Q4 2021 Banco Bbva Argentina SA Earnings Call
Good morning, ladies and gentlemen, and thank you for waiting at this time, we would like to welcome everyone to BBVA, Argentina's fourth quarter and fiscal year 2021 results conference call.
We would like to inform you that this event is being recorded and all participants will be in a listen only mode. During the companys presentation.
After the company's remarks are completed there will be a question and answer session at that time further instructions will be given.
Should any participant need assistance during the call. Please press star zero to reach the operator.
First of all let me point out that some of the statements made during this conference call may be forward looking statements within the meaning of the Safe Harbor provisions found in section 27, a of the Securities Act of 1933 under U S Federal Securities Law.
These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements. Additional information concerning these factors is contained in BBVA. Argentina's annual report on form 20-F for the fiscal year 2020 filed with the U S. Six.
Charities and Exchange Commission.
Today with US we have Mr. Ernesto Gallardo CFO Mrs. Ines. The news are I R O and MS. <unk> <unk> Investor Relations Ms. <unk> you may begin your conference.
Good morning, everyone and welcome to the Yadkin Chinas fourth quarter and fiscal year 2021 earnings Conference call.
Before we begin our formal remarks, let me stress that some of the statements made during the course of this conference call May constitute forward looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those.
Expressed in the forward looking statements, including factors that may be beyond the company's control.
For a description of these risks please refer to our SEC filings and earnings release, which are available until Investor Relations website I, yeah, there'll be V. A dot com built a.
Speaking during today's call will be in Atlanta, and that May still a saddle, our chief financial officer, who will be available for the Q&A session.
Please know that starting January 1st 2020, as far as Central Bank regulation, we have begun reporting results applying hyperinflation accounting.
Do I have a restful Ias 29.
For ease of comparability to 2020, and 2021 figures have been restated to reflect the accumulated effect of inflation adjustment for each period through December 31st 2021 now.
Now, let me turn the call over to you.
Thank you Lynn and thank you all of you for joining us today.
That looks situation improved during the second half of 2021, what's your name when that recovery, depending on they had penalty.
Ocean has had a positive and that's on the financial system as a whole, which hold strong to cope with the challenge that still persist in the short term.
Argentina has a corporate responsibility with society and they run through the balance of the first model, which bolsters inclusion financial education, and so forth scientific research and culture.
Whereas with the highest integrity long term vision and best practices and it is breadth of them through the BBVA group in the main sustainability indexes.
With respect to the Palace station our service offering as it was in such way that by December 2021 did you sell vials penetration reached 74% from 72% a year that while that mobile clients reached 64% from 60% in the same.
The response on the side of costs unless I've been satisfactory and we are convinced this is the basketball glacial, Indiana also sustaining and expanding our competitive position and the financial system.
But that activity monitors its business financial condition and operating results.
Keeping our competitive position to Facebook and purposeful challenging.
I will not comment on the banks fourth quarter 2021, and fiscal year 2021 financial results.
Argentina 2021, net income was 21.2 billion pesos 27, 41 higher than the $16 6 billion pesos with it in 2000 and put.
This implied.
And accumulated annualized ROE of 13, 5% and an hour away up 2% in 2021 compare it to the accumulated annualized ROE of 10, 9% and an hour away at one point in terms of authentic in 2020 <unk>.
The equipment and the operating income is mainly explained by one an increase in interest and fee income. The later, mostly hey by the implementation of a new we work well with the credit card benefit which meant savings in fee expenses to know what that loss from right down to that.
And what does that cost and fair value through OCI and see no what loan loss allowance is mainly due to a good evolution in the behavior of our loan portfolio.
It should be noted that in 2020 with thoughts were affected by the partial collection of payments and voluntary swap of the National Trust for a U S. Dollar linked notes, meaning we've had been restructured in August 28, 2019, and that generated a loss in the Lai not loss.
From right down in the last set of amyloid does that cost and fair value through OCI.
Another factor to be highlighted is that and kind of a pet fly accumulated then you can attach during 2021 recorded a gain of 18 million pesos. The first and second quarter of 2021 were affected by the reversal of a provision connected to the repayment of income tax inflation.
