Good morning, ladies and gentlemen and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's Fourth Quarter 2017 Earnings Conference Call. We would like to inform you that the fourth quarter 2017 press release is available to download at the Investor Relations website of Banco Macro at www.ri-macro.com.ar. 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. [Operator Instructions] It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Jorge Pablo Brito, Member of the Board of Directors; Mr. Gustavo Manriquez, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Nicolás Torres, Investor Relations; and other members of the bank's management team. Now, I will turn the conference over to Mr. Nicolás Torres. You may begin your conference. Nicolás Torres: Good morning and welcome to Banco Marco's 4Q conference call. Any comments 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 is available at our website. 4Q '17 press release was distributed on Monday and is also available at our website. I will now briefly comment on the bank's 4Q '17 financial results. Banco Macro net income for the quarter was Ps. 3.01 billion, or 16% than the Ps. 2.59 billion earned in the previous quarter, and 78% higher than the result posted a year ago based on an increase in net financial income and an increase in net fee income. The advanced 4Q '17 accumulated ROE and ROA of 28.6% and 5.2% respectively, remains healthy until the banks…

[Operator Instructions] The first question comes from Ernesto Gabalonda [ph] with Bank of America Merrill Lynch. Please go ahead.

Three questions from my side. The first one is, if you can provide your expectations for loan growth in this year and a breakdown growth per segment and also if you can share your expectations for net interest income growth? The second is in terms of asset quality, just if you can share with us your expectations for this year for NPLs and accustomed risk? And finally, if you can provide any information regarding if EBITDA could be implicated in these graphed increase [ph]; I don't know if there is a timeframe we should follow to see if no charges will be against EBITDA [ph]? And also, I would like to know if there is a timeframe to look for an acquisitions? If nothing happens with Patagonia, when will you like to approach to another bank and what should be the characteristic and the size of this next bank? Thank you. Nicolás Torres: From the very beginning, we're expecting loan growth for this fiscal year 2018 to be in the area of low [ph], this is nominal. And we are looking for deposit growth in the areas of the high earnings for 2018. In terms of market quality, I would say that we are not seeing a dramatic change in the ratio of NPLs, we finished with a very good level in 2017, so we are forecasting something close to 1.3% by the end of 2018. And also the cost of risk could be slightly higher than the one that we saw in 2017 but closer 20 basis points higher, no more than that, that is something that we are forecasting for 2018. In terms of the acquisition issue that you mentioned, we continue with some conversations with people of Banco [indiscernible], waiting for some news and we have been…

A question on your expectations for the net interest income growth on this year? Nicolás Torres: Basically, in terms of your modeling we are forecasting some slight decrease in the net interest margin, maybe 50 basis points average compared to the average that we have in 2017.

And in terms of growth? Nicolás Torres: This is net interest margin, in terms of growth, loans, I mentioned that we're expecting low 40s for 2018 in terms of deposits earnings [ph].

And in terms of the net interest income growth? Nicolás Torres: We captured [indiscernible] according to that 50% compression margins and the growth has higher in commenting long-term deposits in the area of low to mid-30s, at least.

The next question comes from Gabriel Nobrega [ph] with UBS. Please go ahead.

I actually want to make a follow-up; you're seeing that depositor are going to be able to grow close to 20%. Why isn't that closer to your loan growth and because you also talked about the competitive environment among the banks, whether you're seeing maybe there is some 20% -- it might be affected by this competition? And I'll make my second question afterwards, thank you. Nicolás Torres: Basically, what we saw in 2017 -- we're seeing loans growing faster than deposits. Of course, in the case of Banco Macro, we continue to be the most liquid bank in Argentina, so the idea is to maybe slightly trim down a little bit because of liquidity but also remember that we have liquidity to do some other or to get some other way of getting advance like issuing a local bond or a foreign bond, so that's another alternative that we could be thinking depending on loan demand for the second half of the year. So that is basically our scenario for 2018 in terms of the difference between loans and deposit growth rates.

What about the competitive environment as well? Nicolás Torres: There is some competition in terms of deposit, most of that competition is being happening basically Buenos Aires area, mostly if you see one segment, it's -- we are not seeing that competition happening in the interior of the country and in smaller cities where we have a larger presence.

And my second question; during 2017 we saw OpEx growing more than inflation. Could you just give us a bit more of color on what happened and also as of discussions with the banking union are underway, what do you expect for OpEx growth this year? Thank you. Nicolás Torres: Basically, of course in terms of expenses, they were slightly above the inflation. Of course, we are finishing with the construction of the corporate tower that is taking almost 2 or 2.5 years. So that is something that push a little bit expensive, also the number of employees slightly increased in the last year but basically the idea for 2018 is to have an increasing expenses as close as possible to inflation but the other thing that is important to mention is that we continue to evaluate [ph] the cost to income ratio being the most efficient bank in Argentina. So we are reaching the low 40s or 40% in that sense and that is something that you cannot see in other bank in Argentina, so the idea is also to keep on working on expenses but also keeping an eye on the income side.

