BBVA(US:BBAR)2020-08-26 21:15Financial Data and Key Metrics Changes - BBVA Argentina's Q2 2020 net income was ARS2.6 billion, a decrease of 21.9% from ARS3.3 billion in Q1 2020 and down 70.1% from ARS8.6 billion in Q2 2019 [8] - Net interest income for Q2 2020 totaled ARS15.9 billion, which is 8.4% lower than Q1 2020 and 17.1% lower than Q2 2019 [9] - The efficiency ratio for Q2 2020 remained stable at 47.4%, worsening from 36.1% in Q2 2019 [13] Business Line Data and Key Metrics Changes - Financing to the private sector increased by 5.4% quarter-over-quarter in real terms but decreased by 5% year-over-year [14] - Retail portfolio, including mortgage loans and credit cards, decreased by 0.2% sequentially but grew by 0.9% year-over-year [15] - Commercial loans grew by 11.6% quarter-over-quarter but fell by 10.3% year-over-year [15] Market Data and Key Metrics Changes - Private sector deposits totaled ARS367 billion, up 7.6% sequentially but down 8.5% year-over-year [19] - BBVA Argentina's market share of private sector loans reached 8.54% as of June 2020, increasing for the second consecutive quarter [14] - The bank's market share of private sector deposits reached 6.5% as of June 2020 [20] Company Strategy and Development Direction - The bank has focused on digitalization, with digital client penetration reaching 69.3% and mobile client penetration at 57.4% [7] - BBVA Argentina aims to grow its loan portfolio above inflation, with a focus on peso-denominated loans and commercial lines [38] - The bank has implemented an efficiency plan to reduce expenses, which has shown results over two consecutive quarters [7][13] Management's Comments on Operating Environment and Future Outlook - Management expects non-performing loans (NPL) to peak in Q4 2020, depending on Central Bank regulations [31] - The bank feels comfortable with its current coverage levels and expects a coverage ratio of around 170% by year-end [25] - Future net interest income is projected to remain stable, with potential pressures from lower interest rates [27] Other Important Information - The bank's liquidity ratios remained healthy at 56.5% in pesos and 80.3% in dollars as of June 30, 2020 [21] - The bank has disbursed over ARS20.5 billion in loans to more than 9,000 SMEs at a 24% nominal annual rate [16] Q&A Session Summary Question: Expectations for additional provisions related to COVID - Management projected an NPL of around 3.53% by year-end, excluding Central Bank waivers, and feels comfortable with current provisioning levels [24] Question: Stability of net financial margin - Management expects net interest income to remain stable towards the end of the year, despite potential negative effects from interest rate changes [27] Question: Asset quality peak expectations - Management anticipates asset quality to peak in Q4 2020, influenced by Central Bank regulations and loan book growth [31] Question: Loan growth origin - Loan growth is expected to be driven by a low base in 2020 and mandatory loans provