Banco Macro S.A.

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's third quarter 2024 earnings conference call. We would like to inform you that the third quarter 2024 press release is available to download at the Investor Relations website at Banco Macro at www.macro.com.ar slash Relaciones hyphen Investores slash. 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. Should any participant need assistance during the call, please press star, zero, to signal the operator. It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Jorge Scarnci, and Chief Financial Officer, as well as Mr. Nicholas Torres, IR. Now, I will turn the conference over to Mr. Nicholas Torres. You may begin your conference.

Thanks, Wyatt. Good morning, and welcome to Bank of Macros' third quarter 2024 conference call. Any comment we may make today may include forward-looking statements, which are subject to various conditions, and these are outlined in our 20F, which was filed to the SEC, and it's available at our website. Third quarter 2024 press release was distributed last Wednesday 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. 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 September 30th I will now briefly comment on the bank's third quarter 2024 financial results. In the third quarter of 2024, Banco Macro's net income totaled 91.3 billion pesos. This result was 293% or 68.1 billion pesos higher than in the third quarter of 2023. As of the third quarter of 2024, the accumulated annualized return on average equity and the accumulated annualized return on average assets were 6.8% and 2.1% respectively. In the third quarter of 2024, operating income before general administrative and personal expenses totaled 829.2 billion pesos, 61% or 313 billion pesos higher than the second quarter of 2024, and 25% or 272.3 billion pesos lower than the same period of last year. Net operating income before general administrative and personal expenses in the third quarter of 2024 was 403.7 billion pesos, increasing 263% or 299.6 billion pesos when compared to the previous quarter and 44% or 322.5 billion pesos lower on a yearly basis. Banco Macro's third quarter 2024 net income totaled 91.3 billion pesos, recovering from the loss posted in the previous quarter and 293% or 68.1 billion pesos higher than in the third quarter of 2023. This result is mainly due to higher net interest income and a lower loss related to the net monetary position as inflation is during the quarter. It is important to notice that during the quarter, as it's probably known, Banco Macro exercised about half of some put options that it held on certain inflation-adjusted securities, leading to a $50 billion loss related to the exercise of said put options. It is also worth mentioning that the bank continues to hold put options on the remaining position of those bonds. In the third quarter of 2024, provision for loan losses totaled 23 billion pesos, 24% or 4.5 billion pesos higher than in the second quarter of 2024. On a yearly basis, provision for loan losses increased 53% or 7.9 billion pesos. In the quarter, net income totaled 569.1 billion pesos, 167% or 356.1 billion pesos higher than in the second quarter of 2024, and 53% or 220.9 billion pesos higher year on year. Interest income increased 23% when interest expenses decreased 40%. In the third quarter of 2024, interest income totaled 857.6 billion pesos, 23% or 160.4 billion pesos higher than in the second quarter of 2024, and 35% or 468.4 billion pesos lower than in the third quarter of 2023. Income from interest on loans and other financing totaled 408.4 billion pesos, 13% or 56.9 billion pesos lower compared with the previous quarter, mainly due to a 15.4 percentage point decrease in the average lending rate, which was partially offset by a 20% increase in the average volume of private sector loans. On a yearly basis, income from interest on loans decreased 28% or 161.1 billion pesos. In the third quarter of 2024, interest and loans represented 47% of children's interest income. In the third quarter of 2024, income from government and private securities increased 143%, or 253 billion pesos quarter-on-quarter, and decreased 33%, or 210.1 billion pesos compared with the same period of last year. In the third quarter of 2024, income from Rivos totaled 18.6 billion pesos, 66% or 36 billion pesos lower than the previous quarter, and 84% or 97.5 billion pesos lower than a year ago. In the third quarter of 2024, FX income totaled 16.3 billion pesos gain, 43% or 12.5 billion pesos lower than the previous quarter, and 98% or 719.4 billion pesos lower than a year ago. FX income gain was due to the 6.5% Argentine peso depreciation against the U.S. dollar and the bank's long dollar position during the quarter. In the third quarter of 2024, interest expense totaled 288.4 billion pesos, increasing 40% or 195.7 billion pesos compared to the previous quarter, and 71% or 689.4 billion pesos lower compared to the third quarter of 2023. Within interest expenses, interest on deposits decreased 41% or 191.3 million pesos, quarter and quarter, due to a 12.4 percentage point decrease in the average rate paid on deposits, while the average volume of deposits from the private sector decreased 11%. On a yearly basis, interest on deposits decreased 71% or 682.4 billion