Grupo Supervielle S.A. American Depositary Shares each Representing five Class B shares

Good morning, everyone, and welcome to Grupo Superviel's first quarter earnings call. I'm Ana Bartesagui, treasurer and IRO. Today's conference call is being recorded. As a reminder, all participants will be in listen-only mode. To ask questions during the Q&A session, ensure your first and last name appear on the Zoom platform. Questions can be asked by voice or through the Q&A box. Speaking today will be Patricio Superviel, our chairman and CEO, and Mariano Biglia, our CFO. Gustavo Paco Manriquez, Banco Superviil CEO, and Diego Pizzulli, CEO of Invertir Online, will also be available during the Q&A session. Good morning, everyone. Before we begin, I'd like to remind you that today's call may include forward-looking statements, which are based on management's current expectations and beliefs and subject to risks and uncertainties. For more details, refer to the forward-looking statement section in our earnings release and recent SEC filings. Patricio, please go ahead.

Thank you, Anna. Good morning, everyone, and thank you for joining us today. In first quarter 25, we introduced a cluster-based strategy to strengthen the value proposition across both retail and commercial customers to grain principality with our clients and attract new ones. Loan growth increased modestly sequentially as we experienced some short-term softness in loan demand, particularly in March. This was largely due to external factors including limited peso liquidity, currency volatility and caution ahead of the IMF milestone agreement. Reflecting our strategic focus, retail continued to lead, now comprising over half of our total loan portfolio, up from just a third over a year ago, and the score in our emphasis on higher margin, more resilient segments. On the funding side, deposits increase high single-digit sequentially. As the quality remains solid, our NPL ratio rose this quarter and is aligned with industry levels driven by the rapid expansion of our retail loan book and remains below historical levels as well within risk-adjusted pricing thresholds. Customer-related net financial income increased in the high teens, highlighting the strength of our core franchise, while market volatility weighed on invested portfolio name. On the cost side, we maintained discipline, strongly reducing expenses and demonstrating our ability to drive operational efficiency. In an environment with many moving parts, we delivered amid single-digit ROE in real terms. Mariano will discuss our financial performance in more detail shortly. Argentina continued to its agenda of intense deregulation measures. Inflation continues to decelerate while maintaining fiscal surplus. Foreign exchange restrictions were lifted for individuals and continued to be gradually deregulated for corporations. The strong show for the government in the recent CABA legislative elections demonstrate political support for the milieu government and is contributing to improve consumer confidence. Turning to slide four, as shared during our fourth quarter call, we finalized a strategic roadmap during this first quarter and began executing initiatives to position Supervial as a differentiated player, blending the strength of traditional banking with the agility of fintechs. At the heart of our strategy is meeting evolving customer expectations through simplicity, personalization, and convenience built on a resilient financial platform. We've already made progress on several high-impact initiatives. In April, we launched Argentina's first remunerated account, allowing payroll and SME clients to earn daily interest in pesos and U.S. dollars. This project enhanced the client experience while deepening our funding base and reinforcing our role as a primary bank. We are encouraged by the early response of our clients. This month we launched Tinder Super Villas in the MercadoLibre platform, a bank novelty, fully integrated into our mobile app. This marks a new step in our vision of our super app, providing customers a seamless platform to manage their financing, shop and invest. Our new AI-powered customer interaction via WhatsApp enables real-time intuitive support while retaining the option to access human assistance embodying our take and touch approach. Lastly, the bank launched an investment platform enabling its customers to conduct investment transactions powered by Invertir Online, delivering a frictionless experience and an avenue for higher fee growth. This initiative reinforced our competitive position and we are well positioned to support our clients and deliver long-term value for shareholders as Argentina enters a new phase of growth. With that, I'll turn the call over to Mariano Biglia, who will walk you through our financial performance and perspectives for the year.

