Banco De Chile ADS

Hello, everyone, and welcome to Banco de Chile's 2Q20 Financial Results Conference Call. If you need a copy of the press release, it is available on the company's website. Today with us, we have Mr. Rodrigo Barravena, Chief Economist and Senior VP of Institutional Relations, Mr. Pablo Mejia, Head of Investor Relations, and Mr. Daniel Villarse, Financial Control. Before we begin, I would like to remind you that this call is being recorded and that the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements. I will now turn the call over to Mr. Rodrigo Aravena, who may please proceed.

Good afternoon, everyone. Thank you very much for joining us on this conference call. Today, we'd like to present our analysis of three main areas. First, evolution of the microenvironment. with a special emphasis on the role of economic policies and strong fundamentals as key factors in the potential recovery in the future. Then, we will present the main advances in critical strategic areas of our bank. Finally, before moving to the Q&A section, we will go over our financial results for the second quarter of 2020. I'd like to start with an overview of recent developments on the macro side. Please move to slide number three. Chile has been experiencing an ongoing contraction since March, in line with the trend observed in most countries. This downturn has mostly been explained by the strict social distancing measures which aim to reduce the spread of COVID-19. This has led to a chart drop of 14% in the GDP during the second quarter, as seen in the chart on the left. The breakdown shows a significant deterioration in sectors more intensive in social activities, such as hotels, restaurants, and transportation. On the other hand, the positive growth posed by mining production has offset the chart decline in the rest of the economy. The overall CPI has also been falling. As seen on the other right chart, CPI went down to 26% in June from 39% in February before the pandemic. This trend has been driven by the slight growth reflected in the lower non-tradable inflation and the stability in the Chilean pesos, which has reduced tradable prices. The labor market has also been affected by subdued growth. The bottom left chart shows the increase in the unemployment rate to 12.2% in June, led by the annual decline of 20% in total employment and the 15% drop in the labor force. I am aware that this scenario described so far is not entirely encouraging. However, we are optimistic about the future, especially relative to other countries in the region. In fact, the lower duplication of the Chilean currency, as shown in the chart on the bottom right, confirms the better outlook for Chile. Therefore, the natural question is, What is behind this positive view? Let me try to answer this question on the next slide. Federal factors support a positive view of Chile in the future. One of them is existence of sound fundamentals, which make Chile the strongest economy in Latin America. Apart from having the highest per capita GDP and the most stable economy, We also have a unique combination, the lowest vulnerability and the most significant room to implement counter-cyclical policies. As the table shows, Chile has the best counter-risk, reflected in the lowest sovereign credit for swap among peers. Thanks to this, the government has issued bonds in foreign markets with very favorable conditions. Additionally, Chile has important buffers that make possible the implementation of further fiscal and monetary measures. Resources available from the central bank, including international reserves and the credit line with the IMF, are nearly 20% of the GDP, while the net fiscal debt was only 14% at the end of 2019, due to $22 billion held in sovereign wealth funds. Chile is also less vulnerable to external shocks. According to statistics released by the IMF, foreign investors represent only 10% of the local equity market, due to the strong base of domestic institutional investors. Consequently, Chile would experience lower impact if there were capital outflows from emerging countries. That's why, typically, the Chilean markets have been more resilient in negative cycles. These fundamentals are even more relevant when they are supplemented by strong counter-statistical policies, as we've seen in Chile. The magnitude of the fiscal policy can be seen in the significant rise in the fiscal deficit, as the left part shows. Chile can implement these policies because the solid position had before the pandemic, as shown in the chart on the right. due to the low public debt relative to most countries in the world. The improvement in GDP growth will likely take place in the short term. Let me explain why in the slide number five. Chile is easing the social distancing measures adopted in this pandemic as a result of the improvement in the number of active cases of COVID-19. The upper chart shows the continuous downturn of them, while the number of recovered people has risen significantly. Based on these positive trends, the government reduced zones in quarantine, making possible the beginning of gradual normalization. This change follows a period marked by very strict social distancing measures where, at the start of the bottom shows, more than half of the population was under quarantine. In fact, the Trainings Index, which is released by Oxford University, confirms that Chile applied strict measures due to the temporary suspension in schools and commerce, as well as constraints to the mobility. These changes should be augmented by the economic measures adopted in this crisis. As we mentioned in the previous conference call, Chile has been recognized by having a coordinated, timely, and robust response from different economic authorities at the table on the right shows. The government has announced measures equivalent to nearly 11% of the GDP, including the funds of $12 billion to finance transfer to vulnerable people and public investment for the next year. These resources supplemented the measures announced before, such as the capitalization of both Fogate and the unemployment fund. The central bank has eased even more the monetary policy. In addition to the interest rate cut to 0.5%, the board implemented a forward guidance mode, anticipating that the interest rate will likely remain at 0.5% for the next couple of years and also announced an extension of the FCIC program by further $16 billion and asset purchasing in the open market by $8 billion. Finally, Congress approved a bill that allows withdrawal of up to 10% of personal savings held in pension funds. Despite the long-term impact, This measure will contribute to an increase in private consumption this year. Additionally, they will discuss a change in the Constitution that will allow the central bank to buy and sell treasury bonds in the open market, providing an additional tool to stabilize liquidity in stressful scenarios. All in all, We expect a recovery for the next year, which I'd like to discuss in the next slide. Please go to slide number 6. This table summarizes our macroeconomic forecast. We expect the GDP to decline by 6% this year. Since the GDP plummeted by 14% in the second quarter, this estimate is consistent with better growth ahead. which is more likely after the recent easing in social distancing measures announced by the government. In this environment, we estimate a 4% growth in 2021 as a result of expansionary policies, the better outlook for the global economy, and favorable copper prices. Nevertheless, we are aware of the unusual uncertainty mainly that related to the future evolution of the pandemic. as well as internal factors. We expect the CPI to be at 2% this year and 2.2% next year due to the subdued growth and the stable currency. These changes in the macro conditions have had a direct impact on the banking sector. Please move to slide number 7 to analyze them. Slightest growth, weaker employment, and lower inflation have affected the results of the banking industry. Total net income, adjusted by Itaú figures, posted 437 billion pesos in the second quarter, which is 7% lower than the previous quarter and almost 50% down relative to the same period last year. In a broad sense, this decrease is mainly explained by the pickup in provisions, lower dynamism in loans, and to a lesser extent, the lower mean due to the reduced CDI. As shown in the chart on the right, there was a lower nominal growth in total loans, mainly in those related to more profitable products. As reflected by consumer loans declining 6.8%, in the case of mortgage loans, Quarter-and-quarter growth slowed to 1.4% during the quarter. The changes are explained mainly by lower disposable income and lower consumer confidence. On the other hand, commercial loans maintained the pace of growth, increasing 3.7% quarter-and-quarter as a result of the implementation of COVID loans program. Total provisions increased. doubling the level observed the same period last year. This increase is mostly attributable to the considerable deterioration in commercial sectors affected by the pandemic and the weak employment outlook, resulting in banks recording an important level of additional provisions during the quarter. Due to this, The cost of risk for the industry increased to 2% from 1.15% last year. It's essential to keep in mind that these figures have not reflected the total impact of the weaker economy in asset quality yet, particularly for loans evaluated on a group basis due to the deferral of housing and consumer loan installments that have been implemented during the crisis. Therefore, A further deterioration over the next month is likely for these types of loans. Instead, cost of risk for individually evaluated loans should have already been part of the outlook for the economic sector in which those companies participate. I'd like to finalize this part by highlighting the important role that the banking industry is playing in the current crisis. We know about the positive correlation between GDP and total loans, which tend to be higher in the case of commercial loans. This means that, in positive cycles, loans to companies grow even faster than the overall economy, while in negative cycles we used to see a contraction, as was the case in 2009. The chart on the bottom shows the strong correlation, the strong relationship between them. However, Today, the story is different. Despite the fall of 14% in the GDP during the second quarter, commercial loans increased by 3.7%. This decoupling has been attributable to the pickup in loans with a state guarantee mainly to SMEs, which are known as COVID loans. This confirms the strong counter-cyclical role that our authorities and the banking sectors are playing in this crisis, which undoubtedly will contribute to a faster and healthier recovery after the pandemic. It's important to highlight this has been possible thanks to the solid position of Chile as well as the robust position of Chilean banks, especially in terms of capital. Now, We would like to move to our advances in key strategic pillars and the financial results posted in the last quarter. Please flip to slide number nine. Banco de Chile has been recognized by its ability to post consistent and robust results over time. Since we aspire to continue being the most sustainable and profitable bank, we have reinforced three main aspects of our long-term strategy. digital transformation, efficiency and productivity, and increasing commitment to ESG standards. We strongly believe that strengthening these areas will be critical in transforming Banco de Chile according to the challenges that arise in the new business and social environment. Now, Pablo Mejia, our Head of Investor Relations, will share with you the advances accomplished in these areas.

