Banco Macro SA (NYSE: BMA) Q2 2020 earnings call dated Sep. 01, 2020
Corporate Participants:
Nicolas Torres — Investor Relations
Jorge Francisco Scarinci — Chief Financial Officer
Analysts:
Ernesto Gabilondo — Bank of America — Analyst
Gabriel Nobrega — Citigroup — Analyst
Alonso Garcia — Credit Suisse — Analyst
Nicolas Riva — Bank of America — Analyst
Yuri Fernandes — JP Morgan — Analyst
Carlos Gomez — HSBC — Analyst
Juan Recalde — Scotiabank — Analyst
Presentation:
Operator
Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro’s Second Quarter 2020 Earnings Conference Call. We would like to inform you that Q2 ’20 press release is available to download at the Investor Relations website of Banco Macro, at www.macro.com.ar/relaciones-inversores. [Operator Instructions]
After the Company’s remarks are completed, there will be a question-and-answer session. And at that time, further instructions will be given. [Operator Instructions]
It is now my pleasure to introduce our speakers for today. Joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, IR.
Now I will turn the call over to Mr. Nicolas Torres. You may begin your conference.
Nicolas Torres — Investor Relations
Thank you. Good morning, and welcome to Banco Macro’s second quarter 2020 conference call. Any comment, we may make today may include forward-looking statements, which are subject to various conditions and these are outlined in our 20-F, which was filed to the SEC, and it’s available at our website. Second quarter 2020 press release was distributed yesterday, and it’s also available at our website.
All figures are in Argentine Pesos and have been restated in terms of the measuring unit current at the end of the reporting period. As of January 2020, the Bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29 as established by the Central Bank. For ease of comparison, figures of previous quarters of 2019 have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through June 30, 2020.
I will now briefly comment on the Bank’s second quarter 2020 financial results. Banco Macro’s net income for the quarter was ARS6.4 billion, 14% lower than in the first quarter of 2020 and 111% higher than the ARS3 billion posted a year ago. The Bank’s second quarter 2020 accumulated ROE and ROA of 23% and 5.2%, respectively, remained healthy and showed the Bank’s earnings potential.
Net operating income before general and administrative and personnel expenses for the second quarter of 2020 was ARS22.2 billion, decreasing 9%, or ARS2.3 billion quarter-on-quarter, but 27% or ARS4.7 billion higher than a year ago. Operating income after general and administrative expenses, plus ARS8.5 billion, 24%, or ARS2.7 billion lower than in the first quarter of 2020, but ARS8.3 billion higher than in the second quarter of 2019.
In the quarter, net interest income totaled ARS20 billion, 11%, or ARS2.4 billion lower than the result posted in 1Q ’20 and 19%, or ARS4.6 billion lower than the result posted one-year ago. In the second quarter of 2020, interest income totaled ARS29.6 billion, 9% or ARS3 billion lower than in 1Q ’20, due to lower income from loans and lower income from government securities and 36% or ARS16.4 billion lower than the previous year. Within interest income, interest on loans decreased 4%, or ARS2.5 billion quarter-on-quarter, due to a 408 basis points decrease in the average lending rate, down to 31.5% from 35.6% registered in the first quarter of 2020, while the average volume of the loan portfolio remain practically unchanged.
Interest income decreased 17%, or ARS3.6 billion year-on-year. In the second quarter of 2020, interest on loans represented 61% of total interest income. Net income from government and private securities decreased 12% or ARS1.3 billion quarter-on-quarter, due to lower income from private securities. Compared to second quarter of 2019, net income from government and private securities decreased 56% or ARS12.2 billion.
In the second quarter of 2020, FX gains, including investments in derivative financing, totaled ARS805 million due to the 9% Argentine peso depreciation against the US dollars and the bank loan spot dollar position. FX trading results continue to be impacted by stricter currency controls and regulations.
In the second quarter of 2020, interest expense totaled ARS9.6 billion, a 6%, or ARS560 million decrease compared to the first quarter of 2020 and 55%, or ARS11.8 billion lower on a yearly basis. Within interest expenses, interest and deposits decreased 6%, or ARS566 million quarter-on-quarter, mainly driven by a 262 basis points decrease in the average interest rates paid on deposits. Rates came down from 16.3% in the first quarter of 2020 to 13.6% in the second quarter of 2020. On a yearly basis, interest on deposits decreased 57%, or ARS11.3 billion.
