6-K 1 d11209d6k.htm FORM 6-K Form 6-K
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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 September, 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 June 30, 2020.


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LOGO

CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED

JUNE 30, 2020


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LOGO

Banco BBVA Argentina S.A.

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Condensed interim financial statements for the six-month period ended June 30, 2020, comparatively presented.

Consolidated Condensed Statement of Financial Position

Consolidated Condensed Statement of Income

Consolidated Condensed Statement of Other Comprehensive Income

Consolidated Condensed Statement of Changes in Shareholders’ Equity

Consolidated Condensed Statement of Cash Flows

Notes

Exhibits

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

Separate Condensed Statement of Financial Position

Separate Condensed Statement of Income

Separate Condensed Statement of Other Comprehensive Income

Separate Condensed Statement of Changes in Shareholders’ Equity

Separate Condensed Statement of Cash Flows

Notes

Exhibits

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

Supervisory Committee’s Report

Reporting Summary


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LOGO   - 1 -  

 

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
  06.30.20      12.31.19  

ASSETS

       

Cash and deposits in banks

   7     112,525,187        177,500,792  

Cash

       50,468,432        53,075,302  

Financial institutions and correspondents

       62,056,755        124,425,490  

Argentine Central Bank (BCRA)

       57,914,771        122,114,106  

Other in the country and abroad

       4,141,984        2,311,384  

Debt securities at fair value through profit or loss

   8     9,755,562        4,691,369  

Derivatives

   9     1,056,899        3,461,228  

Repo transactions

   10     34,266,703        —    

Other financial assets

   11     6,377,279        5,328,135  

Loans and other financing

   12     243,225,858        221,820,559  

Non-financial government sector

       161        520  

Argentine Central Bank (BCRA)

       —          19,771  

Other financial institutions

       3,503,970        5,766,005  

Non-financial private sector and residents abroad

       239,721,727        216,034,263  

Other debt securities

   13     81,501,593        51,319,082  

Financial assets pledged as collateral

   14     10,749,018        6,728,646  

Current income tax assets

   15 a)     9,148        29,736  

Investments in equity instruments

   16     1,804,838        2,335,322  

Investments in associates

   17     1,228,738        1,176,768  

Property and equipment

   18     28,270,095        29,615,716  

Intangible assets

   19     1,067,502        886,100  

Deferred income tax assets

       5,280,633        5,417,132  

Other non-financial assets

   20     4,772,113        4,851,678  

Non-currrent assets held for sale

   21     188,518        188,518  
    

 

 

    

 

 

 

TOTAL ASSETS

       542,079,684        515,350,781  
    

 

 

    

 

 

 

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


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CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
    06.30.20     12.31.19  

LIABILITIES

      

Deposits

    
22 and
Exhibit H
 
 
    373,260,112       333,950,719  

Non-financial government sector

       5,463,392       3,337,522  

Financial sector

       299,603       202,674  

Non-financial private sector and residents abroad

       367,497,117       330,410,523  

Liabilities at fair value through profit or loss

     23       —         659,752  

Derivatives

     9       229,595       3,490,662  

Repo transactions

     10       —         —    

Other financial liabilities

     24       28,261,003       32,743,464  

Financing received from the BCRA and other financial institutions

     25       5,098,846       6,984,711  

Corporate bonds issued

     26       4,202,789       8,313,984  

Current income tax liabilities

     15 b)       3,237,726       9,167,042  

Provisions

    
27 and
Exhibit J
 
 
    11,000,021       12,208,640  

Deferred income tax liabilities

       4,406       —    

Other non-financial liabilities

     28       21,836,238       19,303,613  
    

 

 

   

 

 

 

TOTAL LIABILITIES

       447,130,736       426,822,587  
    

 

 

   

 

 

 

EQUITY

      

Share capital

     30       612,710       612,710  

Non-capitalized contributions

       22,016,761       22,016,761  

Capital adjustments

       15,451,936       15,451,936  

Reserves

       82,447,925       49,780,776  

Retained earnings

       (26,972,904     (19,052,368

Other accumulated comprehensive income/(loss)

       (6,233,336     (9,376,218

Income for the period

       5,753,929       27,302,701  
    

 

 

   

 

 

 

Equity attributable to owners of the Parent

       93,077,021       86,736,298  

Equity attributable to non-controlling interests

       1,871,927       1,791,896  
    

 

 

   

 

 

 

TOTAL EQUITY

       94,948,948       88,528,194  
    

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

       542,079,684       515,350,781  
    

 

 

   

 

 

 

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


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LOGO   - 3 -  

 

CONSOLIDATED CONDENSED STATEMENT OF INCOME

FOR THE SIX-MONTH INTERIM PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
  Accumulated
06.30.20
    Accumulated as
of 06.30.19
    Quarter from
04.01.20 to
06.30.20
    Quarter from
04.01.19 to
06.30.19
 

Interest income

   31     48,276,932       63,748,881       22,341,606       33,804,809  

Interest expense

   32     (15,075,868     (28,739,110     (6,465,410     (14,647,674
    

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

       33,201,064       35,009,771       15,876,196       19,157,135  
    

 

 

   

 

 

   

 

 

   

 

 

 

Commission income

   33     11,795,600       12,621,071       6,104,357       6,407,797  

Commission expenses

   34     (6,710,378     (7,347,280     (2,995,808     (3,560,000
    

 

 

   

 

 

   

 

 

   

 

 

 

Net commission income

       5,085,222       5,273,791       3,108,549       2,847,797  
    

 

 

   

 

 

   

 

 

   

 

 

 

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

   35     2,316,260       7,053,859       1,262,397       3,099,582  

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

   36     (2,200,596     (60,394    

(2,066,768

—  


 

   

(53,794

—  


 

Foreign exchange and gold gains /(losses )

   37     2,798,257       3,995,848       1,494,490       1,913,891  

Other operating income

   38     2,236,934       12,000,754       1,142,124       6,449,607  

Loan loss allowances

       (4,356,487     (4,298,326     (2,645,875     (2,593,768
    

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income

       39,080,654       58,975,303       18,171,113       30,820,450  
    

 

 

   

 

 

   

 

 

   

 

 

 

Personnel benefits

   39     (8,643,566     (9,184,151     (3,965,696     (4,755,837

Administrative expenses

   40     (7,614,386     (6,878,521     (3,831,498     (3,548,244

Depreciation and amortization

   41     (1,709,806     (1,992,016     (842,791     (696,436

Other operating expenses

   42     (6,110,237     (13,695,267     (2,831,467     (8,943,732
    

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

       15,002,659       27,225,348       6,699,661       12,876,201  
    

 

 

   

 

 

   

 

 

   

 

 

 

Income from associates and joint ventures

       216,457       197,874       187,819       278,286  

Gain (loss) on net monetary position

       (5,049,139     (7,410,297     (2,284,612     (2,118,456
    

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

       10,169,977       20,012,925       4,602,868       11,036,031  
    

 

 

   

 

 

   

 

 

   

 

 

 

Income tax

   15 c)     (4,338,573     (6,323,024     (2,045,858     (2,477,738
    

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period

       5,831,404       13,689,901       2,557,010       8,558,293  
    

 

 

   

 

 

   

 

 

   

 

 

 

Income attributable to:

          

Owners of the Parent

       5,753,929       13,694,318       2,509,517       8,562,563  

Non-controlling interests

       77,475       (4,417     47,493       (4,270

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


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EARNINGS PER SHARE

AS OF JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   06.30.20      06.30.19  

Numerator:

     

Net income attributable to owners of the Parent

     5,753,929        13,694,318  

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

     5,753,929        13,694,318  

Denominator:

     

Weighted average of outstanding common shares for the period

     612,696,260        612,659,638  

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

     612,696,260        612,659,638  

Basic earnings per share (stated in thousands of pesos)

     9.3912        22.3522  

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

     9.3912        22.3522  

 

(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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CONSOLIDATED CONDENSED STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE SIX-MONTH INTERIM PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

     Accumulated
as of
06.30.20
    Accumulated
as of
06.30.19
    Quarter
from
04.01.20 to
06.30.20
    Quarter
from
04.01.19 to
06.30.19
 

Income for the period

     5,831,404       13,689,901       2,557,010       8,558,293  

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

     (36,228     (54,625     (16,795     (9,907
  

 

 

   

 

 

   

 

 

   

 

 

 
     (36,228     (54,625     (16,795     (9,907
  

 

 

   

 

 

   

 

 

   

 

 

 

Income or loss on hedge instruments - Cash flow hedge

        

Income/(Loss) on hedge instrument for the period

     —         —         1,844       —    

Income tax

     —         —         (404     —    
  

 

 

   

 

 

   

 

 

   

 

 

 
     —         —         1,440       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit or losses from financial instruments at fair value through OCI

        

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

     2,357,132       (3,272,959     1,162,111       (5,500,815

Reclassication adjustment for the period

     2,200,596       60,394       2,066,768       53,793  

Income tax

     (1,367,318     960,156       (1,287,193     791,355  
  

 

 

   

 

 

   

 

 

   

 

 

 
     3,190,410       (2,252,409     1,941,686       (4,655,667
  

 

 

   

 

 

   

 

 

   

 

 

 

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)

        

Income/(Loss) on equity instruments at fair value through OCI

     (16,142     12,052       326       12,052  

Income tax

     4,842             (98      
  

 

 

   

 

 

   

 

 

   

 

 

 
     (11,300     12,052       228       12,052  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Comprehensive Income for the period

     3,142,882       (2,294,982     1,926,559       (4,653,522
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     8,974,286       11,394,919       4,483,569       3,904,771  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income:

        

Attributable to owners of the Parent

     8,896,811       11,399,336       4,436,076       3,909,041  

Attributable to non-controlling interests

     77,475       (4,417     47,493       (4,270

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


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CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX-MONTH INTERIM PERIODS ENDED JUNE 30, 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       22,016,761       15,451,936       (9,425,462     49,244       11,752,575       38,028,201       10,560,184       89,046,149       1,791,896       90,838,045       76,753,485  

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

    —         —         —         —         —         —         —         (2,309,851     (2,309,851     —         (2,309,851     (343,682
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance at the beginning of the year

    612,710       22,016,761       15,451,936       (9,425,462     49,244       11,752,575       38,028,201       8,250,333       86,736,298       1,791,896       88,528,194       76,409,803  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

                       

- Income for the period

    —         —         —         —         —         —         —         5,753,929       5,753,929       77,475       5,831,404       13,689,901  

- Other Comprehensive Income for the period

    —         —         —         3,190,410       (47,528     —         —         —         3,142,882       —         3,142,882       (2,294,982

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

    —         —         —         —         —         —         —         —         —         2,556       2,556       —    

- Distribution of Unappropriated retained earnings as per Shareholders’ Resolution dated May 15, 2020 and April 24, 2019 (Note 30)

                       

Legal reserve

    —         —         —         —         —         7,044,647       —         (7,044,647     —         —         —         —    

Cash dividends (1)

    —         —         —         —         —         —         (2,556,088     —         (2,556,088     —         (2,556,088     (3,637,572

Optional reserve

    —         —         —         —         —         —         28,178,590       (28,178,590     —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at fiscal period-end

    612,710       22,016,761       15,451,936       (6,235,052     1,716       18,797,222       63,650,703       (21,218,975     93,077,021       1,871,927       94,948,948       84,167,150  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(1) It represents $ 4.17 per share.

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


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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH INTERIM PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   06.30.20     06.30.19  

Cash flows from operating activities

    

Income before Income Tax

     10,169,977       20,012,925  

Adjustment for total monetary income for the period

     5,049,139       7,410,297  

Adjustments to obtain cash flows from operating activities:

     725,536       6,398,712  

Depreciation and amortization

     1,709,806       1,992,016  

Loan loss allowance

     4,356,487       4,298,326  

Effect of foreign exchange changes

     (5,492,101     2,662,719  

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

     —         (4,411,429

Other adjustments

     151,344       1,857,080  

Net increases from operating assets:

     (131,793,442     (73,049,824

Debt securities at fair value through profit or loss

     (6,527,505     1,745,551  

Derivatives

     2,404,329       (1,813,465

Repo transactions

     (34,266,703     8,450,410  

Loans and other financing

     (53,027,716     (9,839,428

Non-financial government sector

     359       (282

Other financial institutions

     (1,168,950     3,570,137  

Non-financial private sector and residents abroad

     (51,859,125     (13,409,283

Other debt securities

     (32,401,794     (71,068,631

Financial assets pledged as collateral

     (4,888,689     (2,519,876

Investments in equity instruments

     181,580       (2,750,240

Other assets

     (3,266,944     4,745,855  

Net increases from operating liabilities:

     77,242,269       33,203,439  

Deposits

     82,049,234       40,524,832  

Non-financial government sector

     2,125,870       3,112,145  

Financial sector

     472,762       (17,083

Non-financial private sector and residents abroad

     79,450,602       37,429,770  

Liabilities at fair value through profit or loss

     (659,752     887,968  

Derivatives

     (3,261,067     1,275,714  

Repo transactions

     —         (25,025

Other liabilities

     (886,146     (9,460,050

Income tax paid

     (9,533,128     (903,477
  

 

 

   

 

 

 

Total cash flows used in operating activities

     (48,139,649     (6,927,928
  

 

 

   

 

 

 


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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH INTERIM PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   06.30.20     06.30.19  

Cash flows from investing activities:

    

Payments:

     (803,392     (1,668,282

Purchase of property and equipment, intangible assets and other assets

     (803,392     (1,668,282

Collections:

     475,095       2,982,706  

Sale of investments in equity instruments

     —         2,830,936  

Other collections related to investing activities

     475,095       151,770  
  

 

 

   

 

 

 

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

     (328,297     1,314,424  
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments:

     (5,353,634     (4,951,246

Dividends

     —         (3,637,572

Non-subordinated corporate bonds

     (5,140,365     (881,685

BCRA

     (296     —    

Leases

     (212,973     (431,989

Collections:

     1,748,313       2,844,318  

Issuance of own equity instruments

     749,537       —    

Non-subordinated corporate bonds

     —         2,510,598  

BCRA

     998,776       445  

Financing from local local financial institutions

     —         333,275  
  

 

 

   

 

 

 

Total cash flows used in financing activities

     (3,605,321     (2,106,928
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     5,492,101       (2,662,719

Effect of monetary income (loss) on cash

     (18,394,439     (32,950,580
  

 

 

   

 

 

 

Total changes in cash flows

     (64,975,605     (43,333,731
  

 

 

   

 

 

 

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

     177,500,792       173,180,152  
  

 

 

   

 

 

 

Cash at fiscal period-end (Note 7)

     112,525,187       129,846,421  
  

 

 

   

 

 

 

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

JUNE 30, 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 247 national branches.

Since December 1996, BBVA Argentina is part of the global strategy of Banco Bilbao Vizcaya Argentaria S.A. (hereinafter indistinctly referred to as “BBVA” or the “Parent”), which directly and indirectly controls the Entity, by holding 66.55% of the share capital as of June 30, 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 beginning on or 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: a 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 (“Consolidar A.F.J.P. S.A. - undergoing liquidation proceedings”): a 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;

 

   

PSA Finance Argentina Compañía Financiera S.A. (“PSA”): 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.


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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 Argentine Securities Commission (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 restore Argentina’s public debt sustainability.

As of June 30, 2020, the Entity holds national securities subject to restructuring for an aggregate amount of 7,933,274. These securities are measured at fair value through other comprehensive income, and were recognized for a lower amount of 1,208,397 to reflect the decline in prices.

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 handed down 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.


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  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, 2020, up to the date of issuance of these interim financial statements, pursuant to successive extensions established by subsequent Decrees published in the Official Gazette, which term may be extended for as long as deemed required by the Executive Branch to address the pandemic.

These measures encompass the slowdown or suspension of most non-essential activities carried out 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 from February 19, 2020, for a term of 180 days;

 

  f)

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

 

  g)

new credit facilities at a subsidized interest rate of 24%, including a special tranche for Argentine-sourced capital goods and minimum requirements for companies which had no access to bank loans; and

 

  h)

implementation of corporate loans at subsidized interest rates under the Employment and Production Emergency Assistance Program, which interest rates are determined considering the year-on-year changes in the company’s turnover, and zero-interest rate credit facilities in pesos for taxpayers under the simplified tax regime and self-employed workers engaged in cultural activities.

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

The events described in the preceding Notes 1.2. and 1.3. impact 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 decreasing the financial margin and restricting the Entity’s ability to charge fees and commissions on certain activities.

As of June 30, 2020, minimum capital and minimum cash surpass 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 impact on its financial position.


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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 June 30, 2020.

 

2.

Basis for the preparation of the Financial Statements

These consolidated condensed interim financial statements as of and for the six-month period ended June 30, 2020 were prepared in accordance with 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 June 30, 2020 and December 31, 2019 would have been reduced by 5,078,544 and 4,101,784, 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 beginning 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 June 30, 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 6,187,516 as of June 30, 2020 and December 31, 2019, respectively.

The exceptions described above imply a deviation from IFRS.

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 August 25, 2020.


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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 June 30, 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 June 30, 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.

However, the level of significance of nonobservable inputs used to determine the fair value hierarchy of loans and other financing at amortized cost has been reviewed, resulting in a higher exposure, classified as Level 3.

 

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 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, temporarily excluding debt instruments issued by the non-financial government sector from the scope of such standard (“IFRS 9 as per BCRA”) for Group “A” institutions.

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

 

  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).


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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 (June 30, 2020). The gain or loss on net monetary position is recognized in the consolidated statement of income under “Gain (loss) on net monetary position”, except for gains or losses related to investments in equity instruments at fair value through profit or loss, which are recognized in real terms under “Net income from financial instruments at fair value through profit or loss” in the consolidated statement of income, and financial instruments at fair value through OCI, which are included in the consolidated statement of other comprehensive income, pursuant to Communication “A” 6849 of the BCRA.

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 June 30, 2019 was restated;

 

  c)

the statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the six-month period ended June 30, 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 June 30, 2020 was restated;

 

  f)

the statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the six-month period ended June 30, 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 and liabilities were restated applying the price index from their date of addition. The restated amounts were written down to their recoverable values, applying the pertinent IFRS, where approppriate.

 

  b)

Monetary assets and liabilities 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.

