Grupo Supervielle S.A.

Good morning, everyone, and welcome to the Grupo Supervielle first quarter 2022 earnings call. This is Ana Bartesaghi, pressure and IRO. A slide presentation will accompany today's webinar, which is available in the investor section of the Grupo Supervielle's investor relations website. Today's conference is being recorded. As a reminder, all participants If you want to ask a question, you need to be connected to a 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 press Raise Your Hand again to withdraw your question. You can also send questions in present form via 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 raise your hand again in another round. Speaking during today's call will be Patricio Supervielle, our chairman and CEO, and Mariano Biglia, our new financial officer. Also joining us are Alejandro Stengel, First Vice Chairman of the Board, and Bancio and Sergio Macitello, our Chief Technology Officer. Alejandra Norton, Board Member of several of Grupo Supervielle's subsidiaries, will also be joining us for today's call. All will be available for the Q&A session. As a reminder, today's call We contain forward-looking statements which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties. And I refer you to the forward-looking statement section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Patricio Supervielle, our chairman and CEO, will start the call discussing our key highlights for the quarter. Afterwards, Mariano Biglia, our CFO, will take a different look at our performance and near-term perspectives. Sergio Macitello, our chief technology officer, will then provide an overview of our digital transformation strategies. Patricio, please go ahead.

Thank you, Ana. Good morning, everyone. Thank you for joining us today. Now, please turn to slide four of our earnings presentation. While we saw continued growth in economic activity driven by a statistics carryover following the rebound last year, market conditions remain challenging with accelerated inflation, industry loans at historical lows, While central bank regulations continue to weigh on net interest margins. At the same time, the government's recent agreement with the IMF was a positive development that requires political consensus to increment it. Our bottom line remains negatively impacted by severance and personal charges in connection with headcount reductions to capture operating efficiencies of the bank and ad judo. Excluding these charges, we would have reported a net gain of 446 million pesos and an adjusted return on average equity of 2.9% compared to breakeven profitability in the fourth quarter. Other factors putting pressure on profitability include seasonally low credit demand, which is at historic lows, as well as regulatory flaws on interest rates on time deposits. And while the banking business reported positive return on average equity, results that you do were affected by high inflation and known loss provisions together with a deep personal reduction. Mariano will discuss this in more detail shortly. On the expense front, the efficiency ratio improved 200 basis points sequentially, although it remains highly impacted by a low revenue base. We also maintain an adequate capital base with a Tier 1 ratio of 13.8% at quarter ends, up 110 basis funds sequentially, while the liquidity remains strong, allowing us to navigate the current environment and implement our strategic transformation, supporting long-term sustainability. As a reminder, our capital base remains hedged against inflation through Real estate investments, mortgages and sovereign bonds. The digital and operational transformation that we have been undertaking is core to our goal of delivering long-term value creation. This explains lower profitability in the short term as we incur in higher costs including rightsizing operations, capturing efficiencies, cross-selling and acquiring customers. We are encouraged with the sustained progress on this front. Let me share a few highlights. For example, total digitalized clients were up 54% year-on-year as we continue to see increased digital adoption across personal loans, tank deposits, and insurance sales, while asset management retail customers doubled during the period, also showing higher engagement. This quarter, we also launched the first end-to-end digital onboarding in the market for entrepreneurs and SMEs and continue to add new features across the platform each quarter. As usual, we have included in the exhibits of our earnings presentations the progress we are making on our key digital and operational KPIs across the company. We are pleased to have Sergio Massitello, our Chief Technology Officer, joining us On today's call, he will share his views on the initiatives he has been leading on our digital transformation. As you may recall, Sergio joined our company towards the end of 2019. Before joining Supervielle, he was chief information officer at Naranja, a Grupo Galicia subsidiary. Before turning the call to Mariano, let me provide an update on our status as financial agent of the province of San Luis. As a reminder, in early 2017, the government of the province terminated this financial agency agreement and retained us to continue providing these services until now. On May 5th, we were notified by the government that they designated state-owned Banco Nacion as financial agent for the province. At quarter end, the share of payroll loans made in the province of San Luis employees amounted to 2.6% of the bank's total loan portfolio, while deposits made by the government of the province were only 0.7% of the bank's deposit base. We have been operating in San Luis for the past 25 years and have built a strong franchise in the More information on this can be found in our earnings report. With this, let me turn the call to Mariano. Please go ahead.

