Banco BBVA Argentina (NYSE:BBAR) Q4 2025 Earnings call March 05, 2026 10:00 AM ET Company ParticipantsBelén Fourcade - Investor Relations ManagerBrian Flores - VP of Equity ResearchCarlos Gomez-Lopez - Head of Latin America Financial Institutions ResearchCarmen Morillo - CFODiego Cesarini - Head of ALM and Investor RelationsIgnacio Sniechowski - Head of Equity ResearchMarcos Buscaglia - External Economic AdvisorConference Call ParticipantsMatías Cattaruzzi - Senior Equity AnalystPedro Offenhenden - Research ...

Financial Data and Key Metrics Changes - WaFd Inc. reported net income available to common shareholders of $60.5 million or $0.79 per diluted share for Q1 2026, an increase from $0.54 per share in Q1 2025 and $0.72 per share in the previous quarter [6][10] - Net interest income increased by $1.2 million from the prior quarter, with a net interest margin of 2.7% for the December quarter, slightly down from 2.71% in the September quarter [9][10] - Total non-interest income increased by $1.9 million to $20.3 million, driven by a $3.2 million gain on the sale of a branch property [11] Business Line Data and Key Metrics Changes - Loan originations for active loan types were $1.1 billion, outpacing repayments of $1 billion, with significant contributions from commercial and industrial loans [7][13] - Total loans receivable decreased by $240 million, primarily due to a decline in inactive loan types [6][7] - Non-performing assets increased to $203 million, or 0.75% of total assets, reflecting a rise in non-accrual loans [14][15] Market Data and Key Metrics Changes - Total deposits decreased by $21 million, with non-interest-bearing deposits increasing by 4.9% and interest-bearing deposits by 4.5%, while time deposits decreased by 6.4% [9] - The loan-to-deposit ratio ended the quarter at 92.7%, down from over 110% two years ago [9] Company Strategy and Development Direction - The strategic plan, BUILD 2030, aims to increase non-interest-bearing deposits from 11% to 20% of total deposits by 2030 [20] - The company is focusing on serving small businesses to achieve a lower cost of funds, with a goal of growing active loan portfolios by 8%-12% over the next one to two years [21][24] - WaFd Wealth Management was launched to grow assets under management, targeting $1 billion in the first two years [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, citing a 10% linked quarter EPS growth and a 40% year-over-year growth [20] - The company anticipates continued pressure on margins due to the economic environment but expects to benefit from a shift to lower-cost deposits [10][19] - Management noted that credit quality metrics remain healthy despite some increases in delinquencies and non-performing assets [18] Other Important Information - The company repurchased 1.95 million shares at a weighted average price of $29.75, with a remaining authorization of 6.3 million shares [12][26] - WaFd is appealing its CRA rating to improve its standing, which could facilitate future branching and acquisition activities [27] Q&A Session Summary Question: Margin outlook and plans for borrowings - Management plans to replace $800 million of borrowings due within the next three months with current borrowings, expecting rates to decrease if the Fed cuts rates [28][29] Question: Interest income reversals - Non-accrual interest for the quarter amounted to just over $5 million [29] Question: Expense growth and hiring plans - Management indicated no significant plans for large team increases but will continue to make strategic technology investments [32][33] Question: Margin pressure and growth expectations - Management expects further margin pressure but growth in net interest income dollars, with optimism for future quarters [36][37] Question: Loan portfolio and inactive runoff - Inactive runoff is expected to be around $200 million-$250 million per quarter, with hopes for active loan growth of 8%-10% [38][39] Question: CRA rating and branching opportunities - Improving the CRA rating would ease branching activities and potential mergers and acquisitions, although the company is not actively seeking deals [55][56]

