Grupo Supervielle (SUPV) 20 Nov 202020 Q3 Earnings call transcript

Good morning, and welcome to Grupo Supervielle’s Third Quarter 2020 Earnings Conference Call. A slide presentation will accompany today's webcast, which is available in the Investors section of Grupo Supervielle’s Investor Relations website, www.gruposupervielle.com.

As a reminder, all participants will be in a listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation.

As a reminder, today's conference call is being recorded. would turn I to call time, Ms. this like the to over At and Bartesaghi, IRO. Ana Treasurer ahead. go Please

Thank you. everyone, Good morning, us for today. joining and thank you

Chairman and Biglia, for of Naughton, will that results subsidiaries regulations, All also today's XXXX Supervielle CEO; Stengel, today's Grupo with also Vice us Second a Note call. during call been applying Chairman be joining session. of be as of accordance the and in Alejandro Supervielle, starting IFRS for available Speaking reporting Board several the accounting Jorge we have Chairman Board First Bank will joining us will IAS be Alejandra and Rule CEO; Q member Chief hyperinflation our our per Mariano Q&A Central Vice Financial Banco first XX. of Officer; Board. Patricio and Ramirez,

XXXX as comparability, of for this of inflation have inflation we noted. XX, Therefore, ease presentation all adjustment. effect For to in of unless XXXX, results restated reflect otherwise the adjusted September are results

our report accounting. managerial well filed includes market also terms close nominal in results more your earnings details on as For yesterday hyperinflation after convenience, as

I the or Patricio to make statements safe statement. statements, or over SEC. Chairman, forward-looking to a of update a I the Supervielle. refer call forward-looking any changed our the and or including Before recent like risks harbor the uncertainties, to expectations new forward-looking to we our the on now We as I to which like result circumstances. will to you and obligation with release events reflect turn would following contain statements management's section no call based are of earnings and and subject assume would Today's filings are revise COVID-XX current proceed, beliefs to and number pandemic, of

Good today. you, Thank us you joining everyone. for Thank Ana. morning,

recessionary in average double-digit the to financial following real If Slide In presentation, managing loan, delivered on changing framework. with assets presented We starting a continuing by achieving that despite environment quarter, the we flexibility, you’re return the terms deposit restriction, our and performance. equity challenges annual our lower macro a turn deposits this average please X, Despite growth to equation cycle, while profitability-risk peso satisfactory note increased sequentially. regulatory given balance net margins. this the the on context, credit continue and COVID-XX

that additional anticipatory increased COVID-XX made by highly coverage top-down this in-depth impacted be could the have that outlook. pandemic further the We industries following current quarter we provisions analysis of a believe certain given

and to our and also are XX%. our to loss review inflation, We adjust kept below XX evolves. sequential monitoring ratio our models in points, loan basis We the to achieving continue accordingly efficiency closely improvement strict of the cost expenses controls result expected book risk as the models situation

Finally expanding with to X and and continue an on to XX% positioned we increased rapidly to strong navigate our environment. complex liquidity base, changing well capital Tier are this

service our Turning digital evolving rapidly to different in position launch opportunities, advancing fronts namely to better branch we’re the company our network. the of model IUDÚ, on strategic seize to transformation, our initiatives, growth and

XX% Transactions the digital To business. closer relaxation how doubling levels only in SMEs same July digital XX% in nearly at at observed in during digital across below since digital of is XQ this, consolidated COVID-XX total related give channels XX% let's tellers of of in period. deposit October you our historical to measures flavor continue look transactions banking the on of rapidly the a e-factoring take metrics I’ll continued XX% transformation July this adoption clients with adapt the up non-automated low embrace X. evolving, Now, by context, despite Slide XX% increased this XXXX. our some in our highlight time X% to our January. significantly at were a made e-checks In the of gradual on also this and and through slide. from while

up robust online InvertirOnline than between over On XXX% transactions Finally, with accounts to and outline Page more branch February new initiative. broker, and October continues doubling. deliver our X, growth we transformation

