Regional S.A.B. de C.V. ($RA)

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Regional's First Quarter 2026 Earnings Conference Call. We are joined today by Manuel Rivero Zambrano, Chief Executive Officer of Regional; Enrique Navarro Ramirez, Chief Financial Officer; and Alejandro Galvez, Head of Strategy and Planning and Investor Relations. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Manuel Rivero Zambrano. Thank you, and please go ahead.

Thanks. Good morning, everyone. I hope you and your families are well. We're presenting our first quarter 2026 results, which reflect our continued focus on disciplined execution amid a more challenging environment. Mexico's economic environment has become more challenging, slower GDP growth and trade policy uncertainty are affecting business confidence in ways we are actively monitoring. Our commercial strategies continue to focus on expanding our presence in key regions while maintaining strict cost control and credit underwriting discipline. We remain focused on verifying our income streams particularly through nonfinancial revenue growth as well as increasing the share of fixed rate loans, which provide partial compensation for margin pressures. Net income for the quarter reached MXN 1,515 million, a 7% year-on-year decrease. Our return on average equity contracted to 224 basis points year-on-year to 18.4% on a last 12-month basis. While this reflects pressure from operating environment, profitability remains at solid levels and continues to reflect our focus on maintaining asset quality and long-term returns. Asset quality remained resilient during the quarter. Our consolidated nonperforming loan ratio stood at 1.3%, a 7 basis points improvement year-on-year, while cost of risk contracted 3 basis points to 1%, both metrics reflecting the discipline of our underwriting standards. We continue to monitor credit trends closely, particularly given the current macro environment. Regional delivered 9% year-on-year loan growth with particularly strong performance in Jalisco and solid wholesale momentum in Mexico City, where the portfolio grew 13% quarter-on-quarter. Our strongest sequential performance in the region in recent periods. On the funding side, core deposits grew 33% year-on-year, reflecting continued client engagement across our network. Together, volume growth in gold lending and deposits drove 3% expansion in the financial margin. Our densification efforts showed progress with core merchant fees growing 12% year-on-year and insurance fees 41% year-on-year. Nonfinancial income grew 5% year-on-year, continued progress toward a more diversified revenue base. Operating expenses grew 11% year-on-year, driven primarily by technology investments and geographic expansion, both delivered decisions that support our medium-term growth agenda. This resulted in an efficiency ratio of 43.0% and a 265 basis points increase year-on-year. As the investment cycle matures, we expect expense growth to moderate and efficiency to improve progressively from current levels. The wholesale loan portfolio grew 9% year-on-year, with particularly strong performance in Mexico City at 25% of the book and Jalisco at 23%. We have been seeing some moderation in origination demand as business has been adopting a more cautious stance, a trend we believe in the sector-wide and consistent with current macro environment. Wholesale banking time deposits increased 63% year-on-year, reflecting a strong institutional client activity. Despite this growth in deposits our CASA ratio stood at 41.5% supported by continued momentum in demand deposits across retail and commercial clients. Retail banking continues to show healthy momentum with the preferred banking court deposit growing at 50% year-on-year, reflecting solid client engagement and trust. Our branch network continues to expand in a disciplined manner, focused on the high potential locations and aligned with evolving customer needs. Notably, consumer and auto loans both grew 10%, an indicator of growing client acquisition and deepening relationships. Asset quality remains in key strength with nonperforming loans ratio at healthy levels across all segments. Wholesale 1%, consumer at 2.9% and auto at outstanding 0.6% and mortgage at 1.1%. These figures reflect the effectiveness of our underwriting standards and the resilience of our customer base. Hey Banco continues to advance in a strategic shift toward profitability over growth, prioritizing higher-quality customers over volume expansion. This disciplined approach is delivering results. The individual loan portfolio grew 10% year-on-year, while our business loan portfolio reached MXN 4,559 million, a 23% increase, demonstrating strong traction in target segments. Hey Banco reported financial margin of MXN 282 million and net interest margin reached 10.4%, an increase of 271 basis points year-on-year, reflecting improved asset yields and a more profitable customer mix. Our efficiency ratio improved to 53.0% and a 196 basis point year-on-year reduction, highlighting the progress in cost containment even as we continue investment in automation and digitalized capabilities. Our active individual customer base stands at 458,000, consistent with our strategy of prioritizing quality over scale. We reduced our cost of risk by 76 basis points to 5.6%, while remaining vigilant on credit trends. Net income for the quarter reached [ 7 million ], up 59% year-on-year. And given the progress we have made in the customer mix, pricing and discipline and cost containment, we expect profitability to continue trending higher. The spin-off is complete and Hey Banco is operating as a fully independent entity. Turning to Hey Banco. Total billing increased 90% year-on-year, growth primarily driven by payment facilitator segments of 53% year-over-year reflecting broader adoption of acquiring and processing solutions among partner merchants. Stable contributions from aggregators and large corporate clients continue to support volume diversification. In conclusion, our results this quarter reflect the investment cycle and a more challenging macro environment, both of which we anticipate. What gives us confidence going into the rest of 2026 is not the headline growth rate, but the underlying quality of our franchise. Asset quality remains resilient. Capital stands at 15.7% and the strongest in recent years. Hey Banco is reaching profitability in our core business, continues to generate consistent returns. We expect NIM to begin normalizing from the second quarter onwards as deposits repricing stabilizes. And we anticipate top line dynamics to improve substantially through the year. We remain focused on executing against our 2026 targets, and we are confident in our ability to deliver them. Moving forward, we will continue to enhance our operations and explore new opportunities fully committed to our strategic goals. We're confident that Regional will maintain our strong financial performance, ensuring superior profitability and asset quality for the benefit of -- for all the shareholders. Thank you very much. We appreciate any questions.

