Grupo Supervielle S.A.

Good morning, everyone, and welcome to the Grupo Supervielle Fourth Quarter 2021 Earnings Call. This is Ana Bartesaghi, lecturer and IRO. A slide presentation will accompany today's webinar, which is available in the Investor section of Grupo Supervielle's Investor Relations website. Today's conference call is being recorded. As a reminder, all participants will be listening only mode. There will be an opportunity for you to ask questions at the end of today's presentation. If you want to ask a question, you will need to be connected to the Zoom platform from any device. We will not be able to take your questions if you are connected from a phone line. Also, please make sure your name and last name appear in the Zoom platform you are using. To ask a question by voice, please press the raise your hand button located in the Zoom platform. and Fred, raise your hand again to withdraw your question. You can also send your questions to the Q&A box in the Zoom platform anytime during the call. We will ask you to limit yourself to one question and a follow-up and then you can raise your hand again to another round. Taking you into this call will be Patricio Supervielle, our Chairman and CEO, and Mariano Biglia, our Chief Financial Officer. Also joining us are Alejandra Stengel, second vice chairman of the board, and Van Thiel, and Jorge Ramirez, first vice chairman of the board. Alejandra Norton, board member of several groups of progressive theorists, will also be joining us for today's call. All will be available for the Q&A session. As a reminder, today's call will contain forward-looking statements which are based on management's current expectations and behaviors. and are subject to a number of risks and challenges, including as a result of the COVID-19 pandemic, and I refer you to a forward-looking statement section of our earnings release and recent filings with ESG. We assume no obligation to update or revise any forward-looking statement to reflect new or changed events or circumstances. Mariano Biglia, our CFO, will start the call Patricio Supervielle, our chairman and CEO, will follow with an update on our midterm potential initiative.

Thank you, Ana. Good morning, everyone.

Thank you for joining us today. Please turn to slide four of our earnings presentation. Economic activity continues to grow above pre-pandemic levels, market conditions, Significant macro and regulatory changes, including high inflation, negative real interest rates, spinning currency, and industry loans at historical lows. Profitability in the quarter was negatively impacted by one-time personal expenses related to headcount deficiencies, together with losses that you do, reflecting inflation and higher loan loss conditions. Central bank regulation and higher taxes also impacted performance. resulted in an attributable net loss of nearly 670 million pesos when we posted break-even profitability when excluding non-recurring personal charges. The iteration of our strategy to capture operating efficiencies has allowed us to reduce personnel expenses. Excluding non-recurring, early recurring charges, our efficiency ratio Thank you very much. and the ESG Front, in line with our goal to more broadly integrate ESG criteria in our strategic planning, we will begin reporting under the SASD framework in our 2021 sustainability report, expanding on our current re-reporting. Containing our commitment to long-term value creation, Patricio will discuss shortly how we are advancing on our value creation strategy In terms of lending, we recovered market share year-on-year, even when our loan book posted a low single-digit contraction remaining at historical lows. The average PEPO loans were at just over 2% year-on-year, compensating the decline in U.S. dollar denomination. Now moving on to funding on slide 6. Equity level remains strong, both in pesos and dollars, with a loan-to-deposit ratio at nearly 56%. Total peso deposit increased 5% sequentially as we continued to expand our share in type deposits for both retail and corporate customers. Total peso deposit, however, was

We continue to attract low and no interest-bearing federal deposits Reducing institutional funding. Higher inflation also drove higher PESO needs. In turn, PESO loan portfolio needs declined 30 basis points.

The decrease in cost of funds could not offset the 120 basis points sequential decline in the average yield on PESO loans, a slower interest rate, a slower interest earned on mandatory credit lines granted to SMEs at preferential rates, higher credit card volumes drove lower yields.

Moving on to assets quality on slide A.

Our total NPL ratio improved 100 basis points sequentially to 4.3%, declining across business segments. At the bank, the NPL ratio dropped to 2.6%, reaching pre-pandemic and pre-recession levels. In CURT, you do see the 100 basis points sequential drop in the NPL ratio, mainly as we started to write off delinquent loans of customers who did not resume payments after the expiration of the 12-month grace period approved by the Central Bank. Once that tuned the border, we reassessed exposure to the public ports construction sector as deals on the IMF agreement became public, including the extent of expected fixed-time tightening and the ability of public spending. Pacing this context, decided to write off a portion of the portfolio reducing our exposure to this sector, impacting cost of risk and coverage.

