Banco BBVA Argentina SA Q1 FY2025 earnings call

Macroeconomic Context

• Inflation moderated in 2024 and early 2025, with forecast to converge to ~35% by end of 2025. Economic activity expected to expand ~5.5% in 2025. New IMF agreement led to lifting of exchange controls and floating exchange rate.

BBVA Group Strategy

• New global strategy for 2025-2029 with pillars: customer-centric perspective, value and capital generation, leveraging AI. Cultural shift towards empathy and renewed purpose.

Q1 2025 Results

• Net income ARS81.6 billion, up 16.2% QoQ; ROE 11.5%, ROA 2%. Operating results up 56.9% due to higher income and lower expenses. Loan portfolio: Private loans grew, with consumer loans up 22.9%, overdrafts 18.4%, mortgages 23.1%. Deposits up 1.8%, capital ratio strong at 21.5%.

BBVA Argentina's inflation adjusted net income in the first quarter of 2025 was ARS81.6 billion, increasing 16.2% quarter over quarter. Net interest income was ARS541.3 billion, increasing 3.3% quarter-over-quarter. Fee income totaled ARS180.1 billion, increasing 20.7% quarter-over-quarter. Private loans: Private loans in pesos increased 8.3% in Q1 2025, while loans in foreign currency increased 25.4% QoQ. The commercial portfolio represents 57.1% of the total portfolio. Capital ratio reached 21.5%, with capital excess of ARS1.5 trillion or 161.3%.

Loan and Deposit Growth

• Revised loan growth to 45-50% real terms for the year, down from previous expectations. Deposits revised to ~25% real terms growth.

ROE and Capital

• ROE guidance remains mid-teens to low teens. Capital ratio forecasted to be between 16% and 16.5% by December, benefiting from operational risk improvement aligned with Basel IV.

• Global economic context could negatively impact Argentina.
• Liquidity concerns due to restrictive monetary policy by the government.
• Uncertainty regarding government policy changes affecting dollar portfolio growth.

Q: How has guidance for loan and deposit growth changed?

A: Loan growth revised to 45-50% real terms, deposits to ~25% real terms. ROE guidance remains mid-teens to low teens. Capital ratio forecasted 16-16.5% by Dec.

Q: What's the outlook for SG&A expenses and NIMs?

A: SG&A expenses saw decline due to factors like no severance costs and tax reclassification; NIMs normalized from high levels, expected to decrease but at a softer pace.

Q: What's the driver for dollar loan growth and outlook?

A: More demand for dollars, but growth not expected to continue at Q1 pace due to funding and government policy uncertainty.

Q: Thoughts on credit card growth and portfolio duration?

A: Credit cards still have potential but growth less than other products; portfolio duration increasing due to longer-term loans like SMEs and mortgages.