 

  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 June 30, 2020;

 

  b)

the gain or loss on net monetary position is recognized in the statement of income (with the exceptions mentioned above regarding investments in equity instruments at fair value and securities through OCI); and


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  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:

 

     12.31.19     01.01.19  

Equity before applying IAS 29

     65,317,127       38,581,777  

Impact of the implementation of the financial reporting framework established by the BCRA - IFRS 9, paragraph 5.5

     (2,033,439     (196,675
  

 

 

   

 

 

 

-Equity before applying IAS 29 including the impact of IFRS 9, paragraph 5.5

     63,283,688       38,385,102  

Total impact of application of IAS 29

     14,650,657       5,341,784  
  

 

 

   

 

 

 

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

     77,934,345       43,726,886  

Adjustment for restatement of equity to measuring unit current as of June 30, 2020

     10,593,849       32,682,917  
  

 

 

   

 

 

 

Equity in terms of measuring unit current as of June 30, 2020

     88,528,194       76,409,803  

Total recognized in Equity

     25,244,506  (1)      38,024,701  

 

  (1)

It represents (20,724,428) recognized in unappropriated retained earnings and 45,968,934 recognized in other equity accounts.

Below is a summary of the main impacts from the application of IAS 29 on the Bank’s statement of income for the six-month period ended June 30, 2019:

 

     06.30.19  

Total comprehensive income before applying IAS 29

     12,634,632  

Impact of the implementation of the financial reporting framework established by the BCRA - IFRS 9, paragraph 5.5

     (326,476
  

 

 

 

-Total comprehensive income before applying IAS 29 including the impact of IFRS 9, paragraph 5.5

     12,308,156  

Total impact of application of IAS 29

     (7,183,375
  

 

 

 

Total comprehensive income in terms of measurement unit current as of June 30, 2019

     5,124,781  

Adjustment for restatement of total comprehensive income to measuring unit current as of June 30, 2020

     6,270,138  
  

 

 

 

Total comprehensive income in terms of measuring unit current as of June 30, 2020

     11,394,919  


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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 for Group “A” isntitutions, 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 at an amount equal to the expected credit losses throughout the instrument lifetime.

An allowance for loan losses related to lease receivables is always measured at 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.

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 does 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 results 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.


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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 in the statement of financial position.

 

   

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 under 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.

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.


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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
June 30, 2020
     Effect of change in
accounting policy (1)
     As of January 1, 2019
- modified
balances
 

Other financial assets

     84,321        147,345        —          147,345  

Loans and other financing

     4,258,239        7,440,988        (279,762      7,161,226  

Other financial institutions

     85,488        149,385        (90,872      58,513  

Non-financial private sector and residents abroad

     4,172,751        7,291,603        (188,890      7,102,713  

Overdrafts

     110,147        192,475        111,500        303,975  

Instruments

     1,164,674        2,035,190        (1,608,091      427,099  

Mortgage loans

     99,518        173,901        (67,350      106,551  

Pledge loans

     44,250        77,324        (34,119      43,205  

Consumer loans

     808,085        1,412,074        17,698        1,429,772  

Credit cards

     1,359,528        2,375,684        345,658        2,721,342  

Finance lease

     47,227        82,526        (10,249      72,277  

Other

     539,322        942,429        1,056,063        1,998,492  

Other debt securities

     1,314        2,296        (126      2,170  

Contingent commitments

     1,483        2,591        623,565        626,156  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     4,345,357        7,593,220        343,677        7,936,897  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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
June 30, 2020
     Effect of change in
accounting policy (1)
     As of January 1, 2020 -
modified balances
 

Other financial assets

     2,162,652        2,456,628        (2,199,555      257,073  

Loans and other financing

     8,329,232        9,461,450        3,481,560        12,943,010  

Other financial institutions

     37,174        42,227        103,026        145,253  

Non-financial private sector and residents abroad

     8,292,058        9,419,223        3,378,534        12,797,757  

Overdrafts

     107,287        121,871        616,431        738,302  

Instruments

     2,822,022        3,205,628        (2,165,786      1,039,842  

Mortgage loans

     147,239        167,254        (6,267      160,987  

Pledge loans

     207,012        235,152        (12,974      222,178  

Consumer loans

     1,244,638        1,413,825        122,997        1,536,822  

Credit cards

     2,409,126        2,736,606        1,114,635        3,851,241  

Finance lease

     89,627        101,810        43,859        145,669  

Other

     1,265,107        1,437,077        3,665,639        5,102,716  

Other debt securities

     784        891        (114      777  

Contingent commitments

     925        1,051        1,027,960        1,029,011  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     10,493,593        11,920,020        2,309,851        14,229,871  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (1)

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

 

  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 9 until the fiscal years beginning on or after January 1, 2021 for Group “B” financial institutions. 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.


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  5.3

Comparative information

The consolidated statement of financial position as of June 30, 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 six-month period ended June 30, 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 Note 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 IFRS 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 for fiscal years beginning on or after January 1, 2023. 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.

Moreover, the IASB issued an amendment to IFRS 16 “Leases – COVID-19-related rent concessions”. This amendment applies to annual presentation periods beginning on or after June 1, 2020, and early adoption is permitted. A practical expedient is added, whereby the lessee may elect not to assess whether a Covid-19-related rent concession is a lease modification. In this way, upon making such election, lessees shall account for any change in the lease payments resulting from such a concession as if the change were not a lease modification, provided that certain conditions are met.

These amendments were 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 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.

 

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:


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     06.30.20      12.31.19  

BCRA—Current account

     57,914,771        122,114,106  

Cash

     50,468,432        53,075,302  

Balances with other local and foreign institutions

     4,141,984        2,311,384  
  

 

 

    

 

 

 

TOTAL

     112,525,187        177,500,792  
  

 

 

    

 

 

 

 

8.

Debt securities at fair value through profit or loss

 

     06.30.20      12.31.19  

BCRA Bills

     9,644,042        4,526,120  

Private securities—Corporate bonds

     111,287        106,327  

Government securities

     233        58,922  
  

 

 

    

 

 

 

TOTAL

     9,755,562        4,691,369  
  

 

 

    

 

 

 

 

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 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 June 30, 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:

As of December 31, 2019, PSA Finance Argentina Compañía Financiera S.A. performed interest rate swaps 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.

Breakdown is as follows:

Assets

 

   

06.30.20

   12.31.19  

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

  685,000      778,114  

Debit balances linked to foreign currency forwards pending settlement in pesos

  371,899      2,677,961  

Debit balances linked to interest rate swaps from fixed to floating

  —        5,153  
 

 

  

 

 

 

TOTAL

  1,056,899      3,461,228  
 

 

  

 

 

 


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Liabilities

 

     06.30.20      12.31.19  

Credit balances linked to foreign currency forwards pending settlement in pesos

     216,691        3,324,377  

Credit balances linked to interest rate swaps from floating to fixed

     12,904        166,285  
  

 

 

    

 

 

 

TOTAL

     229,595        3,490,662  
  

 

 

    

 

 

 

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:

 

     06.30.20      12.31.19  

Foreign currency Forwards

     

Foreign currency forward purchases - US$

     450,209        618,497  

Foreign currency forward purchases - Euros

     —          35  

Foreign currency forward sales - US$

     655,601        620,956  

Foreign currency forward sales - Euros

     1,229        1,804  

Interest rate swaps

     

Fixed rate for floating rate (1)

     500,020        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

 

     06.30.20      12.31.19  

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

     34,266,703        —    
  

 

 

    

 

 

 

TOTAL

     34,266,703        —    
  

 

 

    

 

 

 

 

11.

Other financial assets

Breakdown of other financial assets is as follows:

 

     06.30.20      12.31.19  

Measured at amortized cost

     

Other receivables

     3,346,978        1,825,855  

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

     2,095,071        2,137,691  

Non-financial debtors from spot transactions pending settlement

     45,228        31,556  

Financial debtors from spot transactions pending settlement

     —          287,985  

Other

     9,168        192,795  
  

 

 

    

 

 

 
     5,496,445        4,475,882  
  

 

 

    

 

 

 

Measured at amortized cost through profit or loss
Mutual funds

     1,119,004        1,109,326  
  

 

 

    

 

 

 
     1,119,004        1,109,326  
  

 

 

    

 

 

 

Allowance for loans losses (Exhibit R)

     (238,170      (257,073
  

 

 

    

 

 

 

TOTAL

     6,377,279        5,328,135  
  

 

 

    

 

 

 


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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:

 

     06.30.20      12.31.19  

Non-financial government sector

     161        520  

BCRA

     —          19,771  

Other financial institutions

     3,572,607        5,904,606  

Overdrafts

     31,129,319        16,354,370  

Discounted instruments

     11,122,710        14,013,137  

Unsecured instruments

     12,559,350        12,904,813  

Instruments purchased

     252,547        —    

Mortgage loans

     15,682,219        16,075,088  

Pledge loans

     7,645,200        9,833,873  

Consumer loans

     23,788,510        26,802,282  

Credit Cards

     77,013,514        81,861,970  

Loans for the prefinancing and financing of exports

     21,808,380        20,783,154  

Receivables from finance leases

     1,553,941        2,146,678  

Loans to personnel

     1,918,063        1,947,413  

Other financing

     45,950,046        26,115,894  
  

 

 

    

 

 

 
     253,996,567      234,763,569  

Allowance for loan losses (Exhibit R)

     (10,770,709      (12,943,010
  

 

 

    

 

 

 

TOTAL

     243,225,858        221,820,559  
  

 

 

    

 

 

 

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 by thereunder:

 

     06.30.20      12.31.19  
     Total
investment
     Current value
of minimum
payments
     Total
investment
     Current value
of minimum
payments
 
Term

Up to 1 year

     1,036,851        794,970        1,085,041        1,081,598  

From 1 to 5 years

     950,320        758,971        1,068,401        1,065,080  
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     1,987,171        1,553,941        2,153,442        2,146,678  
  

 

 

    

 

 

    

 

 

    

 

 

 

Principal

           1,525,822        2,119,159  

Interest accrued

           28,119        27,519  
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

           1,553,941        2,146,678  
  

 

 

    

 

 

    

 

 

    

 

 

 

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:


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     06.30.20      12.31.19  

Total Exhibits B and C

     256,922,394        236,810,479  

Plus:

     

BCRA

     —          19,771  

Loans to personnel

     1,918,063        1,947,413  

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

     138,614        —    

Less:

     

Allowance for loan losses (Exhibit R)

     (10,770,709      (12,943,010

Adjustments for effective interest rate

     (1,536,140      (1,625,148

Corporate bonds

     (17,901      (110,608

Loan commitments

     (3,428,463      (2,278,338
  

 

 

    

 

 

 

Total loans and other financing

     243,225,858        221,820,559  
  

 

 

    

 

 

 

As of June 30, 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:

 

     06.30.20      12.31.19  

Overdrafts and receivables agreed not used

     2,265,962        353,676  

Guarantees granted

     800,843        575,105  

Liabilities related to foreign trade transactions

     90,198        1,005,231  

Secured loans

     271,460        344,326  
  

 

 

    

 

 

 
     3,428,463        2,278,338  
  

 

 

    

 

 

 

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

 

     06.30.20      12.31.19  

Corporate bonds under credit recovery transactions

     83        94  
  

 

 

    

 

 

 
     83        94  
  

 

 

    

 

 

 

Allowance for loan losses—Private securities (Exhibit R)

     (83      (94
  

 

 

    

 

 

 

TOTAL

     —          —    
  

 

 

    

 

 

 

 

  13.2

Financial assets measured at fair value through other comprehensive income

 

     06.30.20      12.31.19  

BCRA Liquidity Bills

     67,672,383        33,029,164  

Government securities

     13,829,210        18,210,915  

Private securities—Corporate bonds

            79,686  
  

 

 

    

 

 

 
     81,501,593        51,319,765  
  

 

 

    

 

 

 

Allowance for loan losses —Private securities (Exhibit R)

     —          (683
  

 

 

    

 

 

 

TOTAL

     81,501,593        51,319,082  
  

 

 

    

 

 

 

 

14.

Financial assets pledged as collateral

The breakdown of the financial assets pledged as collateral as of June 30, 2020 and December 31, 2019 is included below:


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            06.30.20      12.31.19  

Guarantee trust—Government securities and BCRA Bills at fair value through OCI

     (4      5,565,523        —    

BCRA—Special guarantee accounts (Note 51)

     (1      2,508,376        3,212,288  

Deposits as collateral

     (3      2,455,373        3,438,728  

Guarantee Trust—Pesos

     (2      219,746        77,630  
     

 

 

    

 

 

 

TOTAL

        10,749,018        6,728,646  
     

 

 

    

 

 

 

 

(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 government securities.

(3)

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

(4)

The trust fund consists of dollar-linked Treasury Bills in pesos (Lelinks) pledged as collateral for activities related to transactions made in Mercado Abierto Electrónico S.A. (MAE) and Mercado a Término de Rosario S.A. (ROFEX).

 

15.

Income Tax:

 

  a)

Current income tax assets

 

     06.30.20      12.31.19  

Advances

     9,148        29,736  
  

 

 

    

 

 

 
     9,148        29,736  
  

 

 

    

 

 

 

 

  b)

Current income tax liabilities

 

     06.30.20      12.31.19  

Income tax provision

     5,425,070        10,400,893  

Advances

     (2,189,235      (1,219,140

Collections and withholdings

     1,891        (14,711
  

 

 

    

 

 

 
     3,237,726        9,167,042  
  

 

 

    

 

 

 

 

  c)

Income tax expense

Breakdown of income tax expense:

 

     06.30.20      06.30.19  

Current tax

     (5,534,998      (7,660,814

Deferred tax

     1,196,425        1,337,790  
  

 

 

    

 

 

 
     (4,338,573      (6,323,024
  

 

 

    

 

 

 

Pursuant to IAS 34, income tax is recognized in interim periods based on the best estimate of the weighted average effective tax rate expected by the Entity for the fiscal year.

The Group’s effective rate for the six-month period ended June 30, 2020 was 43%, while for the six- month period ended June 30, 2019, it was 32%.

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 from the beginning to 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.


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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 year 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.

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. 27,430 until fiscal years commencing 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 changes in the CPI are expected to surpass 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, for the fiscal year ended December 31, 2017, in the amount of 1,021,518 and for 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.

In addition, on June 8, 2020, the Federal Courts on Administrative Matters(JCAF 12-23) ruled upon the action for declaratory judgment filed on May 12, 2017, upholding the complaint and thus declaring that the prohibition to apply the inflation adjustment mechanism for the purposes of the income tax return filed by the Bank for fiscal period 2016 is not applicable to the instant case.


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The tax authorities (AFIP) may file an appeal against this judgment before the Appellate Court within 5 days as from the time judicial activities are resumed once the extraordinary judicial vacations declared as a result of the COVID-19 pandemic has ended.

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, the 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.

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

 

     06.30.20      12.31.19  

Prisma Medios de Pago S.A. (1)

     1,569,471        2,141,529  

Private securities—Shares of other non-controlled companies

     217,323        162,704  
  

 

 

    

 

 

 

TOTAL

     1,786,794        2,304,233  
  

 

 

    

 

 

 

 

(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 %.


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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, a profit of 4,411,429 was recognized in “Other operating income” as of June 30, 2019 (Note 38).

 

  16.2

Investments in equity instruments through other comprehensive income

 

     06.30.20      12.31.19  

Banco Latinoaméricano de Exportaciones S.A.

     16,933        29,972  

Other

     1,111        1,117  
  

 

 

    

 

 

 

TOTAL

     18,044        31,089  
  

 

 

    

 

 

 

 

17.

Investments in Associates

 

     06.30.20      12.31.19  

Rombo Compañía Financiera S.A.

     713,727        747,089  

BBVA Consolidar Seguros S.A.

     374,486        300,575  

Interbanking S.A.

     138,025        129,104  

Play Digital S.A. (1)

     2,500        —    
  

 

 

    

 

 

 

TOTAL

     1,228,738        1,176,768  
  

 

 

    

 

 

 

 

(1)

On May 26, 2020, the Bank participated in the organization of the company Play Digital S.A., which was incorporated before the Public Registry of Commerce kept by the Supervisory Board of Companies under dossier No. 5995, Book 99 of Stock Companies, on June 9, 2020.

The company’s initial capital stock is $ 7,500,000 (seven million five hundred thousand pesos), distributed as follows:

(i) Banco BBVA Argentina S.A., holder of 2,500,000 (two million five hundred thousand) common book-entry shares, of $1 par value each, entitling to one vote per share, representing 33.33% of the stock capital;

(ii) Banco de Galicia y Buenos Aires S.A.U., holder of 2,500,000 (two million five hundred thousand) common book-entry shares, of $1 par value each, entitling to one vote per share, representing 33.33% of the stock capital; and

(iii) Banco Santander Río S.A., holder of 2,500,000 (two million five hundred thousand) common book-entry shares, of $1 par value each, entitling to one vote per share, representing 33.33% of the stock capital.

The project provides for the participation of other financial institutions as holders of equity interests in the company’s capital; therefore, the equity interests of the founder financial institutions will be significantly reduced.

The company’s purpose is to engage, directly and/or through third parties, or in association with third parties, in the following activities in Argentina or abroad:

 

  a)

Provision of electronic payment services;

 

  b)

Management and operation of transfers by using mobile communication devices and/or any other electronic means, as well as electronic payment and/or collection services on behalf and for the account of third parties, to which effect it shall enter into agency agreements to make and receive collections and/or payments for the account and to the order of third parties, in all cases through electronic-supported transfer systems;


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  c)

Operation of electronic currency transfer systems through the Internet and/or any other digital or virtual payment means. It may also provide supplementary technological or IT support services related to financial activities. In furtherance of its purposes, Play Digital S.A. has full legal capacity, and it is entitled to acquire rights, incur obligations and perform all such acts as are not prohibited by the laws or its bylaws. The activities falling under the scope of Financial Institutions Law No. 21526, as amended and regulated, are excluded from its purpose.

As of June 30, 2020, the interest held in Play Digital S.A. is registered in Investments in associates in an amount of 2,500, and the outstanding capital contribution, for an identical amount, has been registered in Other non-financial liabilities.

 

18.