Thank you, Patricio. Please turn to slide 5. Several effects impacted our loan book this quarter, resulting in a sequential contraction of nearly 11%. The bank We saw seasonally weak loan demands in factories where we have a higher market share and a drop in loans in SMEs at subsidized rates. Accelerated inflation also eroded consumers' purchasing power, while corporate clients held strong cash positions. As you do, we tightened credit standards in a more challenging environment, resulting in a sharp reduction in loan origination. Now moving on to funding on slide 6. Total Argentine peso deposits increased nearly 3% sequentially as we exhausted liquidity management, increasing institutional funding, as well as the balance of central bank securities at quarter end, benefiting from higher spreads. Total liquidity levels were strong, both in pesos and dollars, with the loan-to-deposits ratio at 49%. In turn, core peso deposits posted a 4% seasonal decline, but increased Over 8% year-on-year. Turning to slide 7. Total net interest margin increased 90 basis points sequentially to just over 19% in the quarter. A couple of factors contributed to this improved sequential performance. First, the yield of PESO loans increased 230 basis points as we repriced our loan book and lowered subsidized loan volumes. Central Bank Securities, reflecting monetary policy rate hikes in the quarter. And lastly, higher inflation also drove higher peso need. These were partially offset by a 70 basis points increase in peso cost of funds, reflecting rises in minimum interest rates ruled by the Central Bank. Moving on to asset quality on slide 8. Our total NDR ratio The bank's NPL ratio remains steady at 2.6% in line with pre-pandemic and pre-recession levels, with cost of risk at 3.1% and coverage of 145%. By contrast, Yudu posted a 70 basis points sequentially deterioration in the NPL ratio, Reaching 20.4%, reflecting the impact of inflation on consumers' disposable income. Note that these high MPI levels reflect mainly the aging of delinquent loans that were deferred during the pandemic through regulatory easing. During the second quarter, with respect to write-off delinquent loans of customers who did not receive payments after the expiration The tier 1 capital ratio increased 110 basis points sequentially to 13.8% at quarter end, mainly explained by the inflation adjustment of capital where risk-weight assets increased below inflation. On slide 10, we share our views on the main drivers of our business for the full year. As we navigate a more challenging environment with accelerated inflation, we now anticipate low growth to slow down and remain in line with inflation in 2022, vis-à-vis our expectations-like growth in real terms on our previous earnings call. However, growth in real terms Thank you very much. Thank you very much. Thank you very much. Our perspective for fees is also unchanged from last quarter, with fee income from individuals anticipated to grow in line with inflation, while insurance income is likely to increase in real terms as premiums recover from the lower levels of the past two years. Similarly, we also maintain our views on operating expenses, mainly increasing above inflation reflecting the combination of incremental costs from the implementation During 2022, we plan to invest approximately 5.1 and 1.2 billion pesos in connection with digital and network transformation initiatives, respectively. Finally, views on capital and liquidity for 2022 are also unchanged, with a Tier 1 ratio anticipated at adequate levels ranging between 12 and 13%. As a reminder, 100% of our capital remains hedged against inflation. Now let me turn the call to Sergio Mazitello, our Chief Technology Officer.

