Grupo Financiero Galicia SA (GGAL) 2024 Q1 法說會逐字稿

Welcome to first quarter 2024 earnings release. My name is Alan. I will be your coordinator for today's event. Please note this call is being recorded and for the duration, your lines will be on listen-only. (Operator Instructions)

I will now hand you over to your host, Pablo Firvida, to begin today's conference. Thank you.

Thank you. Good morning and welcome to this conference call. I will make a concise introduction and then we will take your questions. Some of the statements made during this conference call will be forward-looking statements within the meaning of the Safe Harbor provisions of the US federal securities laws and are subject to risks and uncertainty that could cause actual results to differ materially from those expressed.

According to the monthly indicator for economic activity, the Argentine economy recorded an 8.4% year-over-year contraction during March. In year-to-date terms, the economic downturn reached to 5.3%. During the first quarter, the primary surplus reached 0.6% of GDP and an overall surplus of 0.2% compared to a 0.4% primary deficit in the first quarter of last year. This result was explained by a 254.6% year-over-year increase of revenues, whereas primary spending rose 144.1%. The National Consumer Price Index accumulated a 51.6% increase during the first quarter and a 287.6% in the last 12 months ended on March 31, 2024. However, monthly inflation has decelerated in recent months from 25.5% in December 2023 to 8.8% in April 2024, trend which is expected to continue.

On the monetary front, the monetary base increased by ARS2.9 trillion in the first quarter this year, recording a 132.1% increase in year-over-year terms. After taking office, the Central Bank devalued the exchange rate by 54.2% on December 13, a 118.3% variation, after which the effect has maintained a 2% monthly crawling peg. The exchange rate averaged ARS850.3 per dollar in March, a 76.1% devaluation in year-over-year terms. The overnight repo rate remained the reference monetary policy interest rate after having replaced the Leliq rate in December 2023. Since then, the Monetary Authority lowered the policy interest rate five times from 133% to 40%. But it's also worth to mention that on March 11, the Central Bank eliminated the regulation that established a minimum interest rate on time deposits. In March 2024, the average rate on peso-denominated private sector time deposits for up to 59 days stood at 85.3%, 13.9 percentage points above the average for March of last year. Since March, rates for time deposits were lowered in line with the reduction of the monetary policy interest rate and currently stands at an average of close to 30%. Private sector deposits in pesos averaged ARS42.4 trillion in March, increasing 29.6% during the quarter, and 137.8% in the last 12 months. Time deposits in pesos rose 42.5% during the quarter and 104.2% year over year, when peso-denominated transactional deposits increased 21.2% and 174.8%, respectively, in the same period. Private sector U.S. dollar-denominated deposits amounted to $16.7 billion as of the end of March, increasing 14.7% during the quarter and 2% as compared to March 2023. Peso-denominated loans to private sector averaged ARS18.5 trillion in March, increasing 20.4% in the quarter and 144% when compared to the year before, when private sector dollar-denominated loans amounted to $4.3 billion, recording a 24.5% expansion during the quarter and a 17.5% price when compared to March last year.

Turning now to the results for the quarter, net income attributable to Grupo Financiero Galicia amounted to ARS255.5 billion, 263% higher than the year-ago quarter, mainly due to profits from Banco Galicia for ARS244.3 billion, from Naranja X for ARS22.6 billion, and from Galicia Asset Management for ARS11.3 billion, offset by a ARS16.4 billion loss from Galicia Seguros. This profit represented a 7.1% annualized return on average assets and a 32.4% return on average shareholders' equity. Banco Galicia's net income for the quarter was 319% higher than in the year-ago quarter, mainly due to a 157% increase of the operating income, partially offset by a 102% increase of the loss from the net monetary position. Net operating income increased 102%, primarily due to a 209% higher net interest income, offset by an 18% lower result from financial instruments and a 36%, decrease in the results from gold and foreign currency quotation differences.

Average interest-earning assets reached ARS6.6 trillion, 25% lower than in the same quarter of last year, mainly due to a 61% decrease of the portfolio of government securities and a 33% reduction in the average balance of loans in pesos. In the same period, its yield increased 63 percentage points, reaching 127%. Interest-bearing liabilities decreased 29% from March of last year, amounting to ARS5.3 trillion, mainly due to a 59% decrease in time deposits in pesos. During this period, its costs increased 9.7 percentage points to 52.2%. Interest income increased 55% due to a 48% growth of interest from government securities, a 338% increase of interest on repurchase agreement transactions and a 12% increase of interest on loans and other financing. Interest expenses decreased 14% as a consequence of a 33% lower interest on time deposits, due to the decrease in its average volume.

