Grupo Supervielle S.A.
Q1 2024 Earnings Call Transcript

Published: 23 May 2024

[Ana Bartesaghi:]

Good morning, everyone, and welcome to the Grupo Supervielle First Quarter 2024 Earnings Call. This is Ana Ines Bartesaghi, Treasurer and IRO. Today's conference call is being recorded. [Operator Instructions]

[Speaking during today's call will be Patricio Supervielle, our Chairman and CEO; and Mariano Biglia, our Chief Financial Officer. Also joining us is Alejandro Stengel, [ First ] Vice Chairman of the Board and CEO, Banco Supervielle, all will be available for the Q&A session.:]

[As a reminder, today's call will contain forward-looking statements based on management's current expectations and beliefs and subject to several risks and uncertainties. I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or [ same-event ] or circumstance.:]

[Patricio, please go ahead.:]

[Julio Patricio Supervielle:]

Thank you, Ana. Good morning, everyone and thank you for joining us today. Starting with a discussion of the quarter results on Slide 3. We are pleased to have started the year delivering robust profitability and market share gains in loans. At the same time, we maintained healthy asset quality metrics and attractive capitalization of [ Tier 1 ] to support growth initiatives.

[Profitability achieved another record high ROE of nearly 34% in real terms. This good performance was driven by an unusually high net interest margin of 62%, reflecting our effective asset and liability management and increased spreads. Our strong bottom line was also supported sequentially improved efficiencies as we continue to improve the digital, [ virtual ] and automatic channels while transforming our branch network establishing a solid base to drive higher productivity as growth resumes.:]

[In turn, our healthier loan mix following the shift in loans towards middle market corporates and payroll customers where we have reciprocity with our transactional products, together with significantly lower exposure to consumer loans and tight credit scoring contributed to the NPL ratio hitting another record low of [ 1.5% ].:]

[So how have we been able to achieve our good results? Let me provide a brief overview of the progress we have made across our various strategic initiatives. Starting with SMEs and corporate, we are firmly committed to attracting new clients and expanding our share of [ audit ]. To accomplish this, we are focused on enhancing the [ open ] experience, improving our Net Promoter Score and driving operational efficiency.:]

[During the quarter, we successfully scaled our [ virtual hub ] service model, to capture the companies in the entrepreneurs and SME segment, which received gold recognition in the country's award for financial innovators in the Americas presented by Fintech Americas.:]

[On the back of improved dynamics where actively developing products [ pay to ] highly attractive export-oriented value chains, such as oil and gas, mining and [ agri ] business while keeping a strong focus on selectively tapping regional economies and with attractive prospects.:]

[On retail, digital client base have expanded significantly, [ now ] comprising 64% of total clients, up 2 percentage points sequentially and 7 percentage points from a year ago, reflecting the strong adoption of our digital wallet. Although [ half ] of our retail transactions are not completed [ to our half ], a remarkable increase from just 37% a year ago.:]

[Moreover, our [indiscernible] 24/7 in [ Version Rapida ] feature unique among [ Argentinian banks ] continue to perform well with customers up 28% sequentially. We are confident that our human banking retail relationship model will elevate customer satisfaction, enhance cross-selling opportunities and further improve our NPS.:]

[[indiscernible], our online retail [indiscernible] platform continues to excel, accounting for 20% of total fee income as it captures additional market share and further strengthen its leadership position. The new crypto offering introduced in January in collaboration with [ Rivio ] has been well received by existing customers. And while it is still in its early days, we are seeing consistent growth in both customers and transactions. Our efforts to drive higher operating efficiencies, while remaining close to our customers continue to bear fruit with bank branches and head count down year-on-year by 12% and 4%, respectively, while further improving NPS.:]

[Turning to Slide 4. President [ Mile ] remains fully committed to achieving fiscal surplus and implementing both structural reforms. While there's still much work to the policies implemented over the past 5 months are resulting in a gradual transition in Argentina to a more positive economic environment, conducive to a more sustainable, robust and competitive financial system.:]

