Q3 2025 Banco BBVA Argentina SA Earnings Call
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 US Federal Securities Law. These forward-looking statements are subject to risks and uncertainties that could cause 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 20F for the fiscal year 2024, filed with the US Securities and Exchange Commission. During the company's presentation, all microphones will be disabled. At this 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 questions. You will then receive a request to activate your microphone.
Operator: Please activate it and pick up your headset to provide optimum sound quality when posing your question. I will now turn the call over to Mrs. Belen Fourcade. Please go ahead.
Belen Fourcade: Good morning, and thank you all for joining us today. In Q3 2025, BBVA Argentina has managed to sustain its growth strategy, demonstrating the strength of its fundamentals and effectiveness of its management. We maintained a focus on operational efficiency through careful administration of our fees, and strict control of expenses, which allowed us to navigate the volatile context in which interest rate levels have doubled. The period was marked by high political uncertainty, which resulted in strong movements in financial variables. The central bank implemented a more restrictive monetary policy, with increases in reserve requirements, a new daily compliance scheme for them, and changes in the instruments used to regulate the money supply, which led to a sharp rise in the level and volatility of interest rates.
We maintain the focus on operational efficiency through careful administration of our feast and strict control of expenses, which allowed us to navigate the volatile context in which interest rate levels have doubled.
Belen Fourcade: The electoral results in the province of Buenos Aires at the beginning of September added further doubts about the continuity of the government's economic policy. Deposit rates increased from levels of 30% at the beginning of July, reaching peaks of 70% during September. Furthermore, demand for exchange rate hedging increased, resulting in some dollarization of deposits, while loan growth slowed down. Nevertheless, credit to the private sector of the system achieved a real-term increase of 7% during the quarter. Although this scenario was quickly reversed after the outcome of the national elections in October heavily supported the ruling party, the results of the financial system were not exempt from the impact of what happened during the quarter.
The period was marked by high political uncertainty, which resulted in strong movements in financial variables. The Central Bank implemented a more restrictive monetary policy with increases in reserve requirements and a new daily compliance scheme. They also made changes to the instruments used to regulate the money supply, which led to a sharp rise in the level and volatility of interest rates. The electoral results in the province of Buenos Aires at the beginning of September raised further doubts about the continuity of the government's economic policy.
Deposit rates increased from levels of 30% at the beginning of July, reaching peaks of 70% during September.
Furthermore, demand for exchange rate heading increased, resulting in some dollarization of deposits. While long-term growth slowed down.
Nevertheless, credit to the private sector of the system achieved a real-time increase of 7% during the quarter.
Belen Fourcade: On the one hand, the high level of rates affected the continued deterioration of the system's delinquency, and in addition, it had a negative impact on intermediation margins, given the faster speed at which liabilities are renegotiated compared to assets, despite the short duration of the latter. In this scenario, we are leveraged on active pricing, careful portfolio management, and strict control of expenses, which has allowed us to navigate a context of higher provisions and delinquency while still driving growth in activity. The aforementioned negative impact on margins was mitigated by the high percentage of floating rate sovereign debt in the securities portfolio. In this context, the bank's total loans to the private sector grew by 6.7%, and the consolidated market share was 11.39%.
All of these scenarios were quickly reversed after the outcome of the national elections in October, which heavily supported the ruling party. The results of the financial system were not exempt from the impact of what happened. During the quarter,
On one hand, the high level of rates affected the continued deterioration of the system's delinquency. Additionally, it had a negative impact on intermediation margins. Given the faster speed at which liabilities are renegotiated compared to assets, despite the short duration of the latter.
In this scenario, we are leveraging active pricing, careful portfolio management, and strict control of expenses, which has allowed us to navigate a context of higher provisions and delinquency while still driving growth in activities.
The aforementioned negative impact on margins was mitigated by the higher percentage of floating-rate sovereign debt in the Securities portfolio.
Belen Fourcade: Regarding deposits, a real-term increase of 10.2% was also achieved, so that the market share rose 44 basis points and reached the double-digit figure for the first time, up to 10.09%. As for asset quality, the NPL ratio of BBVA Argentina on private loans reached 3.28% as of September 2025, a figure that remains below the system average. BBVA is renowned for presenting delinquency ratios consistently below the sector average, which reflects the quality of its credit risk management and its prudent approach to portfolio origination. Regarding the liquidity ratio, the bank remains at a comfortable level, which at the end of the quarter reached 44.3% of deposits. The capital ratio stood at 16.7%, decreasing 170 basis points compared to the previous quarter, mainly explained by the temporary impact of the sovereign debt valuation. Yet, it continues at ample levels that allow us to sustain our growth strategy.
In this context, the bank's total loans to the private sector grew by 6.7%, and the consolidated market share was 11.39%.
Points and reach the double-dated figure for the first time up to 10.09%. As for us at quality, the NPL ratio for private loans in Argentina reached 3.28% as of September 2025, a figure that remains below the system average.
Belen Fourcade: Moving to slides 2, 3, and 4, I will now comment on the bank's Q3 2025 financial results. BBVA Argentina's inflation-adjusted net income in Q3 2025 was ARS 38.1 billion, decreasing 39.7% quarter over quarter. This implied a quarterly ROE of 4.7% and a quarterly ROA of 4.7%. The decrease in quarterly operating results was mainly explained by lower operating income, mainly due to: one, a deterioration in loan loss allowances; two, lower net interest income; and three, a drop in the line of net income from measurement of financial instruments at fair value through P&L. These were positively offset by substantially better net free income, operating expenses, and other operating income, including non-recurrent concepts.
