Financial Position - As of December 31, 2021, the total foreign exchange-denominated asset position was Ps.179,543 million, while the total foreign exchange-denominated liability position was Ps.181,338 million, resulting in a net liability currency position of Ps.1,795 million[712]. - Consolidated excess capital as of December 31, 2021, was Ps.84,868.9 million, compared to Ps.79,950.1 million as of December 31, 2020[713]. - Total capital under Argentine risk-based capital guidelines amounted to Ps.142,146.8 million as of December 31, 2021, with a ratio of average shareholders' equity to average total assets at 16.17%[714]. - Shareholders' equity as of December 31, 2021, was Ps.163,014.6 million, down from Ps.172,893.3 million in 2020[714]. - The average shareholders' equity as a percentage of average total assets was 16.17% in 2021, compared to 17.40% in 2020[718]. - The total liabilities to total shareholders' equity ratio was 5.32x as of December 31, 2021, compared to 5.05x in 2020[718]. - Cash and due from banks as a percentage of total deposits was 30.82% in 2021, down from 31.79% in 2020[718]. - Liquid assets as a percentage of total deposits was 32.31% in 2021, compared to 34.43% in 2020[718]. Economic Environment - The Argentine economy shrank by 9.9% in 2020 due to lockdown measures from the Covid-19 pandemic, with inflation recorded at 36.1%[737]. - The fiscal deficit for the domestic public sector was approximately Ps.1,750 billion, accounting for about 6.5% of GDP in 2020[737]. - Inflation reached 51% in 2021, with the Central Bank's currency controls and fiscal deficit continuing to pose challenges for economic recovery[743]. - The Argentine financial system is expected to stagnate, with private loans and total deposits to GDP ratios projected at approximately 8.7% and 19.6% respectively for 2022[741]. - The Central Bank's monetary policy has resulted in negative real interest rates, impacting both loans and deposits[745]. - Currency controls have created a significant gap between official and financial exchange rates, around 100% by the end of 2021[746]. Credit Ratings - BBVA Argentina's local long-term institutional rating was affirmed at "raBBB-" with a negative outlook as of April 2021[724]. - The bank's credit ratings are influenced by Argentine sovereign credit ratings, which limits access to international financial markets[720]. - BBVA Argentina's national credit ratings were affirmed at "AAA(arg)" and "A1+(arg)" for the long and short term, maintaining a stable outlook as of September 2021, attributed to comfortable liquidity and capitalization levels[726]. Governance and Management - The board of directors consists of a minimum of three and a maximum of nine directors, with members elected for a term of three years[751]. - María Isabel Goiri Lartitegui serves as the chairwoman, with her term ending in December 2023[752]. - Jorge Delfín Luna and Alfredo Castillo Triguero are vice chairmen, with their terms ending in December 2022 and 2023 respectively[752]. - The current CEO, Martín Ezequiel Zarich, has been with the bank since 1987 and was appointed in 2015[758]. - Ernesto Ramón Gallardo Jimenez, appointed in 2017, serves as the Director of Finance[758]. - Juan Christian Kindt, Director of Business Development since 2019, has extensive experience in various managerial roles within the bank[758]. - Leandro Alvarez, appointed in 2020, is the Director of Engineering & Data, focusing on technological advancements[758]. - The board meets at least once per month to ensure effective governance and oversight[751]. - The company has a diverse management team with significant experience in finance and banking sectors[758]. - The board includes independent directors as per the independence criteria set forth by regulatory authorities[753]. Compensation and Committees - The total compensation paid to all directors and officers for the fiscal year ended December 31, 2021, was Ps.778,048 million, which included Ps.251,864 million accrued during 2021 to be paid between 2022 and 2026[762]. - The Nomination and Remunerations Committee, established on March 30, 2009, consists of five members, including Gustavo Fernández and Eduardo González Correas, focusing on compensation policies and executive hiring[761]. - The Supervisory Committee is responsible for monitoring compliance with corporate law and internal regulations, with members having unlimited access to the bank's records[763][764]. - The aggregate amount of director compensation must be approved at the annual ordinary shareholders' meeting, as per Argentine legislation[762]. - The bank's corporate governance system emphasizes the distribution of functions between the Board and various committees, ensuring oversight and compliance[763]. - The Supervisory Committee members are required to maintain professional independence and disclose any relevant professional relationships with the bank[764]. - The bank's directors have extensive backgrounds in various financial and legal sectors, contributing to its governance and operational strategies[768][769]. - The compensation structure includes salaries and bonuses, reflecting the bank's commitment to aligning executive incentives with performance[762]. - The bank's governance practices are designed to enhance transparency and accountability in its operations and decision-making processes[763]. Audit and Risk Management - BBVA Argentina's Audit Committee consists of three independent members, ensuring compliance with regulatory standards[770]. - The Audit Committee meets monthly to monitor internal controls, financial statements, and risk management[771]. - The Audit Committee is responsible for evaluating internal control weaknesses identified by auditors and ensuring the integrity of documentation provided to the market[772]. - The Management Committee establishes business strategies and monitors the annual budget, meeting monthly[782]. - The Compliance Committee promotes a culture of ethics and integrity, meeting monthly to review compliance with the Code of Conduct[788]. - The Risk Management Committee includes various risk management roles and meets regularly to address risk-related issues[789]. - The Asset Laundering and Terrorism Financing Prevention Committee meets quarterly to monitor and define operational policies related to asset laundering prevention[786]. - The Nomination and Remunerations Committee advises on the nomination and compensation of directors and executive officers[780]. - The Audit Committee is tasked with reviewing external auditors' plans and assessing their performance[775]. - The Disclosure Committee ensures timely and accurate information disclosure to shareholders and regulatory entities, meeting quarterly[784]. Employee Relations - As of December 31, 2021, the total number of full-time employees was 5,863, a decrease of 2.6% from 6,019 in 2020 and 7.3% from 6,321 in 2019[798]. - The main office employed 3,863 individuals, while branches accounted for 2,000 employees, indicating a significant reduction in branch staff compared to previous years[798]. - The company has maintained satisfactory relations with its employees, with no conflicts with the national bank union for over 20 years[798]. - The bank has a personnel Training and Development Department that provides training across various areas, including Operations, Technology, and Business[799]. - The bank has not employed a significant number of temporary employees, focusing instead on full-time staff[799]. Risk Management Practices - The Risks Management Committee is tasked with approving transactions that exceed certain risk thresholds and monitoring the evolution of risk metrics[790]. - The bank's operational risk model is implemented to enhance the quality and reliability of internal controls across BBVA Argentina and its affiliates[791].

Financial Data and Key Metrics Changes - BBVA Argentina reported a net income of $21.2 billion for 2021, an increase of $27.1 million from $16.6 billion in 2020, resulting in an annualized ROAE of 13.5% and ROAA of 2% compared to 10.9% and 1.7% in 2020 [9] - The fourth quarter 2021 net income was $4.8 billion, a 27.8% increase quarter-over-quarter, with a quarterly ROAE of 11.8% and ROAA of 1.8% [10] - The accumulated income tax recorded a gain of $80 million in 2021, with an effective tax rate of 30% compared to 43% in 2020 [10] Business Line Data and Key Metrics Changes - Net interest income for Q4 2021 was $33.6 billion, up 4.3% quarter-over-quarter and 13.9% year-over-year [11] - Net fee income for Q4 2021 totaled $5.8 billion, down 14.5% quarter-over-quarter but up 37.9% year-over-year [13] - Personnel benefits and administrative expenses totaled $16.2 billion in Q4 2021, falling 8.9% compared to Q3 2021 but growing 11% year-over-year [14] Market Data and Key Metrics Changes - Private sector loans totaled $388.4 billion in Q4 2021, increasing 3.7% quarter-over-quarter but decreasing 11.1% year-over-year [15] - The bank's consolidated market share of private sector loans was 8.05% as of Q4 2021, down from 8.49% a year ago [17] - Total deposits reached $708.3 billion, growing 1.9% quarter-over-quarter but falling 1.9% year-over-year [19] Company Strategy and Development Direction - The bank is focusing on digitalization, with digital client penetration reaching 74% and mobile client penetration at 64% by December 2021 [7] - BBVA Argentina aims to sustain and expand its competitive position in the financial system through improved customer acquisition and marketing strategies [6][7] - The bank's capital ratio was 20.8% as of Q4 2021, indicating strong solvency despite a decrease from 23.5% in Q3 2021 due to dividend announcements [20] Management Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty in the Argentine economy but projected a real growth of around 5% for 2022, despite a contraction in the loan book [23] - The bank expects to gain market share in a contracting system, with a focus on attracting more customers, particularly in SMEs [25] - Profitability is expected to remain stable, with potential improvements in interest income due to increased monetary policy rates, although inflation may impact margins [29][31] Other Important Information - The bank has declared dividends totaling $28 billion, pending distribution, with an expectation to distribute around $13 billion in 2022 [33][34] - The Central Bank's regulations allow for dividends to be paid in 12 installments, which the bank is prepared to follow [32][43] Q&A Session Summary Question: What type of growth does the bank expect for this year and next year? - Management expects real growth around 5% for 2022, despite a contraction in the loan book [23] Question: Why does the bank expect to grow more than the system? - The bank believes it can attract more customers through marketing solutions and has seen increased customer numbers [27] Question: What is the outlook for profitability? - Management anticipates stable profitability figures, with potential improvements in interest income but acknowledges inflation's impact [29][31] Question: What is the status of dividend distribution? - The bank plans to distribute around $13 billion of the declared $28 billion in 2022, pending Central Bank approval [33][34]

[Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's financial position, income, comprehensive income, equity changes, and cash flows for the period [Consolidated Condensed Statement of Financial Position](index=3&type=section&id=Consolidated%20Condensed%20Statement%20of%20Financial%20Position) As of September 30, 2021, the Group's total assets were ARS 914.2 billion, a slight decrease from ARS 942.2 billion at year-end 2020, primarily driven by a reduction in 'Loans and other financing', while total liabilities also decreased to ARS 765.8 billion from ARS 800.1 billion, mainly due to lower deposits and provisions, consequently increasing total equity to ARS 148.4 billion from ARS 142.1 billion Consolidated Statement of Financial Position (in thousands of ARS) | Account | 09.30.21 | 12.31.20 | | :--- | :--- | :--- | | **Total Assets** | **914,205,994** | **942,226,807** | | Cash and deposits in banks | 197,263,229 | 208,324,763 | | Loans and other financing | 327,318,122 | 382,823,323 | | Other debt securities | 173,305,627 | 165,176,550 | | **Total Liabilities** | **765,802,601** | **800,126,325** | | Deposits | 630,776,028 | 654,964,538 | | Provisions | 5,274,214 | 15,715,478 | | **Total Equity** | **148,403,393** | **142,100,482** | [Consolidated Statement of Income](index=7&type=section&id=Consolidated%20Statement%20of%20Income) For the nine months ended September 30, 2021, the Group reported a net income of ARS 14.88 billion, a slight increase from ARS 14.72 billion in the same period of 2020, with net interest income growing modestly to ARS 81.90 billion from ARS 79.89 billion, significantly influenced by a positive income tax of ARS 2.22 billion in 2021, compared to an expense of ARS 8.90 billion in 2020, largely due to the reversal of a tax provision Consolidated Statement of Income (in thousands of ARS) | Account | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | | Net interest income | 81,898,211 | 79,886,037 | | Net commission income | 16,187,500 | 12,928,253 | | Operating income | 39,573,792 | 40,895,913 | | Gain (loss) on net monetary position | (26,984,894) | (17,617,723) | | Income before income tax | 12,655,110 | 23,619,323 | | Income tax | 2,220,538 | (8,903,335) | | **Net income for the period** | **14,875,648** | **14,715,988** | [Earnings Per Share](index=9&type=section&id=Earnings%20Per%20Share) Basic and diluted earnings per share for the nine months ended September 30, 2021, were ARS 24.3463, slightly up from ARS 23.8130 for the same period in 2020, with identical figures as the bank has not issued any dilutive financial instruments Earnings Per Share (in ARS) | Metric | 09.30.21 | 09.30.20 | | :--- | :--- | :--- | | Basic earnings per share | 24.3463 | 23.8130 | | Diluted earnings per share | 24.3463 | 23.8130 | [Consolidated Statement of Other Comprehensive Income](index=10&type=section&id=Consolidated%20Statement%20of%20Other%20Comprehensive%20Income) For the nine-month period ended September 30, 2021, the Group reported a Total Other Comprehensive Loss of ARS 417.8 million, a significant shift from a gain of ARS 7.21 billion in the prior-year period, resulting in a Total Comprehensive Income of ARS 14.46 billion for 9M 2021, down from ARS 21.92 billion in 9M 2020 Total Comprehensive Income (in thousands of ARS) | Account | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | | Net income for the period | 14,875,648 | 14,715,988 | | Total Other Comprehensive Income for the period | (417,828) | 7,205,768 | | **Total comprehensive income** | **14,457,820** | **21,921,756** | [Consolidated Condensed Statement of Changes in Shareholders' Equity](index=11&type=section&id=Consolidated%20Condensed%20Statement%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased from ARS 142.1 billion at the beginning of the year to ARS 148.4 billion as of September 30, 2021, driven by the net income for the period of ARS 14.9 billion, partially offset by cash dividends of ARS 8.15 billion and an other comprehensive loss of ARS 417.8 million - Total equity increased to **ARS 148.4 billion**, primarily due to net income of **ARS 14.9 billion**[21](index=21&type=chunk) - The company distributed cash dividends of **ARS 8.15 billion**, equivalent to **ARS 13.31 per share**[21](index=21&type=chunk) - An amount of **ARS 40.3 billion** from the optional reserve was used to absorb accumulated losses from prior periods[21](index=21&type=chunk) [Consolidated Condensed Statement of Cash Flows](index=12&type=section&id=Consolidated%20Condensed%20Statement%20of%20Cash%20Flows) For the nine months ended September 30, 2021, the Group generated ARS 75.3 billion in cash from operating activities, a significant turnaround from the ARS 43.4 billion used in the same period of 2020, with cash used in investing and financing activities being ARS 2.37 billion and ARS 5.04 billion, respectively, resulting in an overall decrease of ARS 11.06 billion in cash and cash equivalents to end at ARS 197.26 billion Net Cash Flows by Activity (in thousands of ARS) | Activity | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | | Operating Activities | 75,300,121 | (43,436,549) | | Investing Activities | (2,367,208) | (1,600,390) | | Financing Activities | (5,040,025) | (9,534,655) | | **Total changes in cash flows** | **(11,061,534)** | **(88,295,964)** | [Notes to the Consolidated Condensed Interim Financial Statements](index=14&type=section&id=Notes%20to%20the%20Consolidated%20Condensed%20Interim%20Financial%20Statements) This section provides detailed notes on the bank's general information, accounting policies, financial instruments, income tax, investments, and regulatory compliance [General Information and Economic Context](index=14&type=section&id=General%20Information%20and%20Economic%20Context) Banco BBVA Argentina S.A. operates as a universal bank in Argentina, controlled by Spain's Banco Bilbao Vizcaya Argentaria S.A. (BBVA), within a complex economic context characterized by high inflation and financial volatility, with the government extending a Public Emergency Law, and the COVID-19 pandemic impacting operations, leading to various regulatory measures by the Argentine Central Bank (BCRA) aimed at providing credit relief and support to the economy, including the suspension of dividend distributions by financial institutions until December 31, 2021 - The bank is part of the global BBVA group, which holds a **66.55% stake**[30](index=30&type=chunk) - The operating environment is challenging due to high inflation, financial volatility, and a declared Public Emergency in Argentina, extended until **December 31, 2021**[38](index=38&type=chunk)[39](index=39&type=chunk) - In response to COVID-19, the BCRA implemented measures such as credit facilities for MSMEs, payment extensions for credit cards, and a suspension of dividend distributions by financial institutions until the end of **2021**[47](index=47&type=chunk)[49](index=49&type=chunk) [Basis for Preparation and Significant Accounting Policies](index=18&type=section&id=Basis%20for%20Preparation%20and%20Significant%20Accounting%20Policies) The financial statements are prepared under the BCRA's framework, which is based on IFRS but includes significant exceptions related to the impairment of non-financial government sector debt, the measurement of the investment in Prisma Medios de Pago S.A., and the accounting for income tax reassessments, with statements also adjusted for hyperinflation per IAS 29, and a key change in accounting policy being the reclassification of certain fixed-income instruments from 'Held to Collect and Sell' (fair value through OCI) to 'Held to Collect' (amortized cost) effective January 1, 2021 - The financial statements deviate from IFRS in three key areas mandated by the BCRA: impairment of government debt, valuation of the Prisma Medios de Pago investment, and accounting for an income tax reassessment provision[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)[59](index=59&type=chunk) - Due to Argentina's hyperinflationary economy, the financial statements are restated into constant currency as of September 30, 2021, in accordance with **IAS 29**[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Effective January 1, 2021, the business model for certain fixed-income instruments used to meet reserve requirements was changed from 'Held to Collect and Sell' to 'Held to Collect', resulting in a reclassification from fair value to amortized cost[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) [Key Financial Instruments Breakdown](index=22&type=section&id=Key%20Financial%20Instruments%20Breakdown) The bank's financial instruments are detailed across several notes, with 'Loans and other financing' standing at ARS 327.3 billion as of September 30, 2021, credit cards being the largest component, 'Other debt securities' totaling ARS 173.3 billion dominated by BCRA Liquidity Bills, and deposits, the main funding source, amounting to ARS 630.8 billion, while the bank also utilizes derivatives, primarily for foreign currency forwards, and holds a put option related to its Prisma Medios de Pago investment Loans and Other Financing Breakdown (in thousands of ARS) | Category | 09.30.21 | 12.31.20 | | :--- | :--- | :--- | | Credit Cards | 138,341,993 | 156,864,926 | | Consumer loans | 35,681,717 | 38,513,431 | | Discounted instruments | 23,011,178 | 26,182,472 | | Mortgage loans | 21,636,434 | 22,934,622 | | **Total (net)** | **327,318,122** | **382,823,323** | Other Debt Securities Breakdown (in thousands of ARS) | Category | 09.30.21 | 12.31.20 | | :--- | :--- | :--- | | BCRA Liquidity Bills (FVOCI) | 115,439,146 | 123,111,636 | | Government securities (FVOCI) | 37,788,252 | 41,707,577 | | Government securities (Amortized Cost) | 19,513,734 | - | | **Total** | **173,305,627** | **165,176,550** | Deposits Breakdown (in thousands of ARS) | Category | 09.30.21 | 12.31.20 | | :--- | :--- | :--- | | Savings accounts | 252,602,583 | 282,033,599 | | Time deposits | 171,910,078 | 164,442,649 | | Checking accounts | 138,422,073 | 154,192,326 | | **Total** | **630,776,028** | **654,964,538** | [Income Tax](index=29&type=section&id=Income%20Tax) The bank's income tax situation is complex, influenced by changes in tax law and legal disputes over inflation adjustments, with Law No. 27630 enacted in June 2021 establishing a progressive corporate income tax rate system topping at 35%, applicable from January 1, 2021, and a major event in 2021 being the reversal of a provision for income tax reassessments for fiscal years 2016, 2017, and 2018, following favorable court rulings, totaling ARS 5.4 billion in nominal values, which significantly contributed to the income tax benefit recorded in the period - Law No. 27630, enacted in June 2021, established a progressive income tax rate system, with the highest bracket at **35%**, applicable from **January 1, 2021**[110](index=110&type=chunk) - The bank successfully challenged the prohibition of applying inflation adjustments for tax purposes for fiscal year **2016**, with the judgment becoming final in **February 2021**[119](index=119&type=chunk)[120](index=120&type=chunk) - Following favorable legal developments, the bank reversed the entire provision for income tax reassessments related to inflation adjustments for fiscal years **2017** and **2018**, totaling **ARS 4.26 billion** in nominal value[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) [Investments in Equity Instruments and Associates](index=36&type=section&id=Investments%20in%20Equity%20Instruments%20and%20Associates) The bank's key equity investment is its remaining 5.44% stake in Prisma Medios de Pago S.A., valued at ARS 1.80 billion, with the valuation based on an independent appraiser's report but adjusted as per BCRA requirements, representing a deviation from IFRS, and the bank holds