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 2025 earnings conference call. We would like to inform you that the third 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 the 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 Iscarinzi, Chief Financial Officer, and Mr. Nicolás Torres, IR. Now, I will turn the conference over to Mr. Nicolás Torres. You may begin your conference, sir.

Thank you. Good morning, and welcome to Banco Macro Third 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. Third quarter 2025 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 30, 2025. I will now briefly comment on the bank's first quarter 2025 financial results. In the third quarter of 2025, Banco Macro's net income totaled a 33.1 billion pesos loss, which was 191.5 billion pesos lower than the previous quarter. This result was mainly due to higher loan loss provisions, higher administrative expenses, lower income from government and private securities, and lower net fee income that were partially offset by higher other operating income and a lower loss related to the net monetary position. Total comprehensive income for the quarter totaled 28.4 billion pesos lost, and in the first nine months of 2025, Banco Macro's net income totaled 176.7 billion pesos, 35% below than the same period of last year, while total comprehensive income totaled 186.9 billion pesos in the same period. As of the third quarter of 2025, the accumulated annualized ROE and ROA were 4.5% and 1.5% respectively. Net operating income before general and administrative and personal expenses was 779.6 billion pesos in the third quarter of 2025, 23% or 233.7 billion pesos lower compared to the second quarter of 2025, which is lower income from government securities. On a yearly basis, net operating income before general and administrative and personal expenses decreased 29% or 312.9 billion pesos. Provision for loan losses totaled 156.8 billion pesos, 45%, or 49.4 billion pesos higher than the second quarter of 2025. On a yearly basis, provision for loan losses increased 424%, or 128.4 billion pesos. In the quarter, net interest income totaled 686.2 billion pesos, 7%, 52.2 billion pesos lower than the second quarter of 2025, and 8%, or 63.6 billion pesos lower year-on-year. This result was due to a 113.9 billion pesos increase in interest expense, while interest income increased 61.6 billion pesos. In the third quarter of 2025, interest income totaled 1.22 trillion pesos, 5% or 61.6 billion pesos higher than in the second quarter of 2025, and 7% or 84.7 billion pesos higher than in the third quarter of 2024. Income from interest on loans and other financing totaled 930.3 billion pesos, 18% or 139.7 billion pesos higher compared with the previous quarter, mainly due to an 11% increase in the average volume of private sector loans and by a 111 basis points increase in the average lending rate. On a yearly basis, income from interest on loans increased 74% or 396.2 billion pesos. In the third quarter of 2025, interest and loans represented 77% of total interest income. In the third quarter of 2025, income from government and private securities decreased 24% or 85.4 billion pesos quarter-on-quarter, mainly due to inflation-adjusted bonds, and decreased 52% or 292.8 billion pesos compared with the same period of last year. This result is explained 97% by income from government and private securities at amortized cost, and the remaining 3% is explained by income from government securities valued at fair value through other complementary income. In the third quarter of 2025, income from rebates totaled 6.3 billion pesos, 493 or 5.3 billion pesos higher than the previous quarter, and 74% or 18.1 billion pesos lower than a year ago. It is worth noting that as July 22, 2024, the central bank decided to terminate RIPOS and replace them with LEFIS, which were issued by the Treasury, which then were eventually terminated on July 10, 2021. In the third quarter of 2025, FX income received a 13.8 billion pesos loss, 37.5 billion pesos lower than in the second quarter of 2025, mainly due to the loss from the foreign currency exchange, given the bank's short dollar position. It should be noted that the bank posted a 23.2 billion pesos gain related to investment in derivative financing instruments, which is basically the long futures position that the bank has. Therefore, when considering income from foreign currency exchange plus income from investment in derivative financing instruments, the bank posted a 9.4 billion pesos gain. On a yearly basis, FX income decreased 164% of 35.2 billion pesos, And in the quarter, the Argentine peso depreciated 14.4% against the U.S. dollar. After the return of the Bank of Argentina, it replaced the 1% rolling back, allowing the Argentine peso to float. In the third quarter of 2025, interest expense totaled 528.4 billion pesos, increasing 27% or 113.9 billion pesos compared to the previous quarter, and increased 39% or 148.4 billion pesos compared to the third quarter of 2024. Within interest expenses, interest on deposits represented 94% of the bank's total interest expense, increasing 24% or 96.6 billion pesos quarter-on-quarter due to a 248 basis points increase in the average rate paid on deposits, while the average volume of private sector deposits increased 10%. On a yearly basis, interest on deposits increased 36% or 131.3 billion pesos. In the third quarter of 2025, the bank's net interest margin, including FX, was 18.7% lower than the 23.5% posted in the second quarter of 2025 and the 31.5% posted in the third quarter of 2024. In the third quarter of 2025, Bank of America's net fee income totaled 177.3 billion pesos, 7% or 13.9 billion pesos lower than in the second quarter of 2025. In the quarter, credit card fees stand out with a 22% or 14.2 billion pesos decrease, followed by credit-related fees, which