6-K 1 d29607d6k.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 November 2020

Commission File Number: 001-12568

 

 

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

 

 

 


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Banco BBVA Argentina S.A.

TABLE OF CONTENTS

 

Item

        

1.

  Banco BBVA Argentina S.A. reports consolidated third quarter earnings for fiscal year 2020.   

 


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Banco BBVA Argentina S.A. announces Third Quarter 2020 results

Buenos Aires, November 24, 2020 – Banco BBVA Argentina S.A (NYSE; BYMA; MAE: BBAR; LATIBEX: XBBAR) (“BBVA Argentina” or “BBVA” or “the Bank”) announced today its consolidated results for the third quarter (3Q20), ended on September 30, 2020.

As of January 1, 2020, the Bank started to inform its inflation adjusted results pursuant to IAS 29 reporting. To facilitate comparison, figures of comparable quarters of 2019 have been updated according to IAS 29 reporting to reflect the accumulated effect of inflation adjustment for each period up to September30, 2020.

3Q20 Highlights

 

   

BBVA Argentina’s inflation adjusted net income in 3Q20 was $2.83 billion, 2.9% greater than the $2.75 billion reported in the second quarter of 2020 (2Q20) and 65.4% lower than the $8.19 billion reported in the third quarter of 2019 (3Q19).

 

   

In 3Q20, BBVA Argentina posted an inflation adjusted average return on assets (ROAA) of 1.9% and an inflation adjusted average return on equity (ROAE) of 11.0%.

 

   

In terms of activity, total consolidated financing to the private sector in 3Q20 totaled $258.6 billion, contracting in real terms 4.1% compared to 2Q20, and 10.6% compared to 3Q19. In the quarter, contraction was driven by the fall in overdrafts and loans for the prefinancing and financing of exports which decreased 41.0% and 27.6% respectively, partially offset by an increase in pledge loans, discounted instruments and credit cards, growing 17.1%, 15.7% and 10.8% respectively. BBVA’s consolidated market share of private sector loans was 8.25% as of 3Q20.

 

   

Total deposits contracted 0.6% in real terms during the quarter, and expanded 6.5% in the year. The Bank’s consolidated market share of private deposits was 6.48% as of 3Q20.

 

   

As of 3Q20, the non-performing loan ratio (NPL) reached 1.16%, with a 355.26% coverage ratio.

 

   

The accumulated efficiency ratio in 3Q20 was 58.0%, above 2Q20’s 54.7%.

 

   

As of 3Q20, BBVA Argentina reached a regulatory capital ratio of 23.3%, entailing a $61.9 billion or 184.5% excess over minimum regulatory requirement. Tier I ratio was 22.6%. Total liquid assets represented 66.0% of the Bank’s total deposits as of 3Q20.

Message from the CFO

“The pandemic’s persistence during the third quarter of 2020 has contributed to keeping uncertainty over the country’s economic situation, but has also promoted the continuity of banking services trends seen since the beginning of the lockdown.

“Digital transformation” are not just words that convey a path to be taken, but a reality that consolidates day by day. Eventually, we should move past the pandemic, and uncertainties regarding the economy will cease; but all these months will have served as an accelerated consolidation of banking services digitalization.

BBVA Argentina has provided its clients, through its traditional and digital channels, not only its wide range of products but also all possible support that has surged through the health emergency regulation implemented by the Argentine Government.

 

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In this line, the digitalization of our service offering has evolved in such way that as of September 2020, digital client penetration reached 71% from 65% the previous year, while mobile client penetration reached 59% from 50% the previous year.

Additionally, BBVA Argentina keeps a solid balance sheet, both in its loan portfolio behavior (non-performing loan ratio of 1.16%), as in its liquidity and capital ratios, which at September end were at 66.0% (liquidity ratio) and 23.3% (regulatory capital ratio) respectively, which places the Bank in a strong position to face a long expected economic recovery during the next months.

Meanwhile, the Bank closely monitors the impact of the pandemic over its business, financial conditions and operating results, in the aim of anticipating possible actions to optimize value for its shareholders, as it keeps the solidity it has wisely developed, for as long as the volatility and uncertainty as seen during 2020 remains.

In terms of responsible banking, BBVA Argentina keeps working towards its sustainability model, supporting responsible business actions regarding inclusion, financial education and environmental protection, as part of its compromise with the country.”

Ernesto R. Gallardo, CFO of BBVA Argentina

3Q20 Conference Call

Wednesday, November 25, 2020. At 12:00 p.m. Buenos Aires time – (10:00 a.m. EST)

To participate, please dial in:

+1-844-450-3851 (US Toll-Free)

+1-412-317-6373 (International)

+54-11-3984-5677 (Argentina)

Web Phone: click here

Conference ID: BBVA

Webcast & Replay: click here

 

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Safe Harbor Statement

This press release contains certain forward-looking statements that reflect the current views and/or expectations of Banco BBVA Argentina and its management with respect to its performance, business and future events. We use words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “seek,” “future,” “should” and other similar expressions to identify forward-looking statements, but they are not the only way we identify such statements. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this release. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) changes in general economic, financial, business, political, legal, social or other conditions in Argentina or elsewhere in Latin America or changes in either developed or emerging markets, (ii) changes in regional, national and international business and economic conditions, including inflation, (iii) changes in interest rates and the cost of deposits, which may, among other things, affect margins, (iv) unanticipated increases in financing or other costs or the inability to obtain additional debt or equity financing on attractive terms, which may limit our ability to fund existing operations and to finance new activities, (v) changes in government regulation, including tax and banking regulations, (vi) changes in the policies of Argentine authorities, (vii) adverse legal or regulatory disputes or proceedings, (viii) competition in banking and financial services, (ix) changes in the financial condition, creditworthiness or solvency of the customers, debtors or counterparties of Banco BBVA Argentina, (x) increase in the allowances for loan losses, (xi) technological changes or an inability to implement new technologies, (xii) changes in consumer spending and saving habits, (xiii) the ability to implement our business strategy and (xiv) fluctuations in the exchange rate of the Peso. The matters discussed herein may also be affected by risks and uncertainties described from time to time in Banco BBVA Argentina’s filings with the U.S. Securities and Exchange Commission (SEC) and Comisión Nacional de Valores (CNV). Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as the date of this document. Banco BBVA Argentina is under no obligation and expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Information

This earnings release has been prepared in accordance with the accounting framework established by the Central Bank of Argentina (“BCRA”), based on International Financial Reporting Standards (“I.F.R.S.”) and the resolutions adopted by the International Accounting Standards Board (“I.A.S.B”) and by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (“F.A.C.P.E.”), with the transitory exceptions: (i) the record of a prevision for contingencies referred to uncertain fiscal positions required by the BCRA, (ii) the adjustment in valuation established by the B.C.R.A. applied to the valuation of the remaining investment the Bank keeps of Prisma Medios de Pago S.A. (“Prisma”), and (iii) the temporary exclusion of the application of the IFRS 9 impairment model for non-financial public sector debt instruments.

As of 1Q20, the Bank started to inform its inflation adjusted results pursuant to IAS 29 reporting. To facilitate comparison, figures of comparable quarters of 2019 have been updated according to IAS 29 reporting to reflect the accumulated effect of inflation adjustment for each period up to June 30, 2020.

The information in this press release contains unaudited financial information that consolidates, line item by line item, all of the banking activities of BBVA Argentina, including: BBVA Asset Management Argentina S.A., Consolidar AFJP-undergoing liquidation proceeding, and as of July 1, 2019, PSA Finance Argentina Compañía Financiera S.A. (“PSA”) and Volkswagen Financial Services Compañía Financiera S.A (“VWFS”).

BBVA Consolidar Seguros S.A. is disclosed on a consolidated basis recorded as Investments in associates (reported under the proportional consolidation method), and the corresponding results are reported as “Income from associates”), same as Rombo Compañía Financiera S.A. (“Rombo”), Play Digital S.A. and Interbanking S.A.

Financial statements of subsidiaries have been elaborated as of the same dates and periods as Banco BBVA Argentina S.A.’s. In the case of consolidated companies PSA and VWFS, financial statements were prepared considering the B.C.R.A. accounting framework for institutions belonging to “Group B”, without considering the model established by the IFRS 9 5.5. “Impairment” section for periods starting as of January 1, 2021. As of October 2020, PSA and VWFS will belong to “Group C” institutions, keeping the same accounting framework as for “Group B” institutions.

The information published by the BBVA Group for Argentina is prepared according to IFRS, without considering the temporary exceptions established by BCRA.

 

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Quarterly results

 

Income Statement    BBVA ARG Consolidated     Chg (%)     Proforma
 

In millions AR$ except EPS and ADS - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY     3Q20(4)  

Net Interest Income

     16,652       17,092       22,384       (2.6 %)      (25.6 %)      15,963  

Net Fee Income

     3,005       3,347       2,247       (10.2 %)      33.7     3,026  

Net income from measurement of financial instruments at fair value through P&L

     886       1,359       2,339       (34.8 %)      (62.1 %)      886  

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

     (3,988     (2,225     5       (79.3 %)      n.m       (3,988

Foreign exchange and gold gains

     1,618       1,609       5,385       0.5     (70.0 %)      1,629  

Other operating income

     1,500       1,230       1,563       22.0     (4.0 %)      1,530  

Loan loss allowances

     (927     (2,848     (6,936     67.4     86.6     (895

Net operating income

     18,744       19,562       26,986       (4.2 %)      (30.5 %)      18,150  

Personnel benefits

     (4,583     (4,269     (5,249     (7.3 %)      12.7     (4,518

Adminsitrative expenses

     (4,360     (4,125     (4,924     (5.7 %)      11.5     (4,283

Depreciation and amortization

     (838     (907     (1,064     7.7     21.3     (828

Other operating expenses

     (2,706     (3,048     (5,028     11.2     46.2     (2,579

Operating income

     6,257       7,213       10,721       (13.2 %)      (41.6 %)      5,943  

Income from associates

     (14     202       (48     (106.8 %)      71.2     (9

Income from net monetary position

     (2,242     (2,459     (1,406     8.9     (59.4 %)      (1,985

Net income before income tax

     4,002       4,955       9,267       (19.2 %)      (56.8 %)      3,949  

Income tax

     (1,169     (2,202     (1,082     46.9     (8.0 %)      (1,102

Income for the period

     2,833       2,753       8,185       2.9     (65.4 %)      2,847  

Other Comprehensive Income (OCI)(5)

     1,641       2,074       (7,044     58.4     141.4     1,641  

Number of common shares outstanding (in thousands)

     612,710       612,710       612,660       —         0.0     612,710  

Weighted average number of common shares outstanding (2)(3)

     612,710       612,710       612,660       —         N/A       612,710  

Earnings per Share (EPS)

     4.63       4.41       12.65       4.9     (63.4 %)      4.63  

Earnings per ADS (1)

     13.88       13.23       37.94       4.9     (63.4 %)      13.88  

 

(1)

One ADS represents three ordinary shares

(2)

In thousands of shares

(3)

As of October 9th, 2019, 50.441 shares have been issued related to the merger by absorption with BBVA Francés Valores S.A., totaling 612,710,079 shares. As of the release of these consolidated financial statements, the increase in capital and the merger by absoprtion are pending registry approval by the I.G.J.

(4)

Excludes consolidation with VWFS y PSA.

