Grupo Financiero Galicia S.A. (GGAL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Grupo Financiero Galicia Second Quarter 2026 Earnings Call. This conference is being recorded, and the replay will be available at the company's website at gfgsa.com. [Operator Instructions]. Some of the statements made during this conference call will be forward-looking statements within the meaning of the safe harbor provisions of the U.S. federal securities laws and are subject to risks and uncertainty that could cause actual results to differ materially from those expressed. Investors should be aware of events related to the macroeconomic scenario, the financial industry and other factors could cause results to differ materially from those expressed in the respective forward-looking statements. Now I will turn the conference over to Mr. Pablo Firvida, Head of Investor Relations. You may begin your conference.

Thank you. Good morning, and thank you for joining this conference call. Before reviewing our operating performance, I would like to briefly address the macroeconomic backdrop that shaped the performance of the financial system during the quarter and provide the context for our business trends. According to the monthly indicator for economic activity, MI, the Argentine economy expanded 2.7% year-over-year in June and recovered 0.8% month-over-month on a seasonally adjusted basis. Despite this month improvement, activity remained 1.1% below December 2025 levels, mainly reflecting the declines recorded in April and May. In the second quarter of 2026, the primary surplus stood at 0.4% of GDP, in line with the level recorded in the second quarter of 2025. On a year-to-date basis, the primary surplus reached 0.8% of GDP. During the first half of the year, total revenues declined 5.7% year-over-year in real terms, while primary spending decreased 2.8% in real terms. The National Consumer Price Index accumulated a 33.5% increase on a year-over-year basis and a 16% increase during the first months of 2026. During the quarter, monthly inflation decelerated from 3.4% in March to 1.9% in June. The monetary base expanded by ARS 4.1 trillion during the second quarter and ARS 8.5 trillion from the end of June 2025, representing a 23% year-over-year growth. In June 2026, the exchange rate averaged ARS 1,450 per dollar, implying an 18.5% year-over-year depreciation. The average rate on 30-day peso-denominated private sector time deposits above ARS 1 billion, [ Tamar ] stood at 22.7%, 10.9 percentage points below the June 2025 average. Turning now to the financial system. Private sector peso-denominated deposits averaged ARS 117.4 trillion in June, increasing 8.4% during the quarter and 31.8% over the last 12 months. Time deposits grew 8.2% during the quarter and 45.5% year-over-year while peso-denominated transactional deposits declined 8.4% during the quarter but increased 17.1% year-over-year. Private sector dollar-denominated deposits amounted to $39.4 billion, increasing 1.9% during the quarter and 29.6% over the last 12 months. Peso-denominated loans to private sector averaged ARS 98.7 trillion in June increasing 6.8% quarter-over-quarter and 36.4% year-over-year. Private sector dollar-denominated loans amounted to $23.5 billion recording a 14.6% quarterly growth and a 48.8% annual increase. Overall, the second quarter was characterized by a more stable macroeconomic environment improving real activity indicators and continued expansion across key financial system aggregates. Moving on to Grupo Galicia. Net income for the second quarter amounted to ARS 258 billion, 12% higher than in the previous year which represented a 2.1% return on average assets and an 11.3% return on average shareholders' equity. This result was mainly due to profits from Banco Galicia for ARS 158 billion from fund of [ FEMA ] for ARS 38 billion from Naranja X for ARS 36 billion from Galicia Seguros for ARS 23 billion and from Galicia securities for ARS 8 billion. Banco Galicia net income improved by ARS 211 million sequentially and 21% compared to the second quarter of 2025, supported by lower funding costs due to the consolidation of lower interest rates, stronger performance from government securities and derivatives and a modest expansion in net interest margin. Credit quality trends also improved, reducing loan loss provisions while ongoing integration synergies from Galicia mas ex HSBC, drove further efficiency gains. Results additionally benefited from lower inflation driven monetary losses in a decelerating inflation environment. Average interest selling assets reached ARS 30 trillion, 6% higher than in the previous quarter primarily driven by a 27% higher volume government securities in pesos and a 37% higher volume of government securities in dollars, together with the 9% growth of dollar-denominated loans, while peso-denominated loans decreased 7%, in line with a more selective origination policy and lower demand. In the same period, its yield decreased 190 basis points reaching 21.1%, 34.8% in peso portfolio and 7.4% in the dollar portfolio due to lower yields on both local and foreign currency denominated loans. Interest-bearing liabilities decreased 3% from March 2026, amounting to ARS 24 trillion, mainly due to a 10% lower volume of liabilities in dollars, partially offset by an 8% increase in peso-denominated time deposits. During this period, its cost decreased 159 basis points to 10.1%, reflecting the broad-based decline in interest rates that began towards the end of the first quarter of 2026. Net interest income decreased 3% when compared to the prior quarter. Interest income declined 8%, mainly driven by a 17% lower interest income from loans and other financing due to lower volumes and the decline in interest rates during the quarter. This was partially offset by a 20% higher income from government securities, primarily driven by higher average portfolio and stronger returns from CPI-linked securities. Interest expenses were 16% lower, mainly related to deposits. Net fee income increased by 2% quarter-on-quarter, mainly due to a 14% decrease of fee expenses. Net income from financial instruments was 275% higher than in the previous quarter, mainly due to lower losses from derivative financial instruments, which decreased 85% and 84% rise in results from the derecognition of assets driven by sales of [indiscernible] securities classified at fair value through [ OCI ], higher gains from government securities measured at fair value and a recovery in the results from private sector securities. Results from quotation difference of foreign currency decreased 13% quarter-on-quarter. This performance was explained by a lower level of transaction activity given that the previous quarter had registered a higher volume of operations by retail customers. Provision for loan losses declined 8% quarter-on-quarter driven by a decrease in loans becoming Stage 3 and the associated deterioration of that portfolio, reflecting signs of improvement in the delinquency indicators observed during the quarter. Personnel expenses went up 12% sequentially due to an increase in the provisions for variable payments aligned with improvement in the financial performance, while administrative expenses were flat quarter-on-quarter. Other operating expenses declined 15% quarter-on-quarter driven by a 14% lower turnover tax, 13% lower other fee-related expenses and a 21% decrease in other financial results. The bank's financing to the private sector reached nearly ARS 25 trillion at the end of the quarter, up 4% in the last quarter with peso financing decreasing 4% and dollar-denominated financing up 19%. Deposits reached ARS 27 trillion, 7% higher than the quarter before due to a 7% growth of deposits in pesos and a 6% increase in dollar-denominated deposits. The bank's estimated market share of loans to private sector was 15.1%, 69 basis points higher than at the end of the previous quarter, and the market share of deposits from the private sector was 14.3%, 42 basis points higher than in the first quarter of 2026. The bank's liquid assets represented 93.1% of transactional deposits and 55.2% of total deposits compared to 95% and 56.6%, respectively, as of the previous quarter. As regards asset quality, the ratio of nonperforming loans to total financing ended the quarter at 8.3%, reporting a 60 basis points deterioration as compared to the 7.7% of the first quarter of 2026. The coverage with allowances reached 92.8%, up from 91.4% recorded in the prior quarter. As of the end of June, the bank's total regulatory capital ratio reached 26%, while the Tier 1 ratio was 25.9%, both increasing 4 basis points from the end of the prior quarter. In summary, during the second quarter, profitability improved sequentially, supported by a stronger contribution from financial instruments, lower funding costs reduced loan loss provisions and continued efficiency gains from the integration. Business volumes remained resilient with growth in total financing and deposits, particularly in dollar-denominated loans while we continue to gain market share in both loans and deposits. At the same time, the nonperforming loan ratio increased during the quarter although coverage levels improved and provisions decline, reflecting early signs of stabilization. Overall, Grupo Alicia maintained strong liquidity and solvency metrics, and we remain focused on disciplined growth preserving capital strength and further improving asset quality and profitability over the coming quarters. Now Gonzalo Fernández Covaro will make some additional remarks.

Thank you, Pablo. Talking about our financial performance, as Pablo said, we saw a better quarter as interest rates stabilize at lower levels with margins slightly increasing to and also better returns from our loan portfolio. Our cost of risk continue going down as we expected, and expenses under control enjoying the results of last year's restructuring. Talking about volume, loan growth continued to be slow due to a low demand in the commercial credit [indiscernible] peso, better in dollars and strict origination policies on the consumer side. We expect some recovery in the lending volume in the second half. Our projections for loan growth are now around 10% to 15% with more participation on dollar side of companies as it has been happening in the second quarter. We see deposits growing around 10% for the year. As we said in prior calls, cost of risk already had its peak in the fourth quarter, and we started to see credit loss charges to decrease in the first and the second quarter. stabilization and reduction of NPLs will check 1 more quarter than expected. We are seeing now the peak in the second quarter. So in June now, with a stabilization and reduction going forward. In the bank, we expect a slight decrease of NPL ratio in the third quarter and reaching around 6.3% at the end of this year on the NPL ratio. We see a cost of risk for the bank around 8.3% for the full year 2026. That's our expectation for the rest of the year. We are now at 9.3%. So we expect that grade losses charges will continue going down in the second half as it has happened in the first 2 quarters. On the cost side, we are capturing the benefit of the restructure in May last year, as I said, after the HVC acquisition and expect to end the year 11% lower cost than prior year. We already have the same amount of head count than the one we had before the acquisition [indiscernible]. And lastly, regarding returns, we see our ROE around 10% for the year. We trust that the lending volume will pick up to achieve this goal. Of course, while the lending growth is low, we also invest in other earning assets like government bonds at good yields. The goal here is to grow earning assets to be able to continue to improve our needs and results. So with that, I think we are open for questions.