[To date, interest rate flows on time deposits have been lifted. The central bank has acquired ARS 17 billion in reserves while keeping our fiscal surplus since the beginning of the year. Measures were also taking to address the challenge related to importers commercial data and paid dividends, and we are pleased to see that inflation is decreasing faster than anticipated.:]

[Despite the recessionary environment, it is worth noting that social support remains strong. In this context, the financial industry is experiencing a gradual resurgence in loan demand. However, having the necessary [ reforms ] to Congress and the lifting of FX restrictions are crucial to resume sustainable growth and attracting investments. At Supervielle, we have a strong capital base and solid agile foundation that positions us well to resume growth as demand continues to recover.:]

[Now moving to Slide 5. Reflecting anticipated macro improvement, we are strategically diversifying our asset portfolio, [ gradually ] shifting towards larger share of private sector loans and reducing our portfolio of large holdings of central bank repos. The share of central bank repos [ of ] our total assets declined 7 percentage points to 33%. While loans expanded debt [ share ] by 6 percentage points to 29% of total assets, while increasing sequentially the loan-to-deposit ratio stood at just below 44%, providing ample room to expand loan growth.:]

[As this transition unfolds, we anticipate these positive loan growth trend to continue as demand continues to recover while NIM, adjusted revenue from the exceptionally high level experience in recent quarters and converting to historical levels for the Argentine financial story.:]

[Turning to an overview of our loan book performance on Slide 6. Total loans were up 3% sequentially in real terms, while we gained 40 basis points in total market share as the economic environment began to normalize and confidence returns. Reflecting our focus on lower risk segments, SMEs and corporate loans accounted for 64% of our total loan book while retail loans represented the remaining 36%. Corporate loans saw a 60 basis point share increase in the first quarter. For the remainder of the year, we expect to maintain our focus on SMEs and middle market clients, placing particular emphasis on the winning export value change, including oil and gas, mining and agri business. Therefore, corporate loans are expected to grow above retail loans.:]

[Within retail loans, we are selectively tapping lower risk segments. Reflecting this, we're expanding our share of [ card ] loans by 40 basis points in the quarter. More recently, we became the first private bank in the country to relaunch new 30-year mortgage loans. Our return to adding mortgage products to our portfolio is an attractive value proposition in today's market. We're also scaling car, personnel and credit card loan. We're optimistic that there is room for further growth once inflation and nominal interest rates decrease.:]

[With this, let me turn the call to Mariano. Please go ahead.:]

[Mariano Biglia:]

Thank you, Patricio, and good day, everyone. Now let's turn our attention to Slide 7, which provides an overview of our performance for the quarter. Net income increased to nearly ARS 47 billion with ROE in real terms at 34% and a significant increase from net income of ARS 34 billion, an ROE of 27% in the fourth quarter last year.

[Starting with revenues. Net financial income was up just over 2%, mainly supported by higher spreads and volumes on our investment portfolio, a drop of nearly 750 basis points in cost of [indiscernible] following the lifting of floors on time deposits and increases in interest rates. Net fee income, however, contracted 14% as [indiscernible] fees increased below the 52% inflation for the period. [ Term costs ] were down 18%, reflecting seasonality and structural cost efficiencies. [indiscernible], a strategic shift in allocation towards middle market corporate and payroll customers coupled with the update of our expected loss models in 4Q '23 resulted in a 40% sequential decrease in net loan loss provisions.:]

[Other net losses declined 15%, mainly reflecting valuation adjustments of real estate to market value in 4Q '23 and higher provisions for strategic initiatives. All this more than offset the 35% increase inflation adjustment on higher monetary assets.:]

[As shown on the left chart of Slide 8, we have been able -- we have been diversifying our asset base, gradually shifting towards a larger share of private sector loans while significantly reducing our holdings in central bank securities. On the right, you can see the composition of our commercial and retail portfolios at quarter end, where we have gained share across most loan products.:]

[In corporate loans, promissory notes stand out, accounting for 52% of the corporate portfolio as well as overdraft at 26% foreign trade at 15% of this [ book ]. With respect to retail, credit cards account for 33% of the book, followed closely by mortgages at 32%, personal loans at 24% and car loans accounting for 9% of the total retail book.:]