(5)

Net of Income Tax

BBVA Argentina 3Q20 net income was $2.8 billion, 2.9% or $81 million greater than 2Q20, and 65.4% or $5.4 billion lower than 3Q19. The quarter-over-quarter (QoQ) increase is mainly explained by a lower income tax derived from a reduced taxable base, additional to temporary differences between fiscal and accounting inflation adjustment regulations.

Net income from write-down of assets at amortized cost and at fair value (FV) through Other Comprehensive Income (OCI) reflects a loss in 3Q20 of $4.0 billion, 79.3% or $1.8 million greater than that recorded in 2Q20. 72% of the result in this line is mainly explained by the accumulated inflation adjustment in OCI of the remaining position in U.S. dollar linked notes (LELINK), which the Bank exchanged in the voluntary swap offered by the National Treasury on July 17, 2020.

As of 3Q20, net operating income was $18.7 billion, decreasing 4.2% or $818 million QoQ, and 30.5% or $8.2 billion year-over-year (YoY).

Operating income in 3Q20 was $6.3 billion, decreasing 13.2% or $955 million QoQ, and 41.6% or $4.5 billion YoY.

 

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Net interest income

 

Net Interest Income    BBVA ARG Consolidated      Chg (%)     Proforma(1)  

In millions AR$ - Inflation adjusted

   3Q20      2Q20      3Q19      QoQ     YoY     3Q20  

Net Interest Income

     16,652        17,091        22,384        (2.6 %)      (25.6 %)      15,963  

Interest Income

     26,114        24,052        39,004        8.6     (33.0 %)      24,956  

From government securities

     8,534        6,364        13,861        34.1     (38.4 %)      8,534  

From private securities

     0        2        4        (100.0 %)      (100.0 %)      —    

Interest from loans and other financing

     14,780        15,277        21,954        (3.3 %)      (32.7 %)      13,678  

Financial Sector

     254        254        914        0.1     (72.2 %)      520  

Overdrafts

     2,049        3,167        3,251        (35.3 %)      (37.0 %)      2,050  

Discounted Instruments

     2,062        1,938        3,032        6.4     (32.0 %)      2,062  

Mortgage loans

     316        300        415        5.4     (23.8 %)      316  

Pledge loans

     646        610        1,352        6.0     (52.2 %)      136  

Consumer Loans

     2,061        2,151        2,663        (4.2 %)      (22.6 %)      2,061  

Credit Cards

     4,110        3,835        5,974        7.2     (31.2 %)      4,110  

Financial leases

     115        108        176        6.2     (34.5 %)      88  

Loans for the prefinancing and financing of exports

     292        413        1,272        (29.5 %)      (77.1 %)      292  

Other loans

     2,874        2,500        2,906        15.0     (1.1 %)      2,043  

CER/UVA clause adjustment

     2,077        1,934        2,741        7.4     (24.3 %)      2,020  

Other interest income

     724        474        444        52.6     63.1     724  

Interest expenses

     9,463        6,961        16,619        35.9     (43.1 %)      8,993  

Deposits

     8,607        5,738        13,297        50.0     (35.3 %)      8,513  

Checking accounts

     389        181        528        115.4     (26.2 %)      389  

Savings accounts

     44        52        62        (16.3 %)      (30.3 %)      44  

Time deposits

     8,174        5,506        12,706        48.5     (35.7 %)      8,080  

CER/UVA clause adjustment

     173        268        435        (35.5 %)      (60.3 %)      173  

Other liabilities from financial transactions

     389        640        2,045        (39.2 %)      (81.0 %)      282  

Other

     293        314        842        (6.5 %)      (65.2 %)      25  

 

(1)

Excludes consolidation with PSA and VWFS

Net interest income for 3Q20 was $16.7 billion, decreasing 2.6% or $439 million QoQ, and 25.6% or $5.7 billion YoY. In 3Q20, the greater interest income does not make up for the increase in interest expenses, mainly due to the increase in passive rates and time deposits.

In 3Q20 interest income totaled $26.1 billion, 8.6% or $2.1 billion greater than 2Q20, and 33.0% or $12.9 billion lower than 3Q19. Quarterly increase is explained by an increment in income from government securities, and in a lesser extent, by the increase in credit card activity.

Income from government securities grew 34.1% or $2.2 billion compared to 2Q20, and fell 38.4% or $5.3 billion compared to 3Q19. This is explained by an increase in position in BCRA liquidity instruments (LELIQ) as a consequence of an increment in time deposits (as LELIQ are used in time deposit reserve requirement integration), as well as driven by BCRA’s Communication “A” 7078 which enables financial institutions to increment their excess LELIQ position based on time deposits granted at minimum rate. 85% of results is explained by financial instruments at fair value through OCI, mainly LELIQ.

Interest income from loans and other financing totaled $14.8 billion, decreasing 3.3% or $497 million QoQ. This is mainly explained by a fall in overdrafts, derived from the economic situation, and is partially offset by an increase in credit card activity, and by other loans (company loans or “Préstamos a Interés Vencido” or “PIV”).

Income from CER/UVA adjustments was 7.4% higher QoQ and 24.3% lower YoY, mainly explained by the acceleration in inflation during the quarter (7.7% in 3Q20 vs. 5.4% in 2Q201).

Interest expenses totaled $9.5 billion, 35.9% higher than 2Q20 and 43.1% lower than 3Q19. Quarterly increase is explained by an increment in the average minimum rate of time deposits2 and of interest-bearing checking accounts, apart from an increase in the amount granted in time deposits.

Interest expenses from time deposits explain 86.4% of total interest expenses versus 79.1% on the previous quarter. Interests from time deposits grew 48.5% QoQ and fell 35.7% YoY.

 

 

1 

Source: Instituto Nacional de Estadística y Censos (INDEC). Consumer Price Index.

2 

Retail time deposit minimum rates changed from 79% to 87% of the LELIQ rate as of July, 30, 2020 (BCRA Communication “A” 7078).

 

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Net interest margin (NIM)

As of 3Q20, total net interest margin (NIM) was 16.2%, slightly lower than 2Q20’s 16.7%.

 

     BBVA ARG Consolidated  

Assets & Liabilities Performance - AR$

In millions AR$. Rates and spreads in annualized %

   3Q20     2Q20     1Q20  
   Average
Balance
     Interest
Earned/Paid
     Average
Real Rate
    Average
Balance
     Interest
Earned/Paid
     Average
Real Rate
    Average
Balance
     Interest
Earned/Paid
     Average
Real Rate
 

Total interest-earning assets

     366,151        25,913        28.4     357,341        23,306        26.2     299,835        27,138        36.3

Debt securities

     117,299        10,067        34.4     89,023        6,859        30.9     88,792        7,946        35.9

Loans to customers/financial institutions

     231,403        15,835        27.4     235,156        16,433        28.0     208,369        19,191        36.9

Other assets

     17,449        11        0.3     33,162        14        0.2     2,674        0        0.0

Total non interest-earning assets

     104,078        —          0.0     91,683          —        0.0     110,999        —          0.0

Total Assets

     470,229        25,913          449,023        23,306          410,834        27,138     

Total interest-bearing liabilities

     204,229        9,429        18.5     190,572        6,896        14.5     166,669        9,168        22.1

Savings accounts

     77,761        431        2.2     80,302        232        1.2     65,377        329        2.0

Time deposits

     120,248        8,510        28.4     94,901        5,881        24.9     85,480        7,697        36.1

Debt securities issued

     3,007        136        18.1     6,724        638        38.1     8,374        1,037        49.7

Other liabilities

     3,214        352        43.9     8,645        145        6.7     7,438        106        5.7

Total non-interest-bearing liabilities

     270,448        —          0.0     267,385        —          0.0     250,821        —          0.0

Total liabilities and equity

     474,678        9,429        8.0     457,957        6,896        6.0     417,490        9,168        8.8

NIM - AR$

           18.1           18.4           24.0

Spread - AR$

           9.9           11.6           14.2

 

     BBVA ARG Consolidated  

Assets & Liabilities Performance - Foreign Currency

In millions AR$. Rates and spreads in annualized  %

   3Q20     2Q20     1Q20  
   Average
Balance
     Interest
Earned/Paid
    Average
Real Rate
    Average
Balance
     Interest
Earned/Paid
     Average
Real Rate
    Average
Balance
     Interest
Earned/Paid
     Average
Real Rate
 

Total interest-earning assets

     41,987        209       2.0     53,503        746        5.6     57,388        783        5.5

Debt securities

     1,308        (270     (82.9 %)      4,330        112        10.4     7,930        158        8.0

Loans to customers/financial institutions

     34,966        479       5.5     44,484        633        5.7     47,840        624        5.2

Other assets

     5,714        0       0.0     4,689        1        0.1     1,618        1        0.2

Total non interest-earning assets

     109,885        —         —         100,949        —          —         96,841        —          —    

Total Assets

     151,872        209         154,452        746          154,229        783     

Total interest-bearing liabilities

     105,809        42       0.2     104,030        64        0.2     107,872        102        0.4

Savings accounts

     86,380        1       0.0     83,563        2        0.0     86,253        2        0.0

Time deposits and Investment accounts

     18,786        40       0.9     18,982        54        1.1     20,395        67        1.3

Other liabilities

     642        0       0.2     1,486        9        2.4     1,224        33        10.7

Total non-interest-bearing liabilities

     41,615          —         41,488           —         39,701           —    

Total liabilities and equity

     147,424        42       0.1     145,519        64        0.2     147,573        102        0.3

NIM - Foreign currency

          1.6           5.1           4.8

Spread - Foreign currency

          1.8           5.3           5.1

Net fee income

 

Net Fee Income    BBVA ARG Consolidated      Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20      2Q20      3Q19      QoQ     YoY  

Net Fee Income

     3,005        3,347        2,247        (10.2 %)      33.7

Fee Income

     6,269        6,572        6,758        (4.6 %)      (7.2 %) 

Linked to liabilities

     2,539        2,588        3,490        (1.9 %)      (27.2 %) 

From credit cards

     2,665        3,049        2,174        (12.6 %)      22.6

Linked to loans

     327        274        364        19.5     (10.2 %) 

From insurance

     317        327        329        (3.2 %)      (3.9 %) 

From foreign trade and foreign currency transactions

     338        261        355        29.3     (4.9 %) 

Other fee income

     83        73        44        13.0     86.9

Fee expenses

     3,265        3,225        4,511        1.2     (27.6 %) 

In 3Q20 net fee income fell 10.2% or $342 million compared to 2Q20, and grew 33.7% or $758 million compared to 3Q19.

Fee income in 3Q20 totaled $6.3 billion, contracting 4.6% QoQ. This is explained by fees from credit card consumption received during 2Q20, which more than offset the increase in fees related to foreign trade and foreign currency transactions which grew 29.3%, and those linked to loans, which increased 19.5% during the period.

Fee expenses increased 1.2% compared to 2Q20 and contracted 27.6% when compared to 3Q19. Quarterly increase is explained by a surge in activity.

If fees from credit card consumption received in 2Q20 were excluded, net fee income and fee income in 3Q20 would have increased 27.7% and 12.4% respectively QoQ.

