Banco Macro - Q2 2024

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to the Banco Macro's 2Q 2024 Earnings Conference Call. We would like to inform you that the 2Q 2024 press release is available to download at the Investor Relations website of Banco Macro at www.macro.com.ar/relaciones-inversores. Also, this event is being recorded, and all participants will be in 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 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.

Nicolás Torres (Head of Investor Relations)

Thank you, Nick. Good morning, and welcome to Banco Macro's second quarter 2024 conference call. Any comment we may make today may include forward-looking statements which are subject to various conditions, and these are outlined in our 20-F, which was filed to the SEC, and it's available at our website. Second quarter 2024 press release was distributed yesterday, and it's available at our website. Our figures are in Argentine pesos and have been restated in the terms of the measuring unit, current at the end of the reporting period. As 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 June 30, 2024.

I will now briefly comment on the bank's second quarter 2024 financial results. In the six months ended June 30, 2024, Banco Macro's net income totaled ARS 93.1 billion. This result was 55% or ARS 115.9 billion lower than in the six months of 2023. As of the second quarter of 2024, the accumulated annualized return on average equity and accumulated annualized return on average assets were 5.4% and 1.7%, respectively. In the six months ended June 30, 2024, operating income before general, administrative, and personnel expenses totaled ARS 2.38 trillion, 36% or ARS 628.2 billion higher than in the six months of 2023.

Net operating income before general and administrative expenses and personal expenses for the first half of 2024 were ARS 1.59 trillion, increasing 41% or ARS 464.7 billion when compared to the first half of 2023. Banco Macro's second quarter 2024 net income totaled at ARS 233.2 billion pesos loss, which was ARS 559.6 billion lower than the previous quarter and ARS 397.3 billion lower year on year, mainly due to the mark to market of government securities, financial assets at fair value to profit or loss, and lower FX gains registered in the quarter.

It is important to note that if government securities, including financial assets at fair value to profit or loss, namely inflation-adjusted bonds due in 2027, have been valued instead at amortized cost to second quarter 2024, net income would have been ARS 605.5 billion higher. Furthermore, as it is publicly known, Banco Macro recently exercised about half of some of the put options that it held on certain inflation-adjusted securities. Given the current breakdown of our government securities portfolio, the bank estimates the net income could have been around ARS 300 billion higher, had the remaining inflation-adjusted securities been valued at amortized cost. In the second quarter of 2024, provision for loan losses totaled ARS 16.5 billion, 26%, or ARS 5.9 billion lower than in the first quarter of 2024.

On a yearly basis, provision for loan losses decreased 20% or ARS 4 billion. Operating income after general and administrative and personnel expenses were ninety-nine point one billion pesos in the second quarter of 2024, 93% or ARS 1.4 trillion lower than in the first quarter of 2024, and 85% or ARS 544 billion lower than a year ago. In the quarter, net interest income totaled ARS 188 billion, 6% or ARS 12.7 billion lower than in the first quarter of 2024, and 53% or ARS 213.1 billion lower year on year. Interest income decreased 27%, while interest expenses decreased 33%.

In the second quarter of 2024, interest income totaled ARS 619.7 billion, 27% or ARS 229.8 billion lower than in the first quarter of 2024, and 46% or ARS 521.4 billion lower than in the second quarter of 2023. Income from interest on loans and other financing totaled ARS 410.2 billion, 26% or ARS 142.7 billion lower compared with the previous quarter, mainly due to a 25.9 percentage point decrease in the average lending rate, which was partially offset by a 9% increase in the average volume of private sector loans. On a yearly basis, income from interest on loans decreased 10% or ARS 45.2 billion.

In the second quarter of 2024, interest on loans represented 66% of total interest income. In the second quarter of 2024, income from government and private securities increased 40.4%, ARS 4.7 billion quarter on quarter, and decreased 74% or ARS 457.2 billion compared with the same period of last year. In the second quarter of 2024, income from repos totaled ARS 48.7 billion, 73% or ARS 131.4 billion lower than the previous quarter, and 39% or ARS 19.5 billion lower than a year ago.