We continue branch self-service branches. and technology by includes network introducing customer the to additional evolve in experience, This full-service hours and formats other to extend service our increasing enhance productivity. areas

customers this operating also we While to offerings the number With our digital increasing hours and Slide reach turn SMEs. lobbies, acquisition. customer at improve faster self-service initiative, X. NPS through broadening better service XX Please to aim of

restarts We're finance IUDÚ, as by platform, retail IUDÚ service business aims needs driving its Pago, to second allows to a also to points of sales, our mobile undergo new from a launched with consumer to we middle platform. consumer ecosystem in phase, customer the enhance banking in rebranded yesterday, into our efficiency. credit acquisitions our subsidiary XXXX, have fundamental of client low first a half prepaid e-wallet, experience, starting services app IUDÚ offering to iteration, digital multi-segment and In approach. obtain announced while will the first the capture broaden and the will the finance IUDÚ personal transformation also As Supervielle ecosystem This car this into plugging taking income loans, cards segment evolve and plugging additional segments address to traditional deposits. customers Supervielle loans. cards, the IUDÚ In deposits, e-bills. digital during change

exchange investment The second bank and include assurance, platforms. foreign stage will

the will be plan At add we the the rebranding front, card. partnership on Finally, multi-partnerships Walmart correspondence. and partnership to later stage, we

to as fiscal while contraction driving since and in is for We're supported further strengthened signs prices GDP demand distancing services weak number stimulus gradually. domestic May and social in calling last to credit on deteriorated as continues territory performance into October started and XX.X% measures. remain a Industrial struggle. the production expectation turn, blue industrial widen, labor efficient from one also deteriorated by annual inflation and production seeing gap to April. in Central in rates was commodities contact see consensus In extending This a for to to further October of close resulting positive September you raise XXXX. to rebound rate figures recorded the some With monetary for measures day the the of Argentine posted relax agricultural high repo the early chip dependent increase exchange in in figures, October in continued conditions can in a continued expected XX% and sharp As on March continued balance. the Slide drop X, recovery rate Bank trade the the sharp economy November. XX% show between

X%, this year, resumption towards along the sharp in contraction GDP government with restraint around taken for of measures following the IMF negotiations Looking at a XXXX, fiscal we expect and a recovery of XXXX. some of series

to Biglia our ahead. call Mariano, the turn now me CFO. go Mariano Please, Let

declined quarter. the end, started lower from This same peso approach Slide fell almost Good a coupled Thank know of of pandemic, at period. last XXth to deposit loan in ratio slightly relief balances week This in year. billion over nearly everyone. lockdown, cautious with transaction. lifted the currency on the quarter deposit loans gradually XX% of our while overall end. XX% in X% were stable X%, turn the the at XXX AR$X bps which our overall balances XX% environment. sequentially accounted with average book the with peso Please Preferential granted dollar to sequentially the XX% quarter-on-quarter. peso Total resulting down precautionary X. billion lending contracted, total Patricio. you, this The over southern SMEs for a remaining relatively currency current includes rate were the deposit deposit social that to Please Slide relatively together balances of the following industry factoring rate quarter quarter while over by funding first day, Despite X% be of in below seasonal driven were loan-to-deposit a a at original distance to held AR$XX total dollar was uncertain Total increased demand during with total declining loans in stable XX%. higher loan-to-deposit in Total month in nearly June salary turn balances provide original X. XX% to measures in drop declined short-term to denominated of to at the Argentina loans ratio loans trend mainly

Importantly, liquidity levels, strong we in maintain both pesos dollars. and

rates. granted rate the from was sequentially Moving XX. of were higher income Net to volumes total NIMs resulting relatively down the of spread. at the in mainly on cost funds a which quarter-on-quarter reflecting funds to increase bit basis nearly XX.X%. higher interest reduces at on rate market to to NIM, financial XXX cost points increased Peso loans time interest points, AR$XX a billion, preferential stable loan was XX% basis due on SMEs P&L more with Slide deposits, contracted of XXX along floor This however

sequentially Note our on which our provisions we to to approach X.X% management, increased sequentially billion quarter, billion on to this specific points revise we to increased as ratio Now billion to provisions, September. AR$X.X the in by XX% amounted asset COVID provisions AR$X.X in expected by conservative our to basis nearly accumulated an model. AR$X to that included continue This With XX. on XX quality basis. loss Slide book total of loan risk

NPL the segment. also pandemic. coverage easing the the payments turn provision ratios right classifications that to the reflecting debtors amid top We the in key have allows to as since Overall, delinquent breakdown from benefit debtor by mostly year. for Bank of defer benefited you quarter decline loan coverage third quarter, increased last the their NPL Bank second can of COVID-XX XXX% maturing December, in and and the was XXXX. in Central the provisions just the the XXX% continue from see commercial of until ratio, quarter NPL mainly may the on Central I mentioned. to anticipatory write-off loan program regulatory reflecting the slide, relief side On from customer trend sequential observed of ratio that In