 

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Net income from measurement of financial instruments at fair value and foreign exchange and gold gains/losses

 

Net Income from financial instruments at fair value (FV) through P&L    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Net Income from financial instruments at FV through P&L

     886       1,359       2,339       (34.8 %)      (62.1 %) 

Income from government securities

     812       1,159       1,454       (29.9 %)      (44.1 %) 

Income from private securities

     (57     (107     (3     46.8     n.m  

Interest rate swaps

     18       23       285       (22.0 %)      (93.7 %) 

Gains from foreign currency forward transactions

     99       2       654       n.m       (84.9 %) 

Income from debt and equity instruments

     11       18       (51     (38.1 %)      121.3

Other

     3       263       —         (98.8 %)      N/A  

In 3Q20, net income from financial instruments at Fair Value (FV) through P&L was $886 million, decreasing 34.8% or $473 million QoQ. This is explained by the lower LELIQ position during August and September.

 

Differences in quoted prices of gold and foreign currency    BBVA ARG Consolidated      Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20      3Q19      QoQ     YoY  

Foreign exchange and gold gains/(losses) (1)

     1,618       1,609        5,385        0.5     (70.0 %) 

From foreign exchange position

     (195     318        346        (161.3 %)      (156.4 %) 

Income from purchase-sale of foreign currency

     1,813       1,291        5,039        40.4     (64.0 %) 

Net income from financial instruments at FV through P&L (2)

     99       2        654        n.m       (84.9 %) 

Income from foreign currency forward transactions

     99       2        654        n.m       (84.9 %) 

Total differences in quoted prices of gold & foreign currency (1) + (2)

     1,716       1,611        6,039        6.5     (71.6 %) 

In 3Q20, the total differences in quoted prices of gold and foreign currency showed profit for $1.7 billion, growing 6.5% or $105 million compared with 2Q20, due to an increase in results from purchase and sale of foreign currency, derived from a surge in activity.

Other operating income

 

Other operating income    BBVA ARG Consolidated      Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20      2Q20      3Q19      QoQ     YoY  

Operating Income

     1,500        1,230        1,563        21.9     (4.0 %) 

Rental of safe deposit boxes (1)

     259        278        210        (6.6 %)      23.5

Adjustments and interest on miscellaneous receivables (1)

     521        336        449        55.3     16.0

Punitive interest (1)

     1        17        88        (97.1 %)      (99.4 %) 

Loans recovered

     239        178        231        34.8     3.8

Fee income from credit and debit cards (1)

     58        44        219        33.8     (73.3 %) 

Other Operating Income(2)

     421        378        442        11.3     (4.9 %) 

 

(1)

Included in the efficiency ratio calculation

(2)

Includes some of the concepts used in the efficiency ratio calculation

In 3Q20 other operating income totaled $1.5 billion, growing 21.9% or $270 million QoQ, mainly explained by an increase in adjustments and interest on miscellaneous receivables, where interests received from the Government for zero rate credit lines are recorded, and also thanks to a responsive risk management that enabled credit recovery.

 

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Operating expenses

Personnel benefits and Administrative expenses

 

Personnel Benefits and Administrative Expenses    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Total Personnel Benefits and Administrative Expenses

     8,943       8,394       10,173       6.5     (12.1 %) 

Personnel Benefits (1)

     4,583       4,269       5,249       7.3     (12.7 %) 

Administrative expenses (1)

     4,360       4,124       4,924       5.7     (11.5 %) 

Travel expenses

     28       16       49       68.1     (43.9 %) 

Administrative expenses

     327       404       378       (18.9 %)      (13.5 %) 

Security services

     165       227       154       (27.0 %)      7.3

Fees to Bank Directors and Supervisory Committee

     16       7       5       135.9     215.9

Other fees

     231       164       246       40.6     (6.2 %) 

Insurance

     59       39       47       49.1     24.8

Rent

     410       463       342       (11.4 %)      20.0

Stationery and supplies

     9       20       23       (56.6 %)      (61.9 %) 

Electricity and communications

     233       218       225       7.0     3.3

Advertising

     185       137       190       35.2     (2.5 %) 

Taxes

     992       1,014       1,053       (2.2 %)      (5.8 %) 

Maintenance costs

     504       517       410       (2.4 %)      23.1

Armored transportation services

     581       343       1,282       69.2     (54.7 %) 

Other administrative expenses

     619       556       519       11.5     19.3

Headcount*

     6,065       6186       6323       (121     (258

BBVA (Bank)

     5,968       6,090       6,225       (122     (257

Associates (2)*

     97       96       98       1       (1

Total branches

     247       247       251       —         (4

Efficiency ratio

     66.1     54.2     25.4     1,190  bps      4,068  bps 

Accumulated Efficiency Ratio

     58.0     54.7     43.9     337  bps      1,416  bps 

Efficiency ratio - Excl. Inflation adjustment

     49.1     42.8     16.4     631  bps      3,279  bps 

Accumulated Efficiency Ratio - Excl. Inflation adjustment

     46.2     41.8     33.8     436  bps      1,234  bps 

 

(1)

Concept included in the efficiency ratio calculation

(2)

Includes BBVA Asset Management Argentina S.A. and PSA & VWFS as of 3Q19

*

corresponds to total effective employees, net of temporary contract employees

During 3Q20, personnel benefits and administrative expenses totaled $8.9 billion, increasing 6.5% or $549 million QoQ, and decreasing 12.1% or $1.2 billion YoY.

Personnel benefits grew 7.3% or $3.1 billion compared to 2Q20, and decreased 12.7% or $666 million compared to 3Q19. This increase is mainly due to an increment in salaries, as a consequence of a collective bargaining agreement with labor unions on July 16, 2020. This agreement considers a 26% increase in four instalments (7% in January, 6% in April, 7% in July and 6% in October), with a review clause in November, 2020.

In 3Q20, administrative expenses grew 5.7% or $235 million QoQ, and contracted 11.5% or $564 million YoY. The quarterly increase is mainly explained by an increment in armored transportation services, derived from a surge in activity and increased FX market restrictions enforced in September, partially offset by savings in administrative services and rentals.

The accumulated efficiency ratio as of 3Q20 was 58.0%, above the 54.7% and the 43.9% reported in 2Q20 and 3Q19 respectively. The increase is explained by a higher percentage increment of the numerator (expenses) than the denominator (income), which has been mainly affected by the increase in financial expenses.

Excluding inflation adjustments included in the lines “Income from the monetary position” and “Net income from write-down of assets at amortized cost and at fair value through OCI”, the accumulated efficiency ratio as of 3Q20 would reach 46.2%.

 

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Other operating expenses

 

Other Operating Expenses    BBVA ARG Consolidated      Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20      2Q20     3Q19      QoQ     YoY  

Other Operating Expenses

     2,706        3,048       5,028        (11.2 %)      (46.2 %) 

Turnover tax

     1,562        1,790       2,633        (12.8 %)      (40.7 %) 

Inicial loss of loans below market rate

     108        100       239        7.5     (54.9 %) 

Contribution to the Deposit Guarantee Fund (SEDESA)

     165        154       190        7.5     (12.9 %) 

Interest on liabilities from financial lease

     90        82       94        9.2     (4.8 %) 

Other allowances

     265        (88     1,442        401.4     (81.6 %) 

Other operating expenses

     517        1,010       430        (48.8 %)      20.2

In 3Q20 other operating expenses contracted 11.2% or $342 million QoQ, and 46.2% or $2.2 billion YoY.

The quarterly contraction is mainly due to a reduction in Turnover tax, for the recognition of an advanced payment of this tax for 2021 in the City of Buenos Aires.

On the other hand, there is also a reduction in Other operating expenses as a consequence of the release of legal provisions.

Income from associates

This line reflects the results from non-consolidated associate companies. During 3Q20, a loss of $14 million has been reported, mainly due to the participation in BBVA Consolidar Seguros S.A., Rombo Compañía Financiera S.A., Interbanking S.A. and Play Digital S.A.

Income tax

Income tax expenses accumulated in the first nine months of 2020 totaled $5.8 billion, representing an accumulated effective rate of 39%, compared to an accumulated effective rate of 26% as of 3Q19. The increment in such rate compared to the regulatory 30% is based on differences between inflation adjustment regulations and BCRA regulations, changing the taxable base.

 

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Balance sheet and activity

Loans and other financing

 

Loans and other financing    BBVA ARG Consolidated     Chg (%)     Proforma (2)
 

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY     3Q20  

To the public sector

     —         13       1       (100.0 %)      (100.0 %)      —    

To the financial sector

     3,187       3,860       6,048       (17.4 %)      (47.3 %)      6,661  

Non-financial private sector and residents abroad

     258,647       269,567       289,413       (4.1 %)      (10.6 %)      244,162  

Non-financial private sector and residents abroad—AR$

     229,302       231,566       204,674       (1.0 %)      12.0     214,819  

Overdrafts

     19,754       33,510       24,012       (41.0 %)      (17.7 %)      19,754  

Discounted instruments

     29,807       25,748       21,262       15.8     40.2     29,807  

Mortgage loans

     15,888       16,678       17,303       (4.7 %)      (8.2 %)      15,888  

Pledge loans

     9,717       8,301       22,594       17.1     (57.0 %)      2,110  

Consumer loans

     26,120       25,701       32,636       1.6     (20.0 %)      26,047  

Credit cards

     90,350       81,560       69,763       10.8     29.5     90,350  

Receivables from financial leases

     1,507       1,419       2,414       6.2     (37.6 %)      1,272  

Other loans (1)

     36,160       38,650       14,690       (6.4 %)      146.1     29,592  

Non-financial private sector and residents abroad—Foreign Currency

     29,344       38,000       84,739       (22.8 %)      (65.4 %)      29,342  

Overdrafts

     3       2       15       21.8     (80.1 %)      3  

Discounted instruments

     2       18       8,808       (89.3 %)      (100.0 %)      2  

Mortgage loans

     —         208       212       (100.0 %)      (100.0 %)      —    

Credit cards

     1,547       1,394       3,315       11.0     (53.3 %)      1,547  

Receivables from financial leases

     166       254       390       (34.7 %)      (57.5 %)      166  

Loans for the prefinancing and financing of exports

     16,994       23,478       57,239       (27.6 %)      (70.3 %)      16,994  

Other loans (1)

     10,632       12,647       14,761       (15.9 %)      (28.0 %)      10,630  

% of total loans to Private sector in AR$

     88.7     85.9     70.7     275  bps      1,793  bps      88.0

% of total loans to Private sector in Foreign Currency

     11.3     14.1     29.3     (275 )bps      (1,793 )bps      12.0

% of mortgage loans with UVA adjustments (3)

     85.9     86.1     84.2     (20 )bps      166  bps      85.9

% of pledge loans with UVA adjustments (3)

     15.7     22.0     11.6     (629 )bps      417  bps      11.0

% of personal loans with UVA adjustments (3)

     21.3     29.9     42.9     (866 )bps      (2,170 )bps      21.3

% of loans with UVA adjustments over Total loans(3)

     4.3     4.8     6.7     (47 )pbs      (235 )pbs      4.0

Total loans and other financing

     261,834       273,440       295,462       (4.2 %)      (11.4 %)      250,823  

Allowances

     (10,914     (11,595     (14,374     5.9     24.1     (10,683

Total net loans and other financing

     250,920       261,845       281,088       (4.2 %)      (10.7 %)      240,140  

 

(1)

Includes IFRS adjustment.

 

(2)

Excludes consolidation with VWFS & PSA.

 

(3)

Excludes effect of accrued adjustments.

