Good morning, everyone, and welcome to Grupo Supervielle's Second Quarter Earnings Call. I'm Ana Bartesaghi, Treasurer and IRO. Today's conference call is being recorded. [Operator Instructions] Speaking today will be Patricio Supervielle, our Chairman and CEO; and Mariano Biglia, our Chief Financial Officer; Gustavo Paco Manriquez, Banco Supervielle's CEO; and Diego Pizzulli, CEO of invertironline, will also be available during the Q&A session.

Thank you, Ana. Good morning, everyone, and thank you for joining us today. We executed well amid a still transitional macro backdrop. Loan growth outpaced the industry, led by strong performance in commercial lending. By contrast, we took a more cautious approach to retail origination in response to the slight deterioration in asset quality in line with industry and historical levels. This follows the rapid retail expansion of prior quarters and return to credit normalization. On funding, U.S. dollar balances reached record levels, gaining 100 basis points in market share over the past 12 months, underscoring both our competitive position and client trust. We maintained a solid capital position with a CET1 ratio of 13.9% and delivered a 6% return on equity in real terms, further supported by disciplined cost management and improved NIM. While the macro environment still presents some near-term headwinds in connection with the election-related uncertainty, tight peso liquidity and high real interest rates, the broader backdrop remains supportive with public government supported nearly 50%. Fiscal consolidation, ongoing deregulation and inflation trending down. We expect economic growth and credit expansion to resume after the October 26 elections, supported by structural reforms anticipated to begin in the post-election period. These conditions, combined with our strategic execution and solid capital position us to continue capturing opportunities as the credit gains momentum. On Slide 4, our strategic transition towards a more credit-driven balance sheet is progressing, although at a slower pace in this election year and in line with monetary policy. Loans accounted for 48% of total assets, up 25 percentage points since December 2023, while we reduced our investment portfolio by 28 percentage points to 22% of assets. This deliberate rebalancing supports private sector credit growth to benefit from the gradual recovery in economic activity. Our loan-to-deposit ratio increased…

Thank you, Patricio, and good day to all. Let's turn to Slide 6. Net income was ARS 13.6 billion in the second quarter, up 62% sequentially with ROE at 6%, driven by higher net financial income and lower inflation adjustment. Clients net financial income was up 10%, supported by wider spreads on higher loan volumes, while market-related net financial income benefited from gains in our treasury portfolio, growing 15% quarter-on-quarter. Inflation adjustment decreased 34%, reflecting the lower impact in the net monetary position from declining inflation versus the prior quarter. By contrast, net fee income was down 13% as banking fees were not adjusted in the quarter, though repricing is underway in the third quarter. A lower contribution from our brokerage business since the lifting of FX restrictions in line with the industry trend also impacted fee income. Expenses were up 4% as costs were seasonally lower in the prior quarter. Year-to-date, net fee income was up 19%, while expenses declined 11% as we continue to simplify our structure and reduce fixed costs. Loan loss provisions rose 32%, reflecting loan growth and higher risk weighting from retail lending. Other losses increased 40%, mainly from the sale of noncore properties, while income tax benefited from a higher level of tax efficiency. Moving next to Slide 7. Total loans increased 14% sequentially and 71% year-on-year in real terms. Growth in retail loans moderated to 2% sequentially after several quarters of strong expansion as we tightened underwriting policies in response to early signs of industry-wide asset quality deterioration. Other retail products, including credit cards, mortgages and car loans continued to expand modestly. Year-on-year, retail loans were up 130%, accounting for 47% of our total loan book. Commercial lending was up 23% quarter-on-quarter, led by strong growth in foreign trade loans, promissory notes and…

[Operator Instructions] First questions come from Ernesto Gabilondo at Bank of America. Ernesto María Gabilondo Márquez: My first question will be on asset quality and cost of risk. When looking to the NPL ratio, it remains still below historical peaks. But in terms of the cost of risk, it appears to be a little bit high. So just wondering if the peak already happened in the second quarter? And how should be the trend for next year?

