Morning everyone, and welcome to the Grupo Supervielle First Quarter 2023 Earnings Call. This is Ana Bartesaghi, Treasurer and IRO. A slide presentation will accompany today's webinar, which is available in investor section of Grupo Supervielle's investor relations website. Today's conference call is being recorded. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. If you want to ask a question, you need to be connected to a Zoom platform from any device. We will not be able to answer questions if you're connected from a phone line. Please make sure your first and last name appear in the Zoom platform you are using. You will be able to ask a question by voice or send questions in written form via the Q&A box in the Zoom platform any time during the call. 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 at 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 changed events or circumstances. Patricio Supervielle, our Chairman and CEO, will start the call discussing the key highlights for the quarter and priorities for 2023, as well as an update on macro views for this year and 2024. Mariano Biglia, our CFO, will take a deeper look at our performance and near-term perspectives. This will be followed by a Q&A session. Patricio, please go ahead. Thank you, Ana. Good morning, everyone. Thank you for joining us today. I will begin my presentation with slide three. We are pleased to have begun the new year delivering ROE of 2% in real terms in the first quarter. We were able to achieve the positive ROE, even as we continue to operate in macro and political environments that are volatile and challenging. The various initiatives that we have implemented since 1st Q 2022 to optimize operations and streamline our branch network have allowed us to achieve significant operating leverage, contributing to bottom-line profitability. Key among these were personal expenses, which declined nearly 12% year-on-year in real terms. We also benefited from our flexibility in managing assets and liabilities to optimize our financial margin in a context where we saw inflation increase to 22% for the quarter. Mariano Biglia will discuss our performance shortly. For the current year, with upcoming presidential elections, we expect to continue facing a volatile backdrop. As a result, our key priorities for 2023 include: First, we are advancing on executing on our key strategic pillars, prioritizing profitability over growth. We have a large and loyal customer base, and we see the opportunity to deepen our relationship with them. Consequently, for the current year, we're focusing on customer engagement, monetization, and cross-sell to gain additional share of their wallets. Specifically, we are aiming to cross-sell insurance, investment products, short-term loans, along with cash management services. Second, we have adopted an increasingly conservative risk profile. With accelerated inflation putting pressure on individuals' disposable income, we are prioritizing payroll customers while implementing stricter credit scoring overall. On the corporate front, we are focused on providing lending and transactional services to our key target segments that include SMEs and middle-market companies. We're also managing our exposure to public sector bonds while our shareholder equity remains fully hedged against inflation. Now please turn to page four. As shown clearly on this page, we're navigating a complex macro environment in Argentina. The decline in foreign exchange reserves have been further impacted by the severe drought that surpassed the worst-case scenario this year, with the value of the harvest falling by $20 million year-on-year, negatively impacting levels of activity, price, and external accounts. At the same time, interest rates continued the upward trend on the back of accelerated inflation while the FX rate continues to lag. While fiscal spending has declining, we have challenged with the high levels observed in the first half of last year, the fiscal balance has deteriorated as revenues have been declining. The IMF original fiscal primary de-deficit target of 1.9% has been exceeded and is currently estimated to almost reach 3%. In this context, the financial systems continue to experience weak credit demand with peso loans down in the low teens year-on-year, with loans to GDP at a historical low of 7% and presenting significant long-term growth potential once the economy stabilizes. In turn, the system remains highly liquid with peso deposits growing above inflation and deposits to GDP standing at 18%. Turning to slide five. We share macro views for the remainder of 2023 as we head towards primary in August and presidential elections in October. The drought has confronted export and is further pressuring already low reserves. To avoid a devaluation, the current administration is limiting imports, dampening overall economic activity. Several analysts protect inflation for the year to continue increasing, driven by monetizing the fiscal deficit, tariff hikes, and higher devaluation expectation. As I just noted, interest rates are likely to follow an upwards trend. If the government succeeds in securing additional funding from the IMF, the major issue will be the conditions attached in the use of funds to anchor the exchange rate. Looking to 2024, economists reckon that the new administration will have to implement swiftly a stabilization program on several fronts aimed at lowering the fiscal deficit and normalizing relative prices, including truck tariffs and foreign exchange rate. We expect a significant improvement in our commercial surplus, driven by the positive impact of El Niño on crops and therefore exports, and the completion of several infrastructure projects that will support higher energy production. Wrapping up, we have a long and successful record of operating in