Q1 2022 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 first quarter 2022 results conference call.
We would like to inform you that the C band is being recorded and all participants will be in listen only mode. During the company presentation.
After a company remarks are completed there will be a question and answer section.
At that time further instructions will be given.
Should any participant need assistance during this call. Please press star zero to reach an operator.
First of all let me point out that some of the statements made during this call. 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, Argentina's annual report on form 20-F for the fiscal year.
2021 filed with the U S Securities and Exchange Commission.
Today with US we have Mr. Ernesto Gallardo CFO , Mr. Lucena, why do you say I R O N.
And the spelling Procol day Investor Relations.
As for Carter you May begin your conference.
Good morning, everyone and welcome to the <unk> first quarter 2032.
Okay.
Today's webinar will be supported by a slide presentation available on our end.
Our relations website under financial information section.
Speaking during today's call it would it be in the San Jose and maybe what I said about our Chief financial Officer, who will be available for the Q&A session.
Please note that starting very first.
And he asked by Central Bank regulations, we have begun reporting because I think I put in place and that kind of thing that's doing.
Well I, yes.
So each of them by at least 2017.
One I think.
Results have been restated to reflect the accumulated effect.
Inflation adjustments for each period.
Thank you Sir.
Thank you.
Now, let me turn the call over to them.
Thank you Amanda and thank you all of you.
Joining us today, the COVID-19 pandemic situation continued to improve during the first quarter of 2022 in spite of the omicron variance that took place in January.
He is allowed to continue and they feel the economic recovery, although we didn't have that breakdown right now any challenges, we don't think high inflation and foreign exchange rate, Despite having settled and agreement with the IMF in March 2022.
D. A Argentina has a corporate responsibility with the Hyatt characteristic of the bass business model.
Carey financial education, and support high and T. J can reshape our culture.
The bank was where the highest can take we see no prohibition and best practices and express into the BBVA group in the main sustainability indexes.
Moving into business dynamic and you can see on slide three but what type of presentation. Our service offering has evolved in such a way that by the end of March.
2022 but you know.
Why is penetration reached 62% remaining stable compared to a nearby why is that mobile clients, we 54% from 52% in the same period of last year.
Oh, well beside the customer has been satisfactory and we are convinced this is the fastest way to EMEA, the staining and expanding our competitive position in the financial system.
We think that you don't have increased from 17 active late he said you mean, a slightly increase from here.
Thank you.
He preferred measure it as a board.
Thanks.
New customer acquisition digital panel increased to 66 with that in the fourth quarter of 2022 from 64% in the bus or talked about when and what you want.
But I have to be monitored.
Financial condition and operating results.
Oh, keeping a competitive decision because they've got excellent Jack.
Moving to slide four I will now comment on the bad first quarter 2000, and since you do financial or we thought.
Yeah.
Maybe I can see now first quarter 2022, net income well sports media.
Baseball equating, 27% quarter over quarter. This implies a quarterly or are we now.
And our quarterly general way of one 4%.
Quarterly operating results are mainly explained by one.
Interest income to a higher income related to the sale of the remaining participation of the bank.
About a third nowhere operating expense.
These effects were offset by an increase in loan loss allowance, which we tend to average values, considering the particularly positive impact that took place.
What else 2021.
As of March eight 2000, and benzene the transfer of the whole remainder stock participation of the bank.
Maybe talk about.
Well it can be.
Improvement.
Net income from major medical financially, but that's I'd say about E. N N. I mean, another operating income was mainly explained by different section generate adult they'll benefit before taxes of $3 5 million.
Amaya positive effect is also seen in the light of foreign exchange and go okay.
Net income for the period is negatively affected by a higher income probably net monetary position even that the quarterly inflation in the first quarter of 2020, do what 16, 1% compared to pinpoint 2% in the previous quarter.
Excluding the effect of it they look pretty smart.
Net income in the first quarter of 2022 would have been one point in time.
66% lower than the fourth quarter of 2001, and $59, 1% lower than that but what else do you want.
This would have implied a quarterly or a week.
Oh boy for defense and an hour away you have gone further.
Turning into the P&L lines and flagged by net interest income from the third quarter of 2020 to 139 point to be on Batesville, and queasy, 0.6% quarter over quarter, and 17, 4% year over year.
In the first quarter of 2020 to interest income decreased less non interest expenses, mainly used to one higher income from interest no. Another financing and two increases in income from said, what's it all about jobs.
Interest income increased six 4% compared to the fourth quarter of 2000, I think one mainly driven by higher income from government users.
