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

Good morning, everyone, and welcome to Grupo Superviel's second quarter earnings call. I'm Manu Artezaghi, 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 chief financial officer. Gustavo Paco Manriquez, Banco Superviel CEO, and Diego Pizzulli, CEO of Invertir Online, will also be available during the Q&A session.

Thank you, Ana. Good morning, everyone, and thank you for joining us today. We executed well amid a still transitional macro backdrop. Loan growth outpaced the industry led by strong performance in commercial lending. By contrast, we took a more cautious approach to retail origination in response to the slight deterioration in asset quality in line with industry and historical levels. This follows the rapid retail expansion of prior quarters and return to credit normalization. On funding, U.S. dollar balances reached record levels, gaining 100 basis points in market share over the past 12 months, underscoring both our competitive position and client trust. We maintained a solid capital position with a CD1 ratio of 13.9% and delivered a 6% return on equity in real terms. further supported by discipline, cost management and improved NIM. While the macro environment still presents some near-term headwinds in connection with the election-related uncertainty, tight peso liquidity and high real interest rates, The broader backdrop remains supportive, with public government supported nearly 50%, fiscal consolidation, ongoing deregulation, and inflation trending down. We expect economic growth and credit expansion to resume after the October 26 elections, supported by structural reforms anticipated to begin in the post-election period. These conditions, combined with our strategic execution in solid capital, position us to continue capturing opportunities as the credit gains momentum. On slide 4, our strategic transition towards a more credit-driven balance sheet is progressing, although at a slower pace in this election year and in line with monetary policy. Loans accounted for 48% of total assets, up 25 percentage points since December 2023, while we reduced our investment portfolio by 28% percentage points to 22% of assets. This deliberate rebalancing supports private sector credit growth to benefit from the gradual recovery in economic activity. Our loan-to-deposit ratio increased to nearly 72% while leverage stood at 6.5 times, well below historical levels, providing ample capacity to continue expanding our portfolio in a disciplined, profitable way. On slide five, I'm pleased to share that we are seeing tangible early results across the four key initiatives which are central to how we engage clients, build loyalty and drive cross-sell. First, our innovative remunerated account that we are selectively offering in line with our cluster-based strategy continues to deepen primary banking relationships and expand our deposit base. Payroll-linked balances increase sequentially by 27% in pesos and 18% in U.S. dollars, with new payroll accounts increasing by 53% year-to-date. Among SMEs, checking accounts increased 14% in pesos and 43% in dollars. Second, Tienda Superviel, our online store, hosted on Mercado Libre and integrated into our app, has surpassed half a million sessions since launch. This initiative, which complements our value proposition with the Merli platform, resulted in more than 175,000 customers transacting with over 400,000 registered credit cards. This is further evidence that we are embedding ourselves in our clients' daily lives and increasing engagement beyond traditional banking. Third, our GenAI-powered WhatsApp channel was recently enhanced with new transactional features, including credit card purchases, authorizations, transportation card reloads, and mobile top-ups, turning WhatsApp into a daily banking companion. Adoption is growing rapidly. In July alone, the channel registered over 150,000 interactions, posting exponential growth since launch, reinforcing its role as a scalable, convenient service touchpoint. And fourth, new synergies between the bank and InvertinOnline are leading online brokers. are delivering solid results, leveraging Yale's 1.7 million customers to showcase banking products while preserving Yale's core identity as an investment platform. In just four weeks since launch, over 4,700 InvertionLand clients placed $28 million in dollar-time deposits at the bank with nearly one-third for terms over 180 days. With only 3% of your clients currently banking with us, we are launching a targeted cross-sell strategy with a compelling suite of products aimed at deepening relationships and expanding our retail footprint. Lastly, since adding the Yoast button to our mobile app just two months ago, we've seen a clear increase in investment activity among bank customers. These early outcomes give us confidence that our strategy can drive engagement, diversify revenues and capture growth opportunities as Argentina embarks on a renewed expansion cycle. 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. Let's turn to slide 6. Net income was 13.6 billion pesos in the second quarter, up 62% sequentially, with ROE at 6%, driven by higher net financial income and lower inflation adjustment. Clients' net financial income was up 10%, supported by wider spreads on higher loan volumes, while market-related net financial income benefited from gains in our treasury portfolio, growing 15% quarter-no-quarter. Inflation adjustment decreased 34%, reflecting the lower impact in the net monetary position from declining inflation versus the prior quarter. By contrast, net fee income was down 13%, as banking fees were not adjusted in the quarter though repricing is underway in the third quarter. A lower contribution from our brokerage business since the lifting of FX restrictions in line with the industry trend also impacted fee income. Expenses were up 4% as costs were seasonally lower in the prior quarter. Year to date, Net fee income was up 19%, while expenses declined 11%, as we continued to simplify our structure and reduce fixed costs. Loan loss provisions rose 32%, reflecting loan growth and higher risk weighting from retail lending. Other losses increased 40%, mainly from