Net fee income decreased 6% from March last year, mainly due to a 25% lower profit from fees on bundles of products and also a 34% decrease on utility bills and collection services, partially offset by a 68% increase of other fees. Net income from financial instruments decreased 18% due to lower results from government securities and to losses from derivative financial instruments. Gains from gold and FX quotation differences were 36% lower from the year-ago quarter, including the results from foreign currency trading. Other operating income increased 43% in the quarter because of a 126% increase in other adjustments and interest on miscellaneous receivables.

As regards provision for loan losses, the amount for the quarter was 37% higher than the one recorded in the year-ago quarter, reaching to ARS47.3 billion. Personnel expenses were 3% higher than in the first quarter of 2023, in line with the 5% increase of staff and of salary agreements with the unions. Administrative expenses were 10% higher as a consequence of the 34% higher taxes and 20% higher expenses for maintenance and repairment of goods and IT, offset by a 51% lower expenses for publicity from promotion and research. Other operating expenses increased 64%, mainly due to higher charges for other provisions. The income tax charge was 517% higher than the first quarter of 2023, due to higher operating results.

Advanced financing to the private sector reached ARS3.9 trillion at the end of the quarter, down 20% in the last 12 months, with peso-denominated loans decreasing 29% and dollar-denominated loans growing 37%. Net exposure to public sector decreased 15% year-over-year because of lower exposure to the Central Bank, Leliq, Lediv and repurchase agreement transactions. Public sector exposure, excluding Central Bank exposure, represented 23% of total assets compared to 13% as of the end of the first quarter of last year.

Deposits reached ARS6.5 trillion, 26% lower than a year before, mainly due to a 52% decrease of time deposits in pesos and a 47% decrease of current account in pesos. The bank's estimated market share of loans to private sector was 12.2%, 52 basis points lower than at the end of the year-ago quarter, and the market share of deposits from the private sector was 10.2%, 38 basis points higher than the same quarter of 2023. The bank's liquid assets represented 102.5% of transactional deposits and 64.4% of total deposits compared to 115.9% and 57.9%, respectively from a year before.

As regards asset quality, the ratio of nonperforming loans to total financing ended the quarter at 2.09%, recording a 41 bps improvement as compared to the 2.50% of the first quarter of the prior year. At the same time, the coverage with allowances reached 148%, down 38 percentage points from the 186% recording a year ago. As of the end of March 2024, the bank's total regulatory capital ratio reached 32.1%, increasing 862 basis points from the end of the same quarter of the prior year, while Tier 1 ratio was 30.9%, up 935 basis points during the same period.

In summary, in a particularly challenging and volatile political and macro environment, Grupo Financiero Galicia was able to keep asset quality, liquidity and solvency metrics at healthy levels and to improve the level of profitability despite the significant impact of the high inflation and the steep recession recorded in the quarter.

We are now ready to answer the questions that you may have. Thank you.

Thank you. (Operator Instructions) Ernesto Gabilondo, Bank of America. Your line is open. Please go ahead.

Thank you. Hi, good morning, Pablo. Thanks for the opportunity. My first question will be on your loan growth expectations. I just wonder what will be the macro assumptions behind loan growth, if you can elaborate on how are you seeing GDP growth for this next year and also inflation and interest rates?

And then my second question will be on your loan to deposit ratio. As most of the Argentine banks are starting to resume real loan growth on their normalized rates, low inflation, how would you see the evolution of the loan to deposit ratio in the next years?

And lastly, I would like to ask you about your ROE expectations. I would like to hear about your thoughts for the second quarter, given that you will start to lend but at the same time, you will have a lot of moving parts. I think my perception is that second quarter will be tough but then to have a second half recovering in terms of the ROE. So how would you see the ROE evolution throughout the year, how do you see the ROE for this year, and how do you see it sustainable (inaudible)? Thank you.