Thank you, Ernesto. Yes, it's true. The NPL ratio in the last 2 quarters increased from 2% to 2.7%, which is a meaningful increase. But as you said, it remains well below historical standards. And we believe it's part of an industry-wide trend with credit normalization following very low NPLs, historical NPLs. We believe that at this stage, the economy, what's happening is also not creating jobs. It's -- employment is stable, but it's not creating jobs. And it's also -- there is also a behavioral change related to a new pattern because before there was inflation. And with inflation, customers would take a loan, and they would expect that the installments in real terms, they would dilute and this is no longer happening. So there is a learning curve for customers. And so -- but we still think that overall, the credit portfolio is healthy and we -- basically, we are continually adapting underwriting standards, more stringent and this is dynamic, of course, in order to make sure that our portfolio remains healthy. And by the way, also recall that we -- on the retail side, we mostly work with clusters that are cash flow based. That is payroll accounts where we pay the salaries and we collect loans or senior citizens who have a historical good performance in terms of loans or car loans. So sorry, I don't know if you want to add.

Yes. I would like to add 2 things. As Patricio mentioned the customers suffered a big change in their behavior because they know how to work with inflation in the past and now they need to understand how is this scheme without inflation. So it's a big change in their behavior. Also in terms of management, I took several measures, actions in order to make change in the scores and also in the credit policy. And basically, I have a weekly meeting 1 hour, 1.5 hours in order to observe all the trends and all the sales and all the vintage in order to keep down the credit ratio. So we are talking several measures, and we are observing that as a weekly basis. Ernesto María Gabilondo Márquez: And then just on cost of risk because that explains the NPL ratio. But then on cost of risk, how should we think about it? You mentioned it could be between 5% to 5.5%. I think it was above 6% in this quarter. So again, I just wanted to confirm if it has peaked for you? And how should we be evolving for next year? Should it be stable, deteriorating or improving after all these policy metrics that you are implementing?

Yes. Ernesto, let me take that part of your question. Yes, effectively, we expect the cost of risk to be in a peak at this 4.5% net cost of risk for the quarter. So we expect it to range between 5% and 5.5% for the year. It should be stable within that range also into 2026. As Patricio mentioned that this is also a normalization of the credit portfolio, particularly in the retail segment. And then changes will be more depending on the mix of retail versus corporate, but we don't expect to go higher at this point. Ernesto María Gabilondo Márquez: Perfect. And then just my second question, it will be on your ROE expectations for next year, as you mentioned, for this year, it could be around 5% to 10%. But just wondering what should be the level that the ROE could be getting into next year? Just an idea of where can it go again?

Sure. Yes. As you said, we expect ROE to range between 5% to 10% this year as the monetary policy is still very stringent and there is some volatility ahead of the October elections, but still expect the monetary policy to stabilize and interest rates go back down again after the October elections, which are by the end of October. So maybe the upside in the ROE and presuming low growth in high growth rates will be only for the end of this year. So we will see the benefits entering into 2026, where we expect to have an increasing ROE. It could be 15% for the year, but increasing quarter-over-quarter. So it's still too early to tell how we are going to be in the fourth quarter of 2026, but we will be over that average for the year of 15%, maybe levels between 15% and 20%.

So our next question comes from Brian Flores with Citi.

I have a question on growth because you revised your guidance downwards. And I wanted to ask you if this has more to do with what is happening with organic funding, which is deposits, right? You also revised downwards? Or do you think it has to do more with capital, your Tier 1 ratio because as you saw and as we have seen, you perhaps have one of the lowest Tier 1 ratios in the system. Of course, you mentioned there could be some regularity tailwinds. So just if you could explain a bit on what changed your risk appetite? And also on that front, on the Basel III implementation that could happen for your segment, if you have a time line as to when could you have this impact if there's any provision here?

Well, let me start, maybe I will be complemented by my team. But basically, we are going through at this stage, a macroeconomic transition with -- of course, with the fiscal anchor and also foreign exchange anchor, and this inflation process will continue to next year with a very -- and at this stage, the monetary policy is very restrictive. While we believe that there will be a relaxation, I think Mariano mentioned after elections, this is, of course, having an impact this year in terms of growth, because there is scarcity of funding in the system with -- basically with pesos, particularly, not with dollar but with pesos. However, we believe that there's going to be an upside following elections in the sense that with the reform agenda of President Milei, there will be a new -- a much better business confidence, more investments and therefore, more credit demand. And in our case, what we are -- I think what we are doing is laying the groundwork for the loan recovery by what we have done in the past 3 months. We launched on a cluster-based strategy of remunerating accounts for payroll accounts as well as SMEs, and this is showing a very strong effect, driving principality with those clusters, and it is, of course, increasing the funding. So we are very happy with the results. We will continue. And by the way, we are about to launch in the next few weeks, a joint marketing campaign with -- between Banco Supervielle and InvertirOnline in order to make sure that we propose this remunerated -- I mean, this value proposition, even a stronger value proposition than the one we have today through to InvertirOnline clients in order to attract funding. So looking forward, we believe that we are handling -- we are tackling the funding issue. Concerning the capital issue that you mentioned, we don't feel constrained with capital at this stage. Of course, that if conditions arise in the sense that there is a very strong loan demand next year and the market conditions are there, then it might be possible that we tap the market. We are looking into opportunities of tapping the market in equity as well as in debt.