The next question comes from Frederic De Mariz with UBS. Please go ahead.

Can we follow-up with two questions. OpEx, actually could you share with us a little bit of your strategy for digital banking? How much -- what percentage of your transactions already are done digitally and what you're thinking in terms of branch openings? Just wanted to get a sense from a strategic standpoint, how do you think of the different channels? And in the second question, you mentioned your guidance for loan growth; could you go into a bit more details by sector if you see some sector that's very strong, whether a corporate SME consumer and any type of industry segmentation and conversely, if you see any sector that you're not keen in being more present? Thank you very much. Nicolás Torres: In terms of digital, basically we are seeing very thin [ph] increase in terms of [indiscernible] down through internet and mobile. And we have been commenting about these as -- we at Argentina, we need more investment coming on cable companies in turn to have more penetration internet, basically in the interior of the country, also the improvements on the speed on the internet connection, also more investment coming from the telcos in order to improve the mobile net throughout the country. But also what we need to see is a change of the people's mentality, mostly in the interior of the country that they continue to attend the branch in order to do any type of transaction. So that is something that we are seeing that might be happening in Argentina but in the long run, I mean more than 5 years from now. So that will be something that is going to take a bit of time, so that's why we continue to see the opening of branches or the acquisition of branches, that's the way of gaining market share for the moment in Argentina. Your second question about more detail on loan growth; basically we continue to see consumer and commercial lending to be pushing. And in relative terms, we're seeing a bit more demand coming from commercial lending than consumer lending for 2018. However, things from an absolute point of view we are more inclined on consumer than commercial, the absolute numbers are going to continue to be high in consumer than commercial. And the demand that we are expecting for 2018 is basically across the Board in construction, services, infrastructure, energy, so many factors are going to be demanding for 2018.

And may I ask also in terms of dollar exposure and for the loans that you see any changes or if you're willing to take more U.S. exposure? Thank you. Nicolás Torres: Yes, in terms of loans we have -- 9% of our loans are in U.S. dollars, 91% in Pesos; in terms of deposits we have 13% of deposits in dollars, 87% in Pesos.

But how do you think that should change? Do you see more demand in dollar loans, for example, or do you think that's pretty much where you should be on a sustainable basis? Nicolás Torres: For this year we are seeing no big changes there, it could be in terms of long 90-10 but it's not going to dramatically change compared to [indiscernible].

The next question comes from Alonso Garcia with Credit Suisse. Please go ahead.

My first question is if you could provide some color or guidance in terms of fee growth for fee income growth for this year? And my second question is, if you could share your view on the flat -- the sustainable ROE for Banco Macro could be in the coming years with a single inflation in Argentina? Thank you. Nicolás Torres: In terms of net fee income growth, we are seeing for this year close to 25% increase, so above inflation. Inflation, we're expecting that to be in the area of 19%, once again, of course we do not calculate the inflation, we are taking the consensus of the market. In terms of the second question, in the long run, ROE of Banco Macro with single-digit inflation figure is not an easy question to answer but I would say -- I would answer that that should be in the area of ranging between low to mid-20s.

The next question comes from Rafael [ph] with Bradesco. Please go ahead.

I have two questions. First one is related to the performance in the quarter in terms of credit [ph], and deposits. The bank is very worked up, so we would expect you guys to be outpacing the market, we would like to understand why you believe that you lose market share in the quarter in both, credits and deposits? And the second question is related to -- a follow-up from a comment that you made on the stronger competition, Buenos Aires area; do you have anything that's in the past that really you would like to increase your footprint in Buenos Aires but given that's exactly I the area that's -- there is more competition at this point, would not make sense to try to accelerate even more outside of Buenos Aires and not necessarily go to -- how do you see this? Nicolás Torres: In terms of long-term deposits, honestly, we decided to always look not only -- but also at profitability and that is pretty clear in the numbers that we really show in the excellent level of profitability being the most profitable bank in Argentina than most efficient bank in Argentina. So we not only look at market share, what we saw basically at the end of 2017 there were some other banks that were more looking to market share in some loans at lower rate in order to finish with a good level of market share by the end of 2017; so that is not our main goal only looking at market share. So we look at profitability, we're a private local bank and the more you see we can get concentrated on that. So in terms of your second question; the point is in Buenos Aires, there is more competition, of course, maybe marking out -- likely in other words, I mean in the interior, so this is something that we have been commenting for a long time. We have a consolidated franchise in the interior of the country, franchise as Banco Macro in the interior of the country, not even Banco Massimo [ph] but these are larger bank in Argentina. So now we are -- or we have the idea to increase our share in the Buenos Aires because in the air of Buenos Aires including the metropolitan area and also the province of Buenos Aires, you find almost 45% of the population of Argentina, almost 50% of the GDP of Argentina; so Banco Macro wants to be [indiscernible] in banking Argentina wants to be, their reference bank in Argentina, so the local saying here is, 'God is everywhere in Argentina but he [indiscernible] Buenos Aires.' So is the one to be the living -- you need more critical breath in Buenos Aires, so the idea is out and that's why we have been keeping this long negotiating with Patagonia, basically the number of branches of Patagonia is going to give us a good increase in our standing in this area.