Adjustments for 2016, 2017, and 2019, that's clearly excluding the effect of actions of declaratory judgment during the year. The effective tax rate would have been 30% for 2021 compared to an effective tax rate of 43%.
In 2020.
Yeah Cumulated net income for 2021 net of the effect of actions such as Florida or any judgment on the tax line would have been 15 7 billion pesos decreasing 516% versus the accumulated net income for 2010.
These exclusion would have meant an accumulated or are we off pinpoint to defend and then accumulate our away of one 5%.
Additional to these factors net income was affected by the income from the monetary position in that context of higher inflation.
E V. Argentina fourth quarter 2021, net income was $4 8 billion pesos, increasing 27.8 quarter over quarter. This implied a quarterly ROE of 11, 8% on a quarter here or a way of 1.8 with that.
What our results are mainly explained by one lower loan loss allowance is especially due to unsatisfactory behavior of the loan portfolio to a greater fall in interest expenses and three nowhere administrative expense.
The increase in the result is upset by one no one net income due to higher activity to higher expenses in other operating expenses line item due to the recording of a new provision for it one station charges and city, Ohio law from the net monetary.
Fishing.
Turning to the P&L lines net interest income for the fourth quarter of 2021 was $33 6 billion pesos, increasing four 3% quarter over quarter, and 13 nine points and year over year in the fourth quarter of 2021 interest income to increase less than interest expenses.
Mainly due to one higher income from interest from loans. Another financing to include any income from sad, what clause adjustment and see an improvement in the funding mix.
In the fourth quarter of 2021 interest income totaled $55 9 billion faithful falling to five per cent compared to the third quarter of 2021, and increasing 15, 7% compared to the fourth quarter of 2020.
Quarterly decrease is mainly driven by lower income from Penguin or whereas we bought transactions, especially due to a lower position in this instrument.
Salt of higher activity. This fall was partially upset by a full 0.7% increasing said, what's most adjustment mostly on income from government securities linked to southern Texas and up four 5% increase in interest from loans another financing interest expenses totaled $22.
Three faithful denoting an 11.3 decreased quarter over quarter, and an 18.4 increase year over year.
The decrease is described by lower checking that how it expenses, partially offset by higher expenses things are financial loans received by the bank subsidiary.
Input from time deposits and investment accounts explained 76, 6% of interest expenses versus 71, 5% the previous quarter net fee income off of the fourth quarter 2031 totaled $5 8 billion peso falling 14, five or 10 corridor.
Water and increasing 37, 9% year over year.
In the fourth quarter of 2021 fee income totaled 11, 6 million faithful growing one 6% quarter over quarter, and one 8% year over year.
Quarterly growth is mainly explained by an increase in income from credit cards due to higher activity and those links to them.
Regarding tea expenses. These totaled $5 7 billion pesos growing 20, 516 points quarter over quarter, and falling 19, 6% year over year.
Higher expenses in the quarter are partially explained by higher expenditures linked to an increase in marketing app shows higher than satisfying and as far as the favorite business that what they are.
During the fourth quarter to about 121 personal benefits and administrative expenses totaled 16 point to be unfaithful, falling eight 9% compared to the third quarter of 2021, and growing 11% compared to the fourth quarter of 2020.
Accumulated efficiency ratio out of the fourth quarter of 2021 was 69, 1% improving compared to the 69, 47% and deteriorating versus a 56, 8% reported in the third quarter of 2021 and in the fourth quarter.
'twenty respectively.
The quarterly improvement is explained by a high up or sent that increase in the denominator, but the numerator, which has been positively affected by improvement in net fee income and net interest income.
Excluding inflation adjustment, considering and then come from the monetary position line item for fourth quarter 2021 accumulated efficiency ratio would have been 49, 4% marginally improving compared to the 49, 7% of our south Florida for a thousand tonnes one and.
Deteriorating compared to the 45, 1% in the fourth quarter was a thousand them twice.