Okay. Hello, Ernesto. Well, first, the loan growth we see, as you mentioned, growing in real terms this year. The trigger will be when inflation is close to 5% per month. We are going in there in the right track. According to our estimates, the year will end up with loans growing around 30% in real terms. This has to -- I would say, assumptions on inflation and GDP evolution, inflation close to 140% for the full year, although it's a moving target and it has been coming down. Actually, we are perhaps closer to 135%. The recession we have seen in the first quarter looks like it's getting to a bottom. So but nevertheless, the full year will suffer a GDP contraction of roughly 3.8%. That is what our chief economist is forecasting and most of the economists are in the same region. But for next year, we are forecasting a 5% GDP growth and a much lower inflation. How much low depends on many things, but I would say between 35% and 40%, definitely still high, but coming from these high levels we have been having that in the last years, I would say. Next year, with a much lower inflation and GDP growing, as I mentioned, the loan book should be expanded significantly. Perhaps the first loans to react will be the commercial ones and then the individuals. Still it's too early to say how much or what percentage in real terms, but definitely it will be substantial.

The -- what was it, loan deposit -- yes?

Yes, before moving to the loan to deposit ratio, in terms of interest rates, how do you see them for the rest of the year and next year?

Yes. Well, interest rates have been coming down significantly, not only the repo rate but also that is the reference rate that has had an impact on all the rates. One month ago. I remember that the repo rate was at 70%. Today it's at 40%. Time deposits, as I mentioned, in the first quarter were at 85% interest rate and today are at 30%. So we are seeing interest rates coming down. It will be a function of the evolution of the economy. With this reduction in inflation and interest rates, we see this loan demand is picking up quickly. So we will see some type of margin compression coming from very, very high levels and will be gradual. But we are seeing that the volume will more than offset compression in margins.

The loan to --

Yes, so given that the reference rate was at around more than 100% last year and today, it's already at 40%, do you think it could be more sustained at these levels, at least for this year, before going a little bit lower?

Yes, could be the case. Also the Central Bank has many, I would say, simultaneous objectives and they set this reference rate, but also are looking at the FX evolution. So perhaps for this year, it will be difficult to see much more reduction in interest rate, but for next year it could be the case that interest rates will be going down again. Of course, the Central Bank -- well, I don't know if to say of course, but the Central Bank typically don't allow us to anticipate their moves. They are very efficient in setting new price signals, regulations. But looking at the inflation and the FX we are seeing, it looks like this interest rate level, it could remain for this year or perhaps with small reductions or adjustments.

Perfect. Perfect.

Okay. When we go to the loan-to-deposit ratio, if I'm not wrong, the third quarter ended with 50% loan-to-deposit ratio. It's the difference between pesos and dollars, of course in dollars is much lower, although we have been seeing a pickup in dollar loans, in the demand of dollar loans. So it can grow and we don't have -- or I would say the ratios are so low that there is plenty of room to grow. We don't see them getting to the levels we had in 2017 that were close to 90% or 95% but we will navigate in this transition but we have room to improve that ratio.

In terms of ROE expectation, last year, Grupo Financiero Galicia had an ROE of 17.4%. This first quarter was very strong with about 32%. It will be hard to replicate the same numbers, so we'll see some declining ROE in the following quarters. But in my opinion, we'll be in the area of 20% for the full year. Of course, as you also mentioned, Ernesto, there are many moving parts, but we are confident that we'll adapt to these price signals I mentioned.

Excellent. So the ROE for the full year around 20% and do you think it could be maintained for the next years at 20%?

Yes, perhaps I'm being a little bit conservative, taking into account the first quarter. But yes, with the information we have today, I would say 20% and perhaps the same level or even a little bit higher for next year.

Excellent. Thank you very much, Pablo.

You're welcome, Ernesto.

Brian Flores, Citibank. Your line is open. Please go ahead.

Hi, Pablo, team, thank you for the opportunity.

I have two questions. The first one is on strategy. I wanted to ask you, how are you preparing to compete against fintechs, right? You have a very strong consumer franchise but I think eventually fintechs pressure -- and they have pressured everyone regarding fees and being very fast in terms of implementing great offer for consumers. So just wanting to get your views on how are you preparing your franchise going forward, particularly as we saw this quarter some pressures on noninterest expenses, which also is a very important item, right, in the end? Efficiency, efficiency gains are a very important part of the equation. So just how are you thinking about this? And then I'll ask my second question. Thank you.

Yes. Hi, Brian. Well, we have been competing with fintechs for many years now. Mercado Pago is the largest fintech or big tech due to the -- they were born through Mercado Livre, so they they got the clients from the e-commerce platform, and then they converted these clients into Mercado Pago clients. So they have many clients with a wallet. We have Naranja X. That is, I would say, the second fintech in terms of active monthly users. And all the banks are digital. You need scale to become more efficient. That's why, in a way, we announced the purchase of HSBC. We also had, as you mentioned, a pressure on fees this quarter, but mainly because of the high inflation level in the quarter and the price increases couldn't be reflected or adjusted in the first quarter. So the next quarter you will see an improvement in fee income.

