Good morning, everyone, and welcome to the Grupo Supervielle Fourth Quarter 2020 Earnings Call. This is Ana Bartesaghi, Treasurer and IRO. A slide presentation will accompany today's webinar, which is available in the Investors section of Grupo Supervielle's Investor Relations website, www.gruposupervielle.com. Today's conference call is being recorded. [Operator Instructions] Speaking during today's call will be Patricio Supervielle, our Chairman and CEO; and Mariano Biglia, our Chief Financial Officer. Also joining us are Alejandro Stengel, Second Vice Chairman of the Board and Bank CEO; and Jorge Ramírez, First Vice Chairman of the Board. Alejandra Naughton, Board member of several of Grupo Supervielle subsidiaries, will also be joining us for today's call. All will be available for the Q&A session. Note that starting first Q '20, as per Central Bank regulations, we began reporting results applying hyperinflation accounting in accordance with IFRS rule IAS 29. For ease of comparability, we have restated 2019 results to reflect the effects of inflation adjustment. Therefore, all results in this presentation are adjusted for inflation as of December 31, 2020, unless otherwise noted. For your convenience, our earnings report filed yesterday after market close also includes managerial results in nominal terms as well as more details on hyperinflation accounting. Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties, including as a result of the COVID-19 pandemic. And I refer you to the forward-looking statement 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. I would now like to turn the call over to our Chairman, Patricio Supervielle.

Again, thank you, Ana. Good morning, everyone. Thank you for joining us today. Starting with our financial performance on Slide 3 on our earnings presentations. In a complex scenario, we continued to balance risk and profitability by managing the credit cycle and excess liquidity through assets and liability management. We achieved low double-digit comprehensive return on average equity in real terms during the year, notwithstanding the many challenges posed by the pandemic, a recessionary macro that deepened during the year and a shifting regulatory framework. Return on average equity reached 9.9% for the year and was lower at 7.4% in the quarter as pressure from higher cost of funds resulting from the floor on time deposits interest rates and subsidized rates on loans resulted in a NIM contraction, while regulatory controls continued to impact fees. Throughout the year, we consistently increased our coverage ratio, which reached 192% at year-end from 83% in the prior year-end quarter, reflecting a conservative stance on risk management. We also continued to review our expected loss models and are closely monitoring our loan book and risk models to adjust accordingly as the situation evolves. Excluding onetime charges related to some severance charges in the quarter, the efficiency ratio in fourth Q '20 was 66%. For the year, comparable efficiency excluding nonrecurring charges in both periods improved 230 basis points to nearly 62%, as we continue to keep a tight control on expenses and achieving a mid-single digit decline in personnel expenses while advancing on our transformation strategy. Lastly, strong liquidity levels and a solid capital base with a Tier 1 ratio of 13.8% positions us well to advance on our initiatives. Now turning to our strategic initiatives. In parallel, we have been executing our transformation strategy with the goal of driving sustainable growth as demand…

Thank you, Patricio. Good day, everyone. Please turn to Slide 8. Our loan book in the quarter contracted sequentially by nearly 4% on the back of sustained overall week demand while we maintain prudent lending and focus on profitability in this uncertain context. Peso loans were flat sequentially, as growth in credit card loans were offset by lower corporate loans. Dollar-denominated loans in original currency contracted as some large corporates paid down their dollar loans in line with the overall industry trend. Government sponsored loans at preferential rates remained unchanged sequentially at 10% of our loan portfolio at year-end. This includes nearly ARS 11 billion in SME loans at preferential rate, of which ARS 4.5 billion were in short-term factoring transactions that are fully guaranteed by FOGAR. Now looking at funding on Slide 9. We closed the year with strong liquidity levels, both in pesos and dollars. The loans-to-deposit ratio remains at historically low levels of 62%. Average balances of peso deposits increased nearly 78% year-over-year and nearly 1% sequentially. Total peso deposits at year-end declined nearly 7%. While core deposit in pesos remained flat sequentially, we deleveraged the balance sheet by reducing institutional funding to preserve financial margin. Dollar deposits in original currency rose 3% during the quarter, representing only 14% of total deposits, in line with the outflow of dollar-denominated deposits observed in the industry. Turning to the P&L on Slide 10. Net financial income was down 15% sequentially to ARS 9.3 billion. We saw a sequential NIM compression of 170 basis points during the quarter to 19.5% as higher cost of funds from the floor on the rate of time deposits along with higher market interest rates reduced spreads. Increased volumes of loans granted to SMEs at preferential interest rates, together with increased volumes on credit cards…