The total coverage ratio at year-end stood at 110%. Turning to capitalization on slide 9.

Close the year with a tier 1 capital ratio of 12.7%, contracting 140 basis points sequentially, mainly explained by the following factors. Our bottom line was impacted by accelerating health cost efficiencies, which increased severance costs. Second, in Q21, we also increased investments in digital transformation initiatives, which are deducted from year one capital. These investments were in line with our investment plan of approximately 3 billion pesos for the full year disclosed in previous quarters. Third, certain write-offs in the quarter, mainly related to the public construction sector, The expected loss regulatory easing, negative impact in capital. Part of its effect, approximately 40 basis points, will be recovered during 2022. Finally, the increase in risk-weight losses was more than offset by inflation adjustment of capital.

We expect at year-end 2022 an adequate tier 1 capital in the range of 12-13%. Slide 7

While guidance remains upended due to continued limited visibility ahead, on a slight trend we share our views on the main drivers of our business for this year. Still, the eliminated consumer and commercial loans are expected to grow slightly above inflation as we continue to pursue our goal of regaining market share, lost in 2020 when we took a more conservative approach in the midst of the pandemic. In real terms, we will be lower, however, If annual inflation were to accelerate above 55%.

At the same time, while deposit growth remains fostered by foreign exchange restrictions and interest rate flows on time deposits, we expect deposits to grow slightly above inflation.

In terms of asset quality, as anticipated, MPL's ratios declined in the fourth quarter and are expected to remain stable or decline slightly in the year. We also anticipate provisions to grow above 2021 levels in time with down-growth. The cost of risk is expected to remain at similar levels of last year. With respect to margins, we expect NIMS to increase flighting above 2021 levels. This is mainly driven by sustained improvement in our funding mix, a key pillar of our strategic plan, together with anticipated growth in higher-margin personnel levels. Parting is also expected to benefit from the impact of higher inflation on inflation and certain assets, including government bonds and mortgages, along with the next positive effect from the central bank regulations enacted last January. Fortitude on these regulations can be found in our earnings reports. At the same time, we expect big income from individuals, increasing language inflation, while insurance income is likely to grow in real terms, In the last two years. In turn, personal and administrative expenses are anticipated to increase slightly above inflation, driven by additional costs related to the execution of our transformation strategy. Our plan also calls for continued implementation of headcount efficiencies as we move ahead with our press and channel recycling. In connection with our network and digital transformation initiatives, We plan to invest approximately 5.1 and 1.2 billion pesos respectively during 2022. Lastly, capital and liquidity are expected to remain at adequate levels, with the tier 1 ratio anticipated to range between 12 and 13% as I noted earlier. Also recall that 100% of our capital remains hedged against inflation. Now let me turn the call to Patricio Supervielle, who will provide an update on our strategic

Thank you, Mariano, and good day everyone. While work is being done to stabilize the economy, the financial sector in Argentina will continue to face macroeconomic and regulatory challenges that we expect will go beyond this year.

Concurrently, the pandemic has changed business lives. Thank you very much.

