Table of Contents

 

 

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of July, 2020

Commission File Number: 001-12568

 

 

Banco BBVA Argentina S.A.

(Exact name of Registrant as specified in its charter)

BBVA Argentina Bank S.A.

(Translation of registrant’s name into English)

 

 

111 Córdoba Av., C1054AAA

Buenos Aires, Argentina

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐             No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐             No  ☒

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes  ☐             No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):   N/A

 

 

 


Table of Contents

Banco BBVA Argentina S.A.

TABLE OF CONTENTS

 

Item

    
1.
   Financial Statements as of March 31, 2020.


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LOGO

CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE THREE-MONTH PERIOD ENDED

MARCH 31, 2020

 


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LOGO

Banco BBVA Argentina S.A.

TABLE OF CONTENTS

 

Condensed interim financial statements for the three-month period ended March 31, 2020, comparatively presented.

           

Consolidated Condensed Statement of Financial Position

     1  

Consolidated Condensed Statement of Income

     3  

Consolidated Condensed Statement of Other Comprehensive Income

     5  

Consolidated Condensed Statement of Changes in Shareholders’ Equity

     6  

Consolidated Condensed Statement of Cash Flows

     7  

Notes

     9  

Exhibits

     56  

Independent auditors’ report on the review of the consolidated condensed interim financial statements

     64  

Separate Condensed Statement of Financial Position

     67  

Separate Condensed Statement of Income

     69  

Separate Condensed Statement of Other Comprehensive Income

     71  

Separate Condensed Statement of Changes in Shareholders’ Equity

     72  

Separate Condensed Statement of Cash Flows

     73  

Notes

     75  

Exhibits

     92  

Independent auditors’ report on the review of the separate condensed interim financial statements

     104  

Supervisory Committee’s Report

     107  

Reporting Summary

     110  


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CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
    03.31.20      12.31.19  

ASSETS

       

Cash and deposits in banks

     7       146,518,286        168,447,403  

Cash

       37,326,337        50,368,207  

Financial institutions and correspondents

       109,191,949        118,079,196  

Argentine Central Bank (BCRA)

       104,799,668        115,885,703  

Other in the country and abroad

       4,392,281        2,193,493  

Debt securities at fair value through profit or loss

     8       9,059,229        4,452,088  

Derivatives

     9       2,155,425        3,284,689  

Repo transactions

     10       3,201,694        —    

Other financial assets

     11       18,541,094        5,056,367  

Loans and other financing

     12       218,537,669        210,521,665  

Non-financial government sector

       581        493  

Argentine Central Bank (BCRA)

       11,273        18,763  

Other financial institutions

       5,026,311        5,471,908  

Non-financial private sector and residents abroad

       213,499,504        205,030,501  

Other debt securities

     13       64,756,406        48,701,563  

Financial assets pledged as collateral

     14       6,815,417        6,385,453  

Current income tax assets

     15 a)       24,622        28,220  

Investments in equity instruments

     16       1,811,853        2,216,211  

Investments in associates

     17       1,126,379        1,116,747  

Property and equipment

     18       27,331,681        28,105,172  

Intangible assets

     19       919,168        840,905  

Deferred income tax assets

       7,416,288        5,735,315  

Other non-financial assets

     20       4,260,161        4,604,216  

Non-current assets held for sale

     21       178,903        178,903  
    

 

 

    

 

 

 

TOTAL ASSETS

       512,654,275        489,674,917  
    

 

 

    

 

 

 

Notes and exhibits are an integral part of these financial statements.         


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CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
    03.31.20     12.31.19  

LIABILITIES

      

Deposits

    
22 and
Exhibit H
 
 
    327,959,863       316,917,643  

Non-financial government sector

       3,473,308       3,167,294  

Financial sector

       286,915       192,337  

Non-financial private sector and residents abroad

       324,199,640       313,558,012  

Liabilities at fair value through profit or loss

     23       —         626,102  

Derivatives

     9       331,591       3,312,621  

Other financial liabilities

     24       42,830,228       31,073,389  

Financing received from the BCRA and other financial institutions

     25       3,627,151       6,628,457  

Corporate bonds issued

     26       7,498,543       7,889,932  

Current income tax liabilities

     15 b)       11,577,761       8,699,479  

Provisions

    
27 and
Exhibit J
 
 
    11,273,813       11,585,943  

Other non-financial liabilities

     28       18,780,311       18,426,905  
    

 

 

   

 

 

 

TOTAL LIABILITIES

       423,879,261       405,160,471  
    

 

 

   

 

 

 

EQUITY

      

Share capital

     30       612,710       612,710  

Non-capitalized contributions

       20,893,825       20,893,825  

Capital adjustments

       14,632,579       14,632,579  

Reserves

       47,241,771       47,241,771  

Retained earnings

       10,460,210       (17,844,403

Other accumulated comprehensive income/(loss)

       (9,871,341     (11,026,309

Income for the period

       3,078,940       28,304,613  
    

 

 

   

 

 

 

Equity attributable to owners of the Parent

       87,048,694       82,814,786  

Equity attributable to non-controlling interests

       1,726,320       1,699,660  
    

 

 

   

 

 

 

TOTAL EQUITY

       88,775,014       84,514,446  
    

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

       512,654,275       489,674,917  
    

 

 

   

 

 

 

Notes and exhibits are an integral part of these financial statements.


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LOGO   - 3 -  

 

CONSOLIDATED CONDENSED STATEMENT OF INCOME

FOR THE THREE-MONTH INTERIM PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
    Accumulated
as of 03.31.20
    Accumulated
as of 03.31.19
 

Interest income

     31       24,612,502       28,416,766  

Interest expense

     32       (8,171,286     (13,372,696
    

 

 

   

 

 

 

Net interest income

       16,441,216       15,044,070  
    

 

 

   

 

 

 

Commission income

     33       5,400,962       5,896,365  

Commission expenses

     34       (3,525,110     (3,594,108
    

 

 

   

 

 

 

Net commission income

       1,875,852       2,302,257  
    

 

 

   

 

 

 

Net income from financial instruments at fair value through profit or loss

     35       1,000,110       3,752,589  

Net income (loss) from write-down of assets at amortized cost and at fair value through OCI

     36       (127,002     (6,264

Foreign exchange and gold gains/(losses)

     37       1,237,269       1,975,765  

Other operating income

     38       1,038,967       5,268,011  

Loan loss allowances

     Exhibit R       (1,623,363     (1,617,615
    

 

 

   

 

 

 

Net operating income

       19,843,049       26,718,813  
    

 

 

   

 

 

 

Personnel benefits

     39       (4,439,276     (4,202,447

Administrative expenses

     40       (3,589,942     (3,160,419

Depreciation and amortization

     41       (822,794     (1,229,499

Other operating expenses

     42       (3,111,531     (4,509,182
    

 

 

   

 

 

 

Operating income

       7,879,506       13,617,266  
    

 

 

   

 

 

 

Income (loss) from associates and joint ventures

       27,177       (76,309

Gain (loss) on net monetary position

       (2,623,512     (5,021,933
    

 

 

   

 

 

 

Income before income tax

       5,283,171       8,519,024  
    

 

 

   

 

 

 

Income tax

     15 c)       (2,175,775     (3,649,156
    

 

 

   

 

 

 

Income for the period

       3,107,396       4,869,868  
    

 

 

   

 

 

 

Income attributable to:

      

Owners of the Parent

       3,078,940       4,870,007  

Non-controlling interests

       28,456       (139

Notes and exhibits are an integral part of these financial statements.         


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EARNINGS PER SHARE

AS OF MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   03.31.20      03.31.19  

Numerator:

     

Net income attributable to owners of the Parent

     3,078,940        4,870,007  

Net income attributable to owners of the Parent adjusted to reflect the effect of dilution

     3,078,940        4,870,007  

Denominator:

     

Weighted average of outstanding common shares for the period

     612,683,684        612,659,638  

Weighted average of outstanding common shares for the period adjusted to reflect the effect of dilution

     612,683,684        612,659,638  

Basic earnings per share (stated in pesos)

     5.0253        7.9490  

Diluted earnings per share (stated in pesos) (1)

     5.0253        7.9490  

 

(1)

Since Banco BBVA Argentina S.A. has not issued financial instruments with a dilutive effect on earnings per share, basic and diluted earnings per share are the same.


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LOGO   - 5 -  

 

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE THREE-MONTH INTERIM PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

     Accumulated
as of
03.31.20
    Accumulated
as of
03.31.19
 

Income for the period

     3,107,396       4,869,868  

Other comprehensive income components to be reclassified to income/(loss) for the period:

    

Share in Other Comprehensive Income from associates and joint ventures at equity method

    

Income/(loss) on the Share in OCI from associates and joint ventures at equity method

     (18,442     (42,437
  

 

 

   

 

 

 
     (18,442     (42,437
  

 

 

   

 

 

 

Income or loss on hedge instruments - Cash flow hedge

    

(Loss) on hedge instrument for the period

     (1,750     —    

Income tax

     383       —    
  

 

 

   

 

 

 
     (1,367     —    
  

 

 

   

 

 

 

Profit or losses from financial instruments at fair value through OCI

    

Income/(Loss) for the period on financial instruments at fair value through OCI

     1,134,069       2,114,225  

Reclassication adjustment for the period

     127,002       6,264  

Income tax

     (76,038     160,191  
  

 

 

   

 

 

 
     1,185,033       2,280,680  
  

 

 

   

 

 

 

Other comprehensive income components not to be reclassified to income/(loss) for the period:

    

Income or loss on equity instruments at fair value through OCI (IFRS 9, paragraph 5.7.5)

    

(Loss) on equity instruments at fair value through OCI

     (15,628     —    

Income tax

     4,688       —    
  

 

 

   

 

 

 
     (10,940     —    
  

 

 

   

 

 

 

Total Other Comprehensive Income for the period

     1,154,284       2,238,243  
  

 

 

   

 

 

 

Total comprehensive income

     4,261,680       7,108,111  
  

 

 

   

 

 

 

Total comprehensive income:

    

Attributable to owners of the Parent

     4,233,908       7,108,250  

Attributable to non-controlling interests

     27,772       (139

Notes and exhibits are an integral part of these financial statements.


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LOGO   - 6 -  

 

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH INTERIM PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

    2020     2019  
    Share
capital
    Non-capitalized
contributions
          Other comprehensive income     Retained earnings                                

Transactions

  Outstanding
shares
    Share premium     Adjustments
to equity
    Losses on
financial
instruments
at fair value
through OCI
    Other     Legal
reserve
    Optional
reserve
    Unappropriated
retained
earnings
    Total equity
attributable
to owners of
the parent
    Total equity
attributable to
non-controlling
interests
    Total     Total  

Restated balances at the beginning of the year

    612,710       20,893,825       14,632,579       (11,073,041     46,732       11,153,149       36,088,622       12,539,900       84,894,476       1,699,660       86,594,136       72,553,300  

Impact of the implementation of the financial reporting framework established by the BCRA - IFRS 9, paragraph 5.5. (See Note 5.2.c.)

    —         —         —         —         —         —         —         (2,079,690     (2,079,690     —         (2,079,690     (318,744
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance at the beginning of the year

    612,710       20,893,825       14,632,579       (11,073,041     46,732       11,153,149       36,088,622       10,460,210       82,814,786       1,699,660       84,514,446       72,234,556  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

                       

- Income for the period

    —         —         —         —         —         —         —         3,078,940       3,078,940       28,456       3,107,396       4,870,007  

- Other Comprehensive Income for the period

    —         —         —         1,185,033       (30,065     —         —         —         1,154,968       (684     1,154,284       2,238,243  

Difference derived from impact of the implementation of the financial reporting framework established by the BCRA - IFRS 9, paragraph 5.5. Group “B” institutions.

    —         —         —         —         —         —         —         —         —         (1,112     (1,112     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at fiscal period-end

    612,710       20,893,825       14,632,579       (9,888,008     16,667       11,153,149       36,088,622       13,539,150       87,048,694       1,726,320       88,775,014       79,342,806  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE-MONTH INTERIM PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   03.31.20     03.31.19  

Cash flows from operating activities

    

Income before Income Tax

     5,283,171       8,519,024  

Adjustment for total monetary income for the period

     2,623,512       5,021,933  

Adjustments to obtain cash flows from operating activities:

     (2,891,596     (6,762,916

Depreciation and amortization

     822,794       1,229,499  

Loan loss allowance

     1,623,363       1,617,615  

Effect of foreign exchange changes

     (4,490,131     (4,519,174

Income/(loss) from sale of Prisma Medios de Pagos S.A.

     —         (4,186,430

Other adjustments

     (847,622     (904,426

Net increases from operating assets:

     (64,744,086     (39,230,246

Debt securities at fair value through profit or loss

     (4,394,855     7,798,030  

Derivatives

     1,127,514       (352,890

Repo transactions

     (3,201,694     (13,745,349

Loans and other financing

     (24,340,566     (4,913,812

Non-financial government sector

     (88     (333

Other financial institutions

     (1,511,513     5,182,935  

Non-financial private sector and residents abroad

     (22,828,965     (10,096,414

Other debt securities

     (19,335,352     (22,777,240

Financial assets pledged as collateral

     (898,017     (852,485

Investments in equity instruments

     197,655       (2,610,435

Other assets

     (13,898,771     (1,776,065

Net increases from operating liabilities:

     45,992,210       31,060,768  

Deposits

     34,393,644       28,826,404  

Non-financial government sector

     306,014       180,242  

Financial sector

     262,108       (106,317

Non-financial private sector and residents abroad

     33,825,522       28,752,479  

Liabilities at fair value through profit or loss

     (626,102     1,980,713  

Derivatives

     (2,981,030     315,704  

Repo transactions

     —         (23,748

Other liabilities

     15,205,698       (38,305

Income tax paid

     (372,754     (381,421
  

 

 

   

 

 

 

Total cash flows used in operating activities

     (14,109,543     (1,772,858
  

 

 

   

 

 

 


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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE-MONTH INTERIM PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   03.31.20     03.31.19  

Cash flows from investing activities:

    

Payments:

     (377,654     (1,215,966

Purchase of property and equipment, intangible assets and other assets

     (377,654     (1,215,966

Collections:

     191,075       2,686,543  

Sale of investments in equity instruments

     —         2,686,543  

Other collections related to investing activities

     191,075       —    
  

 

 

   

 

 

 

Total cash flows (used in)/generated by investing activities

     (186,579     1,470,577  
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments:

     (2,051,363     (525,400

Non-subordinated corporate bonds

     (1,307,866     (324,396

BCRA

     (484     —    

Financing from local financial institutions

     (542,121     —    

Leases

     (200,892     (201,004

Collections:

     750,586       2,531,551  

Issuance of own equity instruments

     750,586       —    

Non-subordinated corporate bonds

     —         2,514,915  

BCRA

     —         16,636  
  

 

 

   

 

 

 

Total cash flows (used in) / generated by financing activities

     (1,300,777     2,006,151  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     4,490,131       4,519,174  

Effect of monetary income (loss) on cash and cash equivalents

     (10,822,349     (16,293,218
  

 

 

   

 

 

 

Total changes in cash flows

     (21,929,117     (10,070,174
  

 

 

   

 

 

 

Restated cash and cash equivalents at the beginning of the year (Note 7)

     168,447,403       164,347,080  
  

 

 

   

 

 

 

Cash and cash equivalents at fiscal period-end (Note 7)

     146,518,286       154,276,906  
  

 

 

   

 

 

 

Notes and exhibits are an integral part of these financial statements.


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NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS FOR

THE FISCAL PERIOD ENDED

MARCH 31, 2020

(Stated in thousands of pesos)

 

1.

General information

 

  1.1

Information of Banco BBVA Argentina S.A.

Banco BBVA Argentina S.A. (hereinafter, either “BBVA Argentina”, the “Entity” or the “Bank”) is a corporation (“sociedad anónima”) incorporated under the laws of Argentina, operating as a universal bank with a network of 246 national branches.

Since December 1996, BBVA Argentina is part of the global strategy of Banco Bilbao Vizcaya Argentaria S.A. (BBVA or the “Parent”), which directly and indirectly controls the Entity, by holding 66.55% of the share capital as of March 31, 2020.

These consolidated interim financial statements include the Entity and its subsidiary companies (collectively referred to as the “Group”).

The financial statements of the subsidiaries were prepared as of the same dates and for the same periods as those of Banco BBVA Argentina S.A. The financial statements of PSA Finance Argentina Compañía Financiera S.A. and Volkswagen Financial Services Compañía Financiera S.A. were prepared considering the financial reporting framework set forth by the Argentine Central Bank (BCRA) for Group “B” financial institutions, without considering the model established in paragraph 5.5. “Impairment” of IFRS 9 for fiscal years commencing on and after January 1, 2021, as stated in Note 2 to these consolidated condensed interim financial statements.

The Entity’s subsidiaries are listed below:

 

   

BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión: corporation incorporated under the laws of Argentina as an agent for the management of mutual funds;

 

   

Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings): corporation incorporated under the laws of Argentina undergoing liquidation proceedings. On December 4, 2008, Law No. 26425 was enacted, providing for the elimination and replacement of the capitalization regime that was part of the Integrated Retirement and Pension System, with a single government regime named the Argentine Integrated Retirement and Pensions System (SIPA). Consequently, Consolidar A.F.J.P. S.A. ceased to manage the resources that were part of the individual capitalization accounts of affiliates and beneficiaries of the capitalization regime of the Integrated Retirement and Pension System, which were transferred to the Guarantee Fund for the Sustainability of the Argentine Retirement and Pension Regime as they were already invested, and the Argentine Social Security Office (ANSES) is now the sole and exclusive owner of those assets and rights. Likewise, on October 29, 2009, the ANSES issued Resolution No. 290/2009, whereby retirement and pension funds managers interested in reconverting their corporate purpose to manage the funds for voluntary contributions and deposits held by participants in their capitalization accounts had 30 business days to express their intention to that end. On December 28, 2009, based on the foregoing and taking into consideration that it is impossible for Consolidar A.F.J.P. S.A. to comply with the corporate purpose for which it was incorporated, it was resolved, at a Unanimous General and Extraordinary Shareholders’ Meeting to approve the dissolution and subsequent liquidation of that company effective as of December 31, 2009;


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PSA Finance Argentina Compañía Financiera S.A.: a financial company incorporated under the laws of Argentina engaged in the granting of pledge loans; and

 

   

Volkswagen Financial Services Compañía Financiera S.A. (VWFS): A financial company incorporated under the laws of Argentina engaged in the granting of pledge loans.

Argentine Capital Markets Law No. 26831, enacted on December 28, 2012 and amended by Law No. 27440 dated May 11, 2018, subsequently regulated through General Resolution No. 622/13 and General Resolution No. 731/2018 issued by the CNV, establishes in Section 47 that agents have an obligation to register with the CNV, to act in the market in any of the capacities set forth in such law. On September 9 and 19, 2014, the Entity was registered as an Agent for the Custody of Mutual Funds under No. 4 and as a Comprehensive Clearing and Settlement Agent under No. 42. On August 7, 2014, the subsidiary BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión was registered as a Mutual Fund Agent under No. 3.

Part of the Entity’s stock capital is publicly traded and has been registered with the Buenos Aires Stock Exchange, the New York Stock Exchange and the Madrid Stock Exchange.

 

  1.2

Economic context

The future development of Argentina’s macroeconomic conditions is somewhat uncertain as a consequence of the volatility of financial assets, and certain recently enacted laws and regulations, affecting the foreign exchange market, the projected future changes in interest rates, and inflation levels.

In particular, and concerning financial assets, the Argentine Government issued Decree No. 596/2019 dated August 28, 2019, putting off the maturity of short-term securities (Letes, Lecap, Lecer, and Lelink). Furthermore, by means of Decree No. 49/2019 dated December 19, 2019, the Argentine Government put off the repayment of US-dollar denominated Treasury Bills until August 31, 2020.

Against this backdrop, on December 23, 2019, the Public Emergency, Social Solidarity and Productive Revival Law (the “Economic Emergency Law”) was published in the Official Gazette, declaring Argentina in economic, financial, administrative, social security, energy, public health and social emergency until December 31, 2020.

The Economic Emergency Law has also put off until December 31, 2021 the reduction of the income tax rate (see Note 15) and 2017 Fiscal Covenant which established a gradual decrease in turnover tax until December 31, 2020.

In addition, Decree No. 141/2020 dated February 11, 2020 rolled over the repayment of Argentina’s dual currency bonds due in 2020 (“Bonos de la Nación Argentina en Moneda Dual Vencimiento 2020”) to September 30, 2020, while interrupting the accrual of interest on such instruments. Furthermore, Decree No. 346/2020 dated April 5, 2020 mandated the deferral of principal and interest payments on Argentina’s sovereign debt in the form of US-dollar denominated securities issued under Argentine law until December 31, 2020, or until such other earlier date as the Ministry of Economy may determine from time to time, considering the progress made against and the execution of the process to reestablish Argentina’s public debt sustainability.

As of March 31, 2020, the Entity holds national securities subject to restructuring for an aggregate amount of 7,411,834. These securities are measured at fair value through other comprehensive income, and were recognized for a lower amount of 1,853,895 to reflect the decline in prices.


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On September 1, 2019, the Argentine Government published Executive Decree No. 609/2019 setting forth extraordinary and interim guidelines concerning the foreign exchange market. Besides, the BCRA issued Communication “A” 6770, as amended, whereby, among other measures, it provided that up to and including December 31, 2019, the BCRA’s previous consent would be required to access the foreign exchange market for the remittance of profits and dividends, payment of services to foreign related companies, and early payment of financial debts (principal and interest) over three business days before their due date. Then, on December 30, 2019, the BCRA issued Communication “A” 6856, establishing that the preceding provisions would remain in force on and after December 31, 2019. As of the date of these financial statements, the BCRA has issued further regulations imposing new restrictions to access the exchange market.

 

  1.3

COVID-19

On March 11, 2020, the World Health Organization designated the Coronavirus (COVID-19) outbreak as a pandemic, due to its fast pace of proliferation around the world, having affected more than 150 countries. Most governments are taking restrictive measures to contain the spread, including, without limitation, social distancing, confinement, lockdowns, and restrictions to the free movement of people, closure of governmental and private facilities, other than those deemed essential (i.e., heath, food, fuel and communication facilities), border closures, and drastic reductions in transportation by air, sea, railroad and land.

As for Argentina, where the Entity operates, on March 12, 2020, Executive Decree No. 260/2020, as amended, was issued, declaring the country in health emergency in order to cope with the crisis brought about by the COVID-19. Finally, on March 19, 2020, the Executive Branch issued Decree No. 297/2020 mandating social distancing measures, effective from March 20 up to and including March 31, with subsequent extensions until May 24, 2020 by means of Decrees No. 325/2020, 335/2020, 408/2020 and 459/2020. On May 25, 2020, the Argentine Government published Decree No. 493/2020, extending the term set forth by Decree No. 297/2020 up to and including June 7, 2020, which term may be extended for as long as deemed required to address the pandemic. On June 4, 2020, the Executive Branch announced the lockdown would continue until June 28, 2020.

These measures encompass the slowdown or suspension of most non-essential activities carried on by individuals and, as such, are having a significant impact on the economy at the national, regional and global levels, due to the disruption or slowdown of supply chains, coupled with rising economic uncertainty, as evidenced by the increased volatility in asset prices and exchange rates, and a decline in long-term interest rates.

In an effort to address the challenges brought about by the pandemic, the BCRA took several measures primarily aimed at facilitating credit access by economic players, including, without limitation:

 

  a)

eased calculation of days in arrears and suspension of certain mandatory reclassification provisions for purposes of the financial system debtors’ classification and allowance assessment, according to the BCRA’s rules and regulations;

 

  b)

restrictions on positions held by entities in Bills issued by the BCRA (LELIQs);

 

  c)

credit facilities to micro, small and medium enterprises (MSMEs) at an annual nominal interest rate of 24% to cover working capital requirements or to pay for wages;

 

  d)

extension of the payment term of credit card outstanding balances, and suspended indexation of mortgage loan payments until September 30, 2020;

 

  e)

suspended hikes in fees and commissions until June 30, 2020; and

 

  f)

ceiling rates on credit card financing arrangements and floor rates on time deposits.

In addition, the distribution of profits by financial institutions was suspended until December 31, 2020.


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The events described in the preceding Notes 1.2. and 1.3. affect the Entity’s operations, while also affecting the calculation of expected losses under IFRS 9 and the valuation of debt instruments issued by the government sector, by curbing the financial margin and restricting the Entity’s ability to charge fees and commissions on certain activities.

As of March 31, 2020, the payment of minimum capital and minimum cash requirements surpasses the minimum thresholds mandated by the BCRA, with no deficiencies in these ratios being expected to occur in the following twelve months.

The Entity’s management monitors the development of these events on an ongoing basis in order to define the potential actions to be taken and identify their impacts on its financial position.

However, the Entity’s management considers that the above-described circumstances do not prevent the application of the accounting standards a going concern is required to apply in preparing its financial statements as of March 31, 2020.

 

2.

Basis for the preparation of the Financial Statements

These consolidated condensed interim financial statements as of and for the three-month period ended March 31, 2020 were prepared pursuant to the reporting framework set forth by the Argentine Central Bank (BCRA) pursuant to which entities under its supervision are required to submit financial statements prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), with the following exceptions (“financial reporting framework set forth by the BCRA”):

 

  a)

Impairment of financial assets

Pursuant to Communication “A” 6847 issued by the BCRA, the Entity has applied the expected loss model set forth under paragraph 5.5. of IFRS 9, except for debt instruments issued by the non-financial government sector which were temporarily excluded from the scope of such standard. If the Entity had applied the impairment model established in paragraph 5.5. of IFRS 9, its shareholders’ equity as of March 31, 2020 and December 31, 2019 would have been reduced by 3,676,608 and 3,892,574, respectively, net of the deferred tax effect.

In addition, on March 19, 2020, the BCRA issued Communication “A” 6938 deferring the application of the impairment model set forth in paragraph 5.5 of IFRS 9 until fiscal years commencing on or after January 1, 2021 for Group “B” institutions (institutions consolidated by the Bank), which would remain subject to the impairment model established by the BCRA through Communication “A” 2950, as amended. Such model requires that financial institutions recognize an allowance for loan losses based on the minimum guidelines set forth by the BCRA.

 

  b)

Measurement of the remaining investment held in Prisma Medios de Pago S.A.

By means of Memorandum No. 7/2019 dated April 29, 2019, the BCRA established the accounting treatment to be applied to the remaining investment held by the Entity in Prisma Medios de Pago S.A. recorded under “Investments in Equity Instruments” as of March 31, 2020 and December 31, 2019 (see Note 16).

 

  c)

Uncertain tax positions

The BCRA issued Memorandum No. 6/2017 dated May 29, 2017 regarding the treatment to be afforded to uncertain tax positions. Had the IFRS treatment regarding uncertain tax positions been applied, liabilities would have decreased by 5,447,078 and 5,871,923 as of March 31, 2020 and December 31, 2019, respectively.

The exceptions described above imply a deviation from IFRS.


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As this is an interim period, the Entity has opted to present condensed information, pursuant to the guidelines of IAS No. 34 “Interim Financial Information”; therefore, not all the information required for the preparation of complete financial statements under IFRS is included. Therefore, these financial statements should be read jointly with the financial statements as of December 31, 2019. However, explanatory notes of events and transactions that are material for understanding any changes in the financial position as from December 31, 2019 are included.

Furthermore, the B.C.R.A., through Communications “A” 6323 and 6324 set forth guidelines for the preparation and presentation of the financial statements of financial institutions for fiscal years beginning on or after January 1, 2018, including the additional reporting requirements as well as the information to be submitted as Exhibits.

These financial statements have been approved by the Board of Directors of Banco BBVA Argentina S.A. as of June 8, 2020.

 

3.

Functional and presentation currency

The Bank considers the Argentine Peso as the functional and presentation currency. All amounts are stated in thousands of pesos, unless otherwise stated.

As mentioned in Note 5.1, the Entity presents all the periods reflected in these financial statements in constant currency as of March 31, 2020.

 

4.

Accounting estimates and judgments

Significant judgments made by the Board of Directors in the application of accounting policies as well as the premises and estimates on uncertainties as of March 31, 2020 were the same as those described in Note 4.1. and 4.2. to the consolidated financial statements as of December 31, 2019.

In addition, the Group applies the same methodologies for the assessment of fair values and the same criteria for the classification of fair value levels as those described in Note 4.3. to the consolidated financial statements as of December 31, 2019.

 

5.

Significant accounting policies

In preparing these consolidated condensed financial statements, the Entity applied the same accounting policies as those relied on in preparing its financial statements as of December 31, 2019, with the following exceptions:

 

   

The adoption of IAS 29 “Financial Reporting in Hyperinflationary Economies” (“IAS 29”), as mandated by the BCRA through Communication “A” 6651, and

 

   

A change in the method applied for the calculation of the impairment of financial assets according to Communication “A” 6778 issued by the BCRA, which established the adoption of the expected loss model set forth under paragraph 5.5. of IFRS 9 to calculate allowances for loan losses, excluding debt instruments issued by the non-financial government sector from the scope of such standard (“IFRS 9 as per BCRA”).

Below is a description of the new accounting policies applied by the Entity:


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  5.1.

Adoption of IAS 29

IAS 29 requires that the financial statements of an entity whose functional currency is that of a hyperinflationary economy be stated in the measuring unit current at the reporting period end. IAS 29 provides certain qualitative and quantitative guidelines to determine the existence of a hyperinflationary economy. Accordingly, hyperinflation shall be deemed to exist where the last three years’ cumulative inflation approaches or exceeds 100%. In Argentina, consensus has been reached among local professional associations in that, commencing on July 1, 2018, the Argentine economy should be regarded as hyperinflationary based on the guidelines established in IAS 29.

By means of Communication “A” 6651, as amended, the BCRA mandated the retroactive application of IAS 29 to fiscal years beginning on or after January 1, 2020.