So if I had to say today where banks are making money, I would say that much more would be corporates, medium-sized SMEs, agricultural sector, private banking clients, and not so much the typical massive fintech clients. Having said that, we tackle these non-so-profitable businesses with Naranja X and, as I mentioned, we have been competing with them. And I think that both Mercado Pago and Naranja X and perhaps other much smaller companies are kind of barrier for newcomers. It should be very difficult for -- I don't want to mention another company that any new fintech coming to Argentina from zero, it's almost impossible, in my opinion, very costly. And perhaps it was this year when the industry in the world was much lower and it was easy to raise money. Now you have to have profitability much quicker than in the past.

Perfect, perfect, understood. (multiple speakers)

Yes, the second question was on the communique that you published very recently on the sanction by CNV. Just wanted to ask you, how did you reach this conclusion? Was it -- your estimate, is it based on conversations with the regulator or is there an internal and with your lawyers and it could have some upside risk? And when I say upside risk, is could it be more than what you're estimating? Just because on the communique, we didn't have much details. So if you could expand a little, this would be great. Thank you.

Yes. Well, this sanction, as you mentioned, actually was an investigation that the CNV, the local SEC, informed us on April 30 that they initiated this investigation. So we, in turn, initiated our internal investigation to find out if what the CNV alleged was the case or not. Actually at that moment, we didn't have (inaudible) a significant [fixed scale] because when there is an investigation begins, there is nothing to communicate. Yesterday, as we issued the press release and we advanced with the internal investigation, we said or we communicated formally that we were in this process. We will answer to the CNV on May 29. The number that the CNV is saying that was what we got above what should be the correct number is ARS23 billion. Our preliminary numbers are much lower, but that will be answered on May 29.

But in order to be prudent, we have a provision of ARS23 billion plus another ARS23 billion. So actually the provision is ARS46 billion. It was not in something we spoke with the regulator. It was a prudent decision in order to have in our books cover. Most of all, and perhaps more than the final number we will -- but the CNV and the Central Bank will tell us. The thing's not so easy, this -- the number, because executing, well, you know, all the banks that pay a prime have the put right to sell to the Central Bank different bonds. In this case, it was a dual bond and it was not very liquid, and the price that the Central Bank on an ordinary basis sets is an extrapolation of some dots. So there are many different analyses in which you can say, which is the correct price and depending on that, the impact is ARS23 billion or half or whatever or even nothing, if you compare, I don't know, other dual bonds or dollar-linked or other instruments.

So that is what we said as we issued the results. We are saying that we built a provision because of this initial investigation but it's not at all closed. I don't know if it was clear.

No, it was clear. I just think maybe a quick follow-up that would be useful. So you're saying, as you mentioned, it could be less. But also, I mean, is there a probability that it could be more than this? Or is it -- do you think maybe the limit is on this returning the ARS23 billion plus, the ARS23 billion with maybe the limit is around ARS50 billion? Or do you think there is a chance to see the regulator sanctions a higher number?

Really it is difficult to predict. If you analyze these curves, the dots, the extrapolation, the number should be much lower, but the -- it's impossible to predict also the fine. So as I mentioned, as a prudent way, we provision these ARS46 billion. But it's hard really to say if it's enough or it's a lot or it will be marginal, the effect in the next quarters.

Okay, Pablo. Just to finalize -- and I'm sorry to ask on this topic maybe a lot of questions. Would you say this will be -- maybe by 29th you're going to present and you're going to answer formally to CNV. By when do you think we could get like a final resolution from CNV?

The CMD doesn't have a deadline. There is not a process or a procedure that says, I don't know, in 10 days, you have to answer. We hope to get the answer as soon as possible. We would like to close this investigation because definitely we are not happy at all with the situation. So the sooner the better, but it's not in our hands. We will answer. The answer will not be public. Once the situation is closed or settled, it will become public.

Super clear. Thank you.

You're welcome, Brian.

Carlos Gomez, HSBC. Your line is open. Please go ahead.

Yes, hello. Thank you for taking the question. First one, you showed very helpfully that your government exposure is now 23% of total assets and it has been increasing. Is there an internal limit that you have set for that exposure? And if I understand correctly, that is not counted -- I mean, part of that is not counted. The LECAPs are not counted as part of your public sector exposure today. Right? That would be my first question.