Property and equipment

 

     06.30.20      12.31.19  

Real estate

     19,594,969        19,885,993  

Furniture and facilities

     4,171,782        4,499,947  

Right of use of leased real estate (Note 29)

     2,349,826        2,657,457  

Machinery and equipment

     1,671,046        2,163,122  

Constructions in progress

     438,434        365,227  

Vehicles

     44,038        43,970  
  

 

 

    

 

 

 

TOTAL

     28,270,095        29,615,716  
  

 

 

    

 

 

 

 

19.

Intangible Assets

 

     06.30.20      12.31.19  

Licenses—Software

     1,067,502        886,100  
  

 

 

    

 

 

 

TOTAL

     1,067,502        886,100  
  

 

 

    

 

 

 

 

20.

Other non-financial assets

 

     06.30.20      12.31.19  

Investment properties

     1,588,402        1,609,691  

Prepayments

     1,576,626        1,636,372  

Tax advances

     1,002,092        658,502  

Other miscellaneous assets

     197,846        257,030  

Advances to suppliers of goods

     257,805        270,708  

Assets acquired as security for loans

     14,674        16,272  

Advances to personnel

     86,484        369,699  

Other

     48,184        33,404  
  

 

 

    

 

 

 

TOTAL

     4,772,113        4,851,678  
  

 

 

    

 

 

 

 

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. Such commitment was ratified at a Board Meeting held on June 30, 2020. Therefore, these assets, the value of which, as of June 30, 2020 and December 31, 2019 amounts to 188,518, were classified as “Non-current assets held for sale”, continuing with the efforts to sell that group of assets.


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22.

Deposits

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

Breakdown is as follows:

 

     06.30.20      12.31.19  

Non-financial government sector

     5,463,392        3,337,522  

Financial sector

     299,603        202,674  

Non-financial private sector and residents abroad

     367,497,117        330,410,523  

Checking accounts

     75,199,261        61,340,821  

Savings accounts

     172,547,863        167,919,745  

Time deposits

     111,683,260        95,616,484  

Investment accounts

     61,309        87  

Other

     8,005,424        5,533,386  
  

 

 

    

 

 

 

TOTAL

     373,260,112        333,950,719  
  

 

 

    

 

 

 

 

23.

Liabilities at fair value through profit or loss

 

     06.30.20      12.31.19  

Obligations from government securities transactions

     —          659,752  
  

 

 

    

 

 

 

TOTAL

     —          659,752  
  

 

 

    

 

 

 

 

24.

Other financial liabilities

 

     06.30.20      12.31.19  

Obligations from financing of purchases

     16,557,614        19,276,918  

Collections and other transactions on behalf of third parties

     3,032,618        3,636,325  

Liabilities for leases (Note 29)

     2,659,662        2,858,830  

Payment orders pending credit

     1,464,422        2,202,386  

Credit balance for spot purchases or sales pending settlement

     77,013        136,073  

Receivables from foreign currency spot purchases pending settlement

     25,445        136,788  

Commissions accrued payable

     21,755        16,555  

Interest accrued payable

     —          111,784  

Other

     4,422,474        4,367,805  
  

 

 

    

 

 

 

TOTAL

     28,261,003        32,743,464  
  

 

 

    

 

 

 

 

25.

Financing received from the BCRA and other financial institutions

 

     06.30.20      12.31.19  

Local financial institutions

     5,066,385        4,081,342  

BCRA

     32,461        19,024  

Foreign financial institutions

     —          2,884,345  
  

 

 

    

 

 

 

TOTAL

     5,098,846        6,984,711  
  

 

 

    

 

 

 

 

26.

Corporate bonds issued

Below is a detail of corporate bonds in force as of June 30, 2020 and December 31, 2019 of the Bank and its subsidiaries:


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Detail

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

Annual Nominal Rate

  

Payment
of interest

   Outstanding
securities
as of 06.30.20
     Outstanding
securities
as of 12.31.19
 

Class 24

     12.27.2017        546,500        12.27.2020      Badlar Private + 4,25%    Quarterly      476,500        598,069  

Class 25

     11.08.2018        784,334        11.08.2020      UVA + 9,50%    Quarterly      1,528,282        1,469,943  

Class 27

     02.28.2019        1,090,000        08.28.2020      Badlar Private +    Quarterly      891,000        1,012,116  

Class 28

     12.12.2019        2,234,550        06.12.2020      6,25% 4%    Quarterly      —          2,234,550  
Classes 26 - 28 - PSA Finance Argentina      02.01.2018        808,333        06.17.2020      Badlar Private + annual nominal rate / Fixed rate    Quarterly /Upon maturity      —          708,211  
Classes 5 - 7 - Volkswagen Financial Services      02.10.2020        1,181,398        02.27.2021      Badlar Private + annual nominal rate / UVA + annual nominal rate    Quarterly      1,211,459        1,900,794  
            Total Consolidated Principal      4,107,241        7,923,683  
            Consolidated Interest Accrued      95,548        392,903  
            Issuance Expenses      —          (2,602
                 

 

 

    

 

 

 
            Total consolidated principal and interest      4,202,789        8,313,984  
                 

 

 

    

 

 

 

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.

 

27.

Provisions

 

     06.30.20      12.31.19  

Provisions for reorganization (Exhibit J)

     1,731,687        2,244,727  

Provision for contingent commitments (Exhibits J and R)

     981,732        1,029,011  

Provisions for termination plans (Exhibit J)

     89,856        72,977  
For administrative, disciplinary and criminal penalties (Note 56 and Exhibit J)      5,000        5,680  

Other contingencies (Exhibit J)

     8,191,746        8,856,245  

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

     5,447,078        6,187,516  

Provision for commercial lawsuits

     2,198,454        2,187,038  

Provision for labor lawsuits

     249,780        231,960  

Provision for tax lawsuits

     173,301        119,949  

Other

     123,133        129,782  
  

 

 

    

 

 

 

TOTAL

     11,000,021        12,208,640  
  

 

 

    

 

 

 

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:

 

   

Re-assessment 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.


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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 imposed 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-related and commercial claims and miscellaneous complaints.

In the opinion of the Group’s Board of Directors and its legal advisors, there are no 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.

In turn, as of June 30, 2020, approximately 100 contingent claims, including civil and commercial 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 and petitions to secure evidence. 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:

 

     06.30.20      12.31.19  

Miscellaneous creditors

     6,245,925        5,756,777  

Short-term personnel benefits

     4,073,530        4,763,477  

Other collections and withholdings

     3,625,563        3,493,289  

Advances collected

     2,939,738        2,961,096  

Cash dividens payable (Note 30)

     2,500,000         

Other taxes payable

     1,057,926        1,384,704  

For contract liabilities

     567,312        435,922  

Social security payment orders pending settlement

     440,965        69,786  

Long-term personnel benefits

     310,765        348,147  

Other

     74,514        90,415  
  

 

 

    

 

 

 

TOTAL

     21,836,238        19,303,613  
  

 

 

    

 

 

 

 

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 June 30, 2020:

Rights of use under leases

 

Account

   Initial
value as of
01.01.2020
     Increases      Decreases      Depreciation      Residual
value as of
06.30.20
 
   Accumulated
as of 01.01.2020
     Decreases      For the
period (1)
     Accumulated
at period-end
 

Leased real property

     3,312,830        71,250        93,307        655,373        24,628        310,202        940,947        2,349,826  

(1) See note 41

                       


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Liabilities from leases

Future minimum payments for lease agreements are as follows:

 

     In foreign currency      In local currency      06.30.20      12.31.19  

Up to one year

     118,009        28,132        146,141        95,109  

From 1 to 5 years

     1,335,629        165,335        1,500,964        1,393,696  

More than 5 years

     1,000,310        12,247        1,012,557        1,370,025  
        

 

 

    

 

 

 
                   2,659,662      2,858,830  
        

 

 

    

 

 

 

Interest and exchange rate difference recognized in profit or loss

 

     06.30.20      06.30.19  

Other operating expenses

     

Interest on liabilities from finance lease (Note 42)

     (156,892      (183,750

Exchange rate difference

     

Exchange rate difference for finance lease (loss)

     (321,382      (289,063

Other expenses

     

Leases (Note 40)

     (761,436      (512,324

 

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.

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 common book-entry shares, with a nominal value of $ 1 and entitling to one (1) vote each, to be delivered to BBVA Francés Valores S.A.’s minority shareholders.


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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 Supervisory Board of Companies (IGJ).

On May 15, 2020, the Ordinary and Extraordinary Shareholders’ Meeting was held. At such meeting 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

Furthermore, 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

 

     06.30.20      06.30.19  

Interest on government securities

     12,495,474        20,146,788  

Interest on credit card loans

     8,426,569        12,571,331  

Interest on instruments

     4,478,987        6,273,378  

Interst on overdrafts

     5,591,267        4,747,031  

Acquisition Value Unit (UVA) clause adjustment

     4,190,226        5,863,404  

Interest on consumer loans

     4,116,432        5,553,042  

Interest on other loans

     4,119,343        2,044,530  

Premiums on reverse repurchase agreements

     1,208,704        1,010,370  

Interest on pledge loans

     1,194,207        297,461  

Interest on loans to the financial sector

     602,669        1,998,520  

Interest on mortgage loans

     612,663        839,664  

Interest on loans for the prefinancing and financing of exports

     707,977        1,961,292  

Interest on finance leases

     218,591        369,420  

Stabilization Coefficient (CER) clause adjustment

     157,768        65,348  

Interest on private securities

     3,929        6,647  

Other

     152,126        655  
  

 

 

    

 

 

 

TOTAL

     48,276,932        63,748,881  
  

 

 

    

 

 

 

 

32.

Interest expenses

 

     06.30.20      06.30.19  

Time deposits

     11,910,710        23,040,288  

Other liabilities from financial transactions

     1,587,954        2,193,144  

Interfinancial loans received

     577,150        30,880  

Checking accounts deposits

     403,867        2,271,703  

Acquisition Value Unit (UVA) clause adjustments

     463,974        1,044,626  

Savings accounts deposits

     119,585        135,109  

Premiums on reverse repurchase agreements

     —          1,896  

Other

     12,628        21,464  
  

 

 

    

 

 

 

TOTAL

     15,075,868        28,739,110  
  

 

 

    

 

 

 


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33.

Commission income

 

     06.30.20      06.30.19  

Linked to liabilities

     5,438,159        6,568,525  

From credit cards

     4,729,202        4,125,582  

From insurance

     596,260        679,955  

From foreign trade and foreign currency transactions

     462,236        596,390  

Linked to loans

     464,517        584,628  

Linked to securities

     104,232        65,029  

From guarantees granted

     994        962  
  

 

 

    

 

 

 

TOTAL

     11,795,600        12,621,071  
  

 

 

    

 

 

 

 

34.

Commission expenses

 

     06.30.20      06.30.19  

For credit and debit cards

     5,654,182        5,588,553  

For payment of salaries

     364,962        516,066  

For digital sales services

     199,187        420,009  

For foreign trade transactions

     90,065        108,247  

For promotions

     35,730        67,999  

Linked to transactions with securities

     1,619        1,688  

Other commission expenses

     364,633        644,718  
  

 

 

    

 

 

 

TOTAL

     6,710,378        7,347,280  
  

 

 

    

 

 

 

 

35.

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

 

     06.30.20      06.30.19  

Income from government securities

     2,057,863        2,545,886  

Income from foreign currency forward transactions

     244,581        1,273,643  

Income from private securities

     (63,475      3,689,446  

Income/(loss) from interest rate swaps

     45,572        (509,930

Income from corporate bonds

     33,929        54,814  

Other

     (2,210      —    
  

 

 

    

 

 

 

TOTAL

     2,316,260        7,053,859  
  

 

 

    

 

 

 

 

36.

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

 

     06.30.20      06.30.19  

(Loss) from sale of government securities

     (2,186,925      (59,887

(Loss) from sale of corporate bonds

     (13,671      (507
  

 

 

    

 

 

 

TOTAL

     (2,200,596      (60,394
  

 

 

    

 

 

 

 

37.

Foreign exchange and gold gains/(losses)

 

     06.30.20      06.30.19  

Income from purchase-sale of foreign currency

     2,196,450        4,732,234  

Conversion of foreign currency assets and liabilities into pesos

     601,807        (736,386
  

 

 

    

 

 

 

TOTAL

     2,798,257        3,995,848  
  

 

 

    

 

 

 


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38.

Other operating income

 

     06.30.20      06.30.19  

Adjustments and interest on miscellaneous receivables

     574,713        701,072  

Rental of safe deposit boxes

     476,848        409,629  

Loans recovered

     336,020        302,506  

Allowances reversed

     115,584        81,567  

Debit and credit card commissions

     118,854        459,124  

Punitive interest

     76,510        106,050  

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

     —          4,411,429  

Other operating income

     538,405        5,529,377  
  

 

 

    

 

 

 

TOTAL

     2,236,934        12,000,754  
  

 

 

    

 

 

 

 

39.

Personnel benefits

 

     06.30.20      06.30.19  

Salaries

     5,433,004        5,615,566  

Social security withholdings and contributions

     1,517,402        1,579,635  

Other short-term personnel benefits

     1,310,904        1,519,805  

Personnel compensation and bonuses

     173,023        273,132  

Personnel services

     169,219        171,819  

Termination personnel benefits (Exhibit J)

     25,612        —    

Other long-term personnel benefits

     14,402        24,194  
  

 

 

    

 

 

 

TOTAL

     8,643,566        9,184,151  
  

 

 

    

 

 

 

 

40.

Administrative expenses

 

     06.30.20      06.30.19  

Taxes

     1,860,247        1,844,255  

Maintenance an repair costs

     930,831        829,153  

Administrative expenses

     737,468        579,321  

Rent (Note 29)

     761,436        512,324  

Armored transportation services

     609,873        749,640  

Other fees

     405,862        366,428  

Electricity and communications

     436,799        375,061  

Advertising

     315,563        358,177  

Security services

     326,409        268,264  

Insurance

     81,393        79,428  

Representation and travel expenses

     45,821        86,603  

Fees to Bank Directors and Supervisory Committee

     27,975        10,592  

Stationery and supplies

     38,589        34,436  

Other administrative expenses

     1,036,120        784,839  
  

 

 

    

 

 

 

TOTAL

     7,614,386        6,878,521  
  

 

 

    

 

 

 

 

41.

Depreciation and amortization

 

     06.30.20      06.30.19  

Depreciation of property and equipment

     1,298,571        1,435,893  

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

     310,202        330,169  

Amortization of intangible assets

     85,972        222,973  

Depreciation of other assets

     15,061        2,981  
  

 

 

    

 

 

 

TOTAL

     1,709,806        1,992,016  
  

 

 

    

 

 

 


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42.

Other operating expenses

 

     06.30.20      06.30.19  

Turnover tax

     3,498,559        4,360,386  

Reorganization expenses (Exhibit J)

     492,709        268,769  

Other allowances (Exhibit J)

     659,569        6,238,372  

Initial loss of loans below market rate

     277,197        1,189,383  

Contribution to the Deposit Guarantee Fund (Note 50)

     273,702        358,951  

Interest on liabilities from leases (Note 29)

     156,892        183,750  

Claims

     41,451        128,207  

Other operating expenses

     710,158        967,449  
  

 

 

    

 

 

 

TOTAL

     6,110,237        13,695,267  
  

 

 

    

 

 

 

 

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 June 30, 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

     9,755,562        9,755,562        233        9,755,329        —    

Derivative instruments

     1,056,899        1,056,899           371,899        685,000  

Other financial assets

     1,119,004        1,119,004        1,119,004        

Other debt securities

     81,501,593        81,501,593        424,801        81,076,792        —    

Financial assets pledged as collateral

     3,959,075        3,959,075        219,746        3,739,329        —    

Investments in equity instruments

     1,804,838        1,804,838        217,310        18,057        1,569,471  

Financial liabilities

              

Derivative instruments

     229,595        229,595        —          229,595        —    

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

     4,691,369        4,691,369        —          4,691,369        —    

Derivative instruments

     3,461,228        3,461,228        —          2,683,114        778,114  

Other financial assets

     1,109,326        1,109,326        1,109,326        —          —    

Other debt securities

     51,319,082        51,319,082        1,391,555        49,927,527        —    

Financial assets pledged as collateral

     38,849        38,849        38,849        —          —    

Investments in equity instruments

     2,335,322        2,335,322        162,704        31,089        2,141,529  

Financial Liabilities

              

Liabilities at fair value through profit or loss

     659,752        659,752        659,752        —          —    

Derivative instruments

     3,490,662        3,490,662        —          3,490,662        —    

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).


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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

No transfers have occurred from Level 1 to Level 2 as of June 30, 2020 or December 31, 2019.

 

b.2)

Transfers from Level 2 to Level 1

No transfers have occurred from Level 2 to Level 1 as of June 30, 2020 or 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). Below is a detail of the valuation techniques for each financial product:

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 and bills, 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, except for cash-reserve bonds, fixed-rate Argentine Treasury Bonds in pesos maturing on November 21, 2020 (TN20) and fixed-rate Argentine Treasury Bonds in pesos maturing in May 2022 (TY22), which are carried at their technical value. In the specific case of GDP-linked securities denominated in pesos (TVPP), the BYMA’s market traded price was considered, as they were not traded in the principal market (MAE) and due to the features of the cash flows of this kind of bonds, it was decided to consider their BYMA market traded price (given their significant volume) instead of an estimated theoretical price.

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 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. If they were not traded as from their issue date, they are measured at their technical value.


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SWAPS

For swaps, the theoretical valuation consists of discounting future cash flows using the interest rate, according to the estimated curve based on fixed-rate bonds in pesos and bills issued by the Argentine Government.

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 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.; and

 

   

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):


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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:

 

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.


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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:

 

     06.30.20      12.31.19  

Balance at the beginning of the fiscal year

     2,919,643        —    

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

     (315,789      2,141,529  

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

     —          778,114  

Monetary gain (loss) generated by assets at fair value

     (349,383      —    
  

 

 

    

 

 

 

Balance at fiscal period-end

     2,254,471        2,919,643  
  

 

 

    

 

 

 

 

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, adding a liquidity premium (unobservable input) that reflects the added value or additional cost required to dispose of the asset.

 

   

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.