a put option to sell this remaining stake, initiating the process to exercise this option on October 1, 2021, while investments in associates, accounted for using the equity method, totaled ARS 1.95 billion - The investment in Prisma Medios de Pago S.A. represents a **5.44% stake**, valued at **ARS 1.80 billion**, with its valuation method being a deviation from IFRS as mandated by the BCRA[136](index=136&type=chunk) - The bank holds a put option to sell its remaining shares in Prisma Medios de Pago S.A. to the buyer on **December 30, 2021**[140](index=140&type=chunk) - On **October 1, 2021**, the bank, along with other shareholders, exercised the put option to initiate the sale of the remaining **49%** of Prisma's capital stock[141](index=141&type=chunk)[282](index=282&type=chunk) [Regulatory Compliance and Other Disclosures](index=73&type=section&id=Regulatory%20Compliance%20and%20Other%20Disclosures) The bank is subject to several regulatory constraints, including the BCRA's suspension of profit distribution by financial institutions until December 31, 2021, impacting dividend payments, while the bank maintains capital and liquidity levels above the minimums required by the BCRA and the Argentine Securities Commission (CNV), with a surplus capital of ARS 86.3 billion over the regulatory minimum as of September 30, 2021, and the report also details several ongoing administrative proceedings initiated by the BCRA, primarily related to foreign exchange regulations - The BCRA has suspended the distribution of profits by financial institutions, including dividend payments, until **December 31, 2021**[247](index=247&type=chunk) - The bank's paid-in capital of **ARS 133.5 billion** exceeds the minimum requirement of **ARS 47.2 billion**, resulting in a surplus of **ARS 86.3 billion** as of **September 30, 2021**[259](index=259&type=chunk) - The bank is involved in several administrative proceedings initiated by the BCRA concerning alleged breaches of foreign exchange regulations, though management does not expect an adverse financial impact[273](index=273&type=chunk)[274](index=274&type=chunk)[279](index=279&type=chunk) [Independent Auditors' and Supervisory Committee's Reports](index=92&type=section&id=Independent%20Auditors'%20and%20Supervisory%20Committee's%20Reports) This section includes the independent auditors' limited review report and the supervisory committee's report on the interim financial statements [Independent Auditors' Limited Review Report](index=92&type=section&id=Independent%20Auditors'%20Limited%20Review%20Report) The independent auditors, KPMG, concluded that nothing came to their attention to suggest the consolidated condensed interim financial statements were not prepared, in all material respects, in conformity with the accounting standards established by the BCRA, including an "Emphasis of Matter" paragraph highlighting that the BCRA's accounting framework differs from IFRS in certain aspects related to impairment, investment valuation, and income tax reassessment - The auditors issued an **unqualified conclusion** based on their limited review[315](index=315&type=chunk) - An "Emphasis of Matter" was included to draw attention to the deviations from IFRS as mandated by the BCRA's financial reporting framework[316](index=316&type=chunk) [Supervisory Committee's Report](index=145&type=section&id=Supervisory%20Committee's%20Report) The Supervisory Committee reviewed the interim financial statements and the work of the external auditors, raising no observations and stating that the financial statements reflect all substantial known facts and circumstances, and similar to the auditors, the committee included an emphasis matter paragraph highlighting the deviations from IFRS due to the BCRA's regulatory framework - The Supervisory Committee expressed a **favorable opinion** on the financial statements, having no observations to raise[453](index=453&type=chunk) - The committee's report also emphasized that the financial statements were prepared under the BCRA framework, which differs from IFRS in specific areas[454](index=454&type=chunk) [Reporting Summary](index=147&type=section&id=Reporting%20Summary) This section provides an overview of the bank's business performance and financial results, along with its outlook [Business Overview and Performance](index=148&type=section&id=Business%20Overview%20and%20Performance) BBVA Argentina is a major financial institution with over 2.7 million active customers and a network of 243 branches, where for the nine months ended September 30, 2021, the loan portfolio decreased by 14.44% year-over-year, while deposits grew by 3.53%, and the bank maintained a strong portfolio quality, with an irregular portfolio ratio of 2.54% and a coverage level of 181.76%, with its market share standing at 8.08% in private-sector financing and 7.02% in private deposits Key Performance Indicators (as of 09.30.21) | Metric | Value | | :--- | :--- | | Active Customers | > 2.7 million | | Branches | 243 | | Loan Portfolio (YoY Change) | -14.44% | | Deposits (YoY Change) | +3.53% | | Irregular Portfolio Ratio | 2.54% | | Coverage Ratio | 181.76% | | Market Share (Private Financing) | 8.08% | | Market Share (Private Deposits) | 7.02% | [Financial Results and Outlook](index=149&type=section&id=Financial%20Results%20and%20Outlook) The bank recorded an accumulated profit of ARS 14.88 billion for the first nine months of 2021, with a return on average equity of 9.56%, and net interest income grew 2.52% YoY, while the outlook remains uncertain due to Argentina's political and economic situation, including negotiations with the IMF, however, the bank believes it is well-positioned due to its low funding costs, strong capital, and high portfolio quality, with digital transformation continuing to be a key focus, as digital customer share reached 74% and mobile customer share 63% - Accumulated profit for 9M 2021 was **ARS 14.88 billion**, with a **ROAE of 9.56%**[477](index=477&type=chunk) - The economic outlook is uncertain, pending political developments and an agreement with the **IMF**[480](index=480&type=chunk) - Digital adoption continues to grow, with **74%** of customers being digital and **63%** mobile as of **September 2021**[482](index=482&type=chunk) - The bank is focused on maintaining its strength through transactional funding and organic capital generation, while also advancing its sustainability and responsible banking initiatives[483](index=483&type=chunk)[484](index=484&type=chunk)

Consolidated Condensed Interim Financial Statements [**Consolidated Condensed Statement of Financial Position**](index=3&type=section&id=Consolidated%20Condensed%20Statement%20of%20Financial%20Position) As of June 30, 2021, Banco BBVA Argentina S.A.'s total consolidated assets were ARS 864.4 billion, a slight increase from ARS 862.2 billion at year-end 2020. Total liabilities remained stable at ARS 731.5 billion, while total equity increased to ARS 132.9 billion from ARS 130.0 billion over the same period. The balance sheet reflects stability, with a notable decrease in 'Loans and other financing' offset by increases in 'Repo transactions' and 'Cash and deposits in banks' Consolidated Statement of Financial Position Highlights (in thousands of ARS) | Account | 06.30.21 | 12.31.20 | | :--- | :--- | :--- | | **Total Assets** | **864,390,628** | **862,191,343** | | Cash and deposits in banks | 198,329,379 | 190,629,053 | | Repo transactions | 105,264,692 | 61,644,402 | | Loans and other financing | 306,926,264 | 350,305,200 | | Other debt securities | 153,768,644 | 151,145,975 | | **Total Liabilities** | **731,489,965** | **732,161,001** | | Deposits | 609,118,286 | 599,329,960 | | **Total Equity** | **132,900,663** | **130,030,342** | [**Consolidated Statement of Income**](index=6&type=section&id=Consolidated%20Statement%20of%20Income) For the six-month period ended June 30, 2021, the Group reported a net income of ARS 10.51 billion, a 23.7% increase from ARS 8.50 billion in the same period of 2020. This was driven by a 19.8% increase in net commission income and a significant positive swing in income tax from an expense to a benefit. Net interest income slightly decreased by 3.3% to ARS 48.21 billion. Basic and diluted earnings per share rose to ARS 17.2308 from ARS 13.6838 year-over-year Consolidated Income Statement Summary (in thousands of ARS) | Account | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net interest income | 48,214,021 | 49,868,002 | | Net commission income | 9,151,279 | 7,638,002 | | Operating income | 24,066,934 | 24,369,596 | | Gain (loss) on net monetary position | (17,111,333) | (9,680,505) | | Income before income tax | 7,097,249 | 15,016,585 | | Income tax | 3,415,308 | (6,516,536) | | **Net income for the period** | **10,512,557** | **8,500,049** | Earnings Per Share (in ARS) | Metric | 06.30.21 | 06.30.20 | | :--- | :--- | :--- | | Basic earnings per share | 17.2308 | 13.6838 | | Diluted earnings per share | 17.2308 | 13.6838 | [**Consolidated Statement of Other Comprehensive Income**](index=8&type=section&id=Consolidated%20Statement%20of%20Other%20Comprehensive%20Income) For the six months ended June 30, 2021, the Group reported a Total Other Comprehensive Loss of ARS 180.0 million, a significant shift from a Total Other Comprehensive Income of ARS 5.11 billion in the prior-year period. This change was primarily due to losses on financial instruments at fair value through OCI. Consequently, Total Comprehensive Income for the period was ARS 10.33 billion, compared to ARS 13.61 billion for the same period in 2020 Comprehensive Income Summary (in thousands of ARS) | Account | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net income for the period | 10,512,557 | 8,500,049 | | Total Other Comprehensive Income for the period | (180,026) | 5,111,459 | | **Total Comprehensive Income** | **10,332,531** | **13,611,508** | [**Consolidated Condensed Statement of Changes in Shareholders' Equity**](index=9&type=section&id=Consolidated%20Condensed%20Statement%20of%20Changes%20in%20Shareholders%27%20Equity) Total equity increased from ARS 130.0 billion at the start of the period to ARS 132.9 billion as of June 30, 2021. The increase was primarily driven by the net income of ARS 10.56 billion, partially offset by a cash dividend distribution of ARS 7.46 billion and an other comprehensive loss of ARS 180.0 million. A significant transaction was the absorption of accumulated losses of ARS 36.88 billion against reserves - Key equity movements in H1 2021 included net income of **ARS 10.56 billion**, an other comprehensive loss of **ARS 180 million**, and a cash dividend distribution of **ARS 7.46 billion**[26](index=26&type=chunk) - The company absorbed accumulated losses of **ARS 36.88 billion** by utilizing its reserves during the period[26](index=26&type=chunk) [**Consolidated Condensed Statement of Cash Flows**](index=10&type=section&id=Consolidated%20Condensed%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2021, cash flows from operating activities were a net inflow of ARS 56.08 billion, a significant improvement from a ARS 72.31 billion outflow in the prior-year period. Investing activities used ARS 1.39 billion, while financing activities used ARS 4.26 billion. After accounting for currency effects and monetary position losses, total cash and cash equivalents increased by ARS 7.70 billion during the period Cash Flow Summary (in thousands of ARS) | Activity | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Cash flows from operating