In the second quarter of 2024, FX income totaled ARS 25.6 billion, 73% or ARS 69.9 billion lower than the previous quarter, and 91% or ARS 256.1 billion lower than a year ago. FX income gain was due to the 6.3% Argentine peso depreciation against the US dollar and the bank's long dollar position during the quarter. It is important to notice that the bank's average long dollar position decreased 59% during the quarter. In the second quarter of 2024, interest expense totaled ARS 431.7 billion, decreasing 33% or ARS 217.1 billion compared to the previous quarter, and 42% or ARS 308.3 billion lower when compared to the second quarter of 2023.

Within interest expense, interest on deposits decreased 33% or ARS 208.8 billion quarter on quarter, due to a 25.4 percentage points decrease in the average rate paid on deposits, while the average volume of deposits from the private sector increased 16%. On a yearly basis, interest on deposits decreased 42% or ARS 304.5 billion. In the second quarter of twenty twenty-four, the bank's net interest margin, including effects, was 19.9%, lower than the 26.2% posted in the first quarter of twenty twenty-four, and the 38.3% posted in the second quarter of twenty twenty-three.

In the second quarter of twenty twenty-four, Banco Macro's net fee income totaled ARS 95.7 billion, 8% or ARS 6.8 billion higher than the first quarter of twenty twenty-four, and was 2% or ARS 2.1 billion lower than the same period of last year. In the second quarter of twenty twenty-four, net income from financial assets and liabilities at fair values of profit or loss totaled one hundred and twenty-one point two billion pesos gain, decreasing 92% or ARS 1.39 trillion in the quarter. This gain was smaller due to the negative mark-to-market of some government securities, basically inflation-adjusted bonds and in an amount of ARS 1.41 trillion.

In the quarter, other operating income totaled ARS 46.2 billion, 7% or ARS 3.3 billion lower than in the first quarter of 2024. On a yearly basis, other operating income increased 62% or ARS 17.8 billion. In the second quarter of 2024, Banco Macro's administrative expenses, plus employee benefits, totaled ARS 203.5 billion, 15% or ARS 35.3 billion lower than the previous quarter, due to lower employee benefits, which decreased 14% and lower administrative expenses, which decreased 17%. On a yearly basis, administrative expenses, plus employee benefits, increased 14% or ARS 25.6 billion.

As of the second quarter of 2024, the accumulated efficiency ratio reached 22.2%, deteriorating from the 14.7% posted in the first quarter of 2024 and the 22.2% posted one year ago. In the second quarter of 2024, expenses decreased 14%, when net interest income plus net fee income plus other operating income decreased 77% compared to the first quarter of 2024. In the second quarter of 2024, the result from the net monetary position totaled ARS 462.7 billion loss, 56% or ARS 591.3 billion lower than the loss posted in the first quarter of 2024, and 14%, ARS 56.1 billion lower than the loss posted a year ago.

This result is a consequence of lower inflation during the quarter. Inflation was 18.6% in the second quarter of 2024, compared to the 51.6% registered in the first quarter of 2024, while the net monetary position remained unchanged. In the second quarter of 2024, given Macro's negative net income for the quarter, no income tax charge was recovered. Further information is provided in note 21 to our financial statements. In terms of loan growth, the bank's total finances reached ARS 3.47 trillion, increasing 17% or ARS 504.1 billion quarter on quarter, and 5% or ARS 154.5 billion higher year on year.

Within commercial loans, documents stand out with a 7% or ARS 43.6 billion increase, when others increased 27% or ARS 158.3 billion. Within consumer lending, personal loans increased 29% or ARS 111.9 billion, while credit card loans increased 11% or ARS 77.8 billion. Peso financing increased 20% or ARS 563.8 billion in the quarter, while US dollar financing increased $2 million. It is important to mention that Banco Macro's market share over private sector loans as of June 2024 reached 9.1%.

On the funding side, total deposits increased 13% or ARS 769.5 billion quarter on quarter, totaling ARS 6.74 trillion, and decreased 5% or ARS 329.3 billion year on year. Private sector deposits increased 11% or ARS 591.5 billion quarter on quarter, while public sector deposits increased 30% or ARS 181.9 billion quarter on quarter.

