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 4Q24 earnings conference call. We would like to inform you that the 4Q24 press release is available to download at the Investor Relations website of Banco Macro, www.macro.com.ar, slash, Relaciones, dash, Inversorors. 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 this 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 Scorinci, Chief Financial Officer and Mr. Nicholas Torres, IR. Now I will turn the conference over to Mr. Nicholas Torres. You may begin your conference, sir.

Thank you. Good morning, and welcome to Banco Macros' fourth 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. Fourth quarter 2024 press release was distributed yesterday, 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 of Argentina. For ease of comparison, figures of previous quarters have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjusting for each period through December 31st, 2024. I will now briefly comment on the bank's fourth quarter of 2024 financial results. In the fourth quarter of 2024, Banco Macro's net income totaled 102.2 billion pesos. This result was 4% or 3.5 billion pesos higher than in the third quarter of 2024. As of the fourth quarter of 2024, this result was driven by lower net interest income, higher net fee income, higher net income from financial assets, and a lower result from the net monetary position, as inflation is during the quarter. The accumulated analyzed return on average equity and the accumulated analyzed return on average assets were 7.5 and 2.4, respectively. In fiscal year 2024, net income totaled 325.1 billion pesos, 74% lower than in fiscal year 2023. Total comprehensive income totaled 227.7 billion pesos and was 83% lower than in fiscal year 2023. In the fourth quarter of 2024, operating income before general administrative and personal expenses totaled 813.9 billion pesos, 9% or 81.9 billion pesos lower than in the third quarter of 2024 due to lower income from interest on government securities. On a yearly basis, this result decreased 72% of 2.1 trillion pesos. In fiscal year 2024, net operating income before general administrative and personal expenses totaled 4.6 trillion pesos, 26% lower than in fiscal year 2023. In the fourth quarter of 2024, provision for loan losses totaled 37.5 billion pesos, 51% or 12.7 billion pesos higher than the third quarter of 2024. On a yearly basis, provision for loan losses increased 5% or 2.1 billion pesos. In fiscal year 2024, provision for loan losses totaled 109.4 billion pesos and were 9% higher than in fiscal year 2023. In the quarter, net interest income totaled 532.6 billion pesos, 13% or 82.2 billion pesos lower than in the third quarter of 2024, and 33% or 132.6 billion pesos higher year on year. This result is due to a 12% decrease in interest income and an 8% decrease in interest expense. and a 32% decrease in income from interest from government securities. In fiscal year 2024, net interest income totaled 1.6 trillion pesos and was 10% lower than in fiscal year 2003. Interest income decreased 34%, while interest expenses decreased 46%. In the fourth quarter of 2024, interest income totaled 819.1 billion pesos, 12% or 107.3 billion pesos lower than in third quarter of 2024, and 34% of 429.3 billion pesos lower than in the fourth quarter of 2023. In fiscal year 2024, interest income totaled 3.5 trillion pesos, 34% lower than in fiscal year 2023. Income from interest on loans and other financing totaled 499.9 billion pesos, 14% or 62 billion pesos higher compared with the previous quarter, mainly due to a 16% increase in the average volume of private sector loans, which was partially offset by a 102 basis points decrease in the average lending rate. On a yearly basis, income from interest on loans decreased 39% or 326.4 billion pesos. In fiscal year 2024, income from interest on loans and other financing totaled 2.1 trillion pesos, 15% lower than in fiscal year 2023. In the fourth quarter of 2024, interest on loans represented 61% of total interest income. In the fourth quarter of 2024, income from government and private securities decreased 32% or 148.3 billion pesos quarter on quarter and increased 35% or 81 billion pesos compared with the same period of last year. This result is explained 73% by income from government and private securities at amortized cost and the remaining 27% is explained by income from government securities valued at fair value to profit and through other comprehensive income. In fiscal year 2024, income from government and private securities totaled 1.11 trillion pesos, 54% lower than in fiscal year 2023. In the fourth quarter of 2024, income from rebates totaled 444 million pesos, 98% or 19.6 billion pesos lower than the previous quarter, and 100% or 182.8 billion pesos lower than a year ago. It is worth noting that as July 22, 2024, the central bank decided to terminate repos and replace them with lefties, which are now issued by the Treasury. In the fourth quarter of 2024, FX income was 18 billion slower than the previous quarter, and 100% or 398.4 billion pesos lower than a year ago. In the quarter, the original peso depreciated 6.3% against the U.S. dollar. In fiscal year 2024, FX income totaled 163.2 billion pesos, 91% lower than the result posted in fiscal year 2003, while the peso depreciated 27.7% in fiscal year 2024. In the fourth quarter of 2024, interest expense totaled 286.5 billion pesos, decreasing 8% of 25.1 billion pesos compared to the previous quarter, and 56% of 561.9 billion pesos lower compared to the fourth quarter of 2023. Within interest expenses, interest on deposits decreased 9% of 26.2 billion pesos, due to a 208 basis points decrease in the average rate paid on deposits, while the average volume of deposits from the private sector increased 1%. On a yearly basis, interest on deposits decreased 67% of 550.9 billion pesos, and in fiscal year 2024, interest expense totaled 1.8 trillion pesos, which was 47% lower than in fiscal year 2023. In the fourth quarter of 2024, the bank's net interest margin, including FX, was 26.1, lower than the 26.8 posted in the third quarter of 2024, and lower than 41.7 posted in the fourth quarter of 2023. In the fourth quarter of 2024, Bank of America's net pay income