Thank you, Mariano. At this time, we will be conducting the question-and-answer session. [Operator Instructions] The first question comes from Gabriel Nóbrega with Citi. Gabriel da Nóbrega: During the quarter, we actually saw that you reversed some provisions from your corporate loan book. And so I was wondering if -- are there any other parts of your book, which may have been more conservative than the results were actually coming in? Do you expect that there could be any more provision reversals during 2021? Or is there an expectation that due to the Central Bank still giving more reliefs and flexibilizations, this is going to generate uncertainty and then you could actually not even reverse but actually create some additional provisions?

Can you -- please, Mariano, can you answer this question?

Sure, Patricio. During the fourth quarter, as we do in every quarter, we revised our expected loss models, updated macroeconomic variables, revising -- making a top-down industry analysis and revising all the high-risk and very high-risk sectors of every industry. In this context, we made a mix in our provisions, reducing provisions in corporate loans as we received some collections, particularly in the construction sector, where as you can see in the presentation, we reduced exposure. So reducing exposure to a high-risk industry also reduces the need for provisions. Then also, we were expecting a higher devaluation of the peso, as we expect now, so that also contributed to revise downwards the provisions of U.S. dollar loans. But on the other hand, we increased provisions particularly in loans to individuals and SMEs and also credit cards that have been referred -- deferred within the Central Bank deferral program. In this context, although it is an option for debtors and they could take it and they pay -- if it's a loan paid deferred loan as an additional installment at the end of the loan or for credit cards, they are deferred in 12 installments or 9 installments after 3 months period grace. So they are not past due, but we increased coverage in those cases because we will have to expect a few months later to see starting in April, how is the behavior of these debtors. So all in all, we maintained the same -- almost the same level of COVID-19 specific provisions, while we increased coverage because we made some write-off, particularly in the retail segment and thus reducing NPLs and increasing coverage. Gabriel da Nóbrega: All right. That's perfect. And as for my second question, during this quarter, we saw that you increased your investments into digital transformation. And I'm just wondering if you expect to keep the pace of investments in your digital platform throughout 2021? Or should we start seeing this decreasing?

Let me take first this, and then I'll pass to Alejandro. But basically, the digital transformation that we started in 2019 and scaled in 2020 will continue going forward and over the next few years. This is one structural decision we've made in order to modernize our bank. And then also, there's a second transformation, which is -- concerns the future of branches in -- at Supervielle. And we've made 3 MVPs or pilot projects, very interesting, that I think Alejandro will be able to explain both of them because they concern the transformation of our entire franchise into a modern bank, 21st century bank. Please, Alejandro. Emérico Alejandro Stengel: Thank you, Patricio. Yes, we are planning at least to sustain these levels of investments into 2022. As Patricio mentioned, we're working on 2 fronts. One is the channel and network, a branch network transformation into an omnichannel that will allow us to have the best customer experience. There, we worked on 3 formats to enhance this customer experience. One, increasing the self-service areas that were around 20% of premises into 60% of premises in space. And this, coupled with our biometric technology, is allowing an increased acceleration of the adoption of automatic channels to service clients and also to originate products and services from these automated channels. We have also another format focused on offering SME value propositions in areas of the network where we see potential. And we see indication -- early indication that this is actually going to do better than what originally expected. And in the third case, we are scaling up a fully automated format this year and next year, which allow us in the 3 cases to increase our efficiency quite considerably. On the IT business fronts, we have increased all the digital transformation initiatives. Currently, we have 50 squads working with agile methodologies to make sure that end-to-end customer experiences and customer journeys are digitalized. We've seen an increase in NPS, particularly in the case of the branch network pilots, and we're working to enhance the full digital capabilities of onboarding for individuals, corporations, as well as cross-sell and cash management services. We are very enthusiastic about this, and we definitely see it going forward until the end of 2022.