[Operator Instructions] Our first question comes from Maria [ Masoni ] from Bradesco.

[indiscernible] I have a question regarding your margins. We have noticed a meaningful decrease this quarter. Can you give us some color on the main drivers for this? Your cost of funding was stable quarter-on-quarter. So we want to understand like how much came from your sensitivity to interest rates? Anything else on mix or competition?

Yes. Thank you for your question. There is -- as you mentioned, there are two main drivers. The assets are repricing faster than expected. Basically, all the business loans portfolio is variable indexed to [indiscernible] and is the main reason of the decrease. And on the other hand, the deposits is taking longer. And as you saw or maybe [indiscernible] saw, but there is also a change of mix between time deposits and demand deposits. Basically, that's the main explanation. What should we expect to the future is to recover not fully, not all the way to the 6%. But we have already seen in April, the repricing of time deposits that is lagging and usually on that way. And we continue shifting the mix of the portfolio to segments like small businesses and consumer lending that as they are very small portfolios compared to the medium and large companies segment or the wholesale as we call it. It will take for the next 2 quarters but basically, the improvement that you will see in the next quarters will come from the repricing of the time deposits that is taking longer than -- not than expected, is longer than the loans. Loans next month, at the end of the month, the rate is changed and time deposits usually is 90 days, then it will take 2 more months to reprice the whole deposits.

That's super clear. If I may do a follow-up regarding your guidance for NIM, right? So you're currently below the guidance. So you mentioned that you expect a gradual recovery over the quarters. So looking at the full year, where your expectation for now to stand in the middle or more to the lower end of your guidance?

No, to the lower end of the guidance to the 6%, we also have to delete some small impacts, but at the end, our impact on the spin-off and the management of the two treasuries on the consolidated level was an impact. It was planned in terms of how excess of liquidity in both banks once they were totally separated. But right now, we are managing an integrated treasury to delete that excess of liquidity that is expensive. If you saw we increased up to MXN 5 billion [indiscernible] no, no, it's not security investment. It's the debt that we issue in the leasing company, the [indiscernible]. And we are -- it's our more expensive liability or funding. Then there are some room, but not all the way to the 6.3%, obviously, on the 12 months is more close to the 6%.

Our next question comes from Brian Flores with Citi.