the sale of non-core properties, while income tax benefited from a higher level of tax efficiencies. Moving next to slide 7. Total loans increased 14% sequentially and 71% year on year in real terms. growth in retail loans moderated to 2% sequentially after several quarters of strong expansion as we tightened underwriting policies in response to early signs of industry-wide asset quality deterioration. Other retail products, including credit cards, mortgages, and car loans, continued to expand modestly. Year on year, retail loans were up 130%, accounting for 47% of our total loan book. Commercial lending was up 23% quarter-on-quarter, led by strong growth in foreign trade loans, promissory notes, and overdrafts as corporate activity accelerated with commercial now representing 53% of our portfolio. This rebalancing toward commercial lending reflects our disciplined credit stance while retail remains an integral part of our strategy for the long term. Turning to slide eight, our MPL ratio was 2.7%, in line with both historical and industry levels. Retail delinquency was 4.5%, reflecting credit normalization following the 130% year-on-year growth in retail loans and the impact of lower inflationary environment on repayment dynamics. The MPL ratio was a low 1.4% for corporate and SME loans. Coverage is prudent at 130% and we continue to fine tune origination and collection strategies to preserve portfolio health. Provisions rose 32% sequentially to 44.5 billion pesos, lifting net cost of risk by 70 basis points to 5.5%. This was mainly due to higher provisioning needs in retail loans under our forward-looking credit models. Importantly, the living currency levels remain fully within the assumptions embedded in our pricing, and we are adjusting origination where appropriate, while continuing to fund demand in segments with the strongest risk-adjusted returns. Turning to slide 9, Total funding increased 30% year-on-year and 6% sequentially, supported by strong dollar deposit inflows and a growing contribution from corporate notes, which now account for 6% of total funding. Peso deposits were up 24% year-on-year and up 1% sequentially. US dollar deposits were up 154% year-on-year and 16% sequentially, setting another record high at $943 million as we deepen transactional relationships with our clients. The positive trend continued into July, with US dollar deposits exceeding $1.1 billion. This solid funding base positions us to continue expanding loans while maintaining a prudent liquidity profile. The recent increase in the minimum cash requirements for money market funds, unifying reserve requirements on demand deposits across all depositors, allows us to pay the same interest rate to a corporate checking account as to a money market fund, allowing banks to compete with money market funds in attracting customers and thus improve the deposit mix. On slide 10, net interest margin expanded 160 basis points sequentially to 20.8%, supported by strong spreads in both client and market-related portfolios. Total net financial income expanded 12% from the first quarter as client-related net financial income increased 10% on higher spreads and long growth, while market-related net financial income rose 15%, driven by better investment returns as Treasury bond yields stabilized after last quarter's sharp correction ahead of the IMF agreement in April. As shown on the right-hand charts, loan portfolio margins improved to 22.8% and investment portfolio margins to 20.1%. The peso interest spread also widened 200 basis points to 23.1%, supporting the overall lean recovery. Turning to slide 11, reflecting the election year and a longer transition period towards a more loan-centric balance sheet into 2026, we are updating our 2025 perspectives. We now expect real loan growth between 40 and 50% contingent on monetary policy and regulatory developments, and the more balanced mix between retail and corporate loans. On deposits, we anticipate growth of 20% to 30%, with continued improvements in the loan-to-deposit ratio. Peso deposits growth will depend on monetary policy, while we see further share gains in U.S. dollar deposit balances. In terms of asset quality, we expect the NPL ratio to stabilize at historical levels between 3% and 3.5%, with net cost of risk at the 5% to 5.5% range, reflecting ongoing credit normalization and the higher share of retail loans. NIM is expected to trend between 18% and 20%, slightly below 2024 levels, as inflation continues to decline, leverage increases and following restrictive monetary policy. Turning to slide 12, we maintain expectations of net fee income growing 10% in real terms this year, driven by higher bank fees, asset management growth, and improved insurance penetration. In brokerage, we expect to leverage new business lines to offset lower revenues of total net transactions, following the lifting of FX controls. On expenses, our focus remains on driving sustained efficiencies in headcount and other costs, contributing to a contraction in expenses of between 5% to 8%, driving stronger operating leverage. With this, we now expect ROE to improve toward year-end to a range of 5% to 10% below our original full-year guidance, as transition towards a more leveraged balance sheet is longer than expected due to a tighter monetary policy and higher volatility ahead of legislative elections. This revised outlook reflects margin stabilization, stronger fee contributions in the second half, and the full impact of our cost efficiency initiatives, while factoring the dynamics of our election year. Lastly, we now anticipate the CEG1 ratio to close the year between 12 and 13%. There is potential for upside if regulators approve Basel III operational risk treatment for Group 2 banks in line with systemic banks, in which case our CET1 ratio would have been approximately 16.7% as of June 30, 2025. Overall, these targets reflect our disciplined and confident approach to balancing growth, profitability, and capital strength as we navigate an election year and its still evolving macroenvironment. Additional details on our quarterly performance are available in the appendix of our earnings presentation. We are ready to take your questions. Anna, please go ahead.

