Q2 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 second quarter 2022 results conference call.
We'd 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 company remarks are completed there will be a question and answer session at.
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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 statement.
Additional information concerning these factors is contained in BBVA 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 .
This is and that's.
When you say I R O S.
Mrs Mellon Mercado <unk> Investor Relations.
Mr. <unk> you may begin your conference.
Good morning, everyone and welcome to BBVA, Argentina's second quarter, two earnings conference call.
Today's webinar will be supported by a slide presentation available on our Investor Relations website.
Certain information protection.
During today's call it will be new San Jose and that Mr. Sadler O'neill, Chief Financial Officer, who will be available for Q&A session.
Please note that occurred in January five 2020.
Bank regulation it couldn't be done without doing without a plan.
Can you kind of a thing.
So I'm glad you're correct I Eh, yes, crazy here for Rick.
For comparability.
100000, I think you can either have been restated to reflect the accumulated effect of inflation adjustment for each video through June 30th 2019.
And each of them.
Now, let me turn the corner all that cleanup.
Thank you Balan and thank all of you joining us today.
And my last paper at the moment.
Facing because he says he's correcting macroeconomically Sasha.
That is our best ever in the loan agreement reached in March 2022, with International Monetary Fund micro volatility I think recently increased especially in markets and know pretty cartons. He got not.
The high uncertainty about the future development of the economics on it.
With COVID-19 pandemic situation under control and Argentina has been able to continue with its economic recovery.
So within that context that persist great challenges without sustained high inflation on a peso foreign exchange rate.
BBVA, Argentina has a corporate responsibility with society.
On the bank's business model, which encourages inclusion financial education and support scientific research on culture by Bank works with the highest integrity normally come vision and best practices on both.
Breath and through the BBVA group in the main sustainability indexes.
Moving to business dynamics as you call. It your flight three of the webcast presentation, but service offering has evolved and cultural weighed down by the end of June 2000, and I'm quite a good job. They get her clients penetration reached 62% remaining stable homestead right yeah that was.
That.
Life Science reached 54%, 52% in the same period of last year.
The response on the side of the customer has been satisfactory and we are convinced this is a basket of Rachel Yang of sustaining and expanding our competitive position and our financial system.
Digital sales have increased from 78, 6% in the second quarter of 2021% to 82%.
A slightly increasing from 53, 1% to 54% measured as a percentage of sales.
New customer acquisition to digital channels.
6% in the second quarter of 2022 from 70% in the second quarter of 2000 and front do you want.
And actively monitor business financial condition and operating results.
Aim of keeping a competitive decision.
Contextual tonnage.
Moving to slide four I will now comment on the banks second quarter 2022.
I'll start with that.
D D D. Argentina second quarter 2022, net income was $15 9 billion pesos, increasing 235, 8% quarter over quarter. This implied a quarterly ROE of 28, 3% in a quarter in the Iowa, a four 6%.
Operating income in the second quarter of 2000 uncertainty to what 32 billion pesos 10, 2% above the 29 billion pesos recorded in the first quarter of 2032.
The quarterly operating results are mainly explained by one greater interest income too about our net income.
No we're operating expense.
You saw our net operating income to increase about operating expense.
These effects were partially upset by a fall in net income from measured on financial instruments at fair value through P&L, which include let's say well there when they need participation of the bank in Prisma in the first quarter of 2022.
Net income for the period was improved by a benefit in the tax line as a result of yes, that's absolutely fair.
Sure.
Turning into the P&L lines in slide five net interest income for the second quarter of 2000, and I'm from Tito was $54 3 billion pesos, increasing 18% quarter over quarter, and 36, 3% year over year.
Thank God I'm wondering times increased more than interest expenses in the second quarter of 2022.
In the quarter interest income.
<unk> 23 per cent compared to the first quarter 2000, and from Quito, mainly driven by one higher income from government securities. Both from an increase in the nominal rate and the volume in the precision of the led to an increase in staff, who have clause adjustment, especially from government security.
Linked to that and that's it with precision has increased during the quarter.
Income from Overdrafts. Another load also stands out mainly because of the adjustment of the increasing grade and an increasingly.
Although this was offset by lower in kind of a premium on reverse repos.
Considering that such instrument well gradually removed from the market by the Central Bank.
Interest expenses increased 29, 7% quarter over quarter, driven by higher time deposits and checking account expenses together with higher said well I just meant expense.
Interest on time deposits, including investment account explained 69, 3% of interest expenses, but the 17th.
The previous quarter.
Net fee income, although the second quarter of 2022 totaled $10 3 billion pesos, increasing 32, 4% quarter over quarter, and increasing 15% year over year.