Entities should rely on the following price indexes for such purposes:

 

   

for items subsequent to December 2016: Consumer Price Index (CPI) compiled by the Argentine Institute of Statistics and Census (“INDEC”); and

 

   

for items previous to December 2016: The price index released by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE).

Under IAS 29, assets and liabilities which are not stated in the measuring unit current at the end of the reporting period should be adjusted for the pertinent price index. The adjusted value of a non-monetary item is written down if it exceeds its recoverable value.

The Entity recognized the impact of the adoption of IAS 29 at the beginning of the first comparative period (January 1, 2019) under Unappropriated retained earnings. All items of the consolidated statements of income and other comprehensive income are restated into the measuring unit current at the reporting period end (March 31, 2020). The gain or loss on net monetary position is recognized in the (consolidated) statement of income.

The Bank prepares its financial statements based on the historical cost approach, and has applied the guidelines of IAS 29 as follows:

 

  a)

the statement of financial position as of January 1, 2019 was restated, which is the oldest financial information reported;

 

  b)

the statement of financial position as of March 31, 2019 was restated;

 

  c)

the statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the three-month period ended March 31, 2019 were restated, calculating and separately disclosing the gain or loss on net monetary position;

 

  d)

the statement of financial position as of December 31, 2019 was restated;

 

  e)

the statement of financial position as of March 31, 2020 was restated;

 

  f)

the statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the three-month period ended March 31, 2020 were restated, calculating and separately disclosing the gain or loss on net monetary position.

In applying IAS 29 to the statement of financial position, the Bank has relied on the following methodology and criteria:

 

  a)

Non-monetary assets were restated applying the price index. The restated amounts were written down to their recoverable values, applying the pertinent IFRS, where appropriate.

 

  b)

Monetary assets were not restated.

 

  c)

Assets and liabilities contractually related to changes in prices, such as index-linked securities and loans, were measured on the basis of the pertinent contract.


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  d)

The measurement of investments accounted for under the equity method was based on associates’ and joint businesses’ information prepared in accordance with IAS 29.

 

  e)

Deferred income tax assets and liabilities were recalculated on the basis of the restated amounts.

 

  f)

As of January 1, 2019, all shareholders’ equity items, other than Unappropriated retained earnings, were restated by applying the price index as from the date of contribution or origination.. In subsequent periods, all shareholders’ equity items were restated applying the price index since the beginning of the year, or since the contribution date, if later.

In applying IAS 29 to the statements of income, other comprehensive income and cash flows, the Bank has relied on the following methodology and criteria:

 

  a)

all items of the statements of income, other comprehensive income and cash flows were restated into the measuring unit current at March 31, 2020;

 

  b)

the gain or loss on net monetary position is recognized in the statement of income; and

 

  c)

gains or losses on cash and cash equivalents are disclosed in the statement of cash flows separately from the cash flows from operating, investing and financing activities, as a reconciling item between cash and cash equivalents at the beginning and at the end of the period.

Below is a summary of the main impacts from the application of IAS 29 on shareholders’ equity as of January 1, 2019 and December 31, 2019, recognized in Unappropriated retained earnings:

 

     12.31.19      01.01.19  

Equity before applying IAS 29

     63,387,906        38,381,313  

Total impact of application of IAS 29 (1)

     15,011,758        5,177,957  

Equity in terms of measuring unit current as of December 31,
2019 / January 1, 2019

     78,399,664        43,559,270  

Adjustment for restatement of equity to measuring unit current as of March 31, 2020 (2)

     6,114,782        28,675,286  

Equity in terms of measuring unit current as of March 31, 2020

     84,514,446        72,234,556  

Total recognized in Unappropriated Retained Earnings (1) + (2)

     21,126,540        33,853,243  

Below is a summary of the main impacts from the application of IAS 29 on the Bank’s statement of income for the three-month period ended March 31, 2019:

 

     03.31.19  

Income for the period before applying IAS 26

     5,827,051  

Total impact of application of IAS 29

     (1,035,824

Income in terms of measuring unit current as of December 31, 2019 / January 1, 2019

     4,791,227  

Adjustment for restatement of income to measuring unit current as of March 31, 2020

     2,316,884  

Income in terms of measuring unit current as of March 31, 2020

     7,108,111  


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  5.2.

Impairment of financial assets

By means of Communication “A” 6778, as amended, the BCRA established the adoption of the expected loss model set forth under paragraph 5.5. of IFRS 9 to calculate allowances for loan losses, excluding debt instruments issued by the non-financial government sector from the scope of such standard (“IFRS 9 as per BCRA”), effective since January 1, 2020, with retroactive effects. The impact of the change in accounting policy is recognized in Unappropriated retained earnings as of January 1, 2019, which is the transition date.

Below is a description of the accounting policy applied in preparing these financial statements and before:

a) Since January 1, 2020

The Bank recognizes an allowance for loan losses on the basis of the expected credit loss model, for the following financial instruments which are not measured at fair value through profit or loss:

 

   

financial assets that are debt instruments,

 

   

lease receivables,

 

   

financial guarantee contracts, and

 

   

loan commitments.

No impairment is recognized in respect of debt instruments issued by the non-financial government sector or in respect of equity instruments.

The Bank measures the allowance for loan losses as the expected credit losses for the following twelve months on financial instruments (other than lease receivables) which have not experienced a significant increase in credit risk since initial recognition. The expected credit losses for the following 12 months represent the portion of expected credit losses resulting from a default event on a financial instrument which is likely to occur within 12 months after the reporting period end.

As for the rest, the Bank measures the allowance for loan losses for an amount equal to the expected credit losses throughout the instrument lifetime.

An allowance for loan losses related to lease receivables is always measured for an amount equal to the expected credit losses throughout the instrument lifetime.

Measurement of expected credit losses (ECL)

ECLs are a weighted average, which is calculated by considering:

 

   

financial assets that are not impaired at the reporting period end: the present value of the difference between cash flows owing to the Bank calculated on the basis of contractual terms, and the cash flows the Bank expects to receive;

 

   

financial assets that are impaired at the reporting period end: it is the difference between the carrying amount (before allowances) and the estimated present value of future cash flows;

 

   

undisbursed loan commitments: the present value of the difference between contractual cash flows if the Bank grants a loan, and the cash flows the Bank expects to receive;

 

   

financial guarantee contracts: payments expected to be reimbursed to the guarantee holder, net of any amount the Bank expects to recover.


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Restructured financial assets

If the terms of a financial asset are renegotiated or amended, or if the financial asset is replaced for another one as a consequence of debtor’s financial distress, then such financial asset will be assessed for derecognition, and an allowance for loan losses will be calculated as follows.

 

   

If the expected restructuring will not result in the derecognition of the existing asset, then, the expected cash flows from the restructured financial asset is considered.

 

   

If the expected restructuring will result in the derecognition of the existing asset, then, the fair value of the new asset is considered as the final cash flow from the existing financial asset.

Impaired financial assets

At each reporting period end, the Bank assesses assets measured at amortized cost and debt instruments (financial assets) measured at fair value through OCI for impairment. A financial asset is impaired when one or more events have occurred having a negative impact on the estimated cash flows from the financial asset.

Evidence that a financial asset is impaired includes the following observable inputs:

 

   

borrower’s or issuer’s significant financial distress,

 

   

contractual breach,

 

   

restructuring of a loan under conditions the Bank would not otherwise agree to,

 

   

when borrower is likely to go into bankruptcy or other form of financial reorganization, or

 

   

disappearance of an active market for a security due to issuer’s financial distress.

A loan that was renegotiated due to an impairment in borrower’s credit status is usually deemed impaired, unless objective evidence exists that the risk of not receiving contractual cash flows has decreased, with no other evidence of impairment. In addition, a consumer loan over 90 days past due is deemed impaired.

Recognition of the allowance for expected credit losses

The allowance for expected credit losses is recognized as follows:

 

   

Financial assets measured at amortized cost: as a write-down of the asset carrying amount.

 

   

Financial assets measured at fair value through OCI: no allowance is recognized in the statement of financial position because the assets are measured at fair value. However, the allowance for expected credit losses is recognized in OCI.

 

   

Loan commitments and financial guarantees contracts: recognized under the line Provision for contingent commitments in liabilities in the statement of financial position.

Derecognitions

Loans are derecognized (partially or totally) when there are no realistic expectations of recovery.

b) Prior to January 1, 2020

Prior to January 1, 2020, the Entity recognized the impairment of financial assets according to Communication “A” 2950, as amended, issued by the BCRA. As mandated by such regulation, the Bank was required to:

 

   

classify debtors based on their “status” pursuant to the guidelines of the BCRA, and

 

   

recognize an allowance for loan losses based on a schedule that indicated the percentage rates to be accrued for, taking into consideration debtor’s standing and guarantees in force.


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The BCRA required that customers within the “commercial portfolio” be analyzed and classified on an individual basis. The commercial portfolio included loans exceeding an amount set forth by the BCRA, with repayment being related to the course of customer’s productive or business activity. The assessment of debtor’s repayment capacity was based on financial flows estimated on the basis of updated financial information and industry parameters, taking into consideration other circumstances of the business activity.

The “consumer portfolio”, in turn, was analyzed globally, and debtors were classified based on the days in arrears. The consumer portfolio included consumer loans, housing loans and loans up to an amount set forth by the BCRA.

Increases in the allowance for loan losses related to “Loans and other financing” were recognized in “Loan loss allowances” in the consolidated Statement of income.

c) Effect of the change in accounting policy

The effect of the change in the accounting policy for the assessment of impairment of financial assets as at the transition date (January 1, 2019) is shown below:

 

Description

  As per financial statements
as of December 31, 2018
    As per financial statements
as of December 31, 2018
restated in currency as of
March 31, 2020
    Effect of change in
accounting policy (1)
    As of January 1, 2019-
modified balances
 

Other financial assets

    84,321       139,830       —         139,830  

Loans and other financing

    4,258,239       7,061,458       (265,489     6,795,969  

Other financial institutions

    85,488       141,765       (86,237     55,528  

Non-financial private sector and residents abroad

    4,172,751       6,919,693       (179,252     6,740,441  

Overdrafts

    110,147       182,657       105,813       288,470  

Instruments

    1,164,674       1,931,385       (1,526,070     405,315  

Mortgage loans

    99,518       165,031       (63,914     101,117  

Pledge loans

    44,250       73,380       (32,378     41,002  

Personal loans

    808,085       1,340,051       16,796       1,356,847  

Credit cards

    1,359,528       2,254,512       328,028       2,582,540  

Finance leases

    47,227       78,317       (9,726     68,591  

Other

    539,322       894,360       1,002,199       1,896,559  

Other debt securities

    1,314       2,179       (119     2,060  

Contingent commitments

    1,483       2,459       591,760       594,219  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    4,345,357       7,205,926       326,152       7,532,078  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

  (1)

The effect of the change in the accounting policy does not include the impact of the deferred income tax.

The effect of the change in the accounting policy for the assessment of impairment of financial assets as at January 1, 2020 is shown below:

 

Description

  As per financial statements
as of December 31, 2019
    As per financial statements
as of December 31, 2019
restated in currency as of
March 31, 2020
    Effect of change in
accounting policy (1)
    As of January 1, 2020-
modified balances
 

Other financial assets

    2,162,652       2,331,328       (2,087,366     243,962  

Loans and other financing

    8,329,232       8,978,871       3,288,965       12,267,836  

Other financial institutions

    37,174       40,073       114,061       154,134  

Non-financial private sector and residents abroad

    8,292,058       8,938,798       3,174,904       12,113,702  

Overdrafts

    107,287       115,655       568,693       684,348  

Instruments

    2,822,022       3,042,126       (2,055,328     986,798  

Mortgage loans

    147,239       158,723       (5,948     152,775  

Pledge loans

    207,012       223,158       (12,315     210,843  

Personal loans

    1,244,638       1,341,714       116,711       1,458,425  

Credit cards

    2,409,126       2,597,026       1,057,754       3,654,780  

Finance leases

    89,627       96,617       41,622       138,239  

Other

    1,265,107       1,363,779       3,463,715       4,827,494  

Other debt securities

    784       845       (108     737  

Contingent commitments

    925       997       975,530       976,527  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    10,493,593       11,312,041       2,177,021       13,489,062  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

  (1)

The effect of the change in the accounting policy does not include the impact of the deferred income tax.    


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  d)

Accounting policy applicable to Group “B” financial institutions (consolidated subsidiaries PSA and VWFS)

As mentioned in Note 2 to these financial statements, the BCRA issued Communication “A” 6938 deferring the application of the impairment model set forth in paragraph 5.5 “Impairment” of IFRS No. 9 until the fiscal years beginning on January 1, 2021 for financial institutions within Group “B”. Therefore, such financial institutions shall continue applying the model for recognizing loan losses from financial assets established by the BCRA by way of Communication “A” 2950, as amended.

 

  5.3

Comparative information

The consolidated statement of financial position as of March 31, 2020 is presented on a comparative basis to the balances for the previous year, while the consolidated statements of income, other comprehensive income, changes in shareholders’ equity, and cash flows, and their related notes for the three-month period ended March 31, 2020, are presented on a comparative basis to the balances as of the same period the previous year. The comparative information was restated and includes the changes indicated in Notes 3.2 and 5.1 to these condensed interim financial statements.

 

6.

IFRS issued but not yet effective for financial institutions

 

  6.1

New regulations

Pursuant to the provisions of Communication “A” 6114 issued by the BCRA, as the new IFRS are approved, or the current IFRSs are modified or repealed and, once such changes are adopted by means of the Adoption Circulars issued by the FACPCE, the BCRA shall issue a statement of its approval for financial institutions. In general, early adoption of an IFRS shall not be allowed, unless specifically admitted when adopted.

The IASB issued “Classification of Liabilities as Current or Non-current (Amendments to IAS 1)”, effective since fiscal years beginning on or after January 1, 2022. Such amendment:

 

   

clarifies that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period;

 

   

clarifies that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and

 

   

makes clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

This amendment was not early adopted by the Bank in these condensed interim financial statements.

 

  6.2

Other amendments to the financial reporting framework set forth by the BCRA

By means of Communication “A” 7014 dated May 14, 2020, the BCRA mandated that, since then, debt instruments issued by the government sector received in exchange for other instruments should be measured upon initial recognition at the carrying amount as of that date of the instruments delivered in replacement thereof. Therefore, such exchange does not have an impact on the statement of income.

There are no other standards which have not come effective yet and which are expected to have a material impact on the Entity.


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7.

Cash and deposits in banks

Breakdown in the consolidated condensed statement of financial position and the balance of cash and cash equivalents computed for the purposes of the preparation of the consolidated condensed statement of cash flows is as follows:

 

     03.31.20      12.31.19  

BCRA - Current account

     104,799,668        115,885,703  

Cash

     37,326,337        50,368,207  

Balances with other local and foreign institutions

     4,392,281        2,193,493  
  

 

 

    

 

 

 

TOTAL

     146,518,286        168,447,403  
  

 

 

    

 

 

 

 

8.

Debt securities at fair value through profit or loss

 

     03.31.20      12.31.19  

BCRA Bills

     8,906,573        4,295,267  

Private securities - Corporate bonds

     101,377        100,904  

Government securities

     51,279        55,917  
  

 

 

    

 

 

 

TOTAL

     9,059,229        4,452,088  
  

 

 

    

 

 

 

 

9.

Derivatives

Bank:

In the ordinary course of business, the Bank carried out foreign currency forward transactions with daily or upon-maturity settlement of differences, with no delivery of the underlying asset and interest rate swap transactions. These transactions do not qualify as hedging pursuant to IFRS No. 9 - “Financial Instruments”.

The aforementioned instruments are measured at fair value and were recognized in the condensed consolidated statement of financial position in the item “Derivative instruments”. Changes in fair values were recognized in the consolidated condensed statement of income in “Net income/(loss) from measurement of financial instruments at fair value through profit or loss”.

As of March 31, 2020, the Bank has accounted for premiums from put options taken in respect of the Bank’s right to sell its equity interest in Prisma Medios de Pago S.A. to the buyer as of December 30, 2021. Such equity interest was measured at fair value, as calculated by management in reliance of a report prepared by independent appraisers (Note 43).

Subsidiaries:

On the other hand, PSA Finance Argentina Compañía Financiera S.A. performed interest rate swaps with the Bank and with third parties, which are recognized by the subsidiaries as cash flow hedge. The actual portion of the cumulative change in the fair value of swaps pending subsequent recognition in income is recognized in other comprehensive income under the caption “Profits or losses from hedge instruments—Cash flow hedge.” The balance sheet, profit & loss, and comprehensive income balances related to swaps entered into by and between the Bank and its subsidiaries were eliminated during the consolidation process.


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Breakdown is as follows:

Assets

 

     03.31.20      12.31.19  

Debit balances linked to foreign currency forwards pending settlement in pesos

     1,470,425        2,541,372  

Premiums for put options taken - Prisma Medios de Pago S.A.

     685,000        738,427  

Debit balances linked to interest rate swaps from fixed to floating

     —          4,890  
  

 

 

    

 

 

 

TOTAL

     2,155,425        3,284,689  
  

 

 

    

 

 

 

Liabilities

 

     03.31.20      12.31.19  

Credit balances linked to foreign currency forwards pending settlement in pesos

     283,876        3,154,818  

Credit balances linked to interest rate swaps from floating to fixed

     47,715        157,803  
  

 

 

    

 

 

 

TOTAL

     331,591        3,312,621  
  

 

 

    

 

 

 

The notional amounts of the forward transactions and foreign currency forwards, stated in US Dollars (US$) and in Euros as applicable, as well as the base value of interest rate swaps are reported below:

 

     03.31.20      12.31.19  

Foreign currency Forwards

     

Foreign currency forward purchases - US$

     1,139,766        618,497  

Foreign currency forward purchases - Euros

     961        35  

Foreign currency forward sales - US$

     1,132,625        620,956  

Foreign currency forward sales - Euros

     300        1,804  

Interest rate swaps

     

Fixed rate for floating rate (1)

     800,030        1,500,050  

Floating rate for fixed rate

     —          92,463  

 

(1)

Floating rate: Badlar rate, interest rate for deposits of more than one million pesos, for 30-35 day terms.

 

10.

Repo transactions

Breakdown is as follows:

Reverse repurchase transactions

 

     03.31.20      12.31.19  

Amounts receivable for reverse repurchase transactions of BCRA Liquidity Bills with the BCRA

     3,201,694        —    
  

 

 

    

 

 

 

TOTAL

     3,201,694        —    
  

 

 

    

 

 

 


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11.

Other financial assets

Breakdown of other financial assets is as follows:

 

     03.31.20      12.31.19  

Measured at amortized cost

     

Financial debtors from spot transactions pending settlement

     11,587,607        273,297  

Other receivables

     4,126,226        1,732,723  

Receivables from sale of ownership interest in Prisma Medios de Pago S.A.
(Note 16.1)

     1,934,456        2,028,658  

Non-financial debtors from spot transactions pending settlement

     669        29,945  

Other

     84,023        182,961  
  

 

 

    

 

 

 
     17,732,981        4,247,584  
  

 

 

    

 

 

 

Measured at fair value through profit or loss
Mutual funds

     1,056,505        1,052,745  
  

 

 

    

 

 

 
     1,056,505        1,052,745  
  

 

 

    

 

 

 

Allowance for loans losses (Exhibit R)

     (248,392      (243,962
  

 

 

    

 

 

 

TOTAL

     18,541,094        5,056,367  
  

 

 

    

 

 

 

 

12.

Loans and other financing

The Group keeps loans and other financing under a business model for the purpose of collecting contractual cash flows. Therefore, it measures loans and other financing at amortized cost. Below is a breakdown of the related balance:

 

     03.31.20      12.31.19  

Non-financial government sector

     581        493  

BCRA

     11,273        18,763  

Other financial institutions

     5,113,404        5,603,439  

Overdrafts

     29,505,886        15,520,217  

Discounted instruments

     12,207,134        13,298,402  

Unsecured instruments

     8,633,733        12,246,606  

Mortgage loans

     15,106,043        15,255,182  

Pledge loans

     8,506,497        9,332,296  

Consumer loans

     23,815,211        25,435,239  

Credit Cards

     70,380,730        77,686,619  

Loans for the prefinancing and financing of exports

     27,075,155        19,723,114  

Receivables from finance leases

     1,724,746        2,037,186  

Loans to personnel

     1,827,114        1,848,082  

Other financing

     26,690,824        24,783,863  
  

 

 

    

 

 

 
     230,598,331      222,789,501  

Allowance for loan losses (Exhibit R)

     (12,060,662      (12,267,836
  

 

 

    

 

 

 

TOTAL

     218,537,669        210,521,665  
  

 

 

    

 

 

 


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Finance leases

The Group, as lessor, entered into finance leases related to vehicles, machinery and equipment.

The following table shows the total gross investment of finance leases (leasing) and the current value of minimum payments to be received thereunder:

 

     03.31.20      12.31.19  
     Total
investment
     Current value
of minimum
payments
     Total
investments
     Current value
of minimum
payments
 
Term

Up to 1 year

     1,195,860        925,417        1,029,699        1,026,430  

From 1 to 5 years

     1,025,525        799,329        1,013,907        1,010,756  
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     2,221,385        1,724,746        2,043,606        2,037,186  
  

 

 

    

 

 

    

 

 

    

 

 

 

Principal

        1,691,544           2,011,070  

Interest accrued

        33,202           26,116  
     

 

 

       

 

 

 

TOTAL

        1,724,746           2,037,186  
     

 

 

       

 

 

 

The breakdown of loans and other financing according to credit performance (determined as per the criteria set forth by the BCRA in the debtor classification regulations) and guarantees received are presented in Exhibit B. The information on the concentration of loans and other financing is presented in Exhibit C. The reconciliation of the information included in that Exhibit with the carrying amounts is shown below:

 

     03.31.20      12.31.19  

Total Exhibits B and C

     233,090,489        224,732,012  

Plus:

     

BCRA

     11,273        18,763  

Loans to personnel

     1,827,114        1,848,086  

Interest and other items accrued receivable from financial assets with credit value impairment

     134,678        —    

Less:

     

Allowance for loan losses (Exhibit R)

     (12,060,662      (12,267,836

Adjustments for effective interest rate

     (1,482,443      (1,542,261

Corporate bonds

     (92,468      (104,965

Loan commitments

     (2,890,312      (2,162,132
  

 

 

    

 

 

 

Total loans and other financing

     218,537,669        210,521,665  
  

 

 

    

 

 

 

As of March 31, 2020, and December 31, 2019, the Group holds the following contingent transactions booked in off-balance sheet accounts according to the financial reporting framework set forth by the BCRA:

 

     03.31.20      12.31.19  

Overdrafts and receivables agreed not used

     1,448,075        335,637  

Guarantees granted

     541,453        545,772  

Liabilities related to foreign trade transactions

     323,234        953,960  

Secured loans

     577,550        326,764  
  

 

 

    

 

 

 
     2,890,312        2,162,132  
  

 

 

    

 

 

 


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Risks related to the aforementioned contingent transactions are evaluated and controlled in the framework of the Group’s credit risks policy.

 

13.

Other debt securities

 

  13.1

Financial assets measured at amortized cost

 

     03.31.20      12.31.19  

Corporate bonds under credit recovery transactions

     83        89  
  

 

 

    

 

 

 
     83        89  
  

 

 

    

 

 

 

Allowance for loan losses - Private securities (Exhibit R)

     (83      (89
  

 

 

    

 

 

 

TOTAL

     —          —    
  

 

 

    

 

 

 

 

  13.2

Financial assets measured at fair value through other comprehensive income

 

     03.31.20      12.31.19  

BCRA Liquidity Bills

     47,264,185        31,344,519  

Government securities

     17,415,746        17,282,071  

Private securities - Corporate bonds

     77,085        75,621  
  

 

 

    

 

 

 
     64,757,016        48,702,211  
  

 

 

    

 

 

 

Allowance for loan losses - Private securities (Exhibit R)

     (610      (648
  

 

 

    

 

 

 

TOTAL

     64,756,406        48,701,563  
  

 

 

    

 

 

 

 

14.

Financial assets pledged as collateral

The breakdown of the financial assets pledged as collateral as of March 31, 2020 and December 31, 2019 is included below:

 

            03.31.20      12.31.19  

Deposits as collateral

     (3      3,665,447        3,263,337  

BCRA - Special guarantee accounts (Note 51)

     (1      2,310,245        3,048,446  

Guarantee Trust - Pesos

     (2      839,725        73,670  
     

 

 

    

 

 

 

TOTAL

        6,815,417        6,385,453  
     

 

 

    

 

 

 

 

(1)

Special guarantee current accounts opened at the BCRA for the transactions related to the automated clearing houses and other similar entities.

(2)

Set up as collateral to operate with ROFEX and MAE on foreign currency forward transactions and futures contracts. The trust fund consists of pesos and monetary regulation instruments issued by the BCRA.

(3)

Deposits pledged as collateral for activities related to credit card transactions in the country and abroad, leases and futures contracts.


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15.

Income Tax:

 

  a)

Current income tax assets

 

     03.31.20      12.31.19  

Advances

     24,622        28,220  
  

 

 

    

 

 

 
     24,622        28,220  
  

 

 

    

 

 

 

 

  b)

Current income tax liabilities

 

     03.31.20      12.31.19  

Income tax provision

     13,018,868        9,872,488  

Advances

     (1,431,765      (1,159,047

Collections and withholdings

     (9,342      (13,962
  

 

 

    

 

 

 
     11,577,761        8,699,479  
  

 

 

    

 

 

 

 

  c)

Income tax expense

Breakdown of income tax expense:

 

     03.31.20      03.31.19  

Current tax

     (3,974,720      (3,670,558

Deferred tax

     1,798,945        21,402  
  

 

 

    

 

 

 
     (2,175,775      (3,649,156
  

 

 

    

 

 

 

Pursuant to IAS No. 34, income tax is recognized in interim periods based on the best estimate of the weighted average effective income tax rate expected by the Entity for the full fiscal year.

Law No. 27468 amended the transition rules set forth by Law No. 27430 regarding the application of the inflation adjustment for tax purposes under the Income Tax Law, establishing that such adjustment will be applicable for fiscal years beginning on and after January 1, 2018, provided the changes in the Consumer Price Index (CPI), calculated since the beginning until the end of the fiscal year, are in excess of fifty five per cent (55%) during the first fiscal year, thirty per cent (30%) during the second fiscal year, and fifteen per cent (15%) during the third fiscal year. According to such law, one third of the resulting inflation adjustment, whether gain or loss, shall be recognized during that fiscal year, with the remaining two thirds being computed, in equal parts, over the two immediately following fiscal years.

The Social Solidarity and Productive Revival Law – published in the Official Gazette on December 23, 2019—maintains the inflation adjustment mechanism set out under Title VI of the Income Tax Law. Nevertheless, one sixth of the resulting inflation adjustment amount for the first and second fiscal years beginning on or after January 1, 2019 should be recognized during that fiscal year, with the remaining five sixths being computed, in equal parts, over the five immediately following fiscal years.


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Furthermore, the Social Solidarity and Productive Revival Law provides for the discontinuance of the application of the 25% income tax rate established under Section 86, paragraph d), of Law No. 27430 until fiscal years beginning on and after January 1, 2022. For as long as the application of such rate remains suspended, the income tax rate will amount to 30%. Accordingly, the application of the 13% income tax rate on dividend distributions has also been discontinued for the same fiscal years. Such rate has been set at 7%.

Considering that, as of the date of these financial statements, the CPI variation exceeded the 15% limit applicable to the third year, the Entity’s management has included the estimated tax loss for inflation in the provision for income tax. The effect of the deferral of the respective five sixths has been recognized as a deferred tax asset.

 

   

Income tax– Inflation adjustment for tax purposes. Fiscal years 2016, 2017 and 2018.

On May 10, 2017, May 10, 2018 and May 13, 2019, and based on related case law, the Entity approved the filing of actions for declaratory judgment of unconstitutionality of Section 39 of Law 24073, Section 4 of Law 25561, Section 5 of Decree No. 214/02 issued by the Argentine Executive, Law 27468 and any other regulation whereby the inflation adjustment mechanism provided for under Law 20628, as amended, is considered not applicable due to the confiscatory effect on the specific case, for fiscal years 2016, 2017 and 2018. Consequently, the Entity filed its Income Tax Returns for such fiscal years taking into consideration the effect of those restatement mechanisms.

The net impact of this measure is an adjustment to the Income Tax assessed for the fiscal year ended December 31, 2016 in the amount of 1,185,800 with the fiscal year ended December 31, 2017 in the amount of 1,021,518 and the fiscal year ended December 31, 2018, in the amount of 3,239,760.

Through Memorandum No. 6/2017 dated May 29, 2017, the BCRA, without resolving on the decisions adopted by the authorities of the Entity or the right of the Entity regarding the action filed, in its capacity as issuer of accounting standards, requested the Entity to record a provision for contingencies included in “Liabilities” in an amount equivalent to the income recorded, as it considers that “a reassessment of the income tax by applying the inflation adjustment is not addressed by the BCRA regulations”.

In response to this Memorandum, the Entity filed the related answer and confirmed its position by providing the relevant supporting documentation. Notwithstanding the foregoing, the Entity recorded the requested provision in the “Provisions” account under liabilities and in “Other operating expenses” in the statement of income, pursuant to the accounting standards prescribed by the regulator for this case.

As a result of the assessment made and based on the opinion of its legal and tax advisors, the Entity considers that it is highly likely for the Entity to obtain a final favorable judgment supporting the idea that this period’s income tax shall be assessed including the tax inflation adjustment, based on the confiscatory nature of the rate that would result from not applying said adjustment in the fiscal years ended December 31, 2018, 2017 and 2016.

Therefore, the recognition of the provision for contingencies required by the BCRA results in a deviation from IFRS, as stated in Note 2.

 

   

Income tax – Requests for recovery of payments. Fiscal years 2013, 2014 and 2015.

Regarding fiscal years 2013, 2014 and 2015, the Entity assessed income tax without applying the tax inflation adjustment, consequently a higher tax was paid in the amounts of 264,257, 647,945 and 555,002 for those periods.