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The fair value hierarchy of assets and liabilities not measured at fair value as of June 30, 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

     112,525,187        (1     —          —          —    

Repo transactions

     34,266,703        (1     —          —          —    

Other financial assets

     5,258,275        (1     —          —          —    

Loans and other financing

             

Non-financial government sector

     161        (1     —          —          —    

Other financial institutions

     3,503,970        3,501,154       —          —          3,501,154  

Non-financial private sector and residents abroad

     239,721,727        235,211,441       —          —          235,211,441  

Financial assets pledged as collateral

     6,789,943        (1     —          —          —    

Financial liabilities

             

Deposits

     373,260,112        371,663,822       —          371,663,822        —    

Other financial liabilities

     28,261,003        (1     —          —          —    

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

     5,098,846        5,736,906       —          5,736,906        —    

Corporate bonds issued

     4,202,789        4,179,799       —          4,179,799        —    

(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

     177,500,792        (1     —          —    

Other financial assets

     4,218,809        (1     —          —    

Loans and other financing

     221,820,559          

Non-financial government sector

     520        (1     —          —    

Argentine Central Bank (BCRA)

     19,771        (1     —          —    

Other financial institutions

     5,766,005        4,863,033       —          4,863,033  

Non-financial private sector and residents abroad

     216,034,263        214,555,698       —          214,555,698  

Financial assets pledged as collateral

     6,689,797        (1     —          —    

Financial liabilities

          

Deposits

     333,950,719        331,858,002       —          331,858,002  

Other financial liabilities

     32,743,464        (1     —          —    

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

     6,984,711        6,947,416       —          6,947,416  

Corporate bonds issued

     8,313,984        8,252,001       —          8,252,001  

(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 June 30, 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 June 30, 2020 and December 31, 2019:

 

Group (banking activity) (1)

   06.30.20      12.31.19  

Loans and other financing

     243,225,858        221,820,559  

Corporate banking (2)

     47,040,554        43,704,112  

Small and medium companies (3)

     73,681,333        49,907,899  

Retail

     122,503,971        128,208,548  

Other assets

     298,853,826        293,530,222  
  

 

 

    

 

 

 

TOTAL ASSETS

     542,079,684        515,350,781  
  

 

 

    

 

 

 

Deposits

     373,260,112        333,950,719  

Corporate banking (2) (3)

     33,890,395        27,861,017  

Small and medium companies (2) (3)

     91,991,836        77,423,721  

Retail

     247,377,881        228,665,981  

Other liabilities

     73,870,624        92,871,868  
  

 

 

    

 

 

 

TOTAL LIABILITIES

     447,130,736        426,822,587  
  

 

 

    

 

 

 

(2) It includes financial sector.

(3) It includes government sector.


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The following table shows information related to operating segments:

 

Group (banking activity) (1)

   06.30.20      06.30.19  

Net interest income

     33,201,064        35,009,771  

Net commission income

     5,085,222        5,273,791  

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

     2,316,260        7,053,859  

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

     (2,200,596      (60,394

Foreign exchange and gold gains

     2,798,257        3,995,848  

Other operating income

     2,236,934        12,000,754  
  

 

 

    

 

 

 

TOTAL OPERATING INCOME BEFORE LOSS FOR IMPAIRMENT OF FINANCIAL ASSETS

     43,437,141        63,273,629  
  

 

 

    

 

 

 

Loan loss allowances

     (4,356,487      (4,298,326
  

 

 

    

 

 

 

SUBTOTAL

     39,080,654        58,975,303  
  

 

 

    

 

 

 

Operating loss

     (24,077,995      (31,749,955

Income / (loss) from associates and joint ventures

     216,457        197,874  

Loss on net monetary position

     (5,049,139      (7,410,297
  

 

 

    

 

 

 

Income before income tax

     10,169,977        20,012,925  
  

 

 

    

 

 

 

Income tax

     (4,338,573      (6,323,024
  

 

 

    

 

 

 

Net income for the period

     5,831,404        13,689,901  
  

 

 

    

 

 

 

Net income attributable to:

     

Owners of the parent

     5,753,929        13,694,318  

Non-controlling interests

     77,475        (4,417

 

  (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.

 

45.

Subsidiaries

Below is the information on the Bank’s subsidiaries:

 

Name

   Registered office (country)      Interest as of  
   06.30.20     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


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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:

 

     06.30.20      06.30.19  

Fees

     23,022        9,804  
  

 

 

    

 

 

 

Total

     23,022        9,804  
  

 

 

    

 

 

 

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

 

     Balances as of      Profit or loss  
     06.30.20      12.31.19      06.30.20      06.30.19  

Loans

           

Credit cards

     3,487        5,246        1,127        379  

Overdrafts

     8        5        —          —    

Loans

     1,224        1,429        115        86  

Deposits

     16,312        20,970        43        32  

Loans are granted on an arm’s length basis. As of June 30, 2020 and December 31, 2019, balances of loans granted are classified under normal performance according to the debtor classification rules issued by the BCRA.

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

 

Parent

   Balances as of      Profit or loss  
   06.30.20      12.31.19      06.30.20      06.30.19  

Cash and deposits in banks

     287,835        518,477        —          —    

Derivative instruments (Assets) (1)

     102,800        739,618        —          —    

Financial assets pledged as collateral (2)

     7,046        614,099        —          —    

Other non-financial liabilities

     715,628        400,800        191,607        152,402  

Derivative instruments (Liabilities) (1)

     99,728        1,363,577        174,719        1,912,398  

Off-balance sheet balances

           

Securities in custody

     55,071,188        64,627,065        —          —    

Derivative instruments

     6,189,952        12,740,284        —          —    

Sureties granted

     841,666        802,868        1,347        2,359  

Guarantees received

     27,925        32,217        —          —    

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

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


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     Balances as of      Profit or loss  

Subsidiaries

   06.30.20      12.31.19      06.30.20 (1)      06.30.19  

Loans and other finanicng

     3,176,493        2,352,544        676,883        2,114  

Other financial assets

     532        201        —          194  

Deposits

     122,633        54,734        2,611        89,222  

Other non-financial liabilities

     26        1,376        922        —    

Financing received

     —          199,278        8,067        —    

Other operating income

     —          —          3,632        3,692  

Off-balance sheet balances

           

Securities in custody

     1,119,006        1,109,353        —          —    

Sureties granted

     281        319        —          —    

 

Associates

   Balances as of      Profit or loss  
   06.30.20      12.31.19      06.30.20      06.30.19 (1)  

Cash and deposits in banks

     821        334        —          —    

Loans and other financing

     1,505,599        2,025,356        632,311        1,714,720  

Debt securities at fair value through profit or loss

     8,620        19,063        31,266        54,824  

Derivative instruments (Assets)

     —          —          —          —    

Other financial assets

     —          —          —          —    

Deposits

     475,019        425,326        2        10,180  

Other non-financial liabilities

     2,500        —          —          2,788  

Financing received

     —          227,684        2,192        6,140  

Derivative instruments (Liabilities)

     12,904        157,037        45,664        423,137  

Corporate bonds issued

     83,708        177,139        1,253        33,356  

Other operating income

     —          —          17,645        23,869  

Off-balance sheet balances

                           

Interest rate swaps

     500,020        1,514,596        —          —    

Securities in custody

     1,739,906        1,431,070        1,136        479  

Sureties granted

     371        20,769        117        279  

Secured loans

     —          —          —          —    

(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 June 30, 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  

Exposure at default

         Collective     Individual     Collective     Individual  

Balances as of 12.31.19

     241,492,255       26,155,818       2,132,604       4,358,818       4,311,904       278,451,399  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Inter-stage transfers:

            

From stage 1 to stage 2

     (51,522,212     50,488,325       108,674                   (925,213

From stage 2 to stage 1

     22,624,985       (21,761,905     (12,849                 850,231  

From stage 1 or 2 to stage 3

     (296,675     (3,505,953     (59,010     4,539,028       71,374       748,764  

From stage 3 to stage 1 or 2

     336,500       343,307       (1,180     (765,970     (31,664     (119,007

Changes without inter-stage transfers

     3,230,545       (17,192,959     1,757,449       1,855,310       (2,890,385     (13,240,040

New originated financial assets

     223,999,762       14,727,620       495,306       277,327       5,248,833       244,748,848  

Foreign exchange difference

     (131,418,756     (10,374,606     (251,512     (3,405,253     (2,448,639     (147,898,766

Inflation adjustment

           7             (2,473,971     (2,894,099     (5,368,063

New originated financial assets

     4,618,251       1,907,348       186,806       29,052       550,424       7,291,881  

Inflation adjustment

     (29,457,398     (3,611,804     (325,514     (552,052     (528,692     (34,475,460
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of 06.30.20

     283,607,257       37,175,198       4,030,774       3,862,289       1,389,056       330,064,574  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Allowances

   Stage 1     Stage 2     Stage 3     Total  
         Collective     Individual     Collective     Individual  

Balances as of 12.31.19

     4,849,402       2,427,066       216,164       3,154,655       3,380,748       14,028,035  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Inter-stage transfers:

            

From stage 1 to stage 2

     (1,562,142     5,672,361       22,363       —         —         4,132,582  

From stage 2 to stage 1

     601,352       (2,025,291     (2,066     —         —         (1,426,005

From stage 1 or 2 to stage 3

     (18,179     (1,107,411     (5,908     2,664,189       7,184       1,539,875  

From stage 3 to stage 1 or 2

     11,508       34,802       (1,164     (484,936     (32,464     (472,254

Changes without inter-stage transfers

     (1,152,313     (2,545,332     426,583       2,615,830       (2,353,663     (3,008,895

New originated financial assets

     5,719,035       1,474,868       63,416       160,505       5,275,161       12,692,985  

Foreign exchange difference

     (3,421,509     (924,010     (32,159     (3,076,379     (2,517,272     (9,971,329

Inflation adjustment

     —         —         —         (1,948,561     (2,978,369     (4,926,930

New originated financial assets

     189,240       152,887       28,793       25,266       556,675       952,861  

Inflation adjustment

     (571,730     (312,767     (42,482     (406,640     (445,966     (1,779,585
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of 06.30.20

     4,644,664       2,847,173       673,540       2,703,929       892,034       11,761,340  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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 of General Resolution No. 622 issued by the CNV, the Shareholders’ Meeting considering the financial statements with e 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 since August 30, 2019, financial institutions shall be required to have the BCRA’s previous authorization to distribute profits.


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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, Such suspension was subsequently extended until December 31, 2020 by means of Communication “A” 7035 dated June 4, 2020.

 

49.

Restricted assets

As of June 30, 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 217,770 as of June 30, 2020, Treasury Bonds adjusted by CER in pesos maturing in 2021 in the amount of 94,065, Treasury Bonds in pesos maturing on July 31, 2020 in the amount of 122,681 as of December 31, 2019, respectively, as security for loans agreed under the Global Credit Program for micro, small and medium-sized 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 10,749,018 and 6,728,646 as of June 30, 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 June 30, 2020 and 2019, the contributions to the Fund have been recorded in item “Other operating expenses—Contributions to the deposits guarantee fund” in the amounts of 273,702 and 358,951, 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

   06.30.20      12.31.19  

Balances at the BCRA

     

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

     57,182,248        122,061,263  

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

     2,508,376        3,212,288  

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

     389,232        —    
  

 

 

    

 

 

 
     60,079,856        125,273,551  
  

 

 

    

 

 

 

Argentine Treasury Bond in pesos at fixed rate due on 11-21-2020

     8,185,408        8,292,561  

Argentine Treasury Bond in pesos at 22% fixed rate due on 05-21-2022

     1,025,056        —    

Liquidity Bills – B.C.R.A.

     77,316,425        37,555,284  
  

 

 

    

 

 

 

TOTAL

     146,606,745        171,121,396  
  

 

 

    

 

 

 

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

   06.30.20      06.30.19  

Credit risk

     23,437,304        26,265,228  

Operational risk

     7,708,023        6,877,032  

Market risk

     573,988        249,778  
  

 

 

    

Paid-in

     81,728,815        63,152,977  
  

 

 

    

 

 

 

Surplus

     50,009,500        29,760,939  
  

 

 

    

 

 

 

 

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.

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 June 30, 2020 and December 31, 2019, the Bank’s Shareholders’ Equity exceeds the minimum amount imposed by the CNV.


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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 40,369, through custody account No. 493-0005459481 at BBVA Banco Francés S.A. As of June 30, 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 June 30, 2020 and December 31, 2019, the assets of Diagonal Trust amount to 2,427 and 2,757, 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 4,745 as of June 30, 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 326,034 and 338,442 as of June 30, 2020 and December 31, 2019, respectively, and consist of cash, creditors’ rights, real estate and shares.

 

55.

Mutual funds

As of June 30, 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,


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mutual funds, deferred payment checks, BCRA instruments, Buenos Aires City Government Bills, ADRS, Buenos Aires Province Government Bills and repos in the amounts of 41,121,622 and 86,253,001, 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

   06.30.20      12.31.19  

FBA Renta Pesos

     110,392,589        44,448,844  

FBA Horizonte

     761,926        898,450  

FBA Renta Fija Dólar Plus

     736,088        816,730  

FBA Ahorro Pesos

     651,582        525,254  

FBA Renta Fija Dólar

     500,004        534,405  

FBA Calificado

     496,799        537,217  

FBA Acciones Argentinas

     441,919        402,524  

FBA Acciones Latinoamericanas

     362,001        625,975  

FBA Bonos Argentina

     230,540        282,221  

FBA Bonos Globales

     221,494        229,264  

FBA Horizonte Plus

     54,329        94,251  

FBA Brasil I

     54,795        87,566  

FBA Renta Fija Plus

     49,570        59,915  

FBA Retorno Total I

     40,609        32,334  

FBA Renta Mixta

     38,582        20,099  

FBA Gestión I

     24,948        26,312  

FBA Renta Publica I

     1,476        1,572  

FBA Renta Fija Local

     1,476        1,572  

FBA Retorno Total II

     —          360,867  

FBA Renta Publica II

     —          96,557  

FBA Bonos Latam

     —          820  
  

 

 

    

 

 

 
     115,060,727      50,082,749  
  

 

 

    

 

 

 

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:

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.


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“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.

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 been 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”


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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 and the financial statements published in the preceding period, ended in March 2020, are pending transcription into the Financial Statements for Reporting Purposes book, while the accounting entries corresponding to January through June 2020 are in the process of being transcribed to the Journal.

 

58.

Subsequent events

Pursuant to the provisions of Decrees No. 141/20 and 193/20, on July 17, 2020, the Bank exchanged dollar-denominated Lelinks for a face value of 224,675,000, whose original maturity of December 4, 2019 had been extended, for the following securities:

 

  -

Argentine Treasury bonds in pesos adjusted by CER + 1.4% due March 25, 2023 (BONCER 2023) for a face value of 2,675,346,340, with interest payable semi-annually and principal repayable in full upon maturity; and

 

  -

Argentine Treasury Bonds in pesos adjusted by CER + 1.5% due March 25, 2024 (BONCER 2024) for a face value of 6,240,472,351, with interest payable semi-annually and principal repayable in full upon maturity.

The bonds received in exchange will be measured at fair value through OCI.

In addition, in connection with Play Digital S.A., on July 17, 2020, the irrevocable contribution on account of future share subscriptions for 2,500, which was outstanding as of such date, was fully paid.

On July 15, 2020, the Bank received a proposal from the above referred company to make an irrevocable contribution on account of future share subscriptions for 13,750, which was accepted and subsequently transferred on July 20, 2020.

Moreover, on July 23, 3030, Play Digital S.A.’s first General Extraordinary Shareholders’ Meeting was held, whereby it was resolved to allow Banco Macro S.A. to join as new sponsor in addition to the existing members, i.e. Banco BBVA Argentina S.A., Banco de Galicia y Buenos Aires S.A.U. and Banco Santander Río S.A. Therefore, the Bank’s equity interest in Play Digital S.A. was reduced to 25%, down from 33% (as mentioned in Note 17).