Thank you, Mariano. Please, let's go to slide number 12. As you may know, at the bank, we continue with our full agile at scale transformation process. It means A customer-centric focus and also a technology as an enabler of our business. So that's why we think in many cases in technology with purpose. This transformation is complex and includes much more than what we can see on the surface. Mainly it's a cultural transformation, a new way of doing things that involves Thank you very much. Slide number 13 We have been taking many IT decisions based on the objective of accelerating our time to market or time to value. That's why we reorganized and today we have more than 50 squads working in multidisciplinary teams grouped in 11 tribes and also including and six centers of excellence. But to accelerate this key success factor is the empowerment and the autonomy that we have given to the teams, all the Supervielle teams. Our strategy of microservices, building APIs, continuous integrations or continuous delivery and the cloud migration are the enablers for this operating model. Currently, we have more than 340 APIs that were developed in the last year and a half. But I would say that better than that, we have the teams and the talent to continue with this strategy. The data lake that allow us to become a data-driven organization Under the 360 degrees customer view and support by advanced analytics and artificial intelligence models applied to the business and to the strategy. Today, we can say that we have more than 19 machine learning models implemented. For example, the best offer for each of the clients, the next product to buy, or to implement campaigns to retain our clients when we expect Any, for example, probabilities of attrition. But all of this couldn't be possible without the digital channel availability. That's why we also focus on our operational and technology continuity program, getting as a result more than 99.9% of availability in our digital channels. We continue executing our journey to the cloud, implementing a continuous migration of solutions under a multi-cloud strategy, with the aim of achieving greater agility and flexibility, but also, as a consequence, reducing operating costs. This is not a lift and shift of applications. This is a part of re-architecting applications to be cloud-native. to really take advantage of this technology. Our objective is to have 70% of our volume in cloud by mid-2024. And finally, I want to talk about talent and partners. We have made contact with the best IT partners that have given us the best ideas, technology, and practices such as AWS, IBM, and Microsoft. But digital talent is a key to our transformation process. That's why we have approached a comprehensive talent program, which goes along with the IT strategy and, for example, re-skilling our teams, bringing people from the market when we think it's necessary. Today, we are one of the most attractive bands for digital talent here in Argentina. We compete for resources with technology companies, which of course has given us a new challenge. Please, let's go to slide number 14. Today, we can say that we have a digital bank within a traditional bank. We can multiply the number of clients at a low operating cost, thanks to the different technologies and a team of people that we can say they have a human banking mindset. Our app includes almost all the services we provide to individuals and companies, but also can be considered a digital wallet that let our clients perform every day-to-day transaction such as, for example, to pay with a QR code at the merchant with a simple and Friction-Lent Client Experience. Through our digital wallet, that we have today more than 350,000 users, or through our self-service terminal, our clients can solve concerns through a video call, for example, making their day-to-day life easier. All these features have enabled a bank with national presence without the need of having physical branches. Our virtual hub is a reality, including many points of contact to assist our customers. For example, virtual chat integrated to the channels, which facilitates the interaction on frequent problems with an artificial intelligence structure behind it. But also, our virtual hub invited us to rethink our service model, making it possible today to access to one of our 50 account executives virtually with a video conference solution integrated to the app, to the home banking, and to the ATMs. We are the only one offering this solution here in Argentina. From your home, business, or anywhere with connectivity, our clients That makes transfers, service payments, investments, check balances, among any other operations. Having more than 230,000 interactions since we launched it, it allows us to reach more customers in just a click away. So, next steps. We will continue to evolve our data-driven organization, joining more information of our clients, understanding them with new capabilities for the interactions of our virtual hub, continue with our API banking strategy and our payments as a service or embedded finance strategy behind the B2B business there. and also improving and continues working on our user experience digital marketing and architecture as an enabler for Escalade. And of course, our teams are also working on innovation as you can see before. So this goes along with an IT strategy plan that goes together with the digital transformation. That's all from my side. Thank you, Ana.

Thank you, Sergio. Now we can move to the Q&A session. Our first question comes from Ernesto Garilondo from Bank of America. Please, Ernesto, go ahead.

Thank you, Ana. Hi, good morning, Patricio, Mariano, Sergio, and good morning to everybody. Thank you for your presentation. My first question is on the political outlook. Can you share with us what are the latest political events or any potential regulation that could be impacting positively or negatively the banking sector? And also related to this, I know that it is still soon, but I will appreciate your thoughts on whom are you seeing as the potential presidential candidates. And then just a second question on Yudu and the consumer finance segment. Considering the higher rates and the high inflation, when do you think Yudu could start to show positive numbers? Thank you.

Okay, good morning, Ernesto. I will try to answer the first question and maybe I'll then ask Alejandro to compliment. But after the agreement with the letter of intention of the IMF with the government, which is a positive step, it's becoming more clear that in the government there are two factions and Thank you very much. Let's say for the next election, a clear division of views whereby you have on one side a view of let's continue dragging the feet, dragging the structural reforms and not implementing structural reforms which I think this is going to become more clear and the tensions in the government, in my opinion, will help this clear division of views next year for the electorate. So, I don't know if you want to compliment.

Ernesto, good morning. This is Alejandro. I think Patricio sort of summarized this tension we see, but the general trend is that we think that there will be an effort from the current administration, and we see it in the backing of the President's backing to the Finance Minister, Mr. Guzman, In trying to be as close as possible to the IMF targets. The second question was about potential presidential candidates and basically the opposition basically is talking about several candidacies and we think it's still a bit early to determine which of these will actually make it to the finishing line. We've seen declarations by Patricia Bullrich, to some degree Mr. Horacio Rodríguez Larreta and within the opposition coalition Governor Morales. On the sides of the official party or the incumbent we've seen declarations from the current president Mr. Fernández and also some insinuation on Cristina Fernández de Kirchner as well as some ideas around the governor of Buenos Aires, Axel Kicillof, and other alternatives. Frankly, it's very early to say, to be able to determine which of these will be presidential candidates, and as you know, elections will take place on October 2023, and we hope that by that time, before that time, the political candidates will be more clear.