Based on the grounds stated above, on November 19, 2015, a request for recovery of the payments made was filed at the administrative stage for periods 2013 and 2014, and the related complaint was filed at the judicial stage on September 23, 2016 for both periods, given that no answer to the request above was received.


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In turn, on April 4, 2017, a request for recovery of the payments made for the higher amount of tax paid for fiscal year 2015 was filed. Likewise, on December 29, 2017, the related complaint was filed at the judicial stage for this fiscal year.

As of the date of these financial statements, the tax authorities have not issued a resolution regarding the claims filed.

Pursuant to the financial reporting framework set forth by the BCRA, the Entity does not record assets in relation to contingent assets derived from the claims filed.

 

16.

Investments in equity instruments

Investments in equity instruments for which the Group has no control, joint control or a significant influence are measured at fair value through profit or loss and at fair value through other comprehensive income. Breakdown is as follows:

 

  16.1

Investments in equity instruments through profit or loss

 

     03.31.20      12.31.19  

Prisma Medios de Pago S.A. (1)

     1,694,185        2,032,301  

BYMA-Bolsas and Mercados Argentinos S.A.

     43,392        67,762  

Mercado de Valores de Buenos Aires S.A.

     58,750        86,644  
  

 

 

    

 

 

 

TOTAL

     1,796,327        2,186,707  
  

 

 

    

 

 

 

 

(1)

This balance is related to the amount of 2,252,139 shares held in Prisma Medios de Pago S.A., representing 5.44% of such company’s capital stock. Said investment was measured at fair value estimated by the Management based on the report prepared by independent professionals, net of the valuation adjustment required by the BCRA in Memorandum No. 7/2019 and the collection of dividends. The accounting criterion applied as stated above constitutes a deviation from IFRS.

On February 1, 2019, the transfer of 2,344,064 registered, common shares with a nominal value of $ 1 each and one vote per share, owned by the Bank in Prisma Medios de Pago S.A. was made for the benefit of AI Zenith (Netherlands) B.V. (company related to Advent International Global Private Equity).

In accordance with the provisions of the Offer for the purchase of those shares by AI Zenith (Netherlands) B.V., and accepted by the Bank, the total estimated price adjusted was USD 78,265,273, out of which, on February 1, 2019, the Bank received USD 46,457,210, and the unpaid balance is deferred over the following 5 (five) years and settled as follows; (i) 30% of that amount shall be paid in pesos, adjusted by CER (UVA) at an annual nominal rate of 15% and (ii) 70% in US Dollars at an annual nominal rate of 10 %.

On July 22, 2019, the Entity completed the assessment of the selling price of the shares. Such price amounts to USD 76,947,895.33. The gap between the final price and the estimated price was discounted from the outstanding balance; therefore, the Bank did not have to return the funds it had received. The transaction terms included a put option, pursuant to which the Bank is entitled to sell the remaining shares in Prisma Medios de Pago S.A. to the buyer as of December 31, 2021 (see Note 9).

The other payment conditions have remained unaltered.

As a consequence of this transaction as of December 31, 2019, a profit of 4,186,430 (2,644,937 in nominal values) is recognized in “Other operating income” as of March 31, 2019 (Note 38).


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  16.2

Investments in equity instruments through other comprehensive income

 

     03.31.20      12.31.19  

Banco Latinoaméricano de Exportaciones S.A.

     14,490        28,444  

Other

     1,036        1,060  
  

 

 

    

 

 

 

TOTAL

     15,526        29,504  
  

 

 

    

 

 

 

 

17.

Investments in Associates

 

     03.31.20      12.31.19  

Rombo Compañía Financiera S.A.

     689,573        708,983  

BBVA Consolidar Seguros S.A.

     315,133        285,244  

Interbanking S.A.

     121,673        122,520  
  

 

 

    

 

 

 

TOTAL

     1,126,379        1,116,747  
  

 

 

    

 

 

 

 

18.

Property and equipment

 

     03.31.20      12.31.19  

Real estate

     18,719,767        18,871,712  

Furniture and facilities

     4,107,896        4,270,428  

Right of use of leased real estate (Note 29)

     2,346,867        2,521,914  

Machinery and equipment

     1,720,309        2,052,792  

Constructions in progress

     393,152        346,599  

Vehicles

     43,690        41,727  
  

 

 

    

 

 

 

TOTAL

     27,331,681        28,105,172  
  

 

 

    

 

 

 

 

19.

Intangible Assets

 

     03.31.20      12.31.19  

Licenses - Software

     919,168        840,905  
  

 

 

    

 

 

 

TOTAL

     919,168        840,905  
  

 

 

    

 

 

 

 

20.

Other non-financial assets

 

     03.31.20      12.31.19  

Investment properties

     1,514,335        1,527,590  

Prepayments

     1,431,153        1,552,909  

Tax advances

     702,154        624,915  

Other miscellaneous assets

     303,678        243,919  

Advances to suppliers of goods

     250,088        256,900  

Assets acquired as security for loans

     14,158        15,440  

Advances to personnel

     1,077        350,843  

Other

     43,518        31,700  
  

 

 

    

 

 

 

TOTAL

     4,260,161        4,604,216  
  

 

 

    

 

 

 


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21.

Non-current assets held for sale

On December 19, 2018, the Board of Directors agreed to a plan to sell a group of real property assets located in Argentina. Therefore, these assets, the value of which, as of March 31, 2020 and December 31, 2019 amounts to 178,903, were classified as “Non-current assets held for sale”, after the efforts to sell that group of assets began.

 

22.

Deposits

The information on concentration of deposits is disclosed in Exhibit H.

Breakdown is as follows:

 

     03.31.20      12.31.19  

Non-financial government sector

     3,473,308        3,167,294  

Financial sector

     286,915        192,337  

Non-financial private sector and residents abroad

     324,199,640        313,558,012  

Checking accounts

     63,268,050        58,212,147  

Savings accounts

     162,584,954        159,355,038  

Time deposits

     87,215,525        90,739,586  

Investment accounts

     13,952        83  

Other

     11,117,159        5,251,158  
  

 

 

    

 

 

 

TOTAL

     327,959,863        316,917,643  
  

 

 

    

 

 

 

 

23.

Liabilities at fair value through profit or loss

 

     03.31.20      12.31.19  

Obligations from government securities transactions

     —          626,102  
  

 

 

    

 

 

 

TOTAL

     —          626,102  
  

 

 

    

 

 

 

 

24.

Other financial liabilities

 

     03.31.20      12.31.19  

Obligations from financing of purchases

     14,219,318        18,293,703  

Creditors from spot transactions pending settlement

     11,718,423        129,811  

Collections and other transactions on behalf of third parties

     3,850,551        3,450,855  

Credit balance for spot purchases or sales pending settlement

     2,643,258        129,133  

Liabilities for leases (Note 29)

     2,554,223        2,713,017  

Payment orders pending credit

     2,302,796        2,090,054  

Accrued commissions payable

     18,315        15,711  

Interest accrued payable

     —          392,053  

Other

     5,523,344        3,859,052  
  

 

 

    

 

 

 

TOTAL

     42,830,228        31,073,389  
  

 

 

    

 

 

 


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25.

Financing received from the BCRA and other financial institutions

 

     03.31.20      12.31.19  

Local financial institutions

     3,108,485        3,873,173  

Foreign financial institutions

     278,528        2,737,230  

BCRA

     240,138        18,054  
  

 

 

    

 

 

 

TOTAL

     3,627,151        6,628,457  
  

 

 

    

 

 

 

 

26.

Corporate bonds issued

Below is a detail of corporate bonds in force as of March 31, 2020 and December 31, 2019 of the Bank and its subsidiaries:

 

Detail

   Issuance
date
     Nominal
value (in
thousands
of pesos)
     Maturity
date
    

Annual Nominal Rate

   Payment
of interest
     Outstanding
securities as
of 03.31.20
     Outstanding
securities as
of 12.31.19
 

Class 24

     12.27.2017        546,500        12.27.2020      Badlar Private + 4.25%      Quarterly        526,500        567,564  

Class 25

     11.08.2018        784,334        11.08.2020      UVA + 9.50%      Quarterly        1,426,898        1,394,968  

Class 27

     02.28.2019        1,090,000        08.28.2020      Badlar Private + 6.25%      Quarterly        891,000        960,494  

Class 28

     12.12.2019        1,967,150        06.12.2020      4%      Quarterly        1,967,150        2,120,578  

Classes 26 - 28 -  PSA Finance Argentina

     02.01.2018        542,833        06.17.2020      Badlar Private + annual nominal rate / Fixed rate     

Quarterly
/Upon
maturity
 
 
 
     265,500        672,090  

Classes 2 - 4 - 5 - 6 - 7 - Volkswagen Financial Services

     12.07.2018        2,485,042        02.27.2021      Badlar Private + annual nominal rate / UVA + annual nominal rate      Quarterly        2,043,022        1,803,845  
            Total Consolidated Principal         7,120,070        7,519,539  
            Consolidated Interest Accrued         378,473        372,863  
            Issuance Expenses         —          (2,470
                 

 

 

    

 

 

 
           

Total consolidated principal and interest accrued

        7,498,543        7,889,932  
                 

 

 

    

 

 

 

Definitions:

BADLAR RATE: it is the interest rate for time deposits over 1 (one) million pesos, for 30 to 35 days.

UVA RATE: it is a measurement unit updated on a daily basis as per CER, according to the consumer price index.


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27.

Provisions

 

     03.31.20      12.31.19  

Provisions for reorganization (Exhibit J)

     1,870,192        2,130,236  

Provision for contingent commitments (Exhibit J and R)

     1,286,995        976,527  

Provisions for termination plans (Exhibit J)

     64,244        69,255  

For administrative, disciplinary and criminal penalties (Note 56 and Exhibit J)

     5,000        5,390  

Other contingencies (Exhibit J)

     8,047,382        8,404,535  

For reassessment of income tax due to adjustment for inflation (Note 15.c)

     5,447,078        5,871,923  

Provision for commercial lawsuits

     2,065,395        2,075,489  

Provision for labor lawsuits

     264,982        220,129  

Provision for tax lawsuits

     151,827        113,831  

Other

     118,100        123,164  
  

 

 

    

 

 

 

TOTAL

     11,273,813        11,585,943  
  

 

 

    

 

 

 

It includes the estimated amounts to pay highly likely liabilities which, in case of occurrence, would generate a loss for the Entity.

The breakdown and changes of provisions are included in Exhibit J. However, below is a brief description:

 

   

Reassessment of Income Tax due to the application of the inflation adjustment: it reflects the provision required by the BCRA through Memorandum No. 6/2017 dated May 29, 2017, as it was considered that the reassessment of the income tax by applying the inflation adjustment is not addressed by the current regulations. The Bank has answered the BCRA memorandum and evidenced the validity of the recognition timely made and has requested that it be reviewed. Notwithstanding the foregoing, the provision requested by the BCRA was set up.

 

   

Provisions for reorganization: Consistent with the goal of further aligning the organizational structure with the corporate strategy during the current year, achieving efficiency gains and streamlining the decision-making process across all work teams.

 

   

Contingent commitments: it reflects the credit risk arising from the assessment of the degree of compliance of the beneficiaries of unused overdrafts, unused credit card balances, guarantees, sureties and other contingent commitments for the benefit of third parties on behalf of customers, and of their financial position and the counter guarantees supporting those transactions.

 

   

Termination benefit plans: for certain terminated employees, the Bank bears the cost of private health care plans (total or partial) for a certain period after termination. The Bank does not bear any situations requiring medical assistance, but it only makes the related health care plan payments.

 

   

Administrative, disciplinary and criminal penalties: administrative penalties initiated by the Financial Information Unit, even if there were court or administrative measures to suspend payment and regardless of the status of the proceedings regarding penalties.

 

   

Other: it reflects the estimated amounts to pay tax, labor and commercial claims and miscellaneous complaints.

In the opinion of the Group’s Board of Directors and its legal advisors, there are no other significant effects other than those stated in these financial statements, the amounts and repayment terms of which have been recorded based on the actual value of those estimates, considering the probable date of their final resolution.


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In turn, as of March 31, 2020, approximately 100 contingent claims, including civil, commercial, labor and tax claims, which might potentially result in a loss, were brought against the Bank. All such claims have arisen in the ordinary course of business. These actions are primarily related to leasing claims, petitions to secure evidence, and labor claims. The Group’s management and legal advisors consider that these cases might, but are not likely to, result in cash outflows, and that the potential cash disbursements are not material.

 

28.

Other non-financial liabilities

Breakdown is as follows:

 

     03.31.20      12.31.19  

Miscellaneous creditors

     7,582,610        5,571,022  

Short-term personnel benefits

     3,701,461        4,520,516  

Other collections and withholdings

     2,599,858        3,315,114  

Advances collected

     2,510,644        2,810,066  

Other taxes payable

     1,093,038        1,314,079  

For contract liabilities

     481,664        413,688  

Social security payment orders pending settlement

     433,293        66,227  

Long-term personnel benefits

     296,265        330,391  

Other

     81,478        85,802  
  

 

 

    

 

 

 

TOTAL

     18,780,311        18,426,905  
  

 

 

    

 

 

 

 

29.

Leases

The Group as lessee

Below is a detail of the amounts of rights of use under leases and liabilities from leases in force as of March 31, 2020:

Rights of use under leases

 

     Initial
value as of
01.01.2020
     Increases      Decreases      Depreciation      Residual
value as of
03.31.2020
 

Account

   Accumulated
as of
01.01.2020
     Decreases      For
the
period (1)
     Accumulated
at period-end
 

Leased real property

     3,138,091        93,483        126,535        616,177        4,023        146,018        758,172        2,346,867  

 

(1)

See note 41

Liabilities from leases

Future minimum payments for lease agreements are as follows:

 

     In foreign currency      In local currency      03.31.20      12.31.19  

Up to one year

     137,855        15,190        153,045        90,258  

From 1 to 5 years

     1,247,301        160,226        1,407,527        1,322,610  

More than 5 years

     977,955        15,696        993,651        1,300,149  
        

 

 

    

 

 

 
           2,554,223        2,713,017  
        

 

 

    

 

 

 


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Interest and exchange rate difference recognized in profit or loss

 

     03.31.20      03.31.19  

Other operating expenses

     

Interest on liabilities from finance lease (Note 42)

     (76,526      (85,844

Exchange rate difference

     

Exchange rate difference for finance leases (loss)

     (109,421      (319,884

Other expenses

     

Leases (Note 40)

     (314,648      (262,501

 

30.

Share Capital

Breakdown is as follows:

 

Shares

     Share capital  

Class

   Quantity      Nominal
value
per
share
     Votes
per
share
     Shares
outstanding
     Pending
issuance or
distribution
     Paid-in
(1)
 

Common

     612,710,079        1        1        612,615        95        612,710  

 

(1)

Registered with the Public Registry of Commerce.

Banco BBVA Argentina S.A. is a corporation (sociedad anónima) incorporated under the laws of Argentina. The shareholders limit their liability to the shares subscribed and paid in, pursuant to the Argentine Companies Law (Law No. 19550). Therefore, and pursuant to Law No. 25738, it is reported that neither foreign capital majority shareholders nor local or foreign shareholders shall be liable in excess of the above mentioned capital contribution for obligations arising from transactions carried out by the financial institution.

The Shareholders’ Meeting held on June 13, 2017 approved the increase in share capital up to $ 145,000,000 (nominal value) by issuing 145,000,000 new registered, common shares with a nominal value of $ 1 each, one vote per share. The Board of Directors is granted the necessary authority to implement that capital increase and determine the issuance conditions.

On July 18, 2017, the issuance of 66,000,000 registered, common shares was approved, with a nominal value of $ 1 each, and a subscription price of USD 5.28 per share and USD 15.85 per each American Depositary Share (ADS), at the spot exchange rate published by the BCRA as of that date ($ 17.0267) for the purposes of paying the shares in pesos. On July 24, 2017, the shares subscribed were paid in.

Pursuant to the terms of the Shares Subscription Agreement, on July 26, 2017, International Underwriters opted to acquire 9,781,788 new shares (equivalent to 3,260,596 ADS) at the same issue price. On July 31, 2017, those shares were paid in, using the spot exchange rate stated.


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The Entity applied the funds obtained from the global offer and the exercise of preemptive subscription rights to continue with its growth strategy in the Argentine financial system.

On October 9, 2019, the CNV issued Resolution No. 20484/2019 concerning the merger of BBVA Francés Valores S.A. into the Bank. As such, the Bank was authorized to issue 50,441 registered common shares, with a nominal value of $ 1 and entitled to one (1) vote each for delivery to BBVA Francés Valores S.A.’s minority shareholders.

As of the date of these consolidated financial statements, the merger and the ensuing capital stock increase are in the process of being registered with the Argentine Superintendence of Corporations (IGJ).

On May 15, 2020, the Ordinary and Extraordinary Shareholders’ Meeting was held. At such meetings, the following distribution of earnings in nominal values was approved:

 

   

To Legal Reserve: 6,201,640

 

   

To Optional Reserve for future distribution of earnings: 24,806,560

On the other hand, the partial release of the Optional reserve for future distribution of earnings was approved, in order to appropriate 2,500,000 to the payment of cash dividends, subject to the BCRA’s previous consent.

 

31.

Interest income

 

     03.31.20      03.31.19  

Interest on government securities

     6,248,533        7,264,179  

Interest on credit card loans

     4,615,865        6,029,643  

Interest on instruments

     2,542,158        3,092,093  

Interst on overdrafts

     2,513,427        2,374,129  

Acquisition Value Unit (UVA) clause adjustment

     2,394,788        2,392,381  

Interest on consumer loans

     2,010,519        2,719,186  

Interest for other loans

     1,705,596        1,086,055  

Premiums on reverse repurchase agreements

     729,701        575,500  

Interest on pledge loans

     595,797        151,441  

Interest on loans to the financial sector

     347,949        1,091,569  

Interest on mortgage loans

     316,958        404,815  

Interest on loans for the prefinancing and financing of exports

     312,722        1,013,925  

Interest on finance leases

     111,855        190,506  

Stabilization Coefficient (CER) clause adjustment

     26,409        27,648  

Interest on private securities

     1,556        3,074  

Other

     138,669        622  
  

 

 

    

 

 

 

TOTAL

     24,612,502        28,416,766  
  

 

 

    

 

 

 

 

32.

Interest expenses

 

     03.31.20      03.31.19  

Time deposits

     6,449,798        10,856,809  

Other liabilities from financial transactions

     942,624        965,969  

Interfinancial loans received

     276,589        23,837  

Checking accounts deposits

     223,495        1,008,360  

Acquisition Value Unit (UVA) clause adjustments

     204,126        455,194  

Savings accounts deposits

     67,650        56,035  

Premiums on reverse repurchase agreements

     —          616  

Other

     7,004        5,876  
  

 

 

    

 

 

 

TOTAL

     8,171,286        13,372,696  
  

 

 

    

 

 

 


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33.

Commission income

 

     03.31.20      03.31.19  

Linked to liabilities

     2,879,825        3,076,806  

From credit cards

     1,800,672        1,669,599  

From insurance

     277,321        346,078  

From foreign trade and foreign currency transactions

     208,327        283,609  

Linked to loans

     199,710        488,631  

Linked to securities

     34,645        31,194  

From guarantees granted

     462        448  
  

 

 

    

 

 

 

TOTAL

     5,400,962        5,896,365  
  

 

 

    

 

 

 

 

34.

Commission expenses

 

     03.31.20      03.31.19  

From credit and debit cards

     2,932,661        2,705,700  

From payment of salaries

     186,924        262,611  

From digital sales services

     111,594        253,854  

From Fromeign trade transactions

     34,962        42,067  

From promotions

     28,914        27,185  

Linked to transactions with securities

     553        645  

Other commission expenses

     229,502        302,046  
  

 

 

    

 

 

 

TOTAL

     3,525,110        3,594,108  
  

 

 

    

 

 

 

 

35.

Net (loss)/income from financial instruments carried at fair value through profit or loss

 

     03.31.20      03.31.19  

Income from government securities

     930,181        1,352,309  

Income from foreign currency forward transactions

     230,624        186,980  

Income from private securities

     34,219        2,365,531  

Income/(loss) from interest rate swaps

     22,971        (186,731

Income from corporate bonds

     16,624        34,500  

(Loss) from loans

     (232,991      —    

Other

     (1,518      —    
  

 

 

    

 

 

 

TOTAL

     1,000,110        3,752,589  
  

 

 

    

 

 

 

 

36.

Net (loss) /income from writing-down assets carried at amortized cost and at fair value through OCI

 

     03.31.20      03.31.19  

(Loss) from sale of government securities

     (127,002      (6,264
  

 

 

    

 

 

 

TOTAL

     (127,002      (6,264
  

 

 

    

 

 

 

 

37.

Foreign exchange and gold gains/(losses)

 

     03.31.20      03.31.19  

Income from purchase-sale of foreign currency

     946,148        2,230,340  

Conversion of foreign currency assets and liabilities into pesos

     291,121        (254,575
  

 

 

    

 

 

 

TOTAL

     1,237,269        1,975,765  
  

 

 

    

 

 

 


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38.

Other operating income

 

     03.31.20      03.31.19  

Adjustments and interest on miscellaneous receivables

     249,512        295,947  

Rental of safe deposit boxes

     207,680        189,024  

Loans recovered

     162,347        120,758  

Allowances reversed

     88,176        62,842  

Debit and credit card commissions

     74,296        215,292  

Punitive interest

     57,301        48,493  

Income from sale of non-current assets held for sale (Note 16)

     —          4,186,430  

Other operating income

     199,655        149,225  
  

 

 

    

 

 

 

TOTAL

     1,038,967        5,268,011  
  

 

 

    

 

 

 

 

39.

Personnel benefits

 

     03.31.20      03.31.19  

Salaries

     2,671,702        2,581,180  

Social security charges

     785,690        709,413  

Personnel compensation and bonuses

     94,185        200,281  

Personnel services

     88,642        78,754  

Other short-term personnel benefits

     799,057        632,819  
  

 

 

    

 

 

 

TOTAL

     4,439,276        4,202,447  
  

 

 

    

 

 

 

 

40.

Administrative expenses

 

     03.31.20      03.31.19  

Taxes

     871,396        865,413  

Maintenance costs

     427,716        430,883  

Administrative expenses

     344,093        248,558  

Rent (Note 29)

     314,648        262,501  

Armored transportation services

     276,646        255,444  

Other fees

     240,230        138,733  

Electricity and communications

     222,738        170,128  

Advertising

     178,893        187,151  

Security services

     110,037        132,812  

Insurance

     42,521        38,355  

Representation and travel expenses

     29,036        42,316  

Fees to Bank Directors and Supervisory Committee

     20,400        5,942  

Stationery and supplies

     18,991        17,119  

Other administrative expenses

     492,597        365,064  
  

 

 

    

 

 

 

TOTAL

     3,589,942        3,160,419  
  

 

 

    

 

 

 

 

41.

Depreciation and amortization

 

     03.31.20      03.31.19  

Depreciation of property and equipment

     627,016        650,123  

Amortization of rights of use of leased real property (Note 29)

     146,018        424,575  

Amortization of intangible assets

     40,711        153,405  

Depreciation of other assets

     9,049        1,396  
  

 

 

    

 

 

 

TOTAL

     822,794        1,229,499  
  

 

 

    

 

 

 


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42.

Other operating expenses

 

     03.31.20      03.31.19  

Turnover tax

     1,742,174        2,130,893  

Other allowances (Exhibit J)

     703,444        990,808  

Initial loss of loans below market rate

     174,811        625,515  

Contribution to the Deposit Guarantee Fund (Note 50)

     124,189        169,732  

Interest on liabilities from lease (Note 29)

     76,526        85,844  

Claims

     25,238        74,150  

Reorganization expenses (Exhibit J)

     10,575        —    

Other operating expenses

     254,574        432,240  
  

 

 

    

 

 

 

TOTAL

     3,111,531        4,509,182  
  

 

 

    

 

 

 

 

43.

Fair values of financial instruments

 

a)

Assets and liabilities measured at fair value

The fair value hierarchy of assets and liabilities measured at fair value as of March 31, 2020 is detailed below:

 

     Accounting
balance
     Total fair
value
     Level 1 fair
value
     Level 2 fair
value
     Level 3 fair
value
 

Financial assets

              

Debt securities at fair value through profit or loss

     9,059,229        9,059,229        369        9,058,860        —    

Derivative instruments

     2,155,425        2,155,425        —          1,470,425        685,000  

Other financial assets

     1,056,505        1,056,505        1,056,505        

Other debt securities

     64,756,406        64,756,406        382,232        64,374,174        —    

Financial assets pledged as collateral

     839,725        839,725        —          839,725        —    

Investments in equity instruments

     1,811,853        1,811,853        102,142        15,526        1,694,185  

Financial liabilities

              

Derivative instruments

     331,591        331,591        —          331,591        —    

The fair value hierarchy of assets and liabilities measured at fair value as of December 31, 2019 is detailed below:

 

     Accounting
balance
     Total fair
value
     Level 1 fair
value
     Level 2 fair
value
     Level 3 fair
value
 

Financial assets

              

Debt securities at fair value through profit or loss

     4,452,088        4,452,088        —          4,452,088        —    

Derivative instruments

     3,284,689        3,284,689        —          2,546,262        738,427  

Other financial assets

     1,052,745        1,052,745        1,052,745        —          —    

Other debt securities

     48,701,563        48,701,563        1,320,579        47,380,984        —    

Financial assets pledged as collateral

     36,867        36,867        36,867        —          —    

Investments in equity instruments

     2,216,211        2,216,211        154,406        29,504        2,032,301  

Financial Liabilities

              

Liabilities at fair value through profit or loss

     626,102        626,102        626,102        —          —    

Derivative instruments

     3,312,621        3,312,621        —          3,312,621        —    


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The fair value of a financial asset or liability is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date.

The most objective and usual reference of the fair value of a financial asset or liability is the price that would be paid in an orderly, transparent and deep market, that is to say its quoted or market price.

If it is not possible to obtain a market price, a fair value is determined using best market practice quoting techniques, such as cash flows discount based on a yields curve for the same class and type of instrument, or if there is no market curve with the same characteristics of the bond, the technical value is calculated considering the latest market price plus interest accrued until the valuation date (whichever is more representative for the species).

In line with the accounting standard, a three-level classification of financial instruments is established. This classification is mainly made based on the observability of the necessary inputs to calculate that fair value, defining the following levels:

 

   

Level 1: Financial instruments valued with quoted prices in an active market. Active market means a market that allows the observation of representative prices with sufficient frequency and daily volume

 

   

Level 2: Financial instruments that do not have an active market, but that may be valued through market observable data.

 

   

Level 3: Valuation using models where variables not obtained from observable market information are used.

Financial assets at fair value mainly consist of BCRA Liquidity Bills and Argentine Treasury Bills (Letes), together with a minor share in Argentine Government Bonds and Corporate Bonds. Likewise, financial derivatives are classified at fair value, which includes foreign currency forward transactions and NDF (non-delivery forwards), put options and interest rate swaps.

 

b)

Transfers between hierarchy levels

 

b.1)

Transfers from Level 1 to Level 2

The following instruments measured at fair value were transferred from Level 1 to Level 2 of the fair value hierarchy:

 

     03.31.20      12.31.19  

Treasury Bills in US dollars due 08-31-20

     129,873        —    

 

b.2)

Transfers from Level 2 to Level 1

No transfers have occurred from Level 2 to Level 1 as of March 31, 2020 and December 31, 2019.

 

b.3)

Valuation techniques for Levels 2 and 3

The valuation techniques used for Level 2 securities require market observable input data: the last quoted market price (Mercado Abierto Electrónico – MAE), the terms of the bond issue as detailed in the respective offering memorandum or, in the particular case of bonds adjustable for the BADLAR rate published at the BCRA’s web site, the spot discount curve in pesos, US dollars, CER, the yield curve in pesos arising from ROFEX futures, the yield curve in pesos arising from futures traded by ICAP Broker, and the spot selling exchange rate published by Banco de la Nación Argentina (BNA).


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Fixed Income

The determination of fair value prices set forth by the Bank for fixed income consists of considering reference market prices (MAE).

For Argentine Treasury Bonds, prices are captured from MAE. If bonds have not traded for the last 10 business days, a theoretical valuation is made, discounting cash flows using the pertinent discount curve.

Argentine Treasury Bills which have not traded for the last 10 business days are measured by reference to their cash flows discounted using the respective yield curve, based on the currency in which the bills were issued. In particular, US-dollar linked Treasury Bills (Lelinks) are measured using the yield curve in pesos.

Liquidity bills issued by the BCRA without quoted prices in MAE on the last day of the month were assigned a theoretical value, discounting cash flows using the monetary policy rate.

Finally, corporate bonds and sub-sovereign bonds were measured at their market prices prevailing on the last 10 business days in MAE, where available. In the absence of market prices, these securities were assigned a theoretical value, based on the last market price available, plus accrued interest.

SWAPS

For swaps, the theoretical valuation consists of discounting future cash flows using the interest rate, according to the rate curve resulting from the implicit yield of ROFEX futures.

Non Delivery Forwards

The theoretical valuation of NDFs consists of discounting the future cash flows to be exchanged pursuant to the contract, using a discount curve that will depend on the currency of each cash flow. The result is then calculated by subtracting the present values in pesos, estimating the value in pesos based on the applicable spot exchange rate, depending on whether the contract is local or offshore.

For local peso-dollar swap contracts, cash flows in pesos are discounted using the yield curve in pesos resulting from the prices of ROFEX futures and the US dollar spot selling exchange rate published by BNA. Cash flows in US dollars are discounted using the Overnight Index Swap (OIS) international dollar yield curve. Then, the present value of cash flows in dollars is netted by converting such cash flows into pesos using the US dollar spot selling exchange rate published by BNA.

For local peso-euro swap contracts, cash flows in pesos are discounted using the yield curve in pesos resulting from the prices of ROFEX futures and the US dollar spot selling exchange rate published by BNA. Cash flows in euros are discounted using the yield curve in euros. Then, the present value of cash flows in euros is netted by converting such cash flows into pesos using the euro spot selling exchange rate published by BNA.