... The increase in private sector deposits was led by demand deposits, which increased 23% or ARS 581.5 billion pesos, while time deposits decreased 2% or ARS 54.5 billion pesos quarter on quarter. Within private sector deposits, peso deposits increased 17% or ARS 774.6 billion pesos, while US dollar deposits decreased 6% or $97 million. As of June 2024, Banco Macro's transactional accounts represented approximately 52% of total deposits. Banco Macro's market share over private sector deposits as of June 2024 total 8.1%. In terms of asset quality, Banco Macro's non-performing to total financial ratio reached 1.23%. The coverage ratio, measured as total allowances under expected credit losses over non-performing loans under central bank rules, reached 181.4%.

Consumer portfolio non-performing loans deteriorated five basis points, up to 1.52% from 1.47% in the previous quarter, while commercial portfolio non-performing loans deteriorated one basis point in the second quarter of 2024. In terms of capitalization, Banco Macro's accounted a net capital of ARS 2.36 trillion, which represented a capital adequacy ratio of 35.7% and a Tier 1 ratio of 34%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets to total deposit ratio reached 98% in the second quarter of 2024. Overall, we have accounted for a positive first half of 2024. 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, and we keep a well-atomized deposit base. At this time, we would like to take the questions you may have.

Operator (participant)

At this time, we're gonna open it up for questions and answers. If you would like to ask a question, please press star then one on your touchtone phone. To withdraw your question, please press star then two. One moment, please, while we poll for the first question. And our first question today will come from Ernesto Gabilondo with Bank of America. Please go ahead.

Ernesto Gabilondo (Analyst)

Thank you. Hi, good morning, Jorge and Nico. Thanks for the opportunity to ask questions. My first question will be on your loan book and asset quality expectations for this and next year, and then my second question is if you can elaborate a little bit more on the puts that Macro executed with the central bank, and also if you know the timeline and the implications of the repos that the central bank is proposing, and also can you remind us how much is your position on securities linked to inflation, and what will be your strategy going forward with these instruments, and finally my last question is on ROE. How do you see it for the end of the year, and what do you think will be the sustainable level? Thank you.

Jorge Scarinci (CFO)

Hi, Ernesto. This is Jorge speaking. How are you? About your first question in terms of asset quality, I think that, well, the level that we are showing is extremely good, and low. I think that, going forward, if the economy will recover, as is expected for 2025, we are going to be a bit more aggressive in growing in lending, and therefore, delinquency could rise a little bit, but to manageable levels. Again, I think that this is, we commented this before, but since 2008, the peak that we had in our delinquency rate was 3% in 2009.

So I think that without any problems, we could be right in this, the current ratio to levels of between two and two and a half without any problem in the case that we become more aggressive in lending. I will go to your third question. I will leave your second question for the last one. The third question about the bonds that we have that are adjusted to inflation. Currently, we have a level of ARS 3.7 billion or in your case, it's ARS 1 trillion of bonds that are tied to inflation. This is approximately 120% of the equity, and it's also 110% of the monetary position.

The monetary position is the one that is basically the one that adjusts our financial statements to inflation, and in that sense, we are linked or hedged against inflation. Going forward, I think that depending on what happens with the inflation rates, that in last month was 4% on a monthly basis, and we believe that inflation is going to continue in the downward trend. However, we are according to the economists that we listen to, they are not expecting inflation to become below 2%, not until November, December, and the probability of that is maybe the order of 50%. So for the moment, we are going to keep this portfolio tied to inflation, and if market conditions change, we are going to, at some point, maybe exercise-...

the put option or make it into a swap into fixed rate notes, depending on market conditions. In terms of your fourth question, in terms of how are we going forward, for 2024, we think that we would be ranging between 10% and 13% in real terms going forward and in a more sustainable level, we think that we could be delivering between 15% to 20% ROE in real terms. And your second question about the exercise of the put option that we did the first of July, basically, the ALCO decided to execute half of the position of the bond that we have tied to inflation.