I wanted to maybe check with you because as my colleague was mentioning, I think the delta, right, from your consolidated figure for the first quarter versus the run rate as of February, which is the public data from CNBV, showed as you mentioned, better trends in NII, which we now understand is coming and should continue coming from the funding side. And we also saw some, I would say, pressures on the provisioning side again during March. So I just wanted to check with you, Enrique, if the run rate from provisioning is higher. We also noted that during the quarter, you had some help from reclassification of NPLs towards current loans. So I just wanted to understand if this is to be expected also to continue helping or if we should see maybe a higher level here on provisioning?

On provisioning, No. On provisioning, we had in January, we had how do you say, we wrote off some of the portfolio on Hey. You can see the improvement on the NPL on Hey Banco before the spin-off. That's one of the explanations. And in March, we have been mentioning this 5 to 6 cases. There are 6 large cases that we are managing in the wholesale business in Banregio that one deteriorated, but is in the process of improving. We should see an improvement in Banregio wholesale segment on the next quarter. All in, consolidated, we should remain between 0.9% and 1% for the full year basically in the two ends. What we have seen is that Hey Banco improved the provisioning and should be maintained not only because the write-offs, but also because the improvement of the credit quality of the portfolio of individuals. The small business is pretty healthy and the auto is more healthy. And in Banregio as the whole year has been the wholesale and there are still 2 out of the 6, then we are working -- we are almost there on the fore and the asset disposal that should maintain below 1%. We maintain our guidance up to 1%.

Perfect. Just confirming, so you're still comfortable with the range. So unlike maybe in the NIM that is more on the lower part, here is maybe the midpoint. Is that correct?

Yes.

Great. And if I may do a second question very quickly. We saw yesterday the announcement from President Sheinbaum regarding this maybe coordinated plan to waive commissions from electronic fuel payments on gasoline-related acquiring fees. So I just wanted to see with you if you have any color on this, if you have -- I know it's a short-term impact, obviously, expected to be, I would say, remunerated by higher transactions down the road. But if you could give us some color on this coordination, that would be -- I think it would be great for investors.

Yes. It's not in the acquiring business that is something that is misunderstood. -- is on the issuing business, obviously, we also have an impact, but it's very small. Even if it were in the acquiring business, we have a very reduced number of agencies, oil and gasoline agencies. But in the issuing business is where the commission is moving to 0%. If you saw the percentages where made sense is the commission that we call the intermediation commission that goes to the issuer of the credit or debit card. The acquiring, that is the other 1% usually, it's like 1% and 1%. In this case, it's 1% and 0.75% and 0.49%. The 0.75% for credit card and the 0.49% for debit is the part. We haven't -- we don't have a number of specific transactions. We can -- if you call Alejandro maybe in 2 weeks, we can have the historic income should not be that large and should benefit in other parts, as you mentioned, more transactionality. And the full objective that we fully agree with the government is to reduce the use of cash and increase the use of electronic payments.

Our next question comes from [indiscernible] from GBM.

My question is regarding Hey Banco. We saw in the CNBV data from February that it delivered an ROE above 20%. So we would like to understand like where this could go forward? And what would you expect to reach in the end of the year?

Yes. Can you repeat the number? You saw...

We saw an ROE of above 20% in February from the CNBV data.

No, no, no. To be very, very clear and transparent, we are -- as I mentioned, we did write-offs in advance. And right now, we are not -- we have two expenses that are missing in February and March. Yes, the normal should be like MXN 30 million. That month was MXN 40 million and March was MXN 33 million. And the expectation is around 15% of ROI for this year. MXN 260 million out of the MXN 2.1 billion equity.

Our next question comes from Ernesto Gabilondo with Bank of America.