to accelerate client acquisition, expand digital adoption, continue to capture operating efficiencies, lower cost of funding, and maintain healthy asset quality. We are executing our strategy on three key fronts. First, accelerating the digital and operational transformation of Bank of Supervielle, scaling customer acquisition, and executing on our omnichannel and branch transformation strategy. Second, as you do, we are transforming the business model from a consumer finance business into a full digital banking platform to drive profitability. Third, at Corriada Invertil, Yol Invertil Online, we aim to diversify revenue generation beyond of Argentina. For the next slide, I will discuss how leading indicators of our transformation confirm we are on the right track of these initiatives and elaborate on our key goals for this year. Now please turn to slide 12. Starting with Banco Supervielle retail customer base, we added 53,000 new retail customers in 2021, of which over 80% are digital. Clients, in turn, increased over 30% year-on-year. We also expanded the share of digital and automatic personal loan consumers over retail customers by 5.1% to 40% at year-end. Asset management was up 80% year-on-year, with assets under management more than doubling as we increased share of orders. Our key goals for this year on these fronts include further accelerating digital customer acquisition, continue processing digital products including launching and expanding personal finance management products as part of our initiatives to increase share of wallet. We will also continue to leverage our card loan alliances including our recent alliance with Kavak To expand our share as a leader in the pre-owned car loans market. Moving on to slide 12, let me share some examples of the successes we are having in boosting share of orders at the bank along driving higher transactions among SMEs and corporate customers. We reached the top 5 rankings in brand awareness among private banks in the country while increasing our customer base on share of wallet. As we show on the left chart, in the year we expanded SME and middle market customers by nearly 4%. Moreover, over 20% of our sales to SME customers were digital following the launch of digital onboarding early last year. also increased our share of total system customers by over 40 basis points in the year at 5%, regaining our leading market position in leasing and posted share increases across payroll services, site deposits, and assets, among others. Looking ahead, we expect to continue accelerating digital customer acquisition while also launching New features and services, including digital lending, to further drive share of growth. This is turned back to major group 14. You see the traction we are making on enhancing the customer experience. The share of total digitized retail customers increased consistently during the year, up nearly 7 percentage points. We also saw significant advances in corporate clients as we more than doubled the number of monthly collections and payment transactions. In turn, the share of online and anthropodermatic monetary transactions continued to increase to nearly 90% of total transactions by year-end. While we saw sustained growth in e-checks, volumes, and customers, ranking number 6 in this segment above our natural market chart. We expect to continue advancing on driving digital adoption at the bank while scaling digital onboarding and sales throughout the year.

Please turn to slide 15.

As we show in 2021, we also advance on improving funding quality, another key pillar of our strategic plan.

The share of corporate Customer side deposits increased 80 basis points year-on-year.

At the same time, the share of retail customer side deposits was up 5 basis points against year-end 2020 and recovered sequentially by 30 basis points contributing to improve our funding mix. Every year we aim to continue expanding corporate-side deposits, keeping our focus on driving growth in transactional products, managing reciprocities with corporate customers and increasing share of orders to become the primary bank for more of our customers. Please turn to slide 16 for an update on our initiative to scale our branch transformation and innovation. Starting with our hybrid model last year, we began to scale our virtual hubs, expanding our footprint and enabling banking anywhere and anytime. The omnichannel model combines the efficiencies of a virtual hub with the strength of face-to-face interaction and a correspondent strategy. To date, we have implemented three virtual hubs, offering a superior customer experience with Our internal customer satisfaction score at 4.5 over 5. And we are working towards scaling this model to other regions and segments. We also made significant progress on our brand transformation front implementing a new service model and modernizing our network. By year end, we modernized and expanded services to SMEs and multi-segment businesses in 16 branches that until then were exclusively dedicated to senior citizens. In addition, we increased our 24-hour lobby service to 40% of the total branch area, enabling extended banking hours and higher efficiencies. This year, we will continue working towards expanding our digital footprint while boosting customer acquisition on the back of virtual hubs and transform branches. As we show on slide 17, we are advancing on rightsizing our branch network and accelerating efficiencies. We are enhancing customer service and productivity, introducing best-in-class technologies which allow us to extend service hours and facilitate self-service banking in some branches. We are also converting some branches to a full self-service format. We closed one branch last year and plan to close another 16 this year, subject to Central Bank authorization. This includes seven branches that were expected to be closed last year but are still subject to Central Bank approval. These initiatives have allowed us to reduce headcount by nearly 6% year-on-year and 11% since December 2018. During this year, we expect to obtain additional headcount efficiencies and remain vigilant to opportunities to extract further value generation. Please turn to slide 18 to review our strategic pillar related to maintaining healthy asset quality at the bank. As I stated earlier, NPLs declined to below 2.6% levels observed in Q1 2019, while net cost of risk Thank you very much. Thank you. Our fully digital bank Udo is picking up speed. We are well positioned to continue to attract new customers with a wide range of offerings including savings accounts, personal loans, credit cards, insurance, wellness offerings and many others that will be launched in the current year to increase customer engagement with the aim of making Udo its client's primary bank. As I noted in our last poll, we launched a retail digital savings account in the fourth quarter with the aim of attracting lower-cost funding for this business. Between December and February, we opened nearly 70,000 new deposit accounts, and while we had almost 300,000 downloads of the app in 2021, during January and February alone of this year, we saw over 100,000 additional downloads. The year-end, we registered 20,000 digital customers, and that number tripled in the first two months of 2022, closing February with nearly 100,000 digital customers. Our strategy to convert this business online includes reducing due-to-physical presence. In 2021, we were able to reduce headcount by 7%. and expect an additional 25% reduction by the end of the first quarter 2022, along with branch closures in the coming month. In summary, while the financial services industry faces significant macro and regulatory challenges ahead that go beyond this year, we remain focused on executing on our six strategic pillars to improve return on end. Leading indicators demonstrate we are on track to further accelerate digital customer acquisition and capture additional operating efficiencies when long-term demand resumes, all while lowering the cost of funding and maintaining healthy asset quality.