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 June 30, 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 JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

Account

   06.30.20      12.31.19  

COMMERCIAL PORTFOLIO

     

Normal performance

     103,883,540        85,415,254  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     388,999        311,655  

Preferred collaterals and counter-guarantees “B”

     357,648        803,423  

No preferred collaterals and counter-guarantees

     103,136,893        84,300,176  

With special follow-up

     215,520        2,211  
  

 

 

    

 

 

 

Under observation

     215,520        2,211  

Preferred collaterals and counter-guarantees “A”

     43,267        —    

Preferred collaterals and counter-guarantees “B”

     15,882        1,403  

No preferred collaterals and counter-guarantees

     156,371        808  

Troubled

     657,608        1,055,465  
  

 

 

    

 

 

 

No preferred collaterals and counter-guarantees

     657,608        1,055,465  

With high risk of insolvency

     16,859        310,711  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     —          181,963  

No preferred collaterals and counter-guarantees

     16,859        128,748  

Uncollectible

     656,613        3,189,993  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     9,926        11,275  

Preferred collaterals and counter-guarantees “B”

     163,512        11,907  

No preferred collaterals and counter-guarantees

     483,175        3,166,811  
  

 

 

    

 

 

 

TOTAL

     105,430,140        89,973,634  
  

 

 

    

 

 

 


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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 JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

Account

   06.30.20      12.31.19  

CONSUMER AND HOUSING PORTFOLIO

     

Normal performance

     147,696,524        140,421,619  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     79,808        52,906  

Preferred collaterals and counter-guarantees “B”

     22,618,148        24,420,792  

No preferred collaterals and counter-guarantees

     124,998,568        115,947,921  

Low risk

     1,070,929        2,602,070  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     —          1,076  

Preferred collaterals and counter-guarantees “B”

     211,776        389,474  

No preferred collaterals and counter-guarantees

     859,153        2,211,520  

Low risk—with special follow-up

     57,486        —    
  

 

 

    

 

 

 

No preferred collaterals and counter-guarantees

     57,486        —    

Medium risk

     1,719,656        2,041,060  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     13        —    

Preferred collaterals and counter-guarantees “B”

     109,619        112,081  

No preferred collaterals and counter-guarantees

     1,610,024        1,928,979  

High risk

     657,252        1,603,624  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     —          610  

Preferred collaterals and counter-guarantees “B”

     109,512        103,887  

No preferred collaterals and counter-guarantees

     547,740        1,499,127  

Uncollectible

     290,407        168,472  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     537        —    

Preferred collaterals and counter-guarantees “B”

     95,431        52,895  

No preferred collaterals and counter-guarantees

     194,439        115,577  
  

 

 

    

 

 

 

TOTAL

     151,492,254        146,836,845  
  

 

 

    

 

 

 

TOTAL GENERAL

     256,922,394        236,810,479  
  

 

 

    

 

 

 


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EXHIBIT C

CONCENTRATION OF LOANS AND OTHER FINANCING

CONSOLIDATED WITH SUBSIDIARIES

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     06.30.20     12.31.19  

Number of customers

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

10 largest customers

     34,368,560        13.38     24,767,153        10.46

50 following largest customers

     37,708,253        14.68     27,545,125        11.63

100 following largest customers

     16,666,396        6.49     15,661,238        6.61

All other customers

     168,179,185        65.45     168,836,963        71.30
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     256,922,394        100.00     236,810,479        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


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EXHIBIT D

BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING

CONSOLIDATED WITH SUBSIDIARIES

AS OF JUNE 30, 2020

 

            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

     —          161        —          —          —          —          —          161  

Financial sector

     —          55,709        977,490        1,196,000        1,006,344        1,273,958        208,810        4,718,311  

Non-financial private sector and residents abroad

     3,637,679        93,552,971        48,930,905        25,487,420        32,232,313        29,134,608        39,944,526        272,920,422  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

TOTAL

     3,637,679        93,608,841        49,908,395        26,683,420        33,238,657        30,408,566        40,153,336        277,638,894  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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 JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     06.30.20     12.31.19  

Number of customers

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

10 largest customers

     14,803,796        3.97     12,353,621        3.70

50 following largest customers

     23,520,659        6.30     19,345,668        5.79

100 following largest customers

     16,861,820        4.52     15,237,916        4.56

All other customers

     318,073,837        85.21     287,013,514        85.95
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     373,261,212        100.00     333,950,719        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


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EXHIBIT I

BREAKDOWN OF FINANCIAL LIABILITIES BY REMAINING TERMS

CONSOLIDATED WITH SUBSIDIARIES

AS OF JUNE 30, 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
06.30.2020
 

Deposits

     349,264,176        22,052,805        4,079,086        1,330,761        62,449        —          376,789,277  

Non.-financial government sector

     5,338,996        143,257        6,556        —          —          —          5,488,809  

Financial sector

     299,603        —          —          —          —          —          299,603  

Non-financial private sector and residents abroad

     343,625,577        21,909,548        4,072,530        1,330,761        62,449        —          371,000,865  

Derivative instruments

     229,595        —          —          —          —          —          229,595  

Other financial liabilities

     24,427,094        417,484        516,340        535,291        798,050        1,678,130        28,372,389  

Financing received from the BCRA and other financial institutions

     3,791,574        887,663        182,889        539,777        204,710        877,399        6,484,012  

Corporate bonds issued

     58,818        1,200,700        3,049,583        159,550        —          —          4,468,651  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     377,771,257        24,558,652        7,827,898        2,565,379        1,065,209        2,555,529        416,343,924  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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 SIX-MONTH PERIOD ENDED JUNE 30, 2020 AND FISCAL YEAR ENDED DECEMBER 31, 2019

(stated in thousands of pesos)

 

Accounts

   Balances at
the beginning
of the year
     Increases            Decreases               
  Reversals      Uses      Monetary
gain (loss)
generated by
provisions
    Balances as
of 06.30.20
 

INCLUDED IN LIABILITIES

                  
- Provisions for contingent commitments      1,029,011        77,731        (1 )(3)      —          —          (125,010     981,732  
- For administrative, disciplinary and criminal penalties      5,680        —          (1     —          —          (680     5,000  
- Provisions for reorganization      2,244,727        492,709        (1     94,541        646,140        (265,068     1,731,687  
- Provisions for termination plans      72,977        25,612        (1     —          —          (8,733     89,856  
- Other      8,856,245        586,677        (1 )(2)      8,860        152,912        (1,089,404     8,191,746  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

   

 

 

 

TOTAL PROVISIONS

     12,208,640        1,182,729          103,401        799,052        (1,488,895     11,000,021  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

See Note 27.

(2)

It includes decreases of 258 and 98 for reclassifications conducted by PSA Finance Argentina Compañía Financiera S.A. and BBVA Asset Management Argentina S.A., respectively. In addition, it includes an increase of 3,781 corresponding to the subsidiary Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) recorded in Administrative Expenses.

(3)

It includes an increase of 1,414 corresponding to the foreign exchange difference of provisions in foreign currency for contingent commitments.


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EXHIBIT R

ADJUSTMENT TO IMPAIRMENT LOSS—ALLOWANCES FOR LOAN LOSSES

CONSOLIDATED WITH GROUP “A” SUBSIDIARIES

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 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 06.30.20
 

Other financial assets

     257,073        3,559       —         10,782       (33,244     238,170  

Loans and other financing

     12,741,174        233,392       1,259,610       (2,080,127     (1,612,694     10,541,355  

Other financial institutions

     145,253        (27,598     (60,459     (1,298     (14,200     41,698  

Non-financial private sector and residents abroad

     12,595,921        260,990       1,320,069       (2,078,829     (1,598,494     10,499,657  

Overdrafts

     738,302        467,780       1,285,862       71,792       (168,500     2,395,236  

Instruments

     1,039,842        284,125       (431,535     (82,568     (85,113     724,751  

Mortgage loans

     160,987        (55,438     (19,117     163,013       (25,009     224,436  

Pledge loans

     35,433        (6,987     (9,788     13,755       (4,270     28,143  

Consumer loans

     1,536,822        (278,744     (204,354     87,293       (170,245     970,772  

Credit card loans

     3,851,241        (736,691     (13,958     (106,022     (415,496     2,579,074  

Financial leases

     142,354        (24,200     (19,084     (34,360     (14,274     50,436  

Other

     5,090,940        611,145       732,043       (2,191,732     (715,587     3,526,809  

Other debt securities

     777        (600     —         —         (94     83  

Contingent commmitments

     1,029,011        130,641       (26,878     (17,489     (133,553     981,732  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ALLOWANCES

     14,028,035        366,992       1,232,732       (2,086,834     (1,779,585     11,761,340  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EXHIBIT R

ADJUSTMENT TO IMPAIRMENT LOSS—ALLOWANCES FOR LOAN LOSSES

CONSOLIDATED WITH GROUP “B” SUBSIDIARIES

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 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
06.30.20
 

Loans and other financing

     201,836        61,209        (7,440     (26,251     229,354  

Non-financial private sector and residents abroad

     201,836        61,209        (7,440     (26,251     229,354  

Pledge loans

     186,745        57,804        (6,763     (22,835     214,951  

Financial leases

     3,315        232        (455     (468     2,624  

Other

     11,776        3,173        (222     (2,948     11,779  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

TOTAL ALLOWANCES

     201,836        61,209        (7,440     (26,251     229,354  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 


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LOGO   

KPMG

Bouchard 710 - 1° piso - C1106ABL

Buenos Aires, Argentina

  

+54 11 4316 5700

www.kpmg.com.ar

INDEPENDENT AUDITORS’ REVIEW REPORT ON CONSOLIDATED CONDENSED INTERIM 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 June 30, 2020, the condensed consolidated statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the six-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 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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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 $ 5,078,544 thousand and $ 4,101,784 thousand as of June 30, 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. 7/1019, 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, June 30, 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,

 

b)

As of June 30, 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


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d)

As of June 30, 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 $ 409,634,751, no amounts being due as of that date.

City of Buenos Aires, August 25, 2020.

KPMG

Mauricio G. Eidelstein

Partner


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SEPARATE CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and Exhibits      06.30.20      12.31.19  

ASSETS

        

Cash and deposits in banks

     4        112,163,420        177,365,335  

Cash

        50,468,422        53,075,290  

Financial institutions and correspondents

        61,694,998        124,290,045  

Argentine Central Bank (BCRA)

        57,571,480        122,061,263  

Other in the country and abroad

        4,123,518        2,228,782  

Debt securities at fair value through profit or loss

     5 and Exhibit A        9,755,562        4,691,369  

Derivatives

     6        1,056,899        3,456,075  

Repo transactions

     7        34,266,703        —    

Other financial assets

     8        5,085,598        3,979,562  

Loans and other financing

     9        232,515,757        211,082,015  

Non-financial government sector

        161        520  

Argentine Central Bank (BCRA)

        —          19,771  

Other financial institutions

        6,677,248        7,534,892  

Non-financial private sector and residents abroad

        225,838,348        203,526,832  

Other debt securities

     10        81,501,593        51,319,082  

Financial assets pledged as collateral

     11        10,748,311        6,727,843  

Investments in equity instruments

     13 and Exhibit A        1,804,838        2,335,322  

Investments in subsidiaries and associates

     14        4,252,501        4,057,846  

Property and equipment

     15        28,227,832        29,576,745  

Intangible assets

     16        1,067,177        884,722  

Deferred income tax assets

        4,884,609        5,018,900  

Other non-financial assets

     17        4,663,648        4,710,917  

Non-currrent assets held for sale

     18        188,518        188,518  
     

 

 

    

 

 

 

TOTAL ASSETS

        532,182,966        505,394,251  
     

 

 

    

 

 

 

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


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SEPARATE CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
    06.30.20     12.31.19  

LIABILITIES

      

Deposits

    
19 and Exhibit
H
 
 
    372,467,576       333,296,133  

Non-financial government sector

       5,463,392       3,337,522  

Financial sector

       385,228       209,753  

Non-financial private sector and residents abroad

       366,618,956       329,748,858  

Liabilities at fair value through profit or loss

     20       —         659,752  

Derivatives

     6       229,595       3,490,662  

Other financial liabilities

     21       27,576,553       32,057,526  

Financing received from the BCRA and other financial institutions

     22       572,570       3,911,221  

Corporate bonds issued

     23       2,947,894       5,442,000  

Current income tax liabilities

     12 a)       3,160,741       8,975,982  

Provisions

     Exhibit J       10,928,879       12,111,399  

Other non-financial liabilities

     24       21,222,137       18,713,278  
    

 

 

   

 

 

 

TOTAL LIABILITIES

       439,105,945       418,657,953  
    

 

 

   

 

 

 

EQUITY

      

Share capital

     26       612,710       612,710  

Non-capitalized contributions

       22,016,761       22,016,761  

Capital adjustments

       15,451,936       15,451,936  

Reserves

       82,447,925       49,780,776  

Retained earnings

       (26,972,904     (19,052,368

Other accumulated comprehensive income/(loss)

       (6,233,336     (9,376,218

Income for the period/year

       5,753,929       27,302,701  
    

 

 

   

 

 

 

TOTAL EQUITY

       93,077,021       86,736,298  
    

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

       532,182,966       505,394,251  
    

 

 

   

 

 

 

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


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SEPARATE CONDENSED STATEMENT OF INCOME

FOR THE SIX-MONTH INTERIM PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

     Notes and
Exhibits
  Accumulated
as of 06.30.20
    Accumulated
as of 06.30.19
    Quarter from
04.01.20 to
06.30.20
    Quarter from
04.01.19 to
06.30.19
 

Interest income

   27     45,666,153       63,748,639       21,128,972       33,804,687  

Interest expense

   28     (13,905,149     (28,825,453     (5,952,222     (14,694,028
    

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

       31,761,004       34,923,186       15,176,750       19,110,659  
    

 

 

   

 

 

   

 

 

   

 

 

 

Commission income

   29     11,579,966       12,322,157       5,974,507       6,267,168  

Commission expenses

   30     (6,662,705     (7,346,962     (2,972,025     (3,559,832
    

 

 

   

 

 

   

 

 

   

 

 

 

Net commission income

       4,917,261       4,975,195       3,002,482       2,707,336  
    

 

 

   

 

 

   

 

 

   

 

 

 

Net income from financial instruments at fair value through

profit or loss

   31     2,189,156       6,873,829       1,214,306       2,985,353  

Net income (loss) from write-down of assets at amortized

cost and at fair value through OCI

   32     (2,200,596     (60,394     (2,066,768     (53,794

Foreign exchange and gold gains

   33     2,800,442       3,993,485       1,496,052       1,914,031  

Other operating income

   34     2,274,565       11,976,631       1,163,637       6,429,006  

Loan loss allowances

       (4,291,346     (4,296,574     (2,610,261     (2,594,008
    

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income

       37,450,486       58,385,358       17,376,198       30,498,583  
    

 

 

   

 

 

   

 

 

   

 

 

 

Personnel benefits

   35     (8,453,298     (9,146,125     (3,869,641     (4,733,513

Administrative expenses

   36     (7,464,948     (6,842,644     (3,754,517     (3,525,979

Depreciation and amortization

   37     (1,699,205     (1,992,016     (836,978     (696,436

Other operating expenses

   38     (5,818,123     (13,649,188     (2,697,273     (8,912,355
    

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

       14,014,912       26,755,385       6,217,789       12,630,300  
    

 

 

   

 

 

   

 

 

   

 

 

 

Income from associates and joint ventures

       356,305       300,186       277,314       348,549  

Gain (loss) on net monetary position

       (4,493,807     (7,178,536     (2,067,686     (2,013,708
    

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

       9,877,410       19,877,035       4,427,417       10,965,141  
    

 

 

   

 

 

   

 

 

   

 

 

 

Income tax

   12 b)     (4,123,481     (6,182,717     (1,917,900     (2,402,578
    

 

 

   

 

 

   

 

 

   

 

 

 

Income for the period

       5,753,929       13,694,318       2,509,517       8,562,563  
    

 

 

   

 

 

   

 

 

   

 

 

 

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


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EARNINGS PER SHARE

AS OF JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   06.30.20      06.30.19  

Numerator:

     

Net income attributable to owners of the Parent

     5,753,929        13,694,318  

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

     5,753,929        13,694,318  

Denominator:

     

Weighted average of outstanding common shares for the period

     612,696,260        612,659,638  

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

     612,696,260        612,659,638  

Basic earnings per share (stated in thousands of pesos)

     9.3912        22.3522  

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

     9.3912        22.3522  

 

(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 SIX-MONTH INTERIM PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

     Accumulated
as of 06.30.20
    Accumulated
as of 06.30.19
    Quarter from
04.01.20 to
06.30.20
    Quarter from
04.01.19 to
06.30.19
 

Income for the period

     5,753,929       13,694,318       2,509,517       8,562,563  

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

     (36,228     (54,625     (16,075     (9,907
  

 

 

   

 

 

   

 

 

   

 

 

 
     (36,228     (54,625     (16,075     (9,907
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit or losses from financial instruments at fair value through OCI

        

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

     2,357,132       (3,272,959     1,162,111       (5,500,815

Reclassication adjustment for the period

     2,200,596       60,394       2,066,768       53,793  

Income tax

     (1,367,318     960,156       (1,287,193     791,355  
  

 

 

   

 

 

   

 

 

   

 

 

 
     3,190,410       (2,252,409     1,941,686       (4,655,667
  

 

 

   

 

 

   

 

 

   

 

 

 

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)

        

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

     (16,142     12,052       326       12,052  

Income tax

     4,842       —         (98     —    
  

 

 

   

 

 

   

 

 

   

 

 

 
     (11,300     12,052       228       12,052  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Comprehensive Income for the period

     3,142,882       (2,294,982     1,925,839       (4,653,522
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     8,896,811       11,399,336       4,435,356       3,909,041  
  

 

 

   

 

 

   

 

 

   

 

 

 

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 SIX-MONTH PERIODS ENDED JUNE 30, 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       22,016,761       15,451,936       (9,425,462     49,244       11,752,575       38,028,201       10,560,184       89,046,149       76,705,286  

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

     —         —         —         —         —         —         —         (2,309,851     (2,309,851     (343,682
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance at the beginning of the year

     612,710       22,016,761       15,451,936       (9,425,462     49,244       11,752,575       38,028,201       8,250,333       86,736,298       76,361,604  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

                    

- Income for the period

     —         —         —         —         —         —         —         5,753,929       5,753,929       13,694,318  

- Other comprehensive income for the period

     —         —         —         3,190,410       (47,528     —         —         —         3,142,882       (2,294,982

- Distribution of Unappropriated retained earnings as per Shareholders’ Resolution dated May 15, 2020 and April 24, 2019

                    

Legal reserve

     —         —         —         —         —         7,044,647       —         (7,044,647     —         —    

Cash dividends (1)

     —         —         —         —         —         —         (2,556,088     —         (2,556,088     (3,637,572

Optional reserve

     —         —         —         —         —         —         28,178,590       (28,178,590     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at fiscal period-end

     612,710       22,016,761       15,451,936       (6,235,052     1,716       18,797,222       63,650,703       (21,218,975     93,077,021       84,123,368  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

It represents $ 4.17 per share.