For offshore peso-dollar swap contracts, cash flows in pesos are discounted using the yield curve in pesos resulting from market quoted forward prices sourced from ICAP and the US dollar spot selling exchange rate published by BNA. Cash flows in dollars are discounted using the OIS yield curve. Then, the present value of cash flows in dollars is netted by converting such cash flows into pesos using the Emerging Markets Traders Association (EMTA) US dollar spot exchange rate.

Investments in Equity Instruments

The fair value of the equity interest held in Prisma Medios de Pago S.A.—classified as Level 3—was calculated on the basis of independent appraisers’ valuations, who relied on a future discounted cash flow


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method embracing an income approach, net of the valuation adjustment required by the BCRA under Memorandum No. 7/2019, and net of cashed dividends (Note 16).

The most relevant non-observable inputs include:

 

   

Pro forma EBITDA and Free cash flow (primarily determined on the basis of the expected changes in the level of transactions and fees).

 

   

Minority discount rate (equivalent to 1 / (1 + control premium) -1)

 

   

WACC - Weighted Average Cost of Capital of Prisma Medios de Pago S.A.

 

   

g = terminal value growth factor.

Below is a detail of the sensitivity analysis related to the valuation of the remaining 49% interest in Prisma Medios de Pago S.A. held by the shareholders. Sensitivity is related to the following two variables: WACC and “g” level (growth factor for future cash flows after 2023 which determines the terminal value):

 

Value of 49% equity interest + minority discount

(9.09%) – in millions of US$

 
           (g – annual)  
       2.50     3.00     3.50

WACC

     97.5     467.8       480.0       493.3  
     100     461.8       473.8       486.8  
     102.5     455.9       467.7       480.5  

The valuation scenario considers a WACC equals to 100% and a “g” level of 3%.

Premiums from Put Options

The Group has classified the put option taken in respect of its equity interest in Prisma Medios de Pago S.A. as Level 3, since the fair value of such put option was based on significant non-observable inputs. The income (loss) from the asset measured at fair value on the basis of non-observable input data is booked under Net income / (loss) from financial instruments carried at fair value through profit or loss.

These instruments were measured using a valuation technique based on the binomial option pricing model. This model involves creating a comparable portfolio under the same conditions as the put, considering several scenarios. The pricing model factors in the Company’s projected cash flows and financial indebtedness as of year-end (34 months subsequent to the contract closing date). Expected cash flows are discounted using the WACC discount rate.

Some of the most relevant observable input data used in the pricing model include:

 

   

Monthly volatility (sensibility to volatility ranging from 10%, 12.2%, 15% and 20%)

 

   

Notional exercise price. This price is 7 times the expected EBITDA for the third year. EBITDA is calculated considering expected cash flows and financial indebtedness, based on Cash and Banks and Short-term investments, and financial indebtedness projected as of the option exercise date.

Any potential substantial change in any of the aforementioned non-observable input data may increase or decrease the put option estimated fair value.

The table below shows the sensitivity analysis for the valuation of the put option per share, based on the implicit volatility level and the notional exercise price of the share:


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Sensitivity – in US$  
           Volatility  
       10.0     12.2     15.0     20.0

EBITDA

     95     0.84       0.98       1.16       1.45  
     100     0.95       1.10       1.29       1.59  
     105     1.08       1.23       1.42       1.73  
Sensitivity – in pesos  
           Volatility  
       10.0     12.2     15.0     20.0

EBITDA

     95     48.15       56.30       66.51       83.47  
     100     54.88       63.43       74.04       91.58  
     105     62.43       70.55       81.58       99.70  

The valuation scenario considers EBITDA at 100% and volatility at 12.2%, with a fair value equal to 685,000 based on the position held by the Entity in Prisma Medios de Pago S.A.

 

b.4)

Reconciliation of opening and ending balances of Level 3 assets and liabilities at fair value

The following table shows a reconciliation between opening balances and final balances of Level 3 fair values:

 

     03.31.20      12.31.19  

Balance at the beginning of the fiscal year

     2,770,728        —    

Investment in equity instruments – Prisma Medios de Pago S.A.

     (191,075      2,032,301  

Derivative instruments – Put option taken - Prima Medios de Pago S.A.

     —          738,427  

Monetary gain (loss) generated by assets at fair value

     (200,468      —    
  

 

 

    

 

 

 

Balance at fiscal period-end

     2,379,185        2,770,728  
  

 

 

    

 

 

 

 

c)

Fair value of Assets and Liabilities not measured at fair value

Below is a description of methodologies and assumptions used to assess the fair value of the main financial instruments not measured at fair value, when the instrument does not have a quoted price in a known market.

 

   

Assets and liabilities with fair value similar to their accounting balance

For financial assets and financial liabilities maturing in less than one year, it is considered that the accounting balance is similar to fair value. This assumption also applies to deposits, because a significant portion thereof (more than 99% considering contractual terms and conditions) have a residual maturity of less than one year.

 

   

Fixed rate financial instruments

The fair value of financial assets was assessed by discounting future cash flows from market rates at each measurement date for financial instruments with similar characteristics.


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Variable rate financial instruments

For financial assets and financial liabilities accruing a variable rate, it is considered that the accounting balance is similar to the fair value.

The fair value hierarchy of assets and liabilities not measured at fair value as of March 31, 2020 is detailed below:

 

     Accounting
balance
     Total
fair value
    Level 1
fair value
     Level 2
fair value
     Level 3
fair value
 

Financial assets

             

Cash and deposits in banks

     146,518,286        (1     —          —          —    

Repo transactions

     3,201,694        (1     —          —          —    

Other financial assets

     17,484,589        (1     —          —          —    

Loans and other financing

        (1        

Non-financial government sector

     581        (1     —          —          —    

Argentine Central Bank (BCRA)

     11,273        (1     —          —          —    

Other financial institutions

     5,026,311        3,845,457       —          3,845,457        —    

Non-financial private sector and residents abroad

     213,499,504        210,090,681       —          210,090,681        —    

Financial assets pledged as collateral

     5,975,692        (1     —          —          —    

Financial liabilities

             

Deposits

     327,959,863        325,279,154       —          325,279,154        —    

Other financial liabilities

     42,830,228        (1     —          —          —    

Financing received from the Argentine Central Bank (BCRA) and other financial institutions

     3,627,151        3,547,883       —          3,547,883        —    

Corporate bonds issued

     7,498,543        7,357,918       —          7,357,918        —    

(1) The fair value is not reported as it is considered similar to its book value.

The fair value hierarchy of assets and liabilities not measured at fair value as of December 31, 2019 is detailed below:

 

     Accounting
balance
     Total
fair value
    Level 1
fair value
     Level 2
fair value
 

Financial assets

          

Cash and deposits in banks

     168,447,403        (1     —          —    

Other financial assets

     4,003,622        (1     —          —    

Loans and other financing

     —            

Non-financial government sector

     493        (1     —          —    

Argentine Central Bank (BCRA)

     18,763        (1     —          —    

Other financial institutions

     5,471,908        4,614,996       —          4,614,996  

Non-financial private sector and residents abroad

     205,030,501        203,612,334       —          203,612,334  

Financial assets pledged as collateral

     6,348,586        (1     —          —    

Financial liabilities

          

Deposits

     316,917,643        314,931,661       —          314,931,661  

Other financial liabilities

     31,073,389        (1     —          —    

Financing received from the Argentine Central Bank (BCRA) and other financial institutions

     6,628,457        6,593,065       —          6,593,065  

Corporate bonds issued

     7,889,932        7,831,109       —          7,831,109  

(1) The fair value is not reported as it is considered similar to its book value.


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44.

Segment reporting

Basis for segmentation

As of March 31, 2020 and December 31, 2020, the Group determined that it has only one reporting segment related to banking activities based on the information reviewed by the highest operating decision maker. Most of the transactions, properties and customers of the Group are located in Argentina. No customer has generated more than 10% of the total Group’s revenues.

Below is relevant information on loans and deposits by line of business as of March 31, 2020 and December 31, 2019:

 

Group (banking activity) (1)    Total as of
03.31.20
     Total as of
12.31.19
 

Loans and other financing

     218,537,669        210,521,665  

Corporate banking (2)

     48,943,789        41,475,525  

Small and medium companies (3)

     55,645,912        47,365,266  

Retail

     113,947,968        121,680,874  

Other assets

     294,116,606        279,153,252  
  

 

 

    

 

 

 

TOTAL ASSETS

     512,654,275        489,674,917  
  

 

 

    

 

 

 

Deposits

     327,959,863        316,917,643  

Corporate banking (2) (3)

     33,763,864        26,439,973  

Small and medium companies (2) (3)

     77,122,497        73,474,741  

Retail

     217,073,502        217,002,929  

Other liabilities

     95,919,398        88,242,828  
  

 

 

    

 

 

 

TOTAL LIABILITIES

     423,879,261        405,160,471  
  

 

 

    

 

 

 


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The following table shows information related to operating segments:

 

Group (banking activity) (1)    Total as of
03.31.20
     Total as of
03.31.19
 

Net interest income

     16,441,216        15,044,070  

Net commission income

     1,875,852        2,302,257  

Net income from financial instruments at fair value through profit or loss

     1,000,110        3,752,589  

Net income from write-down of assets at amortized cost and at fair value through OCI

     (127,002      (6,264

Foreign exchange and gold gains

     1,237,269        1,975,765  

Other operating income

     1,038,967        5,268,011  
  

 

 

    

 

 

 

TOTAL OPERATING INCOME BEFORE LOSS FOR IMPAIRMENT OF FINANCIAL ASSETS

     21,466,412        28,336,428  
  

 

 

    

 

 

 

Loan loss allowances

     (1,623,363      (1,617,615
  

 

 

    

 

 

 

SUBTOTAL

     19,843,049        26,718,813  
  

 

 

    

 

 

 

Operating loss

     (11,963,543      (13,101,547

Income / (loss) from associates and joint ventures

     27,177        (76,309

Loss on net monetary position

     (2,623,512      (5,021,933
  

 

 

    

 

 

 

Income before income tax

     5,283,171        8,519,024  
  

 

 

    

 

 

 

Income tax

     (2,175,775      (3,649,156
  

 

 

    

 

 

 

Net income for the period

     3,107,396        4,869,868  
  

 

 

    

 

 

 

Net income attributable to:

     

Owners of the parent

     3,078,940        4,870,007  

Non-controlling interests

     28,456        (139

 

  (1)

It includes BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión, Consolidar A.F.J.P. (undergoing liquidation proceedings), PSA Finance Argentina Cía. Financiera S.A. and Volkswagen Financial Services Compañía Financiera S.A.

  (2)

It includes financial sector.

  (3)

It includes government sector.


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45.

Subsidiaries

Below is the information on the Bank’s subsidiaries:

 

Name

   Registered office (country)      Interest as of  
   03.31.20     12.31.19  

Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings)

     Argentina        53.8892     53.8892

PSA Finance Argentina Cía. Financiera S.A.

     Argentina        50.0000     50.0000

Volkswagen Financial Services Compañía Financiera S.A.

     Argentina        51.0000     51.0000

BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión

     Argentina        100.0000     100.0000

 

46.

Related parties

 

  a)

Parent

The Bank’s parent is Banco Bilbao Vizcaya Argentaria.

 

  b)

Key Management personnel

Pursuant to IAS 24, key Management personnel are those having the authority and responsibility for planning, managing and controlling the Group’s activities, whether directly or indirectly.

Based on that definition, the Group considers the members of the Board of Directors as key personnel.

 

  b.1)

Remuneration of key management personnel

The key personnel of the Board of Directors received the following compensations:

 

     03.31.20      03.31.19  

Fees

     18,859        5,354  
  

 

 

    

 

 

 

Total

     18,859        5,354  
  

 

 

    

 

 

 

b.2) Profit or loss for transactions and balances with key management personnel

 

     Balances as of      Profit or loss  
     03.31.20      12.31.19      03.31.20      03.31.19  

Loans

           

Credit cards

     3,851        4,978        288        394  

Overdrafts

     175        4        —          —    

Loans

     1,242        1,356        57        90  

Deposits

     9,855        19,901        60        33  

Loans are granted on an arm’s length basis. As of March 31, 2020 and December 31, 2019, balances of loans granted are classified under normal performance according to the debtor classification rules issued by the BCRA.


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b.3) Profit or loss and balances with related parties (except key Management personnel)

 

     Balances as of      Profit or loss  

Parent

   03.31.20      12.31.19      03.31.20      03.31.19  

Cash and deposits in banks

     264,387        492,032        —          —    

Derivative instruments (Assets) (1)

     82,834        701,894        —          —    

Financial assets pledged as collateral (2)

     —          582,777        —          —    

Other non-financial liabilities

     510,220        380,358        93,217        82,661  

Derivative instruments (Liabilities) (1)

     108,844        1,294,028        - 23,742        335,855  

Off-balance sheet balances

           

Securities in custody

     17,043,020        61,330,777        —          —    

Derivative instruments

     15,942,095        12,090,469        —          —    

Sureties granted

     487,291        761,918        607        1,163  

Guarantees received

     24,807        30,574        —          —    

(1) Profit or loss of Derivative Instruments (Assets) is exposed under Derivative Instruments (Liabilities).

(2) These transactions do not generate profit or loss.

 

     Balances as of      Profit or loss  

Subsidiaries

   03.31.20      12.31.19      03.31.20 (1)      03.31.19  

Loans and other financing

     3,725,235        2,232,553        359,641        1,056  

Other financial assets

     532        191        —          98  

Deposits

     446,745        51,942        1,190        38,122  

Other non-financial liabilities

     579        1,305        1,126        —    

Financing received

     —          189,114        7,425        —    

Other operating income

     —          —          1,679        1,814  

Off-balance sheet balances

           

Securities in custody

     1,056,546        1,052,770        —          —    

Sureties granted

     281        303        —          —    


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     Balances as of      Profit or loss  

Associates

   03.31.20      12.31.19      03.31.20      03.31.19 (1)  

Cash and deposits in banks

     1,829        317        —          —    

Loans and other financing

     1,694,583        1,922,053        302,552        924,452  

Debt securities at fair value through profit or loss

     10,476        18,091        14,101        34,508  

Deposits

     372,300        403,632        2        9,068  

Other non-financial liabilities

     —          —          —          1,403  

Financing received

     —          216,071        2,080        3,027  

Derivative instruments (Liabilities)

     47,715        149,027        - 23,057        151,081  

Corporate bonds issued

     165,380        168,104        1,253        16,689  

Other operating income

     —          —          8,191        11,275  

Off-balance sheet balances

           

Interest rate swaps

     800,030        1,437,345        —          —    

Securities in custody

     1,474,265        1,358,079        488        231  

Sureties granted

     11,986        19,710        131        200  

(1) Includes PSA Finance Argentina Compañía Financiera S.A. and Volkswagen Financial Services Compañía Financiera S.A., over which the Entity took over control as from July 1, 2019. This situation implies considering them as “Subsidiaries” as from the referred date. Until such date, they were exposed as “Associates”.

Transactions have been agreed upon on an arm’s length basis. As of March 31, 2020 and December 31, 2019, balances of loans granted are classified under normal performance according to the debtor classification rules issued by the BCRA.

 

47.

Risks related to financial instruments

No significant changes have occurred in the Bank’s risk management and governance policies and procedures described in the financial statements as of December 31, 2019.

However, as a consequence of the change in the calculation method of impairment of financial assets described in Note 5.2, the Board of Directors has considered it appropriate to disclose in these interim financial statements information related to credit risks, measured in accordance with IFRS 9 as per BCRA (expected loss model, except for non-financial government sector’s financial assets).


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     Stage 1     Stage 2     Stage 3     Total  

Balances as of 12.31.19

     4,866,239       2,508,411       5,922,872       13,297,522  
  

 

 

   

 

 

   

 

 

   

 

 

 

Inter-stage transfers:

        

From stage 1 to stage 2

     (570,152     2,018,316       —         1,448,164  

From stage 2 to stage 1

     210,994       (726,649     —         (515,655

From stage 1 or 2 to stage 3

     (7,354     (598,445     1,497,504       891,705  

From stage 3 to stage 1 or 2

     8,100       21,084       (288,641     (259,457

Changes without inter-stage transfers

     (1,042,030     (434,235     12,205       (1,464,060

New originated financial assets

     3,941,011       724,755       5,102,907       9,768,673  

Reimbursements

     (2,596,205     (340,888     (5,113,500     (8,050,593

Write-offs

     —         —         (839,999     (839,999

Foreign exchange difference

     74,218       71,926       283,791       429,935  

Inflation adjustment

     (364,027     (181,137     (440,288     (985,452

Other

     (1,741     (324,470     —         (326,211
  

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of 03.31.20

     4,519,053       2,738,668       6,136,851       13,394,572  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

48.

Restrictions to the payment of dividends

Pursuant to the provisions in the regulation in force issued by the BCRA, financial institutions shall apply an annual 20% of the year’s profits to increase legal reserves.

Furthermore, pursuant to the requirements in General Resolution No. 622 issued by the CNV, the Shareholders’ Meeting considering the financial statements with accumulated gains shall specifically provide for the allocation thereof.

Specifically, the mechanism to be followed by financial institutions to assess distributable balances is defined by the BCRA through the regulations in force on the “Distribution of earnings”, provided that there are no records of financial assistance from that entity due to illiquidity or shortfalls as regards minimum capital requirements or minimum cash requirements, and other sort of penalties imposed by specific regulators, which are deemed to be material, and/or where no corrective measures had been implemented, among other conditions.

It is worth noting that, on September 20, 2017, the BCRA issued Communication “A” 6327, which provides that financial institutions shall not distribute earnings generated by first application of FRS, and shall create a special reserve which may only be reversed for capitalization or to absorb potential losses of the item “Unappropriated retained earnings”.

In addition, the Group shall maintain a minimum capital after the proposed distribution of earnings.

On August 30, 2019 and January 31, 2020, the BCRA issued Communication “A” 6768 and Communication “A” 6886 setting forth that, effective as from August 30, 2019, financial institutions shall be required to have the BCRA’s previous authorization to distribute profits.

Finally, by means of Communication “A” 6939 released on March 19, 2020, the BCRA suspended the distribution of profits by financial institutions until June 30, 2020, which suspension was subsequently extended until December 31, 2020 by means of Communication “A” 7035 dated June 4, 2020.


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49.

Restricted assets

As of March 31, 2020 and December 31, 2019, the Group has the following restricted assets:

 

  a)

The Entity applied Argentine Treasury Bonds adjusted by CER in pesos maturing in 2021 in the amount of 98,980 and Treasury Bonds in pesos maturing on July 31, 2020 in the amount of 115,200 as of March 31, 2020, Treasury Bonds adjusted by CER in pesos maturing in 2021 in the amount of 89,268, Treasury Bonds in pesos maturing on July 31, 2020 in the amount of 116,243 as of December 31, 2019, respectively, as security for loans agreed under the Global Credit Program for micro, small and medium enterprises granted by the Inter-American Development Bank (IDB).

 

  b)

Also, the Entity has accounts, deposits, repo transactions and trusts applied as guarantee for activities related to credit card transactions, with automated clearing houses, transactions settled at maturity, foreign currency futures, court proceedings and leases in the amount of 6,815,417 and 6,385,453 as of March 31, 2020 and December 31, 2019, respectively.

 

50.

Deposits guarantee regime

The Entity is included in the Deposits Guarantee Fund Insurance System of Law No. 24485, Regulatory Decrees No. 540/95, No. 1292/96, No. 1127/98 and No. 30/18 and Communication “A” 5943 issued by the BCRA

That law provided for the incorporation of the company “Seguros de Depósitos Sociedad Anónima” (SEDESA) for the purpose of managing the Deposits Guarantee Fund (DGF), the shareholders of which, pursuant to the changes introduced by Decree No. 1292/96, will be the BCRA with at least one share and the trustees of the trust with financial institutions in the proportion determined by the BCRA for each, based on their contributions to the DGF.

In August 1995, that company was incorporated, and the Entity has a 10.038% share of the corporate stock.

The Deposits Guarantee Insurance System, which is limited, mandatory and for valuable consideration, has been created for the purpose of covering bank deposit risks in addition to the deposits privileges and protection system set forth by the Financial Institutions Law.

The guarantee covers the refund of the principal paid plus interest accrued up to the date of revocation of the authorization to operate or until the date of suspension of the entity by application of Section 49 of the Articles of Organization of the BCRA, if this measure had been adopted previously, without exceeding the amount of four hundred and fifty thousand pesos. For transactions in the name of two or more people, the guarantee shall be distributed on a pro-rata basis among them. In no case shall the total guarantee per person exceed the aforementioned amount, regardless of the number of accounts and/or deposits.

In addition, it is set forth that financial institutions shall make a monthly contribution to the DGF an amount equivalent to 0.015% of the monthly average of daily balances of the items listed in the related regulations.

As of March 31, 2020 and 2019, the contributions to the Fund have been recorded in the item “Other operating expenses—Contributions to the deposits guarantee fund” in the amounts of 124,189 and 169,732, respectively.

On February 28, 2019, the Argentine Central Bank issued Communication “A” 6654 setting forth an increase in the guarantee from pesos 450,000 (four hundred and fifty thousand) to pesos 1,000,000 (one million), effective March 1, 2019. In addition, on April 16, 2020, the Argentine Central Bank issued Communication “A” 6973 increasing such amount to pesos 1,500,000 (one million five hundred thousand), effective May 1, 2020.


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51.

Minimum cash and minimum capital requirements

 

  51.1

Minimum cash requirements

The BCRA establishes different prudential regulations to be observed by financial institutions, mainly regarding solvency levels, liquidity and credit assistance levels.

Minimum cash regulations set forth an obligation to keep liquid assets in relation to deposits and other obligations recorded for each period. The items included for the purpose of meeting that requirement are detailed below:

 

Accounts

   03.31.20      12.31.19  

Balances at the BCRA

     

Argentine Central Bank (BCRA) – current account - not restricted

     104,310,300        115,835,556  

Argentine Central Bank (BCRA) – special guarantee accounts – restricted (Note 14)

     2,310,245        3,048,446  

Argentine Central Bank (BCRA) –social security special accounts - restricted

     359,810        —    
  

 

 

    

 

 

 
     106,980,355        118,884,002  
  

 

 

    

 

 

 

Argentine Treasury Bonds in pesos at fixed rate due November 2020

     8,702,158        7,869,601  

Liquidity Bills – B.C.R.A.

     56,170,758        35,639,786  
  

 

 

    

 

 

 

TOTAL

     171,853,271        162,393,389  
  

 

 

    

 

 

 

It should be noted that the balances disclosed are the ones reported by the Bank.

 

  51.2

Minimum capital requirements

The regulatory breakdown of minimum capitals is as follows at the above mentioned date:

 

Minimum capital requirements

   03.31.20      03.31.19  

Credit risk

     21,666,264        28,045,338  

Operational risk

     7,052,131        6,087,845  

Market risk

     500,632        347,567  
  

 

 

    

Paid-in

     76,282,372        59,880,037  
  

 

 

    

 

 

 

Surplus

     47,063,345        25,399,287  
  

 

 

    

 

 

 

 

52.

Compliance with the provisions of the Argentine Securities Commission – minimum shareholders’ equity and cash contra-account

According to CNV’s General Resolution No. 622/13, as amended by CNV’s General Resolution No. 821/19, the minimum shareholders’ equity required to operate as “Settlement and Clearing Agent—Comprehensive” shall the equivalent to four hundred seventy thousand three hundred and fifty (470,350) Acquisition Value Units (UVA) to be adjusted by the Stabilization Coefficient (CER), Law No. 25,827. As regards the cash contra-account, the amount to be paid-in shall be a minimum of fifty percent (50%) of the minimum shareholders’ equity.


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The amount mentioned above as cash contra-account includes Argentine Treasury Bonds adjusted by CER due 2021 deposited with the account opened at Caja de Valores S.A., named “Depositor 1647 Brokerage Account 5446483 BBVA Banco Francés minimum cash contra-account”. As of March 31, 2020 and December 31, 2019, the Bank’s Shareholders’ Equity exceeds the minimum amount imposed by the CNV.

Likewise, the subsidiary BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión, as Mutual Funds Management Agent, met the CNV minimum cash contra-account requirements with 2,792,293 shares of FBA Renta Pesos Fondo Común de Inversión, in the amount of 38,712, through custody account No. 493-0005459481 at BBVA Banco Francés S.A. As of March 31, 2020 and December 31, 2019, the company’s Shareholders’ Equity exceeds the minimum amount imposed by the CNV.

In addition, pursuant to the requirements of General Resolution No. 792 issued by the CNV on April 30, 2019, and effective as of the end of fiscal year ended December 31, 2019, mutual fund management companies’ minimum shareholders’ equity will be comprised by 150,000 UVAs plus 20,000 UVAs, per each additional mutual fund under management. As concerns the cash contra-account, the amount to be paid shall be equal to no less that fifty per cent (50%) of minimum shareholders’ equity.

 

53.

Compliance with the provisions of the Argentine Securities Commission – documentation

The CNV issued General Resolution No. 629 on August 14, 2014 to introduce changes to its own rules governing the maintenance and safekeeping of corporate books, accounting records and business documentation. In this respect, it is reported that the Bank keeps the documentation that supports its operations for the periods still open to audit for safekeeping in Administradora de Archivos S.A. (AdeA), domiciled at Ruta 36 Km, 31,5 of Florencio Varela, Province of Buenos Aires.

In addition, it is informed that a detail of the documentation delivered for safekeeping, as well as the documentation referred to in Art. 5. a.3), Section I of Chapter V of Title II of the CNV rules is available at the Bank’s registered office (2013 consolidated text and amendments).

 

54.

Trust activities

On January 5, 2001, the Board of Directors of BCRA issued Resolution No. 19/2001, providing for the exclusion of Mercobank S.A.’s senior liabilities under the terms of section 35 bis of the Financial Institutions Law, the authorization to transfer the excluded assets to the Bank as trustee of the Diagonal Trust, and the authorization to transfer the excluded liabilities to beneficiary banks. Also, on the mentioned date, the agreement to set up the Diagonal Trust was subscribed by Mercobank S.A. as Settler and the Bank as Trustee in relation to the exclusion of assets as provided in the above-mentioned resolution. As of March 31, 2020 and December 31, 2019, the assets of Diagonal Trust amount to 2,427 and 2,617, respectively, considering its recoverable value.

In addition, the Entity in its capacity as Trustee in the Corp Banca Trust recorded the selected assets on account of the redemption in kind of participation certificates in the amount of 4,177 and 4,503 as of March 31, 2020 and December 31, 2019, respectively.

In addition, the Entity acts as a Trustee in 12 non-financial trusts, in no case as personally liable for the liabilities assumed in the performance of the contract obligations. Such liabilities will be settled with and up to the full amount of the trust assets and the proceeds therefrom. The non-financial trusts concerned were set up to manage assets and/or secure the receivables of several creditors (beneficiaries) and the trustee was entrusted the management, care, preservation and custody of the corpus assets until (i) noncompliance with the obligations by the debtor (settler) vis-a-vis the creditors (beneficiaries) are verified, when such assets will be sold and the proceeds therefrom will be distributed (net of expenses) among all beneficiaries, the remainder (if any) shall be delivered to the settler, or (ii) all contract terms and conditions are complied with, in which case all the trust assets will be returned to the settler or to whom it may be indicated. The trust assets totaled 307,401 and 321,180 as of March 31, 2020 and December 31, 2019, respectively, and consist of cash, creditors’ rights, real estate and shares.


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55.

Mutual funds

As of March 31, 2020 and December 31, 2019, the Entity holds in custody, as Custodian Agent of Mutual Funds managed by BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión, time deposit certificates, shares, corporate bonds, government securities, mutual funds, deferred payment checks, BCRA instruments, Buenos Aires City Government Bills, ADRS, Buenos Aires Province Government Bills and repos in the amounts of 17,872,086 and 81,853,687, which are part of the mutual fund portfolio and are recorded in debit balance memorandum accounts “Control – Other”.

The Mutual Fund assets are as follows:

 

MUTUAL FUNDS

   03.31.20      12.31.19  

FBA Renta Pesos

     62,559,136        42,181,741  

FBA Horizonte

     1,287,557        852,625  

FBA Renta Fija Dólar Plus

     728,376        775,073  

FBA Ahorro Pesos

     545,403        498,464  

FBA Renta Fija Dólar

     483,739        507,148  

FBA Acciones Latinoamericanas

     336,722        594,047  

FBA Bonos Latam

     332,361        342,461  

FBA Calificado

     301,677        509,816  

FBA Bonos Globales

     275,334        217,571  

FBA Bonos Argentina

     244,908        267,827  

FBA Acciones Argentinas

     212,560        381,993  

FBA Horizonte Plus

     101,525        83,099  

FBA Retorno Total II

     91,219        91,632  

FBA Renta Fija Plus

     66,587        56,859  

FBA Brasil I

     44,654        89,443  

FBA Retorno Total I

     43,062        30,685  

FBA Gestión I

     24,407        24,970  

FBA Renta Mixta

     15,284        19,074  

FBA Renta Pública I

     1,444        1,492  

FBA Renta Fija Local

     1,444        1,492  

FBA Renta Pública II

     845        778  
  

 

 

    

 

 

 
     67,698,244        47,528,290  
  

 

 

    

 

 

 

The subsidiary BBVA Asset Management Argentina S.A. acts as a mutual funds manager, authorized by the CNV, which registered that company as a mutual funds management agent under No. 3 under Provision 2002 issued by the CNV on August 7, 2014.

 

56.

