Welcome to this Grupo Financiero Galicia second quarter 2021 earnings release conference call. This call is being recorded. At this time, I'll turn the conference over to Mr. Pablo Firvida. Please go ahead. Thank you, Jennifer. Good morning, and welcome to this conference call. I will make a short 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 U.S. Federal Securities Laws and are subject to risk and uncertainty that could cause actual results to differ materially from those expressed. According to the Monthly Estimator of Economic Activity, EMAE, the Argentine economy recorded a 17.3% year-over-year expansion during the second quarter of 2021. The primary deficit reached 0.32% of GDP, a 2.35 percentage points improvement compared to the second quarter's deficit of 2020. The National Consumer Price Index recorded an 11% increase during the quarter and reached a 50.2% annual variation in June 2021. On the monetary front, the Argentine Central Bank expanded the monetary base by ARS 303 billion in the quarter, recording a 26.4% increase in the last 12 months. Meanwhile, the exchange rate averaged ARS 95.3 per dollar in June, a 4.6% increase against the average for March. When compared to June 2020, the Argentine peso underwent a 37% devaluation. In June, the average rate on peso-denominated private sector time deposits for up to 59 days was 34.6%, similar level to the average recorded in March. Private sector deposits in pesos amounted to ARS 6.3 trillion in June, increasing nominally by 12.5% during the quarter and 46.2% in the last 12 months. Time deposits in pesos rose nominally 9% during the quarter and 61.1% in the year, and peso-denominated transactional deposits increased nominally 15.9% and 35.6%, respectively, in the same periods. Private sector dollar-denominated deposits amounted to $16.2 billion, increasing 1.4% during the quarter and declining 3.8% in the last 12 months. As of the end of June, peso-denominated loans to the private sector amounted to ARS 3.1 trillion, increasing nominally 7.2% in the quarter and 36.3% when compared to June 2020. While private sector dollar-denominated loans amounted to $5.4 billion, recording a 2.3% increase during the quarter and a 25% contraction when compared to June 2020. Turning now to Grupo Financiero Galicia, net income for the quarter amounted to ARS 8.9 billion, growing 1% from the year-ago quarter. This profit was mainly due to gains from Banco Galicia for ARS 6.7 billion, from Naranja X for ARS 1.6 billion, from Fondos Fima for ARS 399 million, and from Sudamericana Holding for ARS 312 million. The annualized return on average assets was 2.7%, and the return on average shareholders' equity, 15.5%. Banco Galicia's net income for the quarter decreased 12% from the ARS 7.6 billion of the year-ago quarter, mainly due to a 14% lower net operating income and 133% higher loss from the net monetary position, offset by a 49% decrease of other operating expenses and 15% lower administrative expenses. Net interest income decreased 62%, as interest income was down 1% and interest expenses were up 69%, while net income from financial instruments increased 25%. Average interest-earning assets decreased ARS 10 billion, or 1% year-over-year, mainly due to decreases of 47% of dollar-denominated loans and of 13% of peso-denominated loans, partially offset by a 39% increase of government securities in pesos and a 30% increase of other interest-earning assets in pesos. In the same period, each year increased 198 basis points, primarily due to higher yield on other interest-earning assets in pesos. Interest-earning liabilities decreased ARS 11 billion from the second quarter of 2020 due to a 28% decrease in the average balance of other deposits in pesos, a 22% decrease of dollar-denominated time deposits, and a 10% decrease of dollar-denominated saving accounts, offset by a 31% increase of peso-denominated time deposits. During this period, its cost increased 879 basis points, mainly as a result of 1,923 basis points increase in the average interest rate on other deposits in pesos, and 924 basis points increase in the average interest rate on peso-denominated time deposits. Net fee income decreased 3% from June 2020, mainly due to higher expenditures. Net income from financial instruments increased 25%, due to a 17% increase in the results from Argentine Central Bank securities, and also 34% government securities. Gains from gold and foreign currency quotation differences were down 44% from the year ago quarter, reaching ARS 731 million, including a ARS 386 million profit from foreign currency trading. Provision for loan losses were 52% lower than in the same quarter of the prior year. Personnel expenses decreased 7% from the second quarter of 2020, mainly due to an 8% reduction in staff. While administrative expenses dropped 15% as compared to a year before because of a 17% decrease in taxes and a 76% decline