I have three questions from my side. The first one is when analyzing the first quarter net income, we see there's an 8% contraction for the full year. So how are you seeing your 2026 guidance after this first quarter? And then my second question is in terms of your NII growth. I think you explained it a little bit in terms of NIMs, but how should we think about NII growth in the next quarters? We saw it was kind of limited this quarter, as you explained, because of lower rates. Also, there has been soft lending activity, but it was especially in the first 2 months. But then -- you started to see stronger demand in March and actually, you end at a high single digit above some of your peers. So thinking more on the next quarters that the easing cycle is almost ending, that you posted this high single digit and you probably will have higher financial interest in the next quarter. Then you have Hey Banco, which is growing the loan book at the double digit. So how should we expect the NII growth going forward? Should it start to go from a mid-single digit to start going more to a mid- to high single digit? Any color on that will be helpful. Then my second question is on noncredit-related revenue. So we noted fees came at mid-single-digit year-over-year growth. So just wondering if you start to see more transactions or better economic activity, if we can start to see also this line with a little bit of upside. And then also in the noncredit-related revenues, we saw other income. Other income, we saw there was a wider loss in the quarter. I don't know if this is related to seasonality in loan recoveries and sale of assets. So maybe some of those materialize at the end of the year. So I also wanted to know your thoughts on that. And my last question is on OpEx. We know it came below the double-digit growth. It was a good quarter from that. But having said that, you have said in the past that we should expect double-digit growth for '26, and that is explained because of branch openings, technology investments or all of what you have said. So I just wanted like to all of these questions, how can I expect the guidance for the year? Is there -- where should I be seeing like the tailwinds to feel comfortable that you can still achieve your guidance?

Thank you for your questions, Ernesto. I will start with the last question. We will maintain the guidance. We know that if we consider an average of MXN 1.7 billion looks challenging, but our budget, that is really what guide us and our commercial activity is increasing and then I will move to the parts that will help to the increase. We are below our budget, but not for MXN 200 million to recover. In terms of I will go backwards on the questions. Operating expenses, OpEx, we have seen an impact on salaries and benefits. that happens in the first quarter because it's where we see the general increase. And also we have to consider other parts that is not like the increase that is 1% additional every year and some related provisioning. But the total number of employees is 300 less employees than last year. If you remember, we disclosed in the third quarter a reduction of around 10% of the people and like 7% of the cost. It will be shown on comparison every quarter on salaries and benefits. And the other expenses, the two main reasons that increased and that will be maintained is all the investment that we are doing on the expansion, geographic expansion as well as all the investment that we have done in technology for both banks and also for the spin-off is shown in the recurring depreciation or amortization of the projects. That will lead to the low teens in the whole year that is maintained. The good news or bad news as if you want to see it, is that all the investment done in the expansion is already done and it's very easy to project because it's depreciation for the next 5 or 10 years. And the same happens with the project. So the investment done that you can see in the intangible assets, it will amortize in 7 years then you can project it. That's -- it's a bad news because you cannot reduce or depreciate faster, but it's a good news because also gave stability on the projection to maintain our guidance or our expectation because it's not a guidance officially that the mix of the both salaries and benefits and OpEx will go to low teens even it could go a little bit lower, but we didn't have the impact on the what we call other benefits. We were monitoring very closely the base salary. Base salary is almost not increasing at all, but all the other government-related and accounting-related ones provisioning increased more than expected in this quarter and should not do it in the next quarters. In terms of net interest income, as I mentioned, we have already seen in April, it's not yet public information, it's internal one, the repricing of time deposits, at least by 10 basis points in the first 15 days, then that will help the NIM and the loans is not repricing anymore because there was not a change on the policy rate this month. Then also the growth. We don't have a bulk number or a total number growth. We maintain mid single digit mid-single digit for the growth of margin as an amount, and we maintain high single digit for the loans. As you have seen, March was especially good as we are increasing the pipeline and liberating some of the loans that were approved last year, but was fully contracted and executed this first quarter and the pipeline is good for wholesale and small businesses. I don't know if I missed any of the questions.

Only in terms of the market -- noncredit-related revenues. So any color on fees and any color on other income?

Yes. On fees, we have the FX is recovering. If you remember, in the third quarter, we did a close of very aggressive of the business to review and to do a full due diligence to our largest customers in FX. The due diligence took longer than expected until the end of the year. This quarter, we saw an increase, and you can see versus the third and fourth quarter that were the lowest ones. where we are not that well is in derivatives, all the IRS market-related income. Other market-related income, there is no FX. But in FX, that is our largest one, we have seen a recovery, and we expect to continue recovering all the way that it was on July or June before what happened with the other two institutions and that we decided to be more strict and more to do a full due diligence to all the companies. Even we closed in our electronic banking, the international transfers and we are opening once we have finished each one by one, each customer that make international transfers, especially to the countries that we decided mainly the Far East say that. In the other...