Penalties and administrative proceedings instituted by the BCRA

According to the requirements of Communication “A” 5689, as amended, issued by the BCRA, below is a detail of the administrative and/or disciplinary penalties as well as the judgements issued by courts of original jurisdiction in criminal matters, enforced or brought by the BCRA of which the Entity has been notified:


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Administrative proceedings commenced by the BCRA

 

   

“Banco Francés S.A. over breach of Law 19359”. Administrative Proceedings for Foreign Exchange Offense initiated by the BCRA notified on February 22, 2008 and identified under No. 3511, File No. 100194/05, on grounds of a breach of the Criminal Foreign Exchange Regime as a result of the purchase and sale of US Dollars through the BCRA in excess of the authorized amounts. These totaled 44 transactions involving the Bank’s branches 099, 342, 999 and 320. The individuals/entities subject to these proceedings were Banco BBVA Argentina S.A. and the following Bank officers who served in the capacities described below at the date when the breaches were committed: (i) two Territory Managers, (ii) four Branch Managers, (iii) four Heads of Back-Office Management and (iv) twelve cashiers. On August 21, 2014, the court acquitted the individuals/entities above from all charges. The General Attorney’s Office filed an appeal and Room A of the Appellate Court with jurisdiction over Criminal and Economic Matters confirmed the Bank’s and the involved officers’ acquittal from all charges. The General Attorney’s Office filed an Extraordinary Appeal, which was granted and, as of the date of these financial statements, is being heard by the Supreme Court of Justice.

 

   

“Banco Francés S.A. over breach of Law 19359”. Administrative Proceedings for Foreign Exchange Offense initiated by the BCRA notified on December 1, 2010 and identified under No. 4539, File No. 18398/05 where charges focus on fake foreign exchange transactions, through false statements upon processing thereof, carried out by personnel from five branches in Mar del Plata, which would entail failure to comply with the client identification requirements imposed by foreign exchange rules and regulations through Communication “A” 3471, paragraph 6. The individuals/entities subject to these proceedings were Banco BBVA Argentina S.A., the five regular members of the Board of Directors and the following Bank officers who served in the capacities described below at the date when the breaches were committed: (i) the Retail Bank Manager, (ii) the Territory Manager, (iii) the Area Manager, (iv) a commercial aide to the Area Manager, (v) five Branch Managers, (vi) four Heads of Back-Office Management, (vii) five Main Cashiers and (viii) one cashier. To date, the case is being heard by Federal Court No. 3, Criminal Division of the City of Mar del Plata, under File No. 16377/2016. On June 21, 2017, the court sought to obtain further evidence on its own initiative ordering that a court letter should be sent to the BCRA for it to ascertain if the rules governing the charges brought in the Case File No. 18398/05 Proceedings No. 4539 have been subject to any change. The BCRA answered the request from the Court, stating that noncompliance with the provisions of Communication “A” 3471 would not currently be subject to any change that may imply a lesser offense. On September 30, 2019, the court of original jurisdiction rendered judgment against the Bank for its involvement in the transaction imposing a fine of US$ 592,000, while imposing the following fines to the following individuals involved:

 

   

Pablo Bistacco and Graciela Alonso - US$ 61,000

 

   

Nestor Bacquer and Hugo Benzan - US$ 76,831 and Euros 9,000

 

   

Mariela Espinosa and Mario Fioritti - US$ 59,800 and Euros 11,500

 

   

Liliana Paz and Alberto Gimenez - US$ 296,000 and Euros 28,000

 

   

Jorge Elizalde and Elizabeth Mosquera - US$ 9,135

 

   

Carlos Barcellini - US$ 4,000

 

   

Carlos Alfonso - US$ 4,000

 

   

Samuel Alaniz - US$ 4,000

 

   

Julian Burgos - US$ 4,000

The Bank is jointly and severally liable for the aforementioned fines. The Bank’s Directors Jorge Carlos Bledel, Javier D. Ornella, Marcelo Canestri and Oscar Castro, and Territory Managers Oscar Fantacone and Jorge Allen were acquitted from all charges.


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An appeal was filed on behalf of Banco BBVA Argentina S.A. and its employees asking for the reversal of the decision or otherwise significant reductions of the amounts involved.

The case was filed with the Federal Appellate Court of Mar del Plata, Criminal department, and is awaiting judgment.

 

   

“BBVA Banco Francés S.A. over breach of Law 19359”. Administrative Proceedings for Foreign Exchange Offense initiated by the BCRA notified on July 26, 2013 and identified under No. 5406, File No. 100443/12 where charges focus on fake foreign exchange transactions through false statements upon processing thereof carried out incurred by personnel in Branch 087—Salta -, which would entail failure to comply with the client identification requirements imposed by foreign exchange rules and regulations through Communication “A” 3471, Paragraph 6. The individuals/entities subject to these proceedings were Banco BBVA Argentina S.A. and the following Bank officers who served in the capacities described below at the date when the breaches were committed: (i) the Branch Manager (ii) the Back Office Management Head, (iii) the Main Cashier and (iv) two cashiers. The trial period came to a close and the BCRA must send the file to Salta’s Federal Court. As of the date hereof, the case file has not be filed in court.

 

   

“BBVA Banco Francés S.A. over breach of Law 19359”. Administrative Proceedings for foreign exchange offense initiated by the BCRA, notified on December 23, 2015 and identified under No. 6684, File No. 100068/13. The proceedings were brought for allegedly having completed operations under Code 631 “Professional and technical business services” for ROCA ARGENTINA S.A. against the applicable exchange regulations (Communications “A” 3471, “A” 3826 and “A” 5264), involving the incomplete verification of the services provided. The individuals/entities subject to these proceedings were Banco BBVA Argentina S.A. and two of the Entity’s officers holding the positions described below: (i) the Foreign Trade Manager and (ii) an officer of the Area. The BCRA has decided that the trial period has come to an end. The case is being heard by Federal Court No. 2, in Lomas de Zamora, Province of Buenos Aires, Criminal Division, under File No. 39130/2017. On October 26, 2017, the Entity filed a request for retroactive application of the most favorable criminal law, as through Communication “A” 5264, whereby the restriction on foreign trade transactions was removed, the payment of services abroad was reinstated

The Group and its legal advisors estimate that a reasonable interpretation of the applicable regulations in force was made and do not expect an adverse financial impact from these cases.

 

57.

Accounting records

As of the date of these consolidated condensed interim financial statements, and as a consequence of the subsequent social distancing measures the Argentine Government has been mandating since March 19, 2020 in the wake of the global pandemic unleashed by the COVID-19 described in Note 1.3., these consolidated condensed interim financial statements are pending transcription into the Financial Statements for Reporting Purposes book, while the accounting entries corresponding to January, February and March 2020 are in the process of being transcribed to the Journal.

 

58.

Subsequent events

By means of Communication “A” 7014 dated May 14, 2020, the BCRA mandated that, effective since then, debt instruments issued by the government sector received in exchange for other instruments should be measured upon initial recognition at the carrying amount of the instruments delivered in replacement on such date. Therefore, such exchange does not have an impact on the statement of income.

No other events or transactions have occurred between period end and the date of these financial statements which may significantly affect the Entity’s financial position or results of operations as of March 31, 2020.


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59.

Accounting principles – Explanation added for translation into English

These financial statements are the English translation of those originally issued in Spanish.

These financial statements are presented on the basis of the accounting standards established by the financial reporting framework set forth by BCRA. Certain accounting practices applied by the Bank that conform to the standards of the BCRA may not conform to the generally accepted accounting principles in other countries.

The differences between the financial reporting framework set forth by BCRA and IFRS are detailed in Note 2 to the consolidated financial statements. Accordingly, these financial statements are not intended to present financial position, results of operations and cash flows in accordance with generally accepted accounting principles other than the financial reporting framework set forth by the BCRA.


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EXHIBIT B

CLASSIFICATION OF LOANS AND OTHER FINANCING ACCORDING TO FINANCIAL PERFORMANCE

AND GUARANTEES RECEIVED CONSOLIDATED WITH SUBSIDIARIES

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

Account

   03.31.20      12.31.19  

COMMERCIAL PORTFOLIO

     

Normal performance

     98,412,346        81,058,668  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     390,913        295,759  

Preferred collaterals and counter-guarantees “B”

     559,227        762,444  

No preferred collaterals and counter-guarantees

     97,462,206        80,000,465  

With special follow-up

     94,149        2,097  
  

 

 

    

 

 

 

Under observation

     94,149        2,097  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     1,195        1,331  

No preferred collaterals and counter-guarantees

     92,954        766  

Troubled

     608,224        1,001,631  
  

 

 

    

 

 

 

No preferred collaterals and counter-guarantees

     608,224        1,001,631  

With high risk of insolvency

     43,985        294,863  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     —          172,682  

No preferred collaterals and counter-guarantees

     43,985        122,181  

Uncollectible

     3,533,311        3,027,288  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     9,926        10,700  

Preferred collaterals and counter-guarantees “B”

     170,643        11,300  

No preferred collaterals and counter-guarantees

     3,352,742        3,005,288  
  

 

 

    

 

 

 

TOTAL

     102,692,015        85,384,547  
  

 

 

    

 

 

 


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EXHIBIT B

(Continued)

CLASSIFICATION OF LOANS AND OTHER FINANCING ACCORDING TO FINANCIAL PERFORMANCE

AND GUARANTEES RECEIVED CONSOLIDATED WITH SUBSIDIARIES

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

Account

   03.31.20      12.31.19  

CONSUMER AND HOUSING PORTFOLIO

     

Normal performance

     126,691,763        133,259,447  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     38,656        50,208  

Preferred collaterals and counter-guarantees “B”

     22,825,128        23,175,215  

No preferred collaterals and counter-guarantees

     103,827,979        110,034,024  

Low risk

     1,412,130        2,469,351  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     13        1,021  

Preferred collaterals and counter-guarantees “B”

     86,546        369,609  

No preferred collaterals and counter-guarantees

     1,325,571        2,098,721  

Medium risk

     1,407,457        1,936,957  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     45,873        106,365  

No preferred collaterals and counter-guarantees

     1,361,584        1,830,592  

High risk

     666,100        1,521,831  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     —          579  

Preferred collaterals and counter-guarantees “B”

     107,618        98,588  

No preferred collaterals and counter-guarantees

     558,482        1,422,664  

Uncollectible

     221,024        159,879  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     70,845        50,197  

No preferred collaterals and counter-guarantees

     149,642        109,682  
  

 

 

    

 

 

 

TOTAL

     130,398,474        139,347,465  
  

 

 

    

 

 

 

TOTAL GENERAL

     233,090,489        224,732,012  
  

 

 

    

 

 

 


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EXHIBIT C

CONCENTRATION OF LOANS AND OTHER FINANCING

CONSOLIDATED WITH SUBSIDIARIES

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     03.31.20     12.31.19  

Number of customers

   Debt balance      % over
total
portfolio
    Debt balance      % over
total
portfolio
 

10 largest customers

     29,554,664        12.68     23,503,910        10.46

50 following largest customers

     38,303,869        16.43     26,140,192        11.63

100 following largest customers

     16,041,614        6.88     14,862,440        6.61

All other customers

     149,190,342        64.01     160,225,470        71.30
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     233,090,489        100.00     224,732,012        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


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EXHIBIT D

BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING

CONSOLIDATED WITH SUBSIDIARIES

AS OF MARCH 31, 2020

(stated in thousands of pesos) (1)

 

            Terms remaining to maturity  

ITEM

   Portfolio
due
     1
month
     3
months
     6
months
     12
months
     24
months
     More than
24
months
     TOTAL  

Non-financial government sector

     —          581        —          —          —          —          —          581  

Argentine Central Bank (BCRA)

     —          11,273        —          —          —          —          —          11,273  

Financial sector

     —          1,688,924        360,906        907,358        2,077,069        1,066,724        480,313        6,581,294  

Non-financial private sector and residents abroad

     6,181,192        90,409,255        39,910,681        24,310,746        18,559,765        25,457,746        40,265,168        245,094,553  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     6,181,192        92,110,033        40,271,587        25,218,104        20,636,834        26,524,470        40,745,481        251,687,701  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

These balances are total contractual flows and, therefore, include principal, accrued and to be accrued interest and charges.


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EXHIBIT H

DEPOSITS CONCENTRATION

CONSOLIDATED WITH SUBSIDIARIES

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     03.31.20     12.31.19  

Number of customers

   Debt
balance
     % over
total
portfolio
    Debt
balance
     % over
total
portfolio
 

10 largest customers

     17,591,154        5.36     11,723,528        3.70

50 following largest customers

     18,113,075        5.52     18,358,947        5.79

100 following largest customers

     14,417,622        4.40     14,460,710        4.56

All other customers

     277,838,012        84.72     272,374,458        85.95
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     327,959,863        100.00     316,917,643        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


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EXHIBIT I

BREAKDOWN OF FINANCIAL LIABILITIES BY REMAINING TERMS

CONSOLIDATED WITH SUBSIDIARIES

AS OF MARCH 31, 2020

(stated in thousands of pesos) (1)

 

     Terms remaining to maturity  

ITEMS

   1
month
     3
months
     6
months
     12
months
     24
months
     more than
24
months
     TOTAL
as of 03.31.2020
 

Deposits

     306,210,916        19,268,951        4,187,677        1,573,229        64,117        3,334        331,308,224  

Non.-financial government sector

     3,468,572        14,519        7        —          —          —          3,483,098  

Financial sector

     286,915        —          —          —          —          —          286,915  

Non-financial private sector and residents abroad

     302,455,429        19,254,432        4,187,670        1,573,229        64,117        3,334        327,538,211  

Derivative instruments

     331,591        —          —          —          —          —          331,591  

Other financial liabilities

     36,635,852        363,472        535,712        712,425        876,462        7,855,472        46,979,395  

Financing received from the BCRA and other financial institutions

     1,859,535        705,258        191,543        434,530        79,626        924,780        4,195,272  

Corporate bonds issued

     94,877        3,657,406        1,187,346        3,147,822        —          —          8,087,451  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     345,132,771        23,995,087        6,102,278        5,868,006        1,020,205        8,783,586        390,901,933  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

These balances are total contractual cash flows and, therefore, include principal, accrued and to be accrued interest and charges.


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EXHIBIT J

PROVISIONS

CONSOLIDATED WITH SUBSIDIARIES

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2020 AND

FISCAL YEAR ENDED DECEMBER 31, 2019

(stated in thousands of pesos)

 

                  Decreases               

Accounts

   Balances
at the
beginning of
the year
     Increases     Reversals      Uses      Monetary
gain (loss)
generated by
provisions
    Balances as
of 03.31.20
 

INCLUDED IN LIABILITIES

               

- Provisions for contingent commitments

     976,527        375,140 (1)(3)      —          —          (64,672     1,286,995  

- For administrative, disciplinary and criminal penalties

     5,390        —   (1)      —          —          (390     5,000  

- Provisions for reorganization

     2,130,236        243,566 (1)      82,626        266,024        (154,960     1,870,192  

- Provisions for termination plans

     69,255        —   (1)      —          —          (5,011     64,244  

- Other

     8,404,535        330,497 (1)(2)      1        56,465        (631,184     8,047,382  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

TOTAL PROVISIONS

     11,585,943        949,203       82,627        322,489        (856,217     11,273,813  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

See Note 27.

(2)

Includes an increase of 1,691 corresponding to the subsidiary Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) recorded in Administrative Expenses.

(3)

Includes an increase of 502 corresponding to the foreign exchange difference of provisions in foreign currency for contingent commitments.


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LOGO   - 63 -  

 

EXHIBIT R

ADJUSTMENT TO IMPAIRMENT LOSS - ALLOWANCES FOR LOAN LOSSES

CONSOLIDATED WITH GROUP “A” SUBSIDIARIES

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2020 AND

FISCAL YEAR ENDED DECEMBER 31, 2019

(stated in thousands of pesos)

 

                  ECL of remaining life of the financial asset              

Accounts

   Balances as
of 12.31.19
     ECL for the
following
12 months
    FI with significant
increases of credit risk
    FI with credit
impairment
    Monetary income
(loss) generated
by allowances
    Balances as
of 03.31.20
 

Other financial assets

     243,962        19,568       —         3,583       (18,721     248,392  

Loans and other financing

     12,076,296        (235,904     283,324       867,479       (1,132,703     11,858,492  

Other financial institutions

     154,134        (8,063     (24,500     (2,505     (8,796     110,270  

Non-financial private sector and residents abroad

     11,922,162        (227,841     307,824       869,984       (1,123,907     11,748,222  

Overdrafts

     684,348        585,616       277,129       (25,459     (53,601     1,468,033  

Instruments

     986,798        (229,269     (125,945     (38,223     (53,044     540,317  

Mortgage loans

     152,775        (28,749     14,484       118,297       (9,108     247,699  

Pledge loans

     33,625        (5,018     (62     4,350       (2,326     30,569  

Consumer loans

     1,458,425        (152,756     168,537       (31,183     (96,467     1,346,556  

Credit card loans

     3,654,780        (510,981     267,912       (64,392     (244,193     3,103,126  

Finance leases

     135,092        (19,345     (1,743     (6,062     (9,188     98,754  

Other

     4,816,319        132,661       (292,488     912,656       (655,980     4,913,168  

Other debt securities

     737        9       —         —         (53     693  

Contingent commitments

     976,527        124,164       267,141       (16,125     (64,712     1,286,995  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ALLOWANCES

     13,297,522        (92,163     550,465       854,937       (1,216,189     13,394,572  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EXHIBIT R

ADJUSTMENT TO IMPAIRMENT LOSS - ALLOWANCES FOR LOAN LOSSES

CONSOLIDATED WITH GROUP “B” SUBSIDIARIES

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2020 AND

FISCAL YEAR ENDED DECEMBER 31, 2019

(stated in thousands of pesos)

 

                   Decreases              

Accounts

   Balances
as of
12.31.19
     Increases      Reversals     Monetary income
(loss) generated
by allowances
    Balances
as of
03.31.20
 

Loans and other financing

     191,540        27,061        (2,197     (14,234     202,170  

Non-financial private sector and residents abroad

     191,540        27,061        (2,197     (14,234     202,170  

Pledge loans

     177,218        25,435        (1,911     (13,174     187,568  

Financial leases

     3,147        249        (219     (227     2,950  

Other

     11,175        1,377        (67     (833     11,652  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

TOTAL ALLOWANCES

     191,540        27,061        (2,197     (14,234     202,170  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 


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- 64 -

 

LOGO   

KPMG

Bouchard 710 - 1° piso - C1106ABL

Buenos Aires, Argentina

  

+54 11 4316 5700

www.kpmg.com.ar

LIMITED REVIEW REPORT ON CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

To the President and Directors of

Banco BBVA Argentina S.A.

Registered office: Av. Córdoba 111

City of Buenos Aires

Taxpayer identification number [C.U.I.T.] 30 -50000319 -3

Report on the financial statements

We have audited the accompanying condensed interim consolidated financial statements of Banco BBVA Argentina S.A. (the “Entity”) and its subsidiaries, which include the condensed consolidated statement of financial position as of March 31, 2020, the condensed consolidated statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the three-month period then ended, Exhibits and selected explanatory notes.

Board of Directors’ and Management responsibility for the financial statements

The Board of Directors and Management of the Entity are responsible for the preparation and fair presentation of the accompanying financial statements in accordance with the accounting standards established by the Argentine Central Bank (“BCRA”), which, as indicated in Note 2 to the accompanying financial statements, are based on the International Financial Reporting Standards (“IFRS”) and, particularly, for interim financial statements, on International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”), as issued by the International Accounting Standards Board (“IASB”), and adopted by the Argentine Federation of Professional Councils of Economic Sciences (“FACPCE”), with the exceptions described in Note 2. The Board of Directors and Management are also responsible for such internal control as they determine is necessary to enable the preparation of the interim financial statements that are free from material misstatement whether due to error or irregularities.

Auditors’ responsibility and scope of the review

Our responsibility is to express a conclusion on the accompanying condensed interim consolidated financial statements based on our review. We conducted our review in accordance with the standards set forth by Technical Resolution No. 37 of the FACPCE and the “Minimum Standards applicable to External Audits” set forth by the BCRA for the review of interim financial statements. In accordance with such standards, a review is limited primarily to the performance of analytical and other review procedures applied to financial data included in the interim financial statements and inquiries of personnel responsible for the preparation thereof. A review is substantially less in scope than an audit conducted in accordance with auditing standards in force, and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the condensed interim consolidated financial statements.

Opinion

Based on our review, nothing has come to our attention that causes us to conclude that the accompanying condensed interim consolidated financial statements of Banco BBVA Argentina S.A. have not been prepared, in all material respects, in conformity with the accounting standards established by the BCRA, described in Note 2 to the consolidated financial statements.


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- 65 -

 

Emphasis of matter

Without modifying our conclusion, we draw users’ attention to the information disclosed in the accompanying condensed interim consolidated financial statements:

 

a)

As explained in Note 2 to the accompanying consolidated financial statements, such financial statements were prepared by the Entity’s Board of Directors and Management in accordance with the financial reporting framework set forth by the BCRA. Such financial reporting framework differs from the IFRS in the following aspects:

 

  i.

As explained in note 2.a), in accordance with Communication “A” 6847 issued by the BCRA, the Entity has applied the expected losses model set forth in section 5.5 of IFRS 9, excluding from its scope debt instruments of the nonfinancial public sector. Had the impairment model set forth in section 5.5 of IFRS 9 been applied, the Entity would have recorded a decrease in equity of $ 3,676,608 thousand and $ 3,892,574 thousand as of March 31, 2020 and December 31, 2019, respectively, Furthermore, in accordance with Communication “A” 6938, the BCRA postponed the application of the impairment model set forth in section 5.5 of IFRS 9 until the fiscal years commencing on or after January 1, 2021 for Group “B” entities (entities consolidated by the Entity), maintaining for them the impairment model set forth by the BCRA by means of Communication “A” 2950, as amended, which requires the recognition of allowances for loan losses according to minimum requirements set forth by the BCRA,

 

  ii.

As explained in Notes 2.b) and 16, by virtue of the partial sale of the ownership interest in Prisma Medios de Pago S.A., the remaining ownership interest were recorded in “Investments in equity instruments” and stated at its fair value with changes recognized through profit or loss, based on a valuation report of the Company prepared by an external professional. In addition, the valuation adjustment established by Memorandum No. 7/2019, issued on April 29, 2019 by BCRA, was deducted from such remaining ownership interest, The accounting criterion applied implies a departure from the provisions of IFRS 9 about the measurement of equity instruments at fair value,

 

  iii.

As explained in Note 2.c), the financial statements have been prepared taking into consideration the standards prescribed through Memorandum No. 6/2017 issued by the BCRA on May 29, 2017 regarding the accounting treatment to be applied to uncertain tax positions,

 

b)

As indicated in note 5 to the accompanying consolidated financial statements, and by virtue of BCRA Communications “A” 6778 and 6651, as from January 1, 2020, the Entity has adopted the changes in its accounting policies derived from the implementation of IFRS 9 in order to recognize impairment of its financial assets, excluding debt instruments of the nonfinancial public sector, and IAS 29 for the purposes of presenting the financial statements stated in the reporting currency at period-end. Such changes are applied retroactively from January 1, 2019 as provided for by the regulatory authorities, which implies changes to the financial statements filed as of December 31, 2018, March 31, 2019 and December 31, 2019, for comparative purposes, as disclosed in such note.

Report on other legal and regulatory requirements

In compliance with legal provisions in force, we report that:

 

a)

The accompanying condensed interim consolidated financial statements are pending transcription into the Financial Statements for Publication Book and arise from the Company’s accounting records, which are also pending transcription into the Journal, considering the situation described in Note 57 to the condensed interim consolidated financial statements,


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- 66 -

 

b)

As of March 31, 2020, as disclosed in Note 52 to the accompanying condensed interim consolidated financial statements, the Entity’s equity and its eligible assets exceed the minimum amounts required by the regulations of the Argentine Securities and Exchange Commission (CNV),

 

c)

We read the reporting summary (sections “Statement of financial position items”, “Statement of profit or loss items”, “Statement of cash flow items”, “Statistical data” and “Ratios”), and the additional information required by section 12 of Chapter III, Title IV of CNV regulations (compiled text), based on which, as far as it relates to our area of responsibility, we have no observations; and

 

d)

As of March 31, 2020, the accrued liability for retirement and pension contributions payable to the Argentine Pension Fund System arising from the Entity’s accounting records amounts to $ 243,737,188, no amounts being due as of that date.

City of Buenos Aires, June 8, 2020.

KPMG

Mauricio G. Eidelstein

Partner


Table of Contents
LOGO   - 67 -  

 

SEPARATE CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and Exhibits      03.31.20      12.31.19  

ASSETS

        

Cash and deposits in banks

     4        146,370,967        168,318,858  

Cash

        37,326,327        50,368,197  

Financial institutions and correspondents

        109,044,640        117,950,661  

Argentine Central Bank (BCRA)

        104,670,110        115,835,556  

Other in the country and abroad

        4,374,530        2,115,105  

Debt securities at fair value through profit or loss

     5 and Exhibit A        9,059,229        4,452,088  

Derivatives

     6        2,155,425        3,279,799  

Repo transactions

     7        3,201,694        —    

Other financial assets

     8        17,241,461        3,776,583  

Loans and other financing

     9        209,111,206        200,330,839  

Non-financial government sector

        581        493  

Argentine Central Bank (BCRA)

        11,273        18,763  

Other financial institutions

        8,319,799        7,150,574  

Non-financial private sector and residents abroad

        200,779,553        193,161,009  

Other debt securities

     10        64,756,406        48,701,563  

Financial assets pledged as collateral

     11        6,814,710        6,384,691  

Investments in equity instruments

     13 and Exhibit A        1,811,853        2,216,211  

Investments in associates

     14        3,905,723        3,850,041  

Property and equipment

     15        27,301,433        28,068,189  

Intangible assets

     16        918,360        839,598  

Deferred income tax assets

        7,056,805        5,359,065  

Other non-financial assets

     17        4,054,745        4,470,636  

Non-current assets held for sale

     18        178,903        178,903  
     

 

 

    

 

 

 

TOTAL ASSETS

        503,938,920        480,227,064  
     

 

 

    

 

 

 

Notes and exhibits are an integral part of these financial statements.     


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SEPARATE CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
  03.31.20     12.31.19  

LIABILITIES

      

Deposits

   19 and Exhibit

H

    327,367,825       316,296,444  

Non-financial government sector

       3,473,308       3,167,294  

Financial sector

       538,708       199,055  

Non-financial private sector and residents abroad

       323,355,809       312,930,095  

Liabilities at fair value through profit or loss

   20     —         626,102  

Derivatives

   6     331,591       3,312,621  

Other financial liabilities

   21     42,475,763       30,422,438  

Financing received from the BCRA and other financial institutions

   22     998,326       3,711,731  

Corporate bonds issued

   23     4,899,699       5,164,432  

Current income tax liabilities

   12 a)     11,418,033       8,518,164  

Provisions

   Exhibit J     11,192,691       11,493,661  

Other non-financial liabilities

   24     18,206,298       17,866,685  
    

 

 

   

 

 

 

TOTAL LIABILITIES

       416,890,226       397,412,278  
    

 

 

   

 

 

 

EQUITY

      

Share capital

   26     612,710       612,710  

Non-capitalized contributions

       20,893,825       20,893,825  

Capital adjustments

       14,632,579       14,632,579  

Reserves

       47,241,771       47,241,771  

Retained earnings

       10,460,210       (17,844,403

Other accumulated comprehensive income/(loss)

       (9,871,341     (11,026,309

Income for the period

       3,078,940       28,304,613  
    

 

 

   

 

 

 

TOTAL EQUITY

       87,048,694       82,814,786  
    

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

       503,938,920       480,227,064  
    

 

 

   

 

 

 

Notes and exhibits are an integral part of these financial statements.    


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SEPARATE CONDENSED STATEMENT OF INCOME

FOR THE THREE-MONTH INTERIM PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
    Accumulated
as of 03.31.20
    Accumulated
as of 03.31.19
 

Interest income

     27       23,285,669       28,416,652  

Interest expense

     28       (7,547,291     (13,410,646
    

 

 

   

 

 

 

Net interest income

       15,738,378       15,006,006  
    

 

 

   

 

 

 

Commission income

     29       5,319,554       5,746,154  

Commission expenses

     30       (3,502,438     (3,593,966
    

 

 

   

 

 

 

Net commission income

       1,817,116       2,152,188  
    

 

 

   

 

 

 

Net income from financial instruments at fair value through profit or loss

     31       925,127       3,690,144  

Net income (loss) from write-down of assets at amortized cost and at fair value through OCI

     32       (127,002     (6,264

Foreign exchange and gold gains

     33       1,237,860       1,973,390  

Other operating income

     34       1,054,264       5,264,666  

Loan loss allowances

     Exhibit R       (1,595,342     (1,615,725
    

 

 

   

 

 

 

Net operating income

       19,050,401       26,464,405  
    

 

 

   

 

 

 

Personnel benefits

     35       (4,349,869     (4,187,546

Administrative expenses

     36       (3,521,182     (3,147,498

Depreciation and amortization

     37       (818,250     (1,229,499

Other operating expenses

     38       (2,961,673     (4,495,229
    

 

 

   

 

 

 

Operating income

       7,399,427       13,404,633  
    

 

 

   

 

 

 

Income (loss) from associates and joint ventures

       74,962       (45,895

Gain (loss) on net monetary position

       (2,302,363     (4,901,400
    

 

 

   

 

 

 

Income before income tax

       5,172,026       8,457,338  
    

 

 

   

 

 

 

Income tax

     12 b)       (2,093,086     (3,587,331
    

 

 

   

 

 

 

Income for the period

       3,078,940       4,870,007  
    

 

 

   

 

 

 

Notes and exhibits are an integral part of these financial statements.         


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EARNINGS PER SHARE

AS OF MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   03.31.20      03.31.19  

Numerator:

     

Net income attributable to owners of the Parent

     3,078,940        4,870,007  

Net income attributable to owners of the Parent adjusted to reflect the effect of dilution

     3,078,940        4,870,007  

Denominator:

     

Weighted average of outstanding common shares for the period

     612,683,684        612,659,638  

Weighted average of outstanding common shares for the period adjusted to reflect the effect of dilution

     612,683,684        612,659,638  

Basic earnings per share (stated in pesos)

     5.0253        7.9490  

Diluted earnings per share (stated in pesos) (1)

     5.0253        7.9490  

 

(1)

Since Banco BBVA Argentina S.A. has not issued financial instruments with a dilutive effect on earnings per share, basic and diluted earnings per share are the same.