[Operator Instructions] Our first question comes from Daniel Vaz from Safra.

Gonzalo and Pablo, maybe my first question will be on your macro expectations for the year. I guess last quarter, you mentioned inflation between 28% and 29%, I would love to get your views on that at the margin as we are looking at August, it seems like inflation is a little bit better, but I'd love to hear your thoughts. And secondly, I'd like to touch base on your loan growth between 10% to 15%, as you mentioned, right now. And you're also appetites to government bond at good yields. Do you think your loan growth could be maybe picking up later as you have good government bonds at goodwill yields right now for you to capture? Or -- and maybe your asset quality isn't as good as you expect for the beginning of the year. So I guess my question is maybe 2027, we still have a not so great loan growth, but good yields improving from treasury results. Maybe that's the -- your P&L balance could be more inclined to that. Is it a good assumption?

Thank you for the question. Well, first, talking about economic projections for the year. We see inflation at 29%, around 29% for the year. GDP growth around 2.6%. So it's around the same numbers you were mentioning regarding inflation. Regarding our portfolio mix and our -- I would say that it's both. I mean we are concentrated in trying to grow loans because that's the business we want to grow because it's the one that is sustainable. So we are very close to our customers and many commercial customers to see opportunities. We have seen some dollar opportunities that we capture mainly in the oil and gas arena. And also, there have been some privatizations of state-owned companies that we have been supporting some of the groups [indiscernible] for those that also already require some financing. So we are active there. Of course, it's still slower than what we would like. And on the other hand, yes, we grew in government bonds. I would say that government bonds has a limit. I mean it's not something that in order to continue to improve results, we need to grow our balance sheet from the state we are now. So we can still grow some. We have room to grow more government bonds. But the point is that it is -- we have internal limits, of course, for prudency. So we need to grow lending also.

And also to clarify, in the bond portfolio, we have to think. We can have the bond portfolio to buy longer-term bonds to come and put them to a crew, we can classify them as the whole to collect and sell or hold to collect and leave them to accrue interest, but also we have the trading activity. As you know, that, that will continue to happen, that we see opportunities to buy bonds and then sell them and buy longer terms. So we will capture the difference. So it will be both. The trade activity, of course, are going to be very, very active as we have been in the second quarter to capture opportunities. As you know, we have some volatility between now and the elections because it's usual when elections come closer, so we'll try to get advantage on that. We will continue to see opportunities to capture new bonds that have good yields and just have them accruing interest. But at the same time, we'll need to grow our lending portfolio because, as I said, we have internal limits for [ group ] for keeping our bond portfolio. And so we need to do business with the private sector. And that's something that we will be focused on and we are very focused on and we'll continue to be focused on.

The next question comes from Ernesto Gabilondo from Bank of America.

My first question is one that I made to the other banks, and it was on the political and macro outlook. So I think it was a couple of weeks ago or 3 weeks ago, we started to see some service or kind of initial pulse ahead of the presidential election next year. So I just wanted to hear your thoughts on what did you see in terms of the business and demand, the consumer confidence, the family indebtedness, the financing of the [indiscernible] projects. Is it something that Galicia can actually participate or it will be more the next years? So all of these things ahead of the election. And my second question is on your ROE guidance. So you delivered 7% in the first half. You mentioned a number, I wasn't -- I didn't get it. So if you can also remind us what was the ROE now for the year? And how should we think about the evolution during the second half? And also, how do you see your medium-term ROE? What do you expect that recovering -- when do you see loan growth start recovering as you've said you have reduced the guidance of 10% to 15%. So just wondering how you're seeing the picture more for the next year.