Thank you, Patricio, and good day to all. Starting with slide five, total loans were up 3% sequentially and doubled year over year in real terms. Growth this quarter was almost entirely driven by retail lending, which rose 196% year on year and now represents nearly 52% of our total low portfolio, up from 36% a year ago and 48% at year end. This intentional shift toward higher-margin retail products continues to support profitability and deepen customer engagement. Commercial lending was up 58% year-on-year, but contracted slightly sequentially. reflecting softer demand from corporate clients amid tighter peso liquidity and cautious macro backdrop. That said, our market share remained stable and we are well positioned to reaccelerate in commercial lending as demand recovers. Turning to page 6, within retail loans, personal loans stood out up 29% quarter-on-quarter and more than quadrupling versus the first quarter of last year. Card loans followed, rising 12% sequentially and growing nearly six-fold year-on-year. In turn, credit cards rose 5% quarter-on-quarter and nearly doubled year-on-year. On the commercial side, loans declined 4% sequentially, mainly reflecting a decline in dollar-denominated loan demand in a context of strong volatility in anticipation of the lifting of FX contracts. Moving on to page 7. As anticipated, our NPL ratio reached 2% this quarter, primarily reflecting rapid expansion in written loans. While this marks a normalization from historically low levels, it remains in line with industry benchmarks and consistent with our risk pricing. the coverage ratio at 153% continues to reflect a prudent buffer. By segment, delinquency in the retail portfolio increased to 2.8%, while SME and corporate loans stood at 1.3%. Importantly, all levels remain within our expected range. Cost of risk rose to 5%, reflecting higher provisions aligned with retail loan growth in line with our expected credit loss models. As these loans gain share, we are actively refining our origination and collection models to sustain asset quality and protect returns. In our retail portfolio, we prioritize credit quality and long-term relationship value. Currently, 53% of loans to individuals are tied to payroll and pension accounts, segments associated with lower risk and stronger retention. Notably, 88% of personal loans and over half of credit card volume is sourced from these clients, underscoring the strength of this channel. 57% of retail loans extended to the open market are fully collateralized, mainly through car loans, supporting disciplined growth and enhanced credit quality. With respect to commercial loans, 27% of this book is secured by tangible guarantees and three-quarters of non-performing exposures are collateralized. Our exposure remains well diversified, with the top 10 corporate clients representing just 8% of total loans. Moving to slide seven, client-related net financial income rose 17% sequentially, reflecting the momentum in retail lending. loan portfolio NIM improved 60 BPS to 21.3% in the period, also benefiting from the growing share of higher yield products and a lower funding cost base. In contrast, a correction in bond valuations triggered by renewed FX volatility, together with a more restrictive monetary policy, resulted in a sharp decline in the investment portfolio net financial income. As a result, total net financial income declined 12% quarter over quarter. These trends reflect this resilience of our client franchise and validate our strategic shift towards diversified sources of income. Now, please turn to slide 10. In the context of a transition year, we're slightly adjusting our loan, NPL, and cost of risk targets for the full year. Starting with loans, dollar-denominated lending declined nearly 10% sequentially, while peso loans rose 6% broadly in line with industry trends. For the full year, we now expect to deliver real loan growth between 50% to 60% contingent on monetary policy. This compares to our prior perspective of over 60% growth retail loans are expected to remain above 50% of the portfolio. In terms of funding, peso deposits were up 12% sequentially, while dollar-denominated deposits were practically flat. We continue to expect 40% growth in total deposits for the full year, supported by a rising share of dollar balances and a strong traction in remunerated accounts, while peso deposits remain sensitive to monetary policy. On asset quality, we now expect the NPL ratio to range between 2.2% to 2.5% at year end, up from our original expectation of 2% and 2.2%, reflecting a higher weight of retail loans. Net cost of risk expectations now range between 4% to 4.5% compared to our prior range of 3.7% to 4% on higher share of retail loans. We also expect NIM to continue to normalize in the 18 to 20% range as inflation continues to ease, leverage gradually increases, and the mix shifts toward dollar-denominated loans and deposits. Turning to slide 11, we continue to expect fee income to grow by at least 10% in real terms in 2025. As discussed in our prior call, we anticipate fee income to be driven by higher net bank and brokerage fees, along with higher penetration of investment and insurance products across our client base. On the cost side, operating expenses were down 12% sequentially and 17% year on year, reflecting our focus on driving real-term reductions through workforce optimization and other initiatives. We expect this to further strengthen operating leverage as we continue to cut costs and drive revenue growth. As a result, we continue to expect ROE to improve progressively, reaching between 12 and 15% for the year, reflecting margin stabilization, stronger fee contribution, and the benefits of structural efficiencies. We also maintain our ERN CET1 ratio expectations of 12 to 13%, factoring in long growth and regulatory adjustments. In sum, we remain focused on disciplined execution, balancing growth, efficiency and capital preservation. We are closely monitoring the macro and regulatory landscape and are confident in our ability to navigate the evolving context and these emerging opportunities. Finally, additional details on our quarterly performance are available on the appendix of our earnings presentation. With that,

