Q1 2025 Banco BBVA Argentina SA Earnings Call
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Operator: Good morning everyone and welcome to BBVA Argentina's first quarter 2025 results conference. And today with us are Mr. Diego Cesarini, Head of ALM and Investor Relations. Belen Fourcade, Investor Relations Manager, and Mrs. Carmen Murillo. who will be available for the Q&A. This presentation and the first quarter 2025 earnings release are available on BBVA's Investor Relations website. ir.bbva.com.ar and will also be available for download in the chat.
Good morning, everyone and welcome to BBVA, Argentina's first quarter 2025 results conference call.
Stay with US are Mr. Diego says that any head of a L M and Investor Relations, Mr. Berlin for Kate Investor Relations manager and Mrs. Carmen would you draw out all your CFO, who will be available for the Q&A session.
This presentation and our first quarter 2025 earnings release are available on Bbva's Investor Relations website, IR Dot BBVA dotcom thought a R and will also be available for download in the chat.
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 27A of the Securities Act of 1933 under U.S. federal security 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 2024. filed with the U.S. Securities and Exchange Commission.
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 Security 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 2012.
Four five.
File with the U S Securities and Exchange Commission.
Operator: During the company's presentation, all microphones will be disabled. At that time, we are going to open it up for questions and answers. If you have a question, please write it down in the Q&A section. or click on raise hand for audio. You will then receive a request to activate your microphone.
Speaker Change: During the company's presentation, all microphones will be stable at that time, we were going to open it up for questions and answers. If you have a question. Please write it down into Q&A section click on race hand for audio questions. You will then receive a request to activate your microphone. Please activate it and pick up your headset to provide.
Belen Fourcade: Please activate it and pick up your headset to provide optimum sound quality when posing your I will now turn the call over to Mrs. Bellin Fourcade, please go ahead. Good morning and thank you all for joining us today. The notable fiscal consolidation, monetary stringency, and relative exchange rate stability have contributed to a moderation process of inflation throughout 2024, which has continued at the beginning of 2025. Likewise, there are increasing signs of recovery in economic activity, which after falling 1.7% in 2024, would expand by around 5.5% in 2025, according to BBVA research. The prospects for inflation reduction have strengthened and the forecast is that it will converge to around 35% by the end of 2025.
Speaker Change: Optimum sound quality when posing your question I will now turn the call over to Mr and Mrs balance for Kate. Please go ahead.
Speaker Change: Good morning, and thank you all for joining us today.
Also as discussed consolidation monetary stringency and royalty of exchange rate stability have contributed to a moderation brokers with inflation throughout 2007, before we track and genius at the beginning of <unk> 75.
Speaker Change: Likewise, there are increasing signs of recovery in economic activity. We just are falling one 7% in 2024 would expand by around five 5% <unk> five according to BBVA research.
But our inflation reduction strengthen and the forecast is that it will converge to around 35% by the end of 295.
Belen Fourcade: Recently, within the framework of a new agreement with the International Monetary Fund, the lifting of a large part of exchange controls and implementation of a floating exchange rate scheme with white banks were announced, which could contribute to the macroeconomic normalization program. Regarding the external environment, although the direct impact of U.S. tariffs could be relatively limited, the economy could be affected by a less favorable global context.
Recently, we and the framework of annual agreements with International Monetary Fund the listing of a large part of exchange controls and implementation are floating exchange rates.
When wide bands where are now.
Which could contribute to the macroeconomic normalization process.
Regarding the external environment, although the direct impact of U S dairy could be relatively lead maybe the economy could be affected by a less favorable global context.
Belen Fourcade: Before moving on to this quarter's business dynamics and results, I would like to comment on the new global strategy of the BBVA group for the 2025-2029 cycle. This has been launched arising from an institutional reflection after the closing of the 2020-2024 strategic plan, which was successful in terms of growth and profitability. This redesign responds to a new global context, characterized by macroeconomic stabilization, geopolitical transformation, and population aging, which poses challenges and opportunities in credit and deposit management. In this context, the strategic priorities for 2025-2029 are focused on three main pillars. One, a radical customer-centric perspective.
Before moving onto this quarter's business dynamics and he says I would like to comment on the new global strategy of the BBVA group for the 2025 to <unk> 79 cycles.
Speaker Change: That's been launched arising from an institutional reflection after the closing of the 2000 2024 strategic plan, which was successful in terms of growth and profitability.
These really sign response to our new global context characterized by macroeconomic stabilization geopolitical transformation and population aging, which both the challenges and opportunities in credit and deposit management.
Yeah.
In this context, the strategic priorities for 2035 <unk> nine are focused on three main pillars, one our radical customer centric perspective.
Belen Fourcade: Two, value and capital generation and growth in a changing environment. And three, leveraging accelerators such as artificial intelligence for efficient data processing. These priorities are articulated with an evolution in cultural values towards behaviors with greater empathy and demand, and a renewed purpose, support your desire to go further, which reinforces the active role of the customer as a central character of growth. Now moving on to business dynamics, as you can see on slide four of our webcast presentation, our service offering has evolved in such a way that by the end of March 2025, new customer acquisitions through digital channels reached 86% versus 81% a year ago.
Value and capital generation and growth in a changing environment.
Leveraging accelerators artificial intelligence and data processing. These.
These priorities are articulated with an evolution in kailua values towards behaviors with greater empathy and demand and a renewed purpose.
About your desire to go further which reinforces the role of the customer at the center is character Phil.
Speaker Change: Now moving onto business dynamics as you can see on slide four of our web presentation. Our survey suffering Kathy was in such a way that by the end of March 2025, new customer acquisition through digital channels reached 86% versus 81% a year ago.
Belen Fourcade: Retail digital sales measured in units reached 93% in the first quarter of 2025 and represent 86% of the bank's total sales measured in monetary value. Digitalization, which was previously a competitive advantage, has now become a market standard, while new unregulated players and disruptive technologies, such as artificial intelligence, demand a redefinition of the differential value of the company's properties.
Retail digital sales measured in units reached 93% in the first part of <unk> five and represent 86% up buybacks those are measured in monetary value.
