Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's 4Q '24 Earnings Conference Call. We would like to inform you that the 4Q '24 press release is available to download at the Investor Relations website of Banco Macro, 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. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, IR. Now I will turn the conference over to Mr. Nicolas Torres. You may begin your conference, sir.

Thank you. Good morning, and welcome to Banco Macro's fourth quarter 2024 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 to the SEC and is available at our website. Fourth 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 December 31, 2024. I will now briefly comment on the bank's fourth quarter 2024 financial results. In the fourth quarter of 2024, Banco Macro's net income totaled Ps. 102.2 billion. This result was 4% or Ps. 3.5 billion higher than in the third quarter of 2024. As of the fourth quarter of 2024, this result was mainly driven by lower net interest income, higher net fee income, higher net income from financial assets and liability fair value profit or loss and a lower result from the net monetary position as inflation eased during the quarter. The accumulated annualized return on average equity and the accumulated annualized return on average assets were 7.5% and 2.4%, respectively. In fiscal year 2024, net income totaled Ps. 325.1 billion, 74% lower than in fiscal year 2023. Total comprehensive income totaled Ps. 227.7 billion and was 83% lower than in fiscal year 2023. In the fourth quarter of 2024, operating income before general, administrative and personnel…

Thank you. [Operator Instructions]. And today's first question comes from Ernesto Gabilondo with Bank of America. Please go ahead.

Thank you. Hi, good morning, Jorge, Nicol. And thanks for the opportunity to ask questions. My first question will be on macro expectations. So just wondering what are you seeing in terms of interest rates, inflation, GDP growth, FX for this year? My second question will be on your ROE expectations for this year. We understand there was a challenging 2024, especially for you in the second quarter. So how do you see the ROE recovering in 2025? And can you elaborate on the drivers for earnings growth this year? And when should we expect the ROE to return again to 20% levels? My last question is on asset quality. So we saw modest NPL deterioration, but sequentially higher provision charges. So I just want to double check if this is explained because you are building provisions based on expected losses. And how should we think about the cost of risk in 2025? And for that, what will be your loan growth assumption? Thank you.

Ernesto, good morning. How are you? This is Jorge Scarinci. Thanks for your questions. Well, first one, in terms of macroeconomic expectations, according to the latest economic data released by the government, the decline in -- of GDP in 2024 was close to 2% and the consensus for GDP growth in real rates for 2025 is 5.5%. Inflation is expected to be in the area of 25% for 2025, coming down a lot from the 118% that we got in 2024. According to the FX, the consensus for the market is expecting an FX of $1,250, that's the official one for the end of the year. And those are basically the most important macro estimates that we have right now. Sorry, I can add also in terms of fiscal accounts, the consensus is a primary fiscal surplus of 0.7% and a financial surplus that should be very close to zero, 0.1%. In terms of ROE expectations, yes, I agree with you that 2024 was not a good year. Basically, the second quarter was a poor one basically in relation to the performance of the bond portfolio. That's why we are forecasting that 2025 is going to be much better. We are forecasting an ROE range for 2025 that goes from 12% to 15%. And this is going to be fueled by increase in lending to the private sector. I would say that our estimate for loan growth in real rates for 2025 are 60%. And this is a consequence of what we are seeing that consumer lending is growing faster than what we had expected. And therefore, those type of loans where we can get the higher rates. So ROE should be based on this loan growth and should be ranging 12% to 15% in 2025. Honestly, when we come…

Yes. Super helpful. Just in terms of loan growth, I just want to double check, you mentioned you're expecting a 60% growth.

Yes, 60% in real terms growth for loan growth in 2025.

Okay. Perfect. And then in terms of doing the math on getting to an ROE of 12%, 15% for '25, that implies approximately a 100% net income growth for 2025. And as you mentioned, it will be driven by loan growth and then starting to see that into financial results and also likely because of lower monetary losses under such a low inflation level. Is that number correct to think about such a high earnings growth this year?

Yes, basically, we are targeting those levels. Again, the range is between 12% and 15%. And the drivers are the one that you mentioned before, loan growth, some fee growth, controlling expenses, lower inflation losses and the maintenance of the margins along 2025.

Perfect. Excellent. Super helpful. Okay. Thank you very much.

You're welcome Ernesto.

Thank you. And our next question comes from [indiscernible]. Please go ahead.

Hi, Nicolas. Hi, Jorge. Thank you for the call. I have three questions regarding securities. How do you expect the weight of securities to evolve in 2025? And given the expected 60% growth in your loan book this year, will this growth will be primarily funded by the unwinding of securities or deposit growth? And finally, if you have any projections of how the loan-to-asset and security-to-asset ratio could look this year? Thank you.

Hi, good morning. Well, the securities portfolio is approximately 27% of total assets. We think that in 2025 by December of this year, we are going to see that ratio decreasing to levels maybe in the area of 20% or slightly below 20%. I mean, ideally, the funding for loan growth is going to come basically from deposit growth in pesos that we are expecting them to grow in the area of 35% in real terms. And of course, we are in a loan-to-deposit ratio below 100%. And part of that also is going to be financed by the reduction in securities. So I would say that 80%, which is going to come from deposits, 20% of the funding of loan growth is going to come from the reduction of securities portfolio.

Very clear. Thank you.

You're welcome.

Thank you. And our next question comes from Brian Flores with Citibank. Please go ahead.