volatile environments, and are confident in our capability to weather these business conditions. Today, we are prioritizing profitability over growth, introducing even stricter credit scoring, shortening lending tenors, while actively managing assets and our asset and liability structure. We also maintain high liquidity levels while our capital remains edging against inflation, providing a solid foundation to resume growth as economy recovers. With this, let me turn the call to Mariano. Thank you, Patricio. Good day, everyone. Please turn to slide six. To begin, as Patricio mentioned, ROE was 2% for the quarter. This is in line with our expectations of returning to profitability. Importantly, we accomplished this in an increasingly challenging environment. We reported net income of nearly ARS 560 million in the quarter, compared to a net loss of ARS 550 million in first quarter 2022. The main drivers behind this year-on-year improved performance include, first, a 12% decline in personal expenses or nearly ARS 2 billion, reflecting cost savings obtained from the successful implementation of our right sizing and operating efficiency initiatives, as we have been discussing over the past quarters. Second, loan loss provisions declined nearly 26% or over ARS 800 million as a result of declines in both the balance and in early delinquency of the consumer finance portfolio. Third, a 2% decline in administrative expenses or close to ARS 200 million, reflecting cost savings achieved in the quarter. Four, net fee income was up 1% or slightly over ARS 80 million, resulting from higher fees from our brokerage business along with lower commissions paid. These contributions to profitability were partially offset by turnover taxes, which have a higher weight as interest rates increase. Turning to slide seven. Total assets and liabilities increased below inflation and industry growth as we took advantage of our flexibility in managing assets and liabilities in increasingly volatile context to maximize NIM. On the asset front, the quarter-end balance of securities issued by the Central Bank declined to 31% of total assets from nearly 36% in the prior quarter. While government securities increased their share of total assets to nearly 11%, this returned to 4Q 2022 levels by April. Additionally, annual and quarterly inflation of 104% and yearly 22% respectively, negatively impacted loan demand. On the deposits front, institutional funding declined sequentially, reflecting asset and liability management. While lower side deposits from corporates and individuals were seasonally lower, compounded by customers' behavior in highly inflationary environments. Moving on to slide eight. The growth of our loan portfolio trailed behind inflation, reflecting focus on profitability along with weak credit demand following the highs in nominal interest rates. Also recall that 1st quarter loans are seasonally lower. As a result, our loan book declined nearly 13% sequentially compared to a low single-digit decline at industry level. In the current context, we have implemented a stricter credit scoring. We are prioritizing cross-selling of our existing client portfolio, particularly in insurance, investment products, and personal loans to payroll customers. On the corporate front, we are focused on lending and transactional services to our key target segments that include SMEs and middle-market companies. We will remain very active in providing SMEs with access to the local capital markets, where we hold a leading position as coordinators and placement agents of bonds in these market segments. Moving on to page nine. The total NPL ratio increased 60 basis points sequentially to 4.1%. Nearly 70% of this increase resulted from the decline in real terms of the loan portfolio. The remaining 30% was driven by higher 90-day delinquency levels in both open market and former consumer finance customers impacted by high inflation. We have been consistently tightening our underwriting policies in this customer segment to protect asset quality. By April, the NPL ratio had declined to 3.9%. Net loan loss provisions were 34% lower sequentially, reflecting declines in early delinquency and in the balance of the consumer finance portfolio. Net cost of risk, in turn, declined 140 basis points to 3.8%. Year-on-year, net loan loss provisions were down 26% with a stable cost of risk. As shown on the chart on the right, consumer finance loan loss provisions declined 75% and accounted for 16% of total provisions, down from 43% in the prior quarter. Note also that consumer finance gross loan book declined 27% in real terms. Turning to slide 11. Net financial income for the quarter was relatively stable at ARS 32 billion. Net interest margin of 21.9% increased 30 basis points sequentially and 270 basis points year-over-year. Higher returns in our investment portfolio, driven by interest rate hikes introduced in the first quarter of last year following increasing inflation, more than offset lower loan portfolio yield. Please turn to page 12. Our efforts to right-size operations and drive higher operating leverage implemented since 2Q22 to regain profitability contributed to improved efficiency this quarter. We are encouraged with the 230 basis point year-over-year decline in the efficiency ratio. Total expenses decreased 8% and personal costs 12%, while revenues were stable with a minor decrease of 0.7%. Moving on to capitalization. As shown on slide 13, we ended the quarter with a Tier I ratio of 14.7%. Compared to year-end 2022, our Tier I ratio expanded 170 basis points, mainly explained by the inflation adjustment of capital, while risk-weighted assets increased below the 22% inflation in the quarter. The bank's net result also contributed to the higher Tier I ratio. Before opening for Q&A, please turn to slide 14 to