Speaker Change: Digitalization, which was previously a competitive advantage has now become a market standard while new unregulated players and disruptive technologies, such as artificial intelligence demand that redefinition of the differentiated value of the company.
Belen Fourcade: Moving on to slide five and six, I will now comment on the bank's first quarter 2025 financial results. BBVA Argentina's inflation-adjusted net income in the first quarter of 2025 was 81.6 billion pesos, increasing 16.2% quarter-over-quarter. This implied a quarterly ROE of 11.5% and a quarterly ROE of 2%. The 56.9% increase in quarterly operating results was explained by higher income and lower operating expense. Higher income was mainly due to, one, a substantial improvement in income from fees, and two, better net interest income. On the side of expenses, there was an improvement in all expenses lines, in particular benefits to personnel and other operating income.
Speaker Change: Moving.
Speaker Change: Two slides five and six I will now comment on the bank's first quarter 2025 financial results.
Argentina as inflation adjusted net income in the first quarter of cities and besides was $81 6 billion pesos, increasing 16, 2% quarter over quarter, you can play a quarterly ROE of 11, 5% and the quarterly Arrow eight up 2%.
Speaker Change: The 56, 9% increase in quarterly operating results was explained by higher income and lower operating expenses.
Higher income was mainly due to one a substantial improvement in income from fees and do better net interest income on the startup expenses that we will see improvements in all expense lines in particular benefits the personnel and other operating income.
Belen Fourcade: It should be noted that the income tax line in the first quarter of 2024 reflects a positive result derived from a change in accounting exposure that implies a reclassification of the income tax calculation from other comprehensive income to the income statement. Net income from the net monetary position was 10.7% lower quarter over quarter thanks to a lower net monetary position which offset the increase in quarter inflation which was 8.57% versus 8.03% in the first quarter of 2024. Turning into the P&L lines in slide six, net interest income was 541.3 billion pesos, increasing 3.3% quarter over quarter.
Speaker Change: It should be noted that the income tax line in the fourth quarter of Cindy's and deferred reflects apples results derived from a change in accounting exposure that implied a reclassification of the income tax calculation from other comprehensive income to the income statement net.
Net income from the net monetary position was $10, 7% lower water wastewater thanks to a lower net monetary position, which offset the increase in water inflation, which was 857% versus eight.
8% in the fourth quarter and different before.
Speaker Change: Turning into our P&L lines in slide six net interest income was 541 3 billion pesos, increasing three 3% quarter over quarter.
Belen Fourcade: In the first quarter of 2025, net interest income decreased less than interest in expenses in monetary terms. The former decreased due to lower income from public securities, especially CPI-linked bonds. Expenses decreased due to lower time deposit expenses mainly due to lower rates and interest-bearing checking account expenses as the rates of these products have also declined. Interest from time deposits explain 74.4 percent of interest expenses versus 67.9 percent the previous quarter. Net income as of the first quarter of 2025 totaled 99.8 billion pesos increasing 48.3 percent quarter over quarter. Free income totals $180.1 billion pesos, increasing 20.7% quarter over quarter.
In the first quarter of 2025 net interest income decreased less than interesting expenses in monetary terms.
The former decreased due to lower income from public securities, especially CPI linked bonds.
Expenses decreased due to lower than deposit expenses, mainly due to lower rate and interest bearing checking accounts expenses as a ratio. Please brought it how volatility Lang.
Interest from time deposits explain 74, 4% up interest expenses versus 67, 9% the previous quarter net.
Net income as of the first quarter of 2025, 99, 8 billion pesos, increasing 48, 3% quarter over quarter.
<unk> got those that are 181 billion pesos, increasing 27% quarter over quarter.
Belen Fourcade: Higher income is mainly explained by credit card fees, considering a revision of provisions linked to the MISIA's BUVA loyalty program. It is important to note the increase in fees linked to loans, fees from insurance, and fees linked to loan commitments, the latter related to income from structuring of syndicated loans. On the side of expenses, this total 80.8 billion pesos, decreasing 1.9% quarter over quarter. This is mainly explained by lower expenses on payroll promotion campaigns, followed by lower expenses from foreign trade transactions. In the first quarter of 2025, loan loss allowances increased 4.9%, explained by the real growth of the loan book in the quarter, which implied higher provision.
Speaker Change: Higher income is mainly explained by credit card fees, considering a relation of provisions linked to the <unk> loyalty program.
Speaker Change: It's important to note the increase in fees linked to loan fees from insurance and fees linked to loan commitments. The latter related to income from structuring of syndicated loans.
Speaker Change: On the site.
Speaker Change: These totaled 88 billion peso decreasing one 9% quarter over quarter.
Speaker Change: This is mainly explained by lower expenses and favorable promotional campaigns, followed by lower expenses from point breakdown section.
Speaker Change: In the first quarter authentic 75 loan loss allowances increased four 9% explained by the real growth of the loan book in the quarter, which implies higher provision.
Belen Fourcade: During the first quarter of 2025, total operating expenses were $423.8 billion pesos, decreasing 13.8% quarter over quarter, of which 29% were personal benefit costs. Personal benefits decreased 23% quarter over quarter. In spite of wages increasing in line with inflation, the first quarter of 2024 was highly impacted by severance expenses and the adjustment of provisions recorded for stock application date and variable remuneration, which were not present in the first quarter of 2025, reducing overall expense. Administrative expenses decreased 4.3% quarter over quarter. This is mainly explained by, one, taxes, two, software, and three, rent. Rent and software are related to expenses of software licenses and services contracted with the parent company.
Speaker Change: During the first quarter <unk> total operating expenses were $423 8 billion peso decreasing $13, 8% quarter over quarter of which 99% were personnel benefit costs.
Speaker Change: Senate benefits decreased 23% quarter over quarter.
Speaker Change: Spike up wages, increasing in line with inflation the first quarter of Sandy can default will trail impacted by severance expenses and the adjustment of provisions recorded for stock authorization date, and variable remuneration, which were not present in the first quarter of 2025, reducing overall expenses.
Speaker Change: Okay.