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


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SEPARATE STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   06.30.20     06.30.19  

Cash flows from operating activities

    

Income before Income Tax

     9,877,410       19,877,035  

Adjustment for total monetary income for the period

     4,493,807       7,178,536  

Adjustments to obtain cash flows from operating activities:

     1,164,877       1,198,402  

Depreciation and amortization

     1,699,205       1,992,016  

Loan loss allowance

     4,291,346       4,296,574  

Effect of foreign exchange changes on cash

     (5,489,916     (2,664,429

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

     —         (4,411,429

Other adjustments

     664,242       1,985,670  

Net increases from operating assets:

     (131,850,710     (72,966,380

Debt securities at fair value through profit or loss

     (1,969,777     1,745,379  

Derivatives

     2,399,176       (1,813,465

Repo transactions

     (34,266,703     8,450,410  

Loans and other financing

     (52,993,432     (9,837,868

Non-financial government sector

     359       (282

Other financial institutions

     (2,573,311     3,570,053  

Non-financial private sector and residents abroad

     (50,420,480     (13,407,639

Other debt securities

     (36,959,522     (71,782,813

Financial assets pledged as collateral

     (4,888,785     (2,519,876

Investments in equity instruments

     181,580       (2,771,559

Other assets

     (3,353,247     5,563,412  

Net increases from operating liabilities:

     77,219,994       33,229,067  

Deposits

     81,911,191       40,480,173  

Non-financial government sector

     2,125,870       3,112,145  

Financial sector

     551,308       (17,083

Non-financial private sector and residents abroad

     79,234,013       37,385,111  

Liabilities at fair value through profit or loss

     (659,752     887,968  

Derivatives

     (3,261,067     1,275,714  

Repo transactions

     —         (25,025

Other liabilities

     (770,378     (9,389,763

Income tax paid

     (9,343,373     (771,381
  

 

 

   

 

 

 

Total cash flows used in operating activities

     (48,437,995     (12,254,721
  

 

 

   

 

 

 


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SEPARATE STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019

(stated in thousands of pesos)

 

Accounts

   06.30.20     06.30.19  

Cash flows from investing activities:

    

Payments:

     (790,552     (1,668,282

Purchase of property and equipment, intangible assets and other assets

     (790,552     (1,668,282

Collections:

     475,095       2,982,706  

Sale of investments in equity instruments

     —         2,830,936  

Other collections related to investing activities

     475,095       151,770  
  

 

 

   

 

 

 

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

     (315,457     1,314,424  
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments:

     (3,543,967     (4,951,246

Dividends

     —         (3,637,572

Non-subordinated corporate bonds

     (2,877,043     (881,685

BCRA

     (296     —    

Financing from local financial institutions

     (454,011     —    

Leases

     (212,617     (431,989

Collections:

     —         2,844,318  

Non-subordinated corporate bonds

     —         2,510,598  

BCRA

     —         445  

Financing from local financial institutions

     —         333,275  
  

 

 

   

 

 

 

Total cash flows used in financing activities

     (3,543,967     (2,106,928
  

 

 

   

 

 

 

Effect of exchange rate changes on cash balances

     5,489,916       2,664,429  

Effect of monetary income (loss) on cash

     (18,394,412     (32,949,722
  

 

 

   

 

 

 

Total changes in cash flows

     (65,201,915     (43,332,518
  

 

 

   

 

 

 

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

     177,365,335       173,174,830  
  

 

 

   

 

 

 

Cash at fiscal period-end (Note 4)

     112,163,420       129,842,312  
  

 

 

   

 

 

 

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 JUNE 30, 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 June 30, 2020 and for the six-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 paragraph 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 paragraph 5.5. of IFRS 9, its shareholders’ equity as of June 30, 2020 and December 31, 2019 would have been reduced by 5,078,544 and 4,101,784, 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 paragraph 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 June 30, 2020 and December 31, 2019 (see Note 16 to the consolidated interim financial statements).

 

  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 6,187,516 as of June 30, 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”. Accordingly, these interim financial statements do not include all the information required for full annual


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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 June 30, 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 paragraph 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

 

     06.30.20      12.31.19  

BCRA - Current account

     57,571,480        122,061,263  

Cash

     50,468,422        53,075,290  

Balances with other local and foreign institutions

     4,123,518        2,228,782  
  

 

 

    

 

 

 

TOTAL

     112,163,420        177,365,335  
  

 

 

    

 

 

 

 

5.

Debt securities at fair value through profit or loss

 

     06.30.20      12.31.19  

BCRA Bills

     9,644,042        4,526,120  

Private securities - Corporate bonds

     111,287        106,327  

Government securities

     233        58,922  
  

 

 

    

 

 

 

TOTAL

     9,755,562        4,691,369  
  

 

 

    

 

 

 

 

  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 June 30, 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

 

     06.30.20      12.31.19  

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

     685,000        778,114  

Debit balances linked to foreign currency forwards pending settlement

in pesos

     371,899        2,677,961  
  

 

 

    

 

 

 

TOTAL

     1,056,899        3,456,075  
  

 

 

    

 

 

 


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Liabilities

 

     06.30.20      12.31.19  

Credit balances linked to foreign currency forwards pending settlement in pesos

     216,691        3,324,377  

Credit balances linked to interest rate swaps

     12,904        166,285  
  

 

 

    

 

 

 

TOTAL

     229,595        3,490,662  
  

 

 

    

 

 

 

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.

 

     06.30.20      12.31.19  

Foreign currency forwards

     

Foreign currency forward purchases - Euros

            35  

Foreign currency forward sales - Euros

     1,229        1,804  

Foreign currency forward purchases - US$

     450,209        618,497  

Foreign currenct forward sales - US$

     655,601        620,956  

Interest rate swaps

     

Fixed rate for floating rate

     500,020        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

 

     06.30.20      12.31.19  

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

     34,266,703        —    
  

 

 

    

 

 

 

TOTAL

     34,266,703        —    
  

 

 

    

 

 

 

 

8.

Other financial assets

Breakdown of other financial assets is as follows:

 

     06.30.20      12.31.19  

Measured at amortized cost

     

Other receivables

     3,049,162        1,491,016  

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

     2,196,125        2,209,097  

Non-financial debtors from spot transactions pending settlement

     45,228        31,556  

Financial debtors from spot transactions pending settlement

            287,985  

Other

     9,168        192,795  
  

 

 

    

 

 

 
     5,299,683        4,212,449  
  

 

 

    

 

 

 

Allowance for loans losses (Exhibit R)

     (214,085      (232,887
  

 

 

    

 

 

 

TOTAL

     5,085,598        3,979,562  
  

 

 

    

 

 

 


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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:

 

     06.30.20      12.31.19  

Non-financial government sector

     161        520  

BCRA

            19,771  

Other financial institutions

     6,771,373        7,696,961  

Overdrafts

     31,129,319        16,354,370  

Discounted instruments

     11,122,710        14,013,137  

Unsecured instruments

     12,559,350        12,904,813  

Instruments purchased

     252,547         

Mortgage loans

     15,682,219        16,075,088  

Pledge loans

     1,355,290        1,532,629  

Consumer loans

     23,719,386        26,733,790  

Credit Cards

     77,013,514        81,861,970  

Loans for the prefinancing and financing of exports

     21,808,380        20,783,154  

Receivables from finance lease

     1,322,909        1,984,154  

Loans to personnel

     1,918,063        1,944,969  

Other financing

     38,427,379        21,935,030  
  

 

 

    

 

 

 
     243,082,600        223,840,356  
  

 

 

    

 

 

 

Allowance for loan losses (Exhibit R)

     (10,566,843      (12,758,341
  

 

 

    

 

 

 

TOTAL

     232,515,757        211,082,015  
  

 

 

    

 

 

 

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 thereunder:

 

     06.30.20      12.31.19  
Term    Total
investment
     Current
value of
minimum
payments
     Total
investment
     Current
value of
minimum
payments
 

Up to 1 year

     1,005,137        763,256        1,045,290        1,041,846  

From 1 to 5 years

     751,002        559,653        945,629        942,308  
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     1,756,139        1,322,909        1,990,919        1,984,154  
  

 

 

    

 

 

    

 

 

    

 

 

 

Principal

        1,302,109           1,961,126  

Interest accrued

        20,800           23,028  
     

 

 

       

 

 

 

TOTAL

        1,322,909           1,984,154  
     

 

 

       

 

 

 


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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.

 

     06.30.20      12.31.19  

Total Exhibit B and C

     244,767,834        224,666,393  

Plus:

     

BCRA

            19,771  

Loans to personnel

     1,918,063        1,944,969  

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

     138,614        —    

Less:

     

Allowance for loan losses (Exhibit R)

     (10,566,843      (12,758,341

Adjustments for effective interest rate

     (295,547      (401,831

Corporate bonds

     (17,901      (110,608

Loan commitments

     (3,428,463      (2,278,338
  

 

 

    

 

 

 

Total loans and other financing

     232,515,757        211,082,015  
  

 

 

    

 

 

 

As of June 30, 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:

 

     06.30.20      12.31.19  

Overdrafts and receivables agreed not used

     2,265,962        353,676  

Guarantees granted

     800,843        575,105  

Liabilities related to foreign trade transactions

     90,198        1,005,231  

Secured loans

     271,460        344,326  
  

 

 

    

 

 

 
     3,428,463        2,278,338  
  

 

 

    

 

 

 

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

 

     06.30.20      12.31.19  

Corporate bonds under credit recovery transactions

     83        94  
  

 

 

    

 

 

 
     83        94  
  

 

 

    

 

 

 

Allowance for loan losses - Private securities (Exhibit R)

     (83)        (94)  
  

 

 

    

 

 

 

TOTAL

     —          —    
  

 

 

    

 

 

 


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  b)

Financial assets measured at fair value through OCI

 

     06.30.20      12.31.19  

BCRA Liquidity Bills

     67,672,383        33,029,164  

Government securities

     13,829,210        18,210,915  

Private securities - Corporate bonds

     —          79,686  
  

 

 

    

 

 

 
     81,501,593        51,319,765  
  

 

 

    

 

 

 

Allowance for loan losses - Private securities (Exhibit R)

     —          (683
  

 

 

    

 

 

 

TOTAL

     81,501,593        51,319,082  
  

 

 

    

 

 

 

 

11.

Financial assets pledged as collateral

As of June 30, 2020 and December 31, 2019, the Entity delivered the financial assets listed below as collateral:

 

            06.30.20      12.31.19  

Guarantee trust - Government securities and BCRA Bills at fair value through OCI

     (4      5,565,523        —    

BCRA - Special guarantee accounts (Note 42)

     (1      2,508,376        3,212,288  

Deposits as collateral

     (3      2,454,666        3,437,925  

Guarantee Trust - Pesos

     (2      219,746        77,630  
     

 

 

    

 

 

 

TOTAL

        10,748,311        6,727,843  
     

 

 

    

 

 

 

 

  (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.

 

  (4)

The trust fund consists of dollar-linked Treasury Bills in pesos (Lelinks) pledged as collateral for activities related to transactions made in Mercado Abierto Electrónico S.A. (MAE) and Mercado a Término de Rosario S.A. (ROFEX).

 

12.

Income tax

 

  a)

Current income tax liabilities

Breakdown is as follows:

 

     06.30.20      12.31.19  

Income tax provision

     5,281,515        9,950,432  

Advances

     (2,122,542      (974,169

Collections and withholdings

     1,768        (281
  

 

 

    

 

 

 
     3,160,741        8,975,982  
  

 

 

    

 

 

 

 

  b)

Income tax expense

Breakdown of income tax expense:

 

     06.30.20      12.31.19  

Current tax

     (5,351,666      (7,515,829

Deferred tax

     1,228,185        1,333,112  
  

 

 

    

 

 

 
     (4,123,481)        (6,182,717)  
  

 

 

    

 

 

 


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Pursuant to IAS 34, in interim periods income tax is recognized based on the best estimate of the weighted average effective tax rate expected by the Entity for the fiscal year.

The Bank’s effective rate for the six-month period ended June 30, 2020 was 42%, while for the six-month period ended June 30, 2019, it was 31%.

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

 

     06.30.20      12.31.19  
Prisma Medios de Pago S.A. (Note 16 to the consolidated condensed interim financial statements)      1,569,471        2,141,529  

Private securities - Shares of other non-controlled companies

     217,323        162,704  
  

 

 

    

 

 

 

TOTAL

     1,786,794        2,304,233  
  

 

 

    

 

 

 

 

  13.2

Investments in equity instruments through OCI

 

     06.30.20      12.31.19  

Banco Latinoaméricano de Exportaciones S.A.

     16,933        29,972  

Other

     1,111        1,117  
  

 

 

    

 

 

 

TOTAL

     18,044        31,089  
  

 

 

    

 

 

 

 

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:

 

     06.30.20      12.31.19  

PSA Finance Arg. Cía. Financiera S.A.

     644,250        653,240  

Rombo Cía. Financiera S.A.

     713,726        747,089  

Volkswagen Financial Services Compañía Financiera S.A.

     1,250,452        1,154,061  

Consolidar A.F.J.P. S.A. (en liquidación)

     30,690        34,885  

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

     1,098,372        1,038,892  

Interbanking S.A.

     138,025        129,104  

BBVA Consolidar Seguros S.A.

     374,486        300,575  

Play Digital S.A. (1)

     2,500         
  

 

 

    

 

 

 

TOTAL

     4,252,501        4,057,846  
  

 

 

    

 

 

 

 

  (1)

See Note 17 to the consolidated condensed interim financial statements.


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15.

Property and equipment

 

     06.30.20      12.31.19  

Real estate

     19,594,969        19,885,993  

Furniture and facilities

     4,155,191        4,476,788  

Right of use of leased real estate (Note 25)

     2,336,048        2,650,997  

Machinery and equipment

     1,669,876        2,159,880  

Constructions in progress

     438,434        365,227  

Vehicles

     33,314        37,860  
  

 

 

    

 

 

 

TOTAL

     28,227,832        29,576,745  
  

 

 

    

 

 

 

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

 

     06.30.20      12.31.19  

Licenses - Software

     1,067,177        884,722  
  

 

 

    

 

 

 

TOTAL

     1,067,177        884,722  
  

 

 

    

 

 

 

 

17.

Other non-financial assets

Breakdown is as follows:

 

     06.30.20      12.31.19  

Investment properties

     1,588,402        1,609,691  

Prepayments

     1,516,961        1,578,266  

Tax advances

     996,076        646,004  

Advances to suppliers of goods

     257,805        270,708  

Other miscellaneous assets

     163,752        200,767  

Assets acquired as security for loans

     12,590        12,304  

Advances to personnel

     86,031        369,691  

Other

     42,031        23,486  
  

 

 

    

 

 

 

TOTAL

     4,663,648        4,710,917  
  

 

 

    

 

 

 

 

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. Such commitment was ratified at a Board meeting held on June 30, 2020. Therefore, these assets, the value of which, as of June 30, 2020 and December 31, 2019 amounts to 188,518, were classified as “Non-current assets held for sale”, continuing with the efforts to sell that group of assets.


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19.

Deposits

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

 

     06.30.20      12.31.19  

Non-financial government sector

     5,463,392        3,337,522  

Financial sector

     385,228        209,753  

Non-financial private sector and residents abroad

     366,618,956        329,748,858  

Checking accounts

     75,235,431        61,381,368  

Savings accounts

     172,547,863        167,919,745  

Time deposits

     110,768,929        94,914,272  

Investment accounts

     61,309        87  

Other

     8,005,424        5,533,386  
  

 

 

    

 

 

 

TOTAL

     372,467,576        333,296,133  
  

 

 

    

 

 

 

 

20.

Liabilities at fair value through profit or loss

 

     06.30.20      12.31.19  

Obligations from govermment securities transactions

     —          659,752  
  

 

 

    

 

 

 

TOTAL

     —          659,752  
  

 

 

    

 

 

 

 

21.

Other financial liabilities

 

     06.30.20      12.31.19  

Obligations from financing of purchases

     16,557,614        19,276,918  

Collections and other transactions on behalf of third parties

     3,032,618        3,636,325  

Liabilities for leases (Note 25)

     2,645,386        2,852,952  

Payment orders pending credit

     1,464,422        2,202,386  

Credit balance for spot purchases pending settlement

     77,013        136,073  

Receivables from foreign currency spot purchases pending settlement

     25,445        136,788  

Commissions accrued payable

     21,755        16,555  

Interest accrued payable

            111,784  

Other

     3,752,300        3,687,745  
  

 

 

    

 

 

 

TOTAL

     27,576,553        32,057,526  
  

 

 

    

 

 

 

 

22.

Financing received from the BCRA and other financial institutions

 

     06.30.20      12.31.19  

Local financial institutions

     540,109        1,007,852  

Foreign financial institutions

            2,884,345  

BCRA

     32,461        19,024  
  

 

 

    

 

 

 

TOTAL

     572,570        3,911,221  
  

 

 

    

 

 

 


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23.

Corporate bonds issued

Below is a detail of the Bank’s corporate bonds in force as of June 30, 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 06.30.20
     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      476,500        598,069  

Class 25

     11.08.2018        784,334        11.08.2020      9.50% annual nominal rate    Quarterly      1,528,282        1,469,943  

Class 27

     02.28.2019        1,090,000        08.28.2020      Badlar Private + 6.25% annual nominal rate    Quarterly      891,000        1,012,116  

Class 28

     12.12.2019        2,234,550        06.12.2020      Badlar Private + 4% annual nominal    Quarterly             2,234,550  
                 

 

 

    

 

 

 
            Total principal      2,895,782        5,314,678  
            Interest accrued      52,112        127,322  
              

 

 

    

 

 

 
            Total principal and interest accrued      2,947,894        5,442,000  
              

 

 

    

 

 

 

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

 

     06.30.20      12.31.19  

Miscellaneous creditors

     5,866,538        5,422,921  

Short-term personnel benefits

     3,999,610        4,660,960  

Other collections and withholdings

     3,618,053        3,486,759  

Advances collected

     2,936,662        2,961,096  

Cash dividends payables (1)

     2,500,000         

Other taxes payable

     975,424        1,334,511  

For contract liabilities

     567,312        435,922  

Social security payment orders pending settlement

     440,965        69,786  

Long-term personnel benefits

     310,110        335,904  

Other

     7,463        5,419  
  

 

 

    

 

 

 

TOTAL

     21,222,137        18,713,278  
  

 

 

    

 

 

 

 

  (1)

See Note 30 to the condensed consolidated interim financial statements.


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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 June 30, 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      Increases      period (1)      at period-end      06.30.20  

Leased real property

     3,286,997        54,934        66,904        636,000        2,470        305,449        938,979        2,336,048  

 

  (1)

Note 37

Liabilities from leases

Future minimum payments for lease agreements are as follows:

 

     In foreign
currency
     In local
currency
     06.30.20      12.31.19  

Up to one year

     103,733        28,132        131,865        89,231  

From 1 to 5 years

     1,335,629        165,335        1,500,964        1,393,696  

More than 5 years

     1,000,310        12,247        1,012,557        1,370,025  
        

 

 

    

 

 

 
                   2,645,386      2,852,952  
        

 

 

    

 

 

 

Interest and exchange rate difference recognized in profit or loss

 

     06.30.20      06.30.19  

Other operating expenses

     

Interest on liabilities from finance lease (Note 38)

     (156,529      (183,750

Exchange rate difference

     

Exchange rate difference for finance lease (loss)

     (320,396      (289,063

Other expenses

     

Leases (Note 36)

     (761,424      (512,324

 

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

 

     06.30.20      06.30.19  

Interest on government securities

     12,495,474        20,146,788  

Interest on credit card loans

     8,426,569        12,571,331  

Interest on overdrafts

     5,591,267        4,747,031  

Interest on instruments

     4,478,987        6,273,378  

Interest on consumer loans

     4,116,432        5,553,042  

Acquisition Value Unit (UVA) clause adjustment

     3,961,681        5,793,304  

Interest on other loans

     2,239,718        2,044,530  

Premiums on reverse repurchase agreements

     1,208,704        1,010,370  

Interest on loans to the financial sector

     1,151,940        2,068,378  

Interest on loans for the prefinancing and financing of exports

     707,977        1,961,292  

Interest on mortgage loans

     612,663        839,664  

Interest on pledge loans

     181,902        297,461  

Interest on finance leases

     179,121        369,420  

Stabilization Coefficient (CER) clause adjustment

     157,768        65,348  

Interest on private securities

     3,929        6,647  

Other

     152,021        655  
  

 

 

    

 

 

 

TOTAL

     45,666,153        63,748,639  
  

 

 

    

 

 

 

 

28.