In terms of activity private sector loans as of the fourth quarter of 2021 towards that 388, 4 billion pesos, increasing three 7% quarter over quarter, and falling 11, 41% year over year.
Now onto the private sector and based off increased six 8% in the fourth quarter of 2021 and decreased six 5% year over year. During the water growth is especially driven by a 23, 6% increase in other loans, a 19, 9% increase in discounts that instrument.
Under 3.2% increase in credit cards, the laser primary explained by our superb no.
No. So the private sector are denominated in foreign currencies fell 29 point to the same quarter over quarter and 51, 8% year over a.
Quarterly decrease is mainly explained by a 24, 8% all in pre financing on financing of exports and 100% fall in discounted instrument and a 17, 7% fall in other loans.
All the aforementioned indicate a lack of demand of loans in foreign currency.
Ted we sell loans have increased 2.2% quarter over quarter, and falling seven 9% year over year during the quarter the greater increase.
Seen in consumer lines without falling wanting and then followed by a city 0.1 growth in credit cards.
Commercial loans grew six 1% quarter over quarter and contracted 16, 2% year over year, both in real time.
Growth in commercial loans in the quarter was primarily motivated by marketing campaigns to it in the fourth quarter of 2021.
Loan portfolios are mainly impacted by the effect of inflation on the fourth quarter of 2021, which wheat, 10.2% nominal terms the winter Marshall and total loan portfolio. All increased 12, 6% 17 boyfriend and 14, 3% respectively.
The Florida, well beyond real time growth.
D V Argentina consolidated market share of private sector loans reached 8.05% as of the fourth quarter of 2021 from 849% a year ago.
Although the fourth quarter of 2021, the total loans and other financing over the loss ratio was 55, 4% above the 54, 5% recorded in the third quarter of 2021 and below the 61, 2% in the fourth quarter, because I went on 'twenty.
In the fourth quarter of 2021 asset quality ratio was 187% compared to the 254% recorded in the third quarter of 2000 until Q1 that they create it's mainly explained by one.
Three behavior of the loan portfolio to the write off of nonperforming loans, mainly retail and see an important increase in the total loan portfolio.
The coverage ratio was 180, 189% in the fourth quarter of 2021 versus the 180, 175% recorded in the third quarter of 2021.
The change in the ratio reflects a similar duration in allowances.
Mainly due to the update on improvement of the ISR S 90 in paradigm and low smaller power on the test with most and that's on the weighted portfolio and the total nonperforming loan portfolio.
The rest, we see real point, 46% as of the fourth quarter of 2021 lower than the third quarter, 2021% to 80%.
This is mainly explained by the reduction in loan loss allowances as a result of the year.
No a lot of I F. R. S signing Paramount means model around the stars and an improvement in the sovereign rating for the commercial portfolio upgrading the commercial loan portfolio rating.
Offset by the negative effect of the new default definition implemented in November 2021.
Exposure to the public sector, excluding central bank instruments in the fourth quarter of 2021 represented 8% of total assets above the six 9% in the third quarter of 2021, and the five 6% in the fourth quarter of 2020.
On the funding side I'll go to the fourth quarter of 2021 total deposits reached 708.3 billion base off growing one 9% quarter over quarter and falling one 9% year over year.
Private nonfinancial sector deposits in the fourth quarter of 2021 towards that $294 8 billion faithful, increasing one 6% quarter over quarter, I'm falling to 4% year over year.
Private nonfinancial sector deposits in pesos tolls up $531 9 billion pesos, increasing six 1% compared to the third quarter of 2021, and four 7% compared to the fourth quarter of 2020.
The quarterly growth is mainly explained by the increase inside the bastard, especially checking accounts non interest bearing and saving accounts. This was partially offset by a seven 8% decrease in time deposits.
Private nonfinancial sector deposits in foreign currency expressed in pesos fell 10, 6% quarter over quarter and 20% year over year measured in U S dollars, just deposits fell five 3% quarter over quarter and 1.2% year over here.
As of the fourth quarter of 2021.
For infection on deposits checking accounts and savings accounts represent 65, 6% of total nonfinancial private defaulted fresh is 63% in the third quarter of 2021.