BBVA is renowned for presenting delinquency ratios consistently below the sector average, which reflects the quality of its credit risk management and its prudent approach to portfolio origination. Regarding the liquidity ratio, the bank remains at a comfortable level, which at the end of the quarter reached 44.3% of the deposits. The capital ratio stood at 16.7%, decreasing 170 basis points compared to the previous quarter, mainly explained by the temporary impact of the sovereign debt valuation. Yet, it continues at ample levels that allow us to sustain our growth strategy.
Moving to slides 2, 3, and 4, I will now comment on the bank's third quarter 2025 financial results.
The Argentina's inflation-adjusted net income in the third quarter of 2025 was 38.1 billion pesos, decreasing 39.7% quarter over quarter.
This implied a quarterly arrow of 4.7% and the quarterly Arrow Way of 4.7%.
The decrease in quarterly operating results was mainly explained by lower operating income, mainly due to the duration in long lost allowances.
2. Lower net interest income; and 3. A drop in the line of net income from the measurement of financial instruments at fair value through P&L.
Belen Fourcade: As previously mentioned, it should be noted that the quarter was marked by an increase in average interest rates in a context of volatility, regulatory changes of minimum reserve requirements, and uncertainty raised by the electoral period, which cleared up after the results, reversing several of the negative impacts. Net income from the net monetary position was 5.7% lower quarter over quarter, explained by a stable quarterly inflation. Turning into a P&L line, in slide 3, net interest income was ARS 585.5 billion, decreasing 6.6% quarter over quarter. In Q3 2025, interest income increased less than interest expenses in monetary terms, driven by the sudden increase in interest rates. While income from loans increased 19%, income from the government securities increased 66.6%, given the high percentage of TAMAR floating rate bonds in the portfolio, which rapidly captured changes in market rates.
This was positively offset by substantially better net free income, operating expenses, and other operating income, including non-recurrent concepts.
As previously mentioned, it should be noted that the quarter was marked by an increase in average interest rates, in a context of volatility, regulatory changes of minimum reserve requirements, and uncertainty raised by the electoral period which cleared up after the results, reversing several of the negative impacts.
Net income from the net monetary position was 5.7% lower quarter-over-quarter, explained by stable quarterly inflation.
Turning to the P&L lines on slide 3, net interest income was $585.5 billion pesos, decreasing 6.6% quarter-over-quarter.
In the third quarter of 2025, interestingly, expenses increased less than interest expenses, in monetary terms, driven by the sudden increase in interest rates.
Belen Fourcade: Expenses increased mainly due to higher deposit costs, in particular due to time deposits. Loan loss allowances increased 37.1%, explained by the deterioration of non-performing loans, in particular on the retail book, which implied higher provisioning, as well as the publicly known deterioration of NPLs, both for BBVA and for the system. The effect of loan loss allowances can be observed in the evolution of the cost of risk, which reached 6.63% in Q3 2025. Net free income as of Q3 was ARS 137.1 billion, increasing 37.5% quarter over quarter, thanks to continued alignment in pricing strategies, both in free income and expenses. During Q3 2025, total operating expenses were ARS 494.6 billion, decreasing 3.4% quarter over quarter. Several improvements are observed in administrative expenses, mainly due to proactive efficiency measures in: one, software; two, outsourced administrative expenses; three, advertising; and four, armored transportation.
While income from loans increased 19%, income from government securities increased 66.6%. Given the high percentage of Tamar floating rate bonds in the portfolio, which rapidly captured changes in market rates.
Expenses increased mainly due to higher deposit costs, in particular, due to time deposits. Loan losses and allowances increased 37.1%, explained by the deterioration of non-performing loans, particularly on the retail book, which implied higher provisioning, as well as the publicly known duration of non-performing loans, both for BBVA and for the system.
The effect of long-lost allowances can be observed in the evolution of the cost of risk, which reached 6.63% in the third quarter of 2025.
Net free income as of the third quarter was 5,371 billion pesos, increasing 37.5% quarter over quarter. This growth is due to continuous alignment in pricing strategies, both in fee income and expenses.
During the third quarter of 2025, total operating expenses were 494.6 billion pesos, decreasing 3.4% quarter-over-quarter.
Belen Fourcade: In the case of software, the decrease is due to a re-estimation of expense provisions. For advertising and armored transportation, diverse actions have been taken in the aim of improving efficiency. Both the efficiency ratio, as well as the fee-to-expenses ratio, are improvements that are taking place on these lines of the income statement, and we expect them to improve even further for 2026. Private sector loans as of Q3 2025 totaled ARS 12.8 trillion, increasing 6.7% in real terms quarter over quarter. Growth was mainly driven by an increase in loans in foreign currency, boosted by commercial lending, mainly pre-financing and financing of exports, and other loans, which included investment project loans and acquisition in correspondent banks. On the peso portfolio, credit cards and pledge loans stood out.
Several improvements are observed in administrative expenses, mainly due to proactive efficiency measures in software to outsource administrative expenses. Additionally, there are improvements in transportation costs. In the case of software, the decrease is due to a re-estimate of expense provisions.
For advertising and armor transportation, diverse actions have been taken to improve efficiency.