Speaker Change: As many strategic expenses decreased four 3% quarter over quarter. This is mainly explained by one that's six two software Anthony rents rents and software are related to expenses of software licenses and services contract with the parent company in.
Belen Fourcade: In the case of taxes, the fault is mainly explained by an accounting reclassification of taxes linked to the health and safety, which as of this quarter are now recorded in the turnover tax line in other operating expenses pursuant to the nature of the expense. The accumulated efficiency ratio as of the first quarter of 2025 was 56.3 percent below the 62.2 percent reported in the fourth quarter of 2024 and the 65.4 percent reported in the first quarter of 2024. The decrease in this ratio is due to a decrease in expenses and an increase in income, especially fee income and lower results from the net monetary profit.
Speaker Change: In the case of taxes. The fall is mainly explained by an accounting ready certification of taxes linked to the status on safety.
Speaker Change: As of this quarter are now recorded in the turnover tax line in other operating expenses pursuant to the nature of the expense.
Speaker Change: The accumulated efficiency ratio as of the first quarter of 2025, whilst 56, 3% below the 62, 2% reported in the fourth quarter of <unk>.
Speaker Change: And the 65, 4% reported in the first quarter and before.
Speaker Change: The decrease in this ratio was due to a decrease in expenses and an increasing inbound, especially fee income and lower results from the net monetary position.
Belen Fourcade: Private loans as of the first quarter of 2025 totaled 9.2 trillion pesos, increasing 11.2% quarter over quarter. Loans to the private sector in pesos increased 8.3% in the first quarter of 2025. During the quarter, gross is observed in most lines, but was specially driven by one, a 22.9% increase in consumer loans, followed by two, an 18.4% increase in overdrafts, and three, a 16.2% increase in other loans. A 23.1% growth in mortgages is to be noted, considering the continuous progress in this product, which was relaunched by mid-2024. In all cases, the increment is boosted by genuine growth in real terms of the portfolio, leveraged on relative stability of market interest rates.
Speaker Change: Private loans as of the first quarter of 2025 closed at $9 two trillion pesos, increasing 11, 2% quarter over quarter.
Speaker Change: Loans to the private sector in pesos increased eight 3% in the first quarter of attendees 95.
Speaker Change: During the quarter proxies observed in most lines, but was especially driven by one or 22, 9% increase in consumer loans, followed by two and 18, 4% increase in overdrafts.
Speaker Change: I think simple 2% increase in our loan.
Speaker Change: And then the three 1% growth in mortgages eastern we now considering the continuous progress in this product, which was relaunched by mid 2024 in all cases is the increment is boosted by genuine growth in real terms of the portfolio levered relative stability of market interest rates.
Belen Fourcade: Loans to the private sector denominated in foreign currency increased 25.4% quarter over quarter. Quarterly increase is mainly explained by a 21.4% growth in financing and pre-financing of exports and a 53.7% growth in other loans. The latter linked to financing of investment projects. During the quarter, the commercial portfolio grew 12.5% and the regional portfolio increased 9.5%. The commercial portfolio represents 57.1% of the total portfolio from 52.5% a year ago. In nominal terms, BBVA Argentina managed to increase their retail, commercial, and total loan portfolio by 19, 22, and 23 percent, respectively, during the quarter, surpassing quarterly inflation levels in all cases.
Speaker Change: Loans to the private sector is denominated in foreign currency increased five.
Speaker Change: Five 4% quarter over quarter, while the increase is mainly explained by FMC, one 4% growth in financing and refinancing of exports and a 57% growth in other loan the lateral length to financing of investment projects.
Speaker Change: During the quarter the commercial portfolio grew 12, 5% and our retail portfolio increased nine 5%. The commercial portfolio represents 57, 1% of the total portfolio from 52, 5% a year ago.
Speaker Change: In nominal BBVA, Argentina managed to increase our retail commercial and total loan portfolio by 1922, and 23% respectively. During the quarter, surpassing quarterly inflation leathers Casey.
Belen Fourcade: As of the first quarter of 2025, the total gross loans and other financing over the profit ratio was 84.7%, above the 77.5% recorded in the first quarter of 2024, and above the 55.9% in the first quarter of 2024. Participation of total loans over assets is 56% versus 51% in the fourth quarter of 2024 and 32% in the fourth quarter of 2024, evidencing a lower exposure to the public sector in line with the real growth of credit demand. BBVA Argentina's consolidated market share of private sector loans reached 11.28% as of the first quarter of 2025, improving from 10.10% a year ago and sustaining the two-digit figure.
Speaker Change: As of the first quarter of 2025, the total gross loans and other financing, although the profit ratio was $84, 7% above the 77, 5% regarding the fourth quarter of synergies in the quarter and above the 55, 9% in the first part of 2035.
Speaker Change: Our disease patient of total loans silver assets is 56% versus 51% in the fourth quarter can be than before and 32% in the fourth quarter ended <unk> evidence in a lower exposure to the public sector in line with their real growth credit demand.
BBVA: BBVA, Argentina consolidated market share of private sector loans reached 811, 28% as of the first quarter stands at 95, improving from 10 points, 10% a year ago and sustaining that does digit figures.
Belen Fourcade: As of the first quarter of 2025, asset quality ratio keeps a good performance at 1.38%, increasing quarter over quarter, mainly due to seasonal arrears in credit cards. Commercial NPLs remain with a very good behavior. On the funding side, as of the first quarter of 2025, total deposits reached 11 trillion pesos, increasing 1.8% quarter over quarter. The bank's consolidated market share of private deposits of the first quarter of 2025 reached 9.15%, compared to 7.37% a year ago. Private non-financial sector deposits in pesos totaled 7.4 trillion pesos, increasing 7.8% compared to the fourth quarter of 2024. The quarterly change is mainly affected by a 163.1% increase in investment accounts and a 2.5% increase in checking accounts, mainly explained by higher funding.
Speaker Change: As of the first quarter of 2025 asset quality ratio keeps a good performance at 138% increasing quarter over quarter, mainly due to seasonal iris in created by E.
Speaker Change: Commercial npls remain with a very good behavior.
Speaker Change: On the funding side I saw the first quarter of <unk> and defined as total deposits reached 11, three in pesos, increasing one 8% quarter on quarter the.