In the second quarter of 2020, interest on deposits represented 91% of the Bank’s financial expenses. As of the second quarter of 2020, the Bank’s accumulated net interest margin, including FX was 22.3%, lower than the 25.2% posted in the first quarter of 2020 and higher than the 20% registered one-year ago. In the second quarter of 2020, net fee income totaled ARS4.6 billion unchanged from the first quarter of 2020. On a yearly basis, net fee income decreased 7%, or ARS324 million.
In the second quarter of 2020, net income from financial assets and liabilities at fair value through profit or loss totaled ARS2 billion loss, as a consequence of the inflation adjustment applied to our LELIQ holdings. In the quarter, other operating income totaled ARS1.1 billion, decreasing 8% compared to the first quarter of 2020. On a yearly basis, other operating income increased 11%, or ARS137 million.
In the second quarter of 2020, Banco Macro’s personnel and administrative expenses totaled ARS8.6 billion, 11%, or ARS840 million higher than the previous quarter, due to higher expenses related to employee benefits and higher administrative expenses. On a yearly basis, personnel and administrative expenses decreased 18%, or ARS1.9 billion.
In the second quarter of 2020, the efficiency ratio reached 43.3%, deteriorating from the 39.8% posted in the previous quarter. Excluding the inflation adjustment on our LELIQs holding shown under income from financial instruments at fair value through profit or loss from the efficiency ratio calculation, the efficiency ratio would have been 37.2% in the second quarter of 2020 and 31.6% in the first quarter of 2020.
In the second quarter of 2020, Banco Macro’s effective tax rate was 28.9%, lower than the 35.8% registered during the first quarter of 2020. In terms of loan growth, the Bank’s financing to the private sector decreased 5%, or ARS12.2 billion quarter-on-quarter and 12%, or ARS30.4 billion year-on-year. Within commercial loans, others stand out with a 30%, or ARS9 billion increase quarter-on-quarter, mainly due to the loans extended to SMEs at a 24% interest rate, as part of the relief package given the COVID-19 pandemic.
On the consumer side, personal and credit card loans decreased 5% and 3%, respectively in the quarter. Within private sector financing, peso financing increased ARS244 million, while US dollar financing decreased 36%, or $232 million. It is important to mention that Banco Macro’s market share over private sector loans, as of June 2020, reached 7.5%.
On the funding side, total deposits increased 24%, or ARS78 billion quarter-on-quarter, and increased ARS214 million year-on-year. Private sector deposits increased 16% quarter-on-quarter, while public sector deposits increased 107% quarter-on-quarter. The increase in private sector deposits was led by time deposits, which increased 18%, or ARS23.5 billion quarter-on-quarter, while demand deposits increased 13%, or ARS20.5 billion. Within private sector deposits, peso deposits increased 24%, or ARS52.3 billion, while US dollar deposits decreased 15%, or $179 million. As of June 2020, Banco Macro’s transactional accounts represented approximately 49% of total deposits. Banco Macro’s market share over private deposits as of June 2020 totaled 6.3%.
In terms of asset quality, Banco Macro’s non-performing to total financing ratio reached 1.52%. The coverage ratio, measured as total allowances and our expected credit losses over nonperforming loans under Central Bank rules improved significantly and totaled 210.64% [Phonetic]. Asset quality continues to be positively affected by recent measures adopted by the Central Bank of Argentina in the current pandemic COVID-19 context, particularly the 60-day grace period that was added to debtor classification before a loan is considered as non-performing.
In terms of capitalization, Banco Macro accounted an excess capital of ARS101 billion, which represented a total regulatory capital ratio of 32.1% and a Tier 1 ratio of 25%. The Bank’s aim is to make the best use of this excess capital. The Bank’s liquidity remained more than appropriate. Liquid assets to total deposit ratio reached 54%. Overall, we have accounted for another positive quarter. We continue showing a solid financial position. Asset quality remain under control and closely monitored. We keep on working to improve more our efficiency standards, and we keep our well atomized deposit base.
At this time, we would like to take the questions you may have.