in fees and compensation for services. Other operating expenses for the quarter decreased 49%, mainly due to lower charges for other provisions that decreased 86%, as in the second quarter of 2020, additional charges were recorded in connection with the pandemic. The bank's financing to the private sector reached ARS 497 billion at the end of the quarter, down 21% in the last 12 months, mainly due to a 37% decrease of dollar-denominated loans and a 15% decline of loans in pesos. Exposure to the public sector increased 15% year-over-year, and excluding the central bank instruments, it represented 11% of total assets compared to 6% at the end of the second quarter of 2020. Deposits reached ARS 747 billion, down 2% in a year, with dollar deposits falling 9% and peso deposits growing 1%. The bank's estimated market share of loans to the private sector was 11.9%, 102 basis points lower than at the end of the year-ago quarter, and the market share of deposits from the private sector was 10.3%, 14 basis points lower than in the same quarter of 2020. As regards asset quality, the ratio of Non-Performing Loans to total financing ending the quarter at 3.14%, recording a 60 basis points deterioration as compared with the 2.54% of the second quarter of the prior year, mainly due to the end of the regulation related to the flexibilization of the parameters for the classification of debtors established by the Argentine Central Bank. At the same time, the coverage with allowances reached 219%, down from the 240% from a year ago. As of the end of June 2021, the bank's consolidated computable capital exceeded by ARS 138 billion or 206%, the ARS 67 billion minimum capital requirement, and the total regulatory capital ratio reached 25%, increasing 548 basis points from the end of the same quarter of the previous year. The bank's liquid assets represented 143% of transactional deposits and 61% of total deposits, up from 85% and 52%, respectively, as of June 30, 2020. In summary, in a very challenging and volatile macro environment, Grupo Financiero Galicia was able to improve profitability and to keep asset quality, liquidity, and solvency metrics at good levels. We are now ready to answer the questions that you may have. Thank you. Thank you. If you'd like to ask a question on today's call, press star one on your telephone keypad. We'll go first to Gabriel Nóbrega with Citi. Yes. Hi, everyone. Thank you for the opportunity to ask questions. When we're looking at your total financial margin, we actually saw that the results from financial instruments, they contributed greatly, increasing more than 30% in the quarter. I just wanted to really understand what's going on here. I also wanted to know what's the recurrence of this line, given that I imagine you are increasing your liquidity. As for my second question, we actually saw that the BCRA waivers, they ended this quarter. We also saw you go into a raising. I just wanted to get a feel if you are comfortable with your current loan book. Is there any part that's starting to worry you? Those are the two questions. Thank you. Hi, Gabriel. Well, what is going on, as you mentioned, basically, deposits are growing much faster than loan demand, time deposits, but also transactional deposits. With the money, the flow of funds that we are receiving, and it's not allocated to lending to the private sector, we either purchase or repo transactions with the Central Bank. Particularly in the second quarter, we increased the exposure to the national treasury, mainly in short-term paper indexed by CPI, by inflation. We can, I would say, adjust and take additional deposits, paying high interest rates, we allocate that to this government paper or Central Bank paper. At the beginning of the year, we were envisioning a higher loan demand. Basically, we were expecting loans growing above inflation, like five percentage points above inflation. Right now, we are thinking that for the full year, it's likely that loans in pesos will grow at inflation less 5 percentage points, mainly because the agreement with the IMF took more time than was expected. Some political noises also, and not a minor reason, as there is a lot of liquidity, some other competitors are offering lower interest rates for corporates. There, we prefer not to be very active. Of course, this is very short-term. When we look at the total financial margin, we are seeing, I would say, a stable number, let's say from 16.5%-17%, this kind of levels of margin for Grupo Financiero Galicia as a whole. Going to the asset quality, the second question. Yes, there was some increase in NPLs due to the end of the forbearance or the regulatory change. In the case of the bank NPLs, it jumped from 2.5 - 3.14, basically, in the last 12 months. We could see some further deterioration in the third quarter, and then some improvement in the fourth quarter. This is the current vision we have. The