Our next question comes from Ernesto Gabilondo from Bank of America. Ernesto María Gabilondo Márquez: Can you hear me now?

Yes, perfect. Thank you, Ernesto. Ernesto María Gabilondo Márquez: My question is on asset quality and deferred portfolio. In your press release, you mentioned that around 10% of the loan portfolio is deferred and that you have already created extra provisioning of around ARS 2.8 billion as of December related to COVID-19. So considering that the Central Bank is adding 60 days more of grace period, how should we think of the NPL ratio in the third quarter after ending this grace period? What could be the level of the peak? And if you have any expectations on the payment behavior of the deferred portfolio?

Thank you for your question. We -- in terms of the NPL, we believe that, I think Mariano mentioned, it will peak in second Q or third Q once the deferral program ends. And maybe then afterwards in the second half of the year, we believe that there might be a decrease in NPLs. But please, Mariano, do you want to complement?

Yes. Ernesto, regarding the behavior we expect from debtors who took the option to defer loan installments or credit card balances, in general, we don't expect a different behavior that they would have in normal situations, except for higher-risk industries, where, as I mentioned, we have some additional provisions because those are debtors that could face higher challenges to repay all their loans that -- all the installments that have been deferred. And then we also differentiate between debtors that have deferred maybe only 1 or 2 or 3 months and debtors who have deferred 5 or more installments. In those cases, we classify them as -- with a higher risk of not paying their loans when installments start to mature. And we also monitor whether if these debtors -- when -- particularly when they are individuals, if they have a credit card and a loan and whether they have deferred both or only one. If they deferred only one, what's their behavior in the other financing. So we take all these considerations and make additional provisions where we think they are necessary. Ernesto María Gabilondo Márquez: And for my second question, can you give us an update of the last regulatory framework? Anything related to floors on deposits, subsidiaries that you mentioned, the caps on credit cards, the freeze on fees.

I would like to complement on Mariano's answer. In -- also, I think it -- regards what happened also in fourth Q, there was -- I mean, there was a decrease in our position of high or -- and very high-risk industries in terms of credit exposure. And also, we have -- all our nonperforming loans are very well collateralized. 80% is non -- is well -- is very well collateralized. So regarding -- to finalize your question, I think that we are well positioned for what we expect for 2021.

You can ask it again, if you want, Ernesto. Ernesto María Gabilondo Márquez: Yes. So my second question is if you can give us an update of the last regulatory framework regarding floors on deposits, the subsidiaries in some interests, loans, the caps on credit cards, the freeze on fees. What else I am missing? Or what else are you hearing that could be on the regulatory front this year?

I think you -- I think, we lost you Ernesto, I think you were asking in terms of an update on regulation. Isn't it floors and interest rates and fees and all that? Ernesto María Gabilondo Márquez: Correct. Correct.

Okay. I will pass to Mariano. But regarding fees, there are certain regulations on ATM fees. And -- but the bulk of fees, we believe they are nonregulated. So more or less 90% of the fees which is the bundle banking products, which represent 90% of our fees, they are nonregulated, and they will be -- they will come along with inflation. Mariano, do you want to complement on the rest of regulations?