The third question, yes, concerning you two. We are going through a higher inflation scenario. And this is reflected in the expected inflation, consensus effect inflation in different sectors. And this is negative for the industry and particularly negative for the consumer finance. Because it affects Individuals to take loans affecting their disposable income. And also, tenors are not high because of nominal rates. So, this in combination with higher underwriting standards, stricter underwriting standards, The other thing that we implemented in 2021 and continue to implement in 2022, this makes more challenging to find new customers taking credit cards in the usual business. This is one side. We have in 2022 implemented in the first quarter a very deep reduction in personnel. Around 25% of all personnel has been basically there was a severance of above 25% of personnel. And we will continue this capture of efficiencies strategy We are trying to make sure that this franchise turns profitable. So, in one way or the other, we will We will take measures in order to make it profitable by 2023. Perfect.

Thank you very much, Patricio and Alex. Very helpful.

Thank you, Ernesto. The next question comes from Carlos Gómez López from HBC. Good morning, Carlos.

Hello. Good morning. Thank you for the presentation. First of all, thank you, as always, for the quality of Thank you very much for that. My question is again about profitability. Obviously, as you mentioned, higher inflation makes it more difficult to run the business. We have seen that the result has been worse with the higher inflation this quarter. But from what you're describing and what the market expects, we could see higher inflation going into the rest of the year. Should we therefore expect that because of the inflation adjustment, your reported number will continue to be negative and perhaps larger negative than it is today? And my question is, in the future, if this situation continues for another couple of years, Are the shareholders of Supervielle willing to, if necessary, recapitalize the bank if it needed capital to maintain the capital until we wait for better times?

Thank you. Okay. I will ask Mariano to answer the question, but first give me my view. First of all, yes, it's true. We don't have... We're not happy with the profitability, but since we decided in 2020, and this was implemented already in 2021, to take a hit on short-term profits because of the implementation of the transformation of the franchise and also the transformation of the network. and the capturing of efficiencies in 2021. All this is continuing in 2022 and we expect that the results will take place. We will obtain all the rewards of all these efforts in terms of short-term profits in 2023. You might say that it's possible that in 2023 loans will start to grow. So, there will be also a consumption of capital in 2023. So, we believe that combined, or the two things combined, in 2023, we might have a reduction of Tier 1 capital to 12%. And that will allow us still to continue competing and growing with this Tier 1 capital. So, we believe that all the measures we're taking are In order to execute a much more efficient franchise in the next few years. This is what you do. Mariano, do you want to compliment on 2022 on your views? Yes, well, as you said, inflation is a good thing for the business. So, it's a headwind both for loan growth but also on the cost side as particularly personal costs increase with inflation.

So, how are we tackling this? Well, first it's important to highlight that we are hedged against inflation. Ines Bartesaghi Bender, Julio Patricio Supervielle, Leonardo Rodolfo Maglia, Matias Gonzalez Carrara And then, as Patricio said, we showed negative results this quarter, but if we deduct the non-requiring costs, it was positive. So these non-requiring costs refer to efficiencies we are making in our headcount. Thank you very much. At the beginning it was a physical product, particularly in this environment with high inflation and caps on interest rates in this product in particular. So as we work on these fronts and we acquire more clients and start to pro-sell them and start having also deposits, that will allow us to increase our margins and have positive results.

Thank you Carlos. Our next question comes from Yuri Fernandez at JP Morgan.

Hello, everybody. Thank you for the opportunity to ask questions. I have one here regarding the margins. This is actually a follow-up because you were already discussing. What is the outlook for rates? You see, everybody knows, like, the leak has been increasing every month almost. So, where do you see the leak and how that benefits your business? What should we expect? Because I see long growth being somewhat like luster, and I guess it makes sense, right? Decreasing in real terms while your deposits are growing. and most of the bank's liquidity has been allocated to government securities. So my question is, what is the level for LELIC and how LELIC helped your margins for this year? And also on margins, the second question here is regarding the products. I recall there were several, you know, mandatory lending rate caps and we start to see some flexibilization and you discussed this in the release. How that can help you to improve this profitability in the second half in 2023? Thank you.

