing or at a similar level as inflation. On the other hand, we are seeing dollar deposits maybe peaking or moving upwards slightly above the rhythm of the peso-denominated deposits.

Speaker #7: Okay. Perfect. Thanks.

Lisandro Lovera: Okay, perfect. Thanks.

Speaker #3: Welcome.

Jorge Scarinci: Welcome.

Speaker #1: The next question comes from Ignacio Snihovsky with Inverse Cheat and Bolsa.

Operator 2: The next question comes from Ignacio Snihovsky with Invertir en Bolsa.

Ignacio Snihovsky: Hi. Good evening. Thank you for taking my questions. The first question is regarding Stage 3 loans, asset quality particular. Do you have some kind of system-wide figures to compare that 4.1 that you reported in Q2? The next question is regarding the excess capital and this probably long-term attractive valuation that banks are trading, if you see any potential acquisition at this moment or in the following month. Thank you very much.

Speaker #6: Hi, good evening. Thank you for taking my questions. The first question is regarding stage three loans—asset quality in particular. Do you have some kind of system-wide figures to compare to that 4.1% that you reported in the second quarter?

Speaker #6: And the next question is regarding the excess capital and these probably long-term attractive valuations at which banks are trading. Do you see any potential acquisitions at this moment, or in the following months?

Speaker #6: Thank you very much.

Jorge Scarinci: Hi, Ignacio. How are you? We do not have many comparison zones on the Stage 3 in the system. We are trying to find out all the data that we can use to compare our 4.1. We assume that we are on the top banks on this ratio. But honestly, we do not have a market comparison tool for the Stage 3. In terms of your second question, yeah. The excess capital that we have, this is something that we constantly mention, that is going to be used not only for M&A, but also for organic growth. In terms of M&A, we are always looking at the markets, and there are always opportunities. Of course, not all those opportunities are suitable for Banco Macro's growth and return appetite. We analyze all what we can.

Speaker #3: Hi, Ignacio. How are you? We do not have many comparisons on the Stage Three in the system. We are trying to find out all the data that we can use to compare our 4.1.

Speaker #3: We assume that we are among the top banks on this ratio. But honestly, we do not have a market comparison for Stage Three.

Speaker #3: In terms of your second question, yes, I mean, the excess capital that we have—this is something that we constantly mention—is going to be used not only for M&A, but also for organic growth.

Speaker #3: In terms of M&A, we are always looking at the markets and there are always opportunities. Of course, not all those opportunities are suitable for Banco Macro's growth and return appetite.

Speaker #3: We analyze all that we can. The idea is to continue, and of course, we think that the consolidation process in the banking sector in Argentina is not finished.

Jorge Scarinci: The idea is to continue. Of course, we think that the consolidation process in the banking sector in Argentina is not finished. Going forward, something would happen. Of course, we will be on alert there. That is our vision in terms of the target for the excess capital.

Speaker #3: So, going forward, something has happened, and of course, we'll be on alert there. And that's our vision in terms of the target for the excess capital.

Speaker #6: Okay. Thank you very much.

Ignacio Snihovsky: Okay. Thank you very much.

Speaker #1: The next question comes from Tex Fort with Carlos Gomez from HSBC. Could you explain the reasons for the increase in risk-weighted assets in the quarter?

Operator 2: The next question comes from Tex with Carlos Gomez, with HSBC. Could you explain the reasons for the increase in risk-weighted assets in the quarter, in particular in operational risks? Is your methodology now different from those of the other banks? Under the new models, what is the level of capital you consider adequate, and how much surplus that you can invest or return to shareholders? The other question from him is, how much longer do you expect to continue your restructuring program? Is your footprint, 400 base sheets, now adequate? Thank you.

Speaker #1: In particular, in operational risks? Is your methodology now different from those of the other banks? And under the new models, what is the level of capital you consider adequate, and how much surplus do you have that you can invest or return to shareholders?

Speaker #1: And the other question from him is: How much longer do you expect to continue your restructuring program? Is your footprint—400 basis points—now adequate?

Speaker #1: Thank you.

Speaker #3: In terms of the first question, there was a new methodology that we implemented in terms of operational risk, and that's basically impacted the level of the excess capital.

Jorge Scarinci: In terms of the first question, there was a new methodology that we implemented in terms of operational risk. That basically impacted on the level of excess capital, even though that the 28% ratio of Tier 1 is the highest among Argentinian banks. USD 2.7 billion of excess capital is very wide. The idea is to make the best use of that excess capital going forward. In terms of the second question, we should be going slightly below the 400 branches, as I mentioned before, in the area of 370 by the end of 2026.

Speaker #3: Even though the 28% ratio of Tier One is the highest among Argentine banks, $2.7 billion of excess capital is very significant. The idea is to make the best use of that excess capital going forward.

Speaker #3: In terms of the second question, I mean, we should be going slightly below the 400 branches as I mentioned before in the area of 370 by the end of 2026.

Speaker #1: Next question comes from Agustina Isidro with PBVA. My question is, what is the loan book breakdown in terms of interest rates—fixed versus floating—and materially?

