Financial Data and Key Metrics Changes - Net income for the second quarter was 13.6 billion pesos, up 62% sequentially, with a return on equity (ROE) of 6% driven by higher net financial income and lower inflation adjustment [11][12] - Clients' net financial income increased by 10%, supported by wider spreads on higher loan volumes, while market-related net financial income grew by 15% quarter on quarter [11][12] - Loan loss provisions rose by 32%, reflecting loan growth and higher risk weighting from retail lending [12][15] Business Line Data and Key Metrics Changes - Total loans increased by 14% sequentially and 71% year on year in real terms, with retail loans up 130% year on year, accounting for 47% of the total loan book [13][14] - Commercial lending grew by 23% quarter on quarter, now representing 53% of the portfolio, reflecting a disciplined credit stance [13][14] - The non-performing loan (NPL) ratio was 2.7%, with retail delinquency at 4.5%, indicating credit normalization [14][15] Market Data and Key Metrics Changes - Total funding increased by 30% year on year and 6% sequentially, with US dollar deposits up 154% year on year, reaching a record high of $943 million [16][17] - The loan to deposit ratio increased to nearly 72%, while leverage stood at 6.5x, well below historical levels [5][16] - Net interest margin expanded by 160 basis points sequentially to 20.8%, supported by strong spreads in both client and market-related portfolios [18][19] Company Strategy and Development Direction - The company is transitioning towards a more credit-driven balance sheet, with loans now accounting for 48% of total assets, up 25 percentage points since December 2023 [5] - The strategic focus includes enhancing client engagement through innovative products and services, such as a remunerated account and an integrated online store [6][7][8] - The company anticipates economic growth and credit expansion to resume post-election, supported by structural reforms [5][20] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment presents near-term headwinds due to election-related uncertainty, tight peso liquidity, and high real interest rates, but remains optimistic about post-election recovery [4][5] - The company expects real loan growth between 40% to 50% in 2025, contingent on monetary policy and regulatory developments [20][21] - Management anticipates net fee income growth of 10% in real terms this year, driven by higher bank fees and improved insurance penetration [21] Other Important Information - The CET1 ratio is expected to close the year between 12% to 13%, with potential upside if regulators approve Basel III operational risk treatment for group two banks [22] - The company is focused on driving efficiencies in headcount and costs, aiming for a contraction in expenses of 5% to 8% [21] Q&A Session Summary Question: On asset quality and cost of risk - Management acknowledged the increase in the NPL ratio but emphasized it remains below historical standards, indicating a healthy credit portfolio [26][27] - The cost of risk is expected to stabilize between 5% to 5.5% for the year, with no anticipated increases beyond this range [31][32] Question: On ROE expectations for next year - Management expects ROE to improve towards year-end, potentially reaching 15% in 2026, contingent on stabilization of monetary policy [34][35] Question: On growth guidance revision - The downward revision is attributed to macroeconomic transitions and funding scarcity, with expectations for recovery post-elections [39][41] Question: On NIM expectations - Management anticipates a balanced contribution from retail and commercial loans to NIM, with adjustments made based on credit conditions [96][97] Question: On interest rate volatility - Management believes the current high interest rates are transitory and will ease after the upcoming elections, impacting the overall economy positively [63][66] Question: On international financial institutions entering the market - There is optimism regarding new players entering the Argentine market, which is seen as a positive signal for business confidence [100][101]