We are ready to open the floor to questions.

Ana, please go ahead.

Thank you, Patricio, at this time. We will be conducting the question and answer session. As a reminder, to ask a question, you need to be connected to the Zoom platform. We will not be able to take your questions if you are connected from a phone platform. To ask a question by voice, please press the Raise Your Hand button and press it again to withdraw your question. You can also send your questions in written form via a Q&A box. We would like you to limit yourself to one question and a follow-up, and then you can raise your hand again in another row.

One moment while you report your questions.

The first question comes from Ernesto Gabilondo with Park of America. Please go ahead.

Thank you, Ana. Hi, good morning, Patricio and Mariano and all your team. Thanks for your presentation and for the opportunity. I have three questions, but I will make one question and then I will raise my hand again. So my question is on Yudo. We continue to see high level of MPLs and customer risk. of around 19% and 16% respectively. And also when looking to the reserve coverage ratio of UDO, it seems to be low at 60% for this type of segment. So it would be interesting to know what would be UDO's target for asset quality and when do you expect to start, like, Thank you. Mariano,

would like to answer the question on asset quality.

Sure, Patricio. Yes. Hi, Ernesto. Thank you for your question. Regarding MPLs at YouTube, we are seeing the MPL ratio between 19% and 20%. But we are still seeing the effect of the automatic deferral during the pandemic, which ended At the end of March, regarding personal loans, ended at the end of March 2021. So we still have the MPOs from that same portfolio, which was much more punitive for this business segment as compared to the bank. So we are still working in the recovery of this portfolio and finally these APLs will be eventually not recovered, will be written off the last part in April 2022. So in the next two quarters we might see some rises which will lower the MPL ratio without the distortion that this portfolio made. And then, during 2022, we'll start to see what we expect to become more similar to a medium-term trend, which we expect to start five percentage points lower after write-offs, and then keep going until the end of the year. Remember, this business segment has a new customer profile. It's not only the old customer profile from the Walmart stores, now Changoma. It's becoming a digital mass, so we expect to see a different profile of customers with better Thank you, Mariano. Let me take the part of the strategy.

First, a straight answer when you ask whether the strategy is focused more on client growth or profitability or if both are aligned. The answer is yes, they are aligned, absolutely aligned, profitability and client growth. Let me take a brief description of what the context we see in Argentina for neo-banks. And if you look at the performance of neobanks in Argentina, they are not profitable.

None of them are.

And by the same token, another aspect, which is a critical aspect, I believe, which is the funding, on the funding side, although, let's say, some of the, let's say, the best neobanks in Argentina in terms of UX, and a number of customers. They've achieved a certain level of funding. It's frankly very low and it's almost irrelevant. I would like to show as a comparison what happens with funds that are being managed by the biggest company in Argentina with a fantastic UX, Mercado Vago, Mercado Libre, They have maybe 2.5 million customers, but the funds they manage, the volume is around 10% of the fund industry. So it's frankly irrelevant. And even though it's a fantastic company with a U.S. which is absolutely fantastic, they have not been able to attract funding. I believe that the neobanks to be successful, they need to attract customers that they transform or they choose you do as their principal bank. This is the key factor. In order to do this, you need to be able to offer certain types of services that we believe that we are doing and we are providing which are the services that a traditional bank does, which are loans, credit cards, and insurances. If you look at the transactional savings in Argentina, they are mainly in the banks or in the fund industry, but not in neobanks, as I said, or in big techs. What we do is to, with a disruptive move, to attract customers from traditional banks and get their principality with our company. This is the way we want to go further and we have in the product suites that we have, we believe, will enable us to acquire this principality with clients. By the same token, as I said, for us, the strategy will be not only client growth, but also efficiency and profitability. For us, this year will be a transformational year in terms of the operating business model, and you will see a drastic reduction in cost all along year 2022. and I think then we will become, we expect that our company will become profitable as of 2023.