Interest expenses

 

     06.30.20      06.30.19  

Time deposits

     11,789,129        23,056,531  

Other liabilities from financial transactions

     1,106,062        2,193,144  

Acquisition Value Unit (UVA) clause adjustments

     463,974        1,114,726  

Checking accounts deposits

     403,867        2,271,703  

Savings accounts deposits

     119,585        135,109  

Interfinancial loans received

     13,685        30,880  

Other

     8,847        21,464  

Premiums on reverse repurchase agreements

            1,896  
  

 

 

    

 

 

 

TOTAL

     13,905,149        28,825,453  
  

 

 

    

 

 

 

 

29.

Commission income

 

     06.30.20      06.30.19  

Linked to liabilities

     5,438,159        6,568,525  

From credit cards

     4,729,202        4,125,582  

From insurance

     596,260        679,955  

From foreign trade and foreign currency transactions

     462,236        596,390  

Linked to loans

     248,883        285,714  

Linked to securities

     104,232        65,029  

From guarantees granted

     994        962  
  

 

 

    

 

 

 

TOTAL

     11,579,966        12,322,157  
  

 

 

    

 

 

 


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30.

Commission expenses

 

     06.30.20      06.30.19  

For credit and debit cards

     5,651,087        5,588,553  

For payment of salaries

     364,962        516,066  

For digital sales services

     199,187        420,009  

For foreign trade transactions

     90,065        108,247  

For promotions

     35,730        67,999  

Linked to transactions with securities

     1,619        1,370  

Other commission expenses

     320,055        644,718  
  

 

 

    

 

 

 

TOTAL

     6,662,705        7,346,962  
  

 

 

    

 

 

 

 

31.

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

 

     06.30.20      06.30.19  

Income from government securities

     2,057,863        2,545,733  

Income from foreign currency forward transactions

     244,581        1,273,643  

Income/(loss) from interest rate swaps

     45,572        (509,930

Income from corporate bonds

     33,929        54,814  

(Loss)/income from private securities

     (190,579      3,509,569  

Other

     (2,210      —    
  

 

 

    

 

 

 

TOTAL

     2,189,156        6,873,829  
  

 

 

    

 

 

 

 

32.

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

 

     06.30.20      06.30.19  

(Loss) from sale of government securities

     (2,186,925      (59,887
  

 

 

    

 

 

 

TOTAL

     (2,200,596      (60,394
  

 

 

    

 

 

 

 

33.

Foreign exchange and gold gains/(losses)

 

     06.30.20      06.30.19  

Income from purchase-sale of foreign currency

     2,196,450        4,732,234  

Conversion of foreign currency assets and liabilities into pesos

     603,992        (738,749
  

 

 

    

 

 

 

TOTAL

     2,800,442        3,993,485  
  

 

 

    

 

 

 


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34.

Other operating income

 

     06.30.20      06.30.19  

Adjustments and interest on miscellaneous receivables

     574,713        701,072  

Rental of safe deposit boxes

     476,848        409,629  

Loans recovered

     334,580        302,506  

Debit and credit card commissions

     118,854        459,124  

Allowances reversed

     96,971        67,632  

Punitive interest

     71,469        106,050  

Income from sale of non-current assets held for sale

     —          4,411,429  

Other operating income

     601,130        5,519,189  
  

 

 

    

 

 

 

TOTAL

     2,274,565        11,976,631  
  

 

 

    

 

 

 

 

35.

Personnel benefits

 

     06.30.20      06.30.19  

Salaries

     5,295,559        5,591,674  

Social security withholdings and contributions

     1,486,697        1,573,923  

Other short-term personnel benefits

     1,310,904        1,519,805  

Personnel services

     165,192        171,396  

Personnel compensation and bonuses

     154,932        265,133  

Termination personnel benefits (Exhibit J)

     25,612        —    

Other long-term personnel benefits

     14,402        24,194  
  

 

 

    

 

 

 

TOTAL

     8,453,298        9,146,125  
  

 

 

    

 

 

 

 

36.

Administrative expenses

 

     06.30.20      06.30.19  

Taxes

     1,837,150        1,841,220  

Maintenance and repair costs

     922,630        823,895  

Administrative expenses

     700,460        578,408  

Rent (Note 25)

     761,424        512,324  

Armored transportation services

     609,873        749,640  

Electricity and communications

     434,695        374,904  

Other fees

     350,654        346,994  

Advertising

     313,244        358,177  

Security services

     326,409        268,264  

Insurance

     80,461        79,428  

Representation and travel expenses

     43,672        86,198  

Fees to Bank Directors and Supervisory Committee

     24,364        10,254  

Stationery and supplies

     37,907        34,409  

Other administrative expenses

     1,022,005        778,529  
  

 

 

    

 

 

 

TOTAL

     7,464,948        6,842,644  
  

 

 

    

 

 

 


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37.

Depreciation and amortization

 

     06.30.20      06.30.19  

Depreciation of property and equipment

     1,293,776        1,435,893  

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

     305,449        330,169  

Amortization of intangible assets

     84,919        222,973  

Depreciation of other assets

     15,061        2,981  
  

 

 

    

 

 

 

TOTAL

     1,699,205        1,992,016  
  

 

 

    

 

 

 

 

38.

Other operating expenses

 

     06.30.20      06.30.19  

Turnover tax

     3,271,993        4,338,512  

Reorganization expenses (Exhibit J)

     492,709        268,769  

Other allowances (Exhibit J)

     657,244        6,236,909  

Initial recognition of loans

     277,040        1,189,383  

Contribution to the Deposit Guarantee Fund

     273,082        358,951  

Interest on liabilities from leases (Note 25)

     156,529        183,750  

Claims

     41,451        128,207  

Other operating expenses

     648,075        944,707  
  

 

 

    

 

 

 

TOTAL

     5,818,123        13,649,188  
  

 

 

    

 

 

 

 

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 June 30, 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 217,770 as of June 30, 2020; Treasury Bonds adjusted by CER in pesos maturing in 2021 in the amount of 94,065; Treasury Bonds in pesos maturing on July 31, 2020 in the amount of 122,681 as of December 31, 2019, as security for loans agreed under the Global Credit Program for micro, small and medium-sized 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 10,748,311 and 6,727,843 as of June 30, 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.


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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

   06.30.20      12.31.19  

Balances at the BCRA

     

Argentine Central Bank (BCRA) – current account not restricted

     57,182,248        122,061,263  

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

     2,508,376        3,212,288  

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

     389,232        —    
  

 

 

    

 

 

 
     60,079,856        125,273,551  
  

 

 

    

 

 

 

Argentine Treasury Bond in pesos at fixed rate due on 11-21-2020

     8,185,408        8,292,561  

Argentine Treasury Bond in pesos at 22% fixed rate due on 05-21-2022

     1,025,056        —    

Liquidity Bills – B.C.R.A.

     77,316,425        37,555,284  
  

 

 

    

 

 

 

TOTAL

     146,606,745        171,121,396  
  

 

 

    

 

 

 

 

  42.2

Minimum capital requirements

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

 

Minimum capital requirement

   06.30.20      06.30.19  

Credit risk

     22,633,481        24,710,199  

Operational risk

     7,445,313        6,535,376  

Market risk

     570,463        248,213  
  

 

 

    

 

 

 

Paid-in

     79,664,456        59,455,572  
  

 

 

    

 

 

 

Surplus

     49,015,199        27,961,784  
  

 

 

    

 

 

 

 

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 frameworks 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 A

BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

            HOLDING      POSITION  

Account

   Identification      Fair
value
     Fair
value
level
     Book
value
06.30.20
     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        —          2        —          58,734        —          —          —    

Treasury Bonds adjusted by 1.50% CER in pesos. Maturity 03-25-2024

     5493        135        1        135        —          135        —          135  

Argentine Bond adjusted by CER in pesos. Maturity 07-22-2021

     5495        50        1        50        —          50        —          50  

Treasury Bonds adjusted by 1.40% CER in pesos. Maturity 03-25-2023

     5492        48        1        48        —          48        —          48  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities—In pesos

        233           233        58,734        233        —          233  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Government Securities—In foreign currency

                       

Treasury Bonds in USD. Maturity 10-11-19

     5291        —          2        —          188        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities—In foreign currency

        —             —          188        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

BCRA Bills

                       

BCRA Liquidity Bills in pesos. Maturity 01-02-2020

     13551        —          2        —          4,526,120        —          —          —    

BCRA Liquidity Bills in pesos. Maturity 07-16-2020

     13619        7,869,718        2        7,869,718        —          7,869,718        —          7,869,718  

BCRA Liquidity Bills in pesos. Maturity 07-14-2020

     13618        1,774,324        2        1,774,324        —          1,774,324        —          1,774,324  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal BCRA Bills

        9,644,042           9,644,042        4,526,120        9,644,042        —          9,644,042  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Private Securities

                       

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

     53823        81,736        2        81,736        79,783        81,736        —          81,736  

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

     32890        20,662        2        20,662        16,852        20,662        —          20,662  

Corporate Bond Rombo Cia Financiera S.A. Class 40

     52940        3,507        2        3,507        5,982        3,507        —          3,507  

Corporate Bond Rombo Cia Financiera S.A. Class 42

     53238        5,112        2        5,112        3,710        5,112        —          5,112  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Private Securities

        111,017           111,017        106,327        111,017        —          111,017  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Private Securities—In foreign currency

                       

Corporate Bond YPF Class 9 in USD

     54659        270        2        270        —          270        —          270  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Private Securities—In feoreign currency

        270           270        —          270        —          270  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL DEBT SECURITES AT FAIR VALUE THROUGH PROFIT OR LOSS

        9,755,562           9,755,562        4,691,369        9,755,562        —          9,755,562  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Table of Contents
LOGO   - 91 -  

 

EXHIBIT A

(Continued)

BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

            HOLDING      POSITION  

Account

   Identification      Fair
value
     Fair
value
level
     Book
value
06.30.20
     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 11-21-2020

     5330        8,185,408        2        8,185,408        8,292,561        8,185,408        —          8,185,408  

Argentine Treasury Bond in pesos. 22% fixed rate. Maturity 05-21-2022

     5496        1,025,056        2        1,025,056        —          1,025,056        —          1,025,056  

Treasury Bonds adjusted by 1.50% CER in pesos. Maturity 03-25-2024

     5493        130,214        1        130,214        —          130,214        —          130,214  

Argentine Treasury Bond adjusted by 1% CER in pesos. Maturity 08-05-2021

     5359        120,002        1        120,002        —          120,002        —          120,002  

Argentine Treasury Bond adjusted by CER in pesos. Maturity 07-22-2021

     5315        118,680        1        118,680        118,840        118,680        —          118,680  

Treasury Bonds adjusted by 1.40% CER in pesos. Maturity 03-25-2023

     5492        46,630        1        46,630        —          46,630        —          46,630  

Treasury Bonds adjusted by 1.30% CER in pesos. Maturity 09-20-2022

     5495        9,203        1        9,203        —          9,203        —          9,203  

Treasury Bonds adjusted by 1.20% CER in pesos. Maturity 03-18-2022

     5491        72        1        72        —          72        —          72  

Capitalizable Treasury Bills in Pesos. Maturity 07-31-2020

     5284        —          1        —          1,052,908        —          —          —    

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

     5341        —          2        —          403,824        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities—In pesos

        9,635,265           9,635,265        9,868,133        9,635,265        —          9,635,265  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Government Securities—In foreign currency

                       

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

     5333        4,193,945        2        4,193,945        8,122,974        4,193,945        —          4,193,945  

Treasury Bills in USD. Maturity 08-30-19

     5283        —          1        —          219,808        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Government Securities—In foreign currency

        4,193,945           4,193,945        8,342,782        4,193,945        —          4,193,945  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

BCRA Bills

                       

BCRA Liquidity Bills in pesos. Maturity 07-21-2020

     13620        20,932,518        2        20,932,518        —          20,932,518        —          20,932,518  

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

     13616        18,665,435        2        18,665,435        —          18,665,435        —          18,665,435  

BCRA Liquidity Bills in pesos. Maturity 07-28-2020

     13622        18,557,492        2        18,557,492        —          18,557,492        —          18,557,492  

BCRA Liquidity Bills in pesos. Maturity 07-23-2020

     13621        4,181,180        2        4,181,180        —          4,181,180        —          4,181,180  

BCRA Liquidity Bills in pesos. Maturity 07-14-2020

     13618        3,252,928        2        3,252,928        —          3,252,928        —          3,252,928  

BCRA Liquidity Bills in pesos. Maturity 07-08-2020

     13617        2,082,830        2        2,082,830        —          2,082,830        —          2,082,830  

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

     13554        —          2        —          20,552,410        —          —          —    

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

     13555        —          2        —          12,476,754        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal BCRA Bills

        67,672,383           67,672,383        33,029,164        67,672,383        —          67,672,383  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Private Securities—In foreign currency

                       

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

     54266        —          2        —          79,686        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal Private Securities

        —             —          79,686        —          —          —    
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
                    

 

 

    

Subtotal Measured at Fair Value through OCI

        81,501,593           81,501,593        51,319,765        81,501,593        —          81,501,593  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

MEASURED AT AMORTIZED COST

                       

Private Securities—In pesos

                       

Corporate Bond EXO. S.A.

        83           83        94        83        —          83  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL OTHER DEBT SECURITIES

        81,501,676           81,501,676        51,319,859        81,501,676        —          81,501,676  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

EQUITY INSTRUMENTS

                       

Local:

                       

Private Securities—In pesos

                       

Prisma Medios de Pago S.A.(1)

        1,569,471        3        1,569,471        2,141,529        —          1,569,471        1,569,471  

BYMA- Bolsas y Mercados Argentina share

        94,875        1        94,875        91,301        94,875        —          94,875  

Mercado de Valores de Bs. As. Share

        122,435        1        122,435        71,403        122,435        —          122,435  

Shares of other non-controlled companies

        13        2        13        —          13        —          13  

Other

        226        2        226        262        226        —          226  

Foreign:

                       

Private Securities—In foreign currency

                       

Other

        17,818        2        17,818        30,827        17,818        —          17,818  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL EQUITY INSTRUMENTS

        1,804,838           1,804,838        2,335,322        235,367        1,569,471        1,804,838  
     

 

 

       

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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   - 92 -  

 

EXHIBIT B

CLASSIFICATION OF LOANS AND OTHER FINANCING ACCORDING TO FINANCIAL

PERFORMANCE AND GUARANTEES RECEIVED

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     06.30.20      12.31.19  

COMMERCIAL PORTFOLIO

     

Normal performance

     101,222,957        82,286,554  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     388,999        311,655  

Preferred collaterals and counter-guarantees “B”

     320,193        718,359  

No preferred collaterals and counter-guarantees

     100,513,765        81,256,540  

With special follow-up

     215,520        2,211  
  

 

 

    

 

 

 

Under observation

     215,520        2,211  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     43,267        —    

Preferred collaterals and counter-guarantees “B”

     15,882        1,403  

No preferred collaterals and counter-guarantees

     156,371        808  

Troubled

     657,608        1,055,465  
  

 

 

    

 

 

 

No preferred collaterals and counter-guarantees

     657,608        1,055,465  

With high risk of insolvency

     16,859        310,711  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “B”

     —          181,963  

No preferred collaterals and counter-guarantees

     16,859        128,748  

Uncollectible

     656,613        3,189,993  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     9,926        11,275  

Preferred collaterals and counter-guarantees “B”

     163,512        11,907  

No preferred collaterals and counter-guarantees

     483,175        3,166,811  
  

 

 

    

 

 

 

TOTAL

     102,769,557        86,844,934  
  

 

 

    

 

 

 


Table of Contents
LOGO   - 93 -  

 

EXHIBIT B

(Continued)

CLASSIFICATION OF LOANS AND OTHER FINANCING ACCORDING TO FINANCIAL

PERFORMANCE AND GUARANTEES RECEIVED

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     06.30.20      12.31.19  

CONSUMER AND HOUSING PORTFOLIO

     

Normal performance

     138,530,157        131,852,744  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     79,808        52,906  

Preferred collaterals and counter-guarantees “B”

     16,654,662        16,546,437  

No preferred collaterals and counter-guarantees

     121,795,687        115,253,401  

Low risk

     972,795        2,358,190  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     —          1,076  

Preferred collaterals and counter-guarantees “B”

     134,987        166,638  

No preferred collaterals and counter-guarantees

     837,808        2,190,476  

Low risk—with special follow-up

     57,486        —    
  

 

 

    

 

 

 

No preferred collaterals and counter-guarantees

     57,486        —    

Medium risk

     1,641,298        1,953,842  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     13        —    

Preferred collaterals and counter-guarantees “B”

     44,293        41,283  

No preferred collaterals and counter-guarantees

     1,596,992        1,912,559  

High risk

     581,157        1,534,550  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     —          610  

Preferred collaterals and counter-guarantees “B”

     45,730        45,446  

No preferred collaterals and counter-guarantees

     535,427        1,488,494  

Uncollectible

     215,384        122,133  
  

 

 

    

 

 

 

Preferred collaterals and counter-guarantees “A”

     537        —    

Preferred collaterals and counter-guarantees “B”

     30,379        12,309  

No preferred collaterals and counter-guarantees

     184,468        109,824  
  

 

 

    

 

 

 

TOTAL

     141,998,277        137,821,459  
  

 

 

    

 

 

 

TOTAL GENERAL

     244,767,834        224,666,393  
  

 

 

    

 

 

 