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 the 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 box. 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 poll for questions. The first questions come from Ernesto Gabilondo at Bank of America. Hello. Good morning, Ernesto.

Good morning, Anna. Thank you. Hi. Good morning, Patricio, Paco, and Mariano, and good morning to all your team, and thanks for the opportunity to ask questions. My first question will be on asset quality and cost of risk. When looking to the MPL ratio, it remains still below historical peaks. But in terms of the cost of risk, it appears to be a little bit high. So just wondering if the peak already happened in the second quarter and how should be the trend for next year?

Thank you, Ernesto. Yes, it's true. The NPL ratio in the last two quarters increased from 2% to 2.7%, which is a meaningful increase. But as you said, it remains well below historical standards, and we believe it's part of an industry-wide trend with credit normalization. following a very, very low NPLs, historical NPLs. We believe that at this stage, the economy, what's happening is also not creating jobs. Employment is stable, but it's not creating jobs. And there is also a behavioral change related to a new pattern, because before there was inflation, and with inflation customers would take a loan and they would expect that the installments In real terms, they would dilute, and this is no longer happening. So there is a learning curve for customers. And so, but we still think that overall the credit portfolio is healthy, and we basically, we are continually adapting underwriting standards, more stringent, and this is dynamic, of course, in order to make sure that our portfolio remains healthy. And by the way, also recall that we, on the retail side, we mostly work with clusters that are cash flow based. That is payroll accounts where we pay the salaries and we collect the loans or senior citizens who have a historical good performance in terms of loans or car loans.

So, sorry, I don't know if you want to add something. they know how to work with inflation in the past and now they are they need to understand how is the this scheme without inflation so it's a big change in their behavior also in terms of management i i took several measures actions in order to to make change in the scores and also in the great policy and basically i have a weekly meeting, one hour, one and a half, in order to observe all the trends and all the sales and all the vintage in order to keep down the great ratio. So we are taking several measures and we are observing that as a weekly basis.

Thank you very much. And then just on cost-to-risk, because that explains the MPL ratio, but then on cost-to-risk, how should we think about it? You mentioned it could be between 5% to 5.5%. I think it was above 6% in this quarter. So, again, just wanted to confirm if it has peaked for you, and how should we be evolving for next year? Should it be stable, deteriorating, or improving after all these the policy metrics that you are implementing?