The second refers to loan demand. So you expect now to grow loans 30%, and we understand that things move pretty fast in Argentina, but you had a decline of 2% in the first quarter. What are you seeing so far? We are in the middle of the second quarter. What are you seeing so far and are there any signs of renewed demand in Argentina that that gives you hope that you will be able to get to that 30% by the end of the year? Thank you.

Hi, Carlos. Well, we see -- well, we make a difference between the government exposure that, as you said, was 23% of total assets and the Central Bank exposure, mainly repos today, as the Leliqs disappear, and they stood at 17%. So in total, 40%. There are regulatory limits on government exposure and we also have our internal limits. And this 23% doesn't include the new LECAPs that were issued. Basically the new LECAPs will be seen in the second quarter. Our objective is to keep this percentage around 25% of total assets. When the loan demand from the private sector picks up, basically this will be the source of funding. It will be achieved from one of these assets, the government bonds to lending to the private sector. We are seeing some, I would say, timid or shy loan demand coming from companies. It began with dollars that were seen in the first quarter. And when we speak with the commercial people of corporate banking or SMEs or the agricultural sector, they say that their clients have many projects, but they are waiting for some clarity or some, I would say, more predictable macro variables, mainly lower inflation and a clear path on FX. So in our assumption, we are seeing loan demand rebounding already in the early second half of this -- in the second semester, in the second half of the year.

All right. So you expect -- I mean, you still expect that recovery to happen.

And to give another easy question, you mentioned inflation and duty. What's your forecast for the currency?

For the current year, is between 135% and 140% inflation estimation before. It's a moving target. At the beginning of the year or when we were making our annual budget, most of the economists were thinking 200%, then 180%, and it has been coming down. For next year, it's perhaps early but the current estimates are around between 35% and 40%. And also, as I mentioned, still very high, but coming from the very high levels of the previous year's, it's a good declining trend.

Yes, thank you. And now my question was about the currency. Where do you expect the peso and the CCL exchange rate to finish? And again, I understand nobody knows.

No. The blue-chip swap, the CCL. Well, right now, in this week mainly we saw some recovery or increase in the price of the CCL. It's hard to predict, because we have the [SIP book] the limitations on FX movements. Our, I would say, expectation that the government will release most of these limitations perhaps in September and at that moment, perhaps we will see some increase in the FX and the gap between the official FX and the financial dollars should narrow back as it was. The last - the number I saw was it ARS1,200 for the official exchange rate at the end of the year, but this is even harder to project than the inflation number. So still, having all these restrictions and makes the estimates hard. What is important to understand that for banks, we have to be hedged in dollars. We cannot be long or some -- we can do something long in dollars through forward contracts. But in general, in general, devaluation doesn't have a direct impact on our balance sheet. Of course, there is an indirect impact on the numbers of our clients. And in general, when there is a devaluation, as the private sector is long in dollars in Argentina, there is a kind of a wealth effect. But today I would say that the main variable to monitor is inflation.

Okay. So for the ForEx right now, ARS1,200 for the official exchange rate?

Yes.

Thank you so much.

You're welcome, Carlos

Alonso Aramburu, BTG. Your line is open. Please go ahead.

Yes, hi, good morning, and thank you for for the call. Pablo, I wanted to ask you about your capital ratios, given the demand you're expecting very strong this year and I would imagine that in 2025, you would also expect loan growth in real terms probably above 40% as well. How do you see your capital ratios evolving? You have excess capital today. So just if you can give us a color on that and also related to that, what do you think is going to be the dividend policy of the bank? Thank you.

Hi, Alonso. Well, the capital ratio is above 30%, so very high, much higher than what we would like. And actually, we announced dividends and we paid dividends in May. Grupo Financiero Galicia paid in two tranches, one was ARS65 billion; the second one was [ARS140.2 billion or ARS140.3 billion]. Why the second was [ARS140.2 billion or ARS140.3 billion] is because the Central Bank approved the statements of dividends from the banks to the holding company in three installments. So Grupo Financiero Galicia will receive two additional installments, let's say, between ARS145 billion and ARS160 billion, the next installments, because they will be adjusted by inflation in June and July. And then the Board of Directors of Grupo Financiero Galicia will decide the best moment to pay the other installments to the Grupo Financiero Galicia shareholders.

So capital ratio will be reduced with these payments of dividends. We will also have an increase in our capital once we combine Banco Galicia and Grupo Financiero Galicia with HSBC. We have to see what will be the final effect because the price was set in dollars. But as at the moment when we announced the transaction, the price to book we paid was 40%. I assume there will be a capital gain there. And with all the sensitivity analysis we can make, we see enough capital to distribute dividends to absorb HSBC and to grow our loan book this year and next year. And of course, we will be generating results. So with the capital, it's not an issue in the medium term. I would say.

