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 second quarter 2025 earnings conference call. We would like to inform you that the second Q25 press release is available to download at the Investor Relations website of Banco Macro, www.macro.com.ar slash Relaciones-Inversores. Also, this event is being recorded and all participants will be in a 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. It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Jorge Scarinci, Chief Financial Officer, and Mr. Nicolas Torres, IR. Now, I will turn the conference over to Mr. Nicolas Torres. You may begin your conference.

Thank you. Good morning and welcome to Banco Macros' second quarter 2025 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. Second quarter 2025 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 hyper-referential 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 upon IES 29 to reflect the accumulated effect of the inflation adjustment for each period through June 30, 2025. I will now briefly comment on the bank's second quarter 2025 financial results. In the second quarter of 2025, Banco Macro's net income totaled 149.5 billion pesos, which was 209% or 101.1 billion higher than in the previous quarter. This result was mainly due to higher net interest income, as well as higher net fee income, higher net income from financial assets and liabilities at fair value for profit or loss, and higher FX income, and the lower loss related to the result from the net monetary position, as lower inflation was registered in the quarter. which was partially offset by lower other operating income, higher loan loss provisions, and higher income tax. This result represented an annualized ROE and ROA of 12% and 3.5% respectively. Total comprehensive income for the quarter totaled 157.1 billion pesos, 241% or 111 billion pesos higher than the result posted in the previous quarter. Net operating income before general administrative and personal expenses was 906.2 billion pesos in the second quarter of 2025, 13% or 107 billion pesos higher compared to the first quarter of 2025, due to higher income from interest on loans and higher income from government securities. On a yearly basis, net operating income before general administrative and personal expenses increased 49% or 314.6 billion pesos. Provision for loan losses total 103 billion pesos, 47% or 33.1 billion pesos higher than the first quarter of 2025, given the loan growth experience in the quarter. On a yearly basis, provision for loan losses increased 349% or 80.1 billion pesos. In the quarter, net interest income totaled 696.9 billion pesos, 14% or 82.9 billion pesos higher than in the first quarter of 2025, and 163% or 432 billion pesos higher year on year. This result was due to a 169.2 billion pesos increase in interest income and an 86.3 billion pesos increase in interest expense. In the second quarter of 2025, interest income totaled 1.1 trillion pesos, 18% or 169.2 billion pesos higher than in the first quarter of 2025, and 26% or 221.3 billion pesos higher than in the second quarter of 2024. Income from interest on loans and other financing totaled 746.1 billion pesos, 19% or 118.2 billion pesos higher compared with the previous quarter. mainly due to a 17% increase in the average volume of private sector loans and by a 43 basis points increase in the average lending rate. On a yearly basis, income from interest on loans increased 30% or 171.3 billion pesos. In the second quarter of 2025, interest on loans represented 69% of total interest income. In the second quarter of 2025, income from government and private securities increased 18% or 50.8 billion pesos quarter on quarter, mainly due to the caps and inflation of transit bonds and bond sales. and increased 54% or 118.8 billion pesos compared with the same period of last year. This result is explained 94% by income from government and private securities at a more advertised cost, and the remaining 6% is explained by income from government securities valued at fair value to profit through other comprehensive income. In the second quarter of 2025, income from RIPOs totaled 1 billion pesos, 10% or 92 million pesos higher than the previous quarter, and 99% or 67 billion pesos lower than a year ago. It is worth noting that as of July 2024, the central bank decided to terminate Repos and replace them with Lefis, which were then terminated on July 10, 2025. In the second quarter of 2025, FX income totaled a 22.4 billion pesos gain, 229% or 15.6 billion pesos higher than the first quarter of 2025, mainly due to income from foreign currency exchange, which increased 12.5 billion pesos. On a yearly basis, FX income decreased 37% of 13.1 billion pesos. In the quarter, the Argentine peso depreciated 11.2% against the U.S. dollar after the central bank of Argentina replaced the 1% crawling peg, allowing the Argentine peso to grow freely between 1,000 and 1,400. In the second quarter of 2025, interest expense totaled 391.2 billion pesos, increasing 28% or 86.3 billion pesos compared to the previous quarter, and decreased 35% to 110.7 billion pesos compared to the second quarter of 2024. Within interest expenses, interest on deposits represented 96% of the bank's total interest expense, increasing 30% or 86.6 billion pesos quarter-on-quarter due to a 228 basis points increase in the average rate paid on deposits, while the average volume of private sector deposits increased 14%. On a yearly basis, interest on deposits decreased 35% or 205.1 billion pesos. In the second quarter of 2025, the bank's net interest margin, including FX, was 23.5%, higher than the 23.2% posted in the first quarter of 2025, and the 19.9% posted in the second quarter of 2024. In the second quarter of 2025, Banco Macro's net fee income totaled 108.4 billion pesos, 16% of 25.1 billion pesos higher than the first quarter of 2025. In the quarter, credit card fees stand out with a 90% or 28.6 billion pesos increase, followed by fees charged on deposit