[Moving on to Slide 9. Net financial income to increase sequentially in the low single digits and nearly 140% year-on-year to ARS 299 billion with NIM [ practically stayed ] sequential at 2%. Following the lifting of floors on time deposits and decrease in interest rates, cost of funds posted a sharp sequential growth of over 740 basis points. [ In term ], interest rates on loans increased over 300 basis points, mainly due to a higher adjustment of inflation in [ force ].:]

[In Q-on-Q, performance also benefited for [ peso bond ] gain and a higher yield on increased volumes of inflation in [indiscernible] securities, capturing the inflation [ peak ] in last December and January.:]

[Turning to Slide 10. Our successful strategy execution has contributed to further improving the efficiency ratio reaching 34%, down from 43% in the prior quarter and over 70% a year ago. Sequential improvement in efficiency was mainly driven by exceptionally high NIM driving revenue growth, while we also continue to reduce personnel and administrative expenses.:]

[Turning to Slide 11. Capitalization [ trended further ] in the quarter with a Tier 1 ratio expanding 370 basis points sequentially to nearly 25% at the quarter end. The increase in capitalization reflects strong results along with inflation adjustment of capital and tax efficiencies from the merger of [indiscernible] to the bank, which more than offset growth in risk-weighted assets.:]

[Now moving on to our perspectives for 2024 on Slide 7 -- 12, sorry. Considering the recent trends discussed, we have updated our perspective of the following line [ items ]. While we continue to expect peso loans to grow above inflation, we now see credit demand recovering gradually starting in the second quarter as inflation [ eases ].:]

[In terms of deposits, while expectation for peso deposits remain unchanged, growing slightly above [indiscernible] inflation, total denominated deposits are now anticipated to increase in the original currency.:]

[With respect to fee income, where the bulk of bank fees to individuals are expected to [indiscernible] in line with inflation, dollar-denominated commissions are anticipated to grow below inflation when translated to pesos.:]

[In terms of profitability, we are increasing our ROE expectations for the year to approximately 15%, up from the 10% discussed in our prior call. For the remainder of the year, we expect to see a softer second Q, reflecting negative interest rates [ with ] lower inflation and loan growth are expected to drive higher profitability in the second half of this year. Expectations for all other metrics remain unchanged, including closing the year with a Tier one capital ranging between 20% and 25%.:]

[Now we are ready to open the floor for questions. Ana, please go ahead.:]

[Ana Bartesaghi:]

Thank you, Mariano. [Operator Instructions] Our first question comes from Ernesto Gabilondo with Bank of America.

[Ernesto María Gabilondo Márquez:]

My first question will be on your loan growth expectations. And what would be the macro assumptions that you're expecting for this and next year in terms of GDP, the level of inflation, the level of interest rates I think those should be important to consider in order to think about the loan growth in this and next year. Well, we know that Argentina has a very low credit penetration. So considering all these assumptions, how would you see the loan growth for the second half of this year and next year.

[Julio Patricio Supervielle:]

Okay. I will start, and then Mariano will further expand. After the extraordinary high NIMs that we saw in fourth Q 2023 and as well as first Q 2024, we [ anticipate the decline ] in NIMs alongside for inflation, inflation figures could decline from 50% in first Q to 20% in second Q. Decline in interest rates have several effects. First, in March, we saw already a surge in demand for loans from the SMEs and the corporate segment both in pesos and dollars and as well as on the retail sector, positively impacting our market share. For the remaining of the year, with declining inflation, we expect the loan book to grow in real terms of [ our ] inflation starting this quarter. Second, we also foresee a shift from repos to [indiscernible] as the better preserve our financial margin.

[Mariano, do you want to expand on that?:]

[Mariano Biglia:]

Sure, Patricio. Ernesto, thank you for your questions. Regarding our projections for loan growth [indiscernible] economic payables, we expect, [indiscernible] what Patricio mentioned, loans to start growing in real terms in the second quarter an increase in the pace of growth in the second half of the year. For the full year, it's still, of course, hard to tell, but with increasing inflation even faster than originally expected, we can see loans growing at real rate in double digits. So maybe somewhere between 10% and 20% this year. And growth can be much higher next year.

