Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's First Quarter 2019 Earnings Conference Call. We would like to inform you that the first quarter 2019 press release is available to download at the Investor Relations website of Banco Macro at www.ri-macro.com.ar. Also, this event is being recorded. [Operator Instructions] It is now my pleasure to introduce our speakers today. Joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, Investor Relations. Now I'd like to turn the conference over to Mr. Nicolas Torres. You may now begin your conference.

Good morning, and welcome to Banco Macro's First Quarter '19 Conference Call. Any comments we may make today may include forward-looking statements, which are subject to various conditions and these are outlined in our 20-F, which was filed with the SEC and is available at our website. First quarter '19 press release was distributed yesterday and is also available at our website. I will now briefly comment on the bank's first quarter '19 financial results. Banco Macro's net income for the quarter was ARS 7.3 billion, 40% or ARS 2.1 billion higher than fourth quarter '18 and 106% higher than the ARS 3.5 billion posted a year ago, based on an increase in net interest income and net fee income. The bank's first quarter '19 ROE and ROA of 50% and 8.4%, respectively, remained healthy and showed the bank's earnings potential. Net income for the first quarter 2019 included a ARS 1.9 billion positive results related to the sale of 51% stake that Macro had in Prisma and the mark-to-market of the 49% remaining stake. Excluding Prisma's sale result, recurring ROE and ROA in first quarter '19 would have been 37.2% and 6.3%, respectively. Net operating income from first quarter '19 was ARS 19.1 billion, increasing 18% or ARS 2.9 billion quarter-over-quarter and 78% or ARS 8.5 billion compared to the previous year. Operating income after general and administrative expenses was ARS 10.5 billion, 39% or ARS 2.9 billion higher than fourth quarter '18 and 105% higher than a year ago. In the quarter, net interest income totaled ARS 12.9 billion, 5% or ARS 643 million higher than the result posted in 4Q '18 and 63% or ARS 5 billion higher than the result posted one year ago. This performance can be traced to a 2% quarter-on-quarter increase in interest…

[Operator Instructions] And our first question comes from Gabriel da Nóbrega with Citi. Gabriel da Nóbrega: I wanted to maybe understand a little bit further why you have decided to fully write off the exposure you had through Molca? As we have heard from some of your peers, that there are ongoing discussions with this company. It is still operating with around 20 factories, and some of your peers even mentioned that there could be a possible 50% of reversals. So I'm just trying to understand why you have already wrote it off if there could be this possibility of reversals down the road. And I'll make a second question afterwards.

Gabriel, this is Jorge Scarinci speaking. This was a decision of the credit committee approved by the Board to make the write off of Molino Cañuelas. It's true that the company is still working. It is also true that we think that we are going to recover part of this. I don't know how to quantify, but yes, in the future, we are positive on this brand. But as of credit policy, both the credit committee, the senior credit committee and the Board decided to write it off. It's an internal policy. Gabriel da Nóbrega: All right. And if you just allow me a follow-up here, could you just remind us what was your direct exposure to this company?

Yes. Direct exposure was approximately ARS 390 million. Gabriel da Nóbrega: All right. Perfect. I have a second question. It's also on asset quality. It got to my attention that during the quarter, your NPL ratios for the retail portfolio that you rated around 40 bps. I understand that should have a significant portion of your loans in this portfolio as [imperial] loans, and if I'm not mistaken, out of this, and around 50% are coming from the public sector. So could you just maybe give us more color on what happened here? What should be -- what should we be looking for through 2019, and also if we have reached the peak from NPL ratios?