pesos. In the third quarter of 2024, the bank's net interest margin, including FX, was 31.5%, higher than the 20% posted in the second quarter of 2024, but lower than the 60% posted in the third quarter of 2023. In the third quarter of 2024, Bank of America's net fee income totaled $117.8 billion, 8% or $9.2 billion higher than the second quarter of 2024, and 7% or $8.1 billion higher than the same period of last year. In the third quarter of 2024, net income from financial assets and liabilities of fair value to profit or loss totaled a 103.6 billion pesos gain, decreasing 24% or 32.3 billion pesos in the quarter. The gain was mainly due to a 4% decrease in income from government securities and a 58% decrease in income from private securities. In the quarter, other operating income totaled 45 billion pesos, 7% or 3.3 billion pesos lower than in the second quarter of 2024. On a yearly basis, other operating income increased 29 percent or 10.1 billion pesos. In the third quarter of 2024, BACOM ACROS administrative expenses plus employee benefits totaled 251.9 billion pesos, 11 percent or 24.9 billion pesos higher than the previous quarter due to higher employees' benefits, which increased 6 percent and a 22 percent increase in administrative expenses. On a yearly basis, administrative expenses plus employee benefits increased 23 percent or 47.4 billion pesos. As of the third quarter of 2024, decision rates have reached 25.5%, deteriorating from the 22.2% posted in the second quarter of 2024 and the 23% posted one year ago. In the third quarter of 2024, expenses increased 10%, while net interest income plus net fee income plus other operating income increased 68% compared to the second quarter of 2024. In the third quarter of 2024, the results from the net monetary position totaled 283.9 billion pesos loss, 45% or 234.8 billion pesos lower than the loss posted in the second quarter of 2024. And 57% or 308, 3.3 billion pesos lower than the loss posted a year ago. This result is a consequence of lower inflation observed during the quarter. Inflation is to 12.1% from 18.6% in the second quarter of 2024. In the third quarter of 2024, Macro's effective tax rate was 24.4%, lower than the 60.5% registered in the third quarter of 2023. Further information is provided in Note 21 to our financial statements. In terms of loan growth, the bank's total financing reached 4.55 trillion pesos, increasing 17% or 657.9 billion pesos quarter-on-quarter, and 28% or 988 billion pesos higher year-on-year. Within commercial loans, overdrafts stand out with a 46 percent or 212.5 billion pesos increase, while decimals decreased 12 percent or 83.5 billion pesos. Within consumer lending, personal loans increased 43 percent or 235.5 billion pesos, while credit card loans increased 25 percent or 227.1 billion pesos. Special financing increased 19 percent or 616.7 billion pesos, while U.S. dollar financing decreased 6 million dollars. It is important to mention that Banco Max's market share over private sector loans as of September 2024 reached 9.2%. On the funding side, total deposits increased 7% for 516 billion pesos for one quarter, totaling 8.1 trillion pesos, and increased 30% for 1.8 trillion pesos year on year. Private sector deposits increased 6% for 401.7 billion pesos for one quarter, while public sector deposits increased 12% or 104.6 billion pesos quarter-on-quarter. The increase in private sector deposits was led by demand deposits, which increased 28% or 999.7 billion pesos, driven by the tax amnesty, while time deposits decreased 32% or 829.5 billion pesos quarter-on-quarter. While in private sector deposits, peso deposits decreased 15% or $941.7 billion, while U.S. dollar deposits increased 87% or $1.4 billion. As of September 2024, Bank of Macros transactional accounts represented approximately 62% of total deposits. Bank of Macros market share over private sector deposits as of September 2024 totaled 7.4%. In terms of asset quality, Bank of America's non-performing total financial ratio reached 1.15%, and the coverage ratio measured as total allowances under expected trade laws over non-performing loans under central bank rules reached 177.6%. Consumer portfolio non-performing loans improved 12 basis points down to 1.4% from 1.52% in the previous quarter, while commercial portfolio non-performing loans improved six basis points in the third quarter of 2024. In terms of capitalization, Banco Macro accounted an excess capital of 2.53 trillion pesos, which represented a capital adequacy ratio of 32.8% and a CO1 ratio of 31.3%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets' total deposit ratio reached 91%. Overall, we have accounted for another positive quarter. We continue to show that financial position. Asset quality remained under control and closely monitored. We keep on working to improve more efficiency standards, and we keep a well-atomized deposit base. At this time, we would like to take questions you may have.

Okay, at this time, we're going to open it up for questions and answers. If you would like to ask a question, please press star, then 1 on your touchtone phone. And if you want to withdraw, please press star, then 2. One moment as we assemble our questions. And our first question will come from Brian Flores with Citibank. Please go ahead.