Speaker Change: The banks consolidated market share of private deposits.
Speaker Change: Quarter of Silicon device reached 915% compared to 737% a year ago.
Speaker Change: Private nonfinancial sector deposits in pesos totaled seven four trillion basis, increasing seven 8% compared to the fourth quarter of 2024.
Speaker Change: The quarterly change is mainly affected by 163, 1% increase in investment accounts and up to 5% increase in checking accounts, mainly explained by higher funding.
Belen Fourcade: Private non-financial sector deposits in foreign currency expressed in pesos increased 0.8% quarter over quarter. This is mainly explained by a 20.9% increase in time deposits, partially offset by a 0.4% fall in savings accounts. BBVA Argentina continues to show strong solvents indicators on the first quarter of 2025. Capital ratio reached 21.5 percent. Capital excess of a regulatory requirement was 1.5 trillion pesos or 161.3 percent. In spite of the genuine growth in the loan book, which generated greater requirements, this effect was largely offset by a central bank regulation, which changed operational risk requirements, now aligned to Basel IV regulations.
Speaker Change: Private nonfinancial sector deposits in foreign currency expressed in pesos increased one 8% quarter over quarter.
Speaker Change: This is mainly explained by a 29% increase in tender bolting, partially offset by <unk>, 4% fall in saving accounts.
Speaker Change: BD, Argentina continues to show strong solvency indicators in the first quarter of vintage <unk>.
Speaker Change: EBITDA ratio reached 21, 5% capital excess of a regulatory requirement was one five trillion pesos.
Speaker Change: 161, 3%.
Speaker Change: In spite of the genuine growth in the loan book, we generated greater requirements. This effect was largely offset by a central bank regulation, which changed operational risk requirement now aligned to basal four regulations.
Belen Fourcade: These requirements fell considerably by 94.4%, improving the capital ratio by 202 basis points. The first quarter and 2025 total public sector exposure, excluding central banks, total 2.8 trillion pesos, decreasing 2.9% quarter over quarter. The annual increase is mainly explained by a greater increment of public exposure to the Treasury in detriment of central bank risk exposure. Exposure to the public sector excluding central bank exposure represents 17.1% of total assets below the 17.9% in the fourth quarter of 2024 in line with real loan growth demand. In the quarter, liquid assets were 5.4 trillion pesos, decreasing 13.3% quarter over quarter.
Speaker Change: These requirements fell considerably by 94, 4% improving the capital ratio by 202 basis points.
Speaker Change: The first quarter and 2025 total public sector exposure, excluding central bank.
Speaker Change: Two 8 billion pesos decreasing to 9% quarter over quarter. The annual increase is mainly explained by a breakout Ingram is a public exposure to the treasury in detriment of Central bank risk exposure.
Speaker Change: Closer to the public sector, excluding central bank exposure represents.
Speaker Change: 17, 1% of total assets below with 17, 9% in the fourth quarter of 2007 before in line with real loan growth demand.
Speaker Change: In the quarter liquid assets were five four trillion pesos, decreasing 13, 8% quarter over quarter.
Belen Fourcade: This was mainly driven by a 20.1% decline in cash and deposits in banks and a 12.5% fall in public security.
Speaker Change: This was mainly driven by a 21% decline in cash on deposits in banks and the 12, 5% fall in public securities as.
Belen Fourcade: As of the date of this report, the bank has announced the payment of dividends in cash or in kind. The total amount to be paid will be 89.4 billion pesos, expressed in a homogeneous currency as of December 31st, 2024. And according to central bank regulations, it must be updated by inflation on the payment date.
Speaker Change: As of the day definite to report the bank has announced the payment of dividends in cash or in kind.
Speaker Change: The amount that we paid will be $89 4 billion pesos.
Speaker Change: Brett.
Speaker Change: Genius current T. As of December 31, 2024, and according to Central Bank regulations, it must be updated by inflation on the payment date.
Belen Fourcade: This concludes our prepared remarks. We will now take your questions.
Speaker Change: This concludes our prepared remarks, we will now take your questions. Operator, Please open the line for questions.
Operator: Operator, please open the line for questions. Thank you. We are going to open it up for questions. If you have a question, please click on raise hand for audio. You will then receive a request to activate your microphone. Please activate it and pick up your headset to provide optimum sound quality when posing your question.
Speaker Change: Thank you we are going to open it up for questions and answers. If you have a question. Please click on raise hands for audio questions. You will then receive a request to activate your microphone. Please activate it and pick up your headset to provide up to himself quad.
Speaker Change: Let's see when posing your question.
Brian Flores: Our first question comes from Brian Flores. Hi team, good morning. Thank you for the opportunity to ask questions.
Speaker Change: Our first question comes from Brian Flores with Citi.
Speaker Change: Okay.
Speaker Change: Hi, Good morning, Thank you for the opportunity to ask questions.
Brian Flores: Hmm, I have I have the first one is related to guidance, right? Because it seems that there were some moving pieces. As you mentioned, the implementation of the regulation in March. It seems that real loan growth is actually running well ahead of perhaps very optimistic expectations. So from what we remember that you mentioned in the last quarter, you were expecting to grow between 60-65% in real terms. Deposits growing around 40% in real terms. They seem to be maybe growing a bit less.
Speaker Change: I hope I have the first one as it relates to guidance right because it seems that there were some moving pieces.
Speaker Change: As you mentioned the implementation of the regulation in March.
Speaker Change: It seems that reveals loan growth is actually running well ahead of perhaps very optimistic expectations. So from what we remember that you mentioned in the last quarter, you were expecting to grow between 60% to 65% in real terms.
Speaker Change: Deposits growing around 40% in real terms, they seem to be maybe growing a bit less.
Brian Flores: And I don't know if your expectation of ROE has changed, but I just wanted to hear from you, given the obviously very dynamic economic environment, if any of the guidelines that I just mentioned is also changed.
Speaker Change: I don't know if your expectation of ROA has changed a bit but just wanted to hear from you.
Speaker Change: Given the obviously very dynamic economic environment.