Financial Data and Key Metrics Changes - The company reported an 11% year-over-year revenue growth in Q4 2025, with operating earnings per share increasing by 13% to $0.71 [4] - The return on assets for Q4 was 1.22%, and the return on tangible common equity was 13.3% [4] - For the full year, operating earnings per share grew by 18%, from $2.30 to $2.71, with total revenue exceeding $1 billion [4][5] - The efficiency ratio improved by 264 basis points, and credit losses declined, contributing to overall performance improvements [4] Business Line Data and Key Metrics Changes - Retail and small business lending efforts surpassed $1 billion in annual production for the first time, alongside Novitas equipment finance [5] - The loan portfolio grew at an annualized pace of 4.4%, primarily driven by C&I and HELOC categories [10] - Non-interest income was reported at $40.5 million, down from the previous quarter, with growth in wealth management and treasury management offset by a seasonal decline in mortgage [12] Market Data and Key Metrics Changes - The company experienced a positive seasonality in public funds, with an increase of $293 million in deposits [9] - The cost of deposits improved by 21 basis points to 1.76%, while the loan-to-deposit ratio increased to 82% [9][10] - Deposits grew by 1% for the year, with a focus on customer and account growth [10] Company Strategy and Development Direction - The company aims to improve earnings durability by reducing securities duration and investing in talent and systems for interest rate risk management [7] - Expansion efforts included the successful conversion of American National Bank and Fort Lauderdale to the company's systems, along with new office openings in North Carolina [8] - The company plans to be more assertive in share buybacks due to strong capital build and favorable credit quality [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued growth in 2026, citing a strong economy in their markets [15] - The competitive landscape remains challenging, but the company focuses on client service and employee culture to attract talent [39][40] - Management does not foresee significant impacts from tariffs on credit quality, indicating stability in asset quality [70] Other Important Information - The company was recognized for retail client satisfaction and as one of the top banks to work for, reflecting its commitment to culture and community engagement [6][7] - The company redeemed preferred stock during the year, enhancing returns to common shareholders [5] Q&A Session Summary Question: Balance sheet growth expectations for 2026 - Management expects balance sheet growth to depend on deposit growth, modeling a couple hundred basis points below loan growth [19] Question: Anticipated asset class and geographic loan leaders - C&I and owner-occupied CRE are expected to lead, with strong production in Florida and Novitas contributing positively [21] Question: Future share repurchase strategy - Management intends to be more assertive with buybacks in 2026 due to strong capital build and favorable credit quality [24] Question: Expense growth outlook - Management targets a 3%-3.5% growth rate in expenses, despite recent increases due to incentives and health insurance costs [41] Question: M&A opportunities - Management is focused on organic growth and sees limited M&A opportunities, preferring quality organizations over fixers [43][81] Question: Credit quality concerns related to tariffs - Management reports no significant impact from tariffs on credit quality, with customers managing the effects [70]

Core Viewpoint - Citigroup plans to allocate several hundred million dollars more than the previous quarter to address potential loan losses, indicating that major U.S. banks may be preparing for worsening economic conditions [1] Group 1: Financial Provisions - The increase in provisions is driven by credit loss costs and macroeconomic factors [1] - The bank's head of banking, Vis Raghavan, stated that the expected increase in provisions will be several hundred million dollars compared to the previous quarter [1] - The amount allocated for credit reserves may fluctuate frequently based on the company's outlook [1]

Core Viewpoint - The article discusses the tax deduction policies for loan loss provisions in financial enterprises, particularly focusing on agricultural loans and small and medium-sized enterprise (SME) loans, outlining the specific percentages for different risk categories [4][6][8]. Summary by Relevant Sections Loan Loss Provisions - Financial enterprises are allowed to deduct loan loss provisions from taxable income based on the following formula: Tax-deductible loan loss provision = Year-end eligible loan asset balance × 1% - Unused loan loss provision from the previous year [4]. Agricultural and SME Loans - Financial enterprises must classify agricultural and SME loans according to the "Loan Risk Classification Guidelines" and can deduct loan loss provisions at the following rates: - Attention category loans: 2% - Substandard category loans: 25% - Doubtful category loans: 50% - Loss category loans: 100% [4][6]. Deduction Policy for Agricultural and SME Loans - Losses from eligible agricultural and SME loans must first offset the previously deducted loan loss provisions, with any remaining losses deductible against taxable income [6]. Clarification on Deduction Applicability - According to the announcement by the Ministry of Finance and the State Administration of Taxation, the tax deduction policy for loan loss provisions for agricultural and SME loans is exclusive and does not apply to general loan loss provision deduction policies [8].

Core Insights - U.S. bank profits increased by 5.8% in Q1 2025, reaching $70.6 billion, driven by a rise in non-interest income [1] - Loan loss provisions rose by 9.1% year-over-year in the first quarter [1] - Overall asset quality remains good, although weaknesses persist in the commercial real estate (CRE) portfolio [1] - Loan growth in the banking sector slowed, with an annual growth rate of only 3% in Q1, compared to a pre-pandemic average of 4.9% [1] - The number of "problem banks" decreased by 3, now totaling 63 [1]