Private sector loans in 3Q20 totaled $258.6 billion, decreasing 4.1% or $10.9 billion QoQ, and 10.6% or $30.8 billion YoY.

Loans to the financial sector fell 17.4% QoQ, mainly because of the maturity of a loan.

Loans to the private sector in pesos decreased 1.0% in 3Q20, and grew 12.0% in the year. Loans to the private sector denominated in foreign currency fell 22.8% QoQ and 65.4% YoY, mainly driven by the contraction in demand of loans in foreign currency. These loans, measured in U.S. dollars, fell 29.3% and 79.1% QoQ and YoY respectively. The increase in the currency exchange rate versus the U.S. dollar was 8.1% QoQ and 79.5% YoY.

 

Loans and other financing    BBVA ARG Consolidated     Chg (%)     Proforma (2)
 

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY     3Q20  

Non-financial private sector and residents abroad - Retail

     143,622       133,841       145,823       7.3     (1.5 %)      135,942  

Mortgage loans

     15,888       16,885       17,516       (5.9 %)      (9.3 %)      15,888  

Pledge loans

     9,717       8,301       22,594       17.1     (57.0 %)      2,110  

Consumer loans

     26,120       25,701       32,636       1.6     (20.0 %)      26,047  

Credit cards

     91,898       82,954       73,078       10.8     25.8     91,898  

Non-financial private sector and residents abroad - Commercial

     115,025       135,726       143,590       (15.3 %)      (19.9 %)      108,220  

Overdrafts

     19,757       33,512       24,027       (41.0 %)      (17.8 %)      19,757  

Discounted instruments

     29,809       25,766       30,069       15.7     (0.9 %)      29,809  

Receivables from financial leases

     1,673       1,673       2,804       (0.0 %)      (40.4 %)      1,437  

Loans for the prefinancing and financing of exports

     16,994       23,478       57,239       (27.6 %)      (70.3 %)      16,994  

Other loans (1)

     46,792       51,297       29,451       (8.8 %)      58.9     40,222  

% of total loans to Retail sector

     55.5     49.7     50.4     588  bps      514  bps      55.7

% of total loans to Commercial sector

     44.5     50.3     49.6     (588 )bps      (514 )bps      44.3

 

(1)

Includes IFRS adjustment

(2)

Excludes consolidation with VWFS & PSA.

 

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Considering retail loans (mortgage, pledge, consumer and credit card loans), these have increased 7.3% QoQ and fell 1.5% YoY. In the quarter, the greatest increases are reflected in pledge loans and credit card loans (17.1% and 10.8% respectively), the latter boosted by Ahora 12 and Ahora 18 programs.

Commercial loans (including overdrafts, discounted instruments, receivables from financial leases, loans for the prefinancing and financing of exports, and other loans) fell 15.3% QoQ and 19.9% YoY. The quarterly decrease is mainly explained by a 41.0% decline in overdrafts, and a 27.6% decline in loans for the prefinancing and financing of exports. This was partially offset by a 15.7% increase in discounted instruments, and a 2.2% increase in company loans (or “PIV”, in other loans).

 

Market share - Private sector Loans    BBVA ARG     Chg (bps)  

In%

   3Q20     2Q20     3Q19     QoQ     YoY  

Private sector loans - Bank

     7.46     7.50     7.34     (4 )bps      12 bps  

Private sector loans - Consolidated*

     8.25     8.54     8.13     (29 )bps      12 bps  

Based on daily BCRA information. Capital balance as of the last day of each quarter.

 

*

Consolidates PSA, VWFS & Rombo

Asset quality

 

Asset Quality    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Commercial non-performing portfolio (1)

     471       1,433       5,293       (67.1 %)      (91.1 %) 

Total commercial portfolio

     89,907       113,501       136,889       (20.8 %)      (34.3 %) 

Commercial non-performing portfolio / Total commercial portfolio

     0.52     1.26     3.87     (74 )bps      (334 )bps 

Retail non-performing portfolio (1)

     2,601       2,871       4,412       (9.4 %)      (41.0 %) 

Total retail portfolio

     173,945       163,089       161,791       6.7     7.5

Retail non-performing portfolio / Total retail portfolio

     1.50     1.76     2.73     (27 )bps      (123 )bps 

Total non-performing portfolio (1)

     3,072       4,304       9,705       (28.6 %)      (68.3 %) 

Total portfolio

     263,852       276,590       298,680       (4.6 %)      (11.7 %) 

Total non-performing portfolio / Total portfolio

     1.16     1.56     3.25     (39 )bps      (208 )bps 

Allowances

     10,914       11,595       14,374       (5.9 %)      (24.1 %) 

Allowances /Total non-performing portfolio

     355.26     269.38     148.11     8,588  bps      20,71 5 bps 

Write offs

     5,899       5,303       2,030       11.2     190.6

Write offs / Total portfolio

     2.24     1.92     0.68     32 bps       156 bps  

Cost of Risk (CoR)

     1.37     4.27     9.31     (290 )bps      (794 )bps 

 

(1)

Non-performing loans include: all loans to borrowers classified as “Deficient Servicing (Stage 3)”, “High Insolvency Risk (Stage 4)”, “Irrecoverable” and/or “Irrecoverable for Technical Decision” (Stage 5) according to BCRA debtor classification system

In 3Q20, asset quality ratio or NPL (total non-performing portfolio / total portfolio) was 1.16%. This ratio was positively affected by the temporary flexibility in BCRA regulation regarding debtor classification during the COVID-19 pandemic, which extends grade periods in 60 days before a loan is classified as non-performing, and suspends the mandatory reclassification of clients that have an irregular performance with other institutions but a regular performance with the Bank.

The coverage ratio (allowances / total non-performing portfolio) increased to 355.26% in 3Q20, from 269.38% in 2Q20. This is explained by a decrease in non-performing loans, which is greater than the increase in allowances as a consequence of the implementation of impairment models, and the continuing effect of waivers enforced though BCRA regulation regarding debtor classification.

Cost of risk (loan loss allowances / average total loans) reached 1.37%, lower than the 4.27% recorded in 2Q20. This is mainly explained by an adequate evolution in credit quality, especially in the commercial portfolio.

 

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     BBVA ARG        
Analysis for the allowance of loan losses    Balance at
12/31/2019
     Stage 1     Stage 2     Stage 3     Monetary result
generated by allowances
    Balance at
09/30/2020
 

In millions AR$

Other financial assets

     277        3       —         1       (54     227  

Loans and other financing

     13,715        73       1,919       (2,434     (2,614     10,660  

Other debt securities

     1        (1     —         —         —      

Eventual commitments

     1,108        323       (50     (23     (187     1,171  

Total allowances

     15,101        398       1,869       (2,456     (2,855     12,058  

 

*

ECL: Expected credit loss

Note: to be consistent with Financial Statements, it must be recorded from the beginning of the year instead of the quarter

Allowances for the Bank in 3Q20 reflect expected losses driven by the adoption of the IFRS 9 standards as of January 1, 2020, except for debt instruments issued by the nonfinancial government sector which were temporarily excluded from the scope of such standard.

The financial statements of consolidated subsidiaries PSA and VWFS were prepared considering the financial reporting framework set forth by the BCRA for Group “B” financial institutions, without considering the model established in paragraph 5.5. “Impairment” of IFRS 9 for fiscal years commencing on and after January 1, 2021. As of October 2020, PSA and VWFS will be part of Group “C” financial institutions, keeping the accounting framework of Group “B” financial institutions.

Public sector exposure

 

Net Public Debt Exposure    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Treasury and Government securities

     25,115       19,150       24,567       31.1     2.2

Treasury and National Government

     25,115       19,150       24,535       31.1     2.4

National Treasury Public Debt in AR$

     25,111       10,610       11,893       136.7     111.2

National Treasury Public Debt in dollars

     3       (0     336       n.m       (99.1 %) 

National Treasury Public Debt USD-Linked

     —         8,541       12,306       (100.0 %)      (100.0 %) 

Provinces

     —         —         32       N/A       (100.0 %) 
Loans to the Public Sector                      N/A     N/A  

AR$ Subtotal

     25,111       10,610       11,925       136.7     110.6

USD Subtotal*

     3       8,541       12,642       (100.0 %)      (100.0 %) 

Total Public Debt Exposure

     25,115       19,150       24,567       31.1     2.2

B.C.R.A. Exposure

     111,868       120,125       82,437       (6.9 %)      35.7

Instruments

     92,869       83,235       73,331       11.6     26.6

LELIQs

     92,869       83,235       73,331       11.6     26.6

Loans to the B.C.R.A.

     —         12       —         (100.0 %)      N/A  

Repo

     18,999       36,890       9,106       (48.5 %)      108.6

B.C.R.A. - AR$

     18,999       36,890       9,106       (48.5 %)      108.6

%Public sector exposure (Excl. B.C.R.A.) / Total assets

     4.3     3.3     4.2    
98
 
bps 
    5 bps 

 

*

Includes USD-linked Treasury public debt in AR$

Public sector exposure (excluding BCRA) totaled $25.1 billion, growing 31.1% or $6.0 billion QoQ, and 2.2% or $548 million YoY.

It is important to mention that on July 17, 2020, the Bank participated in the voluntary swap offered by the National Treasury, and swapped the whole of its remaining position (equivalent to 60% of its original position) in U.S. dollar linked notes (LELINK) in exchange of a bundle of sovereign bonds in pesos adjusted by inflation (BONCER) maturing in 2023 and 2024.

Short-term liquidity is allocated in BCRA instruments, which grew 11.6% or $9.6 billion compared to 2Q20, and 26.6% or $19.5 billion compared to 3Q19.

Exposure to the public sector (excluding BCRA) represents 4.3% of total assets.

 

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Deposits

 

Total Deposits    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Total deposits

     399,607       401,833       375,088       (0.6 %)      6.5

Non-financial Public Sector

     5,929       5,882       3,610       0.8     64.2

Financial Sector

     550       323       510       70.4     7.8

Non-financial private sector and residents abroad

     393,128       395,629       370,968       (0.6 %)      6.0

Non-financial private sector and residents abroad - AR$

     279,409       273,341       208,813       2.2     33.8

Checking accounts

     84,301       80,970       57,938       4.1     45.5

Savings accounts

     72,204       84,851       50,358       (14.9 %)      43.4

Time deposits

     101,542       101,585       96,417       (0.0 %)      5.3

Investment accounts

     18,113       2,119       —         n.m       N/A  

Other

     3,248       3,815       4,100       (14.9 %)      (20.8 %) 

Non-financial private sector and res. abroad - Foreign Currency

     113,720       122,288       162,155       (7.0 %)      (29.9 %) 

Checking accounts

     23       19       25       25.2     (6.4 %) 

Savings accounts

     95,643       100,872       137,291       (5.2 %)      (30.3 %) 

Time deposits

     15,612       18,647       21,765       (16.3 %)      (28.3 %) 

Other

     2,441       2,750       3,074       (11.2 %)      (20.6 %) 

% of total portfolio in the private sector in AR$

     71.1     69.1     56.3     19 8 bps      1,47 8 bps 

% of total portfolio in the private sector in Foregin Currency

     28.9     30.9     43.7     (19 8) bps      (1,47 8)bps 

% of time deposits with UVA adjustments

     1.0     2.1     2.7     (10 4)bps      (168 )bps 

During 3Q20, total deposits were $399.6 billion, recording a slight decline of 0.6% or $2.2 billion QoQ, and growing 6.5% or $24.5 billion YoY.