Pablo, please go ahead. Thanks, Rodrigo. Please move to slide 10, where we'll highlight some of our initiatives in digital banking. The pandemic we are facing is changing the way we live, especially in terms of using technology to fulfill our needs. In this sense, digital initiatives that we have implemented in the last years have allowed us to understand our customers' behavior further and has built a solid basis to provide 100% online solutions for most of their requirements during the sanitary crisis. Even though we already had robust platforms, we recognize that the pandemic challenged us to accelerate our digital transformation as we provided an essential service and our role is critical to support our clients' financial activities. As you can see in the timeline, we have innovated in our digital experience for our customers in several fields, focusing on delivering the best customer experience through the incorporation of business intelligence, data mining, analytics, digitalization of our process and branches. In order to continue to provide the best customer service for our customers, we're working on launching a new digital onboarding platform that will give a significant improvement with the possibility of opening a new account 100% online at a very low cost for us. This will also allow us to gain a greater number of customers, particularly within the younger segments, as we will promote financial inclusion. as well as we will promote financial inclusion. Another recent advancement in our front office digital platform is our new web page that offers improved customer experience and incorporates analytic tools. It's more modern, secure and intuitive and has inclusive features for the visually impaired. We also included a heat map that will provide us with valuable information to understand even better a customer's preferences. Those efforts contributed to establish the best digital bank in Chile, as well as having the best online platforms according to Global Finance. All the investments we have made in the previous years allowed us to undertake high digital demands of financial services in the current crisis. During the pandemic, we processed over six times the number of loans pre-COVID using robotics, and through Agile developments, we were the first bank in the market to provide a facility to postpone installments for personal banking customers 100% online and to offer COVID loans to SMEs through our digital channels. On the other hand, we also noticed that usage rates in our digital channels have been intensifying significantly. As we can see on the bottom of the slide, online consumer loan originations increased from 37% during the first half of 2016 to 46% of total operations in the first half of this year. On the right side, the activities done through our online platforms continued growing and now represent 88% of total monetary transactions, an important rise in mobile transactions representing an increase of 16% year-on-year. Although we acknowledge that the lockdown mostly explains the higher digital channels preference. We believe that this trend will continue after the pandemic has finished. Please turn to slide number 11. The successful implementation of our digital transformation has played a critical role in providing the best experience to our customers. Despite this challenging period, we've continued to show excellent indicators. As you can see, We posted once again the highest brand recognition in the Chilean industry and top of mind for the high income segment with a very wide gap with our closest competitors. Along with our superior brand recognition, we're also the leader in customer satisfaction as measured by Net Promoter Score. It's important to note that we have historically been recognized as the bank with the best customer experience levels according to many different sources. We attribute the success to the quality of our services and products, which have helped to generate stronger, long-lasting relationships with customers. These figures are reinforced with the recognition of receiving a Distinguished National Award for Customer Satisfaction in 2019. Another relevant point I want to mention is the strength of our brand. In one survey, customers are asked if they were to switch to another bank, which bank would they choose? As you can see on the chart in the middle, we are the most preferred bank in Chile. Another key aspect we highlight is related to security and solvency, where we lead the perception with a large gap when compared to the next main competitor. This position in surveys is especially relevant in the context of new regulations where it will be much easier for customers to switch from one bank to another. This customer satisfaction is most clearly demonstrated by our low attrition rate that you can see has remained historically low on the chart on the bottom left, which we believe if it's not the best, it's one of the best in the Chilean banking industry. Please turn to slide number 12. Another aspect of our long-term strategy is efficiency and productivity. Our combined focus of digitalizing the bank by implementing technologies that increase productivity and streamlining processes together with identifying savings areas and implementing better cost controls has begun to bear fruit. In addition to these improvements, in 2019 we started a process of optimizing our branch network which includes a new service model that has resulted in a decrease in branches. We have reduced our network to 336 branches, almost 50 less when compared to a year earlier. The new office model should not only permit Further improvements in efficiency will also increase client experience, which is even more important in this context. We have implemented, for instance, new intelligent self-service machines to provide more services that