Q4 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 fourth quarter and 2022 fiscal year results conference call.
We would like to inform you that this event is being recorded and all participants will be in listen only mode. During the company presentations.
After the company's remarks are completed there will be a question and answer session at that time further instructions will be given.
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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 statements.
Additional information concerning these factors is contained in BBVA Argentina's annual reports on form 20-F for the fiscal year 2021 filed with the U S Securities and Exchange Commission.
Today with US we have Mrs. Carmen Morrill Arroyo CFO , Mrs. Ines, Vanessa I R O and Miss Ms. But then for Cod of Investor Relations Ms. For card you may begin your conference.
But morning, and welcome to really act as you know or whatever.
Thank you Phil just on the other side.
Oh did you.
Whether or not what would be supported by a slide presentation available on our Investor Relations website under financial information.
Speaking during today's call will it be in if that looks at our Investor Relations Officer and government money show at Russell, Our Chief Financial Officer, who will be available for the Q&A session.
Please note that starting in January 2000, and Sandy I suppose Central Bank regulation, we have begun with blocking without applying hyperinflation accounting one.
Glenn I guess, a restful Ias 29, sorry.
For ease of comparability with housing and Cynthia one and 2000 and so did you either have been restated to reflect the accumulated effect of inflation adjustment for each previous it'll December 31st 2000 and send it to you now.
Now, let me turn the call alerting.
Thank you Vanessa and thank you all of you for joining us today.
We are all aware inspite of a less favorable than content and a little kind of environment defined by the difficulty correcting for them much person on a distortion and meeting the establish objective in the loan agreement reached with Yemen.
Activity has shown dynamism in 2020.
According to BBVA research have you been suggest that GDP will increase 5% in 2022, Nonetheless, the global context high local inflation financial volatility uncertainty about economic policy and the limited leeway to adult female.
Stimulus measures that you can make your expectation of a contraction of GDP in 2023.
We're starting to be a song and peanuts before him and I bet to operating income in 2022 product, although an improvement in interest income and interest from government.
BBVA, Argentina has a poker responsibility with society.
Or is it about business model, which encourages inclusion financial education and support high end.
Research and culture.
What's with the highest integrity, no television and best practices and displacing some of the BBVA group in the main sustainability indexes.
Moving into business dynamics as you can see on slide three on the website classification.
This offering has evolved in such a way that by the end of December 'twenty 'twenty. Two weekends, you just don't find penetration reached 62% remaining stable for my ear that one that we can move our client reach 55% from 53% on the same period last year.
The response from the side of customer that's been satisfactory and we are convinced this is the path to breakeven yeah, my sustaining and expanding our competitive position in the financial sector.
We tend to digital sales have increased from 80% in the fourth quarter of 2022 to 83, 9% up unit.
Representing 56, 9% of the bank Kilter say measured in monetary value.
52, 9% in the fourth quarter of 2021.
New customer acquisition.
The challenge, we 72% in the fourth quarter of 2022 from 66% in the fourth.
2021.
The bank activity monitors its business financial condition and operating results.
The aim of keeping our competitive position to face contextual changed.
Moving to slide four I will now comment on the banks fourth quarter 'twenty to 'twenty, two and 2022 fiscal year financial results.
E Argentina fourth quarter 2022 net income was 17.1 billion pesos, increasing 59% quarter over quarter.
This implied a horrible yeah ROE of 19, 4% in a quarter you are away all three 6%.
Operating income in fourth quarter points to 92 was 61.7 billion baseball 8.6 defense about.
$6 8 billion pesos recorded in the third quarter 2022.
This is mainly explained by greater interest income driven by a higher monetary policy rate compared to the previous quarter, which allowed net operating income to increase more than operating expense.
I'll get back was partially upset by an increasing one other a break and income to loan loss allowances and three a fall in foreign exchange angle.
It is worth mentioning that in fourth quarter 2022 income from net monetary position decreased 12% given that know what quarterly inflation, which change from 22% in the third quarter 'twenty 'twenty, 2% to 17.3% in the fourth quarter.
E D. Argentina 2022, net income was 57 9 billion pesos, 40.5% higher than the $41 2 billion baseballs reporting in 2020 one.
It's implied and accumulated annualized or are we up 17, 5% and an hour away or 3% in 2022.
So and accumulate I don't want like I, really well 13, 5% and an hour away or 2% in 2020 one.
Increment in the bank operating income is mainly explained by one an increase in interest income mostly you taught in Queens in the petition and the central bank instruments and to better net income from financial instruments at fair value for P&L explain by.
An increase in the decision of money on inflation, the national Treasury bonds and buy back some of their remaining participation of the bank in Greece. My during the first quarter of 'twenty to 'twenty two.
Yeah.
Turning into the P&L lines in slides five and six net interest income for the fourth quarter of 2022.
In fourth quarter 2022 interesting come in monetary terms increased more than interest expense, mainly due to one greater income from government securities to an increase in income from interest from Yale in particular credit cards discounted instruments and see.