Private sector deposits in 3Q20 were $393.1 billion, declining 0.6% or $2.5 billion QoQ, and increasing 6.0% or $22.2 billion YoY.

Private non-financial sector deposits in pesos totaled $279.4 billion, growing 2.2% or $6.1 billion QoQ, and 33.8% or $70.6 billion YoY. This is mainly explained by the strong growth in time deposits, especially of Investment accounts (transferable investment certificates with early withdrawal option), and to a lesser extent, by the growth in checking accounts. This offsets the quarterly fall in saving accounts, partially explained by a reclassification of money market mutual fund operations, previously considered in special checking accounts (included in saving accounts) and now included in checking accounts, abiding BCRA regulation in Communication “A” 7064.

Private non-financial sector deposits in foreign currency expressed in pesos fell 7.0% or $8.6 billion QoQ and 29.9% or $48.4 billion YoY. Measured in U.S. dollars, these deposits fell 14.0% QoQ and 60.9% YoY. Towards the end of the quarter, U.S. dollar deposit withdrawal increased as a consequence of the enhanced restrictions over the FX market. After operability was reestablished under new BCRA regulations, foreign currency deposit withdrawal slowed down, returning to levels observed during previous months.

 

Private Deposits    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Non-financial private sector and residents abroad

     393,128       395,629       370,968       (0.6 %)      6.0

Sight deposits

     257,861       273,277       252,786       (5.6 %)      2.0

Checking accounts

     84,324       80,989       57,963       4.1     45.5

Savings accounts

     167,848       185,723       187,649       (9.6 %)      (10.6 %) 

Other

     5,689       6,565       7,174       (13.3 %)      (20.7 %) 

Time deposits

     135,268       122,351       118,182       10.6     14.5

Time deposits

     117,154       120,233       118,182       (2.6 %)      (0.9 %) 

Investment accounts

     18,113       2,119       —         n.m       N/A  

% of sight deposits over total deposits

     66.1     69.6     68.5     (34 0)bps      (23 4)bps 

% of time deposits over total deposits

     33.9     30.4     31.5     34 0 bps      23 4 bps 

As of 3Q20, the Bank’s transactional deposits (checking accounts and savings accounts) represented 63.1% of total non-financial private deposits, totaling $252.2 billion, versus 66.4% in 2Q20.

 

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Market Share - Private sector Deposits    BBVA ARG     Chg (%)  

In%

   3Q20     2Q20     3Q19     QoQ     YoY  

Private sector Deposits - Consolidated*

     6.48     6.50     7.14     (2 )bps      (66 )bps 

Based on daily BCRA information. Capital balance as of the last day of each quarter.    

 

*

Consolidates PSA, VWFS & Rombo    

Other sources of funds

 

Other sources of funds    BBVA ARG Consolidated      Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20      2Q20      3Q19      QoQ     YoY  

Other sources of funds

     112,135        110,457        116,138        1.5     (3.4 %) 

Central Bank

     30        121        15        (75.5 %)      97.9

Banks and international organizations

     —          —          6,438        N/A       N/A  

Financing received from local financial institutions

     3,327        5,610        7,306        (40.7 %)      (54.5 %) 

Corporate bonds

     4,101        4,525        11,935        (9.4 %)      (65.6 %) 

Equity

     104,677        100,202        90,444        4.5     15.7

In 3Q20, other sources of funds totaled $112.1 billion, growing 1.5% or $1.7 billion QoQ, and falling 3.4% or $4.0 billion YoY.

The 4.5% or $4.5 billion increase in Equity is explained by the 3Q20 results, which more than offset the repurchase of corporate bonds during the quarter.

4Q19 equity evolution can be observed in the table below, going from historical values to current values through the implementation of IAS 29 rule.

 

Equity - Evolution

In millions AR$

   4Q19  

Equity before IAS 29 application

     65,317  

Total impact of IAS 29 application (1)

     14,041  

Equity in terms of 12/31/2019 units

     77,934  

Adjustment from reexpression of equity at current units 09/30/2020 (2)

     17,371  

Equity in terms of 09/30/2020 units

     95,305  

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

     31,412  

Liquid assets

 

Total Liquid Assets    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Total liquid assets

     263,914       256,152       231,512       3.0     14.0

Cash and deposits in banks

     133,178       121,139       128,736       9.9     3.5

Debt securities at fair value through profit or loss

     5,922       10,383       6,997       (43.0 %)      (15.4 %) 

Government securities

     166       0       222       n.m       (25.4 %) 

Liquidity bills of B. C. R. A.

     5,756       10,382       6,775       (44.6 %)      (15.0 %) 

Net REPO transactions

     18,999       36,890       9,106       (48.5 %)      108.6

Other debt securities

     105,815       87,740       86,673       20.6     22.1

Government securities

     18,702       14,888       20,036       25.6     (6.7 %) 

Liquidity bills of B. C. R. A.

     87,113       72,853       66,557       19.6     30.9

Liquid assets / Total Deposits

     66.0     63.7     61.7     230 pbs       432 pbs  

In 3Q20, liquid assets were $263.9 billion, increasing 3.0% or $7.8 billion compared to 2Q20, and 14.0% or $32.4 billion compared to 3Q19.

During the quarter, growth in government securities and LELIQ stands out with a 25.6% and a 19.6% increase respectively, while net REPO transactions decreased by 48.5%.

In 3Q20, the liquidity ratio (liquid assets / total deposits) reached 66.0%. Liquidity ratio in local and foreign currency reached 58.1% and 86.0% respectively.

 

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Solvency

 

Minimum capital requirement    BBVA ARG Consolidated     Chg (%)  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Minimum capital requirement

     33,547       34,147       34,848       (1.8 %)      (3.7 %) 

Credit risk

     24,808       25,231       26,780       (1.7 %)      (7.4 %) 

Market risk

     278       618       457       (55.0 %)      (39.2 %) 

Operational risk

     8,461       8,298       7,611       2.0     11.2

Integrated Capital - RPC (1)*

     95,432       91,391       84,070       4.4     13.5

Ordinary Capital Level 1 ( COn1)

     107,852       103,292       91,326       4.4     18.1

Deductible items COn1

     (14,982     (14,578     (10,071     2.8     48.8

Additional Capital Level 2 (COn2)

     2,562       2,677       2,815       (4.3 %)      (9.0 %) 

Excess Capital

          

Integration excess

     61,885       57,244       49,222       8.1     25.7

Excess as % of minimum capital requirement

     184.5     167.6     141.25     1,690  bps      4,325 bps  

Risk-weighted assets (RWA, according to B.C.R.A. regulation) (2)

     410,318       417,656       425,843       (1.8 %)      (3.6 %) 

Regulatory Capital Ratio (1)/(2)

     23.3     21.9     19.7     140  bps      360  bps 

TIER I Capital Ratio (Ordinary Capital Level 1/ RWA)

     22.6     21.2     19.1     140  bps      350  bps 

 

*

RPC includes 100% of quarterly results    

BBVA Argentina continues to show strong solvency indicators on 3Q20. Capital ratio reached 23.3%. Tier 1 ratio was 22.6% and capital excess over regulatory requirement was $61.9 billion.

These ratios improved in spite of BCRA regulation: Communication “A” 6940, regarding exposure to individuals and companies purchasing touristic services abroad in instalments, and Communication “A” 7018, regarding clients with agricultural activity that stockpile more than 5% of their annual harvest.

 

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Other events

Relevant Events

 

   

As of September 3, 2020, BBVA Argentina’s Board of Directors has decided to make front line management modifications, acknowledging the retirement of Mr. Gustavo Siciliano, Engineering & Data director, and as a consequence the designation of Mr. Leandro Alvarez at said position.

 

   

As of September 29, 2020, BBVA Argentina has been notified of a class action lawsuit filed by the Asociación por la Defensa de Usuarios y Consumidores (ADUC). This Association, which represents consumers, questions the interest rates applicable to time deposits with automatic renewal option.

 

   

As of October 8, 2020, the Board has called for a General Extraordinary Shareholders Meeting to be held on November 20, 2020, to consider the distribution of a complementary cash dividend for the sum of $12 billion, through the partial write-off of the Optional Reserve for future distribution of earnings, with the aim of increasing the $2.5 billion cash dividend approved by the General Shareholders Meeting on May 15, 2020, subject to BCRA approval.

 

   

As of November 20, 2020, the General Extraordinary Shareholders Meeting has approved the distribution of a complementary cash dividend for the sum of $12 billion or a lower amount to be determined by the BCRA. This distribution is subject to BCRA approval.

Corporate bond payments and issuances during 3Q20

 

   

As of August 10, 2020, the Bank completed quarterly coupon payments on corporate bond Class 25 for $37.4 million.

 

   

As of August 28, 2020, the Bank completed quarterly coupon and capital payments on corporate bond Class 27 for $97.1 million and $1.09 billion respectively.

 

   

As of September 28, 2020, the Bank completed quarterly coupon payments on corporate bond Class 24 for $46.7 million.

Digital transformation

Digitalization continued to accelerate during the third quarter of 2020. Active digital clients reached 1.9 million with a 71% penetration over total active clients (2.7 million), versus a penetration of 64.7% in 3Q19.

Active mobile clients were 1.6 million, representing a 59% penetration in 3Q20, versus a penetration of 50.3% in 3Q19.

On 3Q20, retail digital sales measured in units reached 80% of total sales (vs. 64% in 3Q19) and represent 69% of the Banks total sales measured in monetary value (vs. 54% in 3Q19).

Digital3 and mobile3 transactions increased 72% in 3Q20 YoY. For the first time, the use of these channels outweighs that of traditional ones, revealing the digital transformation.

Moreover, digital branches have been launched in October 2020. These combine several features between human capital and structure facilities to promote client self-service, aiming to digitalize and migrate clients to remote channels. Strategic pillars of these branches are: the mixed roles of customer service staff oriented to guide the client, the availability of digital tools, the limitation of teller service for specific transactions, and the availability of a customer service protocol where the importance of each role and client dynamics are detailed.

 

3 

Includes online banking and mobile, Net Cash online y mobile, and non-bank correspondents.

 

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COVID 19 – September 2020 update

Financing (including regulatory)

Retail

 

   

Penalties on unpaid checking account charges, and closure and disabling of accounts, were suspended until December 31, 2020.

 

   

Credits on cash withdrawal costs at own and other banks’ ATMs will continue until December 31, 2020.

 

   

Loan maturities until December 31, 2020 are included for the deferral on unpaid instalments on mortgage, pledge and consumer loans.

Commercial

 

   

As of September 30, 2020, BBVA Argentina has disbursed more than $37 billion in loans to more than 10.400 SMEs, to be allocated in payroll payments, discounted documents and working capital, at a 24% nominal annual rate.

 

   

BBVA Argentina has granted a special credit line for payroll payments for SMEs, which includes a 24% nominal annual rate, in a 12 month period of maturity, and a grace period of 3 months, backed by the Fondo de Garantías Argentino (FoGAr) warrants. On this line, BBVA Argentina has disbursed more than $1.8 billion as of September 30, 2020.

 

   

The Bank is working on credit lines for self-employed individuals at a Zero rate, promoted by the National Government. As of September 30, 2020, the Bank has disbursed more than $7 million on this line. Additionally, “Culture zero rate” credits have been granted to individuals with activity in the cultural sector, for more than $11 million as of September 30, 2020.