coverage should go down a little bit. At year-end, NPLs should be perhaps at around 4% at the bank level. We are comfortable with the dynamics of asset quality. As I mentioned, sometimes or many times perhaps, in other calls, as many of those loans were granted at low interest rates and actually negative in real terms, loans are not so difficult to be paid back, but we see the negative impact in the P&L through the monetary loss due to inflation. All right, Pablo. That's very clear. Thank you so much. You're welcome, Gabriel. We'll go next to Carlos Gomez with HSBC. Hello, good morning. Thank you for the call. I would like to know if you could comment a little bit about the Naranja business. I mean, we have seen much improved profitability there. How is demand in that segment? What are your expectations for the next year or two? Do you have any current plans for the company? I mean, it has its own license. There have been discussions in the past about perhaps some corporate actions, specifically to Naranja. Where does the company stand today? Thank you. Hi, Carlos. Well, the numbers of Naranja, as you saw, improved significantly, mainly comparing second quarter to second quarter of the previous year. Last year, with the beginning of the pandemic, loan origination was almost stopped. Limits were not increased, so the loan book contracted in real terms. We finished with many digital initiatives, rationalization, the end of the merger of the many different regional credit cards we used to have. We are very comfortable with Naranja X. We have all the businesses of Naranja under this new brand, with new logo. The idea is to become each day more and more digital. As we mentioned also in the past, Naranja will be able to take deposits, being a financial entity. The idea is to increase each business. Right now it's fully owned by Grupo Financiero Galicia. In the past, we had minority shareholders, and going more time back in the past, it was controlled by the bank. Now it's an independent unit and fully owned by Grupo Financiero Galicia. We are very happy with the business and the growth prospects, and asset quality, and margins and everything, all the metrics that we can look at. Okay. As you mentioned, it is now controlled by the group as opposed to the bank. Maybe a follow-up question, is that the bank keeps accumulating capital since it is constrained in terms of giving dividends? Any plans or anything you can do to reduce the level of excess capitalization at the bank if you consider it has too much? Well, we don't have many alternatives in that respect. We depend from Central Bank regulations. At the beginning of the pandemic, one year, or, I don't know, 15 months ago, the Central Bank was conservative, and the idea was to strengthen the capital situation of the banks, and that's why they put this limitation to pay dividends. Right now, I think it's more a regulation to avoid international banks and local banks with ADRs to send U.S. dollars abroad. It's an FX issue. Of course, the capital situation should change if the loan demand picks up. Really, what we are seeing is that we have been accumulating cash at the bank level, and Naranja, the insurance business, the asset management businesses, are the ones that are providing dividends to Grupo Financiero Galicia in order for the holding company to be able to pay dividends to the shareholders. Thank you very much. You're welcome, Carlos. We'll go next to Ernesto Gabilondo with Bank of America. Hi. Good morning, Pablo. Thanks for the opportunity. My first question is on how are you seeing the macro-outlook in terms of inflation and interest rates, and how could that be impacting loan growth and the results related to the net monetary position? My second question is on your net interest income. We saw an important contraction quarter-over-quarter and year-over-year. What should we expect for the second half of the year? Thank you. Hi, Ernesto. Well, on inflation, we are expecting to be around 48%. This is, I would say, a moving target from most of the economists. Each monthly reading makes the different economists that give their projections to the Central Bank to move from 47, 48, 49. This is a range of inflation we are seeing for this year. For next year, I would say that most of the economists are forecasting around 40%. Some reduction, definitely nothing significant. Of course, the current number is far from the budget, from the national budget. Basically, this high inflation impacts on the net monetary position. The effects of inflation on our field, the higher the inflation, the higher the negative impact on our P&L. Interest rates, considering these inflation numbers, are negative in most of the loan lines, and also, thinking in the minimum interest rate we pay for time deposits, both for the 34% or 37%, depending on the amounts, and also on the average rate we made on our loans are in the second quarter