Speaker Change: Any of the guidelines that I just mentioned is this also changed also.
Diego Cesarini: Also, and then this is the second question, perhaps an extension of the first, is on capital, right? Because you have a benefit of 200 bps due to the regulation. I just wanted to ask you if... thinking about a 15% tier 1 ratio by the end of the year that already incorporates this, let's say, benefit. one-time benefit due to the regulation. Thank you.
Speaker Change: This is the second question, perhaps on extension of the first.
Speaker Change: Capital right, because you have a benefit to.
Speaker Change: 200 bps due to the regulation.
Speaker Change: Just wanted to to ask you is.
Speaker Change: Thinking about the 15% tier one ratio at the end of the year.
Speaker Change: Yeah.
Speaker Change: That already incorporates these let's say benefit.
Speaker Change: One time benefit due to the regulation.
Speaker Change: Thank you.
Speaker Change: Okay.
Diego Cesarini: Hello Brian, this is Diego Cesarini. I will address your questions. Well, to start with, regarding loans, we have revised a little downwards our provision. We think that we're thinking about growth in real terms of around 45 to 50% for the year. That is in line with our 11% growth in the first quarter. Regarding deposits, we are also revising downwards. We are seeing around 25% in real terms. We are still keeping our ROE guidance between the mid-teens to bias to low-teens. And regarding capital, yes, it's true that we have our projection has been improved a little.
Speaker Change: Yes, Hello, Brian This is Dave I'll, just add any I will address your questions I wanted to start with regarding loans.
Speaker Change: We have revised downward our position, we think that we're thinking about growth in real terms of around 45% to 50%.
Speaker Change: For the year that is in line with our 11% growth in the in the first quarter.
Speaker Change: Regarding the buses. We are also revising downwards, we are seeing around 25% in real terms.
Speaker Change: We are still keeping our Roe.
Speaker Change: Guidance.
Speaker Change: Between the mid jus to bias to low teens.
Speaker Change: And regarding capital.
Speaker Change: Through that we have.
Speaker Change: Our appreciation has.
Speaker Change: Has been improved a little we are now forecasting.
Diego Cesarini: We are now forecasting by December a ratio around between 16 and 16.5%. When we were talking about 15, we had this operational risk improvement in our consideration, but the improvement that we are showing right now is regarding the performance of flows, which we are revising down to 45 to 50%.
Speaker Change: Timber a ratio around between 16 and $16 5%.
Speaker Change: When we were talking about 15.
Speaker Change: We had this operational risk improvement.
Speaker Change: Network consideration, but.
Speaker Change: Yes.
Speaker Change: The improvement that we are showing right now regarding the performance of flows which are we are revising down 2% to 45% to 50%.
Diego Cesarini: Thank you, Diego. Very clear. If I can make a follow up. So you're revising two lines in growth, right? Deposits and loans by double digits. So just wanted to, if you could expand a bit on the rationale behind it. Is it more on maybe lower risk appetite? Is it more on perhaps your internal expectations of lower dynamism in the economy? Just wanted to understand a bit more on the nature of the revision. Thank you. Our risk appetite hasn't changed, what we are seeing is that probably liquidity could be a little concerned this year as the government is keeping a very restrictive monetary policy.
Speaker Change: Thank you they were very clear if I can.
Speaker Change: Can make a follow up so you're revising.
Speaker Change: Two lines and growth rate deposits on loans.
Speaker Change: By double digits. So just wanted to see if you could.
Speaker Change: To expand a bit on the rationale behind it is it more.
Speaker Change: And maybe lower risk appetite to do more.
Speaker Change: Perhaps.
Speaker Change: Your internal expectations of lower dynamism in the economy, just wanted to understand a bit more on the nature of the revision. Thank you.
Speaker Change: Our risk appetite Hasnt changed what we are seeing is that broadly liquidity could be a little concern. This year as the government is keeping a very restrictive monetary policy.
Speaker Change: Yes.
Diego Cesarini: We expect that policy to continue for some months. We have some excess of liquidity that we can still use. So we are not worried in the short term, probably for one or two quarters. We can keep growing even if the deposits grow below loans. But then, of course, we are not certain when this policy will change. So we are being a little more conservative on growth just for that. Okay, super clear.
Speaker Change: Yes.
Speaker Change: And we will get there.
Speaker Change: We expect that policy to continue for some months, we have some excess of liquidity that we can still use. So we are not worried in the short term from early for one or two quarters, we can keep growing even if deposits.
Speaker Change: Grow below loans, but then of course, we are not certain when this policy will change. So we are being a little more conservative on growth just for that okay Super clear. Thank you.
Diego Cesarini: Thank you.
Speaker Change:
Pedro Leduc: Our next question comes from Pedro Leduc with Itaú BBVA.
Speaker Change: Our next question comes from Pedro Leduc with <unk> BBA.
Speaker Change: Yeah.
Pedro Leduc: Hi, Belen, Diego, thank you very much for taking the question. Congratulations on the numbers. OK, two quick ones. First on SG&A, we had a nice decline there in real terms year-over-year QLQ. If you can help us see through the remainder of the year, if this is a trend that's likely to continue. And then second, on your NIMS, well, they've been declining, obviously, but declined a lot less this quarter than they had in the last ones. So if you've already seen the end of the transition in NIMS within your asset base, then maybe when can we expect this to start picking up again?
Speaker Change: Hi blend Diego. Thank you very much for taking the question congratulations on the numbers.
Speaker Change: Quick ones first in SG&A.
Speaker Change: <unk> volume bearing real trends year over year Q on Q.
Steve: If you can help us Steve.
Speaker Change: We ended the year, it's been a trend that's likely to continue and then second one your nims they've been declining obviously by declines a lot less this quarter than they had in the last months.
Speaker Change: You're already seeing the end of the transition and nims within your asset base and maybe when can we expect this to start picking up again. Thank you.
Pedro Leduc: Thank you.