Excluding to and regulatory refine further our extended. models the December, easing, was coverage in analysis XXX% conduct increased continue in from we September in June industry lockdown as XXX% as top-down and XX% to

As closely make they as usual, to impact models and continue the could our adjustments. events potentially and monitor portfolio risk we loan appropriate will

As and you loan food and exposure Slide well higher and to with a minimal our wine, in up portfolio which traveling entertainment such of have a beverage can as Agribusiness, diversified we larger sub-segments performing restaurant. this on book are make see portion and tourism, well context. risk XX,

XX% new a also Only corporates large transportation concentrated adding risk sectors, clients mainly to around XX% is are chains in these guaranteed. extent and and among lesser value of in retail Argentina. of of our with loans construction portfolio We higher in

clients pension remains on Similarly of portfolio and commercial commercial loans with slide, loans collaterals accounted to As individuals. lower our XX% increasing loan collateralized, on for XX%. shown to this total of nonperforming risk nearly to our half loans payroll

turn on Now brief to the near-term. some for Slide XX please for remarks our views

deposit periods on quality growth regulatory loans. particularly together are we interest fact this the in are economic we on suspending of restrictions deteriorate, limited challenging in time XXXX. rate asset for basis on overall growth visibility rebound the given Unexpected rescheduled still on into the guidance outlined in the foreign should loan continues, macro January perspectives that floor the ahead, slide earlier by remainder key inflation drivers the grace deals sectors with and supported our mild above with of present exchange our While drive the market and the may further year the due activity early If the environment business outlined deposits.

income We expect economic the the strength with in expect prohibiting help and for impact remain our fee funds NIM a while by environment February, weak yields to to impacted approach gaps worsening a regulations of lower in for of in higher until addition mitigate next time, potential to the of together along to is portfolio place to At loans, remain prudent cost our anticipated same repricing we year to pressured by lending this environment. environment. with

salaries On digital to ahead transformation. are below our move to grow we while the expense anticipated accelerating inflation continue on front, at or

please our remain initial supporting liquidity Finally, concludes Operator, and sustainability. now level are open expected questions. remarks. the adequate long-term call for to capital at This

comes The Gabilondo line the first question from Ernesto [Operator Bank of Instructions] with America. of

with question. proceed may You your

when so for the Hi, Alejandra, Thanks After is ending relief on for programs, Patricio, presentation. My good the and and that months? everyone. what is regulation? morning, of Jorge, Mariano, question, percentage Ana, and NPLs. updates first opportunity the about And has October? regarding morning provide the good question You portfolio. you of resume clients those do that percentage the next just NPLs? of what you resumed the elaborate Then far, the during what clients something been mentioned be is of level the deferred the And the next last payments have that is ratio second of year? NPL of September And should payments my behavior And peak question you expect on in Can a the is caps. payments any and how what delayed will percentage clients? can

you. So anything helpful. be related to Thank that will

very answer to Thank would much. those you I to questions. Mariano like ask

Sure. Patricio. Hello, Ernesto. Thank you,

These the Regarding for balances also it deferral until the your are been decline this December debtors, because period the and first loans XX% a is paying April. interest loan, were in commercial for one place. last in installments And still a deferral then by we've partially rate. extended are our for place of which two deferral explained have still then in write-off regarding at grace in – times, NPLs, they ninth credit Bank consecutive for three-month is a but of December the cards, Central And was option an question year. extended. was as deferrals due relief lasting credit has of so there a was cards seen there far programs of that second loans, start The It the September. until

Then started in new – there August. paying this cards started credit after paying grace period, So was in deferral. a

corporations, have both behavior of have we a because with also in the deferral the start deferral credit and we very January. January. of individuals second starting loans of So information the for loans, paying deferred paying will only couple on months the all of of in deferral And first card, still little

So or delay. may the the paying the decrease quarter it somewhere and explains the NPL this showing take of and the fourth year when also half in loans between first some start these

up advance in of building using are We our model. this event loss provisions expected

in we deferred So provision coverage which increased ratio our loans. a XXX%, for to these XX% that's why include

of see the that So also during this the of highlight And also for first be, with NPL have related is option question the finally we we'll But next still customers. portfolio. to ahead relating some will behavior to important but an half deferred expect was somewhere what peak time it's to second that your year. the