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SEPARATE STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE THREE-MONTH INTERIM PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

     Accumulated
as of 03.31.20
    Accumulated
as of 03.31.19
 

Income for the period

     3,078,940       4,870,007  

Other comprehensive income components to be reclassified to income/(loss) for the period:

    

Share in Other Comprehensive Income from associates and joint ventures at equity method

    

Income/(loss) on the Share in OCI from associates and joint ventures at equity method

     (19,125     (42,437
  

 

 

   

 

 

 
     (19,125     (42,437
  

 

 

   

 

 

 

Profit or losses from financial instruments at fair value through OCI

    

Income for the period on financial instruments at fair value through OCI

     1,134,069       2,114,225  

Reclassication adjustment for the period

     127,002       6,264  

Income tax

     (76,038     160,191  
  

 

 

   

 

 

 
     1,185,033       2,280,680  
  

 

 

   

 

 

 

Other comprehensive income components not to be reclassified to income/(loss) for the period:

    

Income or loss on equity instruments at fair value through OCI (Items 5.7.5 of IFRS 9)

    

Income/(loss) for the period on equity instruments at fair value through OCI

     (15,628     —    

Income tax

     4,688       —    
  

 

 

   

 

 

 
     (10,940     —    
  

 

 

   

 

 

 

Total Other Comprehensive Income for the period

     1,154,968       2,238,243  
  

 

 

   

 

 

 

Total comprehensive income

     4,233,908       7,108,250  
  

 

 

   

 

 

 

Notes and exhibits are an integral part of these financial statements.


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SEPARATE CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

    2020     2019  
    Share
capital
    Non-capitalized
contributions
          Other comprehensive income     Retained earnings                    

Transactions

  Outstanding
shares
    Share
premium
    Adjustments
to equity
    Losses on
financial
instruments at
fair value
through OCI
    Other     Legal
reserve
    Optional
reserve
    Unappropriated
retained
earnings
    Total     Total  

Restated balances at the beginning of the year

    612,710       20,893,825       14,632,579       (11,073,041     46,732       11,153,149       36,088,622       12,539,900       84,894,476       72,553,300  

Impact of the implementation of the financial reporting framework established by the BCRA - NIIF 9. Item 5.5. (See Note 5.2.c. to the consolidated interim financial statements)

    —         —         —         —         —         —         —         (2,079,690     (2,079,690     (318,744
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance at the beginning of the year

    612,710       20,893,825       14,632,579       (11,073,041     46,732       11,153,149       36,088,622       10,460,210       82,814,786       72,234,556  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

                   

- Income for the period

    —         —         —         —         —         —         —         3,078,940       3,078,940       4,870,007  

- Other comprehensive income for the period

    —         —         —         1,185,033       (30,065     —         —         —         1,154,968       2,238,243  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at fiscal period-end

    612,710       20,893,825       14,632,579       (9,888,008 )      16,667       11,153,149       36,088,622       13,539,150       87,048,694       79,342,806  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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SEPARATE STATEMENT OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   03.31.20     03.31.19  

Cash flows from operating activities

    

Income before Income Tax

     5,172,026       8,457,338  

Adjustment for total monetary income for the period

     2,302,363       4,901,400  

Adjustments to obtain cash flows from operating activities:

     (2,796,343     (8,858,842

Depreciation and amortization

     818,250       1,229,499  

Loan loss allowance

     1,595,342       1,615,725  

Effect of foreign exchange changes on cash and cash equivalents

     (4,490,733     (6,702,812

Income/(loss) from sale of Prisma Medios de Pagos S.A.

     —         (4,186,430

Other adjustments

     (719,202     (814,824

Net increases from operating assets:

     (65,391,938     (39,177,724

Debt securities at fair value through profit or loss

     (4,394,855     7,798,213  

Derivatives

     1,124,374       (352,890

Repo transactions

     (3,201,694     (13,745,349

Loans and other financing

     (25,077,546     (4,901,415

Non-financial government sector

     (88     (333

Other financial institutions

     (3,126,335     5,182,855  

Non-financial private sector and residents abroad

     (21,951,123     (10,083,937

Other debt securities

     (19,335,352     (23,454,996

Financial assets pledged as collateral

     (898,072     (852,485

Investments in equity instruments

     197,655       (2,645,662

Other assets

     (13,806,448     (1,023,140

Net increases from operating liabilities:

     46,320,178       31,065,372  

Deposits

     34,422,805       28,785,309  

Non-financial government sector

     306,014       180,242  

Financial sector

     507,183       (106,317

Non-financial private sector and residents abroad

     33,609,608       28,711,384  

Liabilities at fair value through profit or loss

     (626,102     1,980,713  

Derivatives

     (2,981,030     315,704  

Repo transactions

     —         (23,748

Other liabilities

     15,504,505       7,394  

Income tax paid

     (294,180     (344,652
  

 

 

   

 

 

 

Total cash flows used in operating activities

     (14,687,894     (3,957,108
  

 

 

   

 

 

 


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SEPARATE STATEMENT OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   03.31.20     03.31.19  

Cash flows from investing activities:

    

Payments:

     (380,344     (1,215,966

Purchase of property and equipment, intangible assets and other assets

     (380,344     (1,215,966

Collections:

     191,075       2,686,543  

Sale of investments in equity instruments

     —         2,686,543  

Other collections related to investing activities

     191,075       —    
  

 

 

   

 

 

 

Total cash flows (used in)/generated by investing activities

     (189,269     1,470,577  
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments:

     (794,416     (525,400

Non-subordinated corporate bonds

     (338,939     (324,396

BCRA

     (484     —    

Financing from local financial institutions

     (254,219     —    

Leases

     (200,774     (201,004

Collections:

     —         2,531,551  

Non-subordinated corporate bonds

     —         2,514,915  

BCRA

     —         16,636  
  

 

 

   

 

 

 

Total cash flows (used in) / generated by financing activities

     (794,416     2,006,151  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     4,490,733       6,702,812  

Effect of monetary income (loss) on cash and cash equivalents

     (10,767,045     (16,292,710
  

 

 

   

 

 

 

Total changes in cash flows

     (21,947,891     (10,070,278
  

 

 

   

 

 

 

Restated cash and cash equivalents at the beginning of the year (Note 4)

     168,318,858       164,342,030  
  

 

 

   

 

 

 

Cash and cash equivalents at fiscal period-end (Note 4)

     146,370,967       154,271,752  
  

 

 

   

 

 

 

Notes and exhibits are an integral part of these financial statements.


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NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2020

(Stated in thousands of pesos)

 

1.

Basis for the preparation of the separate financial statements

As mentioned in Note 2 to the consolidated condensed interim financial statements, Banco BBVA Argentina S.A. (the “Bank”) presents consolidated financial statements in accordance with the financial reporting framework set forth by the Argentine Central Bank (BCRA).

These financial statements of the Bank are supplementary to the consolidated condensed interim financial statements mentioned above, and are intended for the purposes of complying with legal and regulatory requirements.

 

2.

Criteria for the preparation of the financial statements

These condensed interim financial statements as of March 31, 2020 and for the three-month period ended on that date were prepared in accordance with the regulations issued by the BCRA which provide that financial institutions under its supervision shall be required to present financial statements prepared pursuant to International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), with the following exceptions (“financial reporting framework set forth by the BCRA”):

 

  a)

Impairment of financial assets

Pursuant to Communication “A” 6847 issued by the BCRA, the Entity has applied the expected loss model set forth under Item 5.5. of IFRS 9, except for debt instruments issued by the non-financial public sector which were temporarily excluded from the scope of such standard. If the Entity had applied the impairment model established in Item 5.5. of IFRS 9, its shareholders’ equity as of March 31, 2020 and December 31, 2019 would have been reduced by 3,676,608 and 3,892,574, respectively, net of the deferred tax effect.

In addition, on March 19, 2020, the BCRA handed down Communication “A” 6938 deferring the application of the impairment model set forth in Item 5.5 of IFRS 9 until fiscal years commencing on or after January 1, 2021 for Group “B” entities (the Entity’s subsidiaries), which would remain subject to the impairment model established by the BCRA through Communication “A” 2950, as amended. Such model requires that financial institutions recognize an allowance for loan losses based on the minimum guidelines set forth by the BCRA.

 

  b)

Measurement of the remaining investment held in Prisma Medios de Pago S.A.

By means of Memorandum No. 7/2019 dated April 29, 2019, the BCRA established the accounting treatment to be applied to the remaining investment held by the Entity in Prisma Medios de Pago S.A. recorded under “Investments in Equity Instruments” as of March 31, 2020 and December 31, 2019 (see Note 16).

 

  c)

Uncertain tax positions

The BCRA issued Memorandum No. 6/2017 dated May 29, 2017 regarding the treatment to be afforded to uncertain tax positions. Had the IFRS treatment regarding uncertain tax positions been applied, liabilities would have decreased by 5,447,078 and 5,871,923 as of March 31, 2020 and December 31, 2019, respectively.

As stated in Note 2 to the consolidated financial statements, the above mentioned circumstances result in a departure from the IFRS which has a significant impact and may distort the information provided in these separate financial statements.

Since the current reporting period is an interim period, the Bank has opted for presenting condensed information, in accordance with the guidelines set forth in IAS 34 “Interim financial information”.


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Accordingly, these interim financial statements do not include all the information required for full annual financial statements prepared under IFRS. Therefore, these financial statements should be read jointly with the financial statements as of December 31, 2019. However, these financial statements contain notes describing the events and transactions deemed material to understand the changes in the Entity’s financial position subsequent to December 31, 2019.

Likewise, these separate financial statements contain the additional information and exhibits required by the BCRA through Communication “A” 6324.

To avoid duplication of information already provided, we refer to the consolidated financial statements regarding:

 

   

Functional and presentation currency (Note 3 to the consolidated condensed interim financial statements)

 

   

Accounting judgment and estimates (Note 4 to the consolidated condensed interim financial statements)

 

   

Significant accounting policies (Note 5 to the consolidated condensed interim financial statements), except for the measurement of ownership interests in subsidiaries.

 

   

IFRS issued but not yet effective for Financial Institutions (Note 6 to the consolidated condensed interim financial statements)

 

   

Provisions (Note 27 to the consolidated condensed interim financial statements)

 

   

Fair values of financial instruments (Note 43 to the consolidated condensed interim financial statements)

 

   

Segment reporting (Note 44 to the consolidated condensed interim financial statements)

 

   

Subsidiaries (Note 45 to the consolidated condensed interim financial statements)

 

   

Deposits guarantee regime (Note 50 to the consolidated condensed interim financial statements)

 

   

Compliance with the provisions of the Argentine Securities Commission – minimum shareholders’ equity and liquid assets (Note 52 to the consolidated condensed interim financial statements)

 

   

Trust activities (Note 54 to the consolidated condensed interim financial statements)

 

   

Mutual funds (Note 55 to the consolidated condensed interim financial statements)

 

   

Penalties and administrative proceedings initiated by the BCRA (Note 56 to the consolidated condensed interim financial statements)

 

   

Accounting records (Note 57 to the consolidated condensed interim financial statements)

 

   

Subsequent events (Note 58 to the consolidated condensed interim financial statements)

 

3.

Significant accounting policies

Except as described in Note 5 to the consolidated condensed interim financial statements, the Bank has consistently applied the accounting policies described in Note 5 to the consolidated financial statements as of December 31, 2019, in all the periods presented in these financial statements.

Investments in subsidiaries

Subsidiaries are all the entities controlled by the Bank. The Bank owns a controlling interest in an entity when it is exposed to, or has rights over, the variable returns from its interest in the company, and has the power to affect the changes in such yields. The Bank reevaluates if its control is maintained when there are changes in any of the conditions mentioned.

Interests in Subsidiaries are measured using the equity method. They are initially recognized at cost, which includes transaction costs. After initial recognition, the financial statements include the Bank’s share in profit or loss and OCI of investments accounted for using the equity method, until the date when the significant influence or joint control cease.


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The interim financial statements as of March 31, 2020 of the subsidiaries BBVA Asset Management Argentina S.A., and Consolidar Administradora de Jubilaciones y Pensiones S.A. (under liquidation proceedings) were adjusted considering the financial reporting framework set forth by the BCRA in order to present information on a homogeneous basis.

The financial statements of Rombo Compañía Financiera S.A., PSA Finance Argentina Compañía Financiera S.A. and Volkswagen Financial Services Compañía Financiera S.A. were prepared considering the financial reporting framework set forth by the BCRA for Group “B” financial institutions, which does not consider the model set forth in item 5.5 “Impairment” of IFRS 9 until the fiscal years commencing on or after January 1, 2021 as stated in note 2 to these financial statements.

 

4.

Cash and deposits in banks

 

     03.31.20      12.31.19  

BCRA - Current account

     104,670,110        115,835,556  

Cash

     37,326,327        50,368,197  

Balances with other local and foreign institutions

     4,374,530        2,115,105  
  

 

 

    

 

 

 

TOTAL

     146,370,967        168,318,858  
  

 

 

    

 

 

 

 

5.

Debt securities at fair value through profit or loss

 

     03.31.20      12.31.19  

BCRA Bills

     8,906,573        4,295,267  

Private securities - Corporate bonds

     101,377        100,904  

Government securities

     51,279        55,917  
  

 

 

    

 

 

 

TOTAL

     9,059,229        4,452,088  
  

 

 

    

 

 

 

 

6.

Derivatives

In the ordinary course of business, the Bank carried out foreign currency forward transactions with daily or upon-maturity settlement of differences, with no delivery of the underlying asset and interest rate swap transactions. These transactions do not qualify as hedging pursuant to IFRS 9 - “Financial Instruments”.

The aforementioned instruments are measured at fair value and were recognized in the Statement of financial position in the item “Derivative instruments” and changes in fair values were recognized in the Statement of Income in the item “Net income from measurement of financial instruments at fair value through profit or loss”.

As of March 31, 2020, the Bank has accounted for premiums from put options taken in respect of the Bank’s right to sell its equity interest in Prisma Medios de Pago S.A. to the buyer as of December 30, 2021. Such equity interest was measured at fair value, as calculated by management in reliance of a report prepared by independent appraisers (Note 43 to the consolidated condensed interim financial statements).

Breakdown is as follows:

Assets

 

     03.31.20      12.31.19  

Debit balances linked to foreign currency forwards pending settlement in pesos

     1,470,425        2,541,372  

Premiums for put options taken - Prisma Medios de Pago S.A.

     685,000        738,427  
  

 

 

    

 

 

 

TOTAL

     2,155,425        3,279,799  
  

 

 

    

 

 

 


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LOGO   - 78 -  

 

Liabilities

 

     03.31.20      12.31.19  

Credit balances linked to foreign currency forwards pending settlement in pesos

     283,876        3,154,818  

Credit balances linked to interest rate swaps

     47,715        157,803  
  

 

 

    

 

 

 

TOTAL

     331,591        3,312,621  
  

 

 

    

 

 

 

The notional amounts of the forward transactions and foreign currency forwards, stated in US Dollars (US$) and euros, as applicable, as well as the base value of interest rate swaps are reported below.

 

     03.31.20      12.31.19  

Foreign currency forwards

     

Foreign currency forward purchases - US$

     1,139,766        618,497  

Foreign currency forward purchases - Euros

     961        35  

Foreign currency forward sales - US$

     1,132,625        620,956  

Foreign currency forward sales - Euros

     300        1,804  

Interest rate swaps

     

Fixed rate for floating rate (1)

     800,030        1,500,050  

 

(1)

Floating rate: Badlar Rate, interest rate for time deposits over 1 (one) million pesos, for 30 to 35 days.

 

7.

Repo transactions

Breakdown is as follows:

Reverse repurchase transactions

 

     03.31.20      12.31.19  

Amounts receivable for reverse repurchase transactions of BCRA Liquidity Bills with the BCRA

     3,201,694        —    
  

 

 

    

 

 

 

TOTAL

     3,201,694        —    
  

 

 

    

 

 

 

 

8.

Other financial assets

Breakdown of other financial assets is as follows:

 

     03.31.20      12.31.19  

Measured at amortized cost

     

Financial debtors from spot transactions pending settlement

     11,587,607        273,297  

Other receivables

     3,861,175        1,482,732  

Receivables from sale of ownership interest in Prisma Medios de Pago S.A.

     1,934,456        2,028,658  

Other

     84,023        182,961  

Non-financial debtors from spot transactions pending settlement

     669        29,945  
  

 

 

    

 

 

 
     17,467,930        3,997,593  
  

 

 

    

 

 

 

Allowance for loans losses (Exhibit R)

     (226,469      (221,010
  

 

 

    

 

 

 

TOTAL

     17,241,461        3,776,583  
  

 

 

    

 

 

 


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9.

Loans and other financing

The Bank keeps loans and other financing under a business model with the purpose of collecting contractual cash flows. Therefore, it measures loans and other financing at amortized cost. Below is a breakdown of the related balance:

 

     03.31.20      12.31.19  

Non-financial government sector

     581        493  

BCRA

     11,273        18,763  

Other financial institutions

     8,443,772        7,304,377  

Overdrafts

     29,505,886        15,520,217  

Discounted instruments

     12,207,134        13,298,402  

Unsecured instruments

     8,633,733        12,246,606  

Mortgage loans

     15,106,043        15,255,182  

Pledge loans

     1,298,250        1,454,456  

Consumer loans

     23,747,432        25,370,240  

Credit Cards

     70,380,730        77,686,619  

Loans for the prefinancing and financing of exports

     27,075,155        19,723,114  

Receivables from finance leases

     1,563,482        1,882,952  

Loans to personnel

     1,827,114        1,845,763  

Other financing

     21,205,992        20,816,243  
  

 

 

    

 

 

 
     221,006,577        212,423,427  
  

 

 

    

 

 

 

Allowance for loan losses (Exhibit R)

     (11,895,371      (12,092,588
  

 

 

    

 

 

 

TOTAL

     209,111,206        200,330,839  
  

 

 

    

 

 

 

Finance leases

The Bank entered into finance leases related to vehicles, machinery and equipment.

The following table shows the total gross investment of finance leases (leasing) and the current value of minimum payments to be received by them:

 

     03.31.20      12.31.19  
     Total
investment
     Current
value of
minimum
payments
     Total
investments
     Current
value of
minimum
payments
 

Up to 1 year

     1,171,197        900,754        991,975        988,707  

From 1 to 5 years

     888,924        662,728        897,397        894,245  
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     2,060,121        1,563,482        1,889,372        1,882,952  
  

 

 

    

 

 

    

 

 

    

 

 

 

Principal

        1,535,215           1,861,099  

Interest accrued

        28,267           21,853  
     

 

 

       

 

 

 

TOTAL

        1,563,482           1,882,952  
     

 

 

       

 

 

 


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A breakdown of loans and other financing according to credit quality standing pursuant to the standards applicable issued by the BCRA are detailed in Exhibit B, while the information on the concentration of loans and other financing is presented in Exhibit C to these separate financial statements. The reconciliation of the information included in those Exhibits with the accounting balances is included below.

 

     03.31.20      12.31.19  

Total Exhibit B and C

     222,360,413        213,207,335  

Plus:

     

BCRA

     11,273        18,763  

Loans to personnel

     1,827,114        1,845,767  

Interest and other items accrued receivable from financial assets with credit value impairment

     134,678        —    

Less:

     

Allowance for loan losses (Exhibit R)

     (11,895,371      (12,092,588

Adjustments for effective interest rate

     (344,121      (381,341

Corporate bonds

     (92,468      (104,965

Loan commitments

     (2,890,312      (2,162,132
  

 

 

    

 

 

 

Total loans and other financing

     209,111,206        200,330,838  
  

 

 

    

 

 

 

As of March 31, 2020 and December 31, 2019, the Bank holds the following contingent transactions booked in off-balance sheet accounts according to the financial reporting framework set forth by the BCRA:

 

     03.31.20      12.31.19  

Overdrafts and receivables agreed not used

     1,448,075        335,637  

Guarantees granted

     541,453        545,772  

Liabilities related to foreign trade transactions

     323,234        953,960  

Secured loans

     577,550        326,764  
  

 

 

    

 

 

 
     2,890,312        2,162,132  
  

 

 

    

 

 

 

Risks related to the aforementioned contingent transactions are evaluated and controlled within the framework of the Bank’s credit risks policy.

 

10.

Other debt securities

 

  a)

Financial assets measured at amortized cost

 

     03.31.20      12.31.19  

Corporate bonds under credit recovery transactions

     83        89  
  

 

 

    

 

 

 
     83        89  
  

 

 

    

 

 

 

Allowance for loan losses - Private securities (Exhibit R)

     (83      (89
  

 

 

    

 

 

 

TOTAL

     —          —    
  

 

 

    

 

 

 


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  b)

Financial assets measured at fair value through OCI

 

     03.31.20      12.31.19  

Government securities

     17,415,746        17,282,071  

BCRA Liquidity Bills

     47,264,185        31,344,519  

Private securities - Corporate bonds

     77,085        75,621  
  

 

 

    

 

 

 
     64,757,016        48,702,211  
  

 

 

    

 

 

 

Allowance for loan losses - Private securities (Exhibit R)

     (610)        (648)  
  

 

 

    

 

 

 

TOTAL

     64,756,406        48,701,563  
  

 

 

    

 

 

 

 

11.

Financial assets pledged as collateral

As of March 31, 2020 and December 31, 2019, the Entity delivered the financial assets listed below as collateral:

 

            03.31.20      12.31.19  

Deposits as collateral

     (3      3,664,740        3,262,575  

BCRA - Special guarantee accounts

     (1      2,310,245        3,048,446  

Guarantee Trust - Pesos

     (2      839,725        73,670  
     

 

 

    

 

 

 

TOTAL

        6,814,710        6,384,691  
     

 

 

    

 

 

 

 

  (1)

Special guarantee current accounts opened at the BCRA for the transactions related to the automated clearing houses and other similar entities.

 

  (2)

The trust fund consists of pesos and monetary regulation instruments issued by the BCRA.

 

  (3)

Deposits pledged as collateral for activities related to credit card transactions in the country and abroad, leases and futures contracts.

 

12.

Income tax

 

  a)

Current income tax liabilities

Breakdown is as follows:

 

     03.31.20      12.31.19  

Income tax provision

     12,561,701        9,442,913  

Advances

     (1,143,420      (924,481

Collections and withholdings

     (248      (268
  

 

 

    

 

 

 
     11,418,033        8,518,164  
  

 

 

    

 

 

 

b) Income tax expense

Breakdown of income tax expense:

 

     03.31.20      03.31.19  

Current tax

     (3,880,508      (3,621,440

Deferred tax

     1,787,422        34,109  
  

 

 

    

 

 

 
     (2,093,086      (3,587,331
  

 

 

    

 

 

 


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Pursuant to IAS No. 34, in interim periods income tax is recognized over the best estimate of the weighted average tax rate expected by the Entity for the fiscal year.

The Bank’s effective rate for the three-month period ended March 31, 2020 was 40%, while for the three-month period ended March 31, 2019, it was 42%.

The policy on the recognition of income tax in interim periods is described in Note 15.c) to the consolidated condensed interim financial statements.

 

13.

Investments in equity instruments

Investments in equity instruments over which the Bank has no control, joint control or a significant influence are measured at fair value through profit or loss or at fair value through OCI. Breakdown is as follows:

 

  13.1

Investments in equity instruments through profit or loss

 

     03.31.20      12.31.19  

Prisma Medios de Pago S.A. (1)

     1,694,185        2,032,301  

BYMA-Bolsas and Mercados Argentinos S.A.

     43,392        67,762  

Mercado de Valores de Buenos Aires S.A.

     58,750        86,644  
  

 

 

    

 

 

 

TOTAL

     1,796,327        2,186,707  
  

 

 

    

 

 

 

 

  13.2

Investments in equity instruments through OCI

 

     03.31.20      12.31.19  

Banco Latinoaméricano de Exportaciones S.A.

     14,490        28,444  

Other

     1,036        1,060  
  

 

 

    

 

 

 

TOTAL

     15,526        29,504  
  

 

 

    

 

 

 

 

14.

Investments in subsidiaries and associates

The Bank has investments in the following entities over which it has a control or significant influence which are measured by applying the equity method:

 

     03.31.20      12.31.19  

PSA Finance Arg. Cía. Financiera S.A.

     602,515        619,085  

Rombo Cía. Financiera S.A.

     689,573        708,983  

Volkswagen Financial Services Compañía Financiera S.A.

     1,141,676        1,095,198  

Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings)

     31,438        33,107  

BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión

     1,003,715        985,904  

Interbanking S.A.

     121,673        122,520  

BBVA Consolidar Seguros S.A.

     315,133        285,244  
  

 

 

    

 

 

 

TOTAL

     3,905,723        3,850,041  
  

 

 

    

 

 

 


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15.

Property and equipment

 

     03.31.20      12.31.19  

Real estate

     18,719,767        18,871,712  

Furniture and facilities

     4,091,522        4,248,450  

Right of use of leased real estate (Note 25)

     2,345,347        2,515,783  

Machinery and equipment

     1,718,848        2,049,716  

Constructions in progress

     393,152        346,599  

Automobiles

     32,797        35,929  
  

 

 

    

 

 

 

TOTAL

     27,301,433        28,068,189  
  

 

 

    

 

 

 

Detailed information on assets and liabilities for leases as well as interest and foreign exchange differences recognized in profit or loss are stated in Note 25 to the separate condensed interim financial statements.

 

16.

Intangible assets

 

     03.31.20      12.31.19  

Licenses - Software

     918,360        839,598  
  

 

 

    

 

 

 

TOTAL

     918,360        839,598  
  

 

 

    

 

 

 

 

17.

Other non-financial assets

Breakdown is as follows:

 

     03.31.20      12.31.19  

Investment properties

     1,514,335        1,527,590  

Prepayments

     1,362,996        1,497,767  

Tax advances

     690,589        613,055  

Advances to suppliers of goods

     250,088        256,900  

Other miscellaneous assets

     190,527        190,526  

Assets acquired as security for loans

     12,181        11,675  

Advances to personnel

     1,050        350,835  

Other

     32,979        22,288  
  

 

 

    

 

 

 

TOTAL

     4,054,745        4,470,636  
  

 

 

    

 

 

 

 

18.

Non-current assets held for sale

On December 19, 2018, the Board of Directors agreed on a plan to sell a group of real property assets located in Argentina. Therefore, these assets, the value of which, as of March 31, 2020 and December 31, 2019 amounts to 178,903, were classified as “Non-current assets held for sale”, after the efforts to sell that group of assets began.


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19.

Deposits

The information on concentration of deposits is disclosed in Exhibit H. Breakdown is as follows:

 

     03.31.20      12.31.19  

Non-financial government sector

     3,473,308        3,167,294  

Financial sector

     538,708        199,055  

Non-financial private sector and residents abroad

     323,355,809        312,930,095  

Checking accounts

     63,307,080        58,250,626  

Savings accounts

     162,584,954        159,355,038  

Time deposits

     86,332,664        90,073,190  

Investment accounts

     13,952        83  

Other

     11,117,159        5,251,158  
  

 

 

    

 

 

 

TOTAL

     327,367,825        316,296,444  
  

 

 

    

 

 

 

 

20.

Liabilities at fair value through profit or loss

 

     03.31.20      12.31.19  

Obligations from securities transactions

     —          626,102  
  

 

 

    

 

 

 

TOTAL

     —          626,102  
  

 

 

    

 

 

 

 

21.

Other financial liabilities

 

     03.31.20      12.31.19  

Obligations from financing of purchases

     14,219,318        18,293,703  

Creditors from spot transactions pending settlement

     11,718,423        129,811  

Collections and other transactions on behalf of third parties

     3,850,551        3,450,855  

Credit balance for spot purchases or sales pending settlement

     2,643,258        129,133  

Liabilities for leases (Note 29)

     2,552,602        2,707,438  

Payment orders pending credit

     2,302,796        2,090,054  

Accrued commissions payable

     18,315        15,711  

Interest accrued payable

     —          148,256  

Other

     5,170,500        3,457,477  
  

 

 

    

 

 

 

TOTAL

     42,475,763        30,422,438  
  

 

 

    

 

 

 

 

22.

Financing received from the BCRA and other financial institutions

 

     03.31.20      12.31.19  

Local financial institutions

     672,555        956,447  

Foreign financial institutions

     278,528        2,737,230  

BCRA

     47,243        18,054  
  

 

 

    

 

 

 

TOTAL

     998,326        3,711,731  
  

 

 

    

 

 

 


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23.

Corporate bonds issued

Below is a detail of the Bank’s corporate bonds in force as of March 31, 2020 and December 31, 2019.

 

Detail

   Issuance
date
     Nominal
value (in
thousands
of pesos)
     Maturity
date
    

Annual Nominal
Rate

  

Payment of
interest

   Outstanding
securities as
of 03.31.20
     Outstanding
securities as
of 12.31.19
 

Class 24

     12.27.2017        546,500        12.27.2020      Badlar Private + 4.25% annual nominal rate UVA +    Quarterly      526,500        567,564  

Class 25

     11.08.2018        784,334        11.08.2020      9.50% annual nominal rate    Quarterly      1,426,898        1,394,968  

Class 27

     02.28.2019        1,090,000        08.28.2020      Badlar Private + 6.25% annual nominal rate    Quarterly      891,000        960,494  

Class 28

     12.12.2019        1,967,150        06.12.2020      Badlar Private + 4% annual nominal    Quarterly      1,967,150        2,120,578  
                 

 

 

    

 

 

 
            Total principal      4,811,548        5,043,604  
            Interest accrued      88,151        120,828  
              

 

 

    

 

 

 
            Total principal and interest accrued      4,899,699        5,164,432  
              

 

 

    

 

 

 

Definitions:

BADLAR RATE: it is the interest rate for time deposits over 1 (one) million pesos, for 30 to 35 days.

UVA RATE: it is a measurement unit updated on a daily basis as per CER, according to the consumer price index.