Just before other income in terms of fees, so it was around 5% year-over-year growth in the first quarter. Should we expect this trend? Or should we start to think it could be between mid- to high single digit?

It should move to mid- to high single digit, closer to 10%, but not above. The 15% that we had last year would be very difficult for -- in all the lines. I won't go. And in other income, we had high expense, as we mentioned in the last conference call. In the second quarter, we created a lot of provisions for securities investments and derivatives from customers. We adjusted our methodology to reflect the real risk and then we free all the provisioning on the last quarter. This quarter, the provisioning was very small, like MXN 10 million. But it shows the contrast, but we should see the second quarter where all the expense was done, and we are not changing again the methodologies. Basically, we were over provisioning and all our securities investment portfolio is government is mainly and a little bit of bond. There is no commercial paper there, then the methodology was not considering that. Then it was a mistake to provision that we corrected on the last quarter, and we free all that provisioning.

For example, in terms of other income, we saw minus MXN 335 million. So how should we think about this line like going forward, should we expect the same minus MXN 335 million per quarter or should be kind of lower or...

No. As you can see, historically, there is variation there. but should be negative for the -- all the concepts that are in there. But it should be around MXN 250 million per quarter negative. But it depends also on the -- mainly on the variations on the assets. We have some impact also with the dollar related is what it is strong.

Excellent. And just the last question, I promised, is related to the USMCA renegotiation. So any color that you can provide us on what your expectations about it, I think, will be helpful.

We haven't included in our guidance any improvement or very big improvement, even though we know that the second half could be much better. We have seen good advances in terms of the negotiation. In terms -- even in dates, we were expecting to be finished more close to the official date of October. And if you have seen Secretary [ Era ] is talking about July, not October. It's a little bit optimistic. We hope that is finished. And again, we expect to improve mainly we see some sectors like the agro business and in general, the agricultural that is being affected by the exchange rate. We expect that if the exchange rate move a little bit up and all these taxes and everything and they can continue exporting to see an improvement over there. On the other lines of business, we don't see either a big impact or a big improvement. basically, the only line of business where we have seen already an improvement in advances warehouses and industrial real estate, mainly here in the North, but also some of [ Bajio ] region. That's mainly what we expect. We are cut optimistic. I like a phrase of [ Mr ]. in terms that maybe we will not see a 0% tax or 0% tariff, but it won't be worse that we already have. And basically, he was saying it will be less than the ones that we already have. that will be -- any improvement is welcome.

Our next question comes from Tito Labarta with Goldman Sachs.

Just one question actually. Good level of capital here at 15.7% in core Tier 1. Just how are you thinking about your capital base, your ability to return dividends? And maybe, I guess, along those lines, loan growth was fairly good in the quarter. I mean, can that accelerate further from here? And just to put that also in your need for capital or ability to return capital?

Thank you, Tito. We have already paid a dividend on April that it was not shown in the 15.7 because that's the last official that we have that is February. It will be shown in the adjustment in April that it was paid around the 9th of April. It was MXN 4 per share, around it was MXN 1.6 billion. Say that, it moves to 14%, still a very good level. We will maintain the second dividend in October if everything is as planned. In terms of the growth of loans, as I mentioned, we have a good pipeline in the wholesale business, but not enough to talk about breaking the single digit -- the two digits, sorry, the 10% of growth, but we are optimistic to maintain the high single digits, 8% or 9% is achievable as long as the wholesale is maintained in that range. And Hey Banco, as mentioned, is in 20%. It should maintain that rate.

Okay. No, that makes a lot of sense. And just, I guess, 14% then the right core Tier 1. Could you go lower? Just to think, I guess, about additional dividends is kind of where I was going with it.

Yes, it's -- if understood right, the question is 14% the official one, and it will increase with the profits and then it will go back to around 14% once we pay the second dividend...