Yes. Hi, Ernesto. Let me take that part of your question. Yes, effectively, we expect the cost of risk to be in a peak at least 4.5%. net cost of risk for the quarter. So, we expect it to range between 5 and 5.5% for the year. It should be stable within that range also into 2026. As Patricia mentioned, this is also a normalization of the rate portfolio, particularly the region segment. And then changes will be more depending on the mix of retail versus corporate, but we don't expect to go higher in this range.

Perfect. Thank you, Mariano. And then just my second question, it will be on your ROE expectations for next year. As you mentioned, for this year, it could be around five to ten. But just wondering, What should be the level that the ROE could be getting into next year? Just an idea of where can it go again.

Sure. Yes, as you said, we expect ROE to range between 5% to 10% this year as the monetary policy is distributed. very restringent, and there is some volatility ahead of the October elections. But they expect the monetary policy to stabilize and interest rates go back down again after the October elections, which are by the end of October. So maybe the upside in the ROE and the presuming low growth in high growth rates will be only for the end of this year. So we will see the benefits entering into 2026, where we expect to have an increase in ROE. It could be 15% for the year, but increasing quarter over quarter. It's still too early to tell how we are going to be in the fourth quarter of 2026, but we could be over that average for the year of 15%, maybe levels between 15% and 20%.

No, perfect. Super helpful. Thank you very much.

Gracias, Ernesto.

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

Hi, Tim. Good morning. Thank you for the opportunity. I have a question on growth because you revised your guidance downwards. And I wanted to ask you if this has more to do with what is happening with organic funding, which is deposits, right? You also revised downwards. Or do you think it has to do more with capital, your T1 ratio? Because as you saw and as we have seen, you perhaps have one of the lowest T1 ratios in the system. Of course, you mentioned there could be some regulatory tailwinds. Just... If you could explain a bit on what changed your risk appetite and also on that front, on the Basel III implementation that could happen for your segment, if you have a timeline as to when could you have this impact, if there's any provision here.

Well, let me start. Maybe I will be complimented by my team. But basically, we are going through at this stage a macroeconomic transition. of course, with the fiscal anchor and also foreign exchange anchor. And this inflation process will continue up to next year. And at this stage, the monetary policy is very restrictive. Well, we believe that there will be a relaxation, as I think Mariano mentioned, after elections. This is of course having an impact this year in terms of growth. because there is scarcity of funding in the system with basically with pesos particularly, not with dollars, but with pesos. However, we believe that there is, This is going to be an upside following elections in the sense that with the reform agenda of President Millet, there will be a much better business confidence, more investments, and therefore more credit demand. And in our case, what I think we are doing is laying the groundwork for the loan recovery by what we have done in the past three months. We launched a cluster-based strategy of remunerating accounts for payroll accounts as well as SMEs accounts. And this is showing a very strong effect, driving principality with those clusters. And it is, of course, increasing the funding. So we're very happy with the results. We will continue. By the way, we are about to launch in the next few weeks a joint marketing campaign between Pankow, Superville, and Invertin Online in order to make sure that we propose this value proposition, even a stronger value proposition than the one we have today, to invert the online clients in order to attract funding. So looking forward, we believe that we are handling, we are tackling the funding issue. Concerning the capital issue that you mentioned, we don't feel constrained with capital at this stage. Of course, that if conditions arise in the sense that there is a very strong loan demand next year, and the market conditions are there, then it might be possible that we tap the market. We all, we are looking into opportunities of tapping the market in equity as well as in debt.

Yes, it's important to highlight that the capital is not restricting the loan growth for this year. The loan growth that we are projecting is more related to the growth in deposit and structural funding. But also we are looking at other sources of funding, as Patricio said. And regarding, you asked also about the basic fee and central bank regulation. Of course, we cannot anticipate when or whether the central bank will change this regulation, but we are optimistic because we think it was not in the spirit of the regulation to be more punitive with the second group of banks. So, if they fix it before year-end, that will be a significant increase.

We are optimistic on that.

No, thank you, Mariano and Patricio. Super helpful. Wanted to make a quick follow-up on Invertir Online. Because I think this was the first quarter where not only we saw a decrease, and I think this decrease, you mentioned it in the pre-release, has to do with the liberalization of the effects that naturally hurts maybe some of the spreads. But I think what was catching our attention here is we saw a decrease in the active users in the platform. I know you have here in the team maybe who can provide a better explanation as to what has happened, but is this an increase in competition? Is this an increase on, I don't know, promotions by other teams? Just wanted to understand why this decrease in active customers happened during the quarter. Thank you.