Table of Contents
LOGO   - 94 -  

 

EXHIBIT C

CONCENTRATION OF LOANS AND OTHER FINANCING

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     06.30.20     12.31.19  

Number of customers

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

10 largest customers

     34,368,560        14.04     25,573,748        11.38

50 following largest customers

     40,251,131        16.44     28,459,562        12.67

100 following largest customers

     15,677,394        6.41     14,041,495        6.25

All other customers

     154,470,749        63.11     156,591,588        69.70
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     244,767,834        100.00     224,666,393        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


Table of Contents
LOGO   - 95 -  

 

EXHIBIT D

BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING

AS OF JUNE 30, 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

     —          161        —          —          —          —          —          161  

Financial sector

     —          1,496,970        1,660,391        1,404,941        1,281,300        1,772,488        275,498        7,891,588  

Non-financial private sector and residents abroad

     3,576,607        92,834,231        41,628,219        23,846,230        29,521,100        25,834,768        38,560,550        255,801,705  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     3,576,607        94,331,362        43,288,610        25,251,171        30,802,400        27,607,256        38,836,048        263,693,454  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

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


Table of Contents
LOGO   - 96 -  

 

EXHIBIT H

DEPOSITS CONCENTRATION

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

     06.30.20     12.31.19  

Number of customers

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

10 largest customers

     14,199,240        3.81     12,353,621        3.71

50 following largest customers

     23,383,008        6.28     19,031,996        5.71

100 following largest customers

     16,990,512        4.56     15,070,132        4.52

All other customers

     317,894,816        85.35     286,840,384        86.06
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     372,467,576        100.00     333,296,133        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 


Table of Contents
LOGO   - 97 -  

 

EXHIBIT I

BREAKDOWN OF FINANCIAL LIABILITIES BY REMAINING TERMS

AS OF JUNE 30, 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

     349,385,971        21,343,186        3,811,117        1,330,761        62,449        —          375,933,484  

Non.-financial government sector

     5,338,996        143,257        6,556        —          —          —          5,488,809  

Financial sector

     385,228        —          —          —          —          —          385,228  

Non-financial private sector and residents abroad

     343,661,747        21,199,929        3,804,561        1,330,761        62,449        —          370,059,447  

Derivative instruments

     229,595        —          —          —          —          —          229,595  

Other financial liabilities

     24,424,124        417,484        516,340        535,291        798,050        1,678,130        28,369,419  

Financing received from the BCRA and other financial institutions

     572,570        —          —          —          —          —          572,570  

Corporate bonds issued

     58,818        968,254        2,070,769        —          —          —          3,097,841  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     374,671,078        22,728,924        6,398,226        1,866,052        860,499        1,678,130        408,202,909  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

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


Table of Contents
LOGO   - 98 -  

 

EXHIBIT J

PROVISIONS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 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 06.30.20
 

INCLUDED IN LIABILITIES

               

- Provisions for contingent commitments

     1,029,011        77,731  (1)(6)      —          —          (125,010     981,732  

- For administrative, disciplinary and criminal penalties

     5,680        —   (4)      —          —          (680     5,000  

- Provisions for reorganization

     2,244,727        492,709  (5)      94,541        646,140        (265,068     1,731,687  

- Provisions for termination plans

     72,977        25,612  (2)      —          —          (8,733     89,856  

- Other

     8,759,004        580,927  (3)      —          144,641        (1,074,686     8,120,604  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

TOTAL PROVISIONS

     12,111,399        1,176,979       94,541        790,781        (1,474,177     10,928,879  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

(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 condensed interim financial statements.

(6)

It includes an increase of 1,414 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 JUNE 30, 2020 AND DECEMBER 31, 2019

(stated in thousands of pesos)

 

ACCOUNTS

   TOTAL
AS OF
06.30.20
     AS OF 06.30.20 (per currency)      TOTAL
AS OF
12.31.19
 
   Dollar      Euro      Real      Other  

ASSETS

                 

Cash and deposits in banks

     87,018,963        84,087,702        2,734,443        26,969        169,849        99,568,684  

Debt securities at fair value through profit or loss

     270        270        —          —          —          189  

Other financial assets

     1,850,576        1,841,031        9,545        —          —          305,524  

Loans and other financing

     32,853,592        32,839,408        14,121        —          63        38,962,910  

Non-financial government sector

     8        8        —          —          —          159  

Other financial institutions

     1,178,394        1,178,394        —          —          —          556,377  

Non-financial private sector and residents abroad

     31,675,190        31,661,006        14,121        —          63        38,406,374  

Other debt securities

     4,193,945        4,193,945        —          —          —          8,421,671  

Financial assets pledged as collateral

     6,672,228        6,672,228        —          —          —          2,582,924  

Investments in equity instruments

     17,818        17,818        —          —          —          30,827  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

     132,607,392        129,652,402        2,758,109        26,969        169,912        149,872,729  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

LIABILITIES

                 

Deposits

     115,987,535        113,799,027        2,188,508        —          —          133,166,592  

Non-financial government sector

     2,315,964        2,315,964        —          —          —          1,654,887  

Financial sector

     48,205        47,591        614        —          —          47,188  

Non-financial private sector and residents abroad

     113,623,366        111,435,472        2,187,894        —          —          131,464,517  

Liabilities at fair value through profit or loss

     —          —          —          —          —          510,736  

Other financial liabilities

     7,838,599        7,492,516        313,566        —          32,517        8,728,401  

Financing received from the BCRA and other financial institutions

     543,832        543,832        —          —          —          3,465,235  

Other non-financial liabilities

     770,909        764,987        5,922        —          —          1,326,130  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES

     125,140,875        122,600,362        2,507,996        —          32,517        147,197,094  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


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EXHIBIT O

DERIVATIVES

AS OF JUNE 30, 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
     Residual
weighted
average
term
     Amount  

SWAPS

   Financial
transactions
own
account
   —      Upon
maturity
of
differences
   RESIDENTS IN
THE COUNTRY
FINANCIAL
SECTOR
     2        —          49        500,020  

REPO TRANSACTIONS

   Financial
transactions
own
account
   Other    Upon
maturity
of
differences
   RESIDENTS IN
THE COUNTRY
FINANCIAL
SECTOR
     1        1        1        38,327,667  

FUTURES

   Financial
transactions
own
account
   Foreign
currency
   Daily
differences
   ROFEX      4        2        1        36,403,972  

FUTURES

   Financial
transactions
own
account
   Foreign
currency
   Upon
maturity
of
differences
   RESIDENTS
ABROAD
FINANCIAL
SECTOR
     5        1        157        6,095,169  

FUTURES

   Financial
transactions
own
account
   Foreign
currency
   Upon
maturity
of
differences
   RESIDENTS IN
THE COUNTRY
NON-FINANCIAL
SECTOR
     3        2        94        40,837,537  

OPTIONS

   Financial
transactions
own
account
   Private
securities
   With
delivery of
underlying
asset
   OTC - Residents
abroad
     34        17        —          685,000  


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EXHIBIT R

ADJUSTMENT TO IMPAIRMENT LOSS – ALLOWANCES FOR LOAN LOSSES

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 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
06.30.20
 

Other financial assets

     232,887        3,559       —         7,843       (30,204     214,085  

Loans and other financing

     12,758,341        241,713       1,259,610       (2,080,127     (1,612,694     10,566,843  

Other financial institutions

     162,420        (19,277     (60,459     (1,298     (14,200     67,186  

Non-financial private sector and residents abroad

     12,595,921        260,990       1,320,069       (2,078,829     (1,598,494     10,499,657  

Overdrafts

     738,302        467,780       1,285,862       71,792       (168,500     2,395,236  

Instruments

     1,039,842        284,125       (431,535     (82,568     (85,113     724,751  

Mortgage loans

     160,987        (55,438     (19,117     163,013       (25,009     224,436  

Pledge loans

     35,433        (6,987     (9,788     13,755       (4,270     28,143  

Consumer loans

     1,536,822        (278,744     (204,354     87,293       (170,245     970,772  

Credit card loans

     3,851,241        (736,691     (13,958     (106,022     (415,496     2,579,074  

Finance leases

     142,354        (24,200     (19,084     (34,360     (14,274     50,436  

Other

     5,090,940        611,145       732,043       (2,191,732     (715,587     3,526,809  

Other debt securities

     777        (600     —         —         (94     83  

Contingent commitments

     1,029,011        130,641       (26,878)       (17,489)       (133,553)       981,732  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ALLOWANCES

     14,021,016        375,313       1,232,732       (2,089,773     (1,776,545     11,762,743  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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LOGO  

KPMG

Bouchard 710 - 1° piso - C1106ABL

Buenos Aires, Argentina

 

+54 11 4316 5700

www.kpmg.com.ar

INDEPENDENT AUDITORS’ REVIEW REPORT ON SEPARATE CONDENSED INTERIM 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 June 30, 2020, the statements of income, other comprehensive income, changes in shareholders’ equity and cash flows for the six-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 $ 5,078,544 thousand and $ 4,101,784 thousand as of June 30, 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. 7/1019, 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, June 30, 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,

 

b)

As of June 30, 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


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c)

As of June 30, 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 $ 403,019,512, no amounts being due as of that date.

City of Buenos Aires, August 25, 2020

KPMG

Mauricio G. Eidelstein

Partner


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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 June 30, 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 six-month period then ended, and their respective supplementary notes and exhibits, as well as the separate condensed financial statements of BBVA as of June 30, 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 August 25, 2020, issued their limited review report on the interim financial statements as of June 30, 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 six-month period ended June 30, 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) to the consolidated and separate financial statements, in accordance with Communication “A” 6847 issued by the BCRA, the Entity has applied the expected losses model set forth in paragraph 5.5 of IFRS 9, excluding from its scope non-financial government sector debt instruments. Had the impairment model set forth in paragraph 5.5 of IFRS 9 been applied, the Entity would have recorded a decrease in equity of $ 5,078,544 thousand and $ 4,101,784 thousand as of June 30, 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 paragraph 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) to the consolidated and separate financial statements, 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 and separate 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, June 30, 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 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.

Pursuant to the BCRA’s requirements, as of June 30, 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).


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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, August 25, 2020.

 

ALEJANDRO MOSQUERA

ATTORNEY

C.P.A.C.F. Vol. 30 – Fol. 536

C.P.S.I. Vol. XXII – Fol. 433

On behalf of Supervisory Committee


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REPORTING SUMMARY FOR

THE FISCAL PERIOD ENDED

JUNE 30, 2020

(Consolidated, stated in thousands of pesos)

These consolidated condensed interim financial statements for the six-month period ended June 30, 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 paragraph 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 paragraph 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 June 30, 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 June 30, 2020 and December 31, 2019.

Information not Covered by the Review Report.

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 June 30, 2020, the Entity’s total assets, liabilities and shareholders’ equity amounted to 542,079,684; 447,130,736; and 94,948,948, 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 2.7 million active customers as of June 30, 2020. That network includes 244 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 881 ATMs, 857 self-service

terminals, 15 in-company banks, two points of Customer service booths.


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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 6,186 employees, including 96 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 243,225,858 pesos as of June 30, 2020, reflecting a decrease of 8.73% in the last twelve months.

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 242.75% compared wiht the previous year. Excluding such loans, commercial loans have shown the most significant growth during the period, up by 12.07%, or 8,293,419.

BBVA Argentina S.A.’s consolidated market share in private-sector financing was 8.54% 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 1.56%, with a coverage level (total allowances/irregular performance) of 269.38% as of June 30, 2020.

The total exposure for securities totaled 125,523,858 pesos as of June 30, 2020, including repos both with the BCRA and Argentina.

In terms of liabilities, customers’ resources totaled 373,260,112, with a 8.32% decrease over the last twelve months.

The consolidated market share of deposits to the private sector of Banco BBVA Argentina S.A. reached 6.50% 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 5,831,404 as of June 30, 2020, representing a return on average shareholders’ equity of 6.51%, a return on average assets of 1.04%, and a return on average liabilities of 1.24%.

Net accumulated interest income totaled 33,201,064, with a 5.17% reduction as compared to June 2019, mainly driven by a decrease in interest from government securities and interest from credit card loans, offset by a decrease in interest expenses for time deposits.

Net accumulated commission income totaled 5,085,222, dropping 3.58% compared to June 2019. This decrease is mainly due to lower income due to a smaller volume of transactions, commissions linked to liabilities (deposits), credit cards and foreign trade and currency transactions, offset by lower commission expenses for credit and debit cards.

Accumulated administrative expenses and personnel benefits totaled 16,257,952, a 1.22% growth in relation to those recorded for June 2019. The increase in personnel expenses is mainly a consequence of salary increases agreed with the union. The remaining expenses grow due to general increase in prices, currency depreciation and increase in utility rates.


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Outlook

As of the date of publication of these results, Argentina is still undergoing a serious economic crisis, worsened by the COVID-19 pandemic in terms of activity and employment. Like most countries affected by the Covid-19, the Argentine Government has taken economic relief actions and has implemented a lockdown that is still in place, through at varying levels, according to the status of the affected areas throughout the country.

Against this backdrop, banking services have been designated as essential services. BBVA Argentina is accompanying its customers in this complex stage, making available to all of them the progress made by the Bank in terms of digitalization over the last years.

It should be noted that since the start of the pandemic, BBVA Argentina has prioritized its customers’ and employees’ safety, both in its branch network and headquarters. In the case of branches, the necessary safety measures have been taken, in line with the highest safety standards, to be able to interact whilst minimizing risks.

The Bank has shown great capacity to adapt to the new scenario: on the one hand, it has swiftly implemented all COVID-19 safeguard measures, making them available to its customers through all channels and being thus able to provide them with an efficient service during the pandemic. All this has been possible thanks to the investment made in digitalization during the past years, which has allowed both retail and corporate clients to enjoy the Bank’s full service offerings through digital channels.

At the closing of June 2020, digital customers and mobile customers accounted for 69% and 57%, respectively, of active customers.

The Bank will continue to actively monitor the impact of the pandemic on its businesses and financial position, in order to continue to service its customers in the safest and most efficient way possible. Meanwhile, it will seek to maintain a sound balance sheet in terms of liquidity and capital. To such end, it relies on transactional funding sources and its high organic capacity to generate capital, both of which are key aspects in uncertainty and volatility environments such as the present one.

In terms of responsible banking, 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.


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CONSOLIDATED STATEMENT OF FINANCIAL POSITION STRUCTURE

COMPARATIVE WITH PREVIOUS FISCAL YEARS

(stated in thousands of pesos)

 

     06.30.20      06.30.19  

Total Assets

     542,079,684        575,818,387  

Total Liabilities

     447,130,736        491,646,820  

Shareholders’ Equity

     93,077,021        84,123,368  

Minority Interest

     1,871,927        48,199  

Total Liabilities + Non-controlling interest + Parent’s Shareholders’ Equity

     542,079,684        575,818,387  


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CONSOLIDATED STATEMENT OF PROFIT OR LOSS STRUCTURE

COMPARATIVE WITH PREVIOUS FISCAL YEARS

(stated in thousands of pesos)

 

     06.30.20     06.30.19  

Net interest income

     33,201,064       35,009,771  

Net commission income

     5,085,222       5,273,791  

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

     2,316,260       7,053,859  

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

     (2,200,596     (60,394

Foreign currency quotation differences

     2,798,257       3,995,848  

Other operating income

     2,236,934       12,000,754  

Loan loss provision

     (4,356,487     (4,298,326

Net operating income

     39,080,654       58,975,303  

Personnel benefits

     (8,643,566     (9,184,151

Administrative expenses

     (7,614,386     (6,878,521

Asset depreciation and impairment

     (1,709,806     (1,992,016

Other operating expenses

     (6,110,237     (13,695,267

Operating income

     15,002,659       27,225,348  

Income from associates and joint ventures

     216,457       197,874  

Loss from net monetary position

     (5,049,139     (7,410,297

Income before income tax from continuing activities

     10,169,977       20,012,925  

Income tax from continuing activities

     (4,338,573     (6,323,024

Net income from continuing activities

     5,831,404       13,689,901  

Net income for the period

     5,831,404       13,689,901  


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CONSOLIDATED CASH FLOW STRUCTURE

COMPARATIVE WITH PREVIOUS FISCAL YEARS

(stated in thousands of pesos)

 

     06.30.20     06.30.19  

Net cash used in operating activities

     (45,583,564     (6,927,928

Net cash (used in)/generated by investing activities

     (328,297     1,314,424  

Net cash used in financing activities

     (6,161,409     (2,106,926

Effect of exchange rate changes

     5,492,101       (2,662,719

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

     (18,394,436     (32,950,582
  

 

 

   

 

 

 

Total cash used during the period

     (64,975,605     (43,333,731
  

 

 

   

 

 

 


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COMPARATIVE STATISTICAL DATA

WITH PREVIOUS FISCAL YEARS

(Variation of balances over the same period of the previous fiscal year)

 

     06.30.20/19  

Total loans

     -8.73

Total deposits

     -8.32

Income/(loss)

     -57.40

Shareholders’ Equity

     12.80


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COMPARATIVE RATIOS

WITH PREVIOUS FISCAL YEARS

 

     06.30.20     06.30.19  

Solvency (a)

     21.24     17.12

Liquidity (b)

     32.76     34.20

Fixed asset-to-equity capital ratio (c)

     33.01     40.33

Indebtedness (d)

     4.71       5.84  

 

(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.

 

  b)

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.

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.

 

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

     184,938,313        25,581,855        107,173        32,593,948        4,569  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     184,938,313        25,581,855        107,173        32,593,948        4,569  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


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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

     147,163,531        4,011,243        81,833,432        115,987,535        24,264,371  

Other liabilities (1)

     10,633,568        —          43,083,695        —          9,153,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     157,797,099        4,011,243        124,917,127        115,987,535        33,417,711  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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.    

 

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

     10,435,217        50,468,432  

Building, machines, IT equipment, furniture, fixtures, signals, telephones and works of art

  

Fire, vandalism and earthquake - Transportation of goods

     35,567,469        30,234,781  

Motor vehicles

  

All kinds of risks and third-party insurance

     68,712        44,038  


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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: September 28, 2020     By:  

/s/ Ernesto R. Gallardo Jimenez

      Name:   Ernesto R. Gallardo Jimenez
      Title:     Chief Financial Officer