After the conference that the economist and the president of the central bank held, saying that the amount of pesos was going to be fixed in the market, therefore, we decided to execute that position in order to get extra liquidity, and to have more elements in order to be more aggressive in future lending. And on the repos that the central bank is offering, I mean, that is for banks which have some transitory liquidity problems. I think they are okay. In our case, we are extremely liquid. We are not, of course, using those repos, but the repos are always there. They have been always there. The only thing in this new thing is that the central bank reduced the interest rates on the repos to a level of 48%.

So to make it more accessible for banks in order to get the extra liquidity. So I think I answered all your questions, Ernesto.

Ernesto Gabilondo (Analyst)

Yes, thank you very much, Jorge. Just a follow-up. Well, two follow-ups. One, in terms of the loan growth. So any color on what could be the pace of loan growth for this year and for next year? And then the other follow-up, you were mentioning that you executed half of the puts. So can you just remind us how was the amount of those securities that you held before?

Jorge Scarinci (CFO)

Yeah. In terms of, let's go to your second question. Yeah, we executed half of the put options that we had, it was like ARS 2 trillion in bonds that we exercised and sell to the central bank, and that amount of pesos we received as extra liquidity. And currently, we hold another two billion, or sorry, ARS 2 trillion in put options in case that we want to exercise these inflation link bonds to the central bank. Going to the long road for twenty twenty-four, we expect to have positive rates in the order of maybe 15% area for twenty twenty-four, and we believe that with a recovery on GDP in twenty twenty-five, we could be at least 30-35% positive rates of growth in loans for next year.

Ernesto Gabilondo (Analyst)

Excellent. Thank you very much, Jorge.

Jorge Scarinci (CFO)

Welcome, Ernesto.

Operator (participant)

The next question comes from Brian Flores with Citibank. Please go ahead.

Brian Flores (Analyst)

Hi, Jorge, Nicolás, and team. Thank you very much for the opportunity. Wanted to ask on NIMS, right? Because, as you say, repos are still helping, but, I think the average earn yields are decreasing. Also, you have some relief on the deposit base. And I know this is a very hard question, right? Because it's a very fluid environment, but when do you think NIMS could stabilize? I think that's my first question. And then on a second one, you mentioned capital, right? Do you have any updates on any regulatory changes that would allow you to distribute maybe higher dividend yields going forward? Thank you.

Jorge Scarinci (CFO)

Hey, Brian, how are you? In terms of your second question first, I mean, we have to wait till next year. For the moment, we haven't seen any new regulation coming. Remember that when we have to pay dividends, basically, when the board proposed to the shareholders meeting the payment of dividends in March, so we have to wait till next year. At that time, is basically when the central bank always put a new regulation on the amount of dividend that basically could be delivered and the amount of installments. Remember that last year the number of installments were six. This year, the number of installments were reduced to three.

I think that we are positive in the, in the way that it's the economy conditions improved, and the central bank's reserves increased going forward. We are positive that we could be allowed to pay dividends maybe in only one installments, and that it will be positive. In terms of your first questions on NIMS, we have a chance to go through the press release, the NIM in pesos increased or expanded a little bit. Basically, you're right, there was some little increase in the cost of funds. Remember that, in our case, the amount of transactional deposits where we pay almost 0% is almost 45% of total deposits.

And on the time deposit side, basically, in those that we are, the financial agent of the four provinces, we could be paying slightly below average interest rates. So, this give us a kind of slight competitive advantage in order to continue expanding a little bit the NIMs. And going forward, we think that the NIMs are going to remain pretty stable, so the increase in the net interest income is going to come through the increase in lending or hand in hand with increase in the funding.

Brian Flores (Analyst)

Perfect. If I can follow up just with your last comment. How is demand evolving? What do you think or where do you see the biggest opportunities to grow your loan book right now?

Jorge Scarinci (CFO)

I mean, there was a decrease in interest rates in the system that was a consequence of the reduction in inflation. We think that there was a recovery in lending in most of the areas, basically SMEs and some consumer. Going forward, we think that if we see some recovery in the real levels of salaries, we are going to see consumption pushing a little harder. Also, if we are having these new investments in different areas as a consequence of this RIGI program approval for companies, we are going to see also corporates or companies also demanding for new lending. It is going to be across the board, we think, in 2025.