Yeah. Hi, Brian. So we have two factors that influenced our business in the first quarter and the second quarter also. The first one was we saw lower trading volumes by retail customers in the Argentinian stock market, mainly retail. equities and CDRs. So that was a trend that started in February and was heading down until July when it reversed. And the other one was the dollar map and the listing of the restrictions started. So we don't see an issue in our value proposition regarding our competitors. We have a strong value proposition. We are leading in the So what we saw is some behavior of investors in Argentina, in Argentinian securities with the lateral market since January. and something that reversed now in July. And also the thing you mentioned about the liberalization of restrictions in effects, of course, we are now competing with banks for that part of the business and effects because it was before only a business for brokers and now it's banks and other institutions. But we think it's moving forward and making forward. We believe that it's a good opportunity We are optimistic about the future on the transactions and the volumes operated because with inflation going down and the effects under control, both preconditions to have a strong capital market. We are very well positioned to capitalize on that. We think in this new environment that is... Through a transition, as we see it, to a more mature capital market, we can capitalize in our not only retail business, but also in our private banking, SMEs, and institutional business. And probably in this environment, we believe we are very well positioned to capitalize on that.

No, perfect. Super clear. Thank you.

Thank you, Brian. Thank you, Brian. So our next questions come from Carlos Gomez with HFEC. Hello. Good morning, Carlos. Thank you for asking questions. Please go ahead.

Hello, good morning and thank you for holding the call. The first question is I would like to know how you are faring with the current volatility in interest rates that we are seeing in Argentina and the very high levels that we have seen recently. Is that, first, is it material? Is it going to affect the banking system in general? And how long do you think it will last? And the second, going back to the capital, I just wanted to verify, the rules have not changed from the first to the second quarter, right? So the banks of your size have not been able to use Basel III. When was that implemented? My point is that the decline in 150 basis points or so in this quarter, that would have happened with or without the capital rules. Is that correct?

I will start from the second question because it's shorter. It's correct. The change in operational risk capital requirements was implemented in the first quarter. So any change in the capital ratio from the first quarter to the second quarter is not related to that. We are only giving guidance on how the capital could be if that regulation equalizes the Group 2 to the Group 1 of systemic banks level, but it has already been implemented at the end of the last quarter.

And again, that would be a 200, and from your description, 280 basis points uplift to your CET1 if you were able to apply Basel III. That's your own calculation, I would imagine, right?

Correct. That's our own question.

That's something in addition to this last question. Remember, in this quarter, we had dividend payments, so that is included in what you mentioned in terms of City 1 declining from one quarter to the other one.

Very clear. Thank you.

Loan growth, but also we had dividend payments. Remember, we as Grupo Superviére, we only pay once per... in normally in the second quarter.

Okay. Thank you so much.

So, regarding the first question, I think regarding the first question is, yes, it's basically this uplift in interest rates has been very significant, and of course, it is a, It is affecting the monetary conditions of banks and liquidity crunch, very high real interest rates. I think they are harmful for the economy, but we believe that it's going to be transitory until elections, and then they will relax, because basically they want to make sure that not only inflation goes, there is no pass-through from the valuation to prices, and so basically this is why they are extremely restrictive to I don't know if you want to add.

Yes, I agree. This is a level of real interest rates that we have never seen, at least in recent years. So, we firmly believe it's temporary. It's not a level of rate that is sustainable in the long term, because it will have an impact, not only in the financial industry, but in the overall economy. So, what we believe is that the central bank and the government is prioritizing the control of the volatility in the exchange rate, and they prefer to have volatility in interest rates, but not in the exchange rate. It is more sensitive for inflation and for consumers ahead of the elections. Remember, in three weeks, we have elections in the province of Buenos Aires that they are like a thermometer for the national elections. So this level of interest rates is after September elections or at the latest after October elections. That's our view.