Our next question comes from Danele Miranda from Santander.

Just a quick follow-up from my side on margins. I know you mentioned it should improve in the coming quarters. But just trying to understand what portion of your assets is still expected to reprice over the next, let's say, 12 months? I mean, how much of your loan book has not yet fully adjusted to the current rate environment and could, therefore, continue to put pressure on margins more on the asset side rather than the improvement in cost of funds.

Give me a second. Well, it has already adjusted, as I mentioned, to the last policy rate and is directly indexed to the fund that is called in Spanish. It will be the funding or funding rate that we changed the index because Central Bank changed the regulation. Say that it will be [ 18 ] as of March, MXN 118 billion out of the MXN 181 billion. And if you help me doing the 65% of the loan book that is being repriced after every movement of the rate. Then we expect that we expect two more reductions this year, we should see that portion of the balance to reduce basically in that amount.

Okay. Perfect. Very clear. And on the funding side, I know deposits should start to reprice and relieve some of that funding. But we did see a shift towards time deposits this quarter. Could you help us reconcile these two dynamics? I mean what is driving this mix shift? And to what extent could it offset the benefit from repricing?

Yes. On the funding side, we have -- let me do quickly is 109 plus Yes. I will do the math to give you the percentage, but around the 63% that should reprice, but it doesn't reprice fully because a part is indexed to that part like 30% is it fully repriced, but it takes longer. But the time deposits that are indexed to is moving slowly and it's not indexed as a percentage of, then that's the reason of the difference between the balancing. And the other part, the MXN 60 billion of check, well, MXN 80 billion of as of March, that doesn't reprice...

Our next question comes from [indiscernible]

. I had two questions. I'm sorry if you had mentioned this before, but I couldn't -- I wanted to understand there is this line in your fee income called other fee income, other fees, which was MXN 133 million in 1Q '25, MXN 160 million in 4Q and MXN 120 million today. What sits in this line? And why did it decline 10% Y-o-Y? I have another question on corporate spreads, but maybe I'll take it after this. Sorry, I'm referring to the other fees line in Page 7 of your quarterly report.

Sorry, just to understand well, you are referring to the other income.

Yes, yes. In other income, there is a line called other fees in the fee income breakdown, which went down 10% year-on-year, and it's MXN 120 million in first quarter of 2026. I wanted to understand what is sitting in that other fees line and the reason for the 10% decline.

Okay. What is included there is basically some commissions for credit card operations. That is the one that is showing the reduction. Also, just for transparency, what is there is the appraisals. We charge a fee for appraisals -- and we have the mutual funds that we sell, we have also a commission. There are the three largest and also we have letters of credit. We have a reduction in letters of credit and also on the credit card. On the credit card, more than volume is all the other transactions commissions that we charge the customers that are variable, mainly the nonpayment or what we call in Spanish for collection as we have improved the quality of the portfolio, mainly in Hey Banco there is not that amount being collected quarter-on-quarter. Also on the letters of credit is very variable. It depends on the -- it's not a line of business that is very large, but it impacts in this line.

Thank you, Enrique for the detailed answer. Just a quick question on the yield side as well. On your business loans, is interest rate decline the only reason for reduction in interest income? Or has there been any impact on the spreads you charged on TA also?

It's mainly that is indexed to the TA and our pricing has not changed. There is some pressure in the wholesale business in some specific segments. It's not all across. But it's mainly the base rate rather than the margin above that rate.

Our next question comes from [ Juan Dominguez ].

Yes. I actually have a follow-up from the previous question about spreads. You mentioned that pricing has not changed, but you saw some pressure in some segments in wholesale. Can you provide more details on where are you seeing pressures? And also if you see any sort of irrationality in the market at this point? And I have a second question related to your insurance business. You had actually a pretty good quarter in terms of insurance revenue growth. I wonder if the -- if this is something recurring or you guys, I don't know, had something that we should think as extraordinary during the quarter?