Especially lately and then equally and said Oh no adjustments, mostly on income from government Securities Inc.
Indexing income.
Income from credit cards also stands out or go to a lower extent.
All these was upset by lower income on Prem you or reverse repos transaction, considering seven day, we thought well gradually removed from the market by the Central Bank.
Interest expenses increased 15% quarter over quarter quarterly increase is that's why I hired tying to get buckets and checking account expenses together with higher that what I guess main expenses, partially upset by lower expenses by interim financial level, we see by the.
So P J.
Interest from kind of Boston I mean, that's my neck out.
73% when things are expensive, but 90 616 points.
The previous quarter.
Net fee income I thought the first quarter 2020.
22 totaled $6 6 billion, Batesville, Bonnie 1.9% quarter over quarter, and increasing 27, 5% year over year.
P income fell 3.5% quarter over quarter, mainly explained by a decline in income from credit cards, especially due to the contract that came to fourth quarter of 2021 and that seasonality your encoding function.
Regarding fee expenses. This contracted five points is that quarter over quarter, partially explained by nowhere expenditures linked to the specialty papers business application and expenses on credit and debit card.
On the first quarter of 2022, Nope allowances increased 341, 6% quarter over quarter, and then well see 36% year over year with charity to average that is considering debit celerity plus it if in fact that took place.
Fourth quarter, 2000, and said, one and having a particularly good portfolio behavior on the commercial side.
During the first quarter of 2022 total operating expenses were 28 billion pesos, increasing three 5% quarter over quarter, I'm falling 648% year over year.
So I think that what personnel benefits and administrative expenses.
65% from the fourth quarter of 2021.
Personal benefits increased one 2% quarter over quarter, partially explained by the collective wage agreement reached with the unions, which established I think some increase for the month of January February and March.
Administrative expenses decreased three 9% quarter over quarter, partially explained by a 43.6% boy it'd be outsource administrative expenses line item.
24, 4% decrease in other administrative expenses.
Yeah, cumulated efficiency ratio, although the third.
Quarter, 2022 was 72.2% he rating compared to 16, 941%.
Marginally improved.
This is the 70 to one 5% reported but what are the about 191.
Third quarter 2021, respectively.
But what are the weakening is explained by a higher percentage accretion income well, let's say during monetary both Fisher with that then the expenses almost exclusively due to the negative impact on the income from the net monetary position.
Oh, but wait to quarterly inflation compared to the fourth quarter of 2000, and when do you want.
In terms of activity on slide six.
Consolidated financing to the private sector in the third quarter 2022 totaled $413 2 billion peso falling eight 4% in real terms compared to the fourth quarter of 2021.
Tracking 10, 3% compared to the fourth quarter, but what else 2071.
In the quarter.
This was mainly driven by a fall in credit card and it's going to be installed.
In Batesville loss decreased eight 5% in the first quarter of 2022, especially driven by a fall in credit cards and a fall in discounted installed.
No its in Florida, or a car and fleet expressed in pesos.
Six point pulp is down quarter over quarter, mainly explained by the fall in refinancing and financing of exports and therefore, you know there are a lot.
The affirmation indicates the continued lack of demand of loans in foreign countries.
During the quarter equate to a degree we can load is senior credit fund I've explained previously mainly due to the contract with the seasonality.
Well, it's one of 2021.
The commercial book the greatest decline is seen on discount defense demand I mean pre financing on financing all of that.
No portfolio are largely impacted by the effect of inflation in the first quarter of 2020, which reached 16, 1% nominal ton the telecom portfolio increased six 4% during the quarter beyond it we have some growth.
BBVA Argentina's consolidated market share of private sector loud week, 789%.
For him to talk with us about Youtube from eight point, 20% I hear about.
In the fourth quarter 2022 asset quality ratio was 129% compared to the one point to 87 four that recorded in the fourth quarter of 2000, and so do you want.
The decrease is mainly explained by a good loan portfolio behavior, mainly on the commercial side.
The decline in the commercial nonperforming portfolio and the total portfolio are driven by write offs in the commercial portfolio.
Positively compared to the 16% and.
Recorded 90 day banking system as of February 2022, the latest available information.
The coverage ratio was 219 point, 75% in the first quarter of 2022.
Yeah, 181.9% reported in the fourth quarter of 2021.
A change in this ratio reflects a nobel rationing allowance. It then in the hope of nonperforming loan portfolio. The later affected by commercial rifle.
Well, that's the race week to plus 11 point that although the first quarter of 2022 above fourth quarter 2021 zero point, 46% yeah.
