Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's Q4 2020 earnings conference call. We would like to inform you that the Q4 2020 press release is available for download at the investor relations website of Banco Macro, www.macro.com.ar/relaciones-inversores/. This event is being recorded, and all participants will be in a listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star and zero to signal the operator. It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer, Mr. Jorge Scarinci, Chief Financial Officer, and Mr. Nicolás Torres, IR. Now, I will turn the conference over to Mr. Nicolás Torres. You may begin your conference. Good morning and welcome to Banco Macro's Q4 2020 conference call. Any comments we may make today may include forward-looking statements distributed yesterday, and it is also available at our website. All figures are in Argentine pesos and have been restated in terms of the measuring unit current at the end of the reporting period. As of Q1 of 2020, the bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29, as established by the Central Bank of Argentina. For ease of comparison, figures of previous quarters have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through December 31st, 2020. I will now briefly comment on the bank's Q4 2020 financial results. Banco Macro's net income for the quarter was ARS 6.9 billion, 2% higher than in Q3 of 2020 and 11% lower than the result posted a year ago. The bank's Q4 2020 accumulated ROE and ROA of 20.9% and 4.3%, respectively, remain healthy and show the bank's earnings potential. In fiscal year 2020, total comprehensive income totaled ARS 25.3 billion, 5% lower than the result posted in fiscal year 2019. Net operating income before general and administrative and personnel expenses for Q4 of 2020 was ARS 17.4 billion, decreasing 20% or ARS 4.4 billion quarter-on-quarter, and 55% or ARS 21.6 billion lower than a year ago. In fiscal year 2020, net operating income before general and administrative and personnel expenses totaled ARS 95.2 billion, 12% lower than the previous year. Operating income after general and administrative expenses was ARS 523 million, 89% or ARS 4.4 billion lower than in Q3 of 2020, and 97% lower than in Q4 of 2019. In the quarter, net interest income totaled ARS 21.7 billion, 8% or ARS 1.8 billion lower than the result posted in Q3 of 2020, and 32% or ARS 10.5 billion lower than the result posted one year ago. In fiscal year 2020, net interest income was 19% lower than in fiscal year 2019 as a result of different regulations adopted by the central bank that set caps on lending rates and floors on deposit rates. In Q4 of 2020, interest income totaled ARS 41.6 billion, 2% or ARS 651 million higher than in Q3 of 2020 due to higher income from government securities, and 11% or ARS 5 billion lower than in the previous year. Within interest income, interest on loans decreased 1% or ARS 164 million quarter-on-quarter. Interest income decreased 38% or ARS 11.8 billion year-on-year. In Q4 of 2020, interest on loans represented 47% of total interest income. In fiscal year 2020, interest on loans totaled ARS 85.6 billion and decreased 23% compared to fiscal year 2019. Net income from government and private securities increased 4% or ARS 680 million quarter-on-quarter due to higher income from government securities. Compared to Q4 of 2019, net income from government and private securities decreased 38% or ARS 5.4 billion. In Q4 of 2020, FX gains, including investments in derivative financing, totaled ARS 1.2 billion, an increase compared to the Q3 of 2020 due to the 10% Argentine peso depreciation against the US dollar and the bank's long spot dollar position. In Q4 of 2020, interest expense totaled ARS 19.8 billion, 14% or ARS 2.4 billion higher compared to Q3 of 2020, and 38% or ARS 5.4 billion higher on a yearly basis. Within interest expense, interest on deposits increased 14% or ARS 2.4 billion quarter-over-quarter, mainly driven by a 320 basis points increase in the average interest rate paid on deposits. The average BADLAR rate increased 452 basis points quarter-over-quarter. On a yearly basis, interest on deposits increased 40% or ARS 5.4 billion. In Q4 of 2020, interest on deposits represented 94% of the bank's financial expenses. In Q4 of 2020, the bank's net interest margin, including effects, was 16.3%, lower than the 17.1% posted in Q3 of 2020 and the 33.6% registered in Q4 of 2019. In Q4 of 2020, net fee income totaled ARS 5.7 billion, 4% or ARS 209 million lower than in Q3 of 2020. On a yearly basis, net fee income decreased 3% or ARS 170 million. In fiscal year 2020, net fee income was 7% lower than in the previous year. In Q4 of 2020, net income from financial assets and liabilities at fair value to profit or loss totaled ARS 10.7 billion loss as a consequence of the inflation adjustment applied to our LELIQ holdings. Higher inflation was observed in the quarter, together with higher LELIQ volume. In the quarter, other operating income totaled ARS 1.4 billion, increasing 6% compared to Q3 of 2020. On a yearly basis, other operating income decreased 9% or ARS 115 million. In Q4 of 2020, Banco Macro's personal administrative expenses totaled ARS 10.8 billion, 1% or ARS 67 million higher than the previous quarter due to higher administrative expenses. On a yearly basis, personnel and administrative expenses