Thank you, Ernesto. I mean, talking about, I mean, the future between now and the election, I mean we will see that Argentina always when there is election, we may have some volatility. We are not seeing it yet. We see that Central Bank has a good and a stronger set of reserves that can help face any volatility issue or any higher demand on dollars than, for example, what happened with last midterm selection. So we believe that, that will help that if there is any volatility that is something that is control, that is something that won't generate big disruptions. So I think that's good for what we are seeing. I mean, I think looking at [ port ] at this time is a bit too early. I mean, this can change every minute. So we are not really focusing on that. I mean, as you know, we are here in Argentina for the long term. So we want to do business regardless the situation, of course, with caution when we see that delinquency is going up, we will change our resection policies, and we adapt to each of the moments, but so far, I mean, things are doing fine. I mean GDP is growing. We are, as I said before, very close to our commercial customers mainly in the oil and gas arena, in trying to serve all the value chain and all the suppliers also of all the oil companies and something that we are doing. And we are, of course, participating. The [indiscernible] financing is very, very big tickets. So at some point, the local financial system we participate with in a very small portion. Some of those financings are already satisfied with international issuances, but of course, we are there for any local portion of the financing that is needed and also as I said before, to serve the value chain of the bigger companies. But as I said, I mean, so far, so good. I mean, we expect some volatility, as always, but nothing really big because we see that Central Bank is better capitalized and with better reserve or the ones that have the last elections. And we see talking about -- you also mentioned indebtedness of the families, we've seen that, that's improving, at least in our portfolio that's improving, and we are seeing our roll rates improving. So that's something that, of course, taking caution on where to land. I think at least for financial system, the worst is -- we are leaving behind the worst. Talking about returns, ROE, what we are seeing the ROE for the year is 10%, around 10%. I mean I cannot measure [indiscernible] that number, but around would say, around 10%. We are 7% and something cumulative. Yes, of course, we see that, that will continue improving, I would say, around 12%, try to end the year with something around 12%. That's the goal, and that's what we are expecting and that's what we are aiming to. For that, we need to continue growing our lending portfolio, of course, at a lower level than what we expected at the beginning of the year, but we are confident that mainly in the commercial side, we can get some traction from now on. Talking about medium-term ROE, of course, that's our -- when we talk about next year, I think we are aiming to be at 15%. I think it's too soon to give a guidance for next year, but that's our target and our aim for next year, and we will confirm the guidance in the third quarter call. That will be closer to year-end, but that's at least what we are aiming and when we do our projections and when we try to shape our balance sheet towards that, again, we confirm that later in the year. When you talk about medium term, well, medium term, it's always -- we're aiming to be above 15%. Where we say between 15% and 20%, we need to see when we are going to achieve that. As you know, we have talked in the past, we have the inflation accounting. That is something that is a burden for Argentine banks and as inflation continued to go down. I would say that in the last year that we have inflation accounting with the lower inflation, it will hurt us more than when we used to have high inflation because interest rate will continue to go down. And with a lower inflation, having that drug in your P&L will be harder and also we'll be more comparable with other countries and -- but we're still having the inflation accounting. So when we are going to reach that, well, it's hard to say, of course, that for sure, when inflation accounting is gone, we still need to see when that will happen. But our long-term ROE target is 15%, 20% talking about next year. we are aiming at 15%, we'll confirm later in the year, if that's something that we'll see first.

The next question comes from Tito Labarta from Goldman Sachs.

Just I guess my question is on the deposit side of things. You could see a pickup in deposits in the quarter even in peso deposits, although there was about a 22% jump on the savings deposits. Just to think about how are you thinking about deposit growth going forward, both in pesos and in foreign currency, particularly in terms of liquidity, if loan growth does improve into next year, you believe to fund that? And do you think pickup we saw in the peso deposits, in particular, is that sustainable? Was there anything particular in the quarter that jumped in the savings deposits? And yes, I guess I can see that going forward.