Diego Cesarini: Hi Pedro, this is Diego again. Well, I couldn't listen very well to your first question regarding your, I will ask you to repeat, but regarding your second question, NIMS have fallen around 100 basis points this quarter, comparing with fourth quarter of last year. If you consider those NIMS in both currency, they have fallen even less. We have some changes in the mix, dollar activity is waiting a little more than the previous quarter. And also, if you consider that monetary policy rates have fallen around 600 basis points in average. We see that NIMS have not fallen so much.
Speaker Change: Hi, Brett This is Joe again, I recently went to your first question regarding Europe I will ask you to repeat but regarding your second question Nims have.
Speaker Change: Helpful in around the 100 basis points.
Speaker Change: This quarter, comparing with fourth quarter of last year.
Speaker Change: If you consider those names in both currency they have fallen even less.
Speaker Change: We have some changes in the mix dollar activities waiting a little more than the previous quarter.
Speaker Change: And also if you consider that monetary policy rates have fallen around 600 basis points in average.
Speaker Change: We see that nims have not fallen so much.
Diego Cesarini: As we have said before, NIMS at the beginning of last year were abnormally high. They have normalized. And you have to consider that part of these high NIMS have in account that we have inflation, high inflation rates are high because of inflation mainly. And for the rest of the year, if we consider that inflation should keep going down, we should expect some decrease, some more decrease in NIMS. But the speed of that decrease will not be will not be, of course, the same as last year. We are expecting some soft decrease in that.
Speaker Change: As we have said before.
Speaker Change: Nims at the beginning of last year were abnormally high they have.
Speaker Change: <unk>.
Speaker Change: You have to consider that part of this higher nims have an account that we have inflation high inflation rates are high because of inflation mainly.
Speaker Change: For the rest of the year, we win if we can see that that inflation should keep going down we should expect some decrease some more decreasing.
Speaker Change: Nims, but.
Speaker Change: The speed of that decrease will not be will not be of course, the same as last year, we are expecting some soft decreasing.
Speaker Change: Those figures.
Diego Cesarini: Very clear, thank you.
Speaker Change: That's very clear. Thank you on the first question was how much and I appreciate <unk>, great long term declines in overall SG&A this year.
Diego Cesarini: The first question was on SG&A if we should continue to see the real term declines in overall SG&A this year. Hi Beto, sorry, could you repeat because we are not getting the first part. In regards to SG&A, so personnel and other admin expenses, they should continue declining in real terms this year as we saw the first quarter. You mean the improvement in expenses, you say? Administrative expenses? That's right. Okay, yes. In benefits to the personnel, you know, the main contrast has to do with severance costs that you had in the first quarter of 2024 and in 2024 overall.
Speaker Change: Yes.
Speaker Change: Hi, better sorry could you repeat because we are not getting the first block.
Speaker Change: And in regards to SG&A, so personnel and other admin expenses.
Speaker Change: They should continue declining in real terms this year as we saw the first quarter.
Speaker Change: You mean that the improvement in expense HSA administrative expenses.
Speaker Change: Okay.
Speaker Change: In benefit.
Speaker Change: The personnel.
Speaker Change: <unk>.
Speaker Change: The main contract customers.
Speaker Change: Sure.
Speaker Change: That you had in the fourth quarter of 2024 and in 2024 overall lending you had a rotation of CLO.
Diego Cesarini: I mean, you had a rotation of C-level employees, so that had a cost and you're not going to see that during 2025. That was the main moving line. And in the case of administrative expenses, we had a reclassification in the line of taxes that has to do with taxes related to health and safety. It's a specific tax here in Argentina. And because of the nature of that expense, we decided to take it from that line on to other operating expenses in the line of turnover tax. So that was the main, what moved the quarter in terms of expenses.
Speaker Change: Employees, so that pay that off.
Speaker Change: And you are not going to see that.
Speaker Change: In 2025 that was the main.
Speaker Change: In line and in the case of our administrative expenses, we've had a reclassification.
Speaker Change: In the lineup that seats that are past due to taxes related to healthy and.
Speaker Change: On safety.
Speaker Change: On the specific facts here in Argentina.
Speaker Change: And because of the nature of that.
Speaker Change: Expense went into April.
Speaker Change: Thank you from the line onto other operating expenses in the lineup and our tax.
Speaker Change: The level of the main.
Speaker Change: One more.
Speaker Change: Quarter.
Speaker Change: In terms of expenses of course this is a one shot in the sense that.
Diego Cesarini: Of course, this is a one-shot in the sense that this reclassification will already be set for the next quarter. And then you had, you did have lower costs on the side of rent and so forth. That has to do mainly with payments to the parent company, but that has to do with lower provisions that we made on. on the effect exchange rate at which we value this.
Speaker Change: This reclassification, we already set for the next quarter.
Speaker Change: And then you'll class you will indeed have lower costs on the side of ramped our software that has to do mainly with <unk>.
Speaker Change: Payments to the parent company, but that it has to do with.
Speaker Change: Lower provisions that we made on.
Speaker Change: On the FX exchange rate at which we value these costs.
Carlos Gomez: Our next question comes from Carlos Gomez with HSP. Hello, thank you for taking my questions. First one refers to, as you mentioned, the mix in the loan portfolio and the fact that you have been lending more in dollars. First, is that because there's more demand for dollars or there's actually more availability of funding for dollars? And what do you expect the dollar portfolio to be this year and next year? Will it continue to grow as a percentage of the total?
Carlos Gomez: Our next question comes from Carlos Gomez with HSBC.
Carlos Gomez: Hello, Thank you for taking my questions.
Speaker Change: First one is the first two.
Speaker Change: You mentioned the mix.
Carlos Gomez: The loan portfolio in the factories have been lumpy.
Carlos Gomez: Firstly is it.
Carlos Gomez: Because there's more demand for Tor minerals.
Carlos Gomez: Our available funding for dollars.
Carlos Gomez: Do you expect the solar portfolio to be this year and next year, we will continue to grow.
Carlos Gomez: As a percentage of the total.
Carlos Gomez: Second, I don't think you have told us your economic assumptions. Can you remind us what you expect for inflation and for the currency for this year and next year?
Carlos Gomez: Second item.
Speaker Change: Thank you have told US your economic assumptions can you remind us with respect for inflation and for the currency for this year and next year. Thank you.