Yes. Sure. Let me follow-up with regulations on interest rates. Right now, we have on the liability side, we have floor on time deposit interest rates. We have 2 floors: 1 for deposit of less than ARS 1 million and another floor which is a little bit higher for deposits of more than ARS 1 million. In this case, the floor is set as a reference to the interest rate. So if the Central Bank happens to increase or decrease interest rates, the floors would also be moving in the same direction. Then on the asset side, we have the subsidized lines at different interest rates. We have loans at 24% interest rate, 30% or 35%, depending on whether they are for working capital or for investments. And those lines are offered principally to SMEs and to the lower end of our middle and bigger corporate clients. And then, of course, we have all the Central Bank instruments, which are not regulated itself, but they are nonetheless set, of course, by the Central Bank. So we have still in place lot of regulations both on the asset and liability side. And also on fees, as Patricio mentioned. Although fees had a much higher impact in 2020, where we were limited to increase all the types of fees. And now in 2021, this affects only a smaller part of all our fees. Ernesto María Gabilondo Márquez: And is there any regulation on the provinces that is correlated to your business or related to your business?

In provinces, the regulations come from the taxes side, not -- there are no different rules from the Central Bank based on the province. But the tax, provincial taxes, which is mainly the main tax is the turnover tax. That tax has a different rate, depending on the province. And on that side, the most important issue that started affecting us in January this year is that the autonomous city of Buenos Aires, which for this matter acts as a province, expanded the reach of the turnover tax to Leliqs and repos with the Central Bank that were previously exempt. So now we have the tax, which has on average a rate -- it had on average rate between 7% and 8%, but now it reaches also Leliqs and repos in the city of Buenos Aires,. And also on top of that, the city of Buenos Aires increased the turnover tax rate to 9%, and that also was made by other provinces such as Cordoba and Tucumán.

Our next question comes from Yuri Fernandes from JPMorgan.

I have a first one regarding your consumer finance, regarding IUDÚ. We see results improving, but still are printing some loss there. So my question is, when do we expect IUDÚ to break even. I am a bit concerned on the amount of loans deferral there. I guess this was a portion of the previous question, but how do you see those loans behaving? Because if I read correctly in the release, I guess, 39% of the loans in IUDÚ, they are being deferred today. So 2 questions, right, like how you see business evolving? Maybe you can comment a little bit on your KPIs. I guess, you have an interesting strategy there on profitability and about asset quality. So an overview on the consumer finance? And my second question is regarding margins, like I guess this quarter was the first quarter fully reflecting the mandatory remuneration of time deposits. So should we see margins more stable now? Like what's the outlook for margins going on?

Okay. Thank you for your question. First of all, IUDÚ, the strategy of IUDÚ and the consumer finance unit, one key part will be the opening of offering digital accounts for individuals for -- in order to capture retail deposits. This is a structural move that will pay off in the next -- this year, we hope and in the following years. And it will reduce the cost of funding we have in this business. And therefore, it will have a very important swing factor in the profitability of the entire group. IUDÚ will act as a digital attacker offering services that banks are not so eager to offer. And therefore, we hope to attract segments of people that prefer to work with digital platforms. There's another factor that affecting the profitability of IUDÚ that during the pandemic, IUDÚ had, let's say, less sales of insurances and less sales of nonfinancial services which are an important equation in the profitability. We -- this is already changing. Now we have -- we see that there is movement in terms of sales, much better sales in insurance and nonfinancial services. And these are services that are not -- it's not just one-off sale, but it's something that you build. Once you get a client, then this client keeps -- there's a life cycle of maybe a couple of years or 2, 3 years of, let's say, fees that are coming into the platform. Regarding margins, we have -- well, first of all, we have very good -- we think that we have a very disciplined score methodologies in terms when we assess and discriminate a good credit from a bad credit. And we believe that rates -- it's important in consumer finance what happen with rates. And in 2021, we believe that rates -- interest rates will be stable because -- even though inflation is high, and that's a risk, the Central Bank does not have incentives to move rates. So rates will -- we believe that they will be quite stable during the year. And so therefore, margin -- financial margin for consumer finance, we believe that they will be strong, I think. So in the mean -- I mean, finally, we believe that profitability will start to improve the 2021, 2022, and it will become a very important part of our, let's say, platform. I hope I have answered your question.

