Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to the Banco Macro's 2Q 2024 Earnings Conference Call. We would like to inform you that the 2Q24 press release is available to download at the Investor Relations website of Banco Macro at www.macro.com.ar/relaciones-inversores. Also, this event is being recorded and all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions] It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolás Torres, IR. Now, I will turn the conference over to Mr. Nicolas Torres. You may begin your conference. Nicolás Torres: Thank you, Nick. Good morning, and welcome to Banco Macro's second quarter 2024 conference call. Any comment we may make today may include forward-looking statements which are subject to various conditions and these are outlined in our 20-F, which was filed to the SEC and it's available at our website. Second quarter 2024 press release was distributed yesterday and it's available at our website. All figures are in Argentine pesos and have been restated in terms of the measuring unit current at the end of the reporting period. As of 2020, the bank began reporting results applying Hyperinflation Accounting, in accordance with IFRS IAS 29 as established by the Central Bank of Argentina. For ease of comparison, figures of previous quarters have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through June 30, 2024. I will now briefly comment on the bank's second quarter 2024 financial results. In the…

At this time, we're going to open it up for questions and answers. [Operator Instructions] And our first question today will come from Ernesto Gabilondo with Bank of America. Please go ahead.

Thank you. Hi, good morning, Jorge and Nico. Thanks for the opportunity to ask questions. My first question will be on your loan growth and asset quality expectations for this and next year. And my second question is, if you can elaborate a little bit more on the puts that Macro executed with the Central Bank? And also if you know the timeline and the implications of the repos that the Central Bank is proposing? And also, can you remind us how much is your position on securities linked to inflation? And what will be your strategy going forward with these instruments? And finally, my last question is on ROE. How do you see it for the end of the year? And what do you think will be the sustainable level? Thank you.

Hi, Ernesto. This is Jorge speaking. How are you? About your first question in terms of asset quality, I think that the level that we are showing is extremely good and low. I think that going forward, the economy will recover, as is expected for 2025. We are going to be a bit more aggressive in growing in lending, and therefore, delinquency could rise a little bit, but to manageable levels. Again, I think that this is already commented before, but since 2008, the peak that we've had in our delinquency rate was 3% in 2009. So, I think that without any problems, we could be rising this -- the current ratio to levels of between 2% and 2.5% without any problem in the case that we become more aggressive in lending. I will go to your third question. I will leave your second question for the last one. The third question about the bonds that we have that are adjusted to inflation. Currently, we have a level of ARS3.7 billion -- or in your case, it's ARS3.7 trillion of bonds that are tied to inflation. This is approximately 120% of the equity, and it's also 110% of the monetary position. The monetary position is the one that is -- basically the one that adjusts our income statement to inflation. And in that sense, we are linked or hedged against inflation. Going forward, I think that depending on what's happening with the inflation rates, that in last month was 4% on a monthly basis, and we believe that inflation is going to continue with the downward trend. However, we are, according to the economists that we listen, they are not expecting inflation to become below the 2% unless until November, December, and the probability of that is maybe the order…

Yes. Thank you very much, Jorge. Just a follow-up. The first one is -- well, two follow-ups. One in terms of the loan growth. So, any color on what could be the pace of loan growth for this year and for next year? And then, the other follow-up, you were mentioning that you executed half of the puts. So, can you just remind us how was the amount of those securities that you held before?

Yeah. In terms of -- let's go to your second question. Yeah, we executed half of the put options that we had. It was like ARS2 trillion in bonds that we exercised and sent to the Central Bank. That amount of pesos we received as extra liquidity. And currently, we hold another ARS2 billion -- sorry, ARS2 trillion in put options in case that we want to exercise these inflationary bonds to the Central Bank. Going to the loan growth for 2024, we expect to have positive rates in the order of maybe 15% area for 2024. And we believe that with a recovery on GDP in 2025, we could be at least 30%, 35% positive rates of growth in loans for next year.

Excellent. Thank you very much, Jorge.

Welcome, Ernesto.

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

Hi, Jorge, Nicolás, and team. Thank you very much for the opportunity. I wanted to ask on NIMs, right, because as you say, repos are still helping, but I think the average earned yields are decreasing. Also, you have some relief on the deposit base. I know this is a very hard question, right, because it's a very fluid environment, but when do you think NIMs could stabilize? I think that's my first question. And then, my second one, you mentioned capital, right? Do you have any updates on any regulatory changes that would allow you to distribute maybe higher dividend yields going forward? Thank you.