Well, this is very, very helpful.

Thank you very much.

Thank you, Ernesto. Our next question, I think you said you will be raising your hand again later on, so our next question comes from Rodrigo Nistor with

Yes, hi, good morning. Hi, good morning. Thank you for the opportunity. This is Pedro Maushart filling in for Rodrigo Nistor. Once again, congratulations on the clarity of the disclosures. They are really helpful. Well, in your presentation, you talk about the transformation of the bank is embarking, but banks can't control many things like the macro or central bank regulations. Could you comment briefly on what you're doing to address your current weak spots and minimize the negative impacts of the operating environment?

Alejandro, would you like to follow on that question? Yes.

Thank you for your question, Rodrigo. Sorry, Pedro. Your comment is actually right on and we are focusing on the things that, regardless of the context, we can control. One of them is very tight expense controls. This includes every efficiency that we can make and it extends to right-sizing our network. We believe that the transformation we've embarked on for some time now is allowing us to be able to capture many efficiencies while at the same time enhancing customer experience and extending our reach through our digital network. The other thing we're focusing on is enhancing our cost of funding. This is very important in the context that we face and we are, as we presented, showing some progress in that regard. and finally to continue the digital transformation will allow us to increase our acquisition of digital clients to adopt or get a higher proportion of our customer base to continue to adopt digital and automatic channels and also to leverage cross-sell opportunities in our portfolio. These are the key things that we're focusing on in what you well described is a challenging environment.

Thank you very much.

Thank you, Pedro. So our next question comes from Juan Recalde with Scotiabank. Hi, Juan.

Okay, hi. Thank you for taking my question. Can you hear me well?

Okay, perfect.

So, I have two questions. One is related to Udo and the relationship with what used to be Walmart. So, how are you leveraging that partnership, the partnership with now, it's called Dorinka. How are you leveraging that partnership to benefit Udo? Can you... We know that there is this new regulation from the central bank that limits the percentage of Profits that Can Be Distributed as Dividends. So, what should we expect in terms of dividend payments for 2022?

Regarding the question of, let's say, the range transfer plan and with the . Basically, we We signed a new contract. This contract gives us a complete control of our customers. Before, in the era of Walmart, you would go to the branches and you would see Walmart Financial Services and below in little letters the name of our brand. Now this is No, this is gone. I mean, all customers that we have, let's say, we have on and originated in this franchise, they belong to you and they know that. So, there's no confusion on that and we're able for us and we don't have anymore the concern what's happened every time we renegotiate with the supermarket. These kinds of are in our franchise. And what we've been doing is transforming them to full digital clients working within Udo app. Looking forward, the opportunities with the Trangomas franchise, we believe they are important in the sense that, of course, there is when you have traffic in a supermarket, There's opportunities to get new customers. And the people from Cangomás, they have plans probably in 2023, not this year, but next year, to put in place a loyalty program, which they know is extremely effective to, you know, Data Analytics to basically to do data mining and get new customers. And we know that for that, it's going to be, for us, it's a powerful tool also to attract new customers for, let's say, in 2U2. But that's, I would say, in a nutshell, we have a very good relation. We talk with them all the time how to basically Thank you very much. Let's say, origination, we believe, in the next few years, will come from, let's say, internet, from basically, from all the plan we have for digital marketing, trying to attract customers from traditional banks and come to it.

That's basically my answer.

Okay, that's very clear. That's helpful. And in terms of dividends, yeah?

Yes, let me add the answer in terms of dividends. Central bank regulations and limits on dividends apply for the bank and the financial companies which are subject to central bank regulations. The holding company Supervielle is only affected indirectly In the past years where we approved dividends of approximately 10% of our net profit, 100% of the dividends at the holding company was funded by dividends received from other subsidiaries, not subject to central bank regulation. Supervielle Seguros and Supervielle Asset Management, mainly. So, we don't expect to approve dividends from the bank, or you do, as we haven't done that in the last years. The dividend for this year that we recommended the shareholders to approve is only to offset the personal asset tax. So, that can be funded with dividends from, again, Supervielle Seguros and Supervielle Management and will not be limited by this regulation.