Both the efficiency ratio, as well as the fee to expenses ratio improvements, are taking place on these lines of the income statement, and we expect them to improve even further for 2026.
In Q3 2025, the total reached 12.8 trillion pesos, increasing 6.7% in real terms quarter over quarter.
Growth was mainly driven by an increase in loans in foreign currency, boosted by commercial lending, mainly pre-financing and financing of exports. Other loans included investment project loans and a position in correspondent banks.
Belen Fourcade: The latter was partially affected by an accounting reclassification done by the subsidiary companies from the other loans lines to the pledge loan line. In the case of consumer loans, prudency policies taken in a context of higher deterioration of non-performing loans were noticeable in this line, with 0% growth. Overdrafts fell 12.1%, driven by the rapid increase in interest rates mentioned previously. After years of commercial segment growth over retail, the sudden increase in interest rates took a toll on commercial loan demand, which tends to be more sensitive to changes in interest rate movements, making the commercial loan book slightly fall versus retail in the portfolio mix. BBVA Argentina's consolidated market share of private sector loans reached 11.39% as of Q3 2025, improving from 10.58% a year ago.
On the portfolio, credit cards, and pledged loans, the latter stood out as it was partially affected by an accounting regulation implemented by the subsidiary companies, in contrast to the other loan lines.
To the pledge loan line.
In the case of consumer loans, currency policies taken in a context of higher deterioration of non-performing loans were noticeable in this line with 0% growth.
Overdrafts fell 12.1%, driven by the rapid increase in interest rates mentioned previously.
After years of commercial segment growth over retail, the sudden increase in interest rates took a toll on commercial loan demand, which tends to be more sensitive to changes in interest rate movements, making the commercial loan book slightly fall versus retail in the portfolio mix.
Belen Fourcade: Regarding asset quality, BBVA Argentina's non-performing loan ratio on private loans reached 3.28% in September 2025, a figure that remains below the system average. This was due to an increase in the non-performing retail portfolio, reflecting a deterioration in non-performing credit card and consumer loans, which aligns with the overall systemic trend. Commercial non-performing loans, however, showed very good performance, remaining at 0.10%. As we can see on slide 6, as of Q3 2025, total gross loans and other financing over deposits ratio was 85%, below the 88% recorded in Q2 2025, and above the 65% in Q3 2024.
BV, Argentina's consolidated market share of private sector loans reached 11.39% as of the third quarter of 2025, improving from 10.508% a year ago.
Regarding asset quality, Argentina's non-performing loan ratio on private loans reached 3.28% in September 2025, a figure that remains below the system average.
This was due to an increase in the non-performing retail portfolio, reflecting a deterioration in non-performing credit cards and consumer loans, which aligns with the overall systemic trends.
Commercial non-performing loans, however, show very good performance, remaining at 0.10%.
Belen Fourcade: Participation of total loans over assets is 57% versus 58% in Q2 2025 and 43% in Q3 2024, evidencing a slightly higher exposure to the public sector, driven by the changes in reserve requirement regulation concerning reserves in kind, also in line with a lower origination of loans as a consequence of prudential actions in a high NPL environment. On the funding side, as of Q3 2025, total deposits reached ARS 15.4 trillion, increasing 11.2% quarter over quarter. The bank's consolidated market share of private deposits as of Q3 2025 reached 10.09%. Private non-financial sector deposits in pesos totaled ARS 9.8 trillion, an increase of 7% quarter over quarter. This was explained by an increase in time deposits and in interest-bearing checking accounts. This effect was partially offset by a drop in investment accounts.
As we can see on slide 6, as of the third quarter of 2025, total growth loans and other financing over the positive ratio was 85%, below the 88% recorded in the second quarter of 2025 and above the 65%. In the third quarter of 2024, participation of total loans over assets is 67% versus 58% in the second quarter of 2025 and 43% in the third quarter of 2024, evidencing a slightly higher exposure to the public sector driven by the changes in reserve requirement regulation concerning research in kind.
And also in line with the lower origination of loans, as a consequence of credit actions in a high NPL environment.
On the funding side, as of the third quarter of 2025, total deposits reached $15.4 trillion pesos, increasing 11.2% quarter over quarter.
The banks consolidated market share of private deposits, as of the third quarter of 2025, reached 10.09%.
Belen Fourcade: Private non-financial sector deposits in foreign currency, expressed in pesos, increased by 16.6% quarter over quarter. This is mainly due to an increase in time deposits, mainly investments from mutual funds, followed by an 8.3% increase in savings accounts. As of Q3 2025, capital ratio reached 16.7%. The drop was due to an increase by 7.4% in risk-weighted assets, which was higher than the 2.9% decrease in common equity tier 1 capital, the latter affected by the fall in the valuation of public securities mentioned previously. This explains two-thirds of the quarterly decrease in the capital ratio. Public sector exposure, excluding central bank, totaled ARS 3.6 trillion, implying a 16.4% exposure above the 15.88% recorded in Q2 2025. The quarter over quarter increase is mainly due to a higher position in securities at amortized cost, related to the higher risk requirements in the quarter.
Private non-financial sector deposits in pesos total 9.8 trillion pesos and increase of 7% quarter of a quarter. This was explained by an increase in time deposits. And in interest pairing checking accounts this effect was partially offset by a drop in investment account.
Private non-financial sector deposits in foreign currency, expressed in pesos, increased by 16.6% quarter over quarter. This is mainly due to an increase in time deposits, primarily investments from mutual funds, followed by an 8.3% increase in savings accounts.
