Grupo Financiero Galicia S.A.

Hello and welcome to the third quarter 2023 earnings release for Grupo Financiero Galicia. My name is Melissa and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be in a listen-only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star 1 on your telephone keypad to register your questions. If you require assistance at any point, please press star zero and you will be connected to an operator. I'll now turn the call over to Pablo Servida. Please go ahead.

Thank you, Melissa. Good morning and welcome to this conference call. I will make a concise introduction and then we will take your questions. Some of the statements made during this conference call will be forward-looking statements within the meaning of the safe harbor provisions of the US federal securities laws and are subject to risk and uncertainty that could cause actual results to differ materially from those expressed. According to the monthly indicator for economic activity, the Argentine economy recorded a 0.3% year-over-year expansion during August. In year-to-date terms, the economic downturn stood at minus 1.6%, but year 2023 would end with a number closer to minus 2%, according to the Argentine Central Bank's market expectations survey. During the third quarter of 2023, the primary fiscal deficit reached 1.4% of GDP. This implied a slight deterioration against the 1.3% deficit accumulated during the same period of 2022. This outcome was explained by a 100.5% revenue increase in year-to-date terms, whereas primary spending rose 104.3%. The National Consumer Price Index accumulated a 103.2% increase during the first nine months of 2023. Inflation reached 142.7% annual variation in October 2023, which entailed an acceleration against the previous year's inflation, with inflation hitting its highest mark in 30 years. On the monetary front, the Argentine Central Bank expanded the monetary base by 942.5 billion pesos in the third quarter, recording a 66.6% increase in year-on-year terms. After the primary elections held in August, the Argentine Central Bank devalued the Argentine peso by 17.9%, which stood at 350 pesos per dollar between August 14 and November 15. Since then, the effect started displaying a daily crawl of around 0.1%. The average exchange rate in September stood at 350 pesos per dollar, which entailed a 50.6% peso devaluation for the first nine months of the year. When compared to September 2022, the Argentine peso underwent a 59% devaluation. The monetary authority rate interest rates after the primary election with the policy rate at the minimum rate for time deposits under 30 million pesos up to 118 percent. After the National Institute for Statistics published September inflation in mid-October, the policy rate was raised again and currently stands at 133 percent, as well as the minimum rate for time deposits. In September 2023, the average rate on peso-denominated private sector time deposits for up to 59 days stood 114%, 46.9 percentage points above the average of September 2022. Private sector deposits in pesos averaged 27.3 trillion pesos in September, increasing by 24.7% during the quarter and 121.7% in the last 12 months. Time deposits in pesos rose 22.7%, during the quarter and 121.2% year over year. While peso denominated transactional deposits increased 27.4 and 123.4% respectively in the same period. Private sector dollar denominated deposits amounted to $15 billion in September, 2023 decreasing 2.9% during the quarter and increasing 1% in the last 12 months. Peso denominated loans to the private sector averaged 11.7 trillion pesos in September, increasing 23% in the quarter and 101.4% when compared to September 2022. While private sector dollar denominated loans amounted to $3.8 billion recording a 2% retraction during the quarter, and a 5.2% expansion when compared to September 2022. In terms of politics, after the primaries, we had presidential elections in October, and after this first round, last Sunday, November 19th, there was a runoff, and Javier Millet was elected president. He will take office on December 10th. Coming now to Grupo Financiero Galicia, net income for the third quarter amounted to 54.2 billion pesos, 103% higher from the year-ago quarter, mainly due to profits from Banco Galicia for 51.1 billion pesos, from Galicia Asset Management for 3.3 billion pesos, and from Galicia Seguros for 590 million pesos, partially offset by the 2.3 billion pesos loans from Naranja X. This profit represented a 3.4% annualized return on average assets and a 17% return on average shareholders' equity. Banco Valencia net income for the quarter was 126% higher than in the year-ago quarter, as the net operating income increased 79%. Average interest earning assets reached 3.55 trillion pesos, 6% lower than in the same quarter of 2022, mainly due to a 13% decrease of loans in pesos. In the same period, its yield increased almost 37 percentage points, reaching 92.2%. Interest-bearing liabilities increased 2% from September 2022, amounting to 3.08 trillion pesos. This growth was mainly due to a 4% increase in time deposits in pesos. During this period, its cost increased 30.1 percentage points to 68.3%. Considering together net interest income and net income from financial instruments, they grew 35% from the same quarter of 2022. It is worth to remember the change in evaluation model of the deliques acquired from January 1st, 2023. These instruments used to be valued at fair value, and the criteria was changed to amortize cost. Thus, each yield is being recorded as interest income instead of within results from financial instruments. Net fee income increased 17% from September, 2022, mainly due to 19% higher profits from trade card fees, 32% increase from other fees and 9% higher fees from bundles of products. The gains from gold and FX quotation differences were 419% higher from the year-goal quarter, including the results from foreign currency trading. Other operating income increased 101% in the quarter as a result of a 58% increase in other adjustments and interest and miscellaneous receivables as a consequence of devaluation of financial instruments granted as collateral, and to a 452% increase in other income. As regards provision for loan losses, the amount for the quarter was 20% higher than those recorded in the year-ago quarter, reaching 20 billion pesos. Personal expenses were 9% higher than in the third quarter of 2022, in line with a 3% increase of staff and of salary increases above inflation, while administrative expenses were 5% higher due to a 27% increase of taxes. Other operating expenses increased 49% due to a 55% higher turnover tax due to an increase in the gross income tax from financial operations, and 51% higher charges for other provisions related to discounts on credit cards and payroll accounts. The income tax charge was 15.8 billion pesos, higher than in the third quarter of 2022, with an effective tax rate of 26%. The bank's financing to the private sector reached 2 trillion pesos at the end of the quarter, down 6% in the last 12 months, with peso-denominated loans decreasing 7% and dollar denominated loans, 29%. Net exposure to the public sector increased 1% year over year as a result of higher holdings of dual bonds and bodies offset by lower holdings of LELIC. Excluding the exposure to the central bank, LELIC, LDIB, and repurchase agreement transactions, net exposure represented 16% of total assets the same level as of the end of the third quarter of last year. Deposits reached 3.75 trillion pesos, 6% lower than a year before, mainly due to a 14% decrease of time deposits in pesos. The bank's estimated market share of loans to private sector was 11.68%, 16 basis points higher than at the end of a year ago quarter, and the market share of deposits from the private sector was almost 10%, 20 basic points lower than in the same quarter of 2022. The bank's liquid assets represented 110% of transactional deposits and 55% of total deposits up from 109 and 53% respectively from a year before. As regards asset quality, the ratio of non-performing loans to total financing ending the quarter at 2.46%, recording a 41 basic points deterioration as compared to the 2.05% of the third quarter of the prior year. At the same time, the coverage with allowances reached 134%, down 100 percentage points from the 234% recorded a year ago. As of the end of September, 2023, the bank's total regulatory capital ratio reached 25%, decreasing 78 basis points from the end of the same quarter of 2022, while tier one ratio was 24.1%, growing 22 basis points during the same period. In summary, in a particularly challenging and volatile political and macro environment, Grupo Financiero Galicia was able to keep asset quality, liquidity, and solvency metrics at healthy levels and to sustain a good level of profitability in spite of the significant impact of the high inflation of the quarter. We are now ready to answer the questions that you may have. Thank you.

Thank you. As a reminder, if you would like to ask a question, you may press star 1 on your telephone keypad. If you would like to withdraw your question for any reason, you may press star 2. You will be advised when to ask your question. Our first question comes from Brian Flores of Citibank. Please go ahead.