Let me know if you have any other questions.

That's careful. Thank you very much.

Okay. Thank you, Juan. Our next question comes from Marlon Medina-Rofelde with David Morgan. Marlon, you can proceed as you confirm your question now.

Hello, Ana. Hi, Patricio. Actually, Yuri Fernandez here. No, no worries. I was using Marlon Link. I have a first one on margins. You mentioned you were expecting a better funding. We saw a decrease on deposits, but with still good post-deposit ratio, good liquidity ratios. So my question is, what should we see for margins in 2022? Because we saw some expansion this quarter, but I don't know how much sustainable it is, given, I guess, we have a new deposit regulation taking place in January, right? So maybe the first few 2022 may be more challenging, given now we have to pay minimal remuneration for a larger chunk of our deposit base. So the first question is margins. Thank you very much.

Mariano, thank you, Yuri, for your question. Mariano, would you like to answer the question of margins? Yes.

Hello, Yuri. Thanks for your question. First, regarding margins, I think you mentioned the recent regulations from January and February. Although it raised the interest rates on time deposits and also raised the limit of 1 million to 10 million of deposits derived, that are set at the highest interest rate, now at 39%. These regulations also increase the elite credit and the people rate that we receive from the central bank and also increase the cap on certain interest rates with credit cards going from 34% to 39% and also increasing The Interest Rate on Subsidized Loans. So, all in all, the increasing interest rates, although the impact of taxes and liabilities, we think the net effect will be positive for 2022. Also, and I think more important, we expect in 2022 to decrease also our cost of funds. and in cost of funds also will be very important the role of UDU starting to attract customers that are also trading accounts customers and not only lending customers that UDU had in the past. And last, inflation, as we are long on inflation because we have Thank you very much. Regarding capital and risk-weight assets, risk-weight assets have three components. The first and more important is the risk-weight assets of credit, and that is very linked to the loan growth. Of course, it's not a one-to-one relationship because there are certain particularities of the regulations, but it tends to go one-on-one with loan growth. And then we have Market Risk Related and Operational Grids. Those other two components of those left materials can also have an impact. For instance, for market grids, sometimes on the edge, we have, again, Donald can increase market requirements of capital. And operational is related mainly to So, in the long term, the increase in growth rate assets will be linked to increasing loans, but in the shorter term, there can be some mismatches. Lastly, for capital in 2022, we expect to remain at an adequate level. In the range of 12 to 13 percent. Now we are at 12.7 percent, having decreased in the last quarter from 14.1. But the write-offs in the quarter made an extraordinary decrease due to the technicalities of the regulations that allow us So, adjusting for that, we would be in 13, 13.1%. So, increasing the risk-weight asset would lead to a small decrease in the shareholder capital ratio, but always we see it above 12%. That's very clear, Mariano.

Thank you very much.

Thank you, Yuri. Our next question comes from Alexandra Aranda with Itaú. Please, Alexandra, go ahead.

Hi, good morning. Thank you for the opportunity. Most of my questions have been answered, but regarding the right sizing, I mean, how long should we expect this to continue? And what should we expect in terms of additional costs coming from this and the additional investments for this year?

Well, as I said, in consumer finance, the right sizing would be

particularly the day large and this year it will be very large and this is already we can see this in the first quarter already but in the first quarter of consumer finance as we stated we are reducing 25% Thank you very much. Thank you very much. Thank you very much. I don't know if you want to add something, Alejandro, on that, on the capture of efficiencies.

Yes, as Patricia was saying, we will continue to capture these efficiencies which, as you know, have been proven by a combination of digital adoption that was accelerated during the pandemic and also our investments of increasing Thank you very much. Digital Acquisition of Digital Native Clients In terms of investments, I recall Mariano mentioned earlier on that the investments planned for 2022 in terms of our network are at approximately 5.1 billion, just to give you an idea of the second question, and digital transformation initiatives are at around 1.2 billion pieces.