So provisions expect due. very high these they Nonetheless, build past-due being start anticipation. after in don't loans we just we up

individuals consider I overall Let me or I it's the – sorry interrupt risk the important pension provided to of business situation think answer. to because our Banco model sorry, complement clients. have the we individual XX% risk have loans on in business, – I'm like Mariano's have would at Also to for that individuals – you. – the for we Supervielle are and to we payroll

a So scenario. an mitigating it's factor an cash and is think I important we uncertain when flow-based navigate this lending

think more. Sorry. Please I your – wanted ahead with you go ask something to

Patricio and you, Thank No. Mariano. Yes.

be X%, Do when in cycle, loans that are you think will NPLs considering the want helped past-due we you So, in have understand case. up. have understand ratio have and And XX that just have clients seen payments Just to resume how to as going NPL to start reach would at of past the do you the the like we these be next regarding of see December, write-offs XX days? mentioned, could When will when to NPL year? to I NPL can level have X%. to build, but ratio the And programs and low. the in NPLs relief the when you know could be But provisions ratio, days, anticipation, the already know most NPL I you just your past-due of that that levels loans? peak

do Mariano, want to? you

add. me let Yes,

the the still is this in – As program relief part place. I before, of mentioned

past-due past-due that having have not were are much before loans relief only new the So loans. program. We we

may have of continue part So more our this but they only portfolio. days to past-due, is a small

added these when installment will loan. this of cards, new we the final as of be end all to when but resume in been start So month see that of paying, the loans a paying maturities the credit installments loans installments also at haven't

it we the in And We be January, start expect then of could installment it's NPLs the the difficult high at of but the levels in they will the end of XXXX don't the decreasing. estimate, original beginning to the but So year, certainly. still paying at had peak, schedule. that

Thank And updates Thank to perfect. related regulation? anything then you. you, on

that? on Can To you repeat update what?

In regulation.

rate. something about interest You caps on mentioned

have an So helpful. anything regulation you as update will regarding be

Yes, Alejandro, please, you want to answer that?

on an We the to rates, to much rebound But in XXXX. as far expect that Central what Maybe, deposit regulation the strong we've continue – see think is earning want SMEs – picture Mariano, of and the to the be recovery. Bank subsidized there so norm. on keep I will we seen the on credits, we But in going caps industry to that. and and heavy economic basically commissions, that's floors as terms add into you think

time have have caps most on we exactly, rate. Alejandro. them we mandatory the now are rates Yes, preferential and interest mandatory Right deposit we on – of commissions interest lines the have floor at at at loans and interest XX% rates,

some are that interest XX% we there for while a XX% in see between Now continue expect rates. and new economy. And some until rebound to the we'll lines

caps cash seen offsetting we've rates far, requirement That's and a floors my or with while. but may these for stay measures lower commissions on interest still minimum some So of opinion. reserves

Thank you perfect. so Okay, much.

important next next year. increase up cap, that's another a this have they this I Sorry, for regulation a add would like that is next caps the I of at maximum. Bank XX% February of would – beginning like our piece we And sorry, fees moment. to That's set We – and on – in next can to another Central regulation issued also fees year.

the after XX have now a – have a each are P&L whole Ernesto in there, just a all and of in or place two that three-page are and affect in press you'll page small set our now of Yes. line. our regulations comment. release – In

there think of the impacting a read, I sheet. So summary have two-page balance to regulations you easy that's a in report

Perfect. you, Thank Ana.

Our Nistor of next with question comes from Rodrigo line AR Partners. the

You and in And once again may question. for thank Hi, proceed congratulations appreciated. the question. Nistor morning, disclosures. Rodrigo - much level with you good taking my That's your Q detail on your of

deposit a first for XXXX. maybe the question you growth high-level sharper And my What short-term. and come year? then first in a next terms of in question, question, loan and where mix, And regarding we should is depreciation my inflation peso the expect expecting are loan So more – from? spike in for

is can question and, that banks my really in the to So have? banks that Thank What how acting you. those from particular effect you scenario? Supervielle protect And scenario? minimize are of

right. All

the Let – on you, me first of the inflation. first last answer all, question

First hedge. we well, all, of have a

equivalent XX% UVA in CER. is being bonds are by estate equity Our have and in on capital equity we have of that adjust of are would we have a and is and And to ahead. – in reinvested hedged assets. and we non-monetary also XX% by a XXX% be commercial treasury against in our equity Also, which portfolio loans real inflation, of, adjust terms non we that of mortgage all XX%