No. Patricio, just a quick follow-up on IUDÚ. We saw the number of clients growing, right, like 40,000 to 410,000, so something like that, right? So the idea is to keep growing at that pace, accelerate that pace. Do you have a target of clients by year-end? Because I think there are other players doing similar strategies. So it will be nice just to have some KPI on your view for you to...

Mariano, do you have some figures on that? I don't -- I cannot -- I don't think I can give you specific targets. We are quite aggressive in terms of growth, but at the same time, very cautious approach in terms of who takes credit. I mean, who -- I mean, exposure of credit and credit cards. I think another important feature that I want to mention is that Walmart is leaving the country, and we have a contract that is renewed until August 2021. The partners -- the new players replacing Walmart will be de Narvaez. We've been working with the de Narvaez Group for the last few years as they were clients of -- with their retailer operations in Argentina. Although they were out of the supermarket business for many years in Argentina, they have been -- they are in the supermarket business in other countries, for instance, Uruguay. And so these guys are knowledgeable in retail. And we believe that the -- we are very happy to work with them. And we believe the business practices will -- might be even better than the ones we had with Walmart. And for instance, just to give you one idea is that Walmart is not used to have loyalty cards, whereas probably de Narvaez, they will incorporate the loyalty card as a core program. And this gives you a huge opportunity to expand the business in terms of traffic coming into Walmart.

And let me add also that it's important to highlight that we are turning IUDÚ also into a digital bank. So it's not only the quantity of clients but -- that we aim to get digital clients, which will increase also the funding and deposit base of IUDÚ. That will be something new compared to the old business model, where it was only an underwriting of loans and only work with retail customers on the asset side. Now it will work both on the assets and liabilities side with retail customers and turning into digital. Then I think there was a second question regarding time deposits. Was it?

Yes. I was asking more -- because I know it's a regulatory issue, right? But today, the numbers in the first Q, they kind of reflect the -- how the time deposits will behave in the future, right? So my question was what is our outlook for margins? Like should margins be stable? I guess, Patricio kind of addressed that. But I don't know, Mariano, if you have -- if you want to add. Basically, what's the outlook for margins in 2021, putting in an easy -- in a short way to ask, what's the outlook for NIMs?

Yes. Well, regarding regulation and we are talking about all the group and mainly the bank for that matter, we expect, of course, floors on time deposits to be in place. They are now in place during the first quarter. So as they were in place, as you said, fully in the fourth quarter, the level of NIM that we saw in the fourth quarter is likely to stabilize during a few months, particularly in this first quarter until we start to offset that growing in more profitable loans. So that's -- in that way, we will be able to increase NIM despite the floor on interest rates on time deposits. But we will see that for sure after the first quarter. Emérico Alejandro Stengel: Yuri, this is Alejandro Stengel. Maybe one thing to look at is that if the Central Bank continues to buy dollar reserves and inflation continues to show signs of going down as we've seen a more equilibrated fiscal situation in the first Q, it is more likely that they will review their policy on the floor of rates and for time deposits and probably consider it bringing it down. I think these are 2 things that we might look at, and that would have, as you can imagine, a considerable impact very quickly on margin and therefore, on overall profitability. I think that's something you might want to look out for.