Carlos Gomez: Thank you. Hello Carlos, how are you? Well, regarding our mix of loans, well, as we said, we grew more in dollars, we grew 25% in the quarter in real terms, and we grew just 8% in real terms in the peso activity. We have seen more demand in this currency, in dollars, but for the coming months, what we have to think is that the financial system as a whole, and even our bank, has some strong and conservative policies regarding this currency. We have paid some run-offs of deposits in the past that were very, very heavy, so we are, we At the moment, we cannot expect the same speed of growth in dollar activity that we have seen in the first quarter.
Speaker Change: Yeah.
Carlos Gomez: Hello, Carlos how are you well regarding our mix of loans.
Carlos Gomez: As we said we grew more in dollars, we grew 25% in the quarter in real terms and we grew just 8% in real terms in the peso activity, we have seen more demand.
Carlos Gomez: And this currency in dollars.
Carlos Gomez: But for for the coming months.
Carlos Gomez: We have to think is that the financial system is Holland and even our bank.
Carlos Gomez: Some strong gang conservative policies regarding these currency, we have faced some runoff of deposits in the past that we're very very heavy so we are we.
Carlos Gomez: At the moment.
Carlos Gomez: We cannot expect the same speed.
Carlos Gomez: Speed of growth in activity that we have seen in the first quarter it will depend on funding.
Carlos Gomez: It will depend on funding. We are ready to see what the government is going to announce regarding dollars that could benefit our funding. We don't know. We have heard just rumors, and they are just announcing this at this moment. But to make it short, we should not expect the same degree of growth in this current. And regarding our economic assumptions, our research department right now is expecting a 5.5 GDP growth this year and 35% inflation. and the exchange rate? The exchange is a little below 1400. for this year and for next year?
Carlos Gomez: We are ready to see what the government is going to announce regarding dollars that could benefit our funding. We do know we have had.
Carlos Gomez: Just rumors.
Carlos Gomez: They are just announcing this at this moment.
Carlos Gomez: <unk>.
Carlos Gomez: To make it short we should not expect the same degree of growth in this currency.
Carlos Gomez: And regarding our economic assumptions, we are where our research department right now is expected in a five five.
Carlos Gomez: GDP growth this year.
Carlos Gomez: 35% inflation.
Carlos Gomez: And the exchange rate the exchange is a little below 1400.
Carlos Gomez: For this year and for next year.
Carlos Gomez: I know, nobody knows, but we'll do. Probably it will grow in line with inflation, it will be a little below 1700.
Carlos Gomez: Nobody knows.
Carlos Gomez: Probably it will grow in line with inflation it will be a little below 1700.
Carlos Gomez: Thank you so much.
Operator: You're welcome. Once again, if you would like to ask a question... click on raise hand for audio You will then receive a request to activate your microphone. Activate it and pick up your headset to provide optimum sound quality. Please hold while we pull for questions.
Carlos Gomez: Youre welcome.
Speaker Change: Once again, if you would like to ask a question. Please click on raised hand for audio questions. You will then receive a request to activate your microphone. Please activate it and pick up your headset to provide optimal sound quality.
Carlos Gomez: Please hold while we poll for questions.
Jorge Mauro: Our next question comes from Jorge Mauro with Fundación Argentina. and Open Air. My Hi, yeah, my question is regarding the growth of credit by product. When you look at credit cards, it barely grew this quarter in real terms. So I just wanted to understand. What's your view? I mean, do you think that there is potential for great cars or because this is a product that has been mainstream for a longer period of time? Historically, there is much less growth than in other products. How are you approaching?
Jorge: Our next question comes from Jorge modal with fundamental you can open your microphone.
Jorge Modal: Hi, Yes. My question is regarding the growth of credit byproduct. When you look at credit cards. It barely grew this quarter in real terms. So I just wanted to understand.
Carlos Gomez: What's your view I mean, do you think that there is potential for great car so because.
Jorge Modal: This is a program has seen mainstream for them.
Jorge Modal: Historically, there is much less growth planning other products how are you approaching this.
Jorge Mauro: Hi Jorge, well you know that the financial system has been very small, it is still very small for many years and very based on transactions in the past. In that context credit card was the product bank used to to make contact with new customers so and people's decisions were also very short-term based so that's where we mainly grew credit cards, loans weighed around 40 or 45 percent of our balance sheet or loan base two or three years ago and that is changing for good, people with stability, people are taking more long-term decisions so we are seeing more growth in consumer loans, car loans, mortgages and so we are not, we do not want to stop our growth on credit cards but other products will grow more probably in the coming years so that is our mainly Our opinion on this act Okay, but do you think that credit cards still have potential or the level we have seen today is the credit penetration of credit cards that Argentina may have?
Jorge Modal: Hi, Jorge.
Jorge Modal: Regarding you know that the financial system has been very small it is still very small for many years.
Barry: <unk> Barry based on transactions.
Jorge Modal: In the past in that context, great come towards the broader bank used to make contact with new customers. So on People's decisions were also very short term basis.
Jorge Modal: So that's where we mainly grew.
Jorge Modal: Cards loans way.
Jorge Modal: Wade around 40, or 45% of our balance sheet may or loan base.
Jorge Modal: Two or three years ago.
Jorge Modal: That is changing for good people with stability people are taking more long term decisions. So we are seeing more growth in consumer loans car loans mortgages and so.
Jorge Mauro: So we are not.
Jorge Modal: We do not want to stop our growth on credit cards, but other products will grow more broadly in the in the in the coming years. So that is our mainly our.
Jorge Modal: Our opinion on this subject.
Speaker Change: Okay, but do you think thats great cars still have potential.
Jorge Modal: The debt level, we have seen today is a great penetration of great cars that Argentina may have so very limited growth in a way.
Jorge Mauro: So very limited growth in a way. No, I think we think that they still have potential. But as I said before, mortgages are come from scratch, they weigh nothing in balance in banks balance sheet. The same happens with other long term loans. So they should grow more credit cards will still we think that they will still be growing above inflation, but not as much as the other lines. In the case of our bank, we are strong on credit cards, we have a market share that is above our average market share.