We In to inflation, news adapt arises, addition in team cash – attracting would to very of – that, we spreads on a high to have for But funding and case our it evaluation have inflation of the deposits. doing seasoned we let's picture, in fast that, that when inflation, liabilities – would CASA to approximately it's particularly dollars funding dollar-linked or to and the on order moving We a never highly also have banks. side, in scenario. in move good – XX% margins, parts is some seasoned good services, changing our the – coverage key we adapt high rapidly developing to overall against represent management focus for preserve – and to say. very Argentine in the bonds And equity. we

we the in for important it's and will cards also would – have loans, we We instance, of speaking, the for tenures also factoring. loans, – work – for flexibility generally would but to and the credit because case in to on also individuals move, – in reduce the working personal reducing inflation we're in

like answer it's for a Regarding answer want your to that, have Mariano and I Mariano? to I first expectations understand deposits Do loans question, would it. XXXX. you

below Hello, inflation. some loans, Patricio. year recovery Rodrigo. regarding we XXXX growth think a we to are for Well, Sure, this see inflation, but above with end XXXX, we going growing

inflation year. year estimates XX% are next Our this XX% and for

see economy of to of rebound expect also the we rebound and credit So some demand. some

XXXX We are with starting personal and loans. commercial we expect loans, to that see in in something to continue the

but proceeds, has year widely been a increased the increase liquidity increase Regarding in increased have also and deposits high much. site institutional. high very from growth a seen was they individuals. corporations deposits, still above really next time Rodrigo Nistor inflation. Q and deposits, this as both be and And That companies in with individuals, you and year Thank year, the inflation will finish they for all of - types clear. above the we've And very so will softer,

on Alejandro. would Good little would Nistor bit is like morning. this add where Good morning, to I as the Rodrigo a from, be - coming Maybe, Q to growth Rodrigo.

consensus right depleted impact side X% this And be time COVID the that is shock, at has look basically the you over inventories. had, that the overall should it's next The basically supply at economy GDP rebounding when year. now

be and also, they to up, working inventories. replenish will In sectors levels most the agribusiness particularly will – sector. be will increasing activity creating export actually sectors, picking So particular,

and help particular, industry likely Nistor as in, very drivers the Q about know, of is you Rodrigo Thank interesting. sectors in the a at up. commodities, in you. one economy like our well grown, we had China trading of well-positioned Agro the to and pick - XXXX, other are has XXXX, be growth are Therefore and As net X% positioned are industry wine is that grow Really few has countries they as and partner country. the to significant citrus growth probably of big during that

of line Our next the from comes Fernandes question with Yuri J.P. Morgan.

You question. with may your proceed

that Like, outlook the XXX is the should this question should the here? you big contraction regarding how provided be Mariano, morning, quarter? what and I have Jorge, What is good Hi, see Should margins the view for make regarding on have to it's if the to deposits, the very you hard on me, minimal deposits, X% deposits spread right, have rate. need concern and pressure. time I coming guess money guidance bps be here? My pay But because requirements, a to of pressure? it off Ana, margins. first the allocate XX%, we it remuneration this you I additional Patricio, under is the now Alejandro, guess for everyone. that time you reserve supportive. in makes

is, margin So start see be regarding stage big how dividends. these, should for margins? considering that my as question increasing should loans what's outlook the three those pressure, So second the My to question ending? considering is keep the we here reliefs

can dividend If update, cannot pay subsidiaries. but the know bank. you bank us regarding other you I provide regulations there are The have an

ADR know topic some So holders? if have was for should an how the I there do was This the like color about you you if what that year. a much. for pay Ana, would here have provide look dividends you also but And is you idea us to can what with to you dividends, discussing you very next and to for if ADRs. Thank I just like dividends for look

Yuri. to idea first pass a margins would, give Mariano. on of you on you, Okay. and all, I Thank then general it

year. is – that we – because, will with in other providing would – clients high-margin in but to next with they have working NIMs high-margin case with situation, maybe rebound, this that we provide we some case, clients. banks, is that our will Leliqs, reducing the is with the margins, a – have When to will rebound a with expect believe growth, Even has economic particularly work there reduce do NIMs, loans characteristic pressure we'll working we that these able in and is has that will is we been starts we – a eventually, our be of continue and franchise That franchise. lower with the shield some the defend they there loan which when pressure Leliqs, – on clients NIMs. whereas we demand expect – on Our