Thank you, Mariano. 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 a Zoom platform. To ask a question, 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 the Q&A. We will ask you to limit yourself to one question and a follow-up, and then you can raise your hand again in another round. One moment while we point for questions. The first question comes from Ernesto Gavilondo with Bank of America. Hello, good morning, Ernesto. Please go ahead.

Thank you, Ana. Hi, good morning, Patricio, Paco, Mariano, and all your team. My question will be on asset quality. We noted the NPL ratio normalized to 2%, but at the same time, we also saw an important increase in provision charges and cost of risk. So can you elaborate if there is any trouble corporate and in which sector, for example, any color in the agriculture sector? And how should we think about the evolution of the cost of risk throughout the year, especially as it was, I think 5.2 in the first quarter, but you're expecting to be the guidance for the full year between four to 4.5%. Thank you.

Thank you, Ernesto, for your question. First of all, I have to say that there is what we are seeing is a normalization of the credit in the market. And what you see, the NPLs are coming to, let's say, a more normal level from very low levels previously. So, and we are very comfortable with our risk controls and individuals and enterprises, they are generally still very low indebted in the industry. in Argentina. And so this is a normalization. This increase of NPL that you saw in the quarter relates to the growth of the loan portfolio, particularly in the retail sector. But please, Mariano, do you want to answer more specifically?

Sure. Thank you, Ernesto, for your question. Regarding the MPL, as Patricio said, we are seeing a normalization and also our portfolio is balancing more towards the retail segment. So that's why we are also seeing an increase in MPLs and an increase in the cost of risk. Regarding our guidance for the full year, we are slightly increasing the guidance for MPL. We had a guidance from the range of 2 to 2.2%. Now we are in the range of 2.2 to 2.5. And that's basically because of the composition of the portfolio leaning more towards retail. So that's also what will make the cost of risk also to range more between 4.5% instead of 3.7 to 4% we had previously. So we are not seeing any problems on the agricultural sector or the corporate side. If you see the evolution of the MPL on the corporate, it's quite stable compared to the previous quarter. We know we have news from some corporates in the last months of last year, but we are seeing a good behavior on that portfolio.

Ernesto, sorry, in the page five, you can see that one year ago, we have 64% for commercial loans and 36% for retail loans. And now this quarter, we have 52% for individual loans, personal loans, and 48% for commercial loans. So that's different compositions. Explain the figures that you are seeing today.

Also, sorry, Ernesto, also to complement, when you look, for instance, for unsecured loans for individuals in terms of personal loans, the bulk is on payroll accounts or pensioners. So we are very confident on that. And also, if it is an open market, Also, the bulk of the loans is car loans, which are basically secured by the car itself. So we're pretty comfortable in that also. Thank you.

Perfect. Thank you. So just to follow up in terms of cost of risk, because I believe it was around 5% the cost of risk in the first quarter, but you are guiding for the full year between 4% to 4.5%. So the worst of the customer risk already happened in the first quarter and it should be improving throughout the rest of the year. As you were saying, the bulk is in payroll loans, pensioners and in auto loans. Is that what we should expect?

Yes, correct. The net cost of risk was 4.8, so it's slightly above the range for the full year, so we should see the cost of risk improving in following quarters and having the full year within that range.

We are working on improving the cost of risk going forward, so yes, we are keeping the the 4.5% of causal risk. But we are working on new measures in order to keep the numbers in that level.