was 37%. The interest rates are, in some way, regulated or not only the time deposits, but also other type of subsidized rates. We don't see much changes in the short term. Loan demand, as I mentioned, is running behind the growth of deposits, and we are forecasting inflation plus 5%. Sorry, less 5% now. For loan growth in pesos for the full year. If inflation is, let's say, 48%, growing 43% loans in pesos. Going to the net interest income, we look at the net interest income together with the net income from financial instruments, because basically, we are taking a part of the deposits and allocate those funds with LELIQs or repo transactions with the central bank or other short-term government paper. Part of those deposits are funding that. Really, it's volatile and depending on the yield on bonds, the breakdown of deposits, breakdown of currency. Definitely, what we target is to have a more peso intermediation and more transactional deposits in the mix, compared to term deposits with costs. I don't know if that was enough and clear, Ernesto. Yes. Perfect. Thank you very much, Pablo. At the end, the net interest margin will continue to be, from the loan side, not contributing so much and should be more related to investment in securities, but should remain to be stable. At the end, looking only on a credit basis, net interest income should continue to be low. Right? Yes. Basically, because part of the funding is allocated to government paper and central bank paper and not to lending. Okay. Take out part of the funding to the loans or allocate just the deposits to the loan volume, margin is, I would say, high and particularly in pesos. Okay. Perfect. Thank you very much, Pablo. You're welcome, Ernesto. Once again, that's star one for questions. We'll go next to Yuri Fernandes with JPMorgan. Hi, Pablo. Good morning. On elections, what is your base case? Should we expect any material policy change after the elections like how Galicia is in the November elections? Thank you. Hi, Yuri. Well, we have two elections this year. One in September 12th, that are our primaries. I would say for the first time in many years, they will be actual primaries, because in other elections, each party had just one list, and the primary elections were like a big poll. This year, in many provinces and cities, there are many lists from the same party. They will be important. The midterm elections will take place on November 24, I think is the day. Pollsters are pointing that the government could be losing a voting power for many different reasons. Many people voted for Alberto Fernández, thinking that he was going to be more independent than Peronism. Also, at the beginning of his mandate, his image was very high, mainly when the pandemic began. After the long quarantine and the negative effects, both in the economy and with the health situation, his image went down very sharply. There are many, I would say, indicators that measure the move of the population, that make linear regressions, that points to a voting of around 38%, coming down from 48% in 2019. Having said that, we all know that pollsters were not very accurate in their estimates, not only in the last elections here, but around the world. Many times it has to do with the tools they use, if they use a fixed phone or cellular phone or if they go face-to-face. If we analyze different factors, purchasing power, the mood, the health, some scandals in the president's residence, the government should suffer some loss. Again, some people are saying from 48 to 38. The opposition in the midterm elections typically is not so polarized. New parties appear, and typically, people tend to vote for the ones they like. Some liberal parties are arising, and they are in the polls. Let's say they have 10%-12%. Also, some leftish parties with 4% or 5%. Typically, in presidential elections, there is more polarization. Let's say the Macri party, not necessarily will get all these votes from people that got disappointed. Sorry if the answer was too long. We don't foresee really any material change in the number of seats, both in the Senate and in the lower chamber. It's a question mark or a big doubt we have, what will be the reaction of the government if they lose a vote in power? They will become, let's say, more rational or more willing to speak and negotiate or angry with the result and saying, "We were not strong enough in our measures." Of course, really nobody knows what will be the impact because really nobody knows the actual numbers. No, that's perfect, Pablo. Thank you for the color. Always nice to know more details. Thank you. Thank you, Yuri. At this time, there are no further questions. Thank you all for attending this call. If you have any further questions, please do not hesitate to contact us. Have a nice day and have a nice weekend. Goodbye. This does conclude today's conference. We thank you for your participation.