As of the third quarter of 2025, the capital ratio reached 16.7%. The drop was due to an increase of 7.4% in risk-weighted assets, which was higher than the 2.9% decrease in Common Equity Tier 1 capital. The latter was affected by the evaluation of public securities mentioned previously.
This explains two-thirds of the quarterly results, decreasing the capital ratio.
Belen Fourcade: Increase 7% of this decrease corresponds to Tamar Bonds. For the quarter, liquidity ratio reached 44.3%, lower than the 8.7% the prior quarter. In local currency, the ratio decreased 779 basis points to 37.6%, explained by the lower valuation of public securities, affecting the overall drop in the total currency liquidity. Liquidity in foreign currency increased 152 basis points to 57%. In line with our commitment to generating value for our shareholders, the bank continued with the payment of dividends corresponding to a 2024 financial year improvement, having successfully completed the period of installment C6 as of the date of this report. In summary, despite the challenges of the environment, BBVA Argentina has demonstrated notable resilience and effective management during the Q3 of 2025.
Public sector exposure, excluding Central Bank, totals 3.6 trillion pesos, implying a 16.4% exposure above the 15.88% recorded in the second quarter of 2025, reflecting a quarter-over-quarter increase. The rise is mainly due to a higher position in securities at amortized costs related to the higher risk environment in the world. As of December, 10% corresponds to the marathon.
The ratio decreased 779 basis points to 47.6%, explained by the lower valuation of product securities affecting the overall drop in total currency liquidity.
Liquid in foreign currency increased 152 basis points to 57%.
In line with our commitment to generating value for our shareholders, the bank continued with the payment of dividends corresponding to the 2024 financial year, having access to complete office reports.
Belen Fourcade: The positive growth in credit, delinquency levels below the system average, and the strength in liquidity and capital ratios are a testament to the quality of our risk management and prudent approach. We reiterate our firm commitment to continue driving activity, maintaining operational efficiency, and generating sustained value for our shareholders. This concludes our prepared remarks. We will now take your questions. Operator, please open the line for questions. Thank you. We are now going to start the Q&A session for investors and analysts. If you have a question, please click on Raise Hand for audio questions. You will then receive a request to activate your microphone. Please activate it and pick up your hand to provide optimal sound quality when posing your question. Our first question comes from Brian Flores with CG. You can open your microphone. Hi, team. Apologies. Yeah, I was having technical issues.
In summary, despite the challenges of the environment, Banco BBVA Argentina has demonstrated notable resilience and effective management due to the third quarter of 2025.
The positive growth in credit, the linguistic levels below the system average, and the strength in liquidity and carrier ratio are assistance to the quality of our weak management and proven approach. We reiterate our firm commitment to continue driving activity, maintaining operational efficiency, and generating sustained value for our shareholders.
This concludes our prepared remarks. We will now take your questions. Operator, please open the line for questions.
Thank you. We are now going to start the Q&A session for investors and analysts. If you have a question, please click on 'raise hand.' For audio questions, you will receive a prompt to activate your microphone. Please activate it and pick up your headset to provide optimal sound quality when posing your question.
Our first question comes from Brian Flores with SI. You can open your microphone.
Belen Fourcade: I have two questions. The first one, kind of a mandatory one on the guidance. Just wanted to check if you are reiterating the real loan growth at 45% to 50% year over year with deposits at 25% in real terms. I think the last time we discussed, the ROE range you provided was real ROE of 10% to 15%, and expectations of the tier 1 ratio between 16% and 16.5%. Just wanted to check if all of these items are maintained, given, obviously, a hectic Q3. My second question is on, basically, loan growth. You showed market share gains, very strong loan growth. Just given the economic stagnation of Q3, how much of this growth would you consider genuine versus merely refinancing from existing clients that were struggling with liquidity? Just wanted to understand how we should think about loan growth going forward. Thank you. Hi, everyone.
Hi team. Um, apologies here; I was having technical issues. Uh, I have two questions. The first one is kind of a...
Uh, a mandatory mandatory 1 on the guidance. Just wanted to check. If you are reiterating the real long group that 45% to 50% year-over-year with deposits at 25%, in real terms, I think the last time we discussed the arrow range, you provided was real ROI of 10% to 15% and the expectations of the 31 ratio between 7, 16 and 16 and a half. Just wanted...
To check, if, if all of these items are maintained given. Obviously a, a hectic, third quarter. Uh my my second question is, uh, on basically long growth, you showed, uh, market share gains very strong long growth. Um, but just given the economic stagnation of the third quarter, how much of this growth
Uh, would you consider genuine versus merely, um, refinancing from the existing clients that were struggling with liquidity? I just wanted to understand how we should think about long-term growth going forward. Thank you.
Belen Fourcade: Okay. Brian, regarding your questions regarding guidance, we are okay with this 45% to 50% in real terms long growth. In terms of deposit, we see something more than what you said, so something similar to 30% to 35% could be okay for us. ROE, we are thinking of high single digits. In terms of capital ratio, finishing the year near 17%, around 17%. That would be the changes in month. In fact, there's no change in our guidance. We are maintaining a similar view for the whole year. That's one issue. Regarding loans and what you asked about refinancing and if the growth is genuine or not, we believe the growth is fully genuine. You have to consider that part of the long growth is related to US dollar loans.
Hi everyone. Okay, uh, uh, Brian, regarding your question.