Perfect. Thank you very much.

Thank you, Ernesto. So our next question comes from Brian Flores with Citi. Hello. Good morning, Brian. Please go ahead.

Hi, Tim. Good morning. I have a question on capital because you might have the lowest position among incumbents. And in the last two months, you have consumed around 10 percentage points of tier one, which comes to around 250 bps per quarter. So you are already at 250. You are already, I mean, at 15 bps. which means that to go to the 12% to 13% range you were saying by the end of the year, you will need to be consuming significantly less than you had. So a question on your risk appetite. Should we continue seeing the aggressive growth we have seen? And should we expect you to defend the market share you have gained? I know, Patricio, in the report, you mentioned the 40 bps market share gain you had in the last months. So should we continue to see you, I would say, aggressively defending or pursuing more market share? Or should we see a bit more, I would say, caution on origination? And if you could expand on which segments, that also would be great. Thank you.

First of all, I... What happened is that in the fourth quarter of last year, we anticipated a market growth that maybe there was a catch-up in the first quarter of this year from the rest of the banks. So this was an anticipation. But our risk appetite has not changed. It is, as I said previously, we are starting from very low levels of debts for corporations and individuals. And this is, we believe that is a great opportunity for the financial system looking forward with inflation continue to go down and also expected at some time also nominal rates to go down. So that would be very positive for the credit side. And regarding the portfolio mix, in order to sustain what you mentioned, to sustain capital levels, it's essential to also to gradually change the mix of the portfolio from corporates to individuals. Paco recently just mentioned the change that occurred from the beginning of last year till now in terms of giving more weight for retail loans. And this should continue gradually to increase the ratio of retail loans in order to defend the return on equity. Additionally, PACO also has implemented stringent measures in terms of cost controls that you can continue to see this in the first quarter. both in personnel and general admin expenses, and also being more, let's say, very high discipline also on the investment side for technology, more focused. And finally, I believe that there is a challenge for the entire financial industry, which is expanding the leverage of the financial industry. And because the leverage is very low, and so we will be looking forward to expand our leverage in order to sustain the return on equity. I hope I have given you the answer to your question. I don't know if you want to answer. No, excellent.

No, great. So just to summarize, we understand based on your presentation, as you mentioned, NIMS should continue coming down. Asset quality, perhaps a bit more pressure, but within control. So basically what you're saying is perhaps a lower risk density helping the ratio, but also more leverage also helping achieving better levels of ROE. Just to summarize, this is a correct picture in 2025? Yes.

Yes, I think it is correct.

Yes, that's correct, Brian. The range of tier one capital ratio that we gave is consistent with the rest of the projections of non-growth, basically, and the other measures.

Thank you.

Thank you, Brian.

Thank you, Brian.

We have another question. It comes now from Carlos Gomez Lopez from HFEC. Hello. Good morning, Carlos. Thank you for asking questions. Please go ahead.

Thank you. Good morning. And as always, thank you for the very detailed presentation of your results. I had a question on the deposit side. You mentioned that you have a 12% increase quarter on quarter. But when I look at page 17 of your presentation, I see that that is mostly on the wholesale side. Now, you expect 40% increase in deposits in real terms in the year. What makes you think that you can achieve that rate of growth and what alternatives for funding do you think you can count on? Thank you.

Let me give you briefly a general answer, then Paco will complement. Basically, we... that there has been, if you look, if you would put context to what happened in the last few years in the financial industry in Argentina, there was an issue of disintermediation, particularly because we had repressive financial measures from the central bank that taking deposits in the banks, and what happened is a large chunk of the savings, of the transactional funding, sorry, of enterprises and individuals, they went into money market accounts. These money market accounts finally ended, and they continue to end, or they come to the banks as remunerated accounts, which, according to Basel, to Basel rules, this can only fund securities. So, the challenge is to increase CASA deposits. And this is exactly what we are tackling. Banco Superviil is, I think, the first bank really to to take seriously this issue and tackling the issue of gaining principality and making sure that the individuals and the enterprises, they start depositing in our bank. And I would like to, if you can explain what we do.