Hey, Brian. How are you? Let's answer your second question first. I mean, we have to wait till next year. For the moment, we haven't seen any new regulation coming. Remember that when we have to pay dividends using basically what the Board proposed to the shareholders meeting the payment of dividends [using] (ph) in March, so we have to wait till next year. At that time, it's basically when the Central Bank always put a new regulation on the amount of dividend that basically could be delivered and the amount of installments. Remember that last year, the number of installments were six. This year, the number of installments were reduced to three. So, I think that we are positive in the way that the economy conditions improved and the Central Bank's reserves increased going forward. We are positive that we could be allowed to pay dividends maybe in only one installment, and that is really positive. In terms of your first question on NIMs, you have a chance to go through the press release, the NIM in pesos increased or expanded a little bit. Basically, you were right. There was some -- little increase in the cost of funds. Remember that, in our case, the amount of transactional deposit where we paid almost 0% there is almost 45% of total deposits. And on the time deposit side, basically, in those that we are the financial agents of the four provinces, we could be paying slightly below average interest rates. So, this gives us a kind of slight competitive advantage in order to continue expanding a little bit the NIMs. And going forward, we think that the NIMs are going to remain pretty stable. So, the increase in the net interest income is going to come through the increase in lending through or hand in hand with increase in the funding.

Perfect. If I can follow up just with your last comment, how is demand evolving? What do you think or where do you see the biggest opportunities to grow your loan book right now?

I mean, there was a decrease in interest rates in the [system] (ph) that was a consequence of the reduction in inflation and we think that there was a recovery in lending in most of the areas, basically, SMEs and some consumer. Going forward, we think that we see some recovery in the real levels of salaries. We are going to see consumption pushing a little bit harder. And also, we are having these new investments on -- in different areas as a consequence of this rigid program approval for companies, we are going to see also corporates or companies also demanding for new lending. So, this is going to be across the board we think in 2025. Imagine that the level of lending that we have is pretty sluggish or pretty low. It's around 6% of loans to GDP. So, we think that the potential growth here is huge.

Okay, Jorge. Thank you.

You're welcome, Brian.

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

Hi. Good morning, and thanks for taking my question. So, in the last -- in the previous two quarters, results were driven by the strong performance in the securities portfolio, which was -- which the trend reversed this quarter and negatively impacted results. Do you expect the securities portfolio to keep on driving results in the remainder of the year or when should we expect to see the increasing loans to have a more relevant impact on results? Thank you.

Hi. How are you? I mean, in terms of income coming from the bond portfolio, as we stated in the press release, after executing or exercising half of our bond portfolio or the puts that we have on the bond portfolio, the remaining half of that, the ALCO decided to account it on the cost plus yield instead of having mark-to-market. So, going forward in the coming quarters, we are going to see more stability in the results coming from bonds and we think that with the pickup in lending, we are going to start seeing that loans or, in this case, interest income from loans are going to start having a bit more -- or better performance in the income statement line.

Great. Thank you very much.

You're welcome.

The next question comes from Yuri Fernandes with JPMorgan. Please go ahead.

Thank you, guys, for the opportunity of asking questions. Just one on these loans versus securities mix, right? And even on the securities mix, right, you have this, I think it's lessee, this new instrument that is one year. Basically, my question is, like on loans and on this lessee, maybe you are increasing the duration, right, of your assets. I think the fiscal liquidity ladder is one year. Although you have the put, you can sell this, but I think like to a one-year term kind of instrument, you are growing more your loans. So, trying to think about your net monetary results, like inflation is moving lower, so this should be a tailwind. But having more loans and having less, I would say, inflation-linked securities, how to think about your balance sheet versus inflation, right? If inflation is wrong and inflation starts accelerating, is the balance sheet getting riskier at some degree because you have more longer-term maturity assets than you used to have in the past when you have more short-term instruments? That's my first question. My second question is regarding further M&As, right? You just had Itau. I think there is still consolidation to happen in Argentina, so I just would like to know the appetite of Banco Macro for new opportunities, if your message is, "Well, let's digest Itau, let's keep working on what we have" or "No, we have a lot of excess capital and we are still open for new opportunities?" And a third question, more on regulatory updates, right? This is still, I think, an important topic. If you can remind us what can be the next Central Bank regulatory change that can benefit the banks? I think there were many moving parts on rates and reserve requirements. What should we expect for the future on the regulatory front to be a tailwind for you? Thank you.