Operator 2: Next question comes from Augustina Isidro with BBVA AM. Which is the loans book breakdown in terms of interest and rates fixed versus floating and materially?

Jorge Scarinci: Yes, Augustina, you will have all that information in the balances that we publish to the CNV and the stock exchange. There is a very detailed breakdown on all that information.

Speaker #3: Yes, Agustina, you will have all that information in the balance sheet that we published to the CNB and the stock exchange. There is a very detailed breakdown of all that information.

Speaker #1: The next question comes from Arthur Barnes with Deltek. Do you sense that Argentines are feeling more comfortable holding pesos?

Operator 2: The next question comes from Artur Barners with Deltek. Do you sense the Argentinians feeling more comfortable holding pesos?

Speaker #3: I mean, for the moment, I think that pesos are being used for transactional purposes. US dollars are used for savings. And of course, if we continue in this trend of reducing the inflation of the country and, of course, maintaining a fiscal surplus and working on institutionality and more developed growth measures, little by little, Argentinians are going to incline and hold more pesos.

Jorge Scarinci: For the moment, I think that pesos are being used for transactional purposes. US dollars are used for savings, and of course, if we continue in this trend of reducing the inflation of the country and, of course, maintaining a fiscal surplus and working on institutionality and more developed growth measures, little by little, Argentinians are going to incline and hold more pesos. That is what we are seeing for the moment.

Speaker #3: That is what we are seeing for the moment.

Speaker #1: The next question comes from private investor Stefan Singer. How do you see the further development of your commercial lending, as you show some pickup in the current quarter?

Operator 2: The next question comes from a private investor called Stefan Zwinger. How do you see the further development of your commercial leading as you showed some pickup in the current quarter? Also, if you may, do you plan to deploy some capital for share buybacks as the share price has suffered lately and is getting close to a level where you did some buybacks in last October? Thanks.

Speaker #1: Also, if you may, do you plan to deploy some capital for share bank by banks as the share price as a separate lately and these getting close to a level where where did you some buy banks in last October?

Speaker #1: Thanks.

Speaker #3: Well, according to the first part of your question, yes, as I mentioned, as we mentioned before, we are seeing the commercial portfolio performing slightly better than the consumer portfolio for the coming two quarters.

Jorge Scarinci: Well, according to the first part of your question, yes, as we mentioned before, we are seeing the commercial portfolio performing slightly better than the consumer portfolio for the coming two quarters. In terms of the second part of the question, always share buyback programs are on the table. It is something that the board of directors analyze depending on market conditions, but that is something that we have used in the past. Again, it is always on the table. It is the board of directors' decision when to implement it.

Speaker #3: And in terms of the second part of the question, I mean, share buyback programs are always on the table. It's something that the Board of Directors analyzes depending on market conditions, but that is something that we have used in the past.

Speaker #3: And again, it's always on the table. It's the Board of Directors' decision when to implement it.

Speaker #1: The next question comes from Adriano Mariani with Seagull Capital LLP. Hola, Jorge. Can you touch quickly on the capital consumption during the quarter? Obviously, 28% is still very high, but interesting how that feels so much with a lackluster.

Operator 2: The next question comes from Adriano Mariani with Seagull Capital LLP. Hola, Jorge. Can you touch quickly on the capital consumption during the quarter? Obviously, 28% is still very high, but interesting how that fills so much with lackluster growth, even after dividends impact.

Speaker #1: Growth, even after dividends impact.

Speaker #3: Yes. I mean, if we explain that, the consultant was because we implemented a new methodology in terms of operating operational risk, and that slightly impacts the ratio, which was down from 32% to 28%.

Jorge Scarinci: Yes. Hi, Augusto. We explained that the consumption was because we implemented a new methodology in terms of operational risk, and that slightly impacts on the ratio that goes down from 30% to 28%. Again, it is the highest among Argentinian banks. The excess capital is the widest, and the idea is to continue, as far as we can, paying kind of dividends on a yearly basis and using that for organic and inorganic growth.

Speaker #3: But again, it is the highest among Argentine banks. The excess capital is the widest, and the idea is to continue, as far as we can, paying current dividends on a yearly basis.

Speaker #3: And using that for organic and inorganic growth.

Speaker #1: There are no more questions at this time. This concludes the question and answer section. I will now turn it over to Mr. Nicolas Torres for final considerations.

Operator 2: There are no more questions at this time. This concludes the questions and answer section. I will now turn over to Mr. Nicolás Torres for final considerations.

Speaker #3: Thank you, Juan Jorge. And thank you all for your interest in Banco Macro and for joining us today. We appreciate your time and your questions.

Nicolás Torres: Thank you, Juan Jorge, and thank you all for your interest in Banco Macro and for joining us today. We appreciate your time and your questions. We look forward to speaking with you again. Have a good day.

Speaker #3: We look forward to speaking with you again. Have a good day.

Speaker #1: This concludes today's presentation. You may now disconnect.

Operator 2: This concludes today's presentation. You may now disconnect.

[Analyst]: Goodbye

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