Questions and Answers:
Operator
We will now begin the question-and-answer session. [Operator Instructions] And our first question today will come from Ernesto Gabilondo with Bank of America. Please go ahead.
Ernesto Gabilondo — Bank of America — Analyst
Hi, good morning, Gustavo, Jorge and Nicolas. Hope you’re well. My first question is on provision charges. Can you elaborate on how much of the total loan portfolio has been related to deferrals in commercial and consumer loans, refinance credit cards and with the support to SMEs? Do you have an estimate of how much additional provisions have been created this year based on expected losses? And how much does that represent of your total loan portfolio? Also how much do you estimate that the additional provisions represent of the loan book that has been subject to deferrals, refinanced credit cards and to support with SMEs?
And then my second question is on margins. Where do you see interest rates by year-end? And how do you see the potential impacts on margins for this and next year? And then my last question is on expenses. How should we think about this line over they year? Are you evaluating to reduce personnel or branches to mitigate some of the potential impacts of the pandemic? Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Hi, Ernesto, how are you? Thanks for your questions. We can start with your second question about margins and interest rates. What we are expecting for interest rates by year-end is a slight increase, basically, because what the market is expecting is a kind of a pickup in the monthly inflation index. So we believe that there should be a slight increase in nominal interest rates by year-end. Even though that we are seeing, in terms of margins, some kind of slight contraction in the third quarter, because there were some increase in deposit interest rates, while the LELIQs or the Repos interest rates remain unchanged.
So we are foreseeing that in the third quarter, we are going to see an additional compression in the net interest margin. However, for the fourth quarter, depending on how the nominal rates behave, we could see some stability, or might be a little bit of widening, or recovering the portion of the margin that we lost in the second and third quarter.
On your third question related to expenses and what we are expecting for the rest of the year is to continue, I mean having a very close eye on expenses both on personnel and other administrative expenses. We do not have any official program on layoff or closing down branches even though that as we have been doing in the last several years, we tried to be extremely efficient in our cost controls and that’s why the deal — the management and the Board of course is to continue showing excellent level of efficiency going forward, as we have been showing the numbers of the last three quarters.
In terms of your first question, that was divided in two or three different questions. In terms of the provisions charges that we are doing, in the second quarter, we increased the provisions compared to the first quarter mainly because of the consequences of the COVID-19, that — I think that worldwide is very unknown, all the consequences that we are going to have in the next — I don’t know, six months, 12 months, 18 months or 24 months. So we have increased that provision level. Also we highlight that we reach a coverage ratio of 210%. But I mean the message here is that we are closely monitoring also asset quality as we have been stating many times, we are a local bank.
We have to be a bit more conservative than maybe other international banks in the sense that we cannot ask for extra money in case of a crisis to any headquarters abroad. So we have to be very conservative in that front. So we are on a daily basis monitoring the asset quality and the evolution of that. And for the moment, we feel very comfortable of the situation that we are having in the bank.
In terms of loans that were re-programmed, we can include what some additional information by email, if you want, but just not to enter into many details. 700 million in corporates or companies, 22,500 in consumer and 50,000 in credit cards. That’s the big numbers on the loan that have been re-programmed.
Ernesto Gabilondo — Bank of America — Analyst
And you have an estimate given that you build additional provisions in second quarter when compared to the first quarter. Do you know how much of these additional provisions are to the loan book that’s been subject to deferrals or the refinance credit cards or to supporting SMEs?
Jorge Francisco Scarinci — Chief Financial Officer
Let me go into those numbers. There is something that we put in the press release there in the paragraph talking about the — at the beginning, in page number 4, about the provisions, you can have some details there just not to maybe take other people’s question. But you can go to page number 4 of our press release, there is a para there, that we are putting some info, but in case as you need additional one, please contact us as we can provide it.
Ernesto Gabilondo — Bank of America — Analyst
Yes, perfect. Thank you, Jorge, because I saw that it was practically the amount that you breakdown that was registered as provision charges in the second quarter. It was close to ARS2.2 billion of Argentine pesos. So just wanted to understand maybe that, that breakdown was more related to the loan book that could be at risk and that you are considering some part of provisions to that loan book at risk. I agree that maybe we can follow up later truly understand how much additional provisions have been built to this loan book. Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
You’re welcome, Ernesto.