activities | 56,077,389 | (72,305,755) | | Cash flows used in investing activities | (1,387,329) | (493,102) | | Cash flows used in financing activities | (4,261,594) | (5,415,191) | | **Total changes in cash flows** | **7,700,326** | **(97,593,359)** | Notes to the Consolidated Condensed Interim Financial Statements [**Note 1: General Information**](index=12&type=section&id=Note%201%3A%20General%20Information) Banco BBVA Argentina S.A. operates as a universal bank in Argentina and is controlled by Banco Bilbao Vizcaya Argentaria S.A. (66.55% ownership). The bank operates in a complex economic context marked by high inflation and a public emergency declaration extended until December 2021. The COVID-19 pandemic has led to significant government and central bank interventions, including credit facilities for SMEs, suspension of loan installment hikes, and a suspension of profit distribution by financial institutions until December 31, 2021. Management states these events have not had a material impact on the Entity's financial position to date - The bank operates in a challenging Argentine economic environment with high inflation and a declared Public Emergency extended through December 31, 2021[42](index=42&type=chunk) - In response to COVID-19, the Argentine Central Bank (BCRA) implemented measures such as credit facilities for SMEs, payment extensions for credit cards, and suspension of hikes on certain loan installments[49](index=49&type=chunk)[50](index=50&type=chunk) - A key regulatory measure is the suspension of profit distribution by financial institutions, including BBVA Argentina, until December 31, 2021[51](index=51&type=chunk) [**Note 2-6: Basis of Preparation and Accounting Policies**](index=15&type=section&id=Note%202-6%3A%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The financial statements are prepared under the BCRA's framework, which is based on IFRS but includes significant exceptions. These deviations include excluding non-financial government sector debt from the IFRS 9 expected loss model, specific accounting for the investment in Prisma Medios de Pago S.A., and a required provision for an income tax reassessment. The statements are presented in constant currency as of June 30, 2021, applying IAS 29 for hyperinflationary economies. A notable change in accounting policy for 2021 was the reclassification of certain government securities from 'Held to Collect and Sell' (FVOCI) to 'Held to Collect' (amortized cost), affecting ARS 17.3 billion in assets - The financial statements deviate from IFRS due to BCRA requirements, notably: - Excluding government debt from the IFRS 9 expected loss model - Specific valuation methods for the Prisma Medios de Pago S.A. investment - A mandated provision for an income tax reassessment[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - The financial statements are adjusted for hyperinflation in accordance with IAS 29, with all amounts stated in constant currency as of June 30, 2021[58](index=58&type=chunk)[59](index=59&type=chunk) - Effective January 1, 2021, the bank changed its business model for certain government securities, reclassifying **ARS 17.3 billion** of assets from fair value through OCI to amortized cost[65](index=65&type=chunk)[66](index=66&type=chunk) [**Note 7-28: Breakdown of Financial Statement Items**](index=20&type=section&id=Note%207-28%3A%20Breakdown%20of%20Financial%20Statement%20Items) This section details key asset and liability accounts. As of June 30, 2021, 'Loans and other financing' totaled ARS 306.9 billion, down from ARS 350.3 billion at year-end 2020, with credit cards being the largest component at ARS 127.1 billion. 'Other debt securities' were ARS 153.8 billion, primarily composed of BCRA Liquidity Bills. On the liability side, 'Deposits' grew to ARS 609.1 billion, with savings accounts (ARS 255.0 billion) and term deposits (ARS 161.7 billion) as the main sources. 'Provisions' saw a significant decrease to ARS 6.3 billion from ARS 14.4 billion, mainly due to the reversal of a large income tax provision Loan Portfolio Breakdown (in thousands of ARS) | Loan Type | 06.30.21 | 12.31.20 | | :--- | :--- | :--- | | Credit Cards | 127,057,684 | 143,540,365 | | Consumer loans | 33,207,421 | 35,241,989 | | Exports financing | 24,579,525 | 20,026,640 | | Mortgage loans | 20,504,839 | 20,986,488 | | **Total (net of allowance)** | **306,926,264** | **350,305,200** | Deposit Breakdown (in thousands of ARS) | Deposit Type | 06.30.21 | 12.31.20 | | :--- | :--- | :--- | | Savings accounts | 254,977,143 | 258,076,853 | | Term deposits | 161,695,313 | 150,474,413 | | Checking accounts | 138,585,142 | 141,094,785 | | **Total Deposits** | **609,118,286** | **599,329,960** | - Provisions decreased significantly from **ARS 14.4 billion** to **ARS 6.3 billion**, primarily due to the reversal of the provision for income tax reassessment, which was **ARS 6.8 billion** at year-end 2020[137](index=137&type=chunk)[139](index=139&type=chunk) [**Note 15: Income Tax**](index=25&type=section&id=Note%2015%3A%20Income%20Tax) The income tax expense for H1 2021 was a benefit of ARS 3.4 billion, compared to an expense of ARS 6.5 billion in H1 2020. This reversal is mainly due to the reversal of a provision for income tax reassessment for fiscal years 2016, 2017, and 2018, following favorable court rulings that allowed the application of inflation adjustments for tax purposes. The corporate income tax rate structure was changed in June 2021, introducing a progressive scale up to 35% for fiscal years starting January 1, 2021 - A new progressive income tax rate system was enacted in June 2021, with rates of **25%**, **30%**, and **35%**, effective for fiscal years beginning on or after January 1, 2021[100](index=100&type=chunk)[101](index=101&type=chunk) - The Bank reversed a provision of **ARS 4.26 billion** related to income tax reassessments for fiscal years 2017 and 2018, following favorable legal opinions and court rulings regarding the application of inflation adjustments for tax purposes[109](index=109&type=chunk)[110](index=110&type=chunk) - The reversal of the tax provision for FY2016, 2017, and 2018 contributed significantly to the income tax benefit of **ARS 3.4 billion** recorded in H1 2021[97](index=97&type=chunk)[109](index=109&type=chunk) [**Note 43: Fair Value of Financial Instruments**](index=39&type=section&id=Note%2043%3A%20Fair%20Value%20of%20Financial%20Instruments) The bank classifies its financial instruments measured at fair value into a three-level hierarchy. As of June 30, 2021, Level 1 assets (quoted prices) were ARS 36.6 billion, Level 2 (observable inputs) were ARS 112.8 billion, and Level 3 (unobservable inputs) were ARS 3.5 billion. The Level 3 assets are primarily the bank's equity interest in Prisma Medios de Pago S.A. and the associated put option, whose valuations are based on discounted cash flow models and are sensitive to unobservable inputs like WACC and growth factors Fair Value Hierarchy of Financial Assets (in thousands of ARS, 06.30.21) | Asset Category | Total Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Debt securities at FVPL | 4,522,549 | 4,518,207 | 4,342 | - | | Derivative instruments | 2,636,384 | - | 1,454,384 | 1,182,000 | | Other debt securities | 136,510,277 | 24,835,638 | 111,185,436 | 489,203 | | Investments in equity instruments | 2,127,357 | 299,184 | 31,194 | 1,796,979 | - The fair value of the equity interest in Prisma Medios de Pago S.A. and the related put option are classified as Level 3, determined by management with input from an independent appraiser using a discounted cash flow method[185](index=185&type=chunk)[187](index=187&type=chunk) [**Note 47: Financial Instruments Risks**](index=50&type=section&id=Note%2047%3A%20Financial%20Instruments%20Risks) The bank details its exposure to credit risk and allowances under the IFRS 9 expected credit loss (ECL) model. As of June 30, 2021, total credit investment exposure at default was ARS 301.6 billion. Allowances for loan losses were categorized into three stages: Stage 1 (performing) at ARS 5.0 billion, Stage 2 (significant increase in credit risk) at ARS 3.9 billion, and Stage 3 (impaired) at ARS 6.5 billion, for a total allowance of ARS 15.5 billion. COVID-19 relief measures, such as payment deferrals, did not result in stage improvements for affected loans, and no relevant impacts on ECLs were directly associated with the pandemic Allowances for Loan Losses by Stage (in thousands of ARS, 06.30.21) | Category | Stage 1 | Stage 2 (Collective & Individual) | Stage 3 (Collective & Individual) | Total | | :--- | :--- | :--- | :--- | :--- | | **Allowances - Credit Investment** | **5,043,048** | **3,916,938** | **6,519,971** | **15,479,957** | - The bank notes that COVID-19 related loan payment deferrals did not result in improvements in the staging of credit risk for the affected portfolios, and there were no relevant impacts on ECLs directly associated with the pandemic[227](index=227&type=chunk)[229](index=229&type=chunk) [**Note 48 & 56: Regulatory Matters**](index=54&type=section&id=Note%2048%20%26%2056%3A%20Regulatory%20Matters) The bank is subject to significant regulatory oversight. A key restriction imposed by the BCRA is the suspension of profit distribution by financial institutions, which has been extended until December 31, 2021. Additionally, the bank is involved in several administrative proceedings initiated by the BCRA for alleged breaches of foreign exchange regulations and other rules. The bank and its legal advisors believe they have made a reasonable interpretation of the regulations and do not expect an adverse financial impact from these cases - The BCRA has suspended the distribution of profits by financial institutions until December 31, 2021. Any dividend payments are subject to the lifting of this suspension and formal BCRA approval[232](index=232&type=chunk) - The bank is party to several administrative proceedings initiated by the BCRA concerning alleged breaches of the Criminal Foreign Exchange Regime and other financial regulations[255](index=255&type=chunk)[256](index=256&type=chunk)[259](index=259&type=chunk) Independent Auditors' and Supervisory Committee's Reports [**Independent Auditors' Limited Review Report**](index=72&type=section&id=Independent%20Auditors%27%20Limited%20Review%20Report) The independent auditors, KPMG, conducted a limited review (not a full audit) of the condensed interim consolidated financial statements. Based on their review, they concluded that nothing came to their attention to suggest the financial statements were not prepared, in all material respects, in conformity with the accounting standards established by the BCRA. The report includes an "Emphasis of Matter" paragraph highlighting the deviations from IFRS as detailed in Note 2 of the financial statements - The auditors' report is a limited review, which is substantially less in scope than an audit, and therefore does not express a full audit opinion[302](index=302&type=chunk) - An "Emphasis of Matter" was included to draw attention to the fact that the financial reporting framework set by the BCRA differs from IFRS in certain aspects, as described in Notes 2.a), 2.b), and 2.c)[304](index=304&type=chunk) [**Supervisory Committee's Report**](index=117&type=section&id=Supervisory%20Committee%27s%20Report) The Supervisory Committee reviewed the interim financial statements and the work of the external auditors. They stated they have no observations to raise and that the financial statements