decreased 8% or ARS 968 million. In fiscal year 2020, administrative expenses plus employees benefits decreased 11% compared to fiscal year 2019, showing the strict cost control policies adopted by the bank's senior management. In Q4 of 2020, the efficiency ratio reached 50.7%, deteriorating from the 49.9% posted in Q3 of 2020. In the quarter, expenses increased 1%, while net interest income plus net fee income plus other operating income decreased 16%. In fiscal year 2020, Banco Macro's effective tax rate was 28.8%, lower than the 39.1% registered during the fiscal year 2019. In terms of loan growth, the bank's financing to the private sector totaled ARS 252.5 billion, decreasing 2% or ARS 6.1 billion quarter-on-quarter, and 12% or ARS 31.9 billion lower year-on-year as a consequence of the economic recession that affected Argentina during 2020. Within commercial loans, documents stand out with a 10% or ARS 2.4 billion increase quarter-on-quarter, mostly due to loans extended to SMEs. Meanwhile, other decreased 20% or ARS 9.7 billion. On the consumer side, credit card loans increased 9% or ARS 5.3 billion in the quarter. Within private sector financing, peso financing decreased 1% or ARS 3.4 billion, while U.S. dollar financing decreased 19% or $64 million. It is important to mention that Banco Macro's market share over private sector loans as of December 2020 reached 7.1%. On the funding side, total deposits decreased 11% or ARS 59.8 billion quarter-on-quarter and increased ARS 138.6 billion year-on-year. Private sector deposits decreased 4% quarter-on-quarter, while public sector deposits decreased 37% quarter-on-quarter. The decrease in private sector deposits was led by term deposits, which decreased 8% or ARS 18.8 billion quarter-on-quarter, while demand deposits increased 2% or ARS 4.2 billion. Within private sector deposits, peso deposits decreased 1% or ARS 3.9 billion, while U.S. dollar deposits decreased 22% or $249 million. As of December 2020, Banco Macro's transactional accounts represented approximately 48% of total deposits. Banco Macro's market share over private deposits as of December 2020 totaled 6.4%. In terms of asset quality, Banco Macro's non-performing total financial ratio reached 0.78%. The coverage ratio, measured as total allowances under expected credit losses over non-performing loans under central bank rules, improved significantly and totaled 479.2%. Consumer portfolio non-performing loans improved 23 basis points, down to 0.73% from 0.96% in the previous quarter. While commercial portfolio non-performing loans improved 65 basis points in the fourth quarter of 2020, down to 0.9% from 1.55% in the quarter ago. The improvement in commercial non-performing loans can be traced to the write-off of a specific agro export client. Asset quality continues to be positively affected by recent measures adopted by the Central Bank of Argentina in the current pandemic COVID-19 context, particularly the 60-day grace period that was added to debtor classification before a loan is considered as non-performing. In terms of capitalization, Banco Macro has accounted an excess capital of ARS 132.1 billion, which represented a total regulatory capital ratio of 34.2% and a Tier 1 ratio of 27.1%. It should be noted that on October 21st, 2020, the special shareholders meeting decided on a supplementary dividend of up to ARS 3.8 billion. The supplementary dividend is calculated by multiplying the ARS 20 per share dividend already declared and approved by the shareholders meeting held in April 2020 by the variation in the consumer price index between April and the date in which the Central Bank's approval is granted. The ARS 3.8 billion from the supplementary dividend were deducted from the shareholders' equity in the fourth quarter of 2020. The bank's aim is to make the best use of this excess capital. The bank's liquidity remains more than appropriate. Liquid assets to total deposit ratios reached 90%. Overall, we have accounted for another positive quarter. We continue showing a solid financial position. Asset quality remain under control and closely monitored. We keep on working to improve more our efficiency standards. We keep a well-optimized deposit base. At this time, we would like to take the questions you may have. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question will come from Ernesto Gabilondo with Bank of America. Please go ahead. Hi. Good morning, Jorge and Nicolás. Thanks for the opportunity. My question is on your expectations for the payment behavior of the deferred portfolio once clients have finished their grace period. Also, can you share with us what is the percentage of your portfolio that is under a grace period or that is deferred? What was the amount of additional provisions related to COVID-19 that were billed during 2020? I think also in the presentation, you were also mentioning that in the fourth quarter, you start to create provisions, but more related to corporates. If you can separate how much are related to COVID, how much are related to those corporates, and how do you think you have already created provisions for the expected NPL peak, in Q2? Thank you. Ernesto, good morning. This is Jorge Scarinci. How are you? Thanks for your questions. In terms of the portfolio that we have under this 60-day grace period, it's approximately 13.5% of total loans. In