So But have of are – I Mariano, have specific protection. answer, this please would in pressure we to we typically in – more like type complement. are a we for NIMs, to – of sense, this

the morning, cost Good in time Yuri. NIMs see fourth of quarter. for some definitely is with so regarding some Patricio. fund interest deposit effectively – floors Yes, Well, rates, we'll rising pressure

rates On profitability the in sheet. expected deposit the on interest our in more the of gives other also to deposits higher due inflation balance increase site sides of hand, and all

because to market, all margin still sure, we So can a see although, quarter, than, second lower great for another where the liquidity big than net we sustain the which interest gave level, will margin the of loans loans such us for and increased the site term, to personal with we explained, Patricio longer as assets as assets higher-yield deposits. Then loans lower-yield substitute SMEs. in

even at that margins also a will will rates So be able And when be cost where declining. context the same interest sustain to time, interest decline. risk we should can be – net in we of

cost So now of margins, interest rate are we high because rate net provisions. we anticipatory creating interest have high – very but a risk

NIM, at cost might of risk. the lower but For some in contractions the a time, same see longer term, we

you loans the a That's NII as year. recognizing the percentage I you rescheduling is the next for cards loans remind your clear. relief, credit likely of us how Can X loans what super today, the are year, nowadays My Stage you from right, that those this are guess, portfolio your point for they should like and next evolve? is,

loans. NII for those recognizing are You

a loan a color the X could is you Stage think more just that provide those because for next headwind Can there between year here and I So too, relationship relief rates. be on right? those

accruing in rate rescheduled interest XX% interest at same to of interest the rescheduled rate corporations. are for We rate the accruing or credit card individuals and loans installments loan

that or are at cards written loans time Stage and but enter loans credit that and then stop X, So accrue they accruing installments credit as to same stop only off. we'll accruing we they if of cards a the rate point, these have collected next year, or eventually interest interest mature any as continue they interest unpaid and – between or or long

don't to a see margin I on high that interest very pressure net side. So

regarding And clear. Super dividends?

Mariano, please. question also, do you want on to answer the dividend

of company investors dividends from capital regulation years. paid Bank that year. profits in holding paid Well, All Bank level, the the the But received us we subsidiaries, we holding in happened from expect never our the the that authorization we from at asset the the company, dividends company. year, bank is other of last ratio. holding we We regardless regulations to and at from in not dividends the of have which, reinvest regarding level, past other the least bank funding the if are any in to fact, at other place. from fact, to management during But Central dividends, on And they're to holding a to company that's insurance dividends in pay the dividends. subsidiaries dividends the company. to at subject required Bank dividends liquidity to the subsidiaries bank, for receive the other Also, of have still of the in maintain source what to have sources decide Central the from dividends source that from pay Central which we this bank from –

a really So make that doesn't that limitation us. – for point

for ADRs, or use swap? the the FX And the blue need use to can you you

those getting having rate, because we that Bank. authorization we general, Yuri. want requested we can on didn't This year we need that are to in official comment want, the exchange authorization, to they if we access the Central companies that from If know that the authorizations. I – you it the not market, get request

market. swap through authorization did way – So it many we in in chip if dividend, we other shareholders, their But dollars because went the other chip companies same we or or well with a – year, rate. the and pesos. gave companies blue the the Argentina as paid through collect that accepted ADR the swap access in the official are dollars, is But the all in we also rate. option XXXX getting as we did And only to that, not in was will to in not this if any option any dividends also, blue they the it way the did the holders, that's

Super very you disclosure Thank the Argentina. everybody. in have, clear, disclosure congratulations best-in-class you. And again, Ana, much thank on

next Instructions] comes Aranda line Alejandra with Itau. of from [Operator Our question the

with your proceed may You questions.

you morning. would we bit with be explain normalized taxes this should My quarter? next what during a is, question happened that And effective good year what little could the rate for Hi, expecting? tax be

All to defer I taxes you. of question Mariano. right. this Thank will

and tax you the differences very from morning, third tax as also in to guarantees the quarter addition, reduced see, derived reduced in tax expense. special adjustment took income Effective arising adoption good from liabilities some as And Alejandra. Yes, deferred we rate, hence SMEs. some of deductions extended our low could was income the inflation tax

be to with is XXXX expect we the the the rate see to statutory But we tax which looking in – it than similar maybe we expect forward, nine to So period, right an year which for full to end rate, tax XXXX, now, is month year, XX%. closer effective XX%. the can what lower