[[ Departing ] from such a very low point when we are at less than 7% of loans to GDP, growth can be very fast. So within that, those are -- with that low starting point next year growth, if inflation keeps going down, it can be really hard -- it's difficult to say a number, whether it will be 50% in real terms, [ 60% ], but we can see a very high rate of growth in 2025.:]

[Then you asked about our projections of GDP, we expect with the -- we are in line with the economic consensus of decreasing GDP for this year of 3.5%. We saw very low levels of activity in the first quarter. Of course, part of that was expected, and then the economy should start to recover gradually. A very important first [ call ] will be the lifting of the exchange rate controls, that should be something that we will see probably by the end of the year, some economies are more [indiscernible] say can be achieved in the third quarter of the year. But at some point in time, we think those quarters [ were ] believe in, and that will also [ add loan ] growth. And in that regard, we expect next year, that's 2025, to see growth in GDP of approximately 3% to 3.5%.:]

[Ernesto María Gabilondo Márquez:]

Excellent. And just a follow-up on these macro assumptions. So you were also saying, Patricio was saying, inflation declining from 50% to 20% levels in the second half. But can you provide us this number also in annual terms, how do you see inflation for this year, inflation for next year and also your expectations for the interest rates?

[Mariano Biglia:]

Sure. Yes, inflation for this year, we expect it to be in [ 160% ]. And for next year, we [indiscernible] keep decreasing, and it can get as low as 60%. We know there are some variations in these projections in some economies expect [indiscernible] inflation to decrease at a higher pace, but our projections are in the range of 60%. And interest rates, we believe with a decrease -- the sharp decrease [ that ] the central bank is during this first 5 months of the year within for the following months, it will keep the interest rate in the actual levels also the [ implicit ] interest rate in the last auction of treasury bonds shows that the market expectations are for interest rate decreases to stop in the following months. But of course, for next year with decreasing inflation, interest rates will also keep going down.

[Ernesto María Gabilondo Márquez:]

No. Perfect. Excellent. And then just a second question. And this will be on your ROE expectations for the second quarter. In your press release, you mentioned you have a record high ROE of 34% in this quarter. But at the same time, you are guiding for the full year to have an ROE of around [ 15% ]. So just wanted to understand how will [ be this ] evolution of the ROE throughout the year. I think that the second quarter will be the most challenging one, given that you will start to accelerate the loan book. But at the same time, you will have the impact of lower rates. So just wanted to understand how should we think about the ROE evolution through the year?

[Mariano Biglia:]

Sure. Yes, you explained very well. Second quarter would be the most challenging probably of the year because our loan growth is starting to grow. But we have seen negative interest rates in real terms. So that's also a challenge to hedge our equity, but I would say ROE for the second quarter will be in single digits, maybe ranging from 5% to 10% and then the evolution of the ROE will be increasing during the third and fourth quarter as we continue to grow our loan book and replacing central bank and treasury bonds with loans and that would make a total ROE for the year of 15%, which was our guidance.

[Operator:]

And our next question comes from Brian Flores with Citibank.

[Brian Flores:]

Maybe I want to start with a more strategic question on your consumer franchise. You have mentioned in the presentation, a lot of the digital efforts are already evolving, right? So more of your transactions already happening with your apps, you're deploying these digital efforts. I just want to maybe get your ideas here on how are you thinking about the digital competition, right? Because for the consumer franchises, we have a lot of competition, maybe Mercado Pago [ Walla ], I just want to maybe ask you strategically, how do you think on this competition? And how are you preparing yourselves to compete against them now that, as you mentioned in your guidance, we will -- we should expect loan growth to become more and more relevant right in the strategy?

[Emérico Alejandro Stengel:]

Thank you, Brian, and good morning. We have, as you probably know, being focused on developing our digital wallets and making that a unique experience. That is one of our key initiatives, and it's [ rated ] really very high and comparable to many other digital wallets and digital wallets that are being developed by fintechs. This is precisely part of the recognition we got with the Fintechs America award.