ARS, it's approximately ARS 34 billion. We can split that between approximately ARS 2.1 billion in corporates, individuals, approximately ARS 32 billion. I would say that almost ARS 25 billion would be in loans and about ARS 7 billion in credit card loans. In terms of the additional provisions that we posted in 2020 related to the COVID-19 are ARS 3.1 billion, including corporates and individuals. Is that okay? Yes. Thank you, Jorge. On the ARS 34 billion that is under a grace period, how are your expectations after the clients finish this grace period? Do you know how much of this will be paying or could be delayed? Just to have an idea if the provisions created related to COVID-19 are enough for this year. Ernesto, I would say that this 60-day period grace could be maybe extended by the Central Bank, this will depend on the economic activity, the pickup on the economy. I would say that the Central Bank is trying to maintain the great quality health of the system. This could be extended. Honestly, we don't know if this is going to happen and how long is going to be, or the extension of this regulation. I have to say that, meanwhile, we are going to maintain the level of provisioning. We are forecasting for 2021 between two and a half and 3% the cost of risk to our books. We are forecasting for 2021, recovering the economy in the area of 7% in real terms. The consensus for inflation for 2021 is 44%. For the moment, we think that this 60 days is going to be extended because we might see some positive recovery figures for the economy starting by late of Q2 of 2021. That is what the market is expecting. Okay, perfect. Thank you. Just let me make another question in terms of NIMs. What are you expecting on NIMs, considering the subsidies on loans and the caps on credit cards and the flows on deposits? How should we think of NIMs this year? That's a good question, Ernesto. Honestly, what we saw in the past in 2020 was a narrowing of our margin along the industry. We think that at least first and second quarter, might be third quarter, we are going to keep on seeing this level of NIM. We are not expecting an expansion on the NIM. We think that the mix between the increasing lending, and increasing deposits, we are not seeing a big variation in rates and volumes in order to affect the NIM here. I would assume for 2021, a NIM between what we saw in the third quarter and the fourth quarter, kind of an average of that. We could see something happen by the end of the year. Honestly, it is not easy to forecast that, our forecast is approximately an average between Q3 and Q4 of 2020. Okay, perfect. Very helpful. Thank you very much. You are welcome, Alberto. The next question will come from Juan Recalde with Scotiabank. Please go ahead. Hi, good morning, Gustavo, Jorge, Nicolás. Thank you for taking my question. I have two questions, one related to the ROE outlook and the second one related to the OCI. In terms of the ROE outlook for 2021, you mentioned that you expect inflation to be around 44%, that's higher than inflation in 2020. How should we think about the ROE for 2021? What's your base case for ROE in 2021? The second question is related to the OCI. We saw a sizable negative comprehensive income of around ARS 3 million, I think, in the fourth quarter. Can you talk a little bit about what drove that and whether we should expect these losses to reverse in the future? Hi, Juan. How are you? Related to your first question, the ROE that we are expecting, with the scenario that I described before, is in real terms between 10% and 15% for 2021. Again, we do not calculate inflation. We always take the consensus of the market that for the moment is 44% for 2021. A recovery in the GDP, as I mentioned before, in the area of 7%. Loans and deposits growing slightly above the inflation, would assume between 5% and 10% increase in both loans and deposits above inflation. That is how we are reaching the 10%-15% ROE for 2021. In terms of your second question, there was a change in the accounting on public bonds, on sovereign bonds, that we did in Q4. That was the impact on the OCI in the negative. Going forward, I would say in 2021, we are going to see a much, I would say, tidy income statement because there was a regulation that was put up by the central bank in order to put all the inflation affecting not only the LELIQs, but also the public bonds to put that above the net income line. We are going to see a much tidy or tidier income statement in 2021 compared to the one that we saw in 2020. Okay, got it. Thank you. You're welcome. The next question will be from Gabriel Nóbrega with Citi. Please go ahead. Hi, everyone. Good afternoon, and thank you for the opportunity to ask questions. Actually, just coming back to this part of profitability, it really called our attention here that you reached a real ROE of almost 20% on top of the very high capital base, and now you are saying that this is going to compress to around 10%-15%, mainly because of the pressures which were seen on provisions and also because NIMs are going to be sort of flattish. I was just wondering, are there any other strategies which you could maybe implement, be it on the P&L or maybe a faster capital deployment, which could even provide some upside to these ROE figures? I'll make a second question afterwards. Thank you. Hi, Gabriel. How are you? No. Honestly, what