Exceptional value recorded in the fourth quarter.
What well mainly explained by the reduction in loan loss allowance at I'm sorry.
Oh, Yeah. They go Oh, I FRS nine inspire them and no more of a barometer on an improvement in the Saudi Arabia.
Portfolio upgrading our commercial loan portfolio.
On the funding side I've seen on the slide seven private nonfinancial sector. The boss in the first quarter of 2022.
779, six be a faithful decreasing 3% quarter over quarter, and increasing one 2% year over year.
Quarterly decrease was mainly explained by sight deposits, which fell nine 6%.
The banks consolidated market share five of deposits reached seven point plus defense I thought the first quarter after about 122.
Private nonfinancial sector, they've got had seen faithful.
I mean, you were up 6% quarter over quarter, mainly affected by a fall inside the phosphate, especially saving.
This was partially upset by an 11% on a seven 4% increase in time deposits and investment account perspective.
Foreign currency deposits expressed in pesos.
11, 7% quarter over quarter.
I'll cover the first quarter of 2022, the bank when section of deposits considering checking accounts and savings accounts represent 60% of total.
Non financing pregnant they bought it but it's a 64, 3% in the fourth quarter of 2000 and I thought he was.
In terms of capitalization BBVA, Argentina continues to show strong positive indicators in the fourth quarter of 2072.
Capital ratios.
23, 5% above fourth quarter 2021, 24%, mostly due to the announcement of a dividend distribution in the fourth quarter of 2021 or $6 5 billion pesos.
Exposure to the public sector in the first quarter of 2020.
Excluding central Bank instruments represented eight 9% of total upset about Yang with that in the fourth quarter of 2021, and a six 4% in the third.
What else is helping in 'twenty one.
Way below that 15.5% reported by the system by February 2022, the latest something of an information.
It is worth mentioning that on April 29, 2020 to the shareholders meeting approved one but this isn't famous nonresident shareholders shall be maintenance of humanity unless thing for them to buy their decision to receive them.
So to my son Central Bank authorization that must be me.
Sure Peter.
Got it.
In $13 2 billion pesos.
It also delegates on the board of directors the power to determine the condition of the payments of dividends and share holding according to central bank prior Authorisation.
The bank's total liquid assets remain healthy at 79, 6% of total deposits as of March 30.
This concludes our prepared remarks, well now take your questions. Operator, Please open the line for questions.
Thank you.
And we will now begin the question and answer session to ask a question you May press star and one on your telephone keypad.
If you're using a speaker phone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause for a moment to assemble our roster.
Okay.
Our first question today will come from Rodrigo Nexstar, a fellow Elias. Please go ahead.
Hi, Good morning, Yeah, Nice Oh, my goodness right in.
Ah So you cool what people can do for a <unk> question. So my question is related to the reasons dynamic school cool pool in Florida.
What are you expecting regarding loan and deposit growth for the year on a broker W. P.
How did the search and inflation over the last few months affect your your strategy and outlook for the year.
Okay. Thank you for your question I'm, sorry for my voice.
Yes, I see a nation. The last week, we have increased our projection of normal inflation. We were we had 63% projection we had our our research team has moved that transactions are 72 for 2022.
Schedule for 2020 feet.
They send out to escalate.
Our loan book for 2022, we are projecting an increase a little bit below inflation and they bought it always talking about <unk>.
And deposits are growing below inflation for Lilly.
He didn't get higher no.
The dynamics on our P&L differently and this would make us have more expenses remember that most of our expenses are salaries and are tied to the wages same location.
So that will increase our expenses, but talking about the margin basically what does that our strategy is basically to cut the chair at wholesale deposits, which you say I know what our interest rates and the time deposits that are not to our retained costs.
The mistakes and goals.
Deposit in that Sun belt in Lilly, which we have and we are increasing our decision and bornstein a tool and that adjustment that would allow us all right and then on NII to grow during 2022.
For a year and a to give you an idea the result.
It should be a little bit lower.
I think I know a little bit lower than 2022, what 'twenty, one sorry, remember that we had the declaratory.
The impact on on it.
And in fact that it increased a lot our our research into southern in 'twenty, one, but excluding that.
Yeah, you could have and also there we thought it would be a little bit more negative would be hard to have much higher inflation.
So I don't know if I answered your question.
Yeah, that's that's helpful.
Maybe I have a follow up yeah, I mean, no conflicts with these strict regulations do you need to do some you are having on your headquarters.
Great.