Operator
And our next question will come from Gabriel Nobrega with Citigroup. Please go ahead.
Gabriel Nobrega — Citigroup — Analyst
Hi, everyone. Good afternoon, and thank you for the opportunity to ask questions. I actually have two questions on asset quality. The first one, when we look at your NPL ratios, they actually increased this quarter, and for us this is a bit strange because even with the flexibilization that the BCRA has given to you. And we also saw, other of your peers in NPL ratios decreasing. It was a bit weird seeing better NPL ratios deteriorated this quarter. So if you could just elaborate and then give us some more color of what’s happening here. And also if you could maybe give us the figure of your NPL ratios without the flexibilization of the 60 days, that would help us a lot.
And as for my second question, it is actually a follow-up regarding provisions we understand that you already made a decent sizable provision this quarter. But looking forward are you comfortable with the coverage ratio, or are you expecting to maybe have to continue making higher provisions due to the higher delinquency we are going to see? Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Hi, Gabriel. Thanks for your questions. On your first question, honestly, we mean that, our quarter increased from 136 to 152 [Phonetic] considering the recession that we are having worldwide more in Argentina plus the COVID-19. We do not take that as a big deterioration in asset quality. I think that is something normal. Congrats to our peers, if they showed some decrease there. Honestly, it depends the quarter of the time frame that you are taking. We think that 152 with the coverage of 210 are showing excellent levels. And again we feel extremely comfortable to how we are managing the asset quality on the bank as well as we have been doing this in past crises.
And going forward in the third quarter, we think that we might include some additional provisions. Honestly, we don’t know as much as the one that we did in the second quarter. But again, we still do not have — know, I think that this is something that the world is wondering. The total effects on these pandemic and the implications on the economy with the additional thing that the recession that we are ongoing in Argentina, and despite that we are foreseeing with inflation by the end of the year depending on the new economic program is what we are going to see for next year in terms of economic activity.
So, overall we think that in terms of asset quality, we are doing fine. With additional provisions in the third quarter, maybe not as much as the one that we put in a second. And again, the NPL ratio deterioration on a quarterly basis, we think that is pretty normal considering the scenario that we are ongoing.
Gabriel Nobrega — Citigroup — Analyst
Perfect. Could you just tell us what would be your NPL ratio, if you have not yet had waiver of the Central Bank?
Jorge Francisco Scarinci — Chief Financial Officer
Yeah. Honestly, we don’t have the exact number, but should be between 2.6% and 3.2%, approx.
Gabriel Nobrega — Citigroup — Analyst
Perfect, perfect. Thank you so much.
Jorge Francisco Scarinci — Chief Financial Officer
You’re welcome, Gabriel.
Operator
And our next question will come from Alonso Garcia with Credit Suisse. Please go ahead.
Alonso Garcia — Credit Suisse — Analyst
Good morning, everyone. Thank you for taking my question. My question is actually on loan growth. I just wanted to hear your thoughts on how you see volumes evolving from here. I mean so far, loans are 10% down year-over-year. You are underperforming some of your main peers. So I wanted to hear your thoughts on how should we see loan growth volume here, and what segments should drive growth in the coming quarters? And regarding the special credit line for SMEs at 24%, if you think most of that is already done, or do you think you will continue originating strongly on that front? Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Hi, Alonso. Thanks for your question. In terms of loan growth, we also provided information in the press release about the total loan growth comparison between the former quarter and one-year ago. But in addition, we also put the behavior of peso loans and also US dollar loans. There you can see that the total loan behavior is extremely influenced by the decline in dollar denominated loans. If you look at the peso loan behavior, we grew 1% quarter-on-quarter and 11% year-over-year.
So going forward, we think that in the peso loan book, we are going to continue showing slightly positive numbers here. We think that there could be some statistic recovery by the fourth quarter of this year, again depending on how the COVID-19 affects the economy. But if we are going to enter in a more or less strict phase of the pandemic, we are seeing some recovery in the fourth quarter. In addition, on the dollar denominated loan portfolio, we think that we are going to continue decreasing in that area, basically because margins in the dollar business are extremely low, and we are not incentivizing that business. But on the peso, we are seeing positive numbers on — in real terms going forward for the third and fourth quarter.