Yes, it's important to highlight that capital is not restricting the loan growth for this year. The loan growth that we are projecting is more related to the growth in deposit and structural funding, but also we are looking at other sources of funding, as Patricio said. And regarding you asked also about the Basel III and Central Bank regulation. Of course, we cannot anticipate when or whether the Central Bank will change this regulation, but we are optimistic because we think it was not in the spirit of the regulation to be more punitive with the second group of banks. So if they fix it before year-end, that will be a significant increase in Tier 1 ratio too.

We are optimistic on that.

Super helpful. I wanted to make a quick follow-up on InvertirOnline because I think this was the first quarter where not only we saw a decrease, and I think this decrease, you mentioned it in the press release, has to do with the liberalization of the FX that naturally hurts maybe some of the spreads. But I think what was catching our attention here is we saw a decrease in the active users in the platform. I know you have here in the team, maybe who can provide a better explanation as to what has happening. But is this an increase in competition? Is this an increase on, I don't know, promotions by other teams? Just wanted to understand why this decrease in active customers happened during the quarter.

Yes. Brian, so we have two factors that influenced our business in the first quarter and the second quarter also. The first one was we saw lower trading volumes by retail customers in the Argentina market, mainly equities and CDRs. So that was a trend that started in February, was heading down until July when reversed. And the other one was the dollar MEP and the restriction in the market. So we don't see an issue in our value proposition in our competitors. We have a strong value proposition. We are leading in the market obviously and we are in a solid position there. So what we saw is some behavior of investors in Argentina in Argentinian securities with the lateral market since January and something that reversed now in July. And also the thing you mentioned about the liberation of restrictions in FX, of course, we are now competing with banks for that part of the business and FX because it was before only a business for brokers and now it's banks and other institutions. But we think it's moving forward and looking forward, we believe that it's good, we are optimistic about the future on the transactions and the volumes operated because with inflation going down and the FX under control, both good conditions to have a strong capital market, we are very well positioned to capitalize on that. We think in this new environment that is through a transition as we see it to a more mature capital market, we can capitalize in our -- not only retail business, but also in our private banking, SMEs and institutional business that probably in this environment we will thrive, we believe we are very well positioned to capitalize on that.

So our next questions come from Carlos Gomez with HSBC.

The first question is, I would like to know how you are faring with the current volatility in interest rates that we are seeing in Argentina and the very high levels that we have seen recently. Is that -- first, is it material? Is it going to affect the banking system in general? And how long do you think it will last? And the second, going back to the capital, maybe I should ask that later. Going back to the capital, I just wanted to verify, the rules have not changed from the first to the second quarter, right? So the banks have not been able -- the banks of your size have not been able to use Basel III, when was that implemented? My point is that the decline in 150 basis points or so in this quarter, that -- I mean, that would have happened with or without the capital rules. Is that correct?

I will ask -- I'll start from the second question because it's shorter. It's correct. The change in operational risk capital requirements was implemented in the first quarter. So any change in the capital ratio from the first quarter to the second quarter is not related to that. We are already giving a guidance on how the capital would be if that regulation equalizes the Group 2 to the Group 1 of systemic bank level, but it has already been implemented at the end of the first quarter.

And again, that will be a 200 -- from your description, 280 basis points uplift to your CET1 if you were able to apply Basel III. That's your own calculation, I would imagine, right?

Correct. That's our calculation.

Yes, something in addition to this last question. Remember, in this quarter, we had dividend payment. So that is included in what you mentioned in terms of CET1 declining from one quarter to the other one. Loan growth, but also we had dividend payment. Remember, we, as Grupo Supervielle, we only pay once in -- normally in the second quarter.