[In this regard, what we see is that -- we are also making a big effort that we've been recognized by the mobile platform, and we see there, too, that we are very well positioned among the [ minds ] that have the greatest use and greater stickiness of clients using the model platform as a strategic response to the [ medical ] [indiscernible] loans.:]

[A lot of the answer to your question depends on what the regulator will do moving forward. As you know, the central bank has ruled that it has to be interoperable QR and there has been a little bit of wrestling with [ Mercado Libre ] around that point. And so far, [ in ] progress is made in that direction, we see a huge opportunity to be able to leverage all the investments and the capabilities we've developed in our digital wallet in that direction. We also see big opportunities on the digitalization of insurance products of -- on the mortgage products and all the car loans, for example, which have been our focus initially for growth. So we are very confident that these capabilities, together with our new operating model, are positioning us very well in this new digital competitive area.:]

[Julio Patricio Supervielle:]

Let me add to the answer of Alejandro, last year, at the beginning of the year, we launched a new service and investment proposal for individuals, which is called [ Industria Rapida ] which is basically an answer to what [ Mercado Pago has been doing over the past several years. which allows for -- it's a way for individuals that have idle funds to invest them in a money market fund. So we did this -- and I believe that we are still the only bank that is providing this service, which is 24/7. So any time, during the week, during the night, weekends and so on, you can dispose of your funds and use them.

[People invest, so this is a way. And the interesting thing is that although let's say, of course, we lost some deposits in 0% deposit [ funds ] on savings accounts. But overall, when you see the profitability on looking on financial revenues on revenues we get from individuals, they have increased. So there was a compensation and there was a reward for doing this. And the adoption was fantastic because we grew 10x in terms of adoption or even more than that in terms of adoption [indiscernible]. So that's a way that we believe that we can compete with fintechs, and it's surprising that we are the only bank to do this yet.:]

[Brian Flores:]

Perfect. It's very helpful. And maybe just a quick follow-up on Ernesto's question. Are you going to prioritize a specific segment? Because as you mentioned, we might see a 10%, 20% growth this year in real terms, but [ 0.5% ] of your loan portfolio is corporate, you have a big consumer franchise. So are you going to prioritize one more or the other? And if you could just remind us on the -- on how fast you can reprice in terms of duration each of the segments would be really helpful.

[Emérico Alejandro Stengel:]

We have initially focused in SMEs. As you know, SMEs have a very low leverage from the starting point and other ones that have been reacting quickly to the change and the [ full recovering ] inflation, particularly in export-oriented value chains. As mentioned by Patricio before, like mining, agribusiness and oil and gas. We have been more cautious on the retail side, but we see increasing demand there too, and we are focusing on payroll clients, on pensioneers, and in the case of clients or nonclients or prospects that are coming on board. We're focused on asset-backed loans, like car loans and mortgages going forward. We think that this approach will put us on a solid footing for where we really expect the retail part of the business to take off during the second half of this year.

[Operator:]

So our next question comes from Marina Mertens with Latin Securities.

[Marina Mertens:]

And congratulations on the results. So the banking business in Argentina for the remainder of the year should look quite different since the central bank has been lowering rates and inflation has been coming down. So what do you expect? What do you ambition for the remainder of the year and 2025?

[Mariano Biglia:]

Yes, we are [indiscernible] Marina, in -- as inflation is going down and interest rates are decreasing, the composition of the balance sheet will be changing and will be transitioning as it already has during the first quarter when we are transitioning from a very low weight of our loan book in our total assets or a very low loans to deposit ratio to higher rates of the loan book. And at some point, we expect to converge to historical levels. This will be achieved by replacing all the [ weight ] that now central bank securities or short-term -- recently short-term treasury notes having in our balance sheet. So when that composition changes also will do the composition of our revenues. So that will also be a change in the [ quality ] of our revenues, [ earning ] most of our revenues from our traditional banking business of receiving deposits and lending to individuals and corporations.

[Operator:]

This is from Carlos Gomez-Lopez with Citibank.

[Carlos Gomez-Lopez:]

HSBC.