reflect all substantial known facts and circumstances. The committee also reiterated the "Emphasis Matter" from the auditor's report concerning the deviations from IFRS due to BCRA's specific accounting framework - The Supervisory Committee's opinion is that the financial statements are appropriate, but they also highlight the "Emphasis Matter" regarding the deviations from IFRS[482](index=482&type=chunk)[484](index=484&type=chunk) Separate Condensed Interim Financial Statements [**Overview of Separate Financials**](index=74&type=section&id=Overview%20of%20Separate%20Financials) This section presents the separate financial statements for Banco BBVA Argentina S.A. (the parent entity), which are supplementary to the consolidated statements. The financial position, income, and cash flows are largely similar to the consolidated figures, with differences arising from the exclusion of subsidiaries and the accounting for investments in these subsidiaries using the equity method. Total assets for the separate entity were ARS 851.3 billion and net income for H1 2021 was ARS 10.56 billion, identical to the income attributable to the parent in the consolidated statements - These financial statements are for the parent entity only and are supplementary to the consolidated statements. Investments in subsidiaries are accounted for using the equity method[341](index=341&type=chunk)[350](index=350&type=chunk) Separate Financial Highlights (in thousands of ARS, 06.30.21) | Account | Amount | | :--- | :--- | | Total Assets | 851,275,684 | | Total Liabilities | 721,009,726 | | Total Equity | 130,265,958 | | Net Income for the Period | 10,557,502 | Reporting Summary [**Business Overview and Performance**](index=120&type=section&id=Business%20Overview%20and%20Performance) BBVA Argentina is a major financial institution in the country with over 2.7 million active customers. For H1 2021, the bank recorded a profit of ARS 10.5 billion, with a ROE of 7.63% and ROA of 1.25%. Net loans decreased by 16% year-over-year, while customer deposits increased by 8.7%. The bank maintained good portfolio quality, with a non-performing loan ratio of 2.49% and coverage of 187.88% - The bank serves over **2.7 million** active customers through a network of **243 branches**[494](index=494&type=chunk) Key Performance Indicators (H1 2021) | Metric | Value | | :--- | :--- | | Net Income | ARS 10.51 billion | | Return on Average Equity (ROE) | 7.63% | | Return on Average Assets (ROA) | 1.25% | | Non-Performing Loan Ratio | 2.49% | [**Outlook and Digital Strategy**](index=121&type=section&id=Outlook%20and%20Digital%20Strategy) The bank's outlook is shaped by the ongoing health crisis, upcoming legislative elections, and external debt negotiations. Management believes the bank is well-positioned due to low funding costs and a strong capital position. A key focus is digital transformation, which has accelerated during the pandemic. As of June 2021, the share of digital customers reached 74%, up from 69% a year prior, and mobile customers grew to 62% from 57% - The bank's outlook is cautious due to the second wave of COVID-19, political uncertainty, and ongoing debt negotiations with the IMF[500](index=500&type=chunk) - Digital adoption continues to grow, with digital customers reaching **74%** and mobile customers reaching **62%** of the total customer base as of June 2021[501](index=501&type=chunk)

Financial Data and Key Metrics Changes - BBVA Argentina's net income for Q2 2021 was ARS 7.2 billion, a 119.3% increase quarter-over-quarter and a 14.3% increase year-over-year [10] - The accumulated net income for the first half of 2021 was ARS 10.5 billion, which is 23.7% higher than the same period in 2020 [10] - The accumulated Return on Equity (ROE) for Q2 2021 was 16.5%, while the Return on Assets (ROA) was 2.5% [10] Business Line Data and Key Metrics Changes - Net interest income totaled ARS 24.3 billion, a 1.7% increase from Q1 2021 and a 1.9% increase year-over-year [11] - Net fee income reached ARS 5.4 billion, growing 45.9% quarter-over-quarter and 16.3% year-over-year [12] - Interest expenses increased to ARS 19.4 billion, a 15.1% increase quarter-over-quarter and a 99.4% increase year-over-year [12] Market Data and Key Metrics Changes - BBVA's market share of private sector loans decreased to 8.21% from 8.54% a year ago [17] - The gross loan-to-deposit ratio was 52.9%, down from 68% a year ago [17] - Total deposits reached ARS 609.1 billion, an 8.1% increase quarter-over-quarter and an 8.6% increase year-over-year [19] Company Strategy and Development Direction - The bank is focusing on digitalization, with digital finance penetration reaching 74% from 69% a year ago [8] - BBVA aims to double its target for sustainable financing to €200 billion globally, with BBVA Argentina contributing to this goal [9] - The bank is closely monitoring business conditions and operating results to anticipate effects from the gradual removal of pandemic-related regulations [8] Management's Comments on Operating Environment and Future Outlook - The second quarter of 2021 was impacted by the second wave of COVID-19 and uncertainty from upcoming midterm elections and unresolved foreign debt conflicts [7] - Management is projecting an increase in the non-performing loan (NPL) ratio to around 2.9% by the end of 2021, primarily due to the retail loan book [24] - The bank expects a contraction of approximately 3.6% in real terms for the private loan book for 2021 [30] Other Important Information - The efficiency ratio for Q2 2021 was 70.1%, an improvement from 72.5% in Q1 2021 [15] - The bank's capital ratio was 23.3%, with a Tier 1 ratio of 22.6% [20] - The bank has ARS 21.5 billion in liabilities pending distribution for dividends once approved by the central bank [36] Q&A Session Summary Question: Concerns about asset quality and loan book - Management indicated that the deferred portfolio is only 10% of the book, mainly in retail and credit cards, and they are comfortable with asset quality ratios [24] Question: Provisions related to inflation adjustments - Management confirmed that all provisions related to the fiscal years of 2017 and 2018 have been reversed, totaling ARS 4.3 billion in Q2 2021 [27] Question: Expectations for volume growth in assets, loans, and deposits - Management projected a contraction of around 3.6% in real terms for the private loan book and a growth of approximately 3.1% in real terms for total deposits [30] Question: Impact of digital wallets on funding - Management stated that they are not currently concerned about the impact of digital wallets on deposit availability, as site deposits are growing [43]

Financial Data and Key Metrics Changes - BBVA Argentina reported a net income of ARS 3.0 billion for Q1 2021, an increase of 821.6% quarter-over-quarter and 50.8% year-over-year [7] - The bank achieved a positive real return on equity of 10.5% and a real return on assets of 1.6% [9] - Net interest income totaled ARS 21.5 billion, a decrease of 2.3% from Q4 2020 and 8.1% from Q1 2020 [9][10] - The efficiency ratio for Q1 2021 was 72.5%, up from 56.8% in Q4 2020 and 59.3% in Q1 2020 [14] Business Line Data and Key Metrics Changes - Interest income from loans and other financing reached ARS 17.7 billion, growing 0.5% quarter-over-quarter, driven by a 16.6% increase in credit card income [11] - Net fee income for Q1 2021 was ARS 3.4 billion, up 6.1% quarter-over-quarter and 25.4% year-over-year [12] - Personnel benefits and administrative expenses totaled ARS 11.2 billion, increasing 2.0% compared to Q4 2020 but decreasing 2.5% year-over-year [13] Market Data and Key Metrics Changes - BBVA Argentina's market share in private sector loans decreased to 8.23% from 8.35% in Q1 2020 [15] - Private sector loans in real terms totaled ARS 296.8 billion, down 9.5% quarter-over-quarter and 7.7% year-over-year [14] - Nonfinancial private sector deposits totaled ARS 501.1 billion, decreasing 6% quarter-over-quarter but increasing 8.3% year-over-year [18] Company Strategy and Development Direction - The bank is focusing on digitalization, with digital client penetration reaching 73% from 68% a year prior [7] - BBVA Argentina aims to maintain a sustainable banking model, emphasizing financial education and environmental protection [7] - The bank is positioned to utilize its excess capital of ARS 69.2 billion effectively, with a total regulatory capital ratio of 22.4% [20] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainties due to the ongoing negotiations with the IMF and the impact of midterm elections on the economy [6] - The bank's management expressed confidence in the stability of the NPLs, projecting a year-end NPL ratio of around 3.62% [23] - The management highlighted the importance of adapting to the evolving economic landscape while ensuring the safety of banking operations [6] Other Important Information - The bank's liquidity ratios remained healthy at 65.8% in pesos and 87.7% in dollars as of March 31, 2021 [20] - A cash dividend of ARS 7 billion was approved, subject to Central Bank authorization, with a payout ratio of 58% [21] Q&A Session Summary Question: Concerns about NPLs and loan segments - Management acknowledged a peak in NPLs due to the expiration of COVID-19 measures but indicated stabilization in subsequent months [23] Question: Tax provision reversals and future effective tax rate - Management clarified that the reversal of the 2016 tax provision was a one-time effect and projected an effective tax rate around 38% depending on regulatory changes [26][27] Question: Details on dividend distribution and pending liabilities - Management confirmed that ARS 14.5 billion in dividends from 2019 are pending distribution, and the newly declared ARS 7 billion will be reflected in liabilities in the second quarter [31][33]