Let me comment on investment. What we mentioned in the presentation is 5.1 billion, as Alejandro said, for IT and digital transformation-related investment, 1.2 billion for the transformation of the network. And regarding Severance, I don't know if you were asking also about the investment on Severance. During 2022, we got 2.6 billion pesos of severance at the bank level. On top of that, 500 million pesos at U2, where we started health care reductions already in the fourth quarter. And for 2022, we'll still have health care contributions at the bank and increasing at U2 level. On a consolidated basis, the 3.1 billion pesos Okay, thank you very much.

Thank you, Alejandra.

I think now we can go back to Ernesto Gabilondo with Bank of America. Ernesto, please go ahead.

Thank you, Ana. So my last question is on your ROE expectations. I think the ROE of last year was minus 2%. So considering now your 22 perspectives, where do you see the ROE?

Yes, please, Mariano.

Yes, let me comment on, although we are not giving an ROE or net income guidance, let me expand on the main factors that we see improving in 2022 or affecting 2022 results. Although there are still As we saw during the presentation, 2021 net profit or net loss was negatively impacted by regulations or taxes that, although I explained some improvements, but most of them will be still in place during 2022. We will also keep a high level of additional costs due to efficiencies, of course, a bit lower than 2021. On the other hand, we'll start to reduce the net loss from the U2 business segment, which is very significant for 2021, reaching or expecting to reach A break-even at the end of the year or beginning of 2023, as Patricio said earlier. So reducing those from you, mainly from new customers with deposits, which is very important in a high inflation environment that affects this company more than other businesses, will be very important in 2022 also. Although we are keeping We are starting to see lowering costs from the reductions we made in 2020 and particularly in 2021. So with this percent less headcount at the bank level, that will allow us to have less personal costs. We reduce the space that we leave for the corporate business. And according to IFRS 16, the savings of that agreement will be seen in 2020, not 2021. That's because of the accounting rule. But in the next, in the life of the contract, that would be a significant saving. And so... So those, what I explained before, that will expect to allow us to have a higher mean and producing cost and trying to maintain a cost of bid will be the main factor that will play in 2022 ROE.

Thank you, Mariano. And then can you just remind us your macro expectations Thank you very much.

As we are hedged against inflation through real estate assets and inflation-adjusted bonds and mortgages, it's positive for our margin, but at the end of the day, it's neutral for the P&L because we have a higher margin by a higher loss from the monetary position. So our monetary position is now, and we expect in this environment to keep the same during the year, It's low on inflation to cover 100% of net equity. On top of that, we might have also a low position in US dollars. That is mainly tactical if we expect to see a higher devaluation or not. So that would be the effect of inflation. A higher inflation impacts mainly the YouTube business segment, but we are covered on a consolidated base. and also for loans and deposits. Inflation, we started to work on 2022 forecast with a 50% inflation, then started to work with a 55% inflation projected. If inflation goes beyond that or much higher, let's say beyond 50%, the growth of loans to real terms will be lower because that will at some point affect credit demand. Deposits may still be growing at or slightly above inflation because it has been financed through the Central Bank. At the end of the day, it plays posters together with the foreign exchange restrictions. It posters the deposit growth. I don't know if I answered your question.

Yes, thank you very much, Mariano.

You're welcome.

Yes, I think we have some questions in the panel. Could you please provide an update on Vertical Online, its growth and growth prospects?

Thank you for an opportunity to talk about Vertical Online. Last year, 2021, we were able to They increase our number of clients around 25% in terms of active users. We are above 110,000 active users. This is one of the metrics by meaning active users, users that have been operating, contracting with Liberty Online over the last 60 days. Invertir Online, we believe that for us it's important to gain traction in terms of growth in Argentina. For this, we are launching in this quarter the new app, Mobile, which we believe will help us to gain traction, as well as we are We are in the process of connecting to a digital wallet to provide customers and to refer, let's say, our customers to a digital wallet that eventually they want to transact with cryptocurrencies. We are doing this absolutely according to the standards of Argentine regulations. At the same time, a substantial number of the people at Invertin Online, engineers and software developers, they are working on the international platform. We are working in the implementation of a plan in order to launch services in the region. And this is in process.

and that's basically my answer.

Ladies and gentlemen, we have reached the end of today's Q&A session. Thank you for joining us today. We appreciate your interest in our company. We look forward to meeting more of you over the coming months and providing financial and business updates next quarter. In the interim, we remain available to answer any questions that you may have. Thank you and stay safe and healthy.