Imagine that the level of lending that we have is, it's pretty sluggish or pretty low. It's around 6% of loans to GDP. So we think that the potential growth here is huge.

Brian Flores (Analyst)

Super clear. Thank you.

Jorge Scarinci (CFO)

You're welcome, Brian.

Operator (participant)

The next question comes from Marina Mertens with Latin Securities. Please go ahead.

Marina Mertens (Analyst)

Hi, good morning, and thanks for taking my question. So in the previous two quarters, results were driven by the strong performance in the securities portfolio, which the trend reversed this quarter and negatively impacted results. Do you expect the securities portfolio to keep on driving results in the remainder of the year? Or when should we expect to see the increase in loans to have a more relevant impact on results? Thank you.

Jorge Scarinci (CFO)

Hi, how are you? I mean, in terms of, income coming from the bond portfolio, as we stated in the press release, after executing or exercising half of our bond portfolio or the puts that we have on the bond portfolio, the remaining half of that, the ALCO decided to account it on the cost plus, plus yield, instead of having mark-to-market. So going forward, in coming quarters, we are going to see more stability in the results coming from bonds. And we think that with the pick-up in lending, we are going to start seeing that loans, or in this case, interest income from loans, are going to start having a bit more, or better performance in the income segment line.

Marina Mertens (Analyst)

Great. Thank you very much.

Jorge Scarinci (CFO)

You're welcome.

Operator (participant)

The next question comes from Yuri Fernandes with JP Morgan. Please go ahead.

Yuri Fernandes (Analyst)

Thank you, guys, for the opportunity of asking question. Just one on these loans versus securities mix, right? And even on the security mix, right, you have this, I think it's LeFi, this new instrument that is a one year. Basically, my question is, Like, on loans, and on this LeFi, maybe you are increasing the duration, right, of your assets. I think the fiscal liquidity letter is one year. Although you have the put, you can sell this, but I think like it to a one-year term kind of instrument, you are growing more your loans. So trying to think about your net monetary results, like inflation is moving lower, so this should be a tailwind.

But having more loans and having less, I would say, inflation-linked securities, how to think about your balance sheet versus inflation, right? If inflation is wrong and inflation start accelerating, is the balance sheet getting riskier at some degree because you have more, you know, longer term maturity assets than you used to have in the past when you have more short-term instruments? That's my first question. My second question is regarding further M&As, right? You just had Itaú. I think there is still consolidation to happen in Argentina. So I just would like to know the appetite of Banco Macro for new opportunities.

If your message is, "Well, let's digest Itaú, let's keep working on what we have," or, "No, we have a lot of excess capital, and we are still, you know, open for new opportunities." And a third question, more on regulatory update, right? This is still, I think, an important topic. If you can remind us what can be the next central bank regulatory change that can benefit the banks? I think there were many moving parts on rates and reserve requirements. What should we expect for the future on the regulatory front to be a tailwind for you? Thank you.

Jorge Scarinci (CFO)

Hi, Yuri. In terms of your first question, I mean, holding these inflation-linked securities, we are hedging our balance sheet against the adjustments for inflation on the monetary position. So by increasing a little bit the duration of our loan book, always having positive real rates, the impact on the balance sheet and the impact on the inflation-adjusted income statement is going to be positive. So we are not seeing any challenge or any damage there or risk there. So it doesn't mean that the increasing duration is going to negatively affect our exposure to inflation. No. On your second question about M&A opportunities, yes, we are going to complete the legal merge with Itaú in the fourth quarter of this year.

So by December of this year, everything is going to be under Banco Macro's umbrella. Going forward, I mean, we will be keeping a close eye on any opportunity that might happen in the banking sector. We think that we are one of the only buyers here, so any potential player that could be interested in leaving, I think that is going to knock on our door. So we're going to be keeping a close eye, as I mentioned before there. On the third question, Central Bank regulation that could improve a little bit the banking industry, I think that there are many. I think that little by little, the Central Bank is working on different regulation, but they want to go very slowly.