Thank you. I mean, yes, deposits have imposed in the second quarter. We expect this to continue. As I said, we expect for this year a total growth of 10%, both in deposits I mean we have been managing also the balance sheet. And when we see that the put that the lending is tracking, then we also go and raise deposits is something that we have been managing at some time, we are not growing deposits because we don't need them. So we prefer to do a more efficient balance sheet management. [indiscernible], we continue to customers to increase transaction on deposits and side deposits, but in terms of time deposit that is the one that we have been lagging, but lagging May on purpose because as we don't see the loans tracking high, we prefer to manage better the balance sheet, but deposits are there, we have trade proved that when we go and look for them, we get those deposits. So it's something that will continue raising if the lending is higher as we expect it will happen. That was pesos. So in terms of dollars, we'll see some growth, but it will be, of course, lower than before. We don't have now tax amnesty or there is something, but we don't see that it will be that explosive than the ones of years before. But as U.S. dollars lending continues, okay, we are going to also be active in the markets with issuances in the local market in dollars. We have been issuing commercial papers, and we'll continue that to fund also lending in dollars that is the one from the wholesale arena with the one that we see tracking better. So it's something that we are not that concerned because we think that we can bring those deposits if the lending is there.

And maybe just one follow-up question. I get this one on capital. To see a bit of an increase in your capital ratios this quarter. But with ROE still below the cost of capital? How do you think about the capital ratio evolution from here?

I mean capital ratio, I mean, as you know, is high. So it allows us to grow and to -- we think that we have enough capital for the next 3 years, I would say, this year and 3 more for the -- with healthy growth, not with the growth that we have been having, which is low. We expect that at some point in Argentina will start growing its loans as percent of GDP. So we -- for the year-end, we expect to be between 24% and 25%, I would say, capital -- the capital ratio. But then on top of that, we -- with our estimations and paying a reasonable amount of dividends, which is more or less what we have been paying in the past. We expect to have capital for the next 3 years with a country that is growing in real terms, the lending and without needing to raise capital at least for 3 years, then of course, we'll see. But -- and we are okay with this we prefer it. I mean we think that the value of our franchise is the growth ahead rather than a higher dividend. So we will be combining dividends, but at boing that led us growth and capture the opportunity Argentina may bring, if everything continues within the stabilization path. So we think that we have the right level of capital for the growth that Argentina can bring in the next 2, 3 years.

The next question comes from Brian Flores from Citi.

My question is on the net interest margin sustainability, this quarter benefited from funding costs, repricing faster than asset yields and from stronger results on CER linked securities. As rates continue to normalize, how should investors think about the balance between net interest margin pressure from lower loan yields and support from funding costs and treasury positioning?

I would say that, yes, of course, that margins will continue to have pressures on the downside as inflation goes down. For the year, talking about the bank, I think we see margins at 16% for the year, for the full year. We are a bit higher now, but we still see that the second half maybe have some pressure to the downside. So -- but full year and average of 16%, I think, is fair to say. But then, of course, next year and the forward onwards, that will have more pressure to the downside if inflation continues going down as we expect. But that's fine. I mean we believe that also the inflation accounting will go down. And the -- that's we're working also in efficiency and expenses reduction in order to compensate that. Total margin is affected by the mix of pesos and dollars. I mean it's totally different. As you know, the mix, the margin between peso, which is above 20% and dollars, which is 3%, 4%. So as we have been growing the dollar lending our margin is also affected by that. It's not that we are deteriorating the peso margin, but the mix affects the numbers. So that will also be affected on the future depending on how the mix evolves going forward. But again, we are getting ready our structure, our cost reduction initiatives and everything for a bank that will have lower margins as will happen with Argentina with a lower inflation. On the other side, we will have lower accounting inflation impact, so that will also be compensating the effects.

Good. Now it's much clearer. Just one follow-up, please. Looking ahead, what do you see as the single largest driver for ROE expansion from current levels towards your through the cycle profitability ambitions, credit growth, lower credit costs, operating leverage or balance sheet optimization?