Do you Oh by the.
Thank you for four months do you compare yourself with.
Which you know banks.
How do you build the headquarters that you are.
The headquarter of civil work that Youre doing.
A good job or not.
Well, we have a budget that we present every year or two the holding and we report on a monthly basis and we compare our our projections to our budget. Obviously are our project shows golf, we keep them update them. They close in Argentina to changes in interest rates are very strong.
I can probably for example last year, we were projecting a more and more income crowding from from repos that we mentioned in the call. They had the withdraw now that excess liquidity is going into Lilly and we have more inflation than the one that we forecasted in our law.
At the end of last year. So when we go out to 18 or projections I would compare that to budget. We also have internal kpis. Many of them tied to market share are tied to efficiency that we continue to monitor and also we try to.
To every transaction that we were loans that we try to get we analyze the profitability of those transaction. We tried to perform for a transaction that's all profitable and it's not just a question of quantity, but a question of price.
Those are the type of loans that we went out and provide our customers.
Okay that was pretty helpful. Thank you.
Uh huh.
Again to ask a question. Please press Star then one our next question today will come from Carlos Gomez of HSBC. Please go ahead.
Hello. Thank you. Thank you very much for the presentation, especially if they could keep go come in very useful.
How do we go or whatever so social thank you.
Got it you took a provision at the.
Could you brief questions. The first one is about Bruce muscle just to clarify do you have completed the sale.
You said the business would consider in the future or Youre happy to stay out of a payments went up.
Second on inflation.
I agree with you.
All of which 72% for this year 62 next year or you go to the possibility to replace them, we'll get really out of controlling what you might be caught the creep that you could place them. All that is a low provoke probability event for you.
And.
Hum BBVA, Argentina, Oh, gosh, maybe it's a big move.
The past, but they tend to come.
Later on you said you were trying to do meet your precision right. Now you have eight to go to a market for the long term for some understand the bullshit.
Are you happy to see where you are or would you consider making a move now and trying to to grow with the market seems to be relatively depression.
Thank you.
Yes. Thank you Carlos first of all starting with her comments on her presentation. We are happy to have this explained.
Explain our our restaurants, okay on the first question Krishna.
Yes, we sold the whole of it.
It shouldn't no we have no longer participation for now we are okay, and precise sort as a provider for us and we are okay and with that application.
Regarding our inflation.
To your question there was.
If it might be get out of control you have over your purpose to 17.
No I think you mentioned in the call. It 80, we were in New York last week on that projection last week or the week before a conference and our projection there from our recharge. Your partners was 63 easily get 72, so it really really really fast in Argentina, our projections on that.
It was truckload.
Alright.
AAA membership a weekend.
No no no I wouldn't.
Right.
Sure it's possible.
I'm not the expert to say exactly and that definitely is moving very very fast, but personally I don't see S. V. G. D inflation I can be wrong again, according to our excellent talent to our research department that normally is very accurate at your project.
Inflation I would stay with a 72 of that today, the I forget, but again that can change in the next 15 days in the next months Ah things in Argentina moved very very fast.
Ah I think well, we do with inflation as we keep managing the P&L and try. This these hedge that we had they were trying to deal with that with the fed aboard.
And when I sat with a Y little touch a day or 4% of our all of our equity and debt.
Real estate real.
Real estate that we own these headsets hedge and the effect of inflation in your balance sheet, which is very high but it's probably one of the market not to other banks and that third Ah boy. It was a the marketshare, yes. It should.
It's increasing but I think it's more a question of lack of demand and we would be happy to be gaining a margin more for the financing intermediation than rather from placing our excess liquidity teach in in bonds, but the reality is that there is a lack of demand conceptually it should go.
Being reduced so we tried to do our best and it would be wise to just sit on the on that package and do nothing.
Currently if demand is there we are going out they go to an attractive.
But today the lack of data on it it's a reality and it's common for all the banks all of them are are reducing in real terms a young girls. So it's something that is more structural from the from the from the country and of course, that's rather for the bank that is lending less I don't know if I answered your question.
Yeah.
Yes.
Thank you so much.
Sure.
Again it is star then one to ask a question.
Showing no further questions. This will conclude our question and answer session.
At this time I'd like to turn the conference back over to management for any closing remarks.
Okay.
Okay. Thank you for your time and please let US know what you have tied up questions have a good day.
Yeah.
The conference has now concluded we thank you for attending today's presentation. You may now disconnect your lines.
Yeah.
Yeah.
Yeah.
Yeah.
Yeah.
Yeah.