The banks consolidated Martha Chill private defaults at week, 695% of our fourth quarter 2021 from seven point, 13% a year ago in terms of capitalization BBVA, Argentina continues to show strong as all of us indicators as of the fourth quarter.
<unk> thousand and a sense of what capital ratio reached 28% lower than the third quarter 2021, 23, 5%, mostly due to the announcement of dividends distribution on November three 2021, 465 billion pesos tier one ratio was 23%.
And capital access or regulatory requirement was $88 5 million faithful or 154, 5%.
It is worth mentioning that since 2020, the bank's shareholders meeting have been announced dividends for a total of 28 billion pesos, which would then pending of distribution given that the central bank sorry is it a suspension in the distribution of results a financial institution until December .
The 31st 2021 now that the suspension has been lifted the ban when proceeds to work on the authorization request to the regulator wants. Its 2071 result are approved by the shareholders meeting the bank's liquid duration basically $10 remained healthy at 72% and 92.
9% of total deposits as of December 31st respectively.
This concludes our prepared remarks, we will now take your questions. Operator, Please open the line for questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question is from Carlos Gomez with HSBC. Please go ahead.
Hello, Good morning, first of all congratulations to finishing on therapy longer shelter.
Particularly on your victory.
On the tax front.
I have two questions one is in general.
Yep.
The brokers pick <unk> mix you guys, we've got expertise.
P M.
Can I just have to see.
The economy plus the cosmetics.
You mean, you must have it back to you. Thank you must have some ideas.
Do you think you expect that you would.
You'll be able to get.
And so volumes any pinch of Greektown.
So that would be my first question.
Hi, This is speaking.
Yes, I mean, I shouldn't there be that sort of unheard of computers and peanuts, but.
But we have some features that we can share with you our the loan book as you as you can see and then turns and ended decreasing net until you send me a new year, but four are mainly driven by you.
And this lack of demand for that charge off.
No.
But it depends on in 'twenty two.
We're seeing a real growth around 5%, we are seeing a shift in contracting around.
We send them to other things.
Just to mention we are projecting inflation for 2022 around 55%.
That's what I'm trying to get them.
Because he's trying to focus on the year 2000, and when do you want to end it with a contraction of two defense.
Mainly driven by the U S a.
People.
2022, we're expecting Derek on traction around people attend but the system even contract more around 7%, although she her thing.
So what I can to clarify do you expect that the Houston will expand loans construction loans by 11%.
As shown in 'twenty two.
If he could fool.
Yeah.
So dependent on 22, the system would be contracted 11, centene, we intend or we should be growing around 5% in real time, So we should be taking some market share.
There's a lot of different link that's almost a 15% difference.
Why do you use precision so much of a transit system.
Maybe because we have been in 2000 and 10-Q, one not that active but you can see in the fourth one measly threat.
A lot of marketing.
To attract more got so much we have grown in a number of customers. So we believe there could be some more of them I'm going to say need for kitchen area and that we are trying to tackle and bring more customers into the bank.
So I know something on the side of David.
We can see some some more demand.
Yeah.
And I think that answers your question.
And you can do even more.
Yeah, we have even spending more in it.
We see you in the fourth quarter, we had been quite stable in the first three quarters.
And that reflects in the amount of customers that we have increased flight ticket if any.
Okay. So you just picked them more.
And that's a perfect ability to.
Goodbye.
Perfect.
These are all week.
I'll give you a or at least a U H D.
Yeah.
Are you asking are we would be around 10, 2% compared to 13.5 and was presented.
And now narrow way if you can do that to defend them.
Yeah, Meredith reactions would have even one 5%.
Whenever we need or we are a team stayed but slight.
Like you all were family.
Let's see.
C N and inflation and it could be higher.
And I mean, we need to see how long until the cost of funds.
It keeps them on and we have improved our mix in the fourth quarter, we need to see what happens for 2022 on that on the income side of interest.
We should see a better performance, mainly because you know the more intelligently.
Anthony.
But basically what you need when there.