PART I [Key Information](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section presents selected financial data, key performance ratios, dividend history, and exchange rate information for Banco BBVA Argentina from 2017-2020, alongside a comprehensive overview of risk factors [Selected Financial Data](index=6&type=section&id=A.%20Selected%20Financial%20Data) Consolidated Statement of Profit or Loss (in thousands of Argentine Pesos) | Indicator | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | 77,050,867 | 90,244,852 | 66,460,642 | 49,749,382 | | **Gross Income** | 95,180,555 | 120,882,953 | 82,511,762 | 67,000,822 | | **Profit Before Tax** | 18,102,889 | 24,636,513 | 5,794,181 | 5,407,440 | | **Profit (Loss) for the Year** | 10,068,795 | 21,815,454 | (3,287,401) | 3,894,338 | | **Profit (Loss) Attributable to Owners** | 10,051,035 | 21,819,964 | (3,119,918) | 3,987,136 | | **Profit (Loss) per Ordinary Share** | 16.41 | 35.61 | (5.09) | 7.00 | Consolidated Statement of Financial Position (in thousands of Argentine Pesos) | Indicator | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | 693,024,525 | 618,310,699 | 757,171,835 | 666,102,475 | | **Total Liabilities** | 578,481,131 | 503,493,790 | 661,793,752 | 563,919,848 | | **Total Equity** | 114,543,394 | 114,816,909 | 95,378,083 | 102,182,627 | Selected Ratios | Ratio | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | **Return on average total assets** | 1.53% | 3.17% | (0.44)% | 1.19% | | **Return on average total equity** | 8.93% | 20.98% | (3.17)% | 7.88% | | **Total equity as a percentage of total assets** | 16.53% | 18.57% | 12.60% | 15.31% | | **Non-performing loans ratio** | 1.50% | 3.58% | 1.78% | 0.65% | - The Board of Directors proposed a cash dividend distribution of **Ps. 7,000 million** for the fiscal year 2020, subject to shareholder and BCRA approval, though the BCRA has restricted financial institutions from distributing dividends until at least **June 30, 2021**[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) Argentine Peso Devaluation and Inflation Rates (Year-end) | Year | Devaluation Rate | Exchange Rate (Ps. per US$) | Inflation Rate (CPI) | | :--- | :--- | :--- | :--- | | **2020** | 40.49% | 84.1450 | 36.14% | | **2019** | 58.42% | 59.8950 | 53.83% | | **2018** | 101.38% | 37.8083 | 47.65% | | **2017** | 18.45% | 18.7742 | 24.80% | | **2016** | 21.88% | 15.8502 | 34.59% | [Risk Factors](index=10&type=section&id=D.%20Risk%20Factors) - The company identifies **three main categories of risks**: those relating to Argentina, risks concerning the Argentine financial system and the Bank itself, and legal, regulatory, and compliance risks[38](index=38&type=chunk)[39](index=39&type=chunk) - The COVID-19 pandemic has **significantly impacted** the Argentine economy and the Bank's operations, leading to measures like temporary branch closures, a shift to remote work, and government-mandated borrower relief, which increased the risk of asset impairment and loan defaults[105](index=105&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - Argentina's economy is classified as **hyperinflationary** for accounting purposes under **IAS 29**, requiring financial statements to be restated to the current measuring unit at the end of the reporting period, which significantly affects data comparability and interpretation[55](index=55&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - The bank faces **significant competition** from non-bank entities like large technology firms (BigTech) and financial technology (Fintech) companies, which often operate under less stringent prudential regulations, creating an uneven playing field[133](index=133&type=chunk)[134](index=134&type=chunk) - The bank's controlling shareholder, BBVA, owns **66.55%** of the capital stock, giving it control over virtually all shareholder decisions, which may create conflicts of interest with minority shareholders[167](index=167&type=chunk)[168](index=168&type=chunk) [Information on the Company](index=37&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details the company's history, business operations, and organizational structure, including recent Argentine economic developments, the bank's business segments, its digitalization focus, and a review of the Argentine banking system's regulatory framework [Recent Political and Economic Developments in Argentina](index=37&type=section&id=Recent%20Political%20and%20Economic%20Developments%20in%20Argentina) Key Argentine Economic Indicators (2018-2020) | Indicator | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **GDP Growth** | -9.9% | -2.2% | -2.5% | | **Inflation (CPI)** | 36.1% | 53.8% | 47.6% | | **Unemployment Rate (Q4)** | 11.0% | 8.9% | 9.2% (annual avg) | | **Primary Fiscal Deficit (% of GDP)** | 6.5% | 0.44% | 2.3% | | **Trade Balance (US$ million)** | 12,530 | 15,990 | (3,823) | - In 2020, the COVID-19 crisis exacerbated Argentina's existing economic challenges, leading to a **9.9% GDP contraction**, with the government's increased public spending resulting in a primary fiscal deficit of **6.5% of GDP**, largely financed by Central Bank monetary issuance[250](index=250&type=chunk)[254](index=254&type=chunk)[265](index=265&type=chunk) - Argentina successfully restructured its sovereign debt with private creditors in August 2020, achieving **99% adherence** and involving a significant coupon reduction from nearly **7% to 3%** with extended maturities[252](index=252&type=chunk) - The Central Bank implemented and tightened foreign exchange controls throughout 2019 and 2020 to manage reserve losses and currency depreciation, establishing a purchase limit of **US$200** per month for individuals[244](index=244&type=chunk)[246](index=246&type=chunk)[253](index=253&type=chunk) [History and Development of the Company](index=43&type=section&id=A.%20History%20and%20development%20of%20the%20company) - Originally incorporated as Banco Francés del Río de la Plata S.A. on **October 14, 1886**, the bank changed its corporate name to Banco BBVA Argentina S.A. in **2019** and is supervised by the Central Bank of Argentina[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) - In 2020, BBVA Argentina participated in the 'Play Sistémico' project with other major private banks to develop a digital payment solution, resulting in the incorporation of Play Digital S.A., in which the Bank holds a **10.762% interest**[309](index=309&type=chunk) [Business Overview](index=44&type=section&id=B.%20Business%20overview) - BBVA Argentina is a subsidiary of Banco Bilbao Vizcaya Argentaria S.A. and is one of the leading private financial institutions in Argentina, offering retail and corporate banking services nationwide[310](index=310&type=chunk) Key Financial and Market Position Data (as of Dec 31, 2020) | Metric | Value | | :--- | :--- | | **Total Assets** | Ps. 693.0 billion | | **Total Loan Portfolio** | Ps. 279.6 billion | | **Total Deposits** | Ps. 478.2 billion | | **Total Shareholders' Equity** | Ps. 114.5 billion | | **Market Share (Private Loans)** | 7.7% (unconsolidated) | | **Market Share (Private Deposits)** | 7.1% (unconsolidated) | - The bank operates through three main business lines: Retail Banking (**2.69 million** active clients), Small and Medium-sized Companies (SMEs) (over **52 thousand** clients), and Corporate and Investment Banking (CIB) (over **700** clients)[320](index=320&type=chunk) - The bank has a strong focus on digitalization, with active digital clients reaching **1.9 million** as of December 31, 2020, representing a **71.7%** penetration rate, and retail digital sales accounting for **80.8%** of total unit sales in 2020[327](index=327&type=chunk)[328](index=328&type=chunk) - The bank's distribution network as of December 31, 2020, includes **247 branches**, **888 ATMs**, and **857 self-service terminals**, complemented by digital channels like bbva.com.ar, BBVA Móvil, Go, and the new MODO payment app[321](index=321&type=chunk)[325](index=325&type=chunk) [Organizational Structure](index=58&type=section&id=C.%20Organizational%20structure) - As of December 31, 2020, Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) is the controlling shareholder, owning **66.55%** of the bank's capital stock[411](index=411&type=chunk) Key Subsidiaries of BBVA Argentina (as of Dec 31, 2020) | Subsidiary | Ownership % | Principal Activity | | :--- | :--- | :--- | | PSA Finance Argentina Cía. Financiera S.A. | 50.00% | Financial institution | | BBVA Asset Management Argentina S.A. | 100.00% | Investment fund manager | | Volkswagen Financial Services S.A. | 51.00% | Financial institution | - The bank holds a **40%** interest in the joint venture Rombo Compañía Financiera S.A. and has investments in associates including BBVA Consolidar Seguros S.A. (**12.22%**) and Play Digital S.A. (**13.00%**)[452](index=452&type=chunk)[461](index=461&type=chunk) [Property, Plant and Equipment](index=67&type=section&id=D.%20Property%2C%20plant%20and%20equipment) - The bank's principal executive offices are located at Av. Córdoba 111, Buenos Aires, in a property owned by the company[480](index=480&type=chunk) - As of December 31, 2020, the bank's network consisted of **247 retail branches**, with **113** located in properties owned by the bank and **134** in leased properties[481](index=481&type=chunk) [Selected Statistical Information](index=67&type=section&id=E.%20Selected%20statistical%20information) - The statistical information presented has been adjusted for hyperinflation in accordance with **IAS 29**, stating figures in the measuring unit current at December 31, 2020[484](index=484&type=chunk) Net Interest Margin and Spread | Indicator | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Net Interest Margin (Weighted Avg)** | 21.82% | 19.67% | 13.56% | | **Yield Spread (Weighted Avg)** | 17.63% | 16.64% | 11.60% | Loan Portfolio Classification by Stage (as of Dec 31) | Stage | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Stage 1** | 84.74% | 86.51% | 91.07% | | **Stage 2** | 13.40% | 9.72% | 6.90% | | **Stage 3 (Non-performing)** | 1.86% | 3.77% | 2.03% | Impairment Allowance Activity (in thousands of Pesos) | Activity | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Balance at beginning of year** | 23,928,237 | 10,197,983 | 5,794,964 | | **Provisions for loan losses** | 4,408,591 | 17,528,046 | 8,107,617 | | **Charge-offs** | (7,298,071) | (3,797,792) | (5,874,897) | | **Balance at end of year** | 21,038,757 | 23,928,237 | 10,197,983 | [The Argentine Banking System and its Regulatory Framework](index=83&type=section&id=F.%20The%20Argentine%20Banking%20System%20and%20its%20Regulatory%20Framework) - The Argentine banking system is supervised by the Central Bank of Argentina (BCRA), which sets technical ratios, capital requirements, and liquidity rules, and consists of both private and public sector banks[531](index=531&type=chunk)[536](index=536&type=chunk) - The Bank is subject to capital adequacy requirements based on **Basel III** principles, with minimum ratios of **4.5%** for ordinary capital level 1, **6%** for basic net equity, and **8%** for total capital relative to risk-weighted assets as of February 2013[571](index=571&type=chunk)[573](index=573&type=chunk)[575](index=575&type=chunk) - The Bank must comply with a **Liquidity Coverage Ratio (LCR)** to ensure it holds sufficient high-quality liquid assets to cover net cash outflows over a **30-day** stress period, with BBVA Argentina's LCR at **314%** as of December 31, 2020[599](index=599&type=chunk)[600](index=600&type=chunk)[604](index=604&type=chunk) - The Bank is subject to the Anti-Money Laundering Law, which requires reporting suspicious transactions to the Financial Information Unit (UIF) and implementing robust 'know your customer' policies[688](index=688&type=chunk)[691](index=691&type=chunk) [Cybersecurity and Fraud Management](index=121&type=section&id=G.%20Cybersecurity%20and%20Fraud%20Management) - In response to accelerated digital transformation and increased cybercrime due to the COVID-19 pandemic, the Bank has focused on initiatives for cybersecurity, fraud prevention, and data protection[712](index=712&type=chunk)[713](index=713&type=chunk) - Key fraud prevention measures in 2020 included implementing a **second authentication factor** for online loans, enhancing password recovery processes, and adopting **3DSecure technology** for e-commerce transactions[716](index=716&type=chunk) - The Bank implemented an infrastructure protection plan which included a firewall solution for its websites, security improvements in critical systems like SWIFT, and a new solution for managing privileged accounts, with no cases of customer data leaks, theft, or loss identified in 2020[714](index=714&type=chunk)[719](index=719&type=chunk) [Operating and Financial Review and Prospects](index=123&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section provides management's discussion and analysis of the Bank's financial condition and results of operations, covering challenging economic conditions, the impact of COVID-19 regulations, operating results, liquidity, capital resources, key trends, and off-balance sheet arrangements [Operating Results](index=134&type=section&id=A.