traditionally had to be executed by the service desk area. Another measure that contributes to reduce their cost is our purchasing desk, which has shown excellent results due to the reduction in expenses in areas such as acquisitions and services hired. Through all of these initiatives, we have been able to show consistent and significant improvements in our productivity as measured by loans per employee and total assets to expenses as seen on these charts. We expect that through these projects, we continue improving our productivity and delivering a better customer experience. We strongly believe that through the greater use of technology across our business, we should continue to see improvements in efficiency in the long term. Please turn to slide 13. The final aspect I would like to share before moving on to our second quarter results is the advances we have made in our commitment to sustainability. Today we are witnessing an unprecedented health crisis that is still impossible to quantify the effects that it will have in the long term. We are aware of our role in supporting the recovery of economic and social development, especially in challenging times, and now this is not an exception. During the pandemic, we strengthened our commitment to society and implemented a national support plan. We took several measures to support our customers. Apart from being the first bank to offer the option of reprogramming loans 100% online, we're the first bank to offer SME customers COVID loans. For this segment, we went beyond providing liquidity and hosted for the fourth time our National Entrepreneur Challenge. where we achieved a record of 56,000 applications and we promoted a virtual fair for 60 entrepreneurs where they were able to exhibit their products. Furthermore, we have also implemented many actions that aim to reduce the consequences of the pandemic for vulnerable groups in Chile. We delivered packages with essential groceries for people with disabilities and their families, offering food, medicine and telemedicine services to senior adults as well. All of these efforts rewarded our banks to be recognized as the financial institution that did the best job in taking actions during this health crisis as seen on the chart on the right. Please turn to slide 15 to begin our discussion of this second quarter. During this quarter, we recorded a bottom line of 112 billion vessels with an ROE of 12.5%. a level we consider reasonable given the magnitude of the crisis we are facing globally and the low level inflation for the period. We also outperformed our peers. Apart from having the highest profitability indicators and coverage ratio, we maintain the best capitalization level as shown on the chart on the right. We are confident that our prudent risk management approach, strong capitalization and our consistent strategy will allow us to continue delivering sustainable and superior profitability for our shareholders. Please turn to slide 16. Operating revenues dropped 6% year-on-year due to the fall of inflation from 1.2% to only 0.3%, impacting non-customer income and, to a lesser extent, a slight decline in customer income, which even though remains strong when taking into consideration the weaker environment in this context, NIM fell 4.5% last year to 3.5% this year, as you can see on the table on the bottom left. About 50% of this decrease was caused by lower CPI we had this quarter and the effect of the lower contribution of demand deposits to our cost of funds given the sliding interest rate. To a lesser extent, these factors coupled with the negative impacts of mortgage loan rate renegotiations at lower rates in the second half of 2019 and the new regulation regarding automatic payments of overdraft line, which became effective in January 2020, both partly offset by higher income from loans. The rest of the decrease in NIM is explained by higher exposure to low margin and low risk assets such as the central bank short term bonds used to comply with the reserve requirements linked to boost in demand deposit balances and other effects. As the chart on the upper right shows, Customer income remained relatively stable as a result of opposite forces. The lower overnight interest rates sharply reduced the contribution from deposits, even though the impressive gross imbalance is seen during the last month. On the other hand, as mentioned, there were positive contributions from the increase in commercial loans, higher sales in the distribution desk from the Treasury Division and higher fee income. Most of the rise in fees was associated to a $9.3 billion increase in insurance brokerage linked to the partnership with an international insurance company. Unfortunately, this was partly offset by a substantial decrease in economic activity amid the strict lockdowns that lowered transactional fee income from other sources such as cards. The market volatility also affected revenues from a mutual fund and stock brokerage business due to customers moving to their AUMs to fix income funds that generate lower fees as well as lower transactions and stock trading. I think it's also important to note that our fee business is chiefly related to the retail segments. Although we had some drawbacks this quarter as a result of the weak activity that affected the aggregate demand from customers and therefore transactionality, we believe that this is temporary. Despite this impact, we continue leading the industry in net operating income and fee margin, as you can see on the charts on the right. Our margin as a percentage of average interest in assets reached 3.8% and 1.2%, well above the average level of our peers. Please turn to slide 17. Total loans reached almost 31 trillion pesos this quarter, increasing 7% year on year and remained basically flat quarter on quarter. Demand, except for COVID