review our perspectives for the full year 2023. Considering that the market consensus for the yearly inflation has risen to close 130%, a notable increase from earlier forecast of 100%, and with predictions of GDP decreasing by 3.1% instead of remaining steady, as reported in this month's Central Bank survey, we have revised our perspective on the following line items. We now see peso loans growing below inflation, while before we anticipated loans to grow in line or slightly below inflation. Likewise, we now expect peso deposits to also grow below inflation, while before we saw peso deposits increasing in line with inflation. With respect to asset quality, as noted in our prior earnings call, the higher delinquency rate in retail customers that we have observed since year-end have continued. With chief inflation eroding low, lower income individuals disposable income, in particular our former IUDÚ customer base, and impacting loan demand, we now anticipate net cost of risk for 2023 increasing by up to 1 percentage point from 2022 levels versus expectations of maintaining steady levels year-over-year. Also note that in 2022, we recorded some extraordinary loan recoveries from corporates, which are not expected to repeat this year. Additionally, we now expect the NPL ratio at year-end to range between 4 Q 2022 and 1st Q 2023 levels, while before we anticipated to close the year with NPL in line with year-end 2022 levels. By contrast, the higher interest rate environment, we now anticipate NIM above 2022 levels, above our prior expectation of a stable NIM year-over-year. We are also increasing our Tier I ratio to range between 13%-14% by year end from 12.5% and 13.5% before. As a reminder, 100% of our capital remains hedged against inflation. Beyond these changes, our 2023 expectations for all other metrics remain unchanged from our prior quarter views. Lastly, while we maintain our views of delivering positive ROE, there's greater uncertainty on the macro political and regulatory front. We are ready to open the floor for questions. Ana, please go ahead. Thank you, Mariano. At this time we will be conducting the question and answer session. As a reminder, to ask a question you need to be connected to the Zoom platform. To ask a question, please press the Raise Your Hand button and press it again to withdraw. You can also send your questions in written form via the Q&A box. We will ask you to limit yourself to one question and a follow-up, and then you can raise your hand again for another round. One moment while we wait for questions. The first questions come from Ernesto Gabilondo at Bank of America. Thank you, Ana. Good morning, everyone. Good morning, Patricio, Mariano, and to all your team. Congrats that your earnings have reached an inflection point, so good. I just have a couple of questions. The first one is on your ROE. We saw it was 2% in real terms in the quarter. How should we think about the ROE for the year, considering this complex macro outlook? The second one is on your effective tax rate. I think it was kind of high during the quarter. Can you elaborate what was the reason behind it, and how should we expect the effective tax rate for the full year? Thank you. Thank you. Mariano, can you? Yes. Sorry, Patricio. Hello, Ernesto. Thank you for your questions. First, regarding ROE, as you said, we achieved 2% positive ROE in real terms for the quarter. For the rest of the year or for the complete year, we are maintaining our expectations of achieving a positive ROE, as we projected in prior quarters. These projections are based mainly in cost reductions derived from the IUDÚ business merging with the bank, also with the transfer of the Salvis financial agency agreement to Banco Nación, which allowed us to reduce costs mainly of branches and personnel. Third, the rest of the efficiencies achieved during last year. Those things were in place, they were executed in 2022, and now we are seeing the results. They allow us to think that we will achieve also the positive ROE for the year. Having said that, as we commented during the presentation, the macro front have worsened significantly. I would say that now, after one quarter of the year, we have more uncertainties than we had three months ago. Why? Because inflation has risen to 22% in the quarter. For the whole year, the last economic consensus of the survey from the Central Bank reached 126%, and that was before the data of April. Most probably those projections are being revised upwards. This is much higher than the 100% inflation we had in our projection. Also the GDP, we now believe that it will be decreasing probably more than 3%. That will also have a toll on economic activity and we will be also monitoring credit risk, particularly on the individual side. All these factors considered, we think there's a greater uncertainty. We are still positive for the ROE for the year, but always a contingent on this factor, particularly the macro and the regulatory front. Regarding the effective tax rates, according to IFRS, we need to record in the income tax line item, the impact of inflation on certain tax credits. That's part of the result of the monetary position that is recorded in the income tax line item. That create a larger charge and a higher effective tax rate. If we adjust by that's about ARS 700 million for the quarter. If we adjust that and reduce the profit before taxes and reduce the income tax charges, that would give us an effective tax rate of approximately 40%, which is still a bit higher from 35%, the difference clearly shortens. There are still some differences because there are some permanent difference regarding non-deductible costs for the income tax return. All these difference also when the result is low, have a greater impact, and they produce a higher distortion. That's why you see