The next question comes from Nicholas Riva with Citi. Please go ahead.

You mentioned -- because we saw that in the fourth quarter, as you said, you have to reload some market share, your loan book grew 10% quarter-on-quarter and especially your commercial book was quite weak in the quarter, only 1% on growth. So you mentioned that some banks try to gain market share in the fourth quarter giving loans at lower interest rates; in your outlook for the net interest margin this year which I believe you said you expected a compression -- if I remember correctly, about 50 basis points, are you including in that outlook more competition from some of these large banks which are trying to gain market share or what's going to -- what are your thoughts in terms of competition in terms of spreads within the banking system? Thanks. Nicolás Torres: Basically, we see more competition but facing to consideration that our competition are -- the few we have -- the least at Santander [indiscernible]; so there are not many competitors I'd say that we have but we see a little more competition but also we are forecasting some decline in local rates along the year, more in the second half than in the first half. So basically this is including all the scenario, including competition and the decline in domestic rate.

And you said you were expecting a compression of -- was it 50 basis points in the margin this year? Nicolás Torres: Yes, 50 basis points on the average of 2018 compared to the average of 2017.

The next question comes from [indiscernible]. The next question is from Domingos Falavina with JP Morgan. Please go ahead.

What caught my attention was the very good job on the funding side, basically your cost of deposits were very lower, pretty much didn't grow despite inflation which brought me back to the attention that we had when we saw the filing for the follow-on and also some conversations with you where we learned about 40% of your deposits if I'm not mistaken comes from item when you say [indiscernible] from the municipalities, and if I'm not mistaken, around 10% to 15% from the municipalities themselves and you know, the cost of those being very close to zero. My question is, I know it's not all for renewal now, I know it's only in 2019 but what is your expected cost of funds on those deposits once they start being renewed? And the reason I ask is because we used to have similar situation for some of the banks in Brazil but government seeking money started demanding better returns, I would have expected something similar to happen in Argentina. So my question is with back running in over 20%, what kind of cost of fund would you expect from these funds that are coming from the municipalities? Thank you. Nicolás Torres: You have to consider also that in the provinces where we are the financial agent -- we are the bank that manages those funds. So even though we have been paying slightly below average interest rates, the idea is to continue with these trends, and of course the trend that we are seeing going forward, this is declining trend in rates. So I would say that as a way of forecasting the cost of funds not only for these public sector deposits but also for private sector deposit is have declining one. But don't you take into consideration that almost 50% of deposits are transactional deposits where we pay 0% interest. So the impact on the declining rates is going to be half on the average cost of funds of the bank.

But when we think as -- if we think of the public deposits as a percentage of the back -- the reference rates in Argentina; I understand the bank is coming down but wouldn't -- isn't it reasonable to assume the percentage of [indiscernible] is going up as the government fix more revenues or no, you don't have any pressure like that? Nicolás Torres: No, we do not have any pressure, of course; and what we are seeing is a decline in trend in the rates of the bank and also on the -- that is the deposit reference rate.

[Operator Instructions] The next question comes from Fernando Suarez [ph] with AR Partners. Please go ahead.

Going back to your commercial performance during the quarter, I will like to get more color of the 20% decrease in overdraft. Is this related to an increase in competition or am I missing something? Thanks. Nicolás Torres: Now basically, at the end of the year we were seeing that some rate in these overdraft is basically the short-term, long-term you need to -- basically AAA companies. The rate there was slightly below the Liberty [ph] interest rates, so we decided to decrease our share in that portion of the balance sheet and increase the Liberty [ph] exposure in order to focus on profitability as far as I was commenting on another question that I talked in this call. So that was basically related to the interest rate that was having at that time of the year.

[Operator Instructions] The next question comes from Carlos Gomez with HSBC.

I wanted you to comment on the renewal of your financial agency agreements from the [indiscernible] published, we see the fresh one; we see honestly is coming up for renewal this year. Can you tell us the timing about the possible exploration and what competition you expect to meet? And also, whether you are seeing the bunch [ph] you are not interested in going for -- have you changed that expense, we'd be waiting to see the income biding for other provinces that may come up for renewal? Thank you. Nicolás Torres: No, in terms of the agreements, the next one that is going to view is in '18 [indiscernible]. We already started the conversation to renew that so we aren't seeing any problem having here in order to renew that. For the moment in your second question, looking for an opportunity for another type of agreement -- another agreement like this one, no for the moment, there has not been on the horizon that we should consider but of course if something appears, we are going to look at that, yes.

And the timing of the insurance counter, when that would expire exactly? Nicolás Torres: Next year, continuously effect month afterwards but in 2017 I think that is mid-year.

[Operator Instructions] There are no further questions at this time. This concludes the question-and-answer session. I will now turn over to Mr. Nicolás Torres for final considerations. Nicolás Torres: Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again, good day.

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