loans, was weak across all segments this quarter. In the wholesale segment, we posted a year-on-year growth of 5% but the quarter-on-quarter dropped by 3%. There was a similar trend in personal banking loans, increasing 5% year-on-year and falling by almost 2% quarter-on-quarter. The annual rise was mainly due to residential mortgage loans that grew 8% while, in contrast, consumer loans during the same 12-month period decreased 6%. On a quarterly basis, mortgage loans remained flat and consumer loans actually dropped 6%. These results were attributable to the strict lockdowns in the weaker economy as we discussed in the beginning of this call. This resulted in reduced household spending as well as lower demand for home sales. In fact, the expectation of the National Chamber of Construction is that new home sales will actually drop by 40% in 2020 and the sector will only return to normal business levels mid-2021. We expect that the dynamism of the personal banking loans should continue weak throughout the remainder of the year. These results were almost offset completely during the quarter by the strong growth we experienced in COVID loans for the SME book, which grew 19% year-on-year and an impressive 14% quarter-on-quarter. Please turn to slide 18. As mentioned, the strong results in this segment was attributable to the government stimulus package for companies that provided guarantees of up to 85% for working capital loans. We are proud that we have been able to assist our customers and the country by taking part in this program. We placed during the quarter over 1 trillion pesos, equivalent to 3.7% of total loans as of June 30th. Most of these loans were directed to provide liquidity to small and medium-sized enterprises and as of July 2nd, we granted almost 25,000 loans with a market share of 18% which is similar to our market share in the sector and aligned with our risk appetite. In terms of total loans reprogrammed and taking into consideration the total value of the loan, we are the bank with the lowest proportion of total loans amongst our peers. as shown on the chart on the bottom right. Finally, if we only look at the installments that have been reprogrammed and of the loans granted, this reaches only $495 billion, or 1.6% of total loans, as the chart on the top right side of this slide demonstrates. I think it's very important also to highlight that the banking industry has made an important effort to assist those customers. We believe that the efforts combined with all of the programs that the government has provided to lay in should make a difference during the economic recovery post-COVID. Please turn to slide 19. We continue to have the best funding structure in CELA. This has been possible thanks to our customers using us as their primary bank account. This is clearly demonstrated by the strong increase we had in demand deposits which rose 37% year-on-year and 11% on a quarterly basis. Also important to note the significant change that the rise in DDAs has for our funding structure. Today, our demand deposits represent 28.5% of total funding, up from last year, 25.7%, and significantly higher than our peers, as shown on the bottom right chart. More importantly, approximately 75% of our DDAs come from non-financial counterparties, which represents a stable source of financing. Aligned with this, we have been able to replace We have been able to replace time deposits from financial counterparties with DDAs. We also have a well-diversified funding base, which is very relevant today, as can be seen on the chart on the left. Undoubtedly, this makes another positive difference of Banco de Chile. All in all, our strong brand coupled with our leading risk indicators and our strong Pier 1 capital base of 10.9% allow us to place debt at favourable conditions, and have permitted us to maintain a leading level of cost of funding of only 2% in the local currency. We're confident that this crisis will open new opportunities to strengthen our already solid relationship with our customers and continue increasing our share of wallet. Our long history of prudent risk policies and very reasonable growth have been fundamental to our sustainability over time and are intertwined to our long-term strategy. Please turn to slide 20. Managing risk globally across all levels of the corporation is a key component to a consistent and attractive result. Our board of directors play a vital role actively participating in establishing policies and guidelines for accepted risk levels, for developing and validating provision models, as well as to define additional provisions. Management is responsible for controlling and complying with the mandates of the board, especially in terms of control of different types of risk. As you can see on the chart on the right, cost of risk this quarter jumped to 139 billion pesos, up from only 68 billion pesos last year and 126 billion from the first quarter. However, our net NPL ratio dropped 1.4% in the first quarter of 2020 to 1.3%. This combined combination of higher cost but lower NPLs was principally due to two factors. Please take a look at the chart on the bottom right. First, 70 billion of the 139 billion pesos posted in the second quarter were due to additional provisions. These provisions were recorded to protect the bank against unforeseeable economic fluctuations. In line with this, the pandemic has brought forth many uncertainties such as city-wide lockdowns, deterioration in employment and financial stress in companies. These uncertainties have made it extremely difficult for traditional risk models to properly gauge credit risk, and as a result, our board approved the establishment of these general provisions. It's important to note that these allowances are not for any certain segment, sector or customer, but they are for the entire