Yes, hello, Jury. Well, regarding the leaks, as inflation increased during the first quarter, the central bank started to increase rates because they had been flat for almost all 2021. Now the central bank has started to increase rates with the last increase last week or very recently. So they are going to catch up with inflation. So that, at some point, that can benefit us because we also have increasing cost of funding. So that will benefit on the liability management side. Also, right now, there's a difference between the interest rate at one day and at 30 days. So that allows us to increase our spreads. And at some point offset, as you said, the decrease in the loan growth in the first quarter. First is there's some seasonality where the fourth quarter higher growth volumes that decrease in the first quarter of the following year. But also we decrease the loans at subsidized rates. So that's why We believe, although we now estimate a higher inflation than originally expected, we expect now inflation around 65%, and although that's very high, we expect monthly inflation to start slowing down. So in that context, probably the central bank will have this last interest rate hike to be the last of the year. If that's the scenario, of course we cannot assure that, but if that's the scenario, although we might not see interest rate decreases, we won't see also increases. So in a more stable interest rate environment, we should be able to increase our long portfolio also with decreasing inflation.

Let me complement what Mariano said with a couple of things. First, one of our strong pillars is the cost of funding. And we are focusing with all the technological transformation we have expanded and providing cash management services to corporations. and with a lot of impact in terms of the transactionality companies have in the bank and with this we started to see last year a huge impact in terms of collections and payments made by corporations, our clients in our bank and so we start to see and we are focusing on our share of checking accounts at our franchise which we The other thing is concerning senior citizens. Senior citizens are our largest individuals in terms of segments and these individuals with senior citizens, they are typically depositors of savings accounts and time deposits. Time deposits, they have a floor because of revelation. And this is very punitive for our franchise because these time deposit floors, they don't allow us to basically to Thank you very much. But we believe that at a certain point in time, this regulation will disappear and it will make it more sustainable for us and provide more scope for a wider financial margins. Someone, do you want to compliment? Thank you.

No, thank you, Patricio and Mariano. Just to follow up, long growth, what is the expectation? I guess Mariano's message was that margins should slightly improve, right? Like keeping slightly improving the margins, I guess that was the message. So just checking long growth so we can assume like maybe an AI growing slightly above volumes or something like that, right? I guess that would be a base case.

Yes, correct. Yes, inflation, as I said, is a headwind for low growth. That's why we expected, on prior quarter, we expected to grow above inflation. And now we are seeing a growth of the peso portfolio in line with inflation, because at 65% inflation, the loan demand will be, we believe, will be definitely weaker. So we expect as demand starts to recover very slightly with these inflation levels to recover the downturn we had in the first quarter. But it will probably be in line with inflation not growing in real terms.

Okay. Thank you, Mariano. Thank you, Patricio.

Thank you. Thank you, Yuri.

Our next question comes from Rodrigo Níctor from our partners. Please, Rodrigo, go ahead.

Hi, how are you? Good morning. Thank you for the opportunity. So you're undergoing a restructuring process, reshaping your consumer finance business and investing in technology, assuming to be ready for a brighter future. So, what kind of Argentina do you have in mind when you invest? What should Argentina look like so your current strategy is successful? And then a follow-up related to my previous question. So, how do you maximize profitability or maybe reduce the overall negative impact of these non-recurrent expenses while your transformation matures? Thank you.

I'm going to ask you that. Good morning, Rodrigo. I love your question. Let's start from the current situation of Argentina. I'm sure you're aware that the level of loans to GDP is very small. It's around 9%, when you would typically find many of our neighbors at at least 50%, and in the case of Chile, even beyond that, up to close to 90%. So the starting point is from a very low level of loans to GDP, which gives you an idea of the huge potential we have. Historically, we've been closer to levels, in recent history, up to 25% of loans to GDP. I'm always referring to loans to the private sector. So the first thing you consider when you look at the Argentine financial system is that it's extremely transactional and very, very small. and it has a huge potential to grow and to be a great dynamic force in the growth of the Argentine economy. So with this in mind and with this perspective in mind is that we've been undergoing significant investments that you've mentioned and we've tried to focus on a couple of key dimensions. The first is to improve the customer experience and make sure that Our customers, both individuals and SMEs, have the best possible experience in our digital transformation. The second is that we've increased our capability of customer acquisition with all our onboarding initiatives, digital onboarding initiatives. And this is allowing us to scale quickly on what we call our digital trends and also increasing significantly The potential of serving them in areas where we don't have a physical network. And through innovation also, as Sergio pointed out earlier, reducing our time to market, while at the same time we make considerable investments in our network to increase the possibility of self-service and cross-selling, and all this is leading to increasing efficiencies which, when times get better, will allow us to capture all these in very positive long-term value creation.

Thank you very much. That was really clear.