So regarding your first question. I think regarding the first question is, yes, it's basically this uplift in interest rates has been very significant. And of course, it is affecting the monetary conditions of banks and liquidity crunch, very high real interest rates. I think they are harmful for the economy. But we believe that it's going to be transitory until elections and then they will relax because basically, they want to make sure that not only inflation goes, there is no pass-through from the valuation to prices, and so basically, this is why they are very extremely restrictive. I don't know if you want to add.

Yes, I agree this is a level of real interest rates that we have never seen, at least in recent years. So we firmly believe it's temporary. It's not a level of rate that is sustainable in the long term because it will have an impact not only in the financial industry, but on the overall economy. So what we believe is that the Central Bank and the government is prioritizing the control of the volatility in the exchange rate, and they prefer to have volatility in interest rates, but not in the exchange rate, is more sensitive for inflation, and for consumers ahead of the elections. Remember, in 3 weeks, we have elections in the province of Buenos Aires that they are, like, a thermometer for the national elections. So this level of interest rates will ease after September elections or at the latest after October elections. That's our view.

And what is the rate that affects your clients, right? Because we -- I mean there have been all these change in monetary policy. There is no set reference rate, if I understand correctly. What is the most used benchmark? Is it Butler, is it a different market interest rate? And how has that evolved relative to what we see in terms of monetary policy?

Yes. For instance, the Tamar interest rate is now at 50% and the 1-day interest rate is at 67%. That's, of course, well above an inflation expected for the next 12 months of 20% to 25%, so those are the rates that impact mainly in short-term loans because for the longer- term loans, we are expecting increase in the interest rates. So they are not as affected as 1-day loans or 30-day loans. So it affects mainly the corporate side of the portfolio.

So again, your corporates when they borrow from you, most of the contracts are based on Butler or Tamar or what rate?

It's a market interest rate, but it's affected mainly by the Tamar interest rate. It's not that they take long-term loans at variable rates. Some cases are like that, mainly for the ones who issue in the capital market for overdrafts or discounted documents, the market interest rates, but of course, it takes as a reference both the Tamar and the 1-day interest rate because that's a funding for the very short term.

And Tamar was 32% or so before this volatility?

Yes, correct.

Our next question comes from Pedro Offenhenden with Latin Securities.

I had a question following Ernesto one on NPLs. I didn't get if you think retail NPLs have already peaked on the second Q and if you see further pressure on SMEs given the rate volatility?

Yes. What we are seeing, Patricio explained the dynamics of the NPLs on the retail side. The system is now so last data published as of May at 4.5% NPLs. So we are in line with the system. We see a peak in the cost of risk. The NPLs could go a bit higher as we gave in our guidance for the overall NPLs combining retail and corporates by the year-end, we expect it to range between 3% to 3.5%, whereas we are now at 2.7%. So for NPLs, there will be room still to provide till year end.

But yes, Pedro, if we maintain this level of rates, yes, we will see some pressure to SME, yes, of course. But this transition is a short period, but yes, we are seeing some pressure to SME in terms of working capital basically. But we are thinking we hope that it's a very short period. But if we maintain this kind of this level of volatility of rate volatility, yes, we will see some pressure to SME segment. Also to the corporate because the 1-day money is very, very high. Okay?

I'm sorry, do you have any follow-up?

No, no follow-up.

Now I will answer -- maybe we will answer first some of the Q&A we have in the box and then we have further questions from the audience. First one comes from Marcos Serú from Allaria. It's a bit technical, maybe this is for you, Mariano. I would like to know how much was the charge registered under other expenses for the sale of the noncore properties?

The net loss registered in that line item was ARS 5 billion, so of the total of that line item, that is a part that is related to the sale of noncore properties.

Okay. And then another from Ernesto Gabilondo with BofA, on the macro and political landscape, what would be the key rates to follow, for example, the election of the province of Buenos Aires?

Yes, of course, the election of the province of Buenos Aires is the first one in September to follow and I think from what I have read, it will be maybe difficult to understand the results because maybe there will be, let's say, depending there will be overall on the province, one result favoring maybe La Libertad Avanza and maybe another result in a particular district of the conurbano there will be another winner, maybe we don't know. But definitely, what I think will be much more powerful is the October election, where definitely, we are seeing that there is a continued support for the President policies above 50%. So this will probably give -- this is what we expect a very strong support for the second term of the mandate after the October elections.

Okay. We have another question from Fernando Zabaleta, I think, with Banco Pichincha.