portfolio and implemented in different circumstances such as the one we are facing today. Second, the remainder of the quarterly provisions was chiefly due to the impact of COVID-19 on the financial position of certain large customers, which have suffered a deterioration in their business environment and income generating capacity. As a reminder, large companies are evaluated on an individual basis for provisioning purposes using a forward looking approach. In terms of retail books, the retail books composed by consumer mortgage and commercial loans evaluated in a group basis, delinquency levels had remained relatively stable. Nevertheless, this was mainly due to the support measures we provided this segment, which included grace periods, loans at preferential rates, and government-backed COVID commercial loans for SMEs. In addition, as a way to promote lending and assistance to banking customers, the local regulator gave a special treatment to reschedule loans in terms of provisioning, which has a positive effect on cost of risk when compared to a normal period, even though we expect deterioration in the portfolio in the next few months. In this regard, we are confident that our prudent risk policies have made Banco de Chile the most prepared bank to face negative cycles, as shown on the next slide, number 21. As you can see, our coverage ratio reached 235% as of June 30th, significantly higher than our peers' and we recorded the lowest delinquency ratio of 1.3%. Our prudent risk culture has also contributed to creating the highest level of additional provisions in the industry reaching 283 billion vessels as you can see on the chart on the bottom right. All of these figures demonstrate the soundness and quality of our portfolio and our prudent management when it comes to risk. Our consistent and successful strategy has been censored to grow our portfolio responsibly and this has allowed us to portray a solid track record of dependable results. As shown on the following slide 22, A well-diversified portfolio with lower overall exposure to the riskier segments also contributes to these results. Our portfolio is highly diversified and concentrated in lower risk sectors. Despite this, we are the most profitable bank in Chile because our customers choose to use us as their primary account and this provides many additional benefits that I'm sure you're all aware. As you can see on the chart on the top left, retail segments. represents 63% of our portfolio and this is divided in three main areas. First, consumer loans for middle and upper income individuals as well as mortgages are focused to the low risk individuals. We have the highest market share in high income individuals which are low risk in nature. Second, our exposure to consumer finance through our credit sealer brand is only 2% today, significantly lower than the level we had in 2009 during the subprime crisis which represented nearly 7%. And lastly, our SME book is a very high quality portfolio that has had historically low levels of cost of risk and is closely related to our upper income individuals. We may not have the largest market share in this segment, but we certainly have the best portfolio in the industry. The remaining portion of the portfolio is the wholesale book that represents 37% of total loans. We work with the largest companies and multinational corporations in Chile and by nature, this segment is lower risk. For this reason, we're proud that we have historically had a solid performance when it comes to wholesale risk. The pie chart on the bottom of the slide shows our exposure to different sectors in Chile. As you can see, our penetration in the highest risk sectors is lower than our peer group. In retail, hotels and restaurants, We have an exposure of 9% versus our peers of 11%. In construction, our exposure is 7% versus the competition's 10%. And lastly, we compare a similarity to our peers in transportation, but it's important to note that we don't have any important loans to the airline industry. We are confident that our prudent approach to risk management should set us apart in the coming months when banks have more information regarding the quality of portfolio and how this will translate into cost of risk. Please turn to slide 23. More important than ever is our focus on managing cost. As you can see on the chart on the left, we managed to maintain total operating expenses basically flat quarter on quarter and decrease 4.4% year on year. The yearly drop in expenses was driven by lower salaries and other expenses as shown on the chart on the right. Specifically, we were able to increase our business activity without increasing significantly our salary and also had a reduction in severance payments and loan loss provisions on cross-border loans due to higher appreciation of the Chilean PESEL this quarter as compared to the second quarter of 2019. In addition to this, we lowered our outsourced Salesforce services by absorbing these functions internally during the second half of last year. We lowered marketing expenses by reducing media expenses, market research and adjusted loyalty program. These reductions were also partially offset by higher IT expenses related to software licensing to adjust the bank quickly in this environment. Also, we incurred higher expenses linked to fixed asset maintenance related to sanitation, new safety measures related to the pandemic as well as costs associated to updating our branches to the new service model among others. On a year-to-date basis, we recorded an improvement in efficiency as shown on the chart on the bottom right, reaching 43.6%. Please turn to slide 24. Before moving on to questions, I would like to highlight the favourable comparison of our stock versus our main tiers in Latin America. As you can clearly see, we are the stock that has been...