 

   

A “Credit at subsidized rate” line has been launched for any company who requests it (as long as they are part of the eligible beneficiaries selected by the Federal Administration of Public Revenues or AFIP). As of September 30, 2020, more than $180 million have been granted on this line.

 

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Main Regulatory Changes

Foreign Currency Global Net Position (“PGNME”). Public security voluntary exchange. (Communication “A” 7093, 08/27/2020). The BCRA grants the same treatment, in terms of PGNME, to securities received in exchange for USD denominated National treasury bonds, as the increase in position enables an increment of up to 30% of the net positive position.

Credit card payment deadlines. (Communication “A” 7095, 08/27/2020). The BCRA stated that financial institutions must automatically rollover unpaid credit card balances up to one year (between September 1st and September 30, 2020), with a 3 month grace period, 9 monthly equal consecutive instalments, at a nominal interest rate of 40% (previously 43%, prev. 49%, and prev. 55% until April 1, 2020).

Non-financial public sector financing. (Communication “A” 7097, 08/27/2020). The BCRA stated on the limits on non-financial public sector financing, that the unutilized quota of the basic global limit – established for the total of granted financing to non-financial public sector in 75% of the regulatory capital (known as Responsabilidad Patrimonial Computable or RPC), can be re-allocated to the sovereign non-financial public sector (previously 50% of the RPC).

PGNME. USD-linked time deposits. (Communication “A” 7101, 09/10/2020). The BCRA determines that export prefinancings for which its foreign currency funding is matched by liabilities linked to the evolution of such currency (for the same amount), can be deducted from the calculation of the cash position within the Net positive Global Currency Position. USD-linked liabilities that exceed that position are not to be considered in such deduction.

Foreign currency savings account opening. Income requirements. (Communication “A” 7105, 09/15/2020). The BCRA states that prior to the opening of a foreign currency savings account, financial institutions must collect evidence that the client has an income or assets consistent with foreign currency savings, not being admissible that he or she should be a beneficiary of a social plan or program.

Foreign currency purchase restrictions. (Communication “A” 7106, 09/15/2020). As of September 16, 2020, the BCRA stated: As of September 1, 2020, debit and credit card consumption abroad with debit on local accounts in pesos, and foreign currency purchased by individuals for the payment of obligations between residents, including payments of foreign currency consumptions through credit cards, will be deducted as of the following month, from the USD 200 cap. Those who are beneficiaries of credit support related to the pandemic will not be able, until the total cancellation of credits or while the support stands, to have access to the foreign exchange market or sell securities that settle in foreign currency, or transfer them to custodians abroad. Those with programmed capital amortizations due between October 15, 2020 and March 31, 2021, related to financial debts abroad or public securities denominated in foreign currency, must present to the BCRA a detailed refinancing plan under certain criteria.

COVID-19 extended measures. (Communication “A” 7107. 09/17/2020). The BCRA extended until December 31, 2020, the regulation stating that financial institutions cannot charge fees for transactions done through ATMs (previously until June 30 and extended until September 30). It is also until that date that financial institutions cannot charge punitive interest over unpaid credits, and ratifies unpaid instalments deferral to maturity, considering accrual of a compensatory interest rate. This regulation does not include credit card financing. Regulation that concedes a 60 day waiver on late-payment periods for stages 1, 2 and 3 is also extended until December 31, 2020 (Communication “A” 6938).

Foreign currency account transfers modification. (Communication “A” 7112. 09/24/2020). The BCRA modifies Communication “A” 7105 stating that all transfers from foreign currency accounts will proceed without need of prior validation, also applicable for foreign currency saving accounts opening and crediting of funds in already activated accounts. (The mentioned regulation only enabled transfers abroad).

Minimum cash requirement. Ahora 12 program. (Communication “A” 7114. 09/24/2020). The BCRA decided to increase to 50% (previously 35%) the deduction from reserve requirements in pesos applicable on Ahora 12 program financings, for financing granted as of October 1, 2020.

 

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UVA loan instalment value freeze. (Decree 767/2020. 09/25/2020). Periods set on items 2°, 3°, 4° and 5° on Decree N° 319/20 are extended until January 31, 2021. This includes the fixing to March 2020 values of UVA mortgage and pledge loan instalments and the suspension of mortgage foreclosures.

LELIQ position reduction. (Communication “A” 7122. 10/01/2020). As of October 2, 2020, financial institutions must reduce in 20 percentage points their net excess position in LELIQ versus their monthly average of daily balances recorded in September 2020. To comply, they shall reduce the excess net position through the gradual maturity of the securities. Along this regulation but in line with it, the BCRA decided to increase the REPO rate from 19% t0 24%.

LELIQ rate modification and passive REPO BCRA rate. (Press release. 10/08/2020). The BCRA decided to increase to 27% the passive REPO BCRA rate (from 24% and previously 19%) and take the LELIQ rate to 37%. It also determined that companies can access the foreign exchange market 30 days prior to financial debt maturities to cancel capital and coupon payments. They can also have access when the pre-cancellation is done within the frame of a securities exchange restructuring process.

Time deposits minimum rate. (Communication “A” 7131. 10/08/2020). As of October 13, 2020, the BCRA increased the percentages applicable to the average rates of LELIQ used to set the minimum rates for time deposits of less than $1 million to 89.35% (previously 87%). Additionally, as of the same date, the coefficient that determines the fixed rate of pre-cancellation of UVA-linked time deposits (with early termination option) was increased to 0.7703.

Minimum cash requirements. Deduction exclusion. (Communication “A” 7132. 10/09/2020). The BCRA informed that for financings that are disbursed as of October 9, 2020, financial institutions will not be able to deduct from cash requirements financings granted to individuals or companies that (i) belong to activity sectors that are not eligible for the “Programa de Asistencia de Emergencia al Trabajo y la Producción” (ATP) social program benefits and/or (ii) have imported consumer goods after March 19, 2020, unless these were medical products and/or supplies.

Increase in REPO rate and decrease in LELIQ rate. (Press release. 10/15/2020). The BCRA decided to increase the one-day passive REPO nominal annual rate from 27% to 30%, implying an increment of three percentage points, and offer 7-day REPOs at a nominal annual rate of 33%. In line with this, the LELIQ rate was set at 36%.

Time deposits minimum rate. (Communication “A” 7139. 10/15/2020). The BCRA decided to increase, for time deposits granted as of October 16, 2020, the percentages applicable to the average rates of LELIQ used to set the minimum rates for time deposits of less than $1 million to 91.89% (previously 89.35%). For time deposits granted as of October 21, 2020, the increment goes up to 94.44% and the coefficient that determines the fixed rate of pre-cancellation of UVA-linked time deposits (with early termination option) was increased to 0.7917. This is equivalent to a 34% nominal annual rate for individuals with time deposits of less than $1 million and 32% for the rest.

New credit lines. (Communication “A” 7140. 10/15/2020). The BCRA stated that financial institutions shall grant, within the frame of the ATP social program created by the Decree N°332/2020- financing for a maximum limit equivalent to the amount resulting from the number of employees (F.931) multiplied by the minimum wage (Salario Mínimo Vital y Movil) plus a 20%, to the SMEs in a list provided by the Federal Administration of Public Revenues (AFIP), and that will be able to rely on a warrant to be arranged by FOGAR, and as of November 1, 2020, can be deducted of reserve requirements (40%).

Moreover, credit lines to SMEs are launched to (i) finance investment projects aimed for the purchase of capital assets and/or the construction of facilities necessary for the manufacturing of goods and/or services, at a 30% nominal annual rate; and (ii) for working capital and discounted instruments to SMEs at 35%. Financial institutions affected by this regulation must comprise under these financings, as of October 16, 2020 and until March 31, 2021, the equivalent to 7.5% of their non-financial private sector deposits in pesos (as a monthly average of daily balances of September 2020). For the financing of investment projects, this limit must be 30% of the 7.5% previously stated.

Prior approval for branch closure. (Communication “A” 7147. 10/22/2020). Financial institutions must, until March 31, 2021, require prior approval by the BCRA to proceed to the transfer or closure of branches.

 

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REPO rate. (Communication “C” 88436. 10/29/2020). The BCRA has increased the 1-day REPO rate from 30% to 31% and the 7-day REPO rate from 33% to 34.5%.

End of legal requirement in credit granting. (Communication “A” 7157. 11/05/2020). The BCRA revokes the requirement of granting credits to SMEs established in Communication “A” 7140 (ATP program) and the possibility of deducting them from reserve requirements. It states that financial institutions can only use for such deduction what is stated in item 1.5.6. of Reserve Requirement regulations on Credits at subsidized rate for Companies, granted as of November 6, 2020 (24% of credits granted at 27% nominal annual rate and 7% of credits granted at 33% nominal annual rate). Zero rate credits cannot be deducted from reserve requirements as of such date.

Fee increments. (Communication “A” 7158. 11/05/2020). The BCRA stated that until February 28, 2020, financial institutions cannot communicate fee increases greater than 9% for January 2021, and 9% for February 2021 for fees on i) Savings accounts: additional debit card issuance; replacement of stolen or lost debit cards; ATM use (other than the Bank’s, the Bank network’s, local or abroad) and cash withdrawal services at points of purchase. Ii) Credit cards: issuance services, renewal, maintenance; replacement or reprinting of stolen or lost cards and additional cards.

Fees. Further remarks. (Communication “B” 12089. 11/09/2020). The BCRA clarifies that the fee increments mentioned in Communication “A” 7158 can be applied only 60 days after being informed to clients. This implies that the nearest date of application of such increments are the first days of February 2021. Consequently, monthly or other periodicity charges will be able to be reflected completely as of March.

Time deposits minimum rate. Modification. (Communication “A” 7160. 11/12/2020). The BCRA decided to increase, for time deposits granted as of November 13, 2020, the percentages applicable to the average rates of LELIQ used to set the minimum rates for time deposits of less than $1 million to 102.78% (previously 94.44%). For the rest of time deposits this percentage will be 94.44% (prev. 88.89%). For time deposits granted as of November 18, 2020, for time deposits of less than $1 million, the applicable rate over LELIQ will be 97.37% (89.48% for the rest).

The coefficient that determines the fixed rate of pre-cancellation of UVA-linked time deposits (with early termination option) granted as of November 13, 2020, was increased to0.8472 (from 0.7917). For the ones granted as of November 18, 2020, the coefficient will be 0.8026.

Additionally, as of November 13, 2020, financial institutions that keep time deposits to the non-financial private sector in pesos below 10% of total deposits in pesos (monthly average of daily balances of the previous month, considering only capital balances without interests or adjustments) will not be able to: (i) buy LELIQ for their excess position (ii) do 7-day REPOs with the BCRA.

SMEs productive investment credit lines. Reserve requirements. (Communication “A” 7161. 12/11/2020). The BCRA states that as of November 1, 2020, it grants a reduction in the average reserve requirement in pesos for an amount of 14% of financings considered in item 4.1. of “SMEs productive investment credit line” regulation, granted at a nominal annual rate of up to 30%. As of November 13, 2020, financings to SMEs that have imported consumer goods after March 19, 2020, can be considered within this credit line.

Increase in REPO and LELIQ rates. (Communication “C” 88548. 11/13/2020). The BCRA has increased the one-day passive REPO rate from 31% to 32% and the 7-day rate from 34.5% to 36.5% Additional to this regulation, the BCRA decided to increase the LELIQ rate from 37% to 38%.