That's interesting. So I guess the message is, again, there are a lot of uncertainties. So it's hard to write this down. But basically, stable margins, it's kind of the worst case in your view, maybe continuing for the next quarter. And you have 2 avenues of increasing the margins. The first one is through low mix, so basically growing in higher risk, higher profitability loans in the second half. And another way is basically a review of those regulations and putting like a lower floor for time deposits. So that's kind of the message, right? Emérico Alejandro Stengel: I would sort of adjust a bit the first part of the message, Yuri. It's not that we're going to go for higher risk. We see a tremendous potential within our franchise and sort of sectors like agribusiness, the winery, the citric industries, which we've served for many years, and that have really depleted their inventories, and they will have a strong need for working capital. And these are very good risks, value chains that are led by strong industry captains that have very good distribution and supplier network. So there is -- to your side of the argument, there is an opportunity basically to compensate by scale these narrow margins. And then, yes, probably maybe as of the third quarter, we'll see a possibility of the Central Bank reviewing the minimum rate -- or the minimum floor that they put on time deposits. That's the way I would frame the answer.

So our next question comes from Alejandra Aranda from Itaú.

I was wondering, it's so difficult to think of Argentina on the 6 months period. I was wondering if you could give us a little bit of a spoiler and share with us what has been happening on the last 2 months in terms of dynamics for your loans? How you're seeing that demand coming through and the NIMs there? If you could give us some indication of the first 2 months of the year?

Yes. Alejandra, thank you. Let me start, first of all, with what happened last year in second Q and third Q. We had very high NIMs that allow us to build very good provisions. Then in fourth Q, there was a little bit of NIM compression due to the floors introduced in interest rates for deposits and also more competition on the institutional funding side. So that drove a little bit of NIM compression. Looking forward, we believe that in the first -- maybe first Q -- first half of the year, NIMs will basically remain stable. And what will happen -- what will be very important is that -- well, regarding NIMs, we believe that loan demand will start to pick up in the second half of 2021 in the avenues that Alejandro recently just explained. But these avenues of growth will allow us to provide -- to replace Leliqs and repos with high NIM loans. And it's interesting to observe that what would happen maybe in other bank franchises, they will also do -- if we expect loan demand resumes, the other banks, what they will do is they will replace these Leliqs and repos with low NIM loans. So because we -- historically, we have high NIM loans compared to the rest of the industry. And then I think -- I don't know if I have answered your question, Alejandra. Do you want some more color?

Well, I do understand the concept of loans probably picking up on the second half and that with stable rates on the deposit side, and we're all believing that they're going to keep those floors there. So there, you can replace that and have a pickup on NIMs in the second half. But I'm a little bit skeptical on the first half as I know I'm not seeing where that loan demand on the first half is coming from. Basically even with rates being stable on the deposit side, you're going to get a compression as you were pointing before on one of your slides, deposits are going to keep on coming because people can't buy dollars and loan demand is just not there.

This is true. We have -- this is true. We have lived a terrible credit crunch in 2019 and -- 2019 and 2020. I mean, 3 years in a row of credit crunch. So today, credit penetration is 11% of GDP. So you can imagine we have almost -- it's a very, very low credit penetration. And to have loan demand pick up, you need, of course, you need business confidence and -- but still, having said that, in an electoral year, I believe that there will be some demand on personal loans, for instance, on consumption. And as Alejandro explained, the -- maybe you're right that there are uncertainties and there are uncertainties. But at the same time, there is a scenario of world demand -- the world is picking up, the world is rebounding. So this is helping Argentina in terms of agricultural exports. And we have commodity prices that are in average, 30% above last year. This is also supporting the export industries. And so I believe that there will be some pickup of loans with -- in particular in these sectors. The uncertainty -- the thing to watch in the first Q and second Q is the behavior of payment of the deferred loans. That's the thing to watch. We are confident that our coverage is okay. But the thing to watch is that, of course. And this is starting due in April.

Thank you, Alejandra. Now we have a question from Carlos Gomez-Lopez from HSBC.

Can you hear me now?

Yes. Sure.

So 2 questions. So first, in terms of loan growth, you ended up the year negative. And I was going back over your previous presentations. In the third quarter, you still expected a positive outcome. What happened exactly in the fourth quarter? Did you see less demand than you expected? Or is it simply that inflation was much higher than you expected? And then also on inflation, given that you expect a higher inflation in 2021, should we expect, therefore, also a higher monetary correction and therefore, a lower return at the end of the year?