Yes, basically we launch early April, Cuenta Remunerada, basically it's a... account for the payroll customer. Also, as you saw in the presentation, we have a huge focus on the payroll accounts customers sector, basically, and we have excellent results in order to And we see the balances of those customers. Basically, they are more stable and also increase the balances against the previous month. So we launched, as Patricia mentioned, we launched a very disruptive and different product for the market for comparing about Basically, in order to compete directly to the vintage with the vintage. So we have excellent results as one month that when we launch, but I think it's and a strategic response for the challenge that we have for the year, for the whole year, in order to reach the goals that we define. So I feel confident about that because we have a very huge and very hard strategic plan in place.

I might compliment the challenge and the goal that PACO has set for the bank is to pay the cost of these remunerated accounts with reduction of expenses. So this is pure value creation for the bank. In addition, let me tell you that if you look at international experiences, there has been already other plays like this in the market. For instance, Quinta Naranja of ING Direct in Spain in 1999 was very successful. Also, you have another example in Chile now in the last four years, Banco Consorcio is another successful example of what we are trying to do. And we are very confident on that. Thank you. Excellent.

Can you tell us how much you are paying for the remunerated account? And can you give us the starting point on how many salary accounts you have now and what would be a good outcome for you by the end of the year?

We are paying 32% annually, the interest rate. And we have half, as today, half of our customer base are in this new product, Cuenta Remunerada. We are attracting the half of the other part. And we are launching the... through our sales force and throughout all the branches, we are selling the new product for the customers and also for the SME segment, also because we We also, because we don't say it, we launched also remunerated account for the SME segment, not only for the payroll services, also for the SME. So we launched this cuenta remunerada for the whole ecosystem, for the company and for the employees. Basically, half of the customers have accepted the cuenta remunerada, and we are looking for another 50%. And also, we launched a very intensive incentive for all our branches and sales force in order to sell this product for the open market in Argentina.

And one final clarification, when you say that half have accepted, so these are clients that before did not have a remunerated account and therefore they would be pure CASA. Now they keep the account, but now you're paying 32% on it, right? I mean, the initial impact should be higher interest expense. Should I understand that that way?

It's a high interest expense, but at the same time, it's a high interest, but as we said, we will compensate this with cost reduction. But there was another factor that I tried to explain before, is that if you see the behavior of a typical individual, What they do with the transactional monies is they invest in money markets. And this is not a casa deposit because these money markets, as I said, they come as remunerated accounts and it's not casa deposit. So what we are trying is to change the behavior. The money was getting out of the banks, the whole financial system, and going to money market accounts, to money market funds. So... This is a structural play. And we believe, do you understand? So basically what we are increasing balances, not only paying more, of course, of the people who are staying with us, but also we are increasing the balances of our own clients because we are changing their behavior.

I hope it's clear. The strategy is clear.

Carlos, to be clear, we don't expect, no, we don't have or will have more cost or financial cost for this initiative. We will cover that additional cost with additional expense cuts.

Very clear. Thank you.

Yes, and it's also important to highlight, Carlos, that for individuals, we pay on their balances on savings account or payroll customers up to one million pesos of balance, which is very competitive compared with banks that don't pay anything and also with fintechs. Also, some of them have that limit. So that's why also the cost is also contained.

Yeah, very good point, because if the customer

remains more balances we earn money on that part of the cycle and for smes it's not that way no so there's a ceiling as mentioned there's a ceiling on what we remunerate a one million pesos Basically. No, no, we can send the scheme if... Above 1 million, we do not remunerate. This is for the case of individuals. In the case of corporations, of SMEs, it's different. It's basically what we... Before remunerating, they need to have a balance with up to a certain amount of... 25 million. 25 million... With no remuneration above that, we remunerate. So it's a different strategy. The rate is 18%. Yes, it's a different rate.

Very clear.