Yes. It is true what you are commenting here. It is 93% of our personal loans are tied to payrolls. Therefore, you have a 7% on the open market, so this is a portion that is not performing really well. And on the credit card business, we have approximately 64% of the credit card portfolio tied to the payrolls, therefore 36% on the open market, and also here, this is a portion that is not performing well and it is affecting the consumer nonperforming portfolio. So going forward, it is going to be very tight and hand-in-hand with the economy track here. Honestly, it is not very easy for us to predict what would happen with the economy in 2019 because interest rates continue to be high. The central banks continue to discuss monetary policy. And for sure, real GDP is going to be down more than 1%, 1.5% this year. So we think that when you look at some statistics that we are reaching the bottom of the economic activity in terms of annual comparisons, so we would get, according to data, we are -- or in the worst part of the economic cycle are reaching this point, but it is not very easy to assure this with 100% of assurance. So we think that in terms of NPLs going forward, we are going to be around the 2%, 2.1%. We are not forecasting for the moment, major deterioration here in this ratio. So -- but again, this is going to be in hand with what's happening with the economy, either some losing in the interest rates after -- or in the second half, that it is going to be the consequence of if inflation -- monthly inflation goes down. So not very easy, but we think that according to what we are seeing, that we are going to maintain this around 2%, 2.1% of NPLs going forward.

And our next question comes from Alonso Garcia with Credit Suisse.

My question is regarding volume growth. Can you update us on your volume growth expectations for this year, probably for next year? And when do you think -- if any, when do you think creating demand could start picking up? And what are the main -- what will be the main constraints or drivers for that to happen during the remainder of the year?

Alonso, well, as you have the chance to see not only in Banco Macro, but also in the other Argentine banks' press releases, quarter-on-quarter loan growth has been very sluggish because the economy is really bad and interest rates are really high. So it is not very easy to forecast volume growth for this year. Also, the consensus have been increasing inflation target for this year from high 20s to high 30s to 40. So I would say that this year, we might see some real decrease in terms of loan growth. Therefore, we should be growing nominally below inflation. So these numbers should be ranging around 30% for this year, nominal growth for loans. Of course, for next year it's tougher. Will depends on the economy and inflation. So if having what the economic consensus in forecasting for next year, that interest rates should be going down sharply, also inflation cooling down. We expect that there's going to be a pickup in loan demand, and therefore, we could be seeing some positive real loan growth next year. But again, this is a kind of a monthly basis movie that can change depending on the monthly inflation that we are having in 2019. Also take into consideration that we are in a year where we are going to have presidential elections in October, so you have many different variables that could affect the economy in 2019 and 2020. But as a summary, I would say that this year, negative real growth; next year, positive real growth in loans. That is with the scenarios we are working with.

Sure. And just a brief follow-up, do you see any particular segment performing varied and the rest of the portfolio? Or do you see both commercial and consumer performing rather similarly?

No. What we are seeing is that, from a nominal point of view, we are maintaining our consumer loan portfolio. The commercial loan portfolio is slightly decreasing. Going forward, depending on the salary increases that might happen in the economy, we could see some pickup in consumption. I would say that commercial portfolio will continue in a working capital phase. Maybe next year we could see a bit more of investment depending on the economic horizon and the landscape. But not that big difference between the two portfolios.

And our next question comes from Carlos Gomez-Lopez with HSBC.

Going back to the loan growth, I was struck with the fact that you have had no loan growth whatsoever in pesos in the last year. In fact it's minus 2%. Should we see that as you being more conservative [indiscernible] of the system? And is this something that you expect to continue going forward? And second, I have a technical question. The capital gain that you have experienced with Prisma, is that already in your capital ratios? Or that is still to come?

On your first question, I would say that the strategy of the bank is, at this time, not to look at market share. It's to look at asset quality and of course profitability. So we have to lose some points of market share, no problem. We want to keep asset quality the best as we can, and of course, profitability as high as we can. So again, that's why we are forecasting some negative real growth this year in lending. And we are focused on maintaining a lot of controls in asset quality and a lot of controls in profitability. Tough times here, so if we are going to have a negative performance there, well, if that's the case, we are going to have positive performance in other races of the balance. But the Board is very committed to asset quality and profitability at this time, so that's what we are following here. Second question, no. The revaluation is not embedded in the capital ratios yet.