Increase in income from rental.
They can.
Mentioned take place in a context of increasing interest rates, resulting from an increase in the monetary policy rate by the central bank as well as an increase in inflation rate.
In fourth quarter of 2022 interest income totaled 200, a 1.7 billion pesos in COVID-19.2 compared to the order.
What a 2022.
The increase is mainly driven by one higher.
Higher income from government Securities book from an increase in the nominal rate and the volume and the decision of lead to an increase in interest from loans, mainly credit cards and discount instrument, especially due to the incremental interest rates and higher activity and an increase in people printing.
Yeah.
Interest expenses totaled $95 6 billion Batesville, denoting a 24% increase or they'll go quite well.
Quarterly increase it's why my higher time deposit expenses although.
Although slightly offset by a fall in said well I've just been expensive the latter connected to say they tend to get bought it in Pittsburg, Boston, including investment account.
79, 9%.
For instance, 74, 9% in the previous quarter.
In 2022 net interest income towards that 339 4 billion pesos led by interest income from higher decision and how Youre you from public Central Bank Securities.
Net income I thought in the fourth quarter of 2022 totaled $10 2 billion pesos, increasing four 9% quarter over quarter.
In the fourth quarter 2022 fee income totaled $19 8 billion pesos, increasing two 1% quarter over quarter.
Quarterly increase is mainly explained by fees from credit cards growing four 2%, mostly due to more activity of consumption and east link pillar.
Regarding fee expenses.
Totaled $9 6 billion pesos, increasing 10, 8% quarter over quarter high.
Higher expenses in the quarter are partially explained by expenditures linked to credit and debit cards due to a higher signed up with the him call processing fees and higher expenditures in seasonal commercial promotions.
Net income in 2020 to remain stable with an increase of one point per cent.
About 6.4% drop in income and a 15 point to the sudden drop inexpensive.
Hey, doing fees was mainly explained by the change of the credit card loyalty program from Latam two condos D S.
In fourth quarter 2022 loan loss allowances increased 52, 7%, mainly due to the uptake in the I FRS nine in Parramatta.
Model parameters. This also explains the yearly increase.
So in fourth quarter 2022, total operating expenses were 57, 5 billion pesos, increasing 12% quarter over quarter of which 32% were personnel benefits costs remaining state, but that's just third quarter 'twenty to 'twenty two.
Person has benefits increased $12 seven per cent quarterly.
Quarterly increase is partially explained by the effect of collective agreement the wages with the unions on the fourth quarter, 2022, and incremental personnel compensation and bonuses and an increase in employee training expenses.
Administrative expenses increased 1% order before.
Quarterly increase is partially explained by one an increase in taxes to rate or expenses. You know, it's always the same cost Anthony and increase in outsource administrative expenses.
Exactly yeah, Fred mentioned items was offset by a decrease in rack and popcorn.
Quarterly efficiency ratio as of the fourth quarter of 2022 was 53% improvement compared to the 64, 8% reported in the third quarter 2022.
Quarterly improvement is explained by a lower increase in expenses net income, especially you.
With that kind of a cool, but interestingly and know what quarterly result from that net monetary position.
The accumulated efficiency ratio of the 2020 to 63, 9% improvement compared to the 69, 1% reported in 2021.
The improvement is also explained by a significant improvement in interest income.
In terms of activity on slide seven total consolidated financing to the private sector in the fourth quarter 'twenty to 'twenty, two totaled 734 billion pesos, increasing seven 5% quarter over quarter and compressing the 0.1% year over year.
No. So the private sector in pesos increased 7.8% in the fourth quarter 2022.
In the quarter, they increase was especially driven by a 34, 1% growth in discounted instrument.
Four 3% increase in credit cards due to the growth in activity.
By a $12 one increasing over time.
Like the Lumpiness and in other alone the latter.
Affected by greater floor planning activities.
Yes, so much it consolidated financial companies well featured dinner she network that's its financing for vehicle stop the attack another good.
Now on to the private sector denominated in foreign currency slightly increased 1% quarter over quarter I'm remained practically stable falling 0.5% year over year quarterly increase is mainly explained by a 38, 6% increments now the law.
Unfortunately, offset by a 36, 1% fall in credit cards.
No the private sector and foreign cars and see measured in U S dollars fell one 5% quarter over quarter and increased 12, 4% year over year.
You were in the quarter, so the retail and commercial portfolio badly in real time.
Loan portfolio, we're highly and that might be effect of inflation. During the first quarter of 2022, which reached $17 80 per cent and nominal ton BBVA, Argentina manage to increase the total loan portfolio by 25, 6% during the quarter.
BBVA Argentina's consolidated market share of private sector loans reached $9, 10% above the fourth quarter of 2022, improving from 8.0% to 5% a year ago.
In fourth quarter of 2022 asset quality ratio was one point, 13% compared to a 1.07% recorded in the third quarter 2022.