 

24.

Other non-financial liabilities

 

     03.31.20      12.31.19  

Miscellaneous creditors

     7,228,012        5,254,199  

Short-term personnel benefits

     3,630,656        4,423,228  

Other collections and withholdings

     2,595,793        3,308,918  

Advances collected

     2,510,644        2,810,066  

Other taxes payable

     1,025,156        1,266,445  

For contract liabilities

     481,664        413,688  

Social security payment orders pending settlement

     433,293        66,227  

Long-term personnel benefits

     295,708        318,772  

Other

     5,372        5,142  
  

 

 

    

 

 

 

TOTAL

     18,206,298        17,866,685  
  

 

 

    

 

 

 


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25.

Leases

Bank as lessee

Below is a detail of the amounts of rights of use under leases and liabilities from leases in force as of March 31, 2020:

Rights of use under leases

 

     Initial                    Depreciation      Residual  
     value as of                    Accumulated             For the      Accumulated      value as of  

Account

   01.01.2020      Increases      Decreases      as of 01.01.2020      Decreases      period (1)      at period-end      03.31.2020  

Leased real property

     3,113,204        92,942        123,007        597,421        2,348        142,719        737,792        2,345,347  

 

  (1)

Note 37

Liabilities from leases

Future minimum payments for lease agreements are as follows:

 

     In foreign
currency
     In local
currency
     03.31.20  

Up to one year

     136,876        14,548        151,424  

From 1 to 5 years

     1,247,301        160,226        1,407,527  

More than 5 years

     977,955        15,696        993,651  
        

 

 

 
           2,552,602  
        

 

 

 

Interest and exchange rate difference recognized in profit or loss

 

Other operating expenses

     (76,408

Interest on liabilities from finance lease (Note 38)

  

Exchange rate difference

     (109,249

Exchange rate difference for finance leases (loss)

  

Other expenses

  

Leases (Note 36)

     (314,645

 

26.

Share capital

The information on the corporate stock is disclosed in Note 30 to the consolidated condensed interim financial statements.


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27.

Interest income

 

     03.31.20      03.31.19  

Interest on government securities

     6,248,533        7,264,179  

Interest on credit card loans

     4,615,865        6,029,643  

Interest on instruments

     2,542,158        3,092,093  

Acquisition Value Unit (UVA) clause adjustment

     2,254,499        2,392,381  

Interest on consumer loans

     2,010,519        2,719,186  

Interest on overdrafts

     2,513,427        2,374,129  

Interest on loans to the financial sector

     626,881        1,091,455  

Interest on other loans

     765,225        1,086,055  

Interest on loans for the prefinancing and financing of exports

     312,722        1,013,925  

Premiums on reverse repurchase agreements

     729,701        575,500  

Interest on mortgage loans

     316,958        404,815  

Interest on finance leases

     94,410        190,506  

Interest on pledge loans

     88,181        151,441  

Stabilization Coefficient (CER) clause adjustment

     26,409        27,648  

Interest on private securities

     1,556        3,074  

Other

     138,625        622  
  

 

 

    

 

 

 

TOTAL

     23,285,669        28,416,652  
  

 

 

    

 

 

 

 

28.

Interest expenses

 

     03.31.20      03.31.19  

Time deposits

     6,383,202        10,856,809  

Checking accounts deposits

     223,495        1,046,310  

Other liabilities from financial transactions

     650,917        965,969  

Acquisition Value Unit (UVA) clause adjustments

     204,126        455,194  

Savings accounts deposits

     67,650        56,035  

Interfinancial loans received

     10,897        23,837  

Other

     7,004        5,876  

Premiums on reverse repurchase agreements

     —          616  
  

 

 

    

 

 

 

TOTAL

     7,547,291        13,410,646  
  

 

 

    

 

 

 

 

29.

Commission income

 

     03.31.20      03.31.19  

Linked to liabilities

     2,879,825        3,076,806  

From credit cards

     1,800,672        1,669,599  

From insurance

     277,321        346,078  

From foreign trade and foreign currency transactions

     208,327        283,609  

Linked to loans

     118,302        338,420  

Linked to securities

     34,645        31,194  

From guarantees granted

     462        448  
  

 

 

    

 

 

 

TOTAL

     5,319,554        5,746,154  
  

 

 

    

 

 

 


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LOGO   - 88 -  

 

30.

Commission expenses

 

     03.31.20      03.31.19  

From credit and debit cards

     2,932,661        2,705,700  

From payment of salaries

     186,924        262,611  

From digital sales services

     111,594        253,855  

From Fromeign trade transactions

     34,962        42,067  

Comisiones Latam Pass

     28,914        27,185  

Linked to transactions with securities

     553        503  

Other commission expenses

     206,830        302,045  
  

 

 

    

 

 

 

TOTAL

     3,502,438        3,593,966  
  

 

 

    

 

 

 

 

31.

Net income/(loss) from measurement of financial instruments carried at fair value through profit or loss

 

     03.31.20      03.31.19  

Income from government securities

     930,181        1,352,239  

Income from foreign currency forward transactions

     230,624        186,980  

Income/(loss) from interest rate swaps

     22,971        (186,731

Income from corporate bonds

     16,624        34,500  

Other

     (1,518      —    

(Loss)/income from private securities

     (40,764      2,303,156  

(Loss) from loans

     (232,991      —    
  

 

 

    

 

 

 

TOTAL

     925,127        3,690,144  
  

 

 

    

 

 

 

 

32.

(Loss) /Income from writing down of financial assets at amortized cost and at fair value through OCI

 

     03.31.20      03.31.19  

(Loss) from sale of government securities

     (127,002      (6,264
  

 

 

    

 

 

 

TOTAL

     (127,002      (6,264
  

 

 

    

 

 

 

 

33.

Foreign exchange and gold gains/(losses)

 

     03.31.20      03.31.19  

Income from purchase-sale of foreign currency

     946,148        2,230,340  

Conversion of foreign currency assets and liabilities into pesos

     291,712        (256,950
  

 

 

    

 

 

 

TOTAL

     1,237,860        1,973,390  
  

 

 

    

 

 

 


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34.

Other operating income

 

     03.31.20      03.31.19  

Adjustments and interest on miscellaneous receivables

     249,512        295,947  

Rental of safe deposit boxes

     207,680        189,024  

Loans recovered

     161,364        120,758  

Allowances reversed

     84,933        57,469  

Debit and credit card commissions

     74,296        215,292  

Punitive interest

     54,335        48,493  

Income from sale of non-current assets held for sale

     —          4,186,430  

Other operating income

     222,144        151,253  
  

 

 

    

 

 

 

TOTAL

     1,054,264        5,264,666  
  

 

 

    

 

 

 

 

35.

Personnel benefits

 

     03.31.20      03.31.19  

Salaries

     2,607,767        2,571,215  

Social security charges

     772,563        706,977  

Personnel compensation and bonuses

     84,191        198,001  

Personnel services

     86,291        78,534  

Other short-term personnel benefits

     799,057        632,819  
  

 

 

    

 

 

 

TOTAL

     4,349,869        4,187,546  
  

 

 

    

 

 

 

 

36.

Administrative expenses

 

     03.31.20      03.31.19  

Taxes

     859,559        864,511  

Maintenance costs

     423,293        429,055  

Administrative expenses

     329,836        247,858  

Rent (Note 25)

     314,645        262,501  

Armored transportation services

     276,646        255,444  

Electricity and communications

     221,740        169,984  

Other fees

     215,734        131,744  

Advertising

     177,703        187,151  

Security services

     110,037        132,812  

Insurance

     42,109        38,355  

Representation and travel expenses

     27,546        42,203  

Fees to Bank Directors and Supervisory Committee

     19,525        5,781  

Stationery and supplies

     18,867        17,095  

Other administrative expenses

     483,942        363,004  
  

 

 

    

 

 

 

TOTAL

     3,521,182        3,147,498  
  

 

 

    

 

 

 


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37.

Depreciation and amortization

 

     03.31.20      03.31.19  

Depreciation of property and equipment

     625,971        650,123  

Amortization of rights of use of leased real property (Note 25)

     142,719        424,575  

Amortization of intangible assets

     40,511        153,405  

Depreciation of other assets

     9,049        1,396  
  

 

 

    

 

 

 

TOTAL

     818,250        1,229,499  
  

 

 

    

 

 

 

 

38.

Other operating expenses

 

     03.31.20      03.31.19  

Turnover tax

     1,627,302        2,122,245  

Other allowances (Exhibit J)

     701,709        990,808  

Other operating expenses

     221,662        426,935  

Initial recognition of loans

     174,725        625,515  

Contribution to the Deposit Guarantee Fund

     124,054        169,732  

Interest on liabilities from financial lease (Note 25)

     76,408        85,844  

Claims

     25,238        74,150  

Reorganization expenses (Exhibit J)

     10,575        —    
  

 

 

    

 

 

 

TOTAL

     2,961,673        4,495,229  
  

 

 

    

 

 

 

 

39.

Related parties

See Note 46 to the Consolidated Condensed Interim Financial Statements.

 

40.

Restrictions to the payment of dividends

See Note 48 to the consolidated condensed interim financial statements regarding the restrictions to the payment of dividends.

 

41.

Restricted assets

As of March 31, 2020 and December 31, 2019, the Bank has the following restricted assets:

 

  a)

The Entity applied Argentine Treasury Bonds adjusted by CER in pesos maturing in 2021 in the amount of 98,980, Treasury Bonds in pesos maturing on July 31, 2020 in the amount of 115,200 as of March 31, 2020, Treasury Bonds adjusted by CER in pesos maturing in 2021 in the amount of 89,268, Treasury Bonds in pesos maturing on July 31, 2020 in the amount of 116,243 as of December 31, 2019, as security for loans agreed under the Global Credit Program for micro, small and medium enterprises granted by the Inter-American Development Bank (IDB).

 

  b)

Also, the Entity has accounts, deposits, repo transactions and trusts applied as guarantee for activities related to credit card transactions, with automated clearing houses, transactions settled at maturity, foreign currency futures, court proceedings and leases in the amount of 6,814,710 and 6,384,691 as of March 31, 2020 and December 31, 2019, respectively.

 

42.

Minimum cash and minimum capital requirements

42.1 Minimum cash requirements

The BCRA establishes different prudential regulations to be observed by financial institutions, mainly regarding solvency levels, liquidity and credit assistance levels.


Table of Contents
LOGO   - 91 -  

 

Minimum cash regulations set forth an obligation to keep liquid assets in relation to deposits and other obligations recorded for each period. The items included for the purpose of meeting that requirement are detailed below:

 

Accounts

   03.31.20      12.31.19  

Balances at the BCRA

     

Argentine Central Bank (BCRA) – current account not restricted

     104,310,300        115,835,556  

Argentine Central Bank (BCRA) – special guarantee accounts - restricted
(Note 11)

     2,310,245        3,048,446  

Argentine Central Bank (BCRA) – social security special accounts - restricted

     359,810        —    
  

 

 

    

 

 

 
     106,980,355        118,884,002  
  

 

 

    

 

 

 

Treasury Bonds in pesos at fixed rate due November 2020

     8,702,158        7,869,601  

Liquidity Bills – B.C.R.A.

     56,170,758        35,639,786  
  

 

 

    

 

 

 

TOTAL

     171,853,271        162,393,389  
  

 

 

    

 

 

 

 

  42.2

Minimum capital requirements

The breakdown of minimum capital requirements is as follows at the mentioned date:

 

Minimum capital requirement

   03.31.20      03.31.19  

Credit risk

     20,908,883        26,430,645  

Operational risk

     6,795,081        5,759,999  

Market risk

     497,445        345,864  
  

 

 

    

 

 

 

Paid-in

     74,376,020        56,206,543  
  

 

 

    

 

 

 

Surplus

     46,174,611        23,670,035  
  

 

 

    

 

 

 

 

43.

Accounting principles – Explanation added for translation into English

These financial statements are the English translation of those originally issued in Spanish.

These financial statements are presented on the basis of the accounting standards established by the financial reporting framework set forth by BCRA. Certain accounting practices applied by the Bank that conform to the standards of the BCRA may not conform to the generally accepted accounting principles in other countries.

The differences between the financial reporting framework set forth by BCRA and IFRS are detailed in Note 2 to the consolidated financial statements. Accordingly, these financial statements are not intended to present financial position, results of operations and cash flows in accordance with generally accepted accounting principles other than the financial reporting framework set forth by the BCRA.


Table of Contents
LOGO   - 92 -  

 

EXHIBIT A

BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

            HOLDING      POSITION  

Account

   Identification      Fair
value
     Fair
value
level
     Book
value
03.31.20
     Book
value
12.31.19
     Position with
no options
     Options      Final
position
 

DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

                       

Local

                       

Government Securities - In pesos

                       

Province of Rio Negro Debt Security, Floating rate, maturity 2021

     42016        50,731        2        50,731        55,738        50,731        —          50,731  

CER-adjusted Argentine Bond in pesos. Maturity 2021

     5315        369        1        369        —          369        —          369  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities - In pesos

        51,100           51,100        55,738        51,100        —          51,100  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Government Securities - In foreign currency

                       

Treasury Bonds in USD. Maturity 10-11-19

     5291        179        2        179        179        179        —          179  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities - In foreign currency

        179           179        179        179        —          179  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

BCRA Bills

                       

BCRA Liquidity Bills in pesos. Maturity 01-02-20

     13551        —          2        —          4,295,268        —          —          —    

BCRA Liquidity Bills in pesos. Maturity 04-23-20

     13595        8,207,874        2        8,207,874        —          8,207,874        —          8,207,874  

BCRA Liquidity Bills in pesos. Maturity 04-03-20

     13589        698,699        2        698,699        —          698,699        —          698,699  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal BCRA Bills

        8,906,573           8,906,573        4,295,268        8,906,573        —          8,906,573  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Private Securities

                       

Corporate Bond FCA Financiera Series I UVA Maturity 11-05-20

     53823        76,625        2        76,625        75,714        76,625        —          76,625  

Corporate Bond Banco de la Provincia de Bs. As. Class IV

     32890        14,276        2        14,276        15,992        14,276        —          14,276  

Corporate Bond Rombo Cia Financiera S.A. Class 40

     52940        5,313        2        5,313        3,520        5,313        —          5,313  

Corporate Bond Rombo Cia Financiera S.A. Class 42

     53238        5,163        2        5,163        5,677        5,163        —          5,163  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Private Securities

        101,377           101,377        100,903        101,377        —          101,377  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

        9,059,229           9,059,229        4,452,088        9,059,229        —          9,059,229  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Table of Contents
LOGO   - 93 -  

 

EXHIBIT A

(Continued)

BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

            HOLDING      POSITION  

Account

   Identification      Fair
value
     Fair
value
level
     Book
value
03.31.20
     Book
value
12.31.19
     Position
with no
options
     Options      Final position  

OTHER DEBT SECURITIES

                       

MEASURED AT FAIR VALUE THROUGH OCI

                       

Local:

                       

Government Securities - In pesos

                       

Argentine Treasury Bond in pesos. Fixed rate. Maturity November 2020

     5330        8,702,157        2        8,702,157        7,869,601        8,702,157        —          8,702,157  

CER-Adjusted Argentine Bond in pesos. 1% Maturity 2021

     5359        982,923        2        982,923        —          982,923        —          982,923  

Capitalizable Treasury Bills in Pesos. Maturity 07-31-20

     5284        257,184        1        257,184        999,204        257,184        —          257,184  

Treasury Bills. Floating rate (BADLAR)

     5358        193,783        2        193,783        —          193,783        —          193,783  

CER-Adjusted Argentine Bond in pesos. Maturity 2021

     5315        125,048        1        125,048        112,779        125,048        —          125,048  

Capitalizable Treasury Bills in Pesos. Maturity 05-29-20

     5341        113,750        2        113,750        383,227        113,750        —          113,750  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities - In pesos

        10,374,845           10,374,845        9,364,811        10,374,845        —          10,374,845  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Government Securities - In foreign currency

                       

USD-Linked Treasury Bills. Maturity 12-04-19

     5333        6,911,028        2        6,911,028        7,708,664        6,911,028        —          6,911,028  

Treasury Bills in USD. Maturity 08-31-20

     5283        129,873        2        129,873        208,596        129,873        —          129,873  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities - In foreign currency

        7,040,901           7,040,901        7,917,260        7,040,901        —          7,040,901  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

BCRA Bills

                       

BCRA Liquidity Bills in pesos. Maturity 03-31-2020

     13588        26,746,377        2        26,746,377        —          26,746,377        —          26,746,377  

BCRA Liquidity Bills in pesos. Maturity 04-08-2020

     13591        8,266,476        2        8,266,476        —          8,266,476        —          8,266,476  

BCRA Liquidity Bills in pesos. Maturity 04-07-2020

     13590        6,474,462        2        6,474,462        —          6,474,462        —          6,474,462  

BCRA Liquidity Bills in pesos. Maturity 04-03-2020

     13589        4,990,705        2        4,990,705        —          4,990,705        —          4,990,705  

BCRA Liquidity Bills in pesos. Maturity 04-16-2020

     13593        786,165        2        786,165        —          786,165        —          786,165  

BCRA Liquidity Bills in pesos. Maturity 01-07-2020

     13554        —          2        —          19,504,139        —          —          —    

BCRA Liquidity Bills in pesos. Maturity 01-08-2020

     13555        —          2        —          11,840,380        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal BCRA Bills

        47,264,185           47,264,185        31,344,519        47,264,185        —          47,264,185  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Private Securities - In foreign currency

                       

Corporate Bond John Deere Credit Cia. Financiera S.A. Class XVIII

     54266        77,085        2        77,085        75,621        77,085        —          77,085  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Private Securities

        77,085           77,085        75,621        77,085        —          77,085  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Measured at Fair Value through OCI

        64,757,016           64,757,016        48,702,211        64,757,016        —          64,757,016  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

MEASURED AT AMORTIZED COST

                       

Private Securities - In pesos

                       

Corporate Bond EXO. S.A.

        83           83        89        83        —          83  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL OTHER DEBT SECURITIES

        64,757,099           64,757,099        48,702,300        64,757,099        —          64,757,099  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

EQUITY INSTRUMENTS

                       

Local:

                       

Private Securities - In pesos

                       

Prisma Medios de Pago S.A.(1)

        1,694,185        3        1,694,185        2,032,301        1,694,185        —          1,694,185  

Shares of other non-controlled companies

        102,142        1        102,142        154,406        102,142        —          102,142  

Other

        226        2        226        249        226        —          226  

Foreign:

                       

Private Securities - In foreign currency

                       

Other

        15,300        2        15,300        29,255        15,300        —          15,300  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL EQUITY INSTRUMENTS

        1,811,853           1,811,853        2,216,211        1,811,853        —          1,811,853  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

The shareholding of Prisma Medios de Pago S.A. has put options taken over the total position (See note 9 to these Consolidated Financial Statements).    


Table of Contents
LOGO   - 94 -  

 

EXHIBIT B

CLASSIFICATION OF LOANS AND OTHER FINANCING

ACCORDING TO FINANCIAL PERFORMANCE AND GUARANTEES RECEIVED

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     03.31.20      12.31.19  

COMMERCIAL PORTFOLIO

     

Normal performance

     96,770,409        78,089,548  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     390,913        295,759  

Preferred collaterals and counter-guarantees “B”

     518,396        681,720  

No preferred collaterals and counter-guarantees

     95,861,100        77,112,069  

With special follow-up

     94,149        2,097  
  

 

 

    

 

 

 

Under observation

     94,149        2,097  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     1,195        1,331  

No preferred collaterals and counter-guarantees

     92,954        766  

Troubled

     608,224        1,001,631  
  

 

 

    

 

 

 

No preferred collaterals and counter-guarantees

     608,224        1,001,631  

With high risk of insolvency

     43,985        294,863  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     —          172,682  

No preferred collaterals and counter-guarantees

     43,985        122,181  

Uncollectible

     3,533,311        3,027,288  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     9,926        10,700  

Preferred collaterals and counter-guarantees “B”

     170,643        11,300  

No preferred collaterals and counter-guarantees

     3,352,742        3,005,288  
  

 

 

    

 

 

 

TOTAL

     101,050,078        82,415,427  
  

 

 

    

 

 

 


Table of Contents
LOGO   - 95 -  

 

EXHIBIT B

(Continued)

CLASSIFICATION OF LOANS AND OTHER FINANCING

ACCORDING TO FINANCIAL PERFORMANCE AND GUARANTEES RECEIVED

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     03.31.20      12.31.19  

CONSUMER AND HOUSING PORTFOLIO

     

Normal performance

     117,822,550        125,127,626  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     38,656        50,208  

Preferred collaterals and counter-guarantees “B”

     15,890,643        15,702,490  

No preferred collaterals and counter-guarantees

     101,893,251        109,374,928  

Low risk

     1,357,028        2,237,911  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     13        1,021  

Preferred collaterals and counter-guarantees “B”

     41,121        158,139  

No preferred collaterals and counter-guarantees

     1,315,894        2,078,751  

Medium risk

     1,382,781        1,854,187  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     26,574        39,178  

No preferred collaterals and counter-guarantees

     1,356,207        1,815,009  

High risk

     582,682        1,456,280  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     —          579  

Preferred collaterals and counter-guarantees “B”

     40,081        43,128  

No preferred collaterals and counter-guarantees

     542,601        1,412,573  

Uncollectible

     165,294        115,904  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     537        —    

Preferred collaterals and counter-guarantees “B”

     22,468        11,681  

No preferred collaterals and counter-guarantees

     142,289        104,223  
  

 

 

    

 

 

 

TOTAL

     121,310,335        130,791,908  
  

 

 

    

 

 

 

TOTAL GENERAL

     222,360,413        213,207,335  
  

 

 

    

 

 

 


Table of Contents
LOGO   - 96 -  

 

EXHIBIT C

CONCENTRATION OF LOANS AND OTHER FINANCING

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     03.31.20     12.31.19  

Number of customers

   Debt balance      % over
total
portfolio
    Debt balance      % over
total
portfolio
 

10 largest customers

     30,739,770        13.82     24,269,365        11.38

50 following largest customers

     40,211,411        18.08     27,007,989        12.67

100 following largest customers

     14,537,504        6.54     13,325,312        6.25

All other customers

     136,871,728        61.56     148,604,670        69.70
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     222,360,413        100.00     213,207,335        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


Table of Contents
LOGO   - 97 -  

 

EXHIBIT D

BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING

AS OF MARCH 31, 2020

(stated in thousands of pesos) (1)

 

            Terms remaining to maturity  

ITEM

   Portfolio
due
     1
month
     3
months
     6
months
     12
months
     24
months
     more than
24
months
     TOTAL  

Non-financial government sector

     —          581        —          —          —          —          —          581  

Argentine Central Bank (BCRA)

     —          11,273        —          —          —          —          —          11,273  

Financial sector

     —          3,307,321        736,493        1,491,379        2,299,946        1,475,858        563,784        9,874,781  

Non-financial private sector and residents abroad

     6,118,941        89,475,942        33,073,851        22,806,320        16,142,788        22,577,218        38,788,739        228,983,799  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     6,118,941        92,795,117        33,810,344        24,297,699        18,442,734        24,053,076        39,352,523        238,870,434  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

These balances are total contractual flows and, therefore, include principal, accrued and to be accrued interest and charges.


Table of Contents
LOGO   - 98 -  

 

EXHIBIT H

DEPOSITS CONCENTRATION

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     03.31.20     12.31.19  

Number of customers

   Debt
balance
     % over
total
portfolio
    Debt
balance
     % over
total
portfolio
 

10 largest customers

     17,591,154        5.37     11,723,528        3.71

50 following largest customers

     17,818,516        5.44     18,061,274        5.71

100 following largest customers

     14,279,012        4.36     14,301,484        4.52

All other customers

     277,679,143        84.83     272,210,158        86.06
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     327,367,825        100.00     316,296,444        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


Table of Contents
LOGO   - 99 -  

 

EXHIBIT I

BREAKDOWN OF FINANCIAL LIABILITIES BY REMAINING TERMS

AS OF MARCH 31, 2020

(stated in thousands of pesos) (1)

 

     Terms remaining to maturity  

ITEMS

   1
month
     3
months
     6
months
     12
months
     24
months
     more than
24
months
     TOTAL  

Deposits

     305,982,400        18,884,450        4,187,677        1,573,229        64,117        3,334        330,695,207  

Non.-financial government sector

     3,468,572        14,519        7        —          —          —          3,483,098  

Financial sector

     538,708        —          —          —          —          —          538,708  

Non-financial private sector and residents abroad

     301,975,120        18,869,931        4,187,670        1,573,229        64,117        3,334        326,673,401  

Derivative instruments

     331,591        —          —          —          —          —          331,591  

Other financial liabilities

     36,633,019        363,472        535,712        712,425        876,462        7,855,472        46,976,562  

Financing received from the BCRA and other financial institutions

     1,004,946        —          —          —          —          —          1,004,946  

Corporate bonds issued

     94,877        2,133,753        967,131        2,031,501        —          —          5,227,262  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     344,046,833        21,381,675        5,690,520        4,317,155        940,579        7,858,806        384,235,568  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

These balances are total contractual cash flows and, therefore, include principal, accrued and to be accrued interest and charges.


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EXHIBIT J

PROVISIONS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2020

AND THE FISCAL YEAR ENDED DECEMBER 31, 2019

(stated in thousands of pesos)

 

                  Decreases               

Accounts

   Balances at
the beginning
of the year
     Increases     Reversals      Uses      Monetary
gain (loss)
generated
by provisions
    Balances as
of 03.31.20
 

INCLUDED IN LIABILITIES

               

- Provisions for contingent commitments

     976,527        375,140 (1)(6)      —          —          (64,672     1,286,995  

- For administrative, disciplinary and criminal penalties

     5,390        —   (4)               —        (390     5,000  

- Provisions for reorganization

     2,130,236        243,566 (5)      82,626        266,024        (154,960     1,870,192  

- Provisions for termination plans

     69,255        —   (2)      —          —          (5,011     64,244  

- Other

     8,312,253        327,071 (3)      —          63,864        (609,200     7,966,260  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

TOTAL PROVISIONS

     11,493,661        945,777       82,626        329,888        (834,233     11,192,691  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

Set up in compliance with the provisions of Communication “A” 2950 and supplementary regulations of the BCRA.

(2)

Set up to cover contingences referred to private healthcare plans.

(3)

Set up to cover for potential contingencies not considered in other accounts (civil, commercial, labor and other lawsuits), and as required by Memorandum 6/2017 issued by the BCRA.

(4)

Set up to cover administrative, disciplinary and criminal penalties.

(5)

See Note 27 to the consolidated financial statements.

(6)

Includes an increase of 502 corresponding to the foreign exchange difference of provisions in foreign currency for contingent commitments.


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EXHIBIT L

BALANCES IN FOREIGN CURRENCY

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

ACCOUNTS

   TOTAL
AS OF
03.31.20
     AS OF 03.31.20 (per currency)      TOTAL
AS OF
12.31.19
 
   Dollar      Euro      Real      Other  

ASSETS

                 

Cash and deposits in banks

     86,551,869        83,858,545        2,490,433        25,934        176,957        94,490,206  

Debt securities at fair value through profit or loss

     179        179                             179  

Other financial assets

     1,669,502        1,660,739        8,763                      289,941  

Loans and other financing

     37,816,856        37,529,890        286,908               58        36,975,616  

Non-financial government sector

     203        203                             151  

Other financial institutions

     1,058,930        1,058,930                             527,999  

Non-financial private sector and residents abroad

     36,757,723        36,470,757        286,908               58        36,447,466  

Other debt securities

     7,117,376        7,117,376                             7,992,126  

Financial assets pledged as collateral

     2,396,560        2,396,560                             2,451,183  

Investments in equity instruments

     15,300        15,300                             29,255  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

     135,567,642        132,578,589        2,786,104        25,934        177,015        142,228,506  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

LIABILITIES

                 

Deposits

     116,021,083        113,959,236        2,061,847        —          —          126,374,461  

Non-financial government sector

     2,087,543        2,087,543        —          —          —          1,570,480  

Financial sector

     43,479        42,975        504        —          —          44,781  

Non-financial private sector and residents abroad

     113,890,061        111,828,718        2,061,343        —          —          124,759,200  

Liabilities at fair value through profit or loss

     —          —          —          —          —          484,686  

Other financial liabilities

     11,702,147        11,260,415        371,543        —          70,189        8,283,211  

Financing received from the BCRA and other financial institutions

     811,481        526,463        285,018        —          —          3,288,492  

Other non-financial liabilities

     896,917        872,655        24,262        —            —        1,258,491  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES

     129,431,628        126,618,769        2,742,670                  70,189        139,689,341  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


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EXHIBIT O

DERIVATIVES

AS OF MARCH 31, 2020

(stated in thousands of pesos)

 

Type of Contract

  Purpose of
the transactions
  Underlying
asset
  Type of settlement   Scope of
negotiation or
counterparty
  Weighted average
term originally
agreed
    Residual
weighted
average
term
    Weighted average
term for settlement
of differences
    Amount  

SWAPS

  Financial
transactions
own
account
    Upon
maturity
of
differences
  RESIDENTS IN
THE COUNTRY
FINANCIAL
SECTOR
    1       1       44       800,030  

REPO TRANSACTIONS

  Financial
transactions
own
account
  Other   Upon
maturity
of
differences
  RESIDENTS IN
THE COUNTRY
FINANCIAL
SECTOR
    1       1       2       3,493,881  

FUTURES

  Financial
transactions
own
account
  Foreign
currency
  Daily
differences
  ROFEX     3       1       1       99,124,542  

FUTURES

  Financial
transactions
own
account
  Foreign
currency
  Upon
maturity
of
differences
  RESIDENTS
ABROAD
FINANCIAL
SECTOR
    4       2       112       15,927,458  

FUTURES

  Financial
transactions
own
account
  Foreign
currency
  Upon
maturity
of
differences
  RESIDENTS IN
THE COUNTRY
NON-FINANCIAL
SECTOR
    4       2       107       38,887,464  

OPTIONS

  Financial
transactions
own
account
  Private
securities
  With
delivery of
underlying
asset
  OTC—Residents
abroad
    34       20       —         685,000  


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EXHIBIT R

ADJUSTMENT TO IMPAIRMENT LOSS - ALLOWANCES FOR LOAN LOSSES

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2020 AND

THE FISCAL YEAR ENDED DECEMBER 31, 2019

(stated in thousands of pesos)

 

                  ECL of remaining life of
the financial asset
             

Accounts

   Balances as
of 12.31.19
     ECL for
the
following
12 months
    FI with
significant
increase of
credit risk
    FI with
credit
impairment
    Monetarty
gain (loss)
generated by
allowances
    Balances as
of 03.31.20
 

Other financial assets

     221,010        19,568       —         2,933       (17,042     226,469  

Loans and other financing

     12,092,588        (215,317     283,324       867,479       (1,132,703     11,895,371  

Other financial institutions

     154,134        (8,063     (24,500     (2,505     (8,796     110,270  

Non-financial private sector and residents abroad

     11,938,454        (207,254     307,824       869,984       (1,123,907     11,785,101  

Overdrafts

     700,640        606,203       277,129       (25,459     (53,601     1,504,912  

Instruments

     986,798        (229,269     (125,945     (38,223     (53,044     540,317  

Mortgage loans

     152,775        (28,749     14,484       118,297       (9,108     247,699  

Pledge loans

     33,625        (5,018     (62     4,350       (2,326     30,569  

Consumer loans

     1,458,425        (152,756     168,537       (31,183     (96,467     1,346,556  

Credit card loans

     3,654,780        (510,981     267,912       (64,392     (244,193     3,103,126  

Finance leases

     135,092        (19,345     (1,743     (6,062     (9,188     98,754  

Other

     4,816,319        132,661       (292,488     912,656       (655,980     4,913,168  

Other debt securities

     737        9       —         —         (53     693  

Contingent commitments

     976,527        124,164       267,141       (16,125)       (64,712)       1,286,995  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ALLOWANCES

     13,290,862        (71,576     550,465       854,287       (1,214,510     13,409,528  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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LOGO  

KPMG

Bouchard 710 - 1° piso - C1106ABL

Buenos Aires, Argentina

 

+54 11 4316 5700

www.kpmg.com.ar

INDEPENDENT AUDITORS’ LIMITED REVIEW REPORT ON CONDENSED INTERIM SEPARATE FINANCIAL STATEMENTS

To the President and Directors of

Banco BBVA Argentina S.A.