Regarding uh guidance um we are okay with this 45 to 50% uh in real terms long growth in terms of the positive uh we see something more than what you said. So something similar to 3035 percent. Could be okay for us. Uh are we uh we we are uh thinking of high single digits.
Um, and in terms of capital ratio, um,
finishing the year near the 17% around 17%. So that would be the, the, the changes in, in the, in fact, there's not no changing in our in our guidance. Uh, we, we, you know, we are, uh, maintaining uh, similar, uh, View for the whole year.
Belen Fourcade: If you take a look to personal loans, you will see that we are very flat. We did not grow in that line. Of course, the situation in the retail side regarding personal loans and credit cards is delicate due to NPL growth, and that is why we have been more prudent on the growth there. Our growth comes from, as I said, US dollar and very linked to companies, of course. Thank you, Carmen. I think the last time we spoke was maybe three weeks ago in one event we hosted. You mentioned the sustainable ROE of the bank is around mid-double digits at least. I just wanted to think if maybe 2026 is a transition year towards this level. Okay. I was talking about the end of 2025. Maybe I misunderstood your question.
Uh, personal loans that you will see, uh, that we are very flat so we didn't, we didn't grow in that in that line. So, uh, of course, the situation in, in the retail side, uh, regarding, uh, personal loans and, and credit cards is delicate due to, uh, MPL growth and, and that's why we've been more prudent on, on the growth there and, uh, our growth comes from. Uh, as I said US dollar, I'm very linked to, uh, uh, companies, of course.
No, thank you, Carmen. I think the last time we spoke was maybe 3 weeks ago in one event. We hosted, uh, you mentioned the sustainable Waterway of the bank is around middle digits, at least. So just wanted to. Oh, okay.
To think if maybe 2026 is a transition year towards this level.
Belen Fourcade: Related to 2026, yes, we maintain the mid-to-low teens, I could say. 2026 will be better than this year, maybe not at a sustainable pace. Yeah, the trend should go upwards. Yeah, we can maintain this mid-to-low to mid-teens here. Thank you, Carmen and team. You're welcome. Our next question comes from Tito Labarta with Goldman Sachs. You can open your microphone. Hi. Good morning, Carmen, Diego, Belen. Thanks for the call and taking my question. Two questions also. Any update on just the daily reserve requirements and what the government is thinking on maybe reducing that to allow for better liquidity and your ability to grow? How do you see that continuing to impact NIM maybe in Q4, and then maybe for 2026, just high-level thoughts on how the NIM can evolve?
Okay. So I I was talking about uh, at the end of 2025, maybe I misunderstood your question uh, related to 2026. Yes, we maintain the, the mid to to, to low. Yeah, we need to load things, I could say so 2026 and we'll be better than this year. Maybe not at that sustainable, uh, Pace. Uh, uh, but yeah. So the, the, the, the, the, the trench should go upwards. So, yeah, we we, we can maintain this, uh, me to ya lo to meet things here.
Thank you, Carmen and team.
You're welcome.
Our next question comes from Tito Lara with.
phone.
Belen Fourcade: Second question, as you mentioned, the retail NPLs, right, have been rising, just given some of the short-term uncertainty. How are you thinking about asset quality from here? Do you think that reverses quickly? Do you think how long of a prolonged credit cycle would it be just to think about asset quality and then your ability to grow the retail loan book? Thank you. Hi, Tito. This is Diego. Thanks for the question. I will take the first one regarding reserve requirements. Central Bank has already made some changes. You know Q3 was very difficult because not only did they raise reserve requirements two or three times, but they also had us comply with it on a daily basis. That made us a little inefficient. They have already changed this from 1 December.
Hi, good morning, Carmen Diego Ben. Thanks for the call and taking my question, uh, 2 questions also, just any update on just the, the, the daily reserve requirements and what the government is thinking on, um, maybe reducing that and, you know, just to allow for the liquidity and your ability to to grow and and how do you see that continuing to impact? Nim, maybe in in 4 q and then maybe for 2026 just high level thoughts on on how the name can evolve. And then second question as you mentioned, um, the retail mpls, right? Have been rising just given some of the short-term uncertainty. Uh, how are you thinking about asset quality from here? Do you think that reverse is quickly? Do you think how long of a prolonged credit cycle? Would it be just to think about the asset quality and then your ability to grow the retail uh, loan book. Thank you.
Hi. This is Diego. Thanks for the question. I will check the the first 1 regarding reserve requirements. Send the bank has already made some changes. You know the the third quarter was very difficult because the they not only they they raised reserve requirements 2 or 3 times but they also had us to to complain.
Belen Fourcade: Even if we have to comply with those requirements on a daily basis, we need to comply with just 75% of the total requirement that the Central Bank makes us comply. This is a huge change for us. This will reduce this inefficiency to zero. Besides, they also reduce the percentage of requirement on our sight deposits. That has a direct impact on profitability because this is money that was allocated at zero rate at Central Bank. Now, well, we can comply with that with bonds. This makes an important change for us and for banks in general. We expect Central Bank in the coming months, of course, to reduce the level of requirements. This monetary policy that has been very restrictive since May or June, we think that with time, they will relax this.