But, sorry, the sale, needless to say not the revaluation is in the capital ratios or one is and the other is not? How does it work?

Sorry. Can you repeat that, Carlos, please?

Sure. You have the sale of 51%, of which 60% you record now, and then you have the revaluation of 49% that you will still retain of the company. Do either of those 2 parts get reflected in the capital ratios? Or it has not been reflected yet for either of them?

No. We are going to see the impact of the revaluation next quarter.

Okay. But the gain already came this quarter?

Yes. Yes.

Okay. All right. Can you give us a guidance? I mean the impact that we should see from this evaluation?

Not for the moment. I do not have a precise number, so I do not want to give you a number that would change in the next quarter. So prefer not to give you a number now.

[Operator Instructions] And our next question comes from Nicolas Riva with Bank of America.

So it's an open-ended question. It's not about the numbers of the quarter. So this year, we have elections in Argentina, and the two leading candidates are Macri and Cristina. We don't know if Cristina is going to run, but we know how Cristina's government intervening the banking system, they put caps on interest rates, they put [indiscernible] on interest rates and time deposits. So my question is, how do you think a Cristina Kirchner government would impact the banking sector, specifically? And how are you prepared for that scenario?

Nicolas, it's not an easy question. First of all, we don't know if Cristina is going to be a candidate. We have to wait until June 22 to see if she's going to be a candidate. Second, if she's a candidate according to the latest poll that we are seeing, she will be losing in the second round. So -- and third, how can Cristina could be in the third mandate of Argentina is like we have the fourth derivative of the presidential's attitude towards the banking sector. So we should be doing a lot, a lot of the positions here. So I don't know how to answer that question. Honestly, it is very -- or have a low probability to have our assurance here. So honestly, I don't know. I don't know what to say, because you need to have -- you need to step a lot of barriers before. And then, I think that only she knows the answer to that question. So it's impossible for me to know it. So I'm sorry, but it's tough to answer that.

Okay. But Jorge, at least, is it fair to say that during the last few years of this administration, even though inflation was very high and interest rates were high as well, banks managed to do quite well, really, given the short-term duration of the loan portfolio. So broadly, the theory of consolidation of the banking system will get delayed, but I believe, based on the experience from carriers in government, the banks manage to do reasonably well within [that condition] that's fair to say?

Yes. Banks that time will have, I would say, good performance in terms of earnings. I mean evaluations were not that good. But in terms if what happened between 2003 and 2015, I would say that the system improved a lot in terms of liquidity, solvency, capitalization, also concentration. So yes.

And our next question comes from Yuri Fernandes with JPMorgan.

I have, actually, two questions. The first one is about the margins. How should we think these: with the changing interest-earning assets mix, should we expect margins to keep slightly decreasing? Or how are you seeing this? And my second question is regarding the recent credit card regulation in Argentina. I know you are somewhat less exposed than some peers. But how decreasing the payment, the settlement dates, from 19 days to 10 days may impact your earnings going on?

I would say that margins will remain stable. With this level of business rates, in albeit a slightly climbing scenario in the case of Banco Macro, we should be some expansion margins. But euro, not that much. So I would assume, for this year, stability in the margins not to be changed here. In terms of your second question, in terms of the impact that we have in credit cards, I would assume that in terms of the impact on bottom lines, around between 2.7% and 3% impact on bottom lines on the new regulation credit cards. And this assumption with Banco Macro not doing anything in terms of to offset this impact, for sure that we are going to do or to take some measures here. Maybe to review some promotions. So the net effect is going to be lower than that. But [indiscernible] I would say 2.7% to 3% impact to the bottom line.

And there are no further questions at this time. So this will conclude the question and answer session. I would like to turn the conference back over to Mr. Nicolas Torres for any closing remarks.

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

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