Thank you. Thank you, Carlos. I think we have a couple of questions in the Q&A box. One comes from Mattia Cateruzzi with AdCap Securities. We have two questions. Maybe we go with two questions at the same time. Net interest margin dropped sharply to 19.2% from 61.8% in 2019. First Q24 and 24.9 in Q24. What were the main drivers of this compression and do you expect a recovery in NIMS going forward? And then it's mostly coming from the NIMS compression net income. It says fell 74% Q&Q and 89 year-on-year with raw return on equity at 3.5. What are management's updated expectations for full year return on equity?

I would like Mariano to answer this question. But first, I'd like to say that in the first quarter, what happened also, what affected the net interest margins were deterioration of the prices of the securities, government securities. And this has to do with, as you know, there were uncertainties during particularly March March and April also, related to the creation of reserves and the expectation of an IMF agreement. So, this affected the prices, and this affected what you see there. Afterwards, there was a change, but this is not, of course, reflected in the first view. It was a positive change. But, so please, you want to complement? Sure, Patricio.

Well, when you compare to first Q24, also if you compare auto quarter, the main driver is the lower NIM on the investment portfolio. First Q24 was completely extraordinary. You see a NIM of more than 60%, you know, it's not sustainable. And in fact, we saw that decreasing quarter to quarter last year, where we have extraordinary results, mainly from investment portfolio, but also in an environment of much higher interest rates and much higher inflation. Then when you compare it quarter on quarter, although inflation was similar, if you see the chart we showed on page nine, the decrease in NIM is only the investment portfolio. And that is related mainly to the volatility that we saw in the first quarter of 2025 with low results from the Treasury positions. But the loan portfolio NIM remained stable and, in fact, it increased slightly. This also explains why we are migrating, and we started doing that since a year ago, migrating the asset compositions from treasury securities or central securities to loans. So those are the main drivers.

Then I think we have another question from the audience. How do you see the impact of the recent government measures to allow non-declared dollars to be used in the economy?

I think it's, well, yet we need to see it because there are certain details, particularly on the fiscal, certain aspects of this, what the government intends to do that needs to pass through Congress because it implies taxes, tax regulation. But, I mean, I think it's positive in the sense that They want to put incentives on consumption and incentives of usages of dollars that today individuals have in safe deposits. These are measures to favor, let's say, the middle income segment of the country. And of course, I think it is very positive. At the same time, it is possible that there will be changes in the regulations of the central bank in terms of, as you know probably, The money that is not given in dollar loans to corporations basically is deposited at the central bank with no interest. I believe that there will be a change on that side and that change in order to adapt it more to international levels and therefore provide a higher or better value proposition for savings in dollars. These measures that you mentioned will probably complement it. I think, I expect they will probably complement it also with a change in regulation and by remunerating our deposit at the central somehow. This is my expectation.

And we have another question from Brian Flores. Brian, please go ahead.

Hi, Tim. Thank you for the follow-up. Just a quick question. If you could remind us a bit on the density of risk weights, and particularly, I think Mariano made a very interesting comment. Of course, I think the system is shifting from public securities, which we understand have a risk weight of zero, to, in your case, a bit more exposure on the retail side. So just can you remind us of the ranges of risk density? I think If I'm not mistaken, it's anywhere between 50 to 150. But then on the retail side, wherever you are focusing on, maybe with guarantees, this could be lower, just to understand a bit more on the technical side. Thank you.

Yeah, so, well, basically, treasury securities, most of treasuries, they don't have... capital requirements or is very low, it's more related to market risk. But on those pressure is on the investment portfolio, they do have credit risk-weight assets, so capital requirements, it's not completely zero. But of course, as we migrate to the loan portfolio, there are higher capital requirements because risk with assets increase. And also when you increase the leverage, because there you are directly increasing assets, not only changing the composition. The density, The normal rule is 100%. There are some exceptions or waivers for certain loans, mainly to individuals, which could be lowered to 75%. For instance, in certain mortgage loans or certain credits for consumption, they can go to 75. And to 150 is more related with non-performing loans, with certain unsecured non-performing loans. But that is not a very material balance sheet. That's at least a brief summary. I don't know if I answered your question.

Yes, you did, Mariano. Thank you. Very helpful.

Thank you, Brian. And we have now a second question from Carlos Gomez-Lopez with HFEC. Carlos, you can answer now.