decreased 27% or 3.1 billion pesos and were partially offset by a 7% or 1.8 billion pesos increase in corporate services fees. On a yearly basis, net fee income increased 14% or 22.1 billion pesos. In the third quarter of 2025, net income from financial assets and liabilities for value-to-profit or loss totaled a 19.5 billion pesos gain, decreasing 84% or 101 billion pesos compared to the second quarter of 2025. This result is mainly due to lower income from government securities. On a yearly basis, net income from financial assets and liabilities for value-to-profit or loss decreased 86% or 117 billion pesos. In the quarter, other operating income totaled 69 billion pesos, 42% or 20.5 billion pesos higher than the second quarter of 2025. Due to higher credit and debit cards income, 14.7 billion pesos. And on a yearly basis, other operating income increased 16% or 9.7 billion pesos. In the third quarter of 2025, bank markets' administrative expenses plus employee benefits totaled 331.5 billion pesos, 4% or 35.1 billion pesos higher than the previous quarter, due to a 20% increase in employee benefits, while administrative expenses decreased 3%. On a yearly basis, administrative expenses plus employee benefits decreased 431 million pesos. In the third quarter of 2025, employee benefits increased 20% of 38.7 billion pesos, meaning due to a 139% or 23.6 billion pesos increase in compensation and bonuses, as the bank builds up provisions for early retirement plans and severance payments. On a yearly basis, employee benefits increased 8% or 16.9 billion pesos. In the third quarter of 2025, the accumulated efficiency ratio reached 39.1%, deteriorating from the 35.9% posted in the second quarter of 2025 and from the 25.5% posted a year ago. In the third quarter of 2025, expenses, which includes employee benefits, general and means of expenses, depreciation, and internment facets, increased 10% while income, basically net interest income, net fee income, difference in quoted prices, plus other operating income, as net income from financial assets for a value of profit and loss, decreased 19% compared to the second quarter of 2025. In the third quarter of 2025, the results from the net monitor precision total a 203.1 billion pesos loss, 6% or 13 billion pesos lower than the loss posted in the second quarter of 2025, and 46% or 171 billion pesos lower than the loss posted one year ago. Lower inflation was observed during the quarter, basically four basis points below the second quarter of 2025. Inflation reached 5.97% in the third quarter of 2025, up to 6.01% in the second quarter of 2025. In the third quarter of 2025, given Max's negative net income, no income tax charge was recorded. Further information is provided in Note 21 of our financial statements. In terms of loan growth, the bank's total financial reached 10.1 trillion pesos, increasing 3% or 332.4 billion pesos quarter-on-quarter, and increasing 69% or 4.1 trillion pesos year-on-year. In the third quarter of 2025, private sector loans increased 3% or 278.2 billion pesos, and on a yearly basis, private sector loans increased 67% or 3.94 trillion pesos. Within commercial loans, documents and others stand out, with a 4% or 60.4 billion pesos and a 27% or 453.9 billion pesos increased respectively. Meanwhile, overdrafts decreased 21% or 364.9 billion pesos. Within consumer lending, almost all product lines increased during the third quarter of 2025, except for credit card loans, which decreased 1% to 21.3 billion pesos. Personal loans, mortgage loans, and pledge loans stand out, with an 8 or 166.8 billion pesos, 4% and 92.8 billion pesos, and 6% or 13.1 billion pesos increased respectively. In the third quarter of 2025, peso financing decreased 2% or 192.1 billion pesos, while U.S. dollar financing increased 10% or $170 million. It is important to mention that Banco Macro's market share over private sector loans as of September 2025 reached 9%. On the funding side, total deposits increased 5% or 556.4 billion pesos quarter-on-quarter, totaling 11.8 trillion pesos and increased 11% or 1.2 trillion pesos year-on-year. Private sector deposits increased 6% or 604.9 billion pesos quarter-on-quarter, but private sector deposits decreased 5% or 49.6 billion pesos quarter-on-quarter. The increase in private sector deposits was led by demand deposits, which increased 10% or 475.2 billion pesos, while time deposits increased 4% or 202.2 billion pesos quarter-on-quarter. Peso deposits decreased 1% or 48 billion pesos, while U.S. dollar deposits increased 3% or 95 million dollars. As of September 2025, Banco Mago's transactional accounts represented approximately 49% of the real deposits. Bank of America's market share over private deposits assets over 2025 totaled 74%. In terms of asset quality, Bank of America's non-performing total financial ratio reached 30.2%. The coverage ratio measured as total allowances under expected credit losses over non-performing loans under central bank rules reached 120.87%. Consumer portfolio non-performing loans deteriorated 149 basis points, up to 4.3% from 2.81% the previous quarter, while commercial portfolio non-performing loans deteriorated 33 basis points in the third quarter of 2025, up to 0.85% from 0.52% in the previous quarter. In terms of capitalization, Banco Macro counted an excess capital of 3.3 trillion pesos, which represented a capital adequacy ratio of 29.9% and a tier 1 ratio of 29.2%. 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 67%. Overall, we have accounted for another positive quarter. We continue showing a solid financial position. We keep a well-atomized deposit base. As a quality remain under control and closing monitor. And we keep on working to improve more our efficiency 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 Carlos Gomez Lopez with HSBC. You can open your microphone.