such high effective tax rate. Thank you, Mariano. Just to follow up in these two ones. In the ROE, you mentioned we should expect positive earnings, positive ROE in the next quarters. I don't know if we can expect like something around mid-single digit ROE for the full year. In your second one, if we normalize the effects, the tax rate should be around 40%. Am I right on those ideas? Well, for the first one, it's still hard to predict. I would probably be more conservative and say in the low single digits, maybe similar to what we see in the first quarter. There are still many moving parts because remember that with so much higher inflation and higher interest rates, that is positive for our margins, higher inflation can be negative for our costs and also can be negative for loan loss provisions. These effects may offset each other, we still have to see which impact is higher, is it positive for margins or the negative on the cost side. I would say an ROE in the low single digits with all these factors to be considered. Regarding the effective tax rate, for the, i t would be 40% if we wouldn't make this adjustment required by IFRS, which is, an adjustment only for the, for the presentation of the income statements, but we will still have to do it. If the ROE is closer to zero, the distortion that this adjustment produces is higher. Maybe you will still see a high, effective income tax rate. I don't know if I was clear. Oh, yes. Super helpful. Thank you very much. You're welcome. Thank you, Ernesto. Our next question comes from Rodrigo Nistor from Latin Securities. Hi. Good morning, everyone. Hi. Appreciate the opportunity to ask questions. First, I would like to address the topic of inflation and interest rates. I mean, in the current economic climate, it seems that interest rates adjustments alone may not be sufficient to control inflation. Given this, how do you anticipate interest rates to evolve in the short term? Is there a possibility that we might experience more negative real rates if inflation continues to escalate? What's your funding strategy allocation given this, given your view on interest rates? Thank you. Well, we expect, I mean, as we have seen already in the past quarters, there has been increases in interest rates and we continue to see this looking forward when there is a mark of inflation and increase in interest rate. The view is that we have this sensation that the Central Bank is behind the curve and it's not. We're not seeing, let's say, rates that anticipate expected inflation. In this sense, this is what we see. Anyway, the way we are basically, the way we structure our assets and liabilities, we have... Every time there is a hike in interest rates, it is positive for our financial margins. I don't know if you want to add something, Mariano, on the-. Yes. As Patricio mentioned, inflation continues to go up, probably, interest rates will follow behind, but without going. To an important, positive feel, because inflation is always the interest rates follow a lag inflation and not anticipate it. That's what we are expecting. Although it is positive for our financial margins, we would expect that the monthly inflation would not go much higher than what we have seen in April and what is expected for May. Okay. Thank you. If a follow-up, if I may, and maybe looking further into the future. Argentina will be welcoming a new government and also a new Central Bank administration next year. Could you share your thoughts on what potential policy changes you anticipate or you think, and how you are preparing your the bank for this new environment in 2024? Thank you. Well, first let's start with the situation today. Today, as of today, Argentina is facing the worst drought we have seen in terms of and with a big drop in or shortfall in revenues for the Central Bank. With very low reserves and severe limitations implemented to restrict imports and affecting the economic activity, there is a sense of fatigue in the sense that there seems to be a political consensus for that next government needs to make broad changes in monetary fiscal policies, but also on other fronts, such as maybe labor reforms. So it would be like a shock therapy probably. Having said that, next government, we believe that the regulatory changes will come. They will have a positive impact, of course, in the banking industry because we've been suffering some punitive regulations that affected our profitability, particularly caps on interest rates, drops on interest rates for time deposits, certain regulations on commissions. At the same time, all these positive regulatory changes, we believe that they will come synchronized with the implementation of the monetary and fiscal policies. Probably regarding the FX, we don't believe at this stage that it will be feasible and complete deregulation from day one. It might take time to do this FX deregulation, it will come gradually. That is as our thought at this point. We expect that for us, it will, anyway, I mean, it is positive because what we need, the financial industry in Argentina is completely transactional and is suffering because of high inflation, because basically, savings, they go away to protect against the erosion of purchasing power. With low inflation, there is a huge potential for the financial industry. Today with the loans are 7% of GDP. Of course, this will depend, and we hope that it will depend on a swift implementation of the normalization of fiscal and monetary policies. We expect that still 2024 will be a relatively difficult year, sort of a transition year, where all this will be implemented and maybe with a pickup of loans in the second part of the year. I don't know if I answered your question. Yeah. That was really helpful and insightful too. Thank you. Thank you, Rodrigo. Our next question comes from Yuri