Layoff ban. Extension. (Decree 761/2020 and Decree 891/2020. 09/24/2020 and 11/16/2020). The Executive Power extends the ban on wrongful dismissals and layoffs for the period of 60 days counted as of the expiry period on the Decree N° 761/20.

 

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Glossary

Active clients: holders of at least one active product. An active product is in most cases a product with at least “one movement” in the last 3 months, or a minimum balance.

Cost of Risk (accumulated): Year to date accumulated loan loss allowances / Average total loans. Average total loans: average between previous year-end Total loans and other financing and current period Total loans and other financing.

Cost of Risk (quarterly): Current period Loan loss allowances / Average total loans. Average total loans: average between previous quarter-end Total loans and other financing and current period Total loans and other financing.

Coverage ratio: Quarterly allowances under the Expected Credit Loss model / total non-performing portfolio

Digital clients: we consider a customer to be an active user of online banking when they have been logged at least once within the last three months using the internet or a cell phone and SMS banking.

Efficiency ratio (excl. inflation adjustments, accumulated): Accumulated (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / Accumulated (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI (excl. Monetary position adjustment) + Foreign exchange and gold gains + Other net operating income)

Efficiency ratio (excl. inflation adjustments, quarterly): (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI (excl. Monetary position adjustment) + Foreign exchange and gold gains + Other net operating income)

Efficiency ratio (accumulated): Accumulated (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / Accumulated (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI + Foreign exchange and gold gains + Other net operating income+ Income from net monetary position)

Efficiency ratio (quarterly): (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI + Foreign exchange and gold gains + Other net operating income+ Income from net monetary position)

Liquidity Ratio: (Cash and deposits in banks + Debt securities at fair value through P&L (Excl. Private securities) + Net REPO transactions + Other debt securities (Excl. Private securities)) / Total Deposits

Mobile clients: customers who have been active in online banking at least once in the last three months using a mobile device.

Net Interest Margin (NIM) – (quarterly): Quarterly Net Interest Income / Average quarterly interest-earning assets

Public Sector Exposure (excl. BCRA): (National and Provincial Government public debt + Loans to the public sector + REPO transactions) / Total Assets

ROA (accumulated): Attributable Net Income of the period / Total Average Assets. Total Average Assets is calculated as the average between total assets on December of the previous year and total assets in the current period, expressed in local currency.

 

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ROA (quarterly): Attributable Net Income of the period / Total Average Assets. Total Average Assets is calculated as the average between total assets on the previous quarter-end and total assets in the current period, expressed in local currency

ROE (accumulated): Attributable Net Income of the period / Average Equity. Average Equity is calculated as the average between equity in December of the previous year and equity in the current period, expressed in local currency.

ROE (quarterly): Attributable Net Income of the period / Average Equity. Average Equity is calculated as the average between equity on the previous quarter end and equity in the current period, expressed in local currency.

Spread: (Quarterly Interest Income / Quarterly average Interest-earning Assets) – (Quarterly Interest Expenses / Quarterly average interest-bearing liabilities)    

 

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Balance sheet

 

Balance Sheet    BBVA ARG Consolidated     Chg (%)     Proforma (1)
3Q20
 

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Assets

            

Cash and deposits in banks

     133,178       121,139       128,736       9.9     3.5     133,017  

Cash

     39,357       54,332       38,608       (27.6 %)      1.9     39,357  

Financial institutions and correspondents

     93,821       66,807       90,128       40.4     4.1     93,660  

B.C.R.A

     89,619       62,348       80,830       43.7     10.9     89,571  

Other local and foreign financial institutions

     4,202       4,459       9,299       (5.8 %)      (54.8 %)      4,088  

Debt securities at fair value through profit or loss

     6,038       10,502       7,074       (42.5 %)      (14.7 %)      6,038  

Derivatives

     1,411       1,138       3,563       24.0     (60.4 %)      1,411  

Repo transactions

     18,999       36,890       9,106       (48.5 %)      108.6     18,999  

Other financial assets

     12,427       6,865       11,197       81.0     11.0     12,357  

Loans and other financing

     250,920       261,845       281,088       (4.2 %)      (10.7 %)      240,140  

Non-financial public sector

     0       0       1       134.5     (40.5 %)      0  

B.C.R.A

     —         —         —         N/A       N/A       —    

Other financial institutions

     2,948       3,786       5,873       (22.1 %)      (49.8 %)      6,398  

Non-financial private sector and residents abroad

     247,971       258,058       275,215       (3.9 %)      (9.9 %)      233,742  

Other debt securities

     105,815       87,740       86,673       20.6     22.1     105,815  

Financial assets pledged as collateral

     14,539       11,572       11,342       25.6     28.2     14,538  

Current income tax assets

     5       10       1       (47.5 %)      n.m       5  

Investments in equity instruments

     1,764       1,943       2,562       (9.2 %)      (31.1 %)      1,764  

Investments in subsidiaries and associates

     1,323       1,323       442       0.0     199.5     3,368  

Property and equipment

     30,143       30,434       34,434       (1.0 %)      (12.5 %)      30,101  

Intangible assets

     1,295       1,149       1,085       12.7     19.4     1,294  

Deferred income tax assets

     5,732       5,685       2,121       0.8     170.2     5,284  

Other non-financial assets

     6,043       5,137       3,675       17.6     64.5     5,928  

Non-current assets held for sale

     203       203       203       —         (0.0 %)      203  

Total Assets

     589,836       583,575       583,301       1.1     1.1     580,262  

Liabilities

            

Deposits

     399,607       401,833       375,088       (0.6 %)      6.5     398,147  

Non-financial public sector

     5,929       5,882       3,610       0.8     64.2     5,929  

Financial sector

     550       323       510       70.4     7.8     610  

Non-financial private sector and residents abroad

     393,128       395,629       370,968       (0.6 %)      6.0     391,608  

Liabilities at fair value through profit or loss

     —         —         59       N/A       (100.0 %)      —    

Derivatives

     36       247       5,994       (85.5 %)      (99.4 %)      36  

Other financial liabilities

     38,630       30,424       43,185       27.0     (10.5 %)      38,075  

Financing received from the B.C.R.A. and other financial institutions

     3,357       5,489       13,759       (38.8 %)      (75.6 %)      580  

Corporate bonds issued

     4,101       4,525       11,935       (9.4 %)      (65.6 %)      2,026  

Current income tax liabilities

     2,878       3,486       7,159       (17.4 %)      (59.8 %)      2,782  

Provisions

     10,481       11,842       11,441       (11.5 %)      (8.4 %)      10,435  

Deferred income tax liabilities

     18       5       2       288.1     n.m       18  

Other non-financial liabilities

     24,038       23,508       20,843       2.3     15.3     23,464  

Total Liabilities

     483,145       481,358       489,465       0.4     (1.3 %)      475,562  

Equity

            

Share Capital

     613       613       613       —         0.0     613  

Non-capitalized contributions

     23,702       23,702       23,690       (0.0 %)      0.0     23,702  

Capital adjustments

     16,682       16,682       16,682       (0.0 %)      0.0     16,682  

Reserves

     88,759       88,759       53,613       (0.0 %)      65.6     88,759  

Retained earnings

     (29,038     (29,038     (16,435     0.0     (76.7 %)      (29,038

Other accumulated comprehensive income

     (5,070     (6,710     (10,211     24.5     50.4     (5,070

Income for the period

     9,029       6,194       22,492       45.8     (59.9 %)      9,029  

Equity attributable to owners of the Parent

     104,677       100,202       90,444       4.5     15.7     104,677  

Equity attributable to non-controlling interests

     2,014       2,015       3,392       (0.1 %)      (40.6 %)      22  

Total Equity

     106,691       102,217       93,836       4.4     13.7     104,699  

Total Liabilities and Equity

     589,836       583,575       583,301       1.1     1.1     580,262  

 

(1)

Excludes consolidation with PSA and VWFS.

 

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Balance sheet – Last five quarters

 

Balance Sheet

   BBVA ARG Consolidated  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     1Q20     4Q19     3Q19  

Assets

          

Cash and deposits in banks

     133,178       121,139       166,212       191,088       128,736  

Cash

     39,357       54,332       42,343       57,138       38,608  

Financial institutions and correspondents

     93,821       66,807       123,868       133,950       90,128  

B.C.R.A

     89,619       62,348       118,886       131,462       80,830  

Other local and foreign financial institutions

     4,202       4,459       4,983       2,488       9,299  

Debt securities at fair value through profit or loss

     6,038       10,502       10,277       5,050       7,074  

Derivatives

     1,411       1,138       2,445       3,726       3,563  

Repo transactions

     18,999       36,890       3,632       —         9,106  

Other financial assets

     12,427       6,865       21,092       5,736       11,197  

Loans and other financing

     250,920       261,845       247,853       238,801       281,088  

Non-financial public sector

     0       0       1       1       1  

B.C.R.A

     —         —         13       21       —    

Other financial institutions

     2,948       3,786       5,739       6,227       5,873  

Non-financial private sector and residents abroad

     247,971       258,058       242,100       232,552       275,215  

Other debt securities

     105,815       87,740       73,460       55,248       86,673  

Financial assets pledged as collateral

     14,539       11,572       7,731       7,244       11,342  

Current income tax assets

     5       10       0       32       1  

Investments in equity instruments

     1,764       1,943       2,055       2,514       2,562  

Investments in subsidiaries and associates

     1,323       1,323       1,278       1,267       442  

Property and equipment

     30,143       30,434       31,005       31,883       34,434  

Intangible assets

     1,295       1,149       1,043       954       1,085  

Deferred income tax assets

     5,732       5,685       8,413       5,832       2,121  

Other non-financial assets

     6,043       5,137       4,860       5,223       3,675  

Non-current assets held for sale

     203       203       203       203       203  

Total Assets

     589,836       583,575       581,560       554,801       583,301  

Liabilities

          

Deposits

     399,607       401,833       372,041       359,514       375,088  

Non-financial public sector

     5,929       5,882       3,940       3,593       3,610  

Financial sector

     550       323       325       218       510  

Non-financial private sector and residents abroad

     393,128       395,629       367,775       355,703       370,968  

Liabilities at fair value through profit or loss

     —         —         —         710       59  

Derivatives

     36       247       376       3,758       5,994  

Other financial liabilities

     38,630       30,424       48,587       35,250       43,185  

Financing received from the B.C.R.A. and other financial institutions

     3,357       5,489       4,115       7,519       13,759  

Corporate bonds issued

     4,101       4,525       8,506       8,950       11,935  

Current income tax liabilities

     2,878       3,486       13,134       9,869       7,159  

Provisions

     10,481       11,842       12,789       13,143       11,441  

Deferred income tax liabilities

     18       5       —         —         2  

Other non-financial liabilities

     24,038       23,508       21,305       20,781       20,843  

Total Liabilities

     483,145       481,358       480,853       459,496       489,465  

Equity

          

Share Capital

     613       613       613       613       613  

Non-capitalized contributions

     23,702       23,702       23,702       23,702       23,690  

Capital adjustments

     16,682       16,682       16,682       16,682       16,682  

Reserves

     88,759       88,759       53,592       53,591       53,613  

Retained earnings

     (29,038     (29,038     11,866       (20,511     (16,435

Other accumulated comprehensive income

     (5,070     (6,710     (11,198     (10,094     (10,211

Income for the period

     9,029       6,194       3,493       29,393       22,492  

Equity attributable to owners of the Parent

     104,677       100,202       98,749       93,376       90,444  

Equity attributable to non-controlling interests

     2,014       2,015       1,958       1,929       3,392  

Total Equity

     106,691       102,217       100,707       95,305       93,836  

Total Liabilities and Equity

     589,836       583,575       581,560       554,801       583,301  

 

(1)

Excludes consolidation with PSA and VWFS.