Okay, a you before, thank number on just that feel you where have do follow-up you. brief answered you a coverage comfortable And with?

we We assessing monitoring a are risk is there risk of loans. our on and the this – constant is our constantly models constantly have –

quarter in models. this, build the provisions it might way you our on talk that of happen the of half changes loss comfortable about expected to in course, XXXX. this know, add will that that. Maybe stage, first provisions of the we evolve. on we to Mariano, at if are have have. occurred the our will – don't we the continue building depend and It future, the want are I to fourth might we the in So and evolution – – fully provisions economy clients But, and with

and now, right and updated the as at we'll comfortable did use are ratio as revise an portfolio updated Yes, we macroeconomic our There's second we with that again variables coverage our so of model in in the expected input. quarter, we the We the We each quarter-end, should then cards as update December. the not being is which constantly. which loss models classification, We credit now, stay. by affects two are adding that each reach the depend to deferred loans XX factors. where and debtor a and many or we the fixed where That number are factors, somehow NPLs. on will coverage our we of also should days Right distorted ratio XXX%.

in at total high provision That's number. our also a right X.X%. we at look ratio, is which now definitely So

to starts expect in early deferred to We be NPLs point in new or see start will loans XXXX that, the provisions, up in as but XXXX, it at we build maturing. decrease, some quarter when evolving, because some might need. we fourth We

we need up, the the will also that and by at these end quarter. whether do coverage, ratio on coverage total So NPLs NPLs evolving we be this with we that provisions did or build as measured write-offs new provision day, to of

very you much. Okay. Thank

Thank you.

HSBC. line question from the Carlos next of Our with Gomez comes

question. You your may proceed with

good morning. and Hello,

Let and results everybody the my on it. on congratulate we and have the hope also colleagues that best the said emulates the disclosure, system me which is you in

Thank very that regarding with inflation-linked that. have for capital first, the you Two instruments. questions, you. you So, thank protection or much of assets

removed forward? is are retirees inflation have very workers. to an go business? total have has or and CER going Thank that estate they You You another me XX%, because there exposure accumulate it quality I large adjustments to two lending not eventually your of you think to a see asset estate. right? think going do more been you such your pensions We Second, Will elements. of new, public on were mentioned used how you your you protecting and did effective much. This wrong. and discretionary. to effect and I'm When real sector that did XX% real real now have that balance business volume will is down at be sheet if at Correct

answer Mariano, do you to want that?

Carlos. Yes. good Hello, morning,

first the me answer Let your protection. regarding inflation question

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And in been them we XXXX, So investments during are then and because maybe other hedged loan is bonds real our the we position have real undervalued investment adjust in assets from were our revaluate for for they year which books bonds. in books, We dollar-linked also in in mortgage updated adding now in a of estate also now equity, very have do inflation. was and were our estate. inflation. XX% we our loans costs UVAs with at But our then inflation. historical they mainly increase year from we and and last UVA inflation-adjusted XXXX when what in rented many did also that this of bonds come and

Their had be this In economy. been the levels this strength. be find Carlos, income question, anchors relatively second actually relative volatility to good has it at behavior significant this look terms, has of to income in performance. we proved And context, the as as our your of rest have speaking, of of the our we Regarding one a When is the Alejandro franchise, stable. retiree morning. much not their

loans. that inflation, we significant they little in some for we've have to even very overall effect, terms a very income that the proved good there's a overall credit recessions NPLs And in forward, each to and and the appetite leave. are this. the site might the the will deposits to and Going containing But in be fact at indexed has and bit still size see coverage in through effective we with segments their income asset personal be relationship it quality, of the a those and maintain terms of of of instalment different that of criteria seen careful that

So effective also end the the and will next to economy be up think toward we we picks expect that as to of work. protection year, continue year, it this

the fixed variable Can or I ask rate rate? are loans

They are fixed No. rate.

Thank Thank much. you. so you

rate. Yes. personal Mainly fixed loans,

Thank you.

with comes question the from line of Scotiabank. next Recalde Our Juan

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end Ana we for to reached to I Ms. gentlemen, [Operator session. Bartesaghi closing the back like Instructions] have over this today's call of question-and-answer Ladies and remarks. would turn

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