%20Operating%20Results) Consolidated Profit or Loss Summary (in thousands of Argentine Pesos) | Line Item | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | **Net Interest Income** | 77,050,867 | 90,244,852 | (14.6)% | | **Gross Income** | 95,180,555 | 120,882,953 | (21.3)% | | **Net Operating Income** | 17,836,317 | 24,462,091 | (27.1)% | | **Profit Before Tax** | 18,102,889 | 24,636,513 | (26.5)% | | **Profit for the Year** | 10,068,795 | 21,815,454 | (53.8)% | | **Profit Attributable to Owners** | 10,051,035 | 21,819,964 | (53.9)% | - Net interest income decreased by **14.6%** in 2020, primarily due to lower interest from government securities (BCRA LELIQ instruments) and reduced interest from various loan products, reflecting lower volumes and rates[793](index=793&type=chunk)[796](index=796&type=chunk)[811](index=811&type=chunk) - Fee and commission income remained relatively stable, decreasing by **1.3%** in 2020, as a significant drop in fees from deposit accounts (due to COVID-19 relief measures) was largely offset by a **66.1%** increase in fees linked to credit cards[813](index=813&type=chunk)[815](index=815&type=chunk) - Impairment of financial assets decreased by **44.7%** in 2020 to **Ps. 11,864.8 million**, an improvement attributed to better portfolio quality and temporary regulatory flexibility from the BCRA on debtor classification amid the pandemic[863](index=863&type=chunk)[864](index=864&type=chunk)[865](index=865&type=chunk) - The loss on net monetary position due to hyperinflation was **Ps. 22,274.8 million** in 2020, a decrease from **Ps. 27,518.8 million** in 2019, reflecting the lower inflation rate during the year[868](index=868&type=chunk) [Liquidity and Capital Resources](index=149&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) - The Bank's primary source of funds is its deposit base, which totaled **Ps. 478,223.0 million** at December 31, 2020, up from **Ps. 400,237.0 million** in 2019[888](index=888&type=chunk) Key Liquidity and Capital Ratios | Ratio | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | :--- | | **Liquid Assets as a % of Total Deposits** | 56.36% | 49.55% | 36.43% | | **Total Liabilities as a multiple of Total Equity** | 5.58x | 4.47x | 8.20x | | **Loans as a % of Total Assets** | 39.70% | 42.96% | 51.16% | - As of December 31, 2020, the Bank had consolidated excess capital of **Ps. 52,967.6 million** pursuant to Central Bank rules, and its total capital to risk-weighted assets ratio was **19.4%**, well above the **8%** minimum requirement[903](index=903&type=chunk)[908](index=908&type=chunk) [Trend Information](index=154&type=section&id=D.%20Trend%20Information) - The COVID-19 pandemic accelerated the adoption of digital tools by customers, with a significant increase in digital product purchases and online transactions, a trend expected to continue[926](index=926&type=chunk)[945](index=945&type=chunk) - The Argentine financial system is expected to face increased regulation in 2021, with the Central Bank setting minimum rates for term deposits and maximum rates for certain loans (e.g., credit cards, SME loans)[939](index=939&type=chunk) - Asset quality trends in 2021 will depend on the evolution of Central Bank measures, as regulatory flexibility, such as extending grace periods for loan classification, led to a decline in delinquency ratios in 2020[939](index=939&type=chunk) - The Argentine banking system remains under-penetrated compared to Latin American peers and is largely unconsolidated, suggesting significant room for industry consolidation and growth if economic conditions stabilize[931](index=931&type=chunk)[933](index=933&type=chunk) [Off-Balance Sheet Arrangements](index=156&type=section&id=E.%20Off-Balance%20Sheet%20Arrangements) - The Bank utilizes off-balance sheet financial instruments, including derivatives, credit commitments, and guarantees, to meet client needs and for its own asset and liability management[947](index=947&type=chunk) - Credit commitments, such as agreements to lend, and guarantees are subject to the same credit policies as on-balance sheet loans, with many commitments expected to expire without being drawn upon[951](index=951&type=chunk) - The Bank acts as a trustee for several financial and non-financial trusts but is not personally liable for the obligations of these trusts; liabilities are satisfied by the trust assets[952](index=952&type=chunk)[953](index=953&type=chunk) [Tabular Disclosure of Contractual Obligations](index=157&type=section&id=F.%20Tabular%20Disclosure%20of%20Contractual%20Obligations) Contractual Obligations and Commercial Commitments as of December 31, 2020 (in thousands of Pesos) | Item | Total | Less than 1 year | 1-3 years | 4-5 years | After 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | **Long-term debt** | 50,210,225 | 48,835,852 | 1,374,373 | — | — | | **Operating leases** | 2,989,674 | 204,288 | 707,992 | 1,260,611 | 816,783 | | **Lines of credit** | 52,858,621 | 52,858,621 | — | — | — | | **Guarantees** | 841,908 | 735,642 | 41,048 | 64,500 | 718 | [Directors, Senior Management and Employees](index=158&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the Bank's leadership and workforce, including the Board of Directors, senior management, aggregate compensation, board committee structures, employee numbers, and share ownership by directors and executives [Directors and Senior Management](index=158&type=section&id=A.%20Directors%20and%20Senior%20Management) - The Board of Directors is led by Chairwoman María Isabel Goiri Lartitegui, and the senior management team is headed by Chief Executive Officer Martín Ezequiel Zarich, appointed in 2015[956](index=956&type=chunk)[963](index=963&type=chunk) [Compensation](index=163&type=section&id=B.%20Compensation) - The aggregate compensation paid by the Bank and its subsidiaries to all directors and officers for the fiscal year ended December 31, 2020, was **Ps. 747.735 million**, with an additional **Ps. 39.323 million** accrued for 2020 to be paid between 2021 and 2024[968](index=968&type=chunk) [Board Practices](index=163&type=section&id=C.%20Board%20practices) - The Bank's corporate governance includes a Supervisory Committee to monitor management's compliance with laws and regulations, and several board committees such as the Audit Committee, Nomination and Remunerations Committee, and Management Committee[970](index=970&type=chunk)[978](index=978&type=chunk)[983](index=983&type=chunk) [Employees](index=172&type=section&id=D.%20Employees) Number of Full-Time Employees | Year | Main Office | Branches | Total | | :--- | :--- | :--- | :--- | | **2020** | 3,118 | 2,901 | 6,019 | | **2019** | 3,826 | 2,495 | 6,321 | | **2018** | 3,568 | 2,521 | 6,089 | - As of December 31, 2020, **2,457 employees** were unionized, and the Bank considers its relations with employees to be satisfactory, having not experienced conflicts with the union for over **20 years**[1006](index=1006&type=chunk) [Share Ownership](index=172&type=section&id=E.%20Share%20Ownership) - As of February 28, 2021, share ownership by any individual director or senior executive represented **less than 1%** of the Bank's capital stock[1009](index=1009&type=chunk) [Major Shareholders and Related Party Transactions](index=172&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section identifies the Bank's principal owners and details related party transactions, noting that BBVA is the largest shareholder and all transactions were conducted on comparable terms to those with unrelated parties [Major Shareholders](index=172&type=section&id=A.%20Major%20Shareholders) Beneficial Ownership of Ordinary Shares (as of Feb 28, 2021) | Beneficial Owner | Number of Shares | % of Shares Outstanding | | :--- | :--- | :--- | | **Banco Bilbao Vizcaya Argentaria S.A.** | 244,870,968 | 39.97% | | **BBV América SL (controlled by BBVA)** | 160,060,144 | 26.13% | | **The Bank of New York Mellon (as ADS holder)** | 99,307,764 | 16.21% | | **Administración Nacional de Seguridad Social (ANSES)** | 42,439,494 | 6.93% | - As of December 31, 2020, BBVA had a total equity interest in the Bank of **66.55%**[1013](index=1013&type=chunk) [Related Party Transactions](index=173&type=section&id=B.%20Related%20Parties%20Transactions) - Transactions with related parties, including controlled companies, controlling shareholders, and key management, were conducted in the ordinary course of business on substantially the same terms as those with unrelated parties and did not present unusual risks[1017](index=1017&type=chunk)[1018](index=1018&type=chunk) [Financial Information](index=175&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers the Bank's legal proceedings, including anti-money laundering violations and a class action, and its dividend policy, which is currently suspended due to BCRA regulations related to the COVID-19 pandemic [Legal Proceedings](index=175&type=section&id=Legal%20Proceedings) - The Bank is involved in several legal and regulatory proceedings, notably with the Financial Information Unit (UIF) filing **two actions** against the Bank and its directors in 2019 for alleged violations of anti-money laundering regulations[1032](index=1032&type=chunk)[1034](index=1034&type=chunk) - In February 2020, the Bank was notified of a class action lawsuit concerning alleged damages to investors in certain investment funds it managed, related to modifications in the price of future dollar contracts[1035](index=1035&type=chunk) [Dividends](index=175&type=section&id=Dividends) - As a result of the COVID-19 pandemic, the Central Bank of Argentina (BCRA) suspended the distribution of dividends by financial institutions, extending this suspension until **June 30, 2021**, by Communication 'A' 7181[1042](index=1042&type=chunk) - For the year ended December 31, 2019, shareholders approved dividend payments totaling **Ps. 14,500 million** (**Ps. 2,500 million** plus a supplementary **Ps. 12,000 million**), while for 2020, a dividend of **Ps. 7,000 million** has been proposed, subject to BCRA authorization[27](index=27&type=chunk)[1040](index=1040&type=chunk) [The Offer and Listing](index=176&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) This section provides information on the trading of the Bank's securities, including its ordinary shares on BYMA and ADSs on NYSE, along with historical high and low closing prices for both - The Bank's ordinary shares are listed on the **BYMA (ticker: BBAR)**, and its American Depositary Shares (ADSs) are listed on the **NYSE (ticker: BBAR)**, with each ADS representing **three ordinary shares**[1044](index=1044&type=chunk)[1047](index=1047&type=chunk) ADS Price History on NYSE (US$ per ADS) | Period | High | Low | | :--- | :--- | :--- | | **Year ended Dec 31, 2020** | 5.77 | 2.27 | | **Year ended Dec 31, 2019** | 13.97 | 3.06 | | **Year ended Dec 31, 2018** | 26.60 | 7.18 | Ordinary Share Price History on BYMA (Pesos per share) | Period | High | Low | | :--- | :--- | :--- | | **Year ended Dec 31, 2020** | 188.85 | 69.40 | | **Year ended Dec 31, 2019** | 183.45 | 80.55 | | **Year ended Dec 31, 2018** | 170.50 | 89.00 | [Quantitative and Qualitative Disclosures About Market Risk](index=191&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the Bank's risk management framework, covering credit, financial, and non-financial risks, including the non-performing loan ratio, VaR model usage, and management of liquidity, interest rate, and foreign exchange risks - The Bank's risk management model is structured around **three main risk groups**: Credit Risk, Financial