Hi team. Thank you for the opportunity to ask questions. I just wanted to make two questions. The first one is on capital consumption because we saw the data from the system. The system is already consuming between 200 and 300 bps per month. And it's very interesting to see that your numbers actually increased marginally, but they increased quarter-over-quarter. So if you could expand a bit on what is driving this and what we could expect? Jorge, you were mentioning expectations of growing 60% year-over-year. This would naturally consume and bring risk-weighted assets into the denominator. So I just wanted to double check here if the capital consumption that we should see is in line with what we're seeing for the system, maybe faster, maybe slower. But any color you could give us on that? And then I'll ask my second question later.

Hi, Brian, no, you're right. When you look at the table, the total capital requirement has increased 12% quarter-on-quarter and 130% year-over-year. I think that basically, you have some increase in part of the equity. It is very explained in the table there. But we are forecasting that the excess of capital of almost Ps. 2.8 billion that we have in the fourth quarter, of course, due to the high level of loan growth that we are forecasting is going to go down. We understand that the 31.6% Tier 1 ratio that we posted at the end of December is going to come down. Also, if you take into consideration the $300 billion that we are paying in -- Ps. 300 million, sorry, that we are going to pay in cash dividends in May of this year. So we are forecasting that the Tier 1 ratio by the end of the year should be in the area of 25%, 26% approx. But yes, it's -- what you mentioned is that there's capital consumption and more 2025 that we are expecting for the system also to grow fast in loans. So it is very important to know that we have the best capitalized balance in the Argentine banking sector. So we are much better prepared to continue lending and growing in lending compared to our peers.

Perfect. Super clear. And then maybe a second question, if I may. You elaborated a bit on deposits. You mentioned expectation of 30% real growth in 2025. So I just wanted to expand a bit on that. Is there any particular strategy that you're pursuing to gain share or to compete? Because I know probably -- I know as you're mentioning, the first part of the allocation is mainly driven by the excess capital that you have. But at some point, as we go back into credit and as people are saying, right, banks becoming banks again, the organic sources of funds become more and more relevant. So I just wanted to check, because I think every bank is going to be competing very strongly for deposits. So I just wanted to see how you're thinking about the strategy to compete on this going forward? Thank you.

Well, in terms of -- I mean, deposits, there's going to be competition. I believe that there should be some marginal increase in maybe in deposit rate in time deposit rates. But when you look at the numbers in the fourth quarter, we grew 11% year-on-year our peso deposits and 24% our dollar-denominated deposits. We think that 2025, the increase will continue. I mean the -- sorry, the fiscal side or the government is going to demand less from the private sector. And therefore, we believe that the private sector is going to be increasing their deposits. The monetary base is going to continue increasing. So basically, those will be the drivers. But I agree that some competitions could create additional some pressure -- upward pressure on time deposits interest rates.

No, that is super helpful. And if I just make a final comment on deposits. Do you expect more regulatory changes as the one we saw last week as to now use at some point, maybe finally deposits in dollars on the asset side of the balance sheet?

I think that the Central Bank is trying to work on different regulations and trying to maintain the efficiency and the solvency on the system. As far as we know, there should not be important regulation changes at least in the first four months of 2025. Honestly, we are not informed yet. Going [Technical Difficulty]

Super helpful. Thank you.

Thank you.

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

Hello, Jorge. And thank you for the update. First, can you tell us anything about any upcoming management changes at the bank or whether you have any news there? Maybe you mentioned it earlier, but I didn't catch it. Second, on the deposits, if we see this correctly, there was actually a decline in dollar deposits between the third and the fourth quarter. And to go back to the question, when do you think that deposits start growing because private sector deposits only grew 2% quarter-on-quarter. Do you need higher interest rates for that to happen? And finally, to confirm, the dividend that you are paying is $300 million? Thank you.

Carlos, how are you? Yes, there's going to be some news on management, I would say, maybe in the short future. Basically in our new CEO, honestly, I cannot make additional comments, but there will be some announcements in the short run in relation to our CEO. That is the only news related to management changes that we are expecting. Second question in terms of deposits, yes, you're right, there was some decline in dollar-denominated deposits between the third and fourth quarter. Remember that on the third quarter, there was the full impact of the tax amnesty, that impacted in the system also in the bank. Of course, in the fourth quarter, we saw some decline in dollar-denominated deposits. Some investors were moving their deposits to maybe corporate bonds or some other type of investments in dollars that are not time deposits or saving accounts in dollars. Going forward, we think that in relation to this regulation of the Central Bank, there could be some, again, upward trend in terms of interest rates, not only in dollars, but could be also impacting in pesos. And those would be, I would say, the drivers that could be making deposits growing to the level that we mentioned in 2025. And in relation to your third question, yes, the dividend is going to be below $300 million if you take the unofficial FX rate of $1,200. So it should be in the area of $240 million.

Okay. And so on rates, so what do you -- where do you expect the policy rate to be by the end of the year?

The policy in interest rates in the deposits, you mean, Carlos?

No, the interest rate by the Central Bank, the reference rate.

No. I mean the consensus is showing some increase by the end of the year of 3 or 4 percentage points in the peso monetary interest rate by the end of the year.

Okay. So an increase of 3% to 4%. Thank you.

Yes.

Thank you. There are no further questions at this time. This concludes the question-and-answer session. I would now like to turn it over to Mr. Nicolas Torres for final considerations.

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.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.