This increase is mainly explained by an increase in their winter nonperforming portfolio.
Yeah, well, the I F or S 90 impairment loss model parameters and that's on the corporate breakthrough, which reached 242, 23% above the 236, 89% recorded in the third.
Quarter twenties of detour and on the cost of freight which reached 4.0, 90% on fourth quarter 2022 above the third quarter 2022.
65%.
On the funding side as seen on slide eight private nonfinancial sector deposits in fourth quarter 2022 so like that 1.3 premium baseball falling 12% quarter over quarter, and three 7% year over year.
Well it was.
It was mainly explained by the Boston.
The banks consolidated market share of private deposits six.
664%, although the fourth quarter of 'twenty to 'twenty two.
The quarterly change is mainly affected by a 15.7% being placed inside the bullshit.
Like time deposits by eight 4%.
This was partially upset by a decrease in investment accounts by 17, 9%.
Private nonfinancial sector deposits in foreign currency expressed in pesos, 16% quarter over quarter, mainly due to a seasonal effect.
Tens of capitalization P. D D areas in Peanuts continues to show strong holds us indicate to us in fourth quarter of 'twenty two.
Capital ratio reached 20 612 on defense.
Exposure to the public sector in the fourth quarter 2022, excluding central bank instruments represent 10.1% till July .
Yeah, Bob the nine 8% in the third.
2022 I'm way be node, 16.4%, we bought by the system as of December 'twenty to 'twenty two.
It's worth mentioning that does the database with for many years and Ciena has distributed dividends by $13 2 billion peso installing them once or twice. According to the established schedule published on June 16th 'twenty to 'twenty two.
The bank's total liquidity ratio remained healthy at 78% up they'll tend to enforce it.
December 31st 2022.
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.
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At this time, we will pause momentarily to assemble our roster.
Okay.
Yeah.
Our first question is from Rodrigo New store with letting securities. Please go ahead.
Hi, everyone. Thank you for the opportunity I have a few questions for you all but four zero recently announced that exchange sowing in jewelry the April 2000.
Seven 5%.
Let alone.
These sustainable in the long run.
And then if you could provide some insight into the outlook for the guarantee or specifically what are your expectations for loan and deposit growth.
Thank you.
Nice talking to you okay. Yeah. So as you mentioned we saw the same time, we have 75% you believe these are real we sustainably basically because we see and I'm going to tell you what my parents when they see rig increasing particularly in the second half of it depends on in 'twenty three.
According to research from the actually the 75%, 85% 98 1043, so it's extra expansion in margins could have the same BRL, we I'd be extra land.
Or macroeconomic projections to give you an idea.
Mainly for GDP, we are already seeing the 'twenty to 'twenty, two ending around five 2% growth, but just hasn't in 'twenty. Three we are seeing a contraction of one point.
Inflation.
We just you know when you go around 95% that need to be flat.
We are projecting for just doesn't I'm pretty deeply 100 down 5%.
And D O fish.
Right.
We are projecting for the end of its really going to be 355 basis that is efficient.
Regarding loan growth.
We had we ended the year with that mid decade relative was only minus 3%.
Well it is decreasing and we got it done for less than the system. The system decreased 90%. So we were able to gain market share.
And then on the.
I'm from the southern end of 'twenty, three we are projecting long road I need to make the low inflation around minus 2% similar levels to what was a niche here we are growing our loan book in the particularly in the commercial and the commercial lines now are we there.
And.
For their bullshit.
We ended 2020 tool was minus 4% and is it more than.
It sounds like it did in the minus 2%.
And for two.
This has been enjoying D C. We offer again.
I also know that there's a real world, but in line with loan Oh, so minus 2%.
Okay. Thank you and then a quick follow up on with.
With regards to the recently announced that in exchange for professional ones.
What is your intention to participate or how do you. How do you think these are exchange. Thank you.
Yes, so basically we have an exposure of around 995 billion based off of a treasury exposure that exclude <unk>.
From that more or less 45, where it tends to be 45 million are and reserve requirement.
So we have $150 million left from that now I'm laughing that figure less that we were going through the voluntary extend with less than 50 billion.
And that includes all the chip.
That's my truly are between today and Oh, sorry.
Just to give you a reference them basically you have to say that that is 195, because I mentioned represent more or less 50% of our ICT and compare that to the system. That's why the state spending represents 80% and for the private only.
Fixed it.
And it's asking Facebook, it's only <unk>.
Portend, a through D E P and that only 7% of the deck in peso.
It's a handful of private holders so and that is basically all of you know we are going to go away with less than 50 leases and voluntary exchange.
Yeah.
That was really helpful. Thank you.
Again, if you have a question. Please press Star then one please standby as we poll for questions.
Showing no further questions. This concludes our question and answer session. At this time I would like to turn the floor back to Ms. Linda <unk> for any closing remarks.
Okay. Thank you for your time, and let US know where you didn't 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.
Okay.
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