Juan Parma: "Due to the drop in rates, we're seeing significant growth in consumer loans."

"My best day of the week is when I go out for a walk in the countryside, visiting clients, colleagues, and fellow bankers," he said. His visit to Mendoza included meetings with Governor Alfredo Cornejo and the Minister of Finance, Víctor Fayad, as well as with business leaders from various sectors of the economy and the local press, to analyze the macroeconomic context.

- What challenges does the Argentine financial system face in terms of growth, given that it is more robust in other countries in the region?

- This was a small financial system, with very high margins. And because of inflation and interest rates , those high margins compensated for the lack of scale. Also, with a high composition of financing to the public sector rather than the private sector. I think we're changing, in this macroeconomic order without which none of this would be possible, and we're approaching a financial system of similar size to others in the region.

Today, it represents 6% to 7% of the country's gross domestic product, and in other countries in the region, it reaches 35% to 40%. And if we look at the most developed countries, such as the United States and Europe, it's more than 100%, because mortgages occupy a very important place, as the capital market is developed to give momentum and dynamism to long-term financing.

We're still a long way off, but we're seeing growth in size—as we sometimes say, the pie is getting bigger—and that very thing will allow us, with inflation falling and rates dropping, to move towards a larger system with smaller margins. Therefore, efficiency, digitalization, processes, and scale are very important.

- How is this growth achieved?

Banco Macro has always been committed to growth, whether organic or inorganic. Last year, the acquisition of Itaú and its integration with Macro were completed. But we have also been growing organically in lending , with very significant real growth rates—that is, above inflation. Credit growth in real terms over the last 12 months has been over 50%.

So we're on that path to gaining scale, which will require greater efficiency, but we're also geared, to the extent that the government maintains fiscal balance, toward increasingly targeting more of that financing to the productive sector, the consumer sector, the private sector, rather than the public sector.

- How have the various loans evolved in recent months?

- Mortgages have grown tremendously, but on a small basis. And they still represent, in the bank's overall balance sheet, a not-so-significant proportion, which will continue to grow. It will have to do with having the raw material, which are stable long-term deposits, financing, and the development of the capital market, which will allow us to take these mortgages, securitize them, and transfer them to the capital market, to pension funds, to investment funds. That has to happen, but it takes time.

We see significant growth and dynamism in consumer lending because, as interest rates fall and real wages recover, consumer confidence rises and demand for credit grows. Therefore, we see significant growth in consumer financing and personal loans.

And in business loans, there's a lot of demand for working capital. Specifically, long-term financing. Especially for the industries that are winning in this new context: extractive industries, oil, and energy.

- How do you see Mendoza Square?

- Today we had the pleasure of meeting with the governor and the Minister of Finance and discussed the state of the province. We also met with clients from various sectors of the economy: construction, winemaking, oil, supermarkets, and tire sales. This allows us to gain a strategic vision of both the government and business leaders.

The wine sector is going through a somewhat critical period, as demand for wine has been falling in the local market, and production costs in dollars are too high to compete in the international market. The sector that sustained the markets, despite the fact that margins for selling abroad when there was a 120% gap were almost zero, is in a slightly more favorable position, but overall the sector is undergoing a transformation.

We believe there's an opportunity to continue investing in productivity. We have a specific sector within the bank, Macro Bodegas y Viñedos, where, among other things, we offer a very convenient line of financing for producers. And we want to support the wine sector in this time of transformation.

Speaking with the governor, he told us they're investing heavily in the extractive industries, with the San Jorge copper deposit in Las Heras and the exploitation of potash in the south of the province, which are an important diversification factor. And although Mendoza isn't Neuquén in terms of the oil industry, there are conventional deposits left behind by YPF that are being occupied by intermediate players, and I believe there's a huge opportunity there.

In addition, there's tourism, which is obviously not the same for a Brazilian coming to the province now as it is with the 2023 exchange rate, but we have to reinvent ourselves, and Mendoza has a unique offering, but with a productivity that hasn't reached its peak efficiency yet.

- What is the level of deposits? Could they grow with the lifting of the currency controls and a stable dollar?

- Today, credit continues to grow faster than deposits. It's important for the economy to be monetized. It's clear that the government's priority is to completely eliminate inflation. It's been a very good job, but in April it was 2.8%, and that's what some countries have in annual terms. Therefore, the government is being very careful with the supply of pesos.

Now there's talk of being able to use dollars. Endogenous dollarization, to feed that demand for money without needing to inject more pesos into the economy. But, evidently, the issue of monetizing the economy and increasing the demand for money as a key factor associated with economic growth remains to be resolved.

Today, interest rates are a bit high because there aren't enough pesos. But we understand that, as the political landscape also consolidates, macroeconomic stability should not only imply a drop in inflation, but also a drop in interest rates and an orderly and progressive monetization of the economy, without generating inflation and with growth.

Whether this monetization, whether this growth in deposits will occur in dollars or pesos, remains to be seen. But one way or another, it has to happen.