In the second quarter of 2022, Tioga fell five 3% mainly explained by a declining meaning to liabilities, especially due to the lack of our increase in prices with less equipment took place in the previous quarter.
Regarding to your extensive it's contracted 44, 9% quarter over quarter, partially explained by the immigration of clients from the Latam benefit programs into the pool.
Our program and lower expenditure linked to credit and debit cards.
On the second quarter of 2022 loan loss allowances decreased 7.7% quarter over quarter. Thanks to a good portfolio behavior, especially in the commercial auto book.
During the second quarter of 2022 total operating expenses were $36 9 billion pesos, increasing 12.6% quarter over quarter.
68%, what personal benefits and administrative expenses versus 66% on the first quarter of 2022.
Person or benefits grew 19, 5% quarter over quarter, partially explained by the collective wage agreement reached by that you're in New York and it's retroactive effect corresponding to the first quarter of 2042, what impacted in April 2022 also join the <unk>.
Second quarter of 2020 do the stock obligations not taken it was reevaluated and buyer of compensation.
Although the second quarter of 2000, and probably to administrative expenses increased nine 8% quarter over quarter.
The increase is partially explained by one an increase in our fourth administrative expenses to an increase in rent and three an increase in sub what extent.
The negative effect of the aforementioned items were upset by a reduction in the tax line items explained by a fall in municipal charges, maintaining our preparation expenses and in arm one transportation given the efficiency plan at like on the latter.
The accumulated efficiency ratio, although the second quarter of 2022 was 71, 3% improving compared to a 72, 2%.
Going into the first quarter of 2022, I think you were raising prices at 17, 1% reported in the second quarter of 2021.
Quarterly improvement is explained by a higher percentage increase in the denominator that the numerator, especially thanks to better net result from be uninterested.
In terms of activity on slide six total consolidated financing to the private sector in the second quarter of 2022 total debt by $119 3 billion pesos, increasing seven 1% compared to the first quarter of 2000, and that's when people are contracting.
Only 1% compared to the second quarter of 2021.
Batesville notes increased four 7% in the second quarter off the phone could do especially driven by an increase in credit cards due to the greater retail consumption unencrypted overdraw, mainly promo like corporate banking transaction and increase in other long most it might be especially productive in the rest of his life.
And then in Cushing discounted himself.
No team foreign currency expressed in pesos increased 45, 8% quarter over quarter, mainly explained by the increasing refinancing and financing of exports followed by an increase in other loud and.
Our growth in credit card.
All the aforementioned are explained by greater activity in foreign car.
You in the quarter.
This increase was seen in the commercial book.
Loan portfolio were highly impacted by the effect of inflation in the second quarter of 2022, which reached 17, 3%.
I'm Gonna terms, BBVA, Argentina manage to increase that retaining commercial and total loan portfolio by 21, 8% to 32.
7% in.
On 25, 6%, respectively during the quarter well beyond real time growth.
BBVA, Argentina consolidated market share of private sector loans reached eight point, 35% as of the second quarter of 2022 from 821% a year ago.
In the second quarter of 2020 do asset quality ratio was 1.08% compared to the 129% reported in the first quarter of 2022.
Cree is mainly explained by a good no before your behavior, mainly in the commercial side as well as growth in adult upper I thought these positively compares to the 336% NPL recorded by the banking system as of May 2022, the latest available information.
The cover ratio was 219, 439% in the second quarter of 2022 remaining stable.
119, 73% recorded in the first quarter of 2022.
Grace reached 194% of the second quarter of 2022.
<unk> first quarter 2022, 11%.
This is mainly explained by a higher growth in the average loan portfolio versus quarterly loan loss allowance.
On the funding side as seen on slide seven private nonfinancial sector deposits in the second quarter of 2022 totaled 959, 3 billion pesos, increasing four 9% quarter over quarter falling to one 8% year over year.
Quarterly increase was mainly explained by site the bullshit, which grew four 4%.
The banks consolidated market shale private deposit we had one point, 15% of the second quarter 2022.
Private not financial sector deposits in pesos increased 7.3% quarter over quarter, mainly affected by an increase in time deposits, especially saving accounts, which grew 18, 8%.
Foreign currency private deposits expressed in pesos.
And three 8% quarter over quarter.
For the second quarter of 2022, the bank's transactional deposits considering checking accounts and saving accounts represent 61, 2% total non financing private deposits buses 61, 3% in the first quarter of 2022.
Tens of capitalization BBVA, Argentina continues to show strong fold as indicated on the second quarter of 2022.
Capital ratio 22, 9% from first quarter 2020 to $23 five mostly due to the effect of other comprehensive income in the.