Registered office: Av. Córdoba 111

City of Buenos Aires

Taxpayer identification number [C.U.I.T.] 30 -50000319 -3

Report on the financial statements

We have audited the condensed interim separate financial statements of Banco BBVA Argentina S.A. (the “Entity”), which include the statement of financial position as of March 31, 2020, the statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the three-month period then ended, Exhibits and selected explanatory notes.

Board of Directors’ and Management responsibility for the financial statements

The Board of Directors and Management of the Entity are responsible for the preparation and fair presentation of the accompanying financial statements in accordance with the accounting standards established by the Argentine Central Bank (“BCRA”), which, as indicated in Note 2 to the accompanying financial statements, are based on the International Financial Reporting Standards (“IFRS”) and, particularly, for interim financial statements, on International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”), as issued by the International Accounting Standards Board (“IASB”), and adopted by the Argentine Federation of Professional Councils of Economic Sciences (“FACPCE”), with the exceptions described in Note 2. The Board of Directors and Management are also responsible for such internal control as they determine is necessary to enable the preparation of the interim financial statements that are free from material misstatement whether due to error or irregularities.

Auditors’ responsibility and scope of the review

Our responsibility is to issue a conclusion on these condensed interim separate financial statements based on our review. We conducted our review in accordance with the standards set forth by Technical Resolution No. 37 of the FACPCE and the “Minimum Standards applicable to External Audits” set forth by the BCRA for the review of interim financial statements. In accordance with such standards, a review is limited primarily to the performance of analytical and other review procedures applied to financial data included in the interim financial statements and inquiries of personnel responsible for the preparation thereof. A review is substantially less in scope than an audit conducted in accordance with auditing standards in force, and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the condensed interim separate financial statements.

Opinion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim separate financial statements of Banco BBVA Argentina S.A. have not been prepared, in all material respects, in accordance with the BCRA accounting framework described in Note 2 to the accompanying financial statements.


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Emphasis of matter

Without modifying our conclusion, we draw users’ attention to the following information disclosed in the accompanying condensed interim separate financial statements:

 

a)

As explained in Note 2 to the accompanying separate financial statements, such financial statements were prepared by the Entity’s Board of Directors and Management in accordance with the financial reporting framework set forth by the BCRA. Such financial reporting framework differs from the IFRS in the following aspects:

 

  i.

As explained in note 2.a), in accordance with Communication “A” 6847 issued by the BCRA, the Entity has applied the expected losses model set forth in section 5.5 of IFRS 9, excluding from its scope debt instruments of the nonfinancial public sector. Had the impairment model set forth in section 5.5 of IFRS 9 been applied, the Entity would have recorded a decrease in equity of $ 3,676,608 thousand and $ 3,892,574 thousand as of March 31, 2020 and December 31, 2019, respectively, Furthermore, in accordance with Communication “A” 6938, the BCRA postponed the application of the impairment model set forth in section 5.5 of IFRS 9 until the fiscal years commencing on or after January 1, 2021 for Group “B” entities (entities consolidated by the Entity), maintaining for them the impairment model set forth by the BCRA by means of Communication “A” 2950, as amended, which requires the recognition of allowances for loan losses according to minimum requirements set forth by the BCRA,

 

  ii.

As explained in Note 2.b), by virtue of the partial sale of the ownership interest in Prisma Medios de Pago S.A., the remaining ownership interest were recorded in “Investments in equity instruments” and stated at its fair value with changes recognized through profit or loss, based on a valuation report of the Company prepared by an external professional. In addition, the valuation adjustment established by Memorandum No. 7/2019, issued on April 29, 2019 by BCRA, was deducted from such remaining ownership interest. The accounting criterion applied implies a departure from the provisions of IFRS 9 about the measurement of equity instruments at fair value, and

 

  iii.

As explained in Note 2.c), the financial statements have been prepared taking into consideration the standards prescribed through Memorandum No. 6/2017 issued by the BCRA on May 29, 2017 regarding the accounting treatment to be applied to uncertain tax positions.

 

b)

As indicated in note 5 to the accompanying condensed interim financial statements, and by virtue of BCRA Communications “A” 6778 and 6651, as from January 1, 2020, the Entity has adopted the changes in its accounting policies derived from the implementation of IFRS 9 in order to recognize impairment of its financial assets, excluding debt instruments of the nonfinancial public sector, and IAS 29 for the purposes of presenting the financial statements stated in the reporting currency at period-end. Such changes are applied retroactively from January 1, 2019 as provided for by the regulatory authorities, which implies changes to the financial statements filed as of December 31, 2018, March 31, 2019 and December 31, 2019, for comparative purposes, as disclosed in such note.

Report on other legal and regulatory requirements

In compliance with legal provisions in force, we report that:

 

a)

The accompanying condensed interim separate financial statements are pending transcription into the Financial Statements for Publication Book and arise from the Company’s accounting records, which are also pending transcription into the Journal, considering the situation described in Note 2 to the condensed interim financial statements,


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b)

As of March 31, 2020, as disclosed in Note 2 to the accompanying financial statements, the Entity’s equity and its eligible assets exceed the minimum amounts required by the regulations of the Argentine Securities and Exchange Commission (CNV), and

 

c)

As of March 31, 2020, the accrued liability for retirement and pension contributions payable to the Argentine Pension Fund System arising from the Entity’s accounting records amounts to $ 239,176,149, no amounts being due as of that date.

City of Buenos Aires, June 8, 2020

KPMG

Mauricio G. Eidelstein

Partner


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  - 107 -  

 

SUPERVISORY COMMITTEE’S REPORT

To the Shareholders of

Banco BBVA Argentina S.A.

Registered Office: Av. Córdoba 111

City of Buenos Aires

 

1.

Identification of the interim financial statements subject to review

In our capacity as members of the Supervisory Committee of Banco BBVA Argentina S.A. (hereinafter, either “BBVA” or the “Entity”) designated at the General Ordinary and Extraordinary Shareholders’ Meeting held on May 15, 2020, and in compliance with the terms of Section 294 of the Argentine Companies Law No. 19550, we have reviewed the consolidated condensed interim financial statements and its subsidiaries as of March 31, 2020, which include the consolidated condensed statement of financial position, the consolidated condensed statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the three-month period then ended, and their respective supplementary notes and exhibits, as well as the separate condensed financial statements of BBVA as of March 31, 2020, which include the separate condensed statement of financial position, the statements of income, other comprehensive income, changes in shareholders’ equity and cash flows as of such date, and its related notes and exhibits.

The Entity is responsible for the preparation and presentation of the above-mentioned financial statements in accordance with the accounting standards applicable to financial institutions established by the Argentine Central Bank (BCRA), as well as for the design, implementation and maintenance of such internal control as the Entity might deem appropriate to prepare its financial statements free from material misstatements.

 

2.

Scope of our Review

In discharging our duties, we have examined the work performed by the Entity’s external auditors KPMG, who, on June 8, 2020, issued their limited review report on the interim financial statements as of March 31, 2020, including an unqualified opinion.

The review of interim financial statements conducted by such auditors is substantially lesser in scope than an audit and, therefore, is not sufficient to become aware of all substantial issues that might arise during an audit. Therefore, the auditors do not render such an opinion on the financial statements referred to in section I.

Since the Supervisory Committee is not responsible for management control, the review did not encompass the corporate criteria and decisions of the Entity’s several areas, for such issues are the exclusive responsibility of the Board of Directors.

 

3.

Supervisory Committee’s Opinion

Based on our review, we have no observations to raise, except as stated in item 4, on the accompanying interim financial statements of BBVA for the three-month period ended March 31, 2020 referred to in the first paragraph of Section 1 of this report. Furthermore, such financial statements reflect all substantial facts and circumstances that are known to us.


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4.

Emphasis Matter

As explained in Note 2 to the accompanying consolidated and separate financial statements, such financial statements were prepared by the Entity’s Board of Directors and Management in accordance with the financial reporting framework set forth by the BCRA. Such financial reporting framework differs from the IFRS in the following aspects:

 

i.

as explained in note 2.a), in accordance with Communication “A” 6847 issued by the BCRA, the Entity has applied the expected losses model set forth in item 5.5 of IFRS 9, excluding from its scope non-financial government sector debt instruments. Had the impairment model set forth in item 5.5 of IFRS 9 been applied, the Entity would have recorded a decrease in equity of $ 3,676,608 thousand and $ 3,892,574 thousand as of March 31, 2020 and December 31, 2019, respectively. Furthermore, in accordance with Communication “A” 6938, the BCRA postponed the application of the impairment model set forth in item 5.5 of IFRS 9 until the fiscal years commencing on or after January 1, 2021 for Group “B” entities (entities consolidated by the Entity), maintaining for them the impairment model set forth by the BCRA by means of Communication “A” 2950, as amended, which requires the recognition of allowances for loan losses according to minimum requirements set forth by the BCRA.

 

ii.

as explained in notes 2.b) to the consolidated and separate financial statements and 16 to the consolidated financial statements, in connection with the partial disposal of the equity interest in Prisma Medios de Pago S.A., the remaining portion was booked under “Investments in Equity Instruments,” and measured at fair value through profit or loss, based on a valuation report on such company prepared by an external appraiser, net of the valuation adjustment established by the BCRA in its Memorandum No. 7/2019 dated April 29, 2019. The accounting criterion applied constitutes a deviation from IFRS 9 as concerns the measurement of equity instrument at fair value, and

 

iii.

as explained in note 2.c), they have been prepared considering the rules set forth in Memorandum No. 6/2017 issued by the BCRA on May 29, 2017 in connection with the treatment to be given to uncertain tax positions.

As explained in note 5 to the consolidated financial statements, and pursuant to the provisions of Communications “A” 6778 and 6651 issued by the BCRA, the Entity has adopted effective January 1, 2020, the changes in the accounting policies arising from the implementation of IFRS 9 as regards the recognition of the impairment of financial assets, excluding non-financial government sector debt instruments and IAS 29 as concerns the presentation of financial statements expressed in the measuring unit current at the reporting period end. Such changes are applied retrospectively as of January 1, 2019 as set forth by the BCRA, implying changes to the financial statements as of December 31, 2018, March 31, 2019 and December 31, 2019, presented for comparative purposes, which are described in such note.

 

5.

Information Required by Applicable Provisions

We hereby report that the figures disclosed in the accompanying financial statements arise from the Entity’s financial records which have been kept, in all formal aspects, in accordance with applicable legal and regulatory standards issued by the BCRA.

The financial statements referred to in paragraph 1 are pending transcription into the Financial Statements for Reporting Purposes book, and arise from the accounting records also pending transcription into the Daily Ledger, considering the situation described in Note 57 to the referred consolidated condensed interim financial statements and in Note 2 to the separate condensed interim financial statements.


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Pursuant to the BCRA’s requirements, as of March 31, 2020, as it arises from note 52 to the consolidated condensed financial statements and note 2 to the separate interim financial statements, the Entity’s shareholders’ equity and minimum cash contra-account in eligible assets exceed the respective minimum required by the Argentine Securities Commission (CNV).

We further represent that, during the reporting period, we have carried out all duties, to the extent applicable, set forth in Section 294 of Argentine Companies Law No. 19550, including attending to Board of Directors’ meetings.

We further represent that any member of this Supervisory Committee is individually authorized to sign, on behalf of such committee, all documents referred to in the first paragraph herein and all copies of this report.

City of Buenos Aires, June 8, 2020

ALEJANDRO MOSQUERA

ATTORNEY

On behalf of Supervisory Committee


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  - 110 -  

 

REPORTING SUMMARY FOR

THE FISCAL PERIOD ENDED

MARCH 31, 2020

(Consolidated, stated in thousands of pesos)

These consolidated condensed interim financial statements for the three-month period ended March 31, 2020 are prepared pursuant to the financial reporting framework established by the Argentine Central Bank (BCRA) pursuant to which entities under its supervision are required to submit financial statements prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), with the following exceptions (“financial reporting framework set forth by the BCRA”):

 

  a)

Impairment of financial assets

Pursuant to Communication “A” 6847 issued by the BCRA, the Entity has applied the expected loss model set forth under Item 5.5. of IFRS 9, except for debt instruments issued by the non-financial public sector which were temporarily excluded from the scope of such standard.

In addition, on March 19, 2020, the BCRA issued Communication “A” 6938 deferring the application of the impairment model set forth in Item 5.5 of IFRS 9 until fiscal years commencing on or after January 1, 2021 for Group “B” entities (entities consolidated by the Bank), which would remain subject to the impairment model established by the BCRA through Communication “A” 2950, as amended. Such model requires that financial institutions recognize an allowance for loan losses based on the minimum guidelines set forth by the BCRA.

 

  b)

Measurement of the remaining investment held in Prisma Medios de Pago S.A.

By means of Memorandum No. 7/2019 dated April 29, 2019, the BCRA established the accounting treatment to be applied to the remaining investment held by the Entity in Prisma Medios de Pago S.A. recorded under “Investments in Equity Instruments” as of March 31, 2020 and December 31, 2019 (see Note 16).

 

  c)

Uncertain tax positions

The BCRA issued Memorandum No. 6/2017 dated May 29, 2017 regarding the treatment to be given to uncertain tax positions.

As a consequence of the application of those standards, the Bank prepares its financial statements according to the new financial reporting framework set forth by the BCRA as of March 31, 2020 and December 31, 2019.

Banco BBVA Argentina S.A. (NYSE; MAE; BYMA: BBAR; Latibex: XBBAR) is a subsidiary of the BBVA Group—its majority shareholder since 1996. In Argentina, it has been one of the major financial institutions since 1886. BBVA Argentina offers retail and corporate banking services to a broad customer base, including individuals, small-to-medium sized companies, and large corporations. As of March 31, 2020, the Entity’s total assets, liabilities and shareholders’ equity amounted to 512,654,275; 423,879,261; and 88,775,014; respectively.

The Entity offers its products and services through a wide multi-channel distribution network with presence in all the provinces in Argentina and the City of Buenos Aires, with more than 2.6 million active customers as of March 31, 2020. That network includes 246 branches providing services to the retail segment and also to small and medium enterprises and organizations.

Corporate Banking is divided by industry sector: Consumers, Heavy Industries and Energy, providing customized services for large companies. To supplement the distribution network, the Entity has 878 ATMs, 850 self-service terminals, 15 in-company banks, two points of Customer service booths.

Information not Covered by the Review Report.


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Moreover, it has a telephone banking service, a modern, safe and functional Internet banking platform, and a mobile banking app. As for its payroll, Banco BBVA Argentina S.A. has 6,233 employees, including 98 employees of BBVA Asset Management Argentina S.A., PSA Finance Argentina Compañía Financiera S.A. and Volkswagen Financial Services Compañía Financiera S.A. (total effective employees, net of temporary replacements).

The loans portfolio net of allowances for loan losses totaled 218,537,669 pesos as of March 31, 2020, reflecting a decrease by 20.52% as compared to the previous year.

As it relates to consumer loans, including personal loans, credit cards, mortgage loans and pledge loans, the latter have experienced the most remarkable increase due to the consolidation, having increased by 247.37% compared with the previous year. Excluding such loans, credit cards have shown the most significant growth during the period, up by 4.07%, or 2,752,131 in nominal terms. Regarding mortgage loans, they show the impact of increasing inflation.

BBVA Argentina S.A.’s consolidated market share in private-sector financing was 8.35% at period-end, based on the BCRA’s daily information (principal balance as of the last day of each quarter on a consolidated basis).

In terms of portfolio quality, the Entity has managed to maintain very good ratios. The irregular portfolio ratio (Financings with irregular performance/total financing) was 2.78%, with a coverage level (total allowances/irregular performance) of 186.69% as of March 31, 2020.

The total exposure for securities totaled 77,017,329 pesos as of March 31, 2020, including repos both with the BCRA and Argentina.

In terms of liabilities, customers’ resources totaled 327,959,863, with a 20.68% decrease over the last twelve months.

The consolidated market share of deposits to the private sector of Banco BBVA Argentina S.A. reached 6.79% at period-end, based on the daily information of the BCRA (principal balance as of the last day of each quarter).

Breakdown of changes in the main income/loss items:

Banco BBVA Argentina S.A. recorded an accumulated profit of 3,107,396 as of March 31, 2020, representing a return on average shareholders’ equity of 3.70%, a return on average assets of 0.56%, and a return on average liabilities of 0.66%.

Net accumulated interest income totaled 16,441,216, with a 9.29% growth as compared to March 2019, mainly driven by an increase in interest from government securities and interest from credit card loans, offset by an increase in interest expenses for time deposits.

Net accumulated commission income totaled 1,875,852, dropping 18.52% compared to March 2019. This decrease is mainly due to higher income due to the rise in prices, commissions linked to liabilities (deposits), credit cards and foreign trade and currency transactions, offset by commission expenses for credit and debit cards.

Accumulated administrative expenses and personnel benefits totaled 8,029,219, a 9.05% growth in relation to those recorded for March 2019. The increase in personnel expenses is mainly a consequence of salary increases agreed with the union. The remaining expenses grew due to the increased volume of activity, the general increase in prices, currency depreciation and increase in utility rates.

Information not Covered by the Review Report.


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Outlook

BBVA Argentina is immersed in a complex scenario, which combines, on the one hand, the health emergency brought about by the Covid-19 pandemic, and on the other hand, a local economy that has been recessionary for over two years now, coupled with staggering inflation levels.

Like most countries affected by the Covid-19, the Argentine Government implemented a lockdown that is still in place, through at varying phases, according to the status of the pandemic in each province.

Against this backdrop, BBVA Argentina has primarily focused on taking care of its employees’ and customers’ health. More than 90% of the employees engaged in the Bank’s central areas are working remotely, while the Bank has implemented all necessary in-branch measures to protect both its employees and customers.

At these times, the Bank’s Digital Transformation efforts initiated years before are gaining special relevance for it allows customers, despite the complex challenges posed by the lockdown, to do their banking business electronically, by means of the App and website. In particular, at the end of March, digital customers and mobile customers accounted for 56.1% and 67.8%, respectively, of active customers.

The Bank is actively monitoring the impact of the pandemic on its businesses, financial position and results of operations. The timing for a potential economic rebound at the local level will depend on the length and on the impact of the global health crisis, the resolution of Argentina’s macroeconomic weaknesses, and also the outcomes of the negotiation of its sovereign debt restructuring.

As we await recovery to come, BBVA Argentina is convinced it has a competitive advantage to face the current challenges, boasting a strong liquidity position, primarily backed by transactional funding at low cost, and suitable capital levels, well above regulatory requirements.

In addition, the Bank has also cooperated with the Argentine Government’s measures to help the real sector and the society in general tackle the current challenges, and has also undertaken other individual efforts, such as the donation of 20 million pesos to the Red Cross and the campaign “Seamos Uno” (Let’s Be One) to fight against the COVID-19.

As part of its commitment to the country, BBVA Argentina keeps working on its sustainability model, and supporting responsible business actions to address issues such as inclusion, financial literacy, and environmental protection.

Information not covered by the Review Report.


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CONSOLIDATED STATEMENT OF FINANCIAL POSITION STRUCTURE

COMPARATIVE WITH PREVIOUS FISCAL YEARS

(stated in thousands of pesos)

 

     03.31.20      03.31.19  

Total Assets

     512,654,275        592,576,686  

Total Liabilities

     423,879,261        513,184,089  

Shareholders’ Equity

     87,048,694        79,342,806  

Minority Interest

     1,726,320        49,791  

Total liabilities + Non-controlling interest + Parent’s Shareholders’ Equity

     512,654,275        592,576,686  


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CONSOLIDATED STATEMENT OF PROFIT OR LOSS STRUCTURE

COMPARATIVE WITH PREVIOUS FISCAL YEARS

(stated in thousands of pesos)

 

     03.31.20     03.31.19  

Net interest income

     16,441,216       15,044,070  

Net commission income

     1,875,852       2,302,257  

Net income from measurement of financial instruments at fair value through profit or loss

     1,000,110       3,752,589  

Net (loss) from write-down of assets at amortized cost and at fair value through OCI

     (127,002     (6,264

Foreign currency quotation differences

     1,237,269       1,975,765  

Other operating income

     1,038,967       5,268,011  

Loan loss provision

     (1,623,363     (1,617,615

Net operating income

     19,843,049       26,718,813  

Personnel benefits

     (4,439,276     (4,202,447

Administrative expenses

     (3,589,942     (3,160,419

Asset depreciation and impairment

     (822,794     (1,229,499

Other operating expenses

     (3,111,531     (4,509,182

Operating income

     7,879,506       13,617,266  

Income/(loss) from associates and joint ventures

     27,177       (76,309

Loss from net monetary position

     (2,623,512     (5,021,933

Income before income tax

     5,283,171       8,519,024  

Income tax from continuing activities

     (2,175,775     (3,649,156

Net income from continuing activities

     3,107,396       4,869,868  

Net income for the period

     3,107,396       4,869,868  


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CONSOLIDATED CASH FLOW STRUCTURE

COMPARATIVE WITH PREVIOUS FISCAL YEARS

(stated in thousands of pesos)

 

     03.31.20     03.31.19  

Net cash (used in) operating activities

     (14,109,543     (1,772,858

Net cash (used in)/generated by investing activities

     (186,579     1,470,577  

Net cash (used in)/generated by financing activities

     (1,300,777     2,006,151  

Effect of exchange rate changes

     4,490,131       4,519,174  

Effect of monetary income/(loss) on cash and cash equivalents

     (10,822,349     (16,293,218
  

 

 

   

 

 

 

Total cash (used in) during the period

     (21,929,117     (10,070,174
  

 

 

   

 

 

 


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COMPARATIVE STATISTICAL DATA

WITH PREVIOUS FISCAL YEARS

(Variation of balances over the same period of the previous fiscal year)

 

     03.31.20/31.03.19  

Total loans

     -20.52

Total deposits

     -20.68

Income/(loss)

     -36.19

Shareholders’ Equity

     11.82


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COMPARATIVE RATIOS

WITH PREVIOUS FISCAL YEARS

 

     03.31.20     03.31.19  

Solvency (a)

     20.94     15.47

Liquidity (b)

     47.44     38.05

Fixed asset-to-equity capital ratio (c)

     34.11     42.93

Indebtedness (d)

     4.77       6.46  

 

(a)

Total Shareholders’ Equity/Liabilities (including minority interest).

(b)

Sum of cash and deposits in banks, government and private securities /deposits.

(c)

Sum of intangible assets and property, plant and equipment/Shareholders’ Equity.

(d)

Total Liabilities (including minority interest)/Shareholders’ Equity.


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Additional Information required by the Argentine Securities Commission (CNV)’s General Resolution No. 622/13, Chapter III, Title IV, Section 12

 

1.

General matters concerning the Entity’s business

 

  a)

Significant specific legal regimes that entail the contingent termination or reinstatement of the benefits set forth by such regimes’ provisions.

None.

 

  a)

Significant changes in the Entity’s activities or other similar circumstances taking place during the periods covered by the financial statements which affect the comparability of the financial statements with those presented in previous periods or capable of affecting comparability with the financial statements to be presented in future periods.

The Shareholders’ Meeting held on June 13, 2017 adopted a decision to increase capital stock through the issuance of new registered, common shares. Refer to Note 30. Share Capital of the Consolidated Financial Statements of Banco BBVA Argentina S.A

On October 9, 2019, the CNV issued Resolution 20484/2019 as concerns the merger of the Bank with BBVA Francés Valores S.A. The share capital resulting after the merger amounts to $ 612,710,079, and is composed of an equal number of book-entry common shares of $1 each and entitled to one (1) vote per share.

As of the date of these consolidated financial statements, the merger and the ensuing capital increase are in the process of being registered with the IGJ.

 

2.

Classification of the balances receivable (financing) and payable (deposits and liabilities) according to their maturity dates.

See “Exhibit D—Breakdown by Term of Loans and Other Financing”, and “Exhibit I—Breakdown of Financial Liabilities by Remaining Terms” of Banco BBVA Argentina S.A.’s Consolidated Financial Statements.


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3.

Classification of the balances receivable (financing) and payable (deposits and liabilities), to know the holding financial effects:

 

Item

   Local currency      Foreign currency  

In thousands of Pesos

   With interest
rate clause
     With CER
adjustment clause
     Without
interest rate
clause
     With interest
rate clause
     Without interest
rate clause
 

Financing facilities (net of allowances)

              

Loans and other financing

     156,144,068        24,375,726        211,586        37,806,289        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     156,144,068        24,375,726        211,586        37,806,289        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Item    Local currency      Foreign currency  

In thousands of Pesos

   With interest
rate clause
     With CER
adjustment clause
     Without
interest rate
clause
     With interest
rate clause
     Without interest
rate clause
 

Deposits and liabilities

              

Deposits

     110,592,069        2,271,170        72,676,753        116,306,099        26,113,772  

Other liabilities (1)

     13,620,936        —          57,596,691        285,018        13,142,940  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     124,213,005        2,271,170        130,273,444        116,591,116        39,256,714  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Includes Derivatives, Repo transactions, Other financial liabilities, Financing received from the BCRA and other financial institutions, Corporate bonds issued, Other non-financial liabilities and Current and deferred income tax liabilities.

 

4.

Breakdown of the percentage of ownership interests in other companies’ capital stock and total votes and debt and/or credit balances per company.

Refer to Note 45. Subsidiaries and Note 46. Related Parties to the consolidated condensed interim financial statements of Banco BBVA Argentina S.A.

 

5.

Receivables from sales or loans to directors.

Refer to Note 46. Related Parties to the consolidated condensed interim financial statements of Banco BBVA Argentina S.A.

 

6.

Physical count of inventories. Term and scope of physical count of inventories.

Not applicable.

 

7.

Ownership interests in other companies in excess of the amount allowed under Section 31 of Law No. 19550 and corrective measures plan.

None.


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8.

Recoverable Values: Criteria followed to determine significant “recoverable values” of inventories, property, plant and equipment and other assets, used as limits for their respective accounting valuations.

To determine the “recoverable values”, the net realization value for the status and condition of property, plant and equipment is considered.

 

9.

Insurance covering tangible assets.

 

Assets insured in
thousands of Pesos

  

Risk

   Insured
Amount
     Book value  

Monies, checks and other valuables

  

Fraud, robbery, safety boxes and valuables in transit

     8,380,503        37,326,337  

Building, machines, IT equipment, furniture, fixtures, signals, telephones and works of art

  

Fire, vandalism and earthquake - Transportation of goods

     32,545,938        29,317,365  

Motor vehicles

  

All kinds of risks and third-party insurance

     182,562        43,690  

 

10.

Positive and negative contingencies

 

  a)

Elements considered to calculate allowances whose balances exceed, individually or jointly, two percent (2%) of the equity.

 

  -

Refer to Note 15. Income Tax to the consolidated condensed interim financial statements of Banco BBVA Argentina S.A.

 

  b)

Contingent situations as of the date of the financial statements that are unlikely to occur and with equity effects not accounted for, stating if the lack of accounting is based on the probability of occurrence or difficulties for the quantification of its effects.

None.

11.

Irrevocable advances for future subscriptions. Status of the process aimed at capitalization.

None.

 

12.

Preferred shares cumulative dividends unpaid.

None.

 

13.

Conditions, circumstances or terms for the elimination of restrictions on the distribution of retained earnings.

Refer to Note 48 Restrictions on the payment of dividends to the consolidated condensed interim financial statements of Banco BBVA Argentina S.A.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Banco BBVA Argentina S.A.
Date: July 27, 2020     By:  

/s/ Ernesto R. Gallardo Jimenez

      Name:   Ernesto R. Gallardo Jimenez
      Title:     Chief Financial Officer