Risk (including market, liquidity, and interest rate risk), and Non-Financial Risk (including operational risk)[1169](index=1169&type=chunk) Credit Risk Ratios | Ratio | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Non-performing loan ratio** | 1.50% | 3.58% | | **Coverage ratio** | 245% | 148% | Daily Trading Value at Risk (VaR) (in millions of Pesos) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Average** | 226.41 | 81.60 | | **Maximum** | 431.58 | 273.42 | | **At December 31** | 225.50 | 43.57 | - As of December 31, 2020, the Bank had a net liability foreign currency position of **Ps. 1,389 million**, where a hypothetical **10% devaluation** of the peso would result in a positive effect on net income of **Ps. 139 million**[902](index=902&type=chunk)[1231](index=1231&type=chunk) PART II [Controls and Procedures](index=202&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) This section addresses the effectiveness of the Bank's internal controls, with management concluding disclosure controls and internal control over financial reporting were effective, and KPMG issuing an unqualified opinion on the latter - As of December 31, 2020, the Bank's management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective**[1237](index=1237&type=chunk)[1238](index=1238&type=chunk) - Management's assessment concluded that the Bank's internal control over financial reporting was **effective** as of December 31, 2020, based on the criteria established in the 'Internal Control—Integrated Framework (2013)' by **COSO**[1241](index=1241&type=chunk)[1242](index=1242&type=chunk) - The independent registered public accounting firm, **KPMG**, audited the internal control over financial reporting and issued an **unqualified opinion** on its effectiveness as of December 31, 2020[1242](index=1242&type=chunk)[1246](index=1246&type=chunk) [Corporate Governance](index=203&type=section&id=ITEM%2016.%20Corporate%20Governance) This section details the Bank's corporate governance practices, including its audit committee, code of ethics, principal accountant fees, and significant differences from NYSE listing standards regarding director independence and committee composition - The Board of Directors has appointed Mr. Alfredo Castillo Triguero as the audit committee financial expert, as defined by the SEC[1252](index=1252&type=chunk) - The Bank has a Code of Conduct that applies to all management and employees and is available on its website[1253](index=1253&type=chunk) Principal Accountant Fees (KPMG) | Fee Type | 2020 (millions of Pesos) | 2019 (millions of Pesos) | | :--- | :--- | :--- | | **Audit fees** | 149.28 | 86.46 | | **Audit-related fees** | 6.24 | — | | **Tax fees** | — | — | | **All other fees** | 0.14 | — | | **Total fees** | 155.66 | 86.46 | - The report discloses **significant differences** between its corporate governance practices and NYSE standards, including not having a majority of independent directors on the board and variations in the composition and requirements of the nominations and compensation committees[1261](index=1261&type=chunk)[1268](index=1268&type=chunk)[1269](index=1269&type=chunk) PART III [Financial Statements](index=209&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains the audited consolidated financial statements of Banco BBVA Argentina and its subsidiaries for 2018-2020, prepared under IFRS and including KPMG's unqualified opinion, with notes detailing hyperinflationary accounting and COVID-19 impacts - The consolidated financial statements were audited by **KPMG**, which issued an **unqualified opinion**, stating the financials present fairly, in all material respects, the financial position and results of operations in conformity with **IFRS** as issued by the IASB[1294](index=1294&type=chunk) - The auditors identified **two critical audit matters**: 1) The provision for **expected credit losses (ECL)**, due to significant measurement uncertainty and complex judgments, especially given the COVID-19 pandemic; 2) The measurement of fair value for difficult-to-value (**Level 3 financial instruments**), which involved subjective auditor judgment on unobservable inputs[1298](index=1298&type=chunk)[1300](index=1300&type=chunk)[1304](index=1304&type=chunk) - The financial statements have been prepared under the assumption of a **hyperinflationary economy** in Argentina since July 1, 2018, in accordance with **IAS 29**, with all items stated in terms of the measuring unit current at the end of the reporting period (December 31, 2020)[1449](index=1449&type=chunk)

Financial Data and Key Metrics Changes - BBVA Argentina's full year 2020 net income totaled 12 billion pesos, a decrease of 38.9% compared to 19.7 billion pesos in the previous year, primarily due to the pandemic's impact and monetary policy changes [12][13] - The bank reported a positive real return on equity of 11.8% and a real return on assets of 1.8% for the year [14] - In the fourth quarter of 2020, net interest income was 19.5 billion pesos, up 5.3% from the previous quarter but down from the previous year [14][15] Business Line Data and Key Metrics Changes - Interest income from loans and other financing decreased by 5.1% quarter-over-quarter, attributed to a contraction in overdrafts and credit card financing [16] - The retail portfolio, including mortgages and credit card loans, increased by 7.3% quarter-over-quarter and 6.1% year-over-year [19] - Commercial loans grew by 7.3% quarter-over-quarter but faced a decline in overdrafts and financing loans [20] Market Data and Key Metrics Changes - BBVA Argentina's market share in private sector loans increased to 8.49% from 7.71% in the same quarter of the previous year [18] - Private sector deposits totaled 472 billion pesos, growing 7.8% quarter-over-quarter and 19.1% year-over-year [23] - The bank's transactional deposits represented 66.6% of total deposits, up from 63.1% in the previous quarter [23] Company Strategy and Development Direction - The bank emphasized the importance of technology in financial services, achieving a total of 1.9 million digital clients, a penetration rate of 72% [9] - BBVA Argentina launched MODO, a payment solution app, which reached 1 million users [10] - The bank is committed to sustainable development, launching eco-personal loans and sustainable cards made from recyclable materials [10] Management's Comments on Operating Environment and Future Outlook - Management noted the uncertainty in the economic environment due to the global health crisis and its impact on fiscal deficit financing and upcoming elections [7][8] - The bank anticipates an increase in non-performing loans (NPL) to around 3.32% by the end of 2021, driven by commercial lending and the removal of Central Bank waivers [28] - Inflation is expected to rise to 50% in 2021, impacting real returns on equity and assets [39] Other Important Information - The bank's liquidity ratios remain healthy at 60.6% in pesos and 85.1% in dollars as of December 31, 2020 [24] - The coverage ratio for non-performing loans decreased to 334.43% in the fourth quarter of 2020 [21] Q&A Session Summary Question: Concerns about the rapid deterioration in the commercial loan book - Management confirmed that the increase in non-performing loans was primarily due to a specific company in the oil and gas sector, which has been provisioned into Stage 3 [28] Question: Inquiry about the increase in provisions - Management explained that the increase in provisions was mainly due to changes in the calculation parameters of IFRS 9, with projections indicating a decrease in the cost of risk [30] Question: Clarification on the P&L disclosure and future reporting - Management stated that the P&L was not disclosed due to regulatory changes affecting inflation recognition, and they committed to providing full quarterly information in the future [33][35] Question: Expectations for growth and profitability in 2021 - Management projected a loan book growth of around 11% in real terms for 2021, with total deposits expected to grow by 10% [38]

Financial Data and Key Metrics Changes - BBVA Argentina's net income for Q3 2020 was ARS2.83 billion, a 2.9% increase from ARS2.75 billion in Q2 2020, but a 65.4% decrease from ARS8.19 billion in Q3 2019 [9] - Net interest income decreased to ARS16.6 billion, down 2.6% quarter-over-quarter and 25.6% year-over-year [10] - The efficiency ratio increased to 58% in Q3 2020, up from 54.7% in Q2 2020 and 43.9% in Q3 2019 [14] Business Line Data and Key Metrics Changes - Income from government securities increased by 34.1% compared to Q2 2020 but fell 38.4% year-over-year [11] - Net fee income amounted to ARS3 billion, a 10.2% decrease quarter-over-quarter [12] - Interest from time deposits represented 86.4% of total interest expense, increasing 48.5% in the quarter [12] Market Data and Key Metrics Changes - BBVA Argentina's market share of private sector loans increased to 8.25% from 8.13% year-over-year [15] - Private sector deposits totaled ARS393 billion, flat quarter-over-quarter and up 6% year-over-year [19] - The bank's transactional deposits represented 63.1% of total deposits, down from 66.4% a year ago [20] Company Strategy and Development Direction - The bank is focusing on digital transformation, with digital client penetration reaching 71% and mobile client penetration at 59% [7] - BBVA Argentina is committed to sustainability and responsible banking, supporting financial education and environmental protection [7] - The bank aims to optimize shareholder value while maintaining solidity amid the pandemic's volatility [8] Management's Comments on Operating Environment and Future Outlook - Management anticipates an increase in non-performing loans (NPL) to around 1.90% by the end of 2020, with a potential rise to 2.10% in 2021 [25][26] - The bank expects net interest income to increase in Q1 2021 due to rising activity, although costs of funds may also rise [28] - The bank's liquidity ratios remain healthy, with a total regulatory capital ratio of 23.3% [21] Other Important Information - The bank has granted ARS47.6 billion in COVID-19 support credit lines [17] - A complementary cash dividend of ARS12 billion was approved, pending Central Bank approval [21] Q&A Session Summary Question: Provisioning levels and future expectations - Management indicated that provisioning levels would likely increase in Q4 2020 due to changes in the IFRS 9 model and anticipated increases in NPLs [25][26] Question: Net interest income trends - Management acknowledged a significant decrease in net interest income compared to peers and indicated that activity increases could help improve this in Q1 2021 [27][28] Question: Loan demand and new regulations - Management noted that demand for unsubsidized loans is uncertain but indicated that they have already guaranteed ARS5.9 billion in new lines [30][31] Question: Dividend situation - Management clarified that while dividends have been declared, payment is contingent on Central Bank approval, and they are hedging against inflation through this process [39][41]

Banco BBVA Argentina S.A. (NYSE:BBAR) Q2 2020 Earnings Conference Call August 26, 2020 11:00 AM ET Company Participants Javier Kelly - IR Officer Ines Lanusse - IR Officer Conference Call Participants Gabriel Nóbrega - Citigroup Alonso Garcia - Crédit Suisse Carlos Gomez - HSBC Operator Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to BBVA Argentina's Second Quarter 2020 Results Conference Call. We would like to inform you that this event is b ...