Exposure to the public sector in the second quarter 2015, excluding central bank instruments represent 9% of prophylaxis.
Slightly above the eight or 9% in the first quarter for thousands would be to Hawaii. We know that 15.3 reported by the system by May 2022, the latest available information.
It is worth mentioning that as of today.
Date of this report BBVA, Argentina had distributed dividends by $8 8 million pesos. One toys. According to the established that is published on June 16 2022.
The banks total liquid ratio remains healthy at 76, 9% of total deposits as of June .
This concludes our prepared remarks, we will now take your questions. Operator, Please open the line for questions.
[laughter].
Ladies and gentlemen at this time, we'll begin the question and answer session.
I'll ask a question you May press Star and then one on your telephone keypad if.
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Once again that is star and then one to join the question queue.
At this time, we will pause momentarily to assemble the roster.
And our first question today comes from Carlos Gomez from HSBC. Please go ahead with your question.
Hello. Good morning, Thank you for taking my questions.
Two of them. The first one is if you can give us some more clarity to the recently for the extraordinarily positive tax line would you prefer to deferred taxes some.
Some more guidance.
John .
Welcome and also what do you expect your tax rate to be.
This year and next year apart from this effect.
The second refers to your loan demand, we should talk to your loan portfolio was actually flat.
Yeah.
That's another piece being declining.
You are still positive.
Loan demand for the rest of the year or the beginning of next year or we should continue it is more like a one off thank you so much.
Got you.
I will come to you.
We start by your second question regarding loan demand.
Firstly.
Okay.
Yeah.
One person.
Total growth.
Got it.
Sure.
Yes.
Sir.
Mainly coming from the commercial side.
Sorry.
Going forward.
All right.
Yeah.
Inflation maybe.
Maybe because you're starting to see more activity.
The company started.
Mark.
On the retail side that further.
Uh huh.
Okay.
Yeah.
Uh huh.
<unk>.
Okay.
Fade.
Got it.
Healthy valuation I'll take that.
Yes.
Well, we did is we had good valuations.
Hey, good by inflation and the differences between these two credit judicial or do you generating a lower deferred tax and a positive result in the income tax line in the P&L that yourself.
Let me give you some background on why.
This has happened now and didn't have it in the past now.
For this section, what's gaining momentum among peers.
Inflation I guess it was implemented in Argentina, and some of other banks have done this already in the past actually there isn't another tier of us and that has implemented during this quarter as well.
This quite peculiar thing that happened at like two fixed assets acquired before 2019, and we believed there was no reason to evaluate the fact that differently from those acquired.
<unk> thousand 90, <unk>. So basically what we did was have the same country and for all of our fixed assets.
This gives us a positive result in the P&L.
If you some color on what would have been the effective tax rate.
Does it imply.
Implied this changing criteria you should think that the effective tax rate would have been between that meet our high 10 piece.
Going forward for the year because of this particular effect you're going to have I actually have positive effective tax rate for the.
Entergy.
Good morning.
Yes.
For the two Wheeler is something he said one know perfectly what would you say just went to the sickle novelty you should see a normal route in the Twentyish that.
Yes.
We are actually it's going to be part of it because you have this one time effect the coupon payment back in the second quarter, but it should be normalized.
In the second and the third and fourth quarter.
So it was again.
My question is did you say what else is it.
Only this quarter.
The normal attrition.
Yes, they may need, but it wasn't the second Florida and you should have it normalize probably the second and the third.
Is there any females in the tax line that we should consider.
Going forward I mean in the past you had litigation.
Nope, so you'll favor now you have the statistics is there anything else, we should keep in mind or from here on it should be normal taxation.
So if anybody was nothing else you should consider.
And on the loan growth.
So with respect to your question sounds recovery into 2022 do you expect us to continue these have an expectation of.
Growing or not growing.
We are seeing loan growth growing above inflation for the until the end of 2022, it's more activity going on.
Great.
Okay.
Alright.
Three.
It's difficult to say.
Great.
He's really funny ways.
Yeah labor away.
[laughter] alright, thank you so much.
We don't have any I've always thought of June and we are now at the end of all of our family.
Okay.
You so much.
Yeah.
And once again, if you would like to ask a question. Please press star and then one to withdraw your question you May Press Star two.
And ladies and gentlemen at this time in showing no additional questions. We will conclude today's question and answer section I'd like to turn the floor back over to you.
This is what did you say for any closing remarks.
Well great. Thank you for your time and let US know what you have follow up questions have a good day.
Yeah.
Yeah. Thank you. This concludes today's presentation you may disconnect. Your lines at this time and have a nice day.