 

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Balance sheet – Foreign currency exposure

 

Foreign Currency Exposure    BBVA ARG Consolidated      Chg(%)  

In millions AR$ - Inflation adjusted

   3Q20      2Q20      3Q19      QoQ     YoY  

Assets

             

Cash and deposits in banks

     97,764        93,718        85,189        4.3     14.8

Debt securities at fair value through profit or loss

     4        0        10        n.m       (65.2 %) 

Derivatives

     10        —          —          N/A       N/A  

Repos

     —          —          7,734        N/A       (100.0 %) 

Other financial assets

     2,012        2,009        507        0.1     296.6

Loans and other financing

     26,174        35,368        91,853        (26.0 %)      (71.5 %) 

Other financial institutions

     366        1,269        762        (71.1 %)      (52.0 %) 

Non-financial private sector and residents abroad

     25,808        34,100        91,090        (24.3 %)      (71.7 %) 

Other debt securities

     —          4,515        15,457        (100.0 %)      (100.0 %) 

Financial assets pledged as collateral

     4,218        7,183        4,290        (41.3 %)      (1.7 %) 

Investments in equity instruments

     20        19        25        5.7     (19.4 %) 

Total foreign currency assets

     130,201        142,813        205,066        (8.8 %)      (36.5 %) 

Liabilities

        —          —         

Deposits

     116,778        124,866        185,792        (6.5 %)      (37.1 %) 

Non-Financial Public Sector

     2,973        2,493        3,720        19.2     (20.1 %) 

Financial Sector

     52        52        126        0.2     (58.8 %) 

Non-financial private sector and residents abroad

     113,753        122,321        181,946        (7.0 %)      (37.5 %) 

Liabilities at fair value through profit or loss

     —          —          227        N/A       (100.0 %) 

Other financial liabilities

     10,598        8,454        12,359        25.4     (14.2 %) 

Financing received from the B.C.R.A. and other financial institutions

     553        585        4,485        (5.5 %)      (87.7 %) 

Other non financial liabilities

     1,120        958        1,387        16.9     (19.3 %) 

Total foreign currency liabilities

     129,049        134,863        204,250        (4.3 %)      (36.8 %) 

Foreign Currency Net Position—AR$

     1,152        7,949        816        (85.5 %)      41.1

Foreign Currency Net Position—USD

     15        113        19        (86.6 %)      (21.4 %) 

P&L

 

Income Statement    BBVA ARG Consolidated     Chg(%)     Proforma (1)
3Q20
 

In millions AR$ - Inflation adjusted

   3Q20     2Q20     3Q19     QoQ     YoY  

Interest income

     26,114       24,052       39,003       8.6     (33.0 %)      24,956  

Interest expense

     (9,463     (6,960     (16,619     (36.0 %)      43.1     (8,993

Net interest income

     16,652       17,092       22,384       (2.6 %)      (25.6 %)      15,963  

Fee income

     6,269       6,572       6,758       (4.6 %)      (7.2 %)      6,268  

Fee expenses

     (3,265     (3,225     (4,511     (1.2 %)      27.6     (3,242

Net fee income

     3,005       3,347       2,247       (10.2 %)      33.7     3,026  

Net income from financial instruments at fair value

     886       1,359       2,339       (34.8 %)      (62.1 %)      886  

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

     (3,988     (2,225     5       (79.3 %)      n.m       (3,988

Foreign exchange and gold gains

     1,618       1,609       5,385       0.5     (70.0 %)      1,629  

Other operating income

     1,500       1,230       1,563       22.0     (4.0 %)      1,530  

Loan loss allowances

     (927     (2,848     (6,936     67.4     86.6     (895

Net operating income

     18,744       19,562       26,986       (4.2 %)      (30.5 %)      18,150  

Personnel benefits

     (4,583     (4,269     (5,249     (7.3 %)      12.7     (4,518

Administrative expenses

     (4,360     (4,125     (4,924     (5.7 %)      11.5     (4,283

Depreciation and amortization

     (838     (907     (1,064     7.7     21.3     (828

Other operating expenses

     (2,706     (3,048     (5,028     11.2     46.2     (2,579

Operating income

     6,257       7,213       10,721       (13.2 %)      (41.6 %)      5,943  

Income from associates and joint ventures

     (14     202       (48     (106.8 %)      71.2     (9

Income from net monetary position

     (2,242     (2,459     (1,406     8.9     (59.4 %)      (1,985

Income before income tax

     4,002       4,955       9,267       (19.2 %)      (56.8 %)      3,949  

Income tax

     (1,169     (2,202     (1,082     46.9     (8.0 %)      (1,102

Income for the period

     2,833       2,753       8,185       2.9     (65.4 %)      2,847  

Income for the period attributable to:

            

Owners of the parent

     2,834       2,702       7,749       4.9     (63.4 %)      2,834  

Non-controlling interests

     (1     51       436       (101.7 %)      (100.2 %)      13  

Other comprehensive Income (2)

     1,641       2,074       (7,044     58.4     141.4     1,641  

 

(1)

Excludes consolidation with PSA and VWFS.

(2)

Neto of Income Tax.

 

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LOGO

 

P&L - Last five quarters

 

Income Statement    BBVA ARG Consolidated  

In millions AR$ - Inflation adjusted

   3Q20     2Q20     1Q20     4Q19     3Q19  

Interest income

     26,114       24,052       27,921       32,822       39,003  

Interest expense

     (9,463     (6,960     (9,270     (11,448     (16,619

Net interest income

     16,652       17,092       18,651       21,374       22,384  

Fee income

     6,269       6,572       6,127       6,540       6,758  

Fee expenses

     (3,265     (3,225     (3,999     (4,463     (4,511

Net fee income

     3,005       3,347       2,128       2,077       2,247  

Net income from financial instruments at fair value

     886       1,359       1,135       1,361       2,339  

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

     (3,988     (2,225     (144     (14     5  

Foreign exchange and gold gains

     1,618       1,609       1,404       3,518       5,385  

Other operating income

     1,500       1,230       1,179       1,339       1,563  

Loan loss allowances

     (927     (2,848     (1,842     (4,965     (6,936

Net operating income

     18,744       19,562       22,510       24,690       26,986  

Personnel benefits

     (4,583     (4,269     (5,036     (5,233     (5,249

Administrative expenses

     (4,360     (4,125     (4,072     (4,784     (4,924

Depreciation and amortization

     (838     (907     (933     (1,937     (1,064

Other operating expenses

     (2,706     (3,048     (3,530     (7,106     (5,028

Operating income

     6,257       7,213       8,939       5,629       10,721  

Income from associates and joint ventures

     (14     202       31       24       (48

Income from net monetary position

     (2,242     (2,459     (2,976     (2,233     (1,406

Income before income tax

     4,002       4,955       5,993       3,420       9,267  

Income tax

     (1,169     (2,202     (2,468     3,001       (1,082

Income for the period

     2,833       2,753       3,525       6,421       8,185  

Income for the period attributable to:

         —        

Owners of the parent

     2,834       2,702       3,493       6,901       7,749  

Non-controlling interests

     (1     51       32       (480     436  

Other comprehensive Income (2)

     1,641       2,074       1,309       280       (7,044

 

(1)

Excludes consolidation with PSA and VWFS.

(2)

Neto of Income Tax

Ratios

 

Quarterly Annualized Ratios    BBVA ARG consolidated     Chg (bps)  

In%

   3Q20     2Q20     3Q19     QoQ      YoY  

Profitability

           

Efficiency Ratio

     66.1     54.2     25.4     1,190 bps        4,068 bps  

Efficiency Ratio (excl. Inflation adjustments)

     49.1     42.8     16.4     631 bps        3,279 bps  

ROA

     1.9     1.9     5.8     2 bps        (383)bps  

ROE

     11.0     11.1     38.6     (13)bps        (2,758)bps  

Liquidity

           

Liquid assets / Total Deposits

     66.0     63.7     61.7     230 bps        432 bps  

Capital

           

Regulatory Capital Ratio

     23.3     21.9     19.7     140 bps        360 bps  

TIER I Capital Ratio (Ordinary Capital Level 1/ RWA)

     22.6     21.2     19.1     140 bps        350 bps  

Asset Quality

           

Total non-performing portfolio / Total portfolio

     1.16     1.56     3.25     (39)bps        (208)bps  

Allowances /Total non-performing portfolio

     355.26     269.38     148.11     8,588 bps        20,715 bps  

Cost of Risk

     1.37     4.27     9.31     (290)bps        (794)bps  

 

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LOGO

 

Accumulated Annualized Ratios    BBVA ARG consolidated     Chg (bps)  

In %

   3Q20     2Q20     3Q19     QoQ      YoY  

Profitability

           

Efficiency Ratio

     58.0     54.7     43.9     337 bps        1,416 bps  

Efficiency Ratio (excl. Inflation adjustments)

     46.2     41.8     33.8     436 bps        1,234 bps  

ROA

     2.1     2.2     5.2     (6)bps        (307)bps  

ROE

     12.3     13.0     36.5     (75)bps        (2,420)bps  

Liquidity

           

Liquid assets / Total Deposits

     66.0     63.7     61.7     230 bps        432 bps  

Capital

           

Regulatory Capital Ratio

     23.3     21.9     19.7     140 bps        360 bps  

TIER I Capital Ratio (Ordinary Capital Level 1/ RWA)

     22.6     21.2     19.1     140 bps        350 bps  

Asset Quality

           

Total non-performing portfolio / Total portfolio

     1.16     1.56     3.25     (39)bps        (208)bps  

Allowances /Total non-performing portfolio

     355.26     269.38     148.11     8,588 bps        20,715 bps  

Cost of Risk

     2.91     3.58     4.80     (67)bps        (189)bps  

About BBVA Argentina

BBVA Argentina (NYSE; BYMA; MAE: BBAR; LATIBEX: XBBAR) is a subsidiary of the BBVA Group, the main shareholder since 1996. In Argentina, it is one of the leading private financial institutions since 1886. Nationwide, BBVA Argentina offers retail and corporate banking to a broad customer base, including: individuals, SME’s, and large-sized companies.

BBVA Argentina’s purpose is to bring the age of opportunities to everyone, based on our customers’ real needs, providing the best solutions, and helping them make the best financial decisions through an easy and convenient experience. The institution relies on solid values: “The customer comes first, We think big and We are one team”. At the same time, its responsible banking model aspires to achieve a more inclusive and sustainable society.

Investor Relations Contact

Ernesto Gallardo

Chief Financial Officer

Inés Lanusse

Investor Relations Officer

investorelations-arg@bbva.com

ir.bbva.com.ar

 

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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: November 24, 2020

 

By:

 

/s/ Ernesto Gallardo Jimenez

   

Name:

 

Ernesto Gallardo Jimenez

    Title:   Chief Financial Officer