With to comply it with in on a daily basis. So that made us a little inefficient. Uh, they have already changed this uh, from the first of December. We even if we have to comply with those requirements on a daily basis, the, we, we, we, we need to, we need to complete just 75% of the total, uh, requirement that the sensor bank makes us to get comply. So, this is a huge change for, for us this week. This, this, this will reduce, uh, this inefficiency to, to zero. And besides they also reduce the, the percentage of of, um, of requirement on the, on our site deposits. So that that has a direct impact on profitability because this is money that was allocated at zero rate at Central Bank. And now well we can have we can comply that with bonds. So this this makes a
An important change for us, and for banks in general.
Belen Fourcade: Of course, that will provide us with more liquidity to fund growth we are expecting for next year. Okay. I'll take the question related to NPLs and what we see. NPLs, as you know, we happened at September with 3.28%. The system was above that, near 4%. We are doing better than the system. The environment has been very complex in this quarter with inflation going down in a very quick way and interest rates still very high in real terms. This is affecting, of course. What we see is that we will see a Q4, which will be also complicated in that sense. Maybe we see something higher, NPLs higher than this quarter, not pretty much. Then 2026 needs to be a much better year. In terms of NPL and in cost of risk, something similar.
We, we expect, and the bank in the coming months, of course, to, to reduce the level of of requirements where this monetary policy that has been very restrictive in the, in the since May and, and, or or or June. And we think that with time, they will relax this. And, and of course, that will provide us with more liquidity, to, to fund growth. We are expecting for next year.
Belen Fourcade: We see cost of risk that has been 6.63% by these nine months. We see something higher, but not really dramatic. By the end of 2025, and then a decrease in 2026. Great. That's helpful. Thank you, Carmen and Diego. Just one follow-up on, as the reserve requirements get relaxed, I mean, rates, I think, have come down from the peak as well. How do you see the evolution of NIM, right? Because we saw some NIM pressure in the quarter. Do you think that already begins to reverse in Q4, just to think about the net interest margin evolution from here? Thank you. Okay. NIMs, when you take out Q3, which is very special, of course, NIMs have been really stable through the year. I think that that will be the main conclusion.
In a, in a very quick way and interest rates still very high in real terms. So this is affected, of course, what we see is that we will, we will, um, see a fourth quarter, which will be also uh, complicated in, in that, in that sense. So maybe we see something higher, so MBS higher than, than this quarter, not not pretty much and then 2026 needs to be. Needs to be, uh, a much better the year. So in terms of, uh, MPL and and in cost of risk something similar, know we, we see cost of risk that has been 6.63%, uh, by the, by the. So this, um,
Nine months. Um, we see something higher, but not really dramatic. So, by the end of 2025, and then a decrease in 2026.
Great, that's helpful. Thank you Carmen and Diego. Just want to follow up on um as the reserve requirements, get relaxed. Um I mean rates I think have come down from the peak as well. How do you see the evolution of nimrah? We because we saw some Nim pressure in the quarter. Do you think that already begins to reverse in 4q, uh, just to think about the the net interest margin Evolution from here? Thank you. Okay. Yeah, you know Nims when you take out the the third quarter with very which is very special, of course,
Belen Fourcade: Q3, of course, was special because rates went from 30% to almost 70% on a given day. Having liabilities from one day to 40, 50 days really impacts much quicker than our asset repricing, which, by the way, our assets are also short-term in general terms. Just as an example, 60% of our bond portfolio was adjusted by interest rate, so it reflected this rise almost immediately and in a way that helped us with the NIM through this quarter. We did not fall as much as many competitors. For Q4, of course, the opposite trend, we should expect that. We should see higher NIMs. For next year, we are not really thinking that NIMs should go down that quickly. With this demand of loan that is, of course, will remain high, we hope it will remain high.
Uh Nims had been really stable through the year and I think that that would be the the main conclusion. Uh third quarter of course was a special because rates went from 30% to almost 70 on a given day. So having liabilities from 1 day to 40, 50 days that really impacts much quicker than than our asset repricing.
Belen Fourcade: Liquidity, which is not as much, it's not scarce, but it's not that high. We think that banks and us especially have a pricing power with our customers. We are not expecting NIMs next year to fall that much. Great. That's helpful. Thank you very much, Diego. You're welcome. Our next question comes from Carlos Gomez Lopez with HSBC. You can open your microphone. Thank you. Thank you for taking the call. Two questions. One, as you mentioned, the asset quality is still going to deteriorate into the fourth quarter. Essentially, my question is, the damage from the high interest rates, when do you think that will be gone? We will see it through. Have you seen already demand started to come or it's still too early?
Which by the way, our assets are also short-term in general terms. We just as an example, 60% of our bond portfolio was adjusted by interest rate. So it it it reflected this, this rise in almost immediately. And, and in a way that, that helped us with with with with the name through the squad, we didn't fall as much as many competitors. So for fourth quarter of course the the the deal policy Trend we should expect that we should see higher names and for next year we are we are not really thinking that Nims should go down that quickly. You know with with this demand of loan that is of course we will remain high we hope it will remain high and liquidity which is not as much. It's not as scarce but it's not that high we think that Banks and and us especially have a a, a pricing
With our customers, we are not expecting names next year to fold that match.
Great. That’s helpful. Thank you very much, Diego.
You're welcome.
Our next question comes from Carlos Gomez Lopez with HSBC. You can open your microphone.
Thank you.
Um,
Thank you for taking the call, the call 2 questions 1.