[Ana Bartesaghi:]

Sorry, from HSBC.

[Carlos Gomez-Lopez:]

I used to be at Citibank, it's okay. So I'm looking at Slide 8 in your presentation. And we see the big decline in central bank exposure. How do you expect this to evolve for the rest of the year? Will you continue to decrease your exposure to central bank and [ covenant ] securities? And traditionally, the banks have been reluctant to take on treasury securities. We understand that maybe [indiscernible] changing, is there a limit as to how much exposure to the [ covenant ] you are willing to take?

[Mariano Biglia:]

Yes. Carlos, thank you for your question. Yes. All right. As you said, we are [indiscernible] to decrease the weight of the central bank securities and [ treasury ] in our balance sheet as we were [ presented ] by loans, and we increased our loan to deposit ratio also recently during this month, the central bank allow us to replace short-term treasury notes instead of one day repos. And that is the change that the central bank [ made ] is that for the amount that we decreased repos, we can increase short-term treasury notes without exceeding the limit of exposure to the public sector.

[So that's on the regulatory side, but also the short-term treasury notes, higher rates. So they are [ suppose an ] economic incentive to do that change of proposition in the balance sheet. That's within our investment portfolio. Then for the longer term. We are, as I explained before, increase in loans, and that will be [ financial relation ] replacing the overall structure to the government sector, whether it's central bank or [ government ] treasury.:]

[Julio Patricio Supervielle:]

So this is a transition, we are in a transition year. And -- but of course, expecting that the business we are in is providing loans to the private sector. But this is definitely a transition year.

[Mariano Biglia:]

Yes. And you also asked about limits, there are limits, although this [ waiver ] that I mentioned of the central banks to increase our exposure. So we can increase it to the -- up to the amount that we decrease central bank exposure. And then we have the regulatory limit to exposure to the public sector and also our own qualities.

[Carlos Gomez-Lopez:]

Well, I guess that is the question [ was ] what is your own policy because, again, from we -- described to see if I understand correctly, the central bank allows you to at this point in time increase your exposure to the treasury without that counting as increased exposure to the public sector and they're obviously keeping it [ that ] way. I imagine you don't want to do that indefinitely, right?

[Julio Patricio Supervielle:]

Definitely not. As I said, it is a transition, and we have our own limits, of course, we -- I mean, essentially, when you have [indiscernible] and the central bank or the government is a different animal, I would say. So this is, as I said, a transition and we have our own limits in order to take treasury securities, which are not the same levers we have on repos.

[Ana Bartesaghi:]

Yes, for this very short-term [indiscernible] only. It's not for any other treasury one we may have. So for this time, while we wait for the loan book to or [ long-grade ] demand to accelerate.

[Carlos Gomez-Lopez:]

So that's only for the [ LCAPs ] in the short term.

[Mariano Biglia:]

Yes, exactly.

[Ana Bartesaghi:]

And only for the amount you have in repos as of May 15, I think it was the date when this cutoff is made.

[Mariano Biglia:]

And also these notes are very short term. So although they are treasury [indiscernible], they have a lower risk than longer-term bonds.

[Ana Bartesaghi:]

[indiscernible] is a transition, as Patricio mentioned.

[Carlos Gomez-Lopez:]

Okay. And then go back to the [indiscernible], which is the loans. I mean we are all very excited about the new UVA loan mortgages and you have been at the forefront, [ making an offer ]. I just wanted to know if we have already seen any of these loans granted [ or have there ] been inquiries petitions. But when do you expect to actually lend that? And what is a realistic prospect as to what amount you could give, let's say, this year or next year?

[Emérico Alejandro Stengel:]

That's a tough question. We already know that there are already mortgages that have been have been already granted.

[Ana Bartesaghi:]

[indiscernible] day, we should be having more from our side as well. But we know one loan at least as we saw in [ Bloomberg ] yesterday was granted by one [indiscernible].