Thank you, Pablo.

You're welcome, Alonso.

[David Cardle, Fionta].

Yes, thank you and well, congratulations on the results from the quarter. I have a couple of questions. First on HSBC's acquisition, I understand first that was not yet consolidated with the group, but I'd like to know if, well, if you could give us some color on the rationale behind it, like are there any synergies between both portfolios we've seen and in (inaudible) that you're expecting to get or something of the sort?

And second, going back to the [admission] process, you're still [on the go] with CNV, other than the money, other than the financial, the fine you may get, are there any other, let's say, trading restrictions that might be imposed on the group?

Hello, David. Well, first, I will begin with the second part. I think that once we -- well, first, we have to finish with the investigation, no? But let's say we need to pay the money back, the additional gain and on the fine. It should be -- I don't know what other sanctions could be. Perhaps some individuals or fines to individuals, but really so far, with the information we have today, I would say no other effect. Of course, we are, as I mentioned, we are not happy at all. We take care a lot of our reputation. Internally it was a very bad surprise, but we need to finish investigations, the answer and the outcome.

With HSBC, we are waiting for two things to get the closing. One is the approval from the Central Bank and the other one that we feel or we estimate that will occur in the second semester, perhaps in the fourth quarter. And the other thing we have to achieve, or HSBC has to achieve, is to be able to disconnect HSBC Argentina with HSBC headquarters. There's some IT software and how -- all things that must be disconnected in order to let the Argentine bank to operate as an independent vehicle. Well, the logic or the rationale with the purchase of HSBC was, well, the price was a good one in our opinion. In the price we didn't put any synergy but I'm sure there will be some of them. We are getting new clients. It's hard to grow organically the union a lot of time. So M&A is a good way to gain market share. They have not only good clients. They also have good employees. We are looking at also to get more talent. They have certain products and niches, like they are very good in Comex, in foreign trade. They have good wealth management. We are getting an insurance company and an asset management company.

So it will give us a 3%, 3.5% increase in market share. There could be some overlapping of certain branches. We will need to see which ones our own branches, either by the current HSBC or Galicia, which are rented. Perhaps at headquarters, could be some overlapping. But typically in a normal year, in any bank, you lose a certain number of people. So without doing anything very active, we could be getting to a good number of people considering our staff and their staff. So there will be synergies. But as I mentioned, they were not priced in. I don't know if I answered you both questions.

Yes, absolutely. Perfect. Thank you.

You're welcome, David.

Marina Mertens, Latin Securities. Your line is open. Please go ahead.

Hi, Pablo. Good morning. So I have just one question regarding the Central Bank regulations. So which additional regulations do you expect to be lifted in the coming months, and how do you expect this to impact your business?

Hi, Marina. Well, we are convinced that the Central Bank will make -- will dismantle many regulations that were built in the previous administrations, because this Central Bank believes more in the competition and not so much in the micro regulation. So the regulation that worried us the most was the minimum interest rates on time deposits that they lifted or they eliminated that minimum interest rate on time deposits in mid-March. So it was a good signal.

Then any mandatory lending to SMEs or any cap on interest rates or more flexibility to merge branches is something we are seeing as necessary and that they are going to tackle that One thing that banks, in general, are fighting for many years is to level the field with certain fintechs. Some fintechs are not regulated by the Central Bank and we keep on saying that if they take deposits, if they run loans, they must have reserve requirements, capital requirements. They have to provide information to the Central Bank. They have to know the clients in order to avoid money laundering or these type of things. So that would be also a good thing, not only eliminating distortive regulations that set caps or floors, but also regulating fintechs. We had some discussions with Mercado Pago regarding the QR. This has been an issue for us for many months, even a year I think. And well, there is need to have similar rights and obligations. That I would say is the main thing. So far, the Central Bank has been more focused on FX inflation on their balance sheet, and I think it's the best thing they did, no? Now the second round of measures, in my opinion, will be more regulating or deregulating the financial systems in the banks.

Perfect. Thank you.

You're welcome, Marina.

There are no further questions on the line. So I'll now hand you back to your host for closing remarks.

Well, okay. Thank you all for attending this call. If you have any further questions, please do not hesitate to contact us. Good morning and have a nice weekend. Bye bye.

Thank you for joining today's call. You may now disconnect.