Hi. Thank you, Yuri. In terms of your first question, I mean, holding these inflation-linked securities, we are hedging our balance sheet against the adjustments for inflation on the monetary position. So, by increasing a little bit the duration of our loan book, and always having positive real rates, the impact on the balance sheet and impact on the inflation-adjusted income statement is going to be positive. So, we are not seeing any challenge or any damage or risk there. So, it doesn't mean that the increasing duration is going to negatively affect our exposure to inflation, no. On your second question about M&A opportunities, yes, we are going to complete the legal merge with Itau in the fourth quarter of this year. So, by December of this year, everything is going to be under Banco Macro's umbrella. Going forward, I mean, we will be keeping a close eye to any opportunity that might happen in the banking sector. We think that we are one of the only buyers here. So, any potential player that could be interested on leaving, I think that is going to knock our door. So, we're going to be keeping a close eye, as I mentioned before, there. On your third question, Central Bank regulations that could improve a little bit the banking industry, I think that there are many. I think that little by little, the Central Bank is working on different regulations, but to be -- they want to go very slowly. They do not want to make any mistakes and to have a -- to take a measure that after two weeks, they have to turn it around. So, I think that they are little by little removing the gaps on interest rates, remove the floor on the deposit rates. So, I think that the Central Bank is working really good here, going very slowly, because there is a complete bunch of regulations that need to be removed, but carefully. So, going forward, I think that they are going to have these new regulations on the positive for the banking sector in order to be less regulated. That is going to be, in our view, positive for the big players as Banco Macro.

Super clear. Thank you very much.

You're welcome.

[Operator Instructions] The next question comes from Carlos Gomez with HSBC. Please go ahead.

Hello, good morning. Two questions. The first one is, if you could explain in simple terms for us what happened to the bond portfolio this quarter? What is that in contrast to the previous quarters? And what we should expect in the coming quarters? What should be the normal profitability yield on securities that we might expect? And then -- I think that'll be it. Yeah.

Hi, Carlos. How are you? Well, I mean, in -- as of June, I mean, we decided to execute or to exercise the put on half of our position, and that happened the 1st July. So, at the end of this second quarter, that's why the portfolio remains -- in terms of the amount of bonds that we have, remains the same. In the third quarter, you're going to see the impact on the -- of the exercise of the put and a reduction in the bond portfolio. And again, we decided to make a change in the accounting instead of having mark-to-market, it's going to be at a cost plus yield mechanism. So, going forward, if we are maintaining this amount of bonds, a more reasonable level for the income from the bond portfolio is going to be in the area between ARS30 trillion to ARS50 trillion on a quarterly basis.

Okay. And the position that you exercise, you have it now in CPI-linkage, right?

Yes.

Okay. Very good. And then, my second question, sorry, I didn't ask before, is regarding your capital and the fact that you're paying a big dividend. I mean, the prospects have changed. You are doing M&A. There is loan growth in the system. Would you review -- I mean, we know that you have a lot of excess capital, but, I mean, we could see a lot of it consumed pretty rapidly if loan growth indeed goes up. Would you consider for the coming years perhaps you want to retain more capital rather than pay more dividends?

Yes. I mean, if you see the reduction in the capital ratio from the first quarter to the second, you can see that it was a reduction for -- on Tier 1 -- looking at Tier 1, from 44.5% to 34%. So, 10 percentage point there because of the payment of dividends. Going forward, we agree and, of course, we would like to have a more normalized level of excess capital. But the combination of organic growth that we think that we are going to need for future years plus some M&A opportunities that might have in the past that we think that would appear some other banks wanting to leave Argentina, and they yet to continue to pay attractive cash dividends, I think that, that is the mix that we want to maintain. So going forward, a more sustainable rate of ratio for capital in the future for Macro could be in the area of 18% to 22% Tier 1, not the current level. So, that is going to be consumed through organic growth plus cash dividends, first, and then the opportunity for another M&A. So, going forward between 18% to 22% seems more reasonable for us. That is what we would like to have in the future with maybe higher market share performance in the season.

Okay. And to go back to the M&A, and we understand you are open to all possibilities, is there anything in the works or anything that -- would you anticipate that you might be considering another transaction, let's say, in the next three or four quarters?

No. Honestly, we are not looking to anything for the moment. I think that if that something happens, could be next year. I don't know exactly which -- how many quarters, but next year or in 2026.

Okay. That's fair. Thank you.

Thank you, Carlos.

There are no more questions at this time. This concludes the question-and-answer session. I will now turn the call over to Mr. Nicolás Torres for final considerations. Nicolás Torres: Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Have a good day.

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