Belen Fourcade: What is the optimal level of capital that you want to achieve now that you have come down all the way from 33% to, I believe, 16.7% now? Where would you like to stabilize the capital level? Thank you. Thank you, Carlos. Related to the demand on credits, what we see is that the retail side is going to come back slowly, maybe. We need to see how long it takes to go through these NPL high ratios. Maybe in the retail side, we will see, yeah, a slow move. In commercial, what we see is that US dollar needs to—well, we are already having high demand on US dollar credits for companies and also pesos. What we see is a different—so we have a different view between retail and commercial.
As you mentioned, the the asset quality is still going to deteriorate into the fourth quarter. So it's usually my question is the damage from the high interest rates. Uh, when do you think that will be gone? We will we will see it through and and have you seen already the man started to to come or or it's still too early and second. Um, what is the optimal level of capital that you want to achieve, not that you have come down all the way from 333 to? I believe, 16.7%. Now, where would you like to stabilize the capital level? Thank you.
Thank you, Carlos. So related to the, to the demand on on credits. What we see is that the retail side is going to to, to come back.
Slowly, maybe know we need to see how, how, how long does it take to to, to go through through this MPL, uh, High ratios? So maybe, um, and in, in the retail side we will see. Um, yeah, ah, ah, ah, ah, low model, but in, in commercial, uh, what we see is that US dollar needs to to, you know, we are we are already uh, uh.
Belen Fourcade: We believe this 45% to 50% loans growth will come through companies and mostly dollar-based. That's the first question. Hi, Carlos. This is Diego. Regarding capital level and where we feel comfortable, as Carmen said before, we are thinking that 2025 will finish with a ratio of around 17%, probably a little higher. For the coming years, first of all, we have a management level, which is the minimum level that we feel comfortable, that is a little below 13%. Having said that, when we forecast for the four or five next years, and on every year, we are forecasting that Argentina's financial system will grow in real terms and that BBVA will keep growing in market share. Considering all that, we are not forecasting that we will reach that level of 13% or 12.75%.
A commercial. So we believe this 45 to 50%, uh, um, a loans growth will come through companies and mostly, uh, uh, dollar based. So, that that's the the, the first question and hi Carlos. This is Diego regarding Capital level and where we feel comfortable as Carmen said before, uh, we are thinking that 2025 will finish with a ratio of around 17, probably a little higher uh and and for the coming years when
Belen Fourcade: We have some possibilities, of course, of issuing at any given moment subordinated debt. We do not have at this moment a tier two instrument in our books. We really are not seeing concerns regarding capital for the coming years. Thank you. This is a bit technical, but actually, when I was looking at risk-weighted assets, there seems to have been something changing in the formula from Q2 to Q3. Your capital consumption seemed to be much higher than what the loan growth seems to justify. Was there a regulatory change that we overlooked? No. If you are mentioning our decrease in Q3, it's mainly because the valuation of our public sector debt, it weighs a lot because at the end of Q3 was the worst moment for Argentinian assets. Bonds were at their worst moment.
First of all, we have a, a management level, which is the minimum level that we feel comfortable that is around, is a little below 13%. Um, having said that, when we forecast for, for the 4 5 next years. And on every year, we are forecasting, that Argentina Financial system will grow in real terms. And that BBA will keep growing in market share, and considering all that. We are not forecasting, that will will reach that level of 13% of for 12.75. So we have some possibilities, of course, of issuing at any given moment, a, a subordinated debt. We we we do not have that at this moment that year to, uh, instrument in our books. So we, we really are not seeing
Concerns regarding capital for coming years.
Um, thank you, and this is a bit technical, but actually, when I was looking at risk with it, I said there seems to have been something changing in the formula from the second quarter to the third quarter. Your capital consumption seemed to be much higher than what the long growth seems to justify. Was that a regulatory change that we overlooked? No, no. In what you're mentioning, our decrease in the third quarter is mainly because of the valuation of our public sector debt.
Belen Fourcade: Next month, in October, our capital ratio will be much higher than in Q3. Okay. This was temporary, and October should go back up. Going back to the loan demand that we mentioned before, we have the high NPLs that have to be absorbed, digested. The problem right now is lack of demand in terms of customers or lack of willingness on the part of banks to lend until that NPL situation is solved? I would say it's both. Yeah. Yeah. In retail, of course. Yeah. As I mentioned, commercial is another story, and we're okay with that. In retail, I guess it's both. These high interest rates are doing part of the situation. Yeah, it's lack of demand and also more restrictive lending policies. Yeah, both. Both. That is it. Thank you.
Right? It weighs a lot because, at the end of the third quarter, it was the worst moment for Argentinian assets. Bonds were at their worst moments for next month. In October, our capital ratio will be much higher than in the third quarter.
Okay, so this was temporary in October. I should should go back up and going back to the loan demand that that we mentioned before. Uh, so we have the high MPL. They have to be absurd digested. So the problem right now is lack of demand in terms of uh, customers or lack of willingness on the on the part of banks to lend until that MP situation is shocked.
I would say it's both. Yeah, yeah. So um, in retail, of course, yeah. Commercial, so as I mentioned, commercial is another story and and and we're okay with that. So but in retail I I guess it's both. So this High interest rates uh are doing part of the of the of the um situation. But yeah, it's lack of demand and also more restrictive uh lending policies. Um so yeah both both that is thank you.