Fernandes at J.P. Morgan. Hello, everybody, and congrats for the first profits in a while. I have a question regarding the valuation and your FX exposure. We saw you increase a lot your global net position on that. My question is, if there is a big devaluation on the offshore FX, what is the moving parts? How this affect you, the bank? I have a second question regarding deposits, especially on transactional deposits, on demand deposits and savings. We are seeing, you know, a big decrease quarter-over-quarter, and we also saw that when other banks reported in Argentina. Higher rates, high inflation, maybe, you know, investors are getting more smarter on deposits. Is this only a rate thing or, you know, are the banks losing market share to wallets in Argentina, like Naranja X, you know, like all those guys maybe as they are paying for deposits, are you know, losing market share or is just people in Argentina using less, you know, banks to keep deposits? Thank you. Please, Mariano, can you answer the first part of the question? Yes. Hello, Yuri. Thank you for your question. Regarding devaluation, if the devaluation, if a hike in devaluation were to happen in real terms, that is, devaluation much higher than inflation for the period, we can be long in U.S. dollars up to 5% of our Tier I, of our capital at the bank, through dollar-linked instruments or NDFs. On top of that, we also can have, we do have a position in UL bonds from the government. These bonds pay the higher of inflation or devaluation. Right now, we are accruing inflation, which is at very high levels. Devaluation is going behind. Although the government is accelerating the crawling peg, it's going behind inflation. If the devaluation were to happen, those bonds would pay the devaluation rate. That's how. We are, as we have already mentioned, we are 100 hedged against inflation, but also we have a small long position in U.S. dollars, which can be also larger if we account for these UL bonds. The first impact would be again, mainly on this long position in foreign currency, accounting for the UL bonds. Most probably, a devaluation would translate into higher inflation. Also there, we would increase our margins to offset the higher inflation. That would translate in the short term or the middle term into higher costs. That's what I would expect to be the moving parts. Regarding our loan portfolio right now, the weight of the foreign currency, the loan portfolio denominated in foreign currency is much lower than several years ago, so it has a very low weight. The risk-weighted assets would increase because of the devaluation, because we measure them in pesos translated to the official exchange rate. The impact on the risk-weighted assets would be limited. I would say probably the gain on the long position in U.S. dollars would more than offset that increase in risk-weighted assets when we look at the Tier I ratio. Regarding deposits, as we mentioned during the presentation, we have this flexibility in our balance sheet to increase or decrease deposits and in turn increase or decrease positions, mainly in central bank instruments. What we've seen during this first quarter is a decrease mainly in the deposits. We applied to repos with the Central Bank or the lease, which is something we manage according to the opportunities we see. You may see these deposits increasing or decreasing quarter-over-quarter. Also as you said, with higher inflation, individuals and companies try to reduce as much as they can their balances in savings accounts or current accounts to be less impacted by inflation. They go to mainly money market funds or time deposits with other minimum interest rates. That's what we are seeing, that the balances of savings accounts and current accounts, they don't grow at the same pace of inflation. In turn, we can see or we could see higher growth in time deposits. At the same time, we don't want to grow that much on deposits with a minimum interest rate because we don't have any spread, with particularly with the individuals deposits, which have the higher minimum interest rate. And we pay taxes on that. That's why we are not growing in real terms. Of course, we are growing in nominal terms, but not at the pace of 22% inflation in this quarter. Yes. Adding to that, what Mariano said, you mentioned on the competitive situation for deposits. I think it's interesting to mention that with high inflation, there is an erosion of purchasing power in the Argentine currency. Many individuals, they have. What they do to basically to preserve their purchasing power, they make transfers from banks to certain fintech, particularly to Mercado Pago. Because it's, it compensates for inflation for in money markets. This is a pattern that we have seen. we have decided, and in fact, we have implemented a very interesting tool for customers not to do that and to maintain their money with us. Basically, we have implemented as of a few weeks ago, a way, basically a money market investment that they can invest 24 hours a day, five days a week and keep and they, you know, make the investments and take them out instantly. This will be seven days a week in a few weeks time and for 24 hours a day. The same standards that Mercado Pago. We believe that this is a competitive reaction, very strong from our part. We are the first bank, by the way, to do this, we are very happy with that. No, thank you, Patricio, Mariano. That was very clear. Thank you, Yuri. Ladies and gentlemen, we have reached the end of today's Q&A session. Thank you for joining us today. We appreciate your interest in our company. We look forward to meeting more of you over the coming months and providing financial and business updates next quarter. In the interim, we'll remain available to answer any questions that you may have. Thank you, and have a good day.