Jorge Modal: No I think we think that they still have potential.
Jorge Modal: But as I said before mortgages are commercial probe from scratch they weigh nothing in Malaysia Banks' balance sheets. The same happens with other long term loans. So they should grow more Greg Caris will still we think that there will still be growing above inflation, but not as much.
Jorge Modal: The other lines.
Jorge Modal: In the case of a bank were strong on grape costs, we have.
Jorge Modal: Our market share.
Jorge Modal: That is above our average market share. So we feel very comfortable with the level and probably we will we will keep that high market share in the future.
Jorge Mauro: So we feel very comfortable with the level and probably we will we will keep that high market share in the Thank you very much.
Jorge Modal: Thank you very much.
Brian Flores: Question from Brian Flores with Hi Tim, just a quick follow-up on the last question. I think it's a very interesting point. So just wanted to understand, are you seeing on average, the duration of your portfolio already increasing or is this something that should happen still? We just wanted to understand how quickly this could be happening or not. Thank you.
Brian Flores: Next question from Brian Flores with Citi.
Jorge Modal: Hi.
Jorge Modal: Just a quick follow up on the last question.
Brian Flores: I think it's a very interesting point. So just wanted to understand are you seeing on average the duration of your portfolio already increasing or is this something that should happen steel.
Jorge Modal: Just wanted to understand how quickly this could be happening or not thank you.
Jorge Modal: Okay.
Diego Cesarini: Hi Brian, yes, yes, we see that our duration is increasing mainly because of consumer loans. We have also grown last year and this year on SMEs loans that have longer terms than we had in the past. In the past, the usual product for an SME was a discount of checks, documents, very short term, 60 days, 90 days, and since mid-year of 2024, we have seen more demand on investing lines. So yes, it's definitely, the duration is growing. On average, we are still short in our presentation. We have some figures, some charts regarding durations, and you can see that most of our loans still are below one year tenure.
Brian Flores: Hi, Brian Yes, yes, yes.
Jorge Modal: We see that our duration is increasing.
Speaker Change: Mainly because of consumer loans, we have also grown last year and this year on Smes loans.
Jorge Modal: The longer terms.
Jorge Modal: We had in the past we in the past the usual product for an SME was discount objects documents very short term 60 days 90 days.
Jorge Modal: Since mid year 2024, we have seen more demand on investing lines. So yes. It's definitely is the duration is growing on average we are still.
Jorge Modal: Sure.
Jorge Modal: In our.
Diego Cesarini: In our presentation, we have some some figures through some charts regarding durations and you can see that most of our loans still are below one year tenor but in the future. We can expect duration to go to go longer we are also growing in mortgages.
Diego Cesarini: But in the future, we can expect duration to go longer.
Diego Cesarini: We are also growing on mortgages. It doesn't represent an important part of our loan portfolio, but in the future we can also expect that line to weigh more. Perfect.
Jorge Modal: Still very it doesn't represent an important part of our loan portfolio, but.
Diego Cesarini: We can also expect that line to weigh more.
Diego Cesarini: I'm sorry for the follow-up here, but on the last point, do you think securitization or the ability to do securitization is, I would say, a requirement for us to see mortgages in your portfolio to really gain relevance or even for the system? and well we think that you cannot keep this level of growth in in mortgages in in the long term if we do not have a long-term plan. Securitization is one alternative, but we also could have, as in other countries, some long-term bond market. We have that in Argentina, but it's still a very shallow market with small volume, short terms. For example, you cannot issue a bond of more than a year and a half or two years, and volumes will still be very, very low.
Jorge Modal: Perfect.
Jorge Modal: Sorry for the follow up here.
Jorge Modal: On the last point.
Jorge Modal: Do you think securitization or the ability to do securitization is.
Jorge Modal: I would say a requirement for us to see mortgages in your portfolio to really gain relevance or for the even for the system.
Jorge Modal: And we're seeing that.
Jorge Modal: You cannot keep this level of growth in mortgages in the long term if we do not have a long term funding securitization is one uncertainty, but who knows it could have.
Jorge Modal: Asked another countries.
Jorge Modal: Some long term bond market.
Jorge Modal: We have that in Argentina, but it's still very shallow market with small.
Diego Cesarini: Small volume short terms for example, you cannot issue a bond of more than a year and a half or two years in.
Diego Cesarini: Volumes will still be very very low.
Diego Cesarini: So, yes, definitely we need some change in funding to keep this trend in mortgages. At this moment, we cannot be sure that that will happen. but if we think that Argentina is normalizing, our capital markets should also get more complex and some long-term investors should be able to buy mortgages or to provide us with some long-term funding. That is our expectation in the short-term and mid-term. We can still grow on these lines, but for the long-term, we need some changes in our economy. No, thank you. Thank you very much.
Jorge Modal: So, yes, definitely we need some change in funding to keep these.
Jorge Modal: This trend in mortgages.
Jorge Modal: At this moment, we cannot be sure that that will happen.
Jorge Modal: But if we if we think that Argentina is normalizing our capital markets should should also we had more complex.
Jorge Modal: Some long term investors should be able to talk to buy mortgages or to provide us with some long term funding that is our expectation in the short term and midterm. We can still grow on these on these lines Matt.
Jorge Modal: Long term, we need some some changes in our funding.
Diego Cesarini: No. Thank you.
Jorge Modal: Thank you very much.
Jorge Modal: Please hold while we poll for questions.
Operator: We are showing no further questions at this time. This concludes the question and answer section.
Speaker Change: We are showing no further questions at this time. This concludes the question and answer section I would now like to turn it over to Bbva's team for closing remarks.
Operator: I would now like to turn it over to BBVA's team for closing remarks. Well, thank you all for joining us today. And if you have any further questions, do not hesitate to reach out. Have a nice day. Have a nice week. Thank you.
Speaker Change: Well. Thank you all for joining us today and if you have any further questions do not hesitate to reach out have a nice day and a nice week.
Speaker Change: Sure.
Operator: This concludes the presentation, you may disconnect now and have a nice Goodbye.
Speaker Change: This concludes the presentation you may disconnect now and have a nice day.
Speaker Change: Good.