My question goes in line with Ernesto's first question and this follow-up that you just commented and it is in line with NPL and the projections, you're still projecting a 40% to 50% increase in loans. We have seen the loans increasing during the year. But also Patricio mentioned before that it's been a challenge to create job for the government. My question go in line with how difficult or how important, I think Ernesto just asked the same question is the election that you have because the last election is in October and how it will impact in your projections? And I think it was mentioned before, too, how you guys are thinking on controlling the increase of the NPL and not to get to a ratio where it could be kind of difficult to manage. But it goes in line to that. It's just considering that the last election is in October and the country could be going different directions. How difficult would be or how it would change or the different scenarios for you guys that you are managing or evaluating to meet those projections of 40% to 50% increase in loans.

First of all, I think that personally, I'm very optimistic, with what I said, with the October elections in the sense that these are the important ones. But as I said the September election probably of Buenos Aires might be difficult to understand with different -- difficult to understand. But the October elections is basically what will give the mandate for the second part of the government. And Milei has stated that in the second part of his government, he will concentrate in fiscal reform and labor reform. And I believe that also what will happen is that there will be an uplift or liberation of the foreign exchange market for corporations after the elections. So the business climate will improve. We expect this, and this will drive loan demand. So I don't know if I answered your question, but maybe...

Yes. And also remember that these projections are based on a macro scenario where we see inflation at 28% interest rate, the Tamar that I mentioned before now jumped 50%, but we expected as low as 25% for year-end. So that is a scenario consistent with a good result for the government that will foster loan growth.

I think we have a follow-up from Brian Flores with Citi.

So just wondering on your NIM expectation because I think you maintained at 18% to 20%, and we saw the contribution from commercial loans growing significantly quarter-over-quarter, which obviously has to do with the conditions you are seeing in terms of asset quality on the retail side. So just could you elaborate a bit on what are you expecting in terms of contribution from retail versus corporates in that projection that you're making on NIM? Is this already including, I would say, a higher contribution, sorry, from commercial loans? Or is it 50-50? Just wondering here how is the composition by year-end in your view?

Yes, Brian, thank you for your question. What we expect is to have an almost even contribution. We expect the portfolio to maintain this 50% for each of the banking segments. We could see some change by the end of the year, but for the contribution to the NIM, it will be more or less balanced as we expected.

Okay. But just a quick follow-up here. So if we see, for example, I don't know, worsening conditions in retail, would you pivot and be a bit more aggressive on the commercial side? Or you will go along with the plan because penetration is still low?

Yes. In that case, we would be more aggressive on the commercial side. But also on the retail side, we have longer duration loans. So it's not that even in that case, on the credit conditions for individuals, the loan portfolio will not grow sharp, but even that in our base case scenario -- in our base scenario, not best case, we expect to be adjusting our credit policies, but allowing the loan portfolio to grow in a healthy manner.

We have another question in the Q&A box. I think we have some 5 minutes to take it. So first one, as the Argentinian economy stabilizes, do you see international financial institutions interested in getting into the Argentina market? Any worries, concerns?

I think, yes, I would say that we've seen and we've heard and we know that there are new players coming in into the market, neobanks, successful neobanks in Europe or big techs that are applying to become banks. So I think this is a very positive signal first of all, for Argentina in terms of confidence in Milei's government and what his agenda. I think -- so this is the first thing, very positive. Of course, we -- in our case, and our challenge is to continue strengthening our competitive position to continue simplifying and digitizing our operations to make it more simpler and agile for customers, and we -- I believe that what we have done in terms of remunerating accounts as being the first bank in the country to do this, we are anticipating what the fintechs will do when they start playing in the market. So this is something that we believe that will give us a good competitive position. In addition, all these international players, they are looking to individuals. Some of them, the bottom -- maybe the bottom line of the pyramid, the unbanked, some of them. The others, maybe another one might be on, let's say, on the premium side, but no one at this stage is really taking care of SMEs. So we believe in a balanced approach. We believe that the way looking forward for us to compete is to have a balanced approach and to provide good services with all the SMEs, particularly the value chains of dynamic industries and make sure that we get the cash management, making sure that we provide trade finance and leasing and so on. So -- and this is going to be our anchor and as well as the payroll accounts. So we believe that we -- in this sense, we will be able to compete effectively.

Okay. I think we have reached the end of today's Q&A session. So thank you for joining us today. We appreciate your interest in our company, and we look forward to meeting more over the coming months and providing financial and business updates next quarter. In the interim, we remain available to answer any questions that you may have. So have a good day.