we are seeing is, first of all, a higher inflation scenario. What we are seeing is that, as I mentioned before, the margin is going to remain, at least the first three quarters of the year, similar level than the one that we saw in Q4. In Q4, at the beginning of Q4, we continue having some extra net interest margin, I would say, that were measures that were passed by middle, beginning of Q4. No, I would assume that taking into consideration that the conservative scenario and of course, the struggle that we are going to carry out in terms of expenses, trying to maintain expenses similar or below inflation levels. That's why that we are forecasting between 10% and 15% real return. In terms of the capital that we are going to deploy, as we have been showing in the past, we try to deploy the capital in those assets that develops or brings the best risk return rate for the bank. We are forecasting, again, a recovery starting by late Q2 of the year. Basically, those are the assumptions that we have in order to read these ROE expectations. Okay, that's very clear. As per my second question, could you maybe just elaborate on what happened with your effective tax rates? When we look here in the quarter, in my estimates, it was around 8%, but in the other quarters, it was between 30%-35%. If you could just maybe give us a bit more color on what happened here. Thank you. Basically, the statutory rate here on the income statement is 30%. The thing here is that we made the adjustments on inflation to the income tax in Q4. That's why we are showing a lower effective income tax rate. That was an accounting issue, basically that. If you have to forecast going forward, consider the 30% rate. All right, perfect. Thank you very much. You're welcome, Nobrega. The next question is from Alonso Garcia with Credit Suisse. Please go ahead. Good morning, everyone. Thank you for taking my question. I wanted to check with you, regarding the asset quality question, you mentioned that 13.5% of your total loans were under this additional 60-day period grace that the Central Bank is granting for calculating NPLs. Basically taking the 90 days to 150 days. Wanted to check if, besides that, if there is any portion of your portfolio that is currently still under payment holidays as the ones that you had back in April last year. Also regarding asset quality, if you could mention when do you expect the NPL ratio to peak, at which level, and from current levels, if you expect the commercial or the retail segment to drive that deterioration. Thank you. Hi, Alonso. How are you? Loans in category three to five, all of the ones that are being, including the 60-day period, are included in those categories between three to five. They're included there. On the question on the recovery on loans, basically what we are seeing is some recovery on the corporate side, on export-oriented industries and agribusiness. We can see some recovery or pickup in construction compared to last year. In terms of individual, some recovery also in consumption in personal loans. Again, that is going to happen second quarter afterwards. Thank you. In terms of the NPL ratio, do you expect it to peak? I know it will depend on central bank's regulation, but what is your best case on when the NPL ratio will peak, and what level do you expect to be that peak, and what segment are you most concerned about in terms of asset quality? If it's the retail portfolio or is it the commercial portfolio at this point? Thank you. Yes, it will depend on the extension on this regulation of the 60-day grace period. Depending on that, we could see a deterioration on the NPL ratio, maybe level of between two, 2.5 could be. Honestly, it's hard to say when that could be happening because it will depend on the extension on this rule. Now, basically, I would say that, well, last year was a disaster for the world. For Argentina, I think that was a very bad year because apart from the COVID-19, we have some internal issues going on, and therefore the recession was maybe deeper than expected and deeper than in other countries. What we saw, and we are still seeing some consumers having problems for payment, basically because some layoffs happened in Argentina, and of course, the economic activity collapsed for every company. Also some on the range of SMEs on the corporates, that depending on the industry, they are showing still problems to recover. Again, if the scenario is what the system is expecting or the consensus is expecting, that from second quarter onwards, we are going to see a recovery there. We could see some healthier behaviors of SMEs and consumers going forward. Great. Thank you. You're welcome. Again, if you have a question, please press star then one. The next question will come from Carlos Gomez-Lopez with HSBC. Please go ahead. Hi, good afternoon. Could you reiterate the comment about the tax rate? We have seen them higher for most of your competitors, but lower in your case, so I wanted to understand the discrepancy, and also if you continue to see a 30% tax rate on inflation-adjusted results for the coming one or two years. Regarding profitability, so you are targeting 10%-15% in real ROE for next year. What could change that more? Is it more growth or the elimination of regulations or lower inflation? Hi, Carlos, how are you? As I commented before, it's basically an accounting