Currently.
So it could be good if rates are going to be higher shooting ducting principle.
You can put your margins are going to jewelry.
Yes, it could increase but we're going to have more inflation and we're going to spend even more and you need in acquisition cost.
If you remember 2021.
The feedback was very well, mainly because you're spending less.
And you can extend it and that's starting to increase in the fourth quarter, because we're being more active in trying to attack and attract new customers.
Okay. Good.
Good luck.
Hello, Good morning.
Hum.
Did you have you been.
So we understand that you have been alone.
<unk> been stuck in a very particular fashion, which is this plus installments that the central bank has allowed.
These are subject to change or would you be willing to pay.
Just could you know you are trying to negotiate something different with the central bank in Switzerland would be to lead people to really see people given that you've come up with the declared dividend for the last two years of tough enough to be distributed to you.
Yes, we have already declared a 28 million people that are already in and I am.
Besides that financial or capital ratio has decreased.
The net said we are going out.
Harold limitation catch that.
We started for 2000 and cause you wanted me to be approved by the annual shareholders' meeting that is gonna be hands on April 29th last night.
Oh, no relevant again was released.
Even if it makes sense.
So that was besides having their first we're gonna breached anti proton centers at Central Bank Levy will we be able to distribute around parity.
Billions of people in the 12th in Finland.
It's not really an innovation that but again that needs to be at me I'm biased.
By the Central Bank one that.
2000, and when do you want me to have been approved by the annual shareholders' meeting, we're not projecting dividends to be declared in 2022 for the time be.
So well make a district, but you think of the 28 billion.
You already have a clear.
Sure.
One three would be distributable.
Exactly okay.
Okay.
The other 15 would not be that she would do this year, probably will be to see what the world in the future.
We need to see how that really haven't baked any months is very difficult to say, what probably try and bring in the data has been changed and you can see what happens.
With our metrics.
N V I N and fun and maybe things get where you can see what happens in that front.
Now and you correctly.
Correctly getting distribution, but not to be clear additional D D bench.
Now on to the other ones have a print.
Or you would declare dividends under 2% could be one of them.
You can see again, what happens in 2020 dual macroeconomic scenario.
Okay.
To look at and did you.
Yeah.
Yeah, it could be up a familiar to you okay.
Hey.
We are okay with that.
With the sorry T V.
We expect that we would be able to distribute during 2052.
Right.
No.
Because if they want to be.
Yeah, one thing one thing.
Okay now.
Okay. So do you need to call for another AGM to be clear more because you have to give you do you can do it with the board come to me to be felt.
Cool.
The way to Orient the annual shareholders' meeting on April 29, Oh, we should pull join extraordinary shareholder meeting and we did two in 2022 in 2019.
Okay, and then in terms of the timing that you said you have the possibility of being over 12.
Goldman's Doug.
Could you speak too complicated, but you are willing to go through to that particular person. So do you have hopes that he could be changing in the future.
And we have the annual shareholders meeting in April 2019, as she has two months to go and then we need to if we can go.
All options are kind of forgotten countries of central bank, we need to be up to the time frame, where do we stand out.
Young the controls on fake swap who are proposing additional ones.
That's exactly right.
Change in Guangdong.
Two questions.
David.
Okay No no I have essentially the D. C area you can respond to these requests at any point in time and you can pick a number but my question is specifically, whether you would be willing to make.
Who else is small.
And so like a year or do you think that he can be changed.
No.
It could be changed in the future.
Uh huh.
And B, what do we know what we have seen.
Yeah.
Good choice.
<unk>.
So moved.
We really do it enough.
Sure Jim.
Okay.
Okay. That's very clear. Thank you so much for that.
Again, if you have a question. Please press Star then one please standby as we pull for questions.
Showing no further questions. This concludes the question and answer session. At this time I'd like to turn the floor back to Mr. Flynn for any closing remarks.
Thank you very much for your time and let US know if you have further questions have a good day.
Thank you. This concludes today's presentation you may disconnect. Your lines at this time and have a nice day.
Yeah.
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Hum.
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