Thank you so much. Just to follow up on the capital question, there was a change in regulation. You referred to it in your presentation. I think it's 1.4%. But it's not clear to me that's a reduction in your capital ratio because of the change in regulation or an increase because in some other banks, I had seen that the impact was favorable, not disfavorable. So if you could clarify what the change in regulation is, how much it affects you, and going back to the target, 12%, 13% by the end of the year, I mean, obviously you continue to grow very fast. What is the minimum that you would consider acceptable going into the following year? And would it be reasonable to expect that at some point you may tap the market for more equity if growth continues to be favorable?

Yeah. Okay, the last part of the question. We are comfortable with the capital levels, but of course, if there is a huge, if we continue to see a huge increase in demand of loans for 2026, and the market is there. It is possible that we might tap the market for capital. We are looking into this, but it's not in our plans as of today. But do you want to compliment on answering this question?

Yes, sure. Carlos, regarding the first part of your question, it's correct. As we said in the presentation, the changes in regulation, mainly for operational risk, because there were also changes in capital for credit risk, but the most important for us is the one of operational risk. That made the tier one ratio decreased by 1.4%. And that is related to an increase in the risk-weight assets. It's not a higher deduction or less capital, but it's an increase in the risk-weight assets because it increases the capital requirements for operational risk.

That is permanent.

The change is permanent, although we are having some discussions with the central bank because it affected in a more punitive way the medium-sized entities, I would say. There is like a waiver for the smallest one. The entities with systemic risk, they can adopt Basel III, and the most punitive is in the middle where we are, so we are expecting the central bank to review that and allow us to adopt a complete Basel III. If that doesn't change, it will be permanent, but it should decrease over time because what the regulation change is that we have to adjust for inflation all the past revenues, which are the base for the calculation of the operational risk. And if you go back to years with very high inflation, revenues are very high because they need to compensate for inflation. So the operational risk-weight asset become very important in the capital requirements. So that should decrease over time because inflation decreases and revenues decrease.

That's very clear. And again, I know you are comfortable today, but what is the level at which you are not comfortable? 12%, 11%, 10%? What is the absolute minimum that you would like to run the bank by?

For us, we feel comfortable with an 8%. 11% Tier 1 ratio. On top of that, as we always say, we can add Tier 2, which right now we don't have, as we didn't need it in the past. So in the last years, we didn't have any Tier 2. All our capital is CE2-1. we could add tier two if there's the opportunity, and we would feel comfortable with 11% or more. And in fact, it would be an efficient use of capital.

So again, it's 11% tier one or 11% total that you are targeting?

11% tier one.

11% tier one.

Yes, and always remember that the minimum capital requirement is 8% and 10.5% if we want to pay dividends, although we are not paying dividends from the bank. We just receive dividends from the insurance and the asset manager subsidiary.

Very clear. Thank you.

Thank you, Carlos, and thank you all. We have reached the end of today's Q&A session. I'm sorry. I see there is another, a new question in the Q&A box. I'm Ignacio. I'm sorry, from Invertin and Bolsa. Thank you for taking my question. The question is regarding the NIM of 18 to 20 estimated for 2025. Could you break down that in terms of rates on assets and liabilities? What levels of rates are you estimating on assets and the funding? Thanks so much.

Let me tell you about the reference interest rate. From there, it's a starting point for pricing assets, which, of course, they are very different regarding the segment. and the product, but we see the reference interest rate to stay stable the next few months and then to decrease. As inflation decreases, I think the interest rates will naturally decrease, but particularly in the lifting of capital controls, we think we will see positive real interest rates. So the path that we see for inflation and interest rate is a decrease in inflation and a decrease in interest rate a few months from now, not immediately. So that will lead to positive interest rates that will be translated, of course, to both loans and time deposits. And from that is that we will price our assets and liabilities.

Yes, we have reached the end of today's Q&A session and earnings call. Thank you for joining us today. We appreciate your interest in the company and we look forward to meeting more of you over the coming weeks and months and providing financial and business updates next quarter. We remain available to answer any questions that you may have and have a good day.