BBVA(US:BBAR)2021-08-25 21:09Financial 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]