I would say that credit growth. I mean we need to grow our top line, our credits. So that's the main one. Cost of risk reduction. I mean we are still at high levels of cost of risk. We know that. We need to continue reducing it, but something that is low. Of course, we are aiming at some point to get it to a 5%, 5.5% cost of risk, we ended with 9.3%. So we are still at higher levels. And so that will be reducing quarter-by-quarter, as I said before. I mean, for the year, we expect to be at 8.3%, and we are at 9.3% now. So that will also be helping this year and next year because next year, we expect [indiscernible] another notch down on cost of risk. So that will be another big contributor to profitability. And we continue with our work in efficiency, even though we -- we made a big one after the [ HVC ] acquisition. We continue not with major initiative but with a regular business as usual plan of head count reduction, branches reduction or branches optimization. That will continue, so we can be more efficient, bring more automation, bring more AI to also have to contribute to the margin reduction. So the only point where it won't come is for margins increase if Argentina continues in this path, but it will be then a mix of balance sheet growth, lending growth, better cost of risk and better efficiency.

The next question comes from Yuri Fernandes from JPMorgan.

Just a clarification regarding a few of your guidance, especially the cost of risk. I think you mentioned 8.3% for the full year. Just checking if this is the end of period or if this is the average for the year, and if this is Banco Galico or if this is the entire holding because I guess your cost of risk for the first half for the group has been running around 11%, 11.5% and for the bank around 9.4%. So just checking 8.3%. This is the fourth Q '26? Or is it the average of the year? So that's question number one. And the same about margins. You just mentioned means around 16%, but when I look to the NIMs of the group here, I see your NIMs for the first half closer to 18% like 17.9% 17.8%. So my question is, is the average or the end of period? Because if this is the average, this would imply a much lower NIM in the second half of the year?

Yes, sorry. Yes, I was talking about the bank, maybe I didn't clarify that. So it's -- the 8.3% is just a bank, which is at 9.3% now going to 8.3% for the full year for the 12 months, let's say, I mean, it's 8. 3%, we expect to be. The cost of risk of the bank only for the full year. When I was talking about margins, yes, I was talking also about the bank which is around 17% something. So we expect just to end the year at 16% by the bank and the full group will be more or less around the total group, I think it's almost 18%. I think we expect to end the year around 17% let's say, in the last quarter, 17% in group and 16% in the bank. And cost of risk was bank and in the full year in the 12 months.

The next question comes from [ Eduardo Zeng ] from UBS.

I have 2 of my slides. So first, a quick follow-up on the growth trends that you highlighted. You mentioned some opportunities in corporate dollar loans than expanding the private sector. I just would like to know if we -- what we could expect for the retail segment? I mean if this more restricted approach that we saw in recent quarters could continue. So this is the first question. And the second one is regarding NPLs. So you mentioned about some stability trends in the end of the quarter, and we all saw that through the broader trends. So if you could provide a quick color on which segments are driving this more significant inflation. It will be very helpful.

Okay. The first was the growth in retail. I mean no, we are working had trying to grow also the retail portfolio, I mean, mainly in the personal loans arena, working with risk in order to go to different segments. And we have been seeing our volume in personal loans picking up from the bottom that we had that it was kind of the first quarter of this year. We have been growing the [indiscernible] is moving, the total portfolio is being moved slowly. But we expect that for the second half that can increase again very carefully, going to the right segments. I mean, we have now better products with a lower rates for better segments than going after those that even though they have lower rates, they have also lower cost of risk, also profitability is the same. And so we expect -- I mean, my point is we don't expect the growth we used to have. Still this year, of course, at some point, we'll resume the growth. But for the second half, I would say that a portfolio of personal loans may grow 4% to 5%. But that's better than what we have been seeing. But it's something that we are working and doing champion challengers all the time in order to find ways to grow in the retail segment with good credit quality. And it's something that -- so we expect to improve, not at the point of the commercial engine. But again, we'll be very -- we are being very close to that. So to see whether it's the moment to restart the growth in that arena. And the second point was NPLs, no? I mean NPLs, yes, we have seen -- we're starting to see the turnaround of that. I mean this is mainly -- the main products we have is credit cards and personal loans. And in both, we are seeing that. Of course, that -- as we said before, we are targeting different segments now, and we are attacking also different segments, higher -- I would say, higher segments, and that's paying back. And we -- and that's what we are seeing improvements. We still continue to do champion channel sales to lower segments and still is not the time to grow -- to go back to lower segments, but at some point, we would -- for the end of the year, we expect to be at 6.3% in the bank of NPLs. So that's a reduction from where we are now. We are at 8.3% -- so -- and in general, I mean, we are seeing the amount of customers going or rolling through Stage 2 and 3 improving. So it's something that we expect to continue to see, and we are monitoring that very, very closely.

The next question comes from Carlos Gomez-Lopez from HSBC.