And what is the rate that affects your clients, right? Because we, I mean, there have been all these changes in monetary policy. There is no set reference rate, if I understand correctly. What is the most used benchmark? Is it Butler? Is it a different market interest rate? And how has that evolved relative to what we see in terms of monetary policy?

Yes, for instance, the Tamar interest rate is now that... 50% and the one-day interest rate is at 67%. That's, of course, well above an inflation expected for the next 12 months of 20% to 25%. So those are the rates that impact mainly in short-term loans because for the longer-term loans, we are... affecting, increasing the interest rates. So they are not as affected as one-day loans or 30-day loans. So it affects mainly the corporate side of the portfolio.

So, again, your corporates, when they borrow from you, most of the contracts are based on Butler or Tamar or what rate?

It's a market interest rate, but it's affected mainly by data market interest rates. It's not that they take long-term loans at variable rates. Some cases are like that, mainly for the ones who issue in the capital markets, for overdrafts or discounted documents. The market interest rates, but of course it takes as a reference both the TAMAR and the one-day interest rate because that's a finding for the very short term.

And TAMAR was 32% or so before this volatility?

Yes, correct. Thank you so much.

Thank you, Carlos. Our next question comes from Pedro of England with Latin Securities. Good morning, Pedro.

Good morning. Hi, everyone. Thank you for the call. I have a question following Ernesto and on MPLs. I didn't get if you think retail MPLs have already peaked on the second Q and if you see further pressure on SMEs given the rate volatility.

Yes, what we are seeing, Patricio explained the dynamics of the MPLs on the retail side. The system is now, so last data published as of May, at 4.5% MPLs, so we are in line with the system. We see a peak in the cost of risk. The MPLs could go a bit higher as we gave in our guidance for the overall MPLs combining retail and corporates. By the year end, we expect it to range between 3% to 3.5%, whereas we are now at 2.7%. So for MPLs, there could be a

But yes, Pedro, if we maintain this level of rates, yes, we will see some pressure to SME, yes, of course. But there is a transition, it's a short period, but yes, we are seeing some pressure to SME in terms of working capital, basically. But we are thinking, we hope, that it's a very short period. But if we maintain this kind of, this level of volatility, of rate volatility, yes, we will see some pressure to SMEs. Also to the corporate, because the one-day money is very high. Okay?

Okay. Thank you very much.

Thank you, Pedro. I'm sorry, do you have any follow-up? No.

No, no follow-up was here.

Thank you. Thank you. Now, I will answer, maybe we will answer first some of the Q&A we have in the box, and then we have further questions on the audience. First one comes from Marco Ceru from Alaria. It's very technical. Maybe this is for you, Mariano. I would like to know how much was the charge registered under other expenses for the sale of the non-core properties?

The net loss registered in that line item was 5 billion pesos. So, of the total of that line item, that is the part that is related to the sale of non-core properties.

Okay, and then another from Ernesto Avedondo with BOFA. On the macro and political landscape, what would be the key leads to follow? For example, the election of the province of Buenos Aires?

Yes, of course, the election of the province of Buenos Aires is the first one in September to follow. And I think... from what I have read, it will be maybe difficult to understand the results because maybe there will be, let's say, depending, there will be overall on the province one result when favoring maybe La Libertad Avanza and maybe another result in a particular district of the Conurbano where there will be another winner. Maybe. We don't know. But definitely what I think will be much more powerful is the October election. where definitely we are seeing that there is a continued support for the president policies above 50%. So this will probably, if this is what we expect, a very strong support for the second term of the mandate after the October elections.

Okay, we have another question from Fernando Zabaleta, I think with Banco Pichincha. Isn't it? Hello, good morning, Fernando. Thank you for asking questions.

Please go ahead. Good morning, everybody, and thank you for the call. My question goes in line with Ernesto's first question and this follow-up that you just commented, and it's in line with the... MPL and the projections. You're still projecting a 40 to 50% increase in loans. We have seen the loans increasing during the year, but also Patricio mentioned before that it's been a challenge to to create job for the for the government uh my question go in line with uh how difficult or how important i think i need to just just ask the same question is the election that you have because the last election is in october and and and how will impact in in in your projections and and i think it was mentioned before too how to you guys are thinking on controlling the increase of the MPL and not to get to a ratio where it could be kind of difficult to manage. But it goes in line to that. It's just considering that the last election is in October and the country could be going different directions. how difficult would be or how it would change or the different scenarios for you guys that you are managing or evaluating to meet those projections of 40% to 50% increase in loans? Thank you.

