Grupo Financiero Galicia S.A.

Welcome to first quarter 2024 earnings release. My name is Alan. I'll be your coordinator for today's event. Please note this call has been recorded and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any time, please press star zero and you'll be connected to an operator. I'll now hand you over to your host, Pablo Ferreira, to begin today's conference. Thank you.

Thank you. 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 U.S. 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 an 8.4% year-over-year contraction during March. In year-to-date terms, the economic downturn reached to 5.3%. During the first quarter, the primary surplus reached 0.6% of GDP and an overall surplus of 0.2%. compared to a 0.4% primary deficit in the first quarter of last year. This result was explained by a 254.6% year-over-year increase of revenues, whereas primary spending rose 144.1%. The National Consumer Price Index accumulated a 51.6% increase during the first quarter and a 287.6% in the last 12 months ended on March 31, 2024. However, monthly inflation has decelerated in recent months from 25.5% in December 2023 to 8.8% in April 2024, trend which is expected to continue. On the monetary front, the monetary base increased by 2.9 trillion pesos in the first quarter of this year, recording a 132.1% increase in year-over-year terms. After taking office, the central bank devalued the exchange rate by 54.2% on December 13th, a 118.3% variation, after which the FX has maintained a 2% monthly crawling peg. The exchange rate averaged 850.3 pesos per dollar in March, a 76.1% devaluation in year over year terms. The overnight repo rate remained the reference monetary policy interest rate after having replaced the LELIC rate in December, 2023. Since then, the monetary authority lowered the policy interest rate five times from 133% to 40%. It is also worth to mention that on March 11th, the central bank eliminated the regulation that established a minimum interest rate on time deposits. In March, 2024, the average rate on peso denominated private sector time deposits for up to 59 days stood at 85.3% 13.9 percentage points above the average for March of last year. Since March rates for time deposits were lowered in line with the reduction of the monetary policy interest rate and currently stands at an average close to 30%. Private sector deposits in pesos average 42.4 trillion pesos in March, increasing 29.6% during the quarter and 137.8% in the last 12 months. Time deposits in pesos rose 42.5% during the quarter and 104.2% year-over-year, while peso-denominated transactional deposits increased 21.2% and 174.8% respectively in the same period. Private sector dollar denominated deposits amounted to $16.7 billion as of the end of March, increasing 14.7% during the quarter and 2% as compared to March 2023. Peso denominated loans to private sector averaged 18.5 trillion pesos in March, increasing 20.4% in the quarter and 144% when compared to the year before. while private sector dollar denominated loans amounted to $4.3 billion, recording a 24.5% expansion during the quarter and a 17.5% rise when compared to March last year. Turning now to the results for the quarter, net income attributable to Grupo Financiero Galicia amounted to 255.5 billion pesos, 263% higher than the year-ago quarter, mainly due to profits from Banco Galicia for 244.3 billion pesos, from Naranja X for 22.6 billion pesos, and from Galicia Asset Management for 11.3 billion pesos, offset by a 16.4 billion pesos loss from Galicia Seguros. This profit represented a 7.1% annualized return on average assets and a 32.4% return on average shareholders' equity. Banco Alicia's net income for the quarter was 319% higher than in the year-ago quarter, mainly due to a 157% increase of the operating income, partially offset by 102% increase of the loss from the net monetary position. Net operating income increased 102% primarily due to a 209% higher net interest income offset by an 18% lower results from financial instruments and of 36% decrease in the results from gold and foreign currency quotation differences. Average interest in assets reached 6.6 trillion pesos, 25% lower than in the same quarter of last year, mainly due to a 61% decrease of the portfolio of government securities and a 33% reduction in the average balance of loans in pesos. In the same period, its yield increased 63 percentage points, reaching 127%. Interest-bearing liabilities decreased 29% from March of last year, amounting to 5.3 trillion pesos, mainly due to a 59% decrease in time deposits in pesos. During this period, its cost increased 9.7 percentage points to 52.2%. Interest income increased 55% due to a 48% growth of interest on government securities, a 338% increase of interest on repurchase agreement transactions, and a 12% increase of interest on loans and other financing. Interest expenses decreased 14% as a consequence of a 33% lower interest on time deposits due to the decrease in its average volume. Net fee income decreased 6% from March last year mainly due to a 25% lower profit from fees on bundles of products and also a 34% decrease on utility bills and collection services, partially offset by a 68% increase of other fees. Net income from financial instruments decreased 18% due to lower results from government securities and to losses from derivative financial instruments. Gains from gold and effects quotation differences was 36% lower from the year-ago quarter, including the results from foreign currency trading. Other operating income increased 43% in the quarter because of a 126% increase in other adjustments and interest on miscellaneous receivables. As regards provision for loan losses, the amount for the quarter was 37% higher than the one recorded in the year-ago quarter, to 47.3 billion pesos. Personal expenses were 3% higher than in the first quarter of 2023 in line with the 5% increase of staff and of salary agreements with the union. Administrative expenses were 10% higher as a consequence of 34% higher taxes and 20% higher expenses for maintenance and repairment of goods and IT. Offset by 51% lower expenses for publicity from promotion and research. Other operating expenses increased 64% mainly due to higher charges for other provisions. The income tax charge was 517% higher than the first quarter of 2023 due to higher operating results. The bank's financing to the private sector reached 3.9 trillion pesos At the end of the quarter, down 20% in the last 12 months, with peso-denominated loans decreasing 29% and dollar-denominated loans growing 37%. Net exposure to the public sector decreased 15% year-over-year because of lower exposure to a central bank, LELIC, LELID, and repurchase agreement transactions. Public sector exposure, excluding central bank exposure, represented 23% of total assets compared to 13% as of the end of the first quarter of last year. Deposits reached 6.5 trillion pesos, 26% lower than a year before, mainly due to a 52% decrease of time deposits in pesos and a 47% decrease of current account in pesos. The bank's estimated market share of loans to the private sector was 12.2%, 52 basic points lower than at the end of a year-ago quarter, and the market share of deposits from the private sector was 10.2%, 38 basic points higher than in the same quarter of 2023. The bank's liquid assets represented 102.5% of transactional deposits and 64.4% of total deposits, compared to 115.9% and 57.9% respectively from a year before. As regards asset quality, the ratio of non-performing loans to total financing ended the quarter at 2.09%, recording a 41 basic points improvement as compared to the 2.50% of the first quarter of the prior year. At the same time, the coverage with allowances reached 148% down 38 percentage points from the 186% recording a year ago. As of the end of March, 2024, the bank's total regulatory capital ratio reached 32.1%, increasing 862 basic points from the end of the same quarter of the prior year. While tier one ratio was 30.9%, up 935 basic 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 solid metrics at healthy levels and to improve the level of profitability despite the significant impact of the high inflation and the steep recession recorded in the quarter. We are now ready to answer the questions that you may have. Thank you.

Thank you. If you'd like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. To withdraw your question, please press star 2. You'll be advised when to ask your questions. We'll take our first question from Ernesto Gabilando, Bank of America. Your line is open. Please go ahead.