And in terms of — sorry, about the second question, in terms of SMEs, I mean if there is a recovery, this is going to be a recovery across the board. SMEs, we think, are the ones that have been more affected by the recession and the pandemic, so the level of credit in that level is very low. So I think that if the perspective of the landscape for both the pandemic and the recovery of the economy are better we are going to see a bit more demand coming from SMEs.
Alonso Garcia — Credit Suisse — Analyst
Still at least 24% interest rate as part of this program.
Jorge Francisco Scarinci — Chief Financial Officer
Yeah.
Alonso Garcia — Credit Suisse — Analyst
Okay. Got it. Thank you very much.
Jorge Francisco Scarinci — Chief Financial Officer
You’re welcome, Alonso. Thanks.
Operator
And our next question will come from Nicolas Riva with Bank of America. Please go ahead.
Nicolas Riva — Bank of America — Analyst
Yes. Thanks very much for taking my questions. Jorge, I have a follow-up on the prior questions about all these loan re-programmings. Can you give us a bit of an idea, you already mentioned that the actual NPL ratio would be probably between 2.6% and 3.2%, if you were to include all these loan re-programmings as NPLs have. Can you give us an idea in terms of next steps, the future steps for these re-programmed loan book? For example, I mean you’re already two months into the third quarter. Should we expect to see more of these grace periods, loan re-programmings in the third quarter? When would you expect to start unwinding some of these measures, given everything that’s going on in Argentina and everything that was going on even before we had the COVID-19 pandemic in Argentina?
And then the second question is about deposits. If I look at the deposits from the public sector and we know that you are a financial agent for a number of provinces in Argentina, I see that the deposits from the public sector, basically doubled — or more than doubled in the second quarter versus the prior quarter. Any color on that? Did you feel like a new contract with any of — with a province as a financial agent, or any changes to existing contracts that justify that big change? Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Nicolas, thanks for the questions. On your first question, in terms of NPLs, we are seeing some in the third quarter, some additional new re-programming on some balances on the credit cards. Honestly, going forward I think that’s the time of programs are going to be maintained until the economy is start to pick up again. I think that the government is committed to allow people to extend the payments on credit cards, on personal loans in order to see — not to see a big spike in terms of NPLs. So meanwhile, we are going to see this program to be maintained.
Honestly, the one that I’d mention about credit cards has happened last week, going forward, we do not have an official information about new reprogramming or extension in installments or whatever. But again, we think that the government is committed to help people and companies in order to transit this recession and pandemic period as best as possible.
In terms of your second question, the increase in the public sector deposits are mainly driven by the ANSES. That is the fund that is managing the retirees’ money, that has been depositing or making time deposits in Banco Macro in a higher speed than the ones that we saw in the previous quarters. So that is the main reason of the increase in public sector deposits, basically, 30 days or 40 days time deposit in pesos.
Nicolas Riva — Bank of America — Analyst
Okay. Thanks very much, Jorge.
Jorge Francisco Scarinci — Chief Financial Officer
You’re welcome, Nicolas.
Operator
And our next question will come from Yuri Fernandes with JP Morgan. Please go ahead.
Yuri Fernandes — JP Morgan — Analyst
Thank you, Jorge, Nicolas. I have a question regarding margins. If I understood correctly, you said margins may slightly go up because of higher rates. And I believe the mix shift of local currency loans may also help on that regard. But what about the time deposits? I know it’s like 35% to 40% of your loans, but the new regulation shouldn’t be a headwind, right, like this minimum remuneration? So just asking if you have taken that into account when you said margins should likely recover?
And my second question is regarding the provinces, right. Like if you can give us a color on how Santa Fe, Cordoba, South, like the main provinces in which Macro operators behaving regarding loan growth and asset quality. When you compare versus Buenos Aires, do we think it’s fair to say that those regions are doing better or no? Like what can you tell us about your geographic exposure? Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Hi, Yuri. Thank you for your questions. No. I mean in terms of margins, what I mentioned is that in the third quarter, we are going to see additional compression in margins, basically of the minimum — because of the minimum time deposit rates and also because the LELIQs and Repo rates remain unchanged. However, in the fourth quarter, if nominal rates are going to go up as we are expecting, depending on the range that we are seeing those rates going up in LELIQs and repos and also deposits. Margins could remain stable or slightly expanding. That is what I mentioned before.