First of all, I think that... Personally, I'm very optimistic with what, as I said, with the October elections in the sense that these are the important ones. But, as I said, the September election province of Buenos Aires might be difficult to understand with different, you know, difficult to understand, but the October elections is basically what will give the mandate for the second part of the government. And Millet has stated that in the second part of his government he will concentrate in fiscal reform and labor reform. And I believe that Also, what will happen is that there will be an uplift or liberation of the foreign exchange market for corporations after the elections. So, the business climate will improve. We expect this, and this will drive loan demand. So, I don't know if I answered your question, but maybe.

Yes, and also remember that these projections are based on a macro scenario where we see inflation at 28%, the interest rate data mark that I mentioned before now jumped 50%, but we expected as low as 25% for year-end. So that is a scenario consistent with the good result for the government that will foster low growth. Perfect.

Thank you. Very clear. Thanks.

Thank you, Fernando. I think we have a follow-up from Brian Flores with Citi.

Yes, Tim, thank you very much for the opportunity here. So just wondering on your NIM expectation, because I think you maintained at 18 to 20, and we saw the contribution from commercial loans growing significantly quarter over quarter, which obviously has to do with the conditions you are seeing in terms of asset quality on the retail side. So could you elaborate a bit on what are you expecting in terms of contribution from retail versus corporates in that projection that you're making on NIM? Is this already including, I would say, a higher contribution from commercial loans, or is it 50-50? Just wondering here, how's the composition by year-end in your view?

Yes, Fran, thank you for your question. What we expect is to have almost even a contribution. We expect the portfolio to maintain this 50% for each of the banking segments. We could see some change by the end of the year, but for the contribution to the NIM, it will be more or less balanced. as we expected.

Okay, but just a quick follow-up here. So if we see, for example, I don't know, worsening conditions in retail, would you pivot and be a bit more aggressive on the commercial side or you will go along with the plan because, you know, penetration is still low?

Yes, in that case, we would be more aggressive on the commercial side. But also on the retail side, we have longer duration loans. So it's not that even in that case, if the credit conditions for individuals, the loan portfolio will not drop sharply. But even that, in our base scenario, not best case, we expect to be adjusting our credit policies, but allowing the loan portfolio to grow in a healthy manner.

No, thank you. Very clear, Mariano. Thank you. Gracias.

I have another question on the Q&A box. I think we have some five minutes to take it. So first one, as the Argentinean economy stabilizes, do international financial institutions interested in getting into the Argentine market? Any worries, concerns?

I think, yes. I would say that we've seen and we've heard and we know that there are new players coming in into the market, neo-banks, successful neo-banks in Europe or techs that are applying to become banks. So I think this is a very positive signal. first of all, for Argentina in terms of confidence in Millet's government and his agenda. So this is the first thing, very positive. um of course we um in our case and uh our challenge is to continue uh strengthening uh our competitive position to continue um simplifying and detail digitizing our operations to make it more simpler for um and agile for for customers and uh um we we I believe that what we have done in terms of remunerating accounts has been the first bank in the country to do this. We are anticipating what the fintechs will do when they start playing in the market. So this is something that we believe that will give us a good competitive position. All these international players, they are looking to individuals. Some of them, maybe the bottom line of the pyramid, the underbank, some of them. The others, maybe another one might be on the premium side, but no one at this stage is really taking care of So we believe in a balanced approach. We believe that the way looking forward for us to compete is to have a balanced approach and to provide good services with all the SMEs, particularly the value chains of dynamic industries and make sure that we get the cash management making sure that we provide, you know, trade finance and leasing and so on. So this is going to be our anchor as well as the payroll accounts. So we believe that in this sense we will be able to compete effectively.

Okay, I think we have reached the end of today's Q&A session. So thank you for joining us today. We appreciate your interest in our company. We look forward to meeting more 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. So have a good day.