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BBVA(BBAR) - 2020 Q4 - Earnings Call Transcript
BBVABBVA(US:BBAR)2021-03-10 21:06

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]