They do not want to make any mistakes and to have to take a measure that after two weeks, they had to turn it around. So I think that they are little by little moving, removing the caps on interest rates, after they remove the floor on the deposit rates. So I think that the central bank is working really good here, going very slowly because there is a complete bunch of regulation that need to be removed, but carefully. So going forward, I think that they are going to have these new regulations on the positive for the banking sector in order to be less regulated, and that is going to be, in our view, positive for the big players as Banco Macro.

Yuri Fernandes (Analyst)

Oh, super clear. Thank you very much.

Jorge Scarinci (CFO)

Welcome.

Operator (participant)

Again, if you have a question, please press star then one. The next question comes from Carlos Gomez with HSBC. Please go ahead.

Carlos Gomez Lopez (Analyst)

Hello, good morning. Two questions. The first one is, if you could explain in simple terms for us, what happened to the bond portfolio this quarter? What is that in contrast to the previous quarters, and what we should expect in the coming quarters? What should be the normal profitability yield on securities that we might expect? And I think that will be it. Yeah.

Jorge Scarinci (CFO)

Hi, Carlos, how are you? Well, no, I mean, as of June, I mean, we decided to execute or to exercise the put on half of our position, and that happened the 1st of July. So, at the end of this second quarter, that's why the portfolio remains, in terms of the amount of bonds that we have, remains the same. In the third quarter, you're going to see the impact on the exercise, of the exercise of the puts and a reduction in the bond portfolio. And again, and we said to make a change in the accounting, instead of having mark to market, it's going to be at a cost plus deal mechanism.

So going forward, if we are maintaining this amount of bonds, a more reasonable level for the income from the bond portfolio is going to be in the area between ARS 30 trillion-ARS 50 trillion on a quarterly basis.

Carlos Gomez Lopez (Analyst)

Okay, and the position that you exercise, you have it now in CPI linkers, right?

Jorge Scarinci (CFO)

Yes.

Carlos Gomez Lopez (Analyst)

Okay, very good. And then my second question is what I didn't ask before, is regarding your capital and the fact that you're paying a activity, then I mean, the prospects have changed. Doing M&A, there is loan growth in the system. Would you review, I mean, we know that you have a lot of excess capital, but, I mean, we could see a lot of it consumed pretty rapidly if loan growth indeed goes up. Would you consider, for the coming years, perhaps you want to retain more capital rather than pay more dividends?

Jorge Scarinci (CFO)

I mean, if you see the reduction in the capital ratio from the first quarter to the second, you can see that it was a reduction from Q1, from 44.5% to 34%, so 10 percentage points there, because of the payment of dividends. Going forward, we agree, and of course, we would like to have a more normalized level of excess capital. But the combination of organic growth that we think that we are going to need for future years, plus some M&A opportunities that might have in the past that we think that would appear some other banks wanting to leave Argentina.

The idea to continue to pay attractive cash dividends, I think that that is the mix that we want to maintain. So going forward, or a more sustainable rate of ratio for capital in the future for Macro could be in the area of 18%-22% Q1, not the current level. So that is going to be consumed through organic growth, plus cash dividends first, and then the opportunity for another M&A. So going forward, between 18%-22% seems more reasonable for us. That is we would like to have in the future, with a maybe higher market share performance in the system.

Carlos Gomez Lopez (Analyst)

Okay. And to go back to the M&A, and we understand you are open to all possibilities. Is there anything in the works or anything that, you know, would you anticipate that you might be considering another transaction, let's say, in the next three or four quarters?

Jorge Scarinci (CFO)

No. Honestly, we are not looking to anything for the moment. I think that if something happens, it could be next year. I don't know exactly which, how many quarters, but next year or in twenty twenty-six.

Carlos Gomez Lopez (Analyst)

Okay. That's clear. Thank you.

Jorge Scarinci (CFO)

Thank you, Carlos.

Operator (participant)

There are no more questions at this time. This concludes the question and answer session. I will now turn the call over to Mr. Nicolás Torres for final considerations.

Nicolás Torres (Head of Investor Relations)

Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Have a good day.

Operator (participant)

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.