Thank you, Rodrigo. Our next questions come from Juan Recalde at Scotiabank. Please, Juan, good morning and go ahead.

Hi, good morning. Thank you for taking my question. I have two questions. One is a follow-up on loan growth. So I see that you are expecting loan growth around 65%, so in line with inflation for 2022. And that would imply an acceleration in loan growth. So my question is, what segments do you expect to lead this loan growth acceleration? Is it going to be corporate loans you do or the retail portfolio at the bank? So that's the first one in terms of loan growth per segment. And the second one is related to the FX or the exchange rate. So, in terms of the blue chip, I know this is hard to forecast. I know it's hard. If it was easy, it would be a different story. But how do you see the blue chip evolving over the next year or even up to... Yes, over the next 12 months or even before, into 2023, before the elections, do you think that the government can do something to keep the blue chip effects at close to 200 pesos?

Go ahead, Mariano.

Yes. Yes, hello Juan, thank you for your questions. Regarding loan growth, we expect to see loan growth both in The commercial portfolio and the retail portfolio of the time. The commercial portfolio, we saw a decline. We saw first a weak growth last year. So we expect that to start gradually recovering. Then we also, as I mentioned earlier, we have some seasonality, particularly in the factoring portfolio and the short-term financing, where we typically grow More in the last quarter of the year. Then in the retail segments, also the retail segment of the bank showed a decline in real terms in the last two years. So we also expect that to gradually recover. And then you mentioned you do, as you do, we are being We are very cautious on the low growth because we want to grow healthier instead of just growing in volumes with a higher risk. In this particular segment, inflation can reduce significantly the disposable income of individuals, so we are having tighter So, low growth on that side will be lower than what we would expect last year. Then, regarding the blue-chip rates, my view, as you say, that's very difficult to forecast. First, let me tell you about the official exchange rates, because at the end of the day you have the evaluation of the official exchange rate. The official exchange rate, we think that it will be lower than inflation, so we will see the valuation of the peso, and although at a higher rate than last year, we are seeing now the valuation of around 4% monthly, but for the year, that will be lower than inflation. And on top of that, I believe the main component of that gap is the confidence in the government and the domestic currency. So based on the confidence, we saw some moments of very, very low confidence where the gap went to 100%. It was reduced to 70%, so we are seeing inflation, devaluation, but the future swap rate being steady. Let me complement on that a couple of things

The noises in the government concerning the implementation of the IMF has been solved and then you see an implementation of the measures that were agreed with the IMF. This will improve confidence. There is also what is happening today in world markets in terms of inflation and commodity prices. We've seen increasing commodity prices last year and that continues this year. And the terms of exchange, that is the difference of price of exports, price of imports for Argentina's economy, have improved. And according to recent publications by the World Bank in terms of chance of exchange, you have to go back to the Second World War to see the same chance of exchange than today. With this focus of the World Bank, Argentina this year should Around 10 billion by the end of the year. So they will be able to achieve one of the commitments they had with the AMA. So I think this will help reduce a little bit, let's say, the tension in the market and maybe help with the blue chip swap. But of course, we cannot make any predictions.

That's helpful, thank you. And one follow-up, if I may, in terms of the bank branch rationalization. I see that the number of branches has been stable, but my understanding is that you intended to close some branches. So are there any updates related to the central bank authorization in terms of branches closures?

Alejandro, if you want to answer that, also talking about the plans we have.

Yes, what we are doing actually is a consolidation of brands. As you know, we started a process where the two networks that we had, one focused on senior citizens and the other one, the typical traditional branch, we brought these two branches together and in that process identified a series of branches There were relatively close within the relevant market area of each other. This led to a first stage of consolidation, and as you pointed out, we have a request to the central bank to consolidate 16 of our branches, which is standing for already some time. Moving forward, we see similar opportunities in the second stage during this year. where we continue to observe that there are several branches that we could consolidate, basically also leveraging a hub and spoke model that we think would be useful. This will be rolled out during this year and is always pending central bank approval.

In addition to that, there are also, as you know, that we basically announced in this call. I mean, this transfer of business to Banco Nacion that has been basically requested by the government of San Luis. This is giving us also an opportunity to, in that particular province, to maintain all our private business franchise with clients, which is very strong. But all the, let's say, the franchise, the small branches in the provinces that were linked to basically to maintaining the financial agents contract will probably in the case Thank you, Juan.

Ladies and gentlemen, we have reached the end of today's Q&A session. Thank you for joining us today. Thank you for your questions. 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'll remain available to answer any questions