Belen Fourcade: Our next question comes from Pedro Oskenden with Latin Securities. Hi, everyone. Thank you for the call. I wanted to ask what risk or pressure points do you identify in this new credit expansion after the electoral result and for 2026? If there are any specific segments where you anticipate greater sensitivity, maybe. Sorry, Pedro. I'm not sure if I got your question right. Can you please repeat? Yes. Now, looking at credit growth for 2026, what risk or pressures do you see if NPLs, liquidity, or what are you looking at for credit growth? No, we don't see an issue related to capital or liquidity, so that's for sure. Of course, as I mentioned before, we need to be cautious on the retail side in NPLs, looking at the—so we need to see where it ends, these high NPLs.
Our next question comes from Pedro of Scandin with Latin Securities.
Hi everyone, thank you for the call. I wanted to ask what risk or pressure points. Do you identify in this new credit expansion after the the Electoral results and for 2026? And if there are any specific segments when you are, where you anticipate greater sensitivity sensitivity, Maybe,
Uh, sorry, Pedro. I'm not sure if I got your question right. Can you please repeat?
Yes. I know looking at Great growth for 2026. If the what risk or or pressures. Do you see if npl is liquidity or or what are you? You looking at for, for great growth.
Really quick.
Belen Fourcade: What we think is that we will see the worst part by the end of this year, maybe beginning of the next year. From then on, it should go back to more normal levels. That's in the retail side. In the commercial side, we don't see anything. There is demand. We believe with the reforms, and if everything goes in the direction that the government is announcing, what we believe is that there will be more willingness from the companies to go long, to make investments, and we will have the opportunity to fund those in pesos and in dollars. No restrictions in terms of capital and liquidity. I would say it's the most important message to give. Okay. Thank you, Carmen. You're welcome. Next question from Mateus Rafael with Itaú BBVA. Hi, everyone. Thanks for taking the question.
Next year, I'm from then on; it should go, uh, back to a more normal level.
Um, so that's the, in the retail site in the, in the commercial site. We we don't see anything. So, uh, there is demand. Um, so we believe with, with the, uh, uh, reforms and, and if everything goes in the, in the, in the direction that the government is, uh, announcing, what we believe is that there will be more, uh, willingness from from the companies to to go long to to make investments and and we will have the opportunity to fund those uh investors and in dollars. So um no restrictions in in terms of uh capital and liquidity. I will say it's the most important message uh, to give
Okay, thank you Carmen.
You're welcome.
next question, from mattios hafeli with it BBA,
Belen Fourcade: I'd like to ask about cover ratios and cost of risk because we've been seeing cover straining downwards, covering 99% as NPLs continue to rise. The short-term outlook, at least, is for continued increase in NPLs. The bank is still growing significantly portfolios. How should we think about coverage ratio levels in this particular scenario of high growth and high NPLs? I know coverage is an output of models, but it would be nice to hear if maybe this is the core level for coverage ratios and should improve, or maybe you're still comfortable at these levels considering the portfolio growth mix, more commercial, less retail. Also, if you could give us an outlook for retail and NPLs, maybe if it stabilizes going into the second half of next year or maybe already in that. Thank you. Okay, Mateus, thank you for your question.
Hi everyone. Thanks for taking the question. So I would like to ask about cover ratios and cost of risk because we've been seeing coverage trending in our current position, 99%, as NPLs continue to rise, and the short-term outlook, at least, is for a continued increase in NPLs. However, the bank is still growing significantly, uh, portfolios. So how should we think about coverage ratio levels in this particular shift?
Scenario of my growth and high NPL. And I know coverage is an output of models, but it would be nice to hear if maybe this is the 41 level for perpetrators and should improve, or maybe you're still comfortable with these levels. Instead, during the portfolio growth, make more commercialized details. And also, if you could give us an outlook for retail and NPL, maybe to stabilize this growing into the second half, or maybe you're in that. Thank you.
Belen Fourcade: First of all, maybe it's good to notice that coverage ratio were really, really high because of the lack of NPLs in the past years. We were at a very good level of this ratio. Now, of course, in a more complex environment, it's normal that you see a reduced coverage ratio. At these levels, we are comfortable in this 98% to 100% levels for 2025. We believe we are not going to decrease much more for this year. In 2026, we are already projecting higher levels. It should be the minimum levels we are forecasting to see. Thank you. You're welcome. The Q&A session is now concluded. I would like to turn the floor back to the BBVA team for closing remarks. Thank you all for joining the call, and if you have any further questions, please do not hesitate to contact us.
Okay, Ms. Thank you for your question. Uh, so as as
First of all, uh, maybe it's good to to notice that coverage ratio were were really, really high because of, uh, the lack of mpls in the, in the past years. So we were at a very good levels of of this ratio. And now, of course in a, in a more complex environment, it's normal that that you see, uh ah ah ah reduced uh, coverage ratio, uh, then uh this levels, we we are comfortable in, in, in this uh, 98 to to 100% levels for 2025. We believe we are not going to to decrease much, uh, more, uh, for this year and then 2026. We are, uh, already. Um, projecting higher levels so it should be, uh, the
The minimum levels. We are forecasting to see...
Thank you.
You're welcome.
The Q&A session is now concluded. I would like to turn the floor back to the BBVA team for closing remarks.
Belen Fourcade: Have a good day and goodbye. This concludes today's presentation. You may disconnect and have a nice day. Goodbye.
Okay, thank you all for joining the call. If you have any further questions, please do not hesitate to contact us. Have a good day, and goodbye.
This concludes today's presentation. You may disconnect, and have a nice day.