totaled 139.9 billion pesos, 6% or 7.6 billion pesos higher than the third quarter of 2024, and was 11% or 13.9 billion pesos higher than the same period of last year. In fiscal year 2024, net fee income totaled $485.9 billion, 1% higher than fiscal year 2023. In the fourth quarter of 2024, net income from financial assets and liabilities at fair value to profit or loss totaled $134.9 billion, increasing 21% or $23 billion compared to the third quarter of 2024. This result is mainly due to profit from investment in the derivative financing instrument. On a yearly basis, net income from financial assets and liabilities at fair value to profit or loss decreased 93 percent of 1.8 trillion pesos. In fiscal year 2024, net income from financial assets and liabilities at fair value to profit or loss totaled 2.2 trillion pesos, 5 percent higher than in fiscal year 2023. In the quarter, other operating income totaled 48.8 billion pesos, 153 million pesos higher than in the third quarter of 2024. On a yearly basis, other operating income decreased 11% or 6 billion pesos. In fiscal year 2024, other operating income totaled 214 billion pesos, 35% higher than fiscal year 2023. In the fourth quarter of 2024, Banco Madras administered expenses plus employee benefits totaled 261.8 billion pesos, 4% or 10.4 billion pesos lower than the previous quarter. due to lower employee benefits, which decreased 2%, and lower administrative expenses, which decreased 8%. On a yearly basis, administrative expenses plus employee benefits decreased 21%, or 70.2 billion pesos. In fiscal year 2024, administrative expenses plus employee benefits increased 11% compared to fiscal year 2023. As of the fourth quarter of 2024, the efficiency ratio reached 39.4%, deteriorating from the 36.3% percent posted in the third quarter of 2024 and the 13.6 percent posted one year ago. In the fourth quarter of 2024, expenses decreased 2 percent while net interest income plus net fee income plus other operating income decreased 9 percent compared to the third quarter of 2024. In the fourth quarter of 2024, the results from the net monetary position totaled a 221 billion pesos loss. 85.6 billion pesos lower than the loss posted in the third quarter of 2024, and 81% or 924 billion pesos lower than the loss posted one year ago. Lower inflation was observed during the quarter, 410 basis points below the third quarter of 2024. Inflation was down from 12.1 in the third quarter to 8% in the current quarter. In fiscal year 2024, the result from the net monetary position totaled 2.4 trillion pesos. Loss 17% lower than the one posted in fiscal year 2023. Inflation in 2024 reached 117.8% compared to the 211.4% registered in 2023. In the fourth quarter of 2024, given macro's effective tax rate was 26.6%, lower than the registered in the fourth quarter of 2023. In fiscal year 2024, the effective income tax rate was 9.2%, given the loss posted in the second quarter of 2024, and was lower than the 32.7% registered in fiscal year 2023. Further information is provided in note 24 to our financial statements. In terms of loan growth, the bank's total financial reached 5.8 trillion pesos, increasing 18% or 884.1 billion pesos quarter-on-quarter, and 45% or 1.8 trillion pesos higher year-on-year. Within commercial loans, documents and others stand out with a 49% or 336.3 billion pesos increase and a 15 or 137.6 billion pesos increase respectively. Overdraft decreased 26% or 192.5 billion pesos. Within consumer lending, almost all product lines increased in the fourth quarter of 2024. Personal loans and credit card loans stand out with a 36 or 303.8 billion pesos and a 14 or 169.7 billion pesos increased respectively. In fiscal year 2024, documents, others, personal loans, and credit card loans stand out with a 39, 52, 122, and 31% increase respectively. In the fourth quarter of 2024, special financing increased 14% of 577.7 million pesos, while US dollar financing increased 29% of $246 million. It is important to mention that Banco Macro's market share over private sector loans as of December 2024 reached 8.3%. On the funding side, total deposits decreased 3% or 299.3 billion pesos quarter on quarter, totaling 8.4 trillion pesos, and increased 15% or 1.1 trillion pesos year on year. Private sector deposits increased 2% or 147 billion pesos quarter on quarter, while public sector deposits decreased 40% or 433.3 billion pesos quarter on quarter. The increase in private sector deposits was led by 10 deposits, which increased 6% or 122.3 billion pesos, while demand deposits increased 2% or 97.8 billion pesos quarter-on-quarter. Within private sector deposits, peso deposits increased 2% or 106 billion pesos, while U.S. dollar deposits decreased 18% or $587 million. As of December 2024, Banco Macro's transactional accounts represented approximately 65% of total deposits. Banco Macro's market share of private sector deposits as of December 2024 totaled 7%. In terms of asset quality, Banco Macro's non-performing total financial ratio reached 1.28%. The coverage ratio measured that total allowance and expected credit losses over non-performing loans under central bank rules reached 158.81%. Consumer portfolio non-performing loans deteriorated four basis points, up to 144 from 1.4 in the previous quarter, while commercial portfolio non-performing loans deteriorated 21 basis points in the fourth quarter of 2024, up to 0.88% from 0.77% in the previous quarter. In terms of capitalization, Banco Macros accounted an excess capital of 2.8 trillion pesos, which represented a capital adequacy ratio of 32.4% and a tier one ratio of 31.6%. 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 deposits ratio reached 79%. Overall, we have accounted for another positive quarter. We continue to show a solid financial position. Asset quality remains under control and closely monitored, and we keep on working to improve more our efficiency standards, and we keep up a well-atomized deposit base. At this time, we would like to take the questions you may have. Thank you.

To ask a question, please press star then 1 on your touchstone phone. We will pause for one moment while we assemble our roster. And today's first question comes from Ernesto Gabalondo with Bank of America. Please go ahead.