issue that we made all the adjustments on inflation to this line in Q4. Going forward, as I mentioned before, you can use the 30% rate in order to forecast our P&L. In terms of, yes, we could see that this 10%-15% ROE expectations is based on what I commented before, a 44% inflation as a consensus for the system here in Argentina. I would say that, yes, if we see low inflation, we are going to be above the 15% for sure in terms of return. If there is a recovery higher than the one that we are expecting, the impact could be, of course, positive, but less than the impact of a lower inflation in Argentina. Our P&L is more sensitive to inflation than a recovery, considering that the current interest rates on loans and deposits. Okay, that's clear. If I can follow up, you also mentioned that interest rates look to be stable through the third quarter. That seems to imply that you think that by the end of the year, we might see some type of adjustment in macroeconomic policy. It's very hard, but what are you envisioning, and how are you preparing yourself? When you look at what's going on in the financial sector, all the economic books will advise you to increase interest rates and to maybe increase more the lending or asset rates than the borrowing rates. However, we're in Argentina, and of course, we challenge all the economic books. Also considering that we have midterm elections in October, I would assume that the central bank will try not to increase interest rates in order not to affect the recovery of the economy, and that could be affecting a potential good record in the election for the official party. That's what we are forecasting. Thank you very much, Jorge. You are welcome, Carlos. The next question comes from Nick Dimitrov with Morgan Stanley Investment Management. Please go ahead. Hi there. Good morning. Just a quick question regarding your plans about the subordinated debt that you have that is callable in November this year. When I look at your capital ratios, you clearly don't need a subordinated debt. Nonetheless, it's dollar-denominated, so you need the dollars. I think the market is pretty clear in terms of its expectations, what you're going to do with the bond, but I was just curious to hear your thoughts. Thank you. Hi, Nick. How are you? According to the level of today interest rates, if we not or would not call the bond, the bond would transform from the six and three quarters fixed rate into a variable step-down interest rate. Honestly, we are considering different scenarios. What is also pretty clear is that even the interest rate that bond could have, in this scenario, which is lower than the six and three quarters, it is also true that for the moment, we cannot apply those funds to an attractive asset. We are considering different scenarios for this bond. Again, the call date for this bond is the 5th of November of this year, so we still have some months Right ...to see what's happening in the interest rates and also on maybe some potential demand on dollar-denominated loans that could be a good alternative for allocation of those funds. For the moment, we are not seeing that demand for dollar-denominated loans. Right. You mentioned different scenarios. Can you share your thoughts regarding what those scenarios could be? One is calling the bond that day. Yeah. The other one is not calling the bond. Another one could be after the call date to buy back the bond partially. Yep. It will depends on market condition, on interest rates, on the economic activity in Argentina. I would like to have your view on central bank policies that are affecting banks' profitability, like floor rates on deposits, credit lines with negative real rates. Do you expect them to remain in place for a long time? Also, your assumptions take into account the continuity of these policies? A follow-up on that, in this highly regulated context, what's your commercial strategy? Does it make sense to gain market share? Thank you. Hi, Ramiro. For the moment, we are assuming that these regulations are going to be maintained. Of course, depending on the monthly inflation evolution of Argentina, we could see some fine-tuning. Again, we are working with the scenario that the central bank does not want to change a lot its monetary strategy going forward. We are assuming that in a big portion of this 2021, we are going to have to live with these regulations. In terms of the commercial view, you can see what's happening in part of 2020, that we decreased in real terms in our lending portfolio because we were not seeing that being aggressive was a good strategy for the bank and, of course, for the bank profitability. Going forward, we are going to see. If it is profitable for the bank to increase share, we are going for that. If not, we are going to continue as the last two quarter of the year. What we are assuming is that the recovery in the country is going to be a positive incentive for the bank to maybe marginally increase in market share with a positive impact on the P&L. Okay. Thank you. You're welcome. Ladies and gentlemen, there are no further questions at this time. This concludes our question- and- answer session. I would now like to turn the conference back over to Nicolás Torres for final considerations. Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Good day. Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.