In terms of your second question about the provinces, you know that in terms of our standing, 80% of our business is basically in the interior of the country. A very small portion is in the area of the city and the province of Buenos Aires. So for the moment what we are seeing that in interior, the situation is kind of similar of the Buenos Aires province in the sense that the only sector that is doing good, let’s say, is the agricultural sector. The rest of the sectors are showing some decline in terms of activity compared to last year. But we are not seeing any province with any dramatic problem of any specific sector.
So I would say that for the moment, there is kind of a parallel or similar situation between the most important provinces of the interior and the Buenos Aires province.
Yuri Fernandes — JP Morgan — Analyst
Okay. So no tailwinds and no headwind coming from the provinces, right? You are behaving very similar to your peers that are more exposed to the Buenos Aires region, right?
Jorge Francisco Scarinci — Chief Financial Officer
Not for the moment.
Yuri Fernandes — JP Morgan — Analyst
Okay, thank you.
Jorge Francisco Scarinci — Chief Financial Officer
You’re welcome.
Operator
[Operator Instructions] And our next question will come from Carlos Gomez with HSBC. Please go ahead.
Carlos Gomez — HSBC — Analyst
Hi, good morning. Couple of questions. One on your capital year book value. We see there is a decline, or rather, stabilization in nominal terms between the first and the second quarter. Any big changes there? And have you restated the first quarter? Because we don’t really expect the same number that you’ve written into the restated figures, so that is the book value?
Second, regarding the dividend, we understand that you have provision for it, but it’s just still pending approval. We wanted to know if you have any news about that. And finally, on the line of loan at 24%, do you consider that you are making any type of return on that, or that’s just the cost of doing business and you accept a negative return at this point? Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Hi, Carlos. How are you? In terms of your first question about the book value of the capital, we deducted the amount of the dividend there. So that’s why you’re seeing a decline in the nominal level, and also, yes, we adjusted in the first quarter. So that’s the difference in the figure that you are seeing. In terms of the dividend, it’s still pending. We — for the moment, we do not have additional information coming from the Central Bank when this dividend is going to be allowed or approved to be paid. So honestly, no additional information there.
In terms of the 24% credit line, remember that we have some additional reserve requirements benefits there. So the 24% nominal interest rate that we are extending the loans, if you add the benefits of some reserve requirements, it goes up to 38% similar to the LELIQs interest rate. So meanwhile these benefits are being sustained. We are going to continue extending this credit line. Of course, the Central Bank knows that there’s a limit for that. So if the Central Bank wants to continue to see banks incentivizing this 24% credit line, they will have to add other incentives or benefits in order to take the 24% interest rate to more reasonable levels.
Carlos Gomez — HSBC — Analyst
That’s very clear. Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Welcome, Carlos.
Operator
All right. And our next question will come from Juan Recalde with Scotiabank. Please go ahead.
Juan Recalde — Scotiabank — Analyst
Hi, thank you for taking my questions. My question would be related to the result from net monetary position. We’ve seen that you have had a positive impact of around ARS400 million in this quarter. It was around ARS300 million in the previous quarter. So inflation as you mentioned, inflation is expected to pick up in the rest of the year. So how should we think about the result from net monetary position in the coming quarters? Thank you.
Jorge Francisco Scarinci — Chief Financial Officer
Hi, Juan, how are you? Let me give you — if you take consideration all the inflation impact in all the balance because here, because of Central Bank regulation, we have to put parting one side of the income segment, another part of the inflation adjustments on another part. If you put altogether, we are having a negative impact on inflation going forward. I would say that the negative number is going to increase, depending on the level of inflation that we think is going to grow slightly up, plus the behavior of the monetary assets and liabilities. Honestly, it’s not very easy to forecast this number. It’s going to be negative in the range of, I would say the average that we see between the second and third quarter.
Juan Recalde — Scotiabank — Analyst
That is perfect. Great guys. Thank you very much.
Jorge Francisco Scarinci — Chief Financial Officer
You’re welcome.
Operator
And this concludes our question-and-answer session. I’d like to turn the conference back over to Mr. Nicolas Torres for any closing remarks.
Nicolas Torres — Investor Relations
Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Good day.
Operator
[Operator Closing Remarks]