Alejandro, in terms of loan growth, do you want to -- what happened in fourth Q or why there was less demand? I think, I would start my answer for fourth Q. I think that there is -- I mean, there was uncertainty. I mean, the pandemic, there was uncertainty and also a very cautious approach. Still the market is not -- it was not requesting loans. And so again, we had 3 years in a row of credit crunch. We believe that this -- there will be a turning point and -- for the reasons I just mentioned, the world economic rebound, the agricultural exports, maybe an electoral year where consumption will have some rebound. But this is looking forward. What happened, particularly in 4Q, I cannot explain, except that there was lack of confidence and people did not want to request loans. Alejandro, do you want some -- maybe Mariano, do you want to complement on that?

Yes. Thank you, Patricio. Carlos, yes, what we've seen during the 4Q, as Patricio mentioned, was a weak -- still a very weak demand. And we saw a mild rebound in the demand for personal loans and then some growth in credit card loans or credit card financing overall. And on the commercial side, the demand for credit is still very low and only growing in the subsidized lines of 24%, 30% and 35% in interest rates. So we are still also cautious on growth, particularly, as I mentioned, when I talked about asset quality, we are very cautious in the industries that we consider to be with a high risk or very high risk due to the pandemic. So for instance, in that sense, we received collections in -- of loans of the construction industry, but we haven't grown with new origination in that industry. So we're being cautious. And at the same time, the demand particularly on the commercial side is still very low. Emérico Alejandro Stengel: Carlos, this is Alejandro. Just to complement what Mariano is saying, when you look at what we were doing on the third quarter, that has a bearing on how it compares to the fourth quarter, there was a significant increase in the mandatory 24% lines, which are subsidized credit lines. And we focused on short-term working capital, not long term. And that, of course, has a bearing on the level of growth that you have from 1 quarter to the other. The other thing I think you should be aware of or follow-up on is that there was a significant reduction in dollar-denominated credit lines. So the combination of both things is having an effect on the result at the fourth quarter that you are correctly pointing out. I would highlight the reduction of dollars, dollar-denominated credit lines and the fact that we did not want to become exposed in long-term subsidized credit lines.

And about inflation for this year?

Mariano?

Yes. For this year, we are expecting inflation to be clearly higher than 2020. In line with market expectations, we were expecting inflation to be in the high 40s, closer to 50%. But of course, it's still soon to tell because there's a lot of variability. We are seeing some good signs on the fiscal deficit side, but it's still too soon to predict a lower forecast -- a much lower forecast of inflation.

We understand that. I guess our question is with higher inflation, I mean, do you think that the way the business looks now, you would need a nominal return about 50% for -- to have real earnings. Is that realistic? Or should we expect lower real returns this year than we saw last year?

Well, inflation, of course, is never good for the financial industry, it's not good for credit demand. But beside that, we are -- on the first place, we are hedged against inflation through different asset classes. So those assets should give us, first, the profitability in nominal terms to match inflation and on top of that deliver positive results in real terms. Our hedge with inflation is based in nonmonetary assets that include real estate. And also, about 50% of our equity, we have loans that adjust by UVA and bonds -- treasury bonds that adjust by CER, both our inflation indexes. So if inflation happens to increase, we will see an increase in those nonmonetary assets. And thus, that will increase our shareholders' equity. And then we will see a higher return and higher revenues from UVA loans and from CER bonds. I'm not sure if that answered your question.

Yes.

Yes. Complementing what Mariano said, we also have a 14% equity exposed into dollars, dollar-linked bonds, which also correlated to inflation. That's complete -- the overall picture.

Thank you, Carlos. I think if there is some more questions, we are not seeing any new one. So I think this ends today's question-and-answer 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 remain available to answer any questions that you may have. Thank you and stay safe and healthy. This concludes today's conference. You may disconnect your lines at this time. Thank you again.