Yes. In terms of insurance, we have some annual payments that happened in the first quarter and in the last quarter is recurrent in terms that is every year, we do this calculation with our two partners, Qualitas and [ CHOP ]. And if we reach some goals or some -- or we improve the, I don't know if that's the right word, but the recoveries, we receive a bonus. Then I was just trying to be clear that it's recurrent, but it's not.

So it's seasonal.

It's seasonal, yes.

Perfect.

And the largest ones are paid in the first quarter and in the last quarter because it depends on the [ year ], on the month that is renovated the whole premium. And in terms of -- the other question was.

Pricing, right? So you mentioned that spreads...

The pressure on price. No, it's basically on large tickets, mainly on the construction side, we have decided a product. We have a large portfolio for bridge loans to homebuilders where the project is going on, the risk is higher, then the rate is higher. Once the project is finished and is rented or leased, we proactively reduced the rate because we were seeing that the large banks is the portfolio where they were pressuring more to get the customers with them. That's basically the we don't see as irrational. It's just that once the -- whatever we are financing is finished and then is lease, the risk is different. Then that's the main reason. We don't see any competitor being irrational. We are monitoring Banamex that has been claiming publicly that they are back, but we haven't yet seen any irrational behavior.

Our next question comes from Federico Galassi.

The first one, and I will continue with the wholesale business and the Enrique. But the question is you have a growth in time deposit in the quarter-over-quarter and part of that, you funding the growth in loans. The question is, is there any change in the case of time deposits? And the second question is, and you mentioned that they are not offering cheaper assets, cheaper loans, but you increase the assets in the lower pricing sectors as a corporate or something like that? That is part of the [indiscernible]...

Part, but it's not a big part. I don't know if we do the conference call, give me a second, Federico.

Yes. I'm taking the Slide 10 in your presentation, Wholesale business.

Wholesale business it's all included. Well, out of that growth of MXN 7 billion between fourth quarter and first quarter, like MXN 3 billion is in corporates, corporates and governments. As we disclosed, we entered the syndicate with many other banks that is coordinated by the government to fund I guess, is a large syndicated loan. We don't do individual government loans. But we do some corporates, and that is part of the explanation in this growth. But it's not what is driving, as I mentioned, is more than out of this MXN 139 billion, a large proportion is indexed to TA.

Okay. Perfect. And the second question, and you mentioned the pipeline and you believe that you can achieve this high single digit in loans growth. But when we see -- we have only the information of February was negative this Friday, we will have the GDP for the -- at least for the first quarter and looks like the activity continue to be weak. Your pipeline is -- when you see your pipeline is for the second quarter, for the second part of the year? I'm trying to understand how is the visibility for the second part of the year.

Well, the actual pipeline, we only have visibility for the next 3 to 4 months. That is what is already in our -- either the CRM as prospects or in the credit system in the process of the -- how do you say the BPM process manager. But say that we believe that if we see this good pipeline for the next 4 months and nothing has changed in terms of the USMCA agreement should be better. But to be very transparent, we don't have specific projects for the second half. It's month-to-month that we are monitoring.

Okay. And the last one, Enrique, if I may. When I see the quality of the portfolio, nonperforming provisions, looks like everything is under control. Do you see or have you worried for any sector or region on the country? And that is the last question.

No, not as a sector, not as a region. In the wholesale, as we have been mentioning are specific cases that affects. And in medium-sized businesses, well, I mentioned already one. Yes, we have one worry that is agricultural, I mentioned in the last question. We don't see still any deterioration significant. But we know that the agro business customers are having difficult times to pay. They say that it's mainly because of the exchange rate and the price they have already negotiated. That's the only one we don't have that much exposition. I cannot say that it's the whole segment, but it's the only one where we have seen some medium-sized businesses or loans that are having problems are loans around MXN 20 million to MXN that are being renegotiated, restructured and everything that is in our hands to help these customers.

Since there are no more questions, on behalf of our senior management, I would like to thank everyone for joining the call, and we look forward to speaking with many of you in the coming weeks. If additional questions arise, please don't hesitate to reach out Alejandro and our Investor Relations team. Thank you for your interest in Regional, and have a good day.

Thank you very much.

Thank you, everyone.