[Julio Patricio Supervielle:]

Definitely, there is a huge demand in the expectation. I would say most of the [indiscernible] Argentina, they need -- they're looking for the mortgages. This is unbelievable that the potential demand is absolutely [indiscernible] and it reflects probably what happened in the last few years when no one knew, people were forced to stay in [ house that's ] renting apartments and so on and now they want to move on. So it's unbelievable the demand that is already in [ there ]. We know it.

[Carlos Gomez-Lopez:]

But we understand there are operational problems. There are some definitions that have to be made before you can actually start lending in large amounts, is that correct?

[Ana Bartesaghi:]

Yes, the FX measure some of them, they are not good for the final [ buy and ] sale of the houses, this operation and things that we understand will be removed soon in coming days. They told that they were working [indiscernible].

[Emérico Alejandro Stengel:]

Some of them are starting to be addressed like, for example, the parking required when you purchase local dollars.

[Ana Bartesaghi:]

And the [ ARS 200 million daily ] limit.

[Emérico Alejandro Stengel:]

And this will help a lot of Carlos to increase demand and to make it more agile. But these things, as soon as they start working out, it will be very, very important in driving demand very quickly.

[Ana Bartesaghi:]

We have a new question from Ernesto Gabilondo with BofA.

[Ernesto María Gabilondo Márquez:]

Just a couple of questions. The first one is on your loan-to-deposit ratio. So considering this excess cash that you have in security is and that you will use them to expand the loan book. How should we think about the loan-to-deposit ratio evolving in the next years? And my second question is on regulation. Do you think that the big part of the tough regulation is already listed, or do you think still there are some things that can be removed or lifted? And if that is true, do you have an estimate on how this removal of tough regulation can help your business?

[Mariano Biglia:]

Yes. And I would take the first part of your question regarding the loans to deposit ratio, we can -- over [ 33% ] as of December last year, we are now over 40%. By the end of the year, we can be close to 50%, and we increase in loans faster than we increase in deposits. And for following years, we should be reaching levels that we had in the past, for instance, 90%. Remember also that right now, we don't have other sources of funding because we don't need them. But in the past, we [indiscernible] capital market instruments, securitizing part of our portfolio or issuing a negotiable obligation. So when we start to issue also that type of instrument in order to manage liquidity, we will also see deposits increasing significantly.

[Julio Patricio Supervielle:]

Concerning your second question, I'll try to make an answer, maybe Alejandro can help me also. First of all, I think that the main regulation that is restricting the entire economy. And of course, the financial [indiscernible] the foreign exchange restrictions and all of that is related to that [indiscernible]. This is critically important that they are being lifted as soon as possible because it will instill new investments, it will bring confidence to the market and hopefully instill growth and getting out of recession.

[For us, for the balance, also, it is important because, first of all, lifting -- I mean having clear rules on FX restrictions will help also all export-oriented industries. And for us, it's also -- it has been a traditional business when you lift foreign exchange restrictions, you have individuals, [ our clients ], that they want maybe to have their savings in dollars. So for us, it's also a very interesting opportunity to make commissions. This has been traditional in the banking system. And this -- it's a substantial revenue that banks used to get when there was no restrictions, and it will happen again. So we are prepared for this. And hopefully, as I said, we have these restrictions, [ they should ] remove it as soon as possible.:]

[Do you want to [ complement ] on that?:]

[Emérico Alejandro Stengel:]

I think you're quite right, Patricio. [indiscernible] and it is over arching. Then you have many other things. For example, you might be aware of the increase on gross income tax that we are -- we have to pay in different jurisdictions, which is also making the process of lending far more expensive than it was. That is something that should be lowered to expedite and to make it more accessible to the public.

[And also, if you [ go ] specifically at some products take mortgages that we would like to grow and expand there should be also some reasoning on the conditions for securitization to provide a good [indiscernible] [ the pull ] -- the banks can originate the mortgages and then [indiscernible] through some securitization, which in turn leads to the question of the creation of investment funds framework, which does not allow them. So it is a huge opportunity when you look at all these different changes that could come around and therefore take you from the very small [ 4% ] of credit to the private sector to something closer to, at least in the first stage, around 20% [ by ] 20% to [ 25% ], which would be closer to something reasonable over the next 4 years.:]

[Ana Bartesaghi:]

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