accounts and credit-related fees, which increased 4% or 2.9 billion pesos and 33% or 2.8 billion pesos respectively, which were partially offset by a 30% or 2.3 billion pesos decrease in mutual funds and securities fees. On a yearly basis, fee income increased 34% or 45.3 billion pesos. In the second quarter of 2025, net income from financial assets and liabilities deferred value to profit or loss totaled a $113.7 billion gain, increasing 61% of $43.3 billion compared to the first quarter of 2025. This result is mainly due to higher income from government securities. On a yearly basis, net income from financial assets and liabilities deferred value to profit or loss decreased 33% of $55.3 billion. In the quarter, other operating income totaled 45.8 billion pesos, 37% or 26.8 billion pesos lower than the first quarter of 2025 due to lower credit and debit card income. On a yearly basis, other operating income decreased 24% or 14.3 billion pesos. In the second quarter of 2025, Bank of Macro's administrative expenses plus employee benefits totaled 279.7 billion pesos, 3% or 7.3 billion pesos higher than the previous quarter, due to higher administrative expenses, which increased 8%. Meanwhile, employee benefits were practically unchanged. On a yearly basis, administrative expenses plus employee benefits decreased 1% or 2.6 billion pesos. In the second quarter of 2025, the efficiency ratio reached 33.9%, improving from the 38.2% posted in the first quarter of 2025 and from the 55.6% posted a year ago. In the second quarter of 2025, expenses, employee benefits plus general and administrative expenses, depreciation and impairment of assets increased 2% while income, net interest income, net fee income plus difference in quoted prices of golds and foreign currency plus other operating income and net income from financial assets for value to profit or loss increased 15% compared to the first quarter of 2025. In the second quarter of 2025, The result from the net monetary position totaled 203.9 billion pesos loss, 28% or 79.3 billion pesos lower than the loss posted at the first quarter of 2025, and 68% or 439.9 billion pesos lower than the loss posted one year ago. Lower inflation was observed during the quarter, 256 basis points below the first quarter of 2025, down to 601%, 8.97% in the first quarter of 2025. Next. In the second quarter of 2025, Banco Macro's effective income tax rate was 39%, lower than the one registered in the first quarter of 2025. Further information is provided in Note 21 to our financial statement. In terms of loan growth, the bank's total financing reached 9.24 trillion pesos, increasing 14% or 1.1 trillion pesos per quarter, and increasing 91% or 4.4 trillion pesos year-on-year. In the second quarter of 2025, private sector loans increased 13% of 1.1 trillion pesos. On a yearly basis, private sector loans increased 91% of 4.3 trillion pesos. Within commercial loans, overdrafts, documents, and others stand out with a 29 or 369.8 billion pesos increase at 19 or 243.5 billion pesos and a 14 or 206 billion pesos increase, respectively. Consumer lending, almost all product lines increased during the second quarter of 2025, except for credit card loans. Personal loans and mortgage loans stand out, with a 12% or 206.8 billion pesos and a 13 or 82.2 billion pesos increase, respectively. In the second quarter of 2025, peso financing increased 13% or 846.1 billion pesos, while U.S. dollar financing increased 4% or 65 billion dollars. It is important to mention that The bank marks market share over private sector loans as of June 2025, which 9.2%. On the funding side, total deposits increased 4% or 406.2 billion pesos quarter-on-quarter, total deposits increased 62 trillion pesos and increased 13% or 1.2 trillion pesos year-on-year. Private sector deposits increased 4% or 414 billion pesos quarter-on-quarter, while public sector deposits decreased 1% or 8.3 billion pesos quarter-on-quarter. The increase in private sector deposits was led by time deposits, which increased 12% of 514.6 billion pesos, while demand deposits increased 5% or 209.9 billion pesos quarter-on-quarter. While in private sector deposits, peso deposits increased 1% or 45.9 billion pesos, while U.S. dollar deposits increased 2% or 45 million dollars. As of June 2025, Bank of Macro's transactional accounts represented approximately 48% of total deposits. Bank of Macros market share over private sector deposits as of June 2025 totaled 7.3%. In terms of asset quality, Bank of Macros non-performing to total financial ratio reached 2.06%. The current ratio measured as total allowances under expected credit losses over non-performing loans reached 147%. Consumer portfolio non-performing loans deteriorated 100 basis points, up to 2.81% from 181% in the previous quarter, while commercial portfolio non-performing loans improved 14 basis points in the second quarter of 2025, down to 0.52% from 0.66% in the previous quarter. In terms of capitalization, Banco Macro created an excess capital of 3.13 trillion pesos, which represented a capitalization ratio of 30.5% and a tier 1 ratio of 9%. The Banco claims it is to make the best use of this excess capital. The bank's liquidity remains more than appropriate. Liquid assets to the deposit ratio reached 67%. Overall, we have accounted for another positive quarter. We continue to show the same financial position. We keep a well-atomized deposit base. Asset quality remains under control and close in monitor. And we keep on working to improve more artificial standards. At this time, we would like to take the questions you may have.

Thank you. At this time, we are going to open it up for questions and answers. If you would like to ask a question, please press the Q&A button at the bottom of the screen. Or, to ask questions on audio, click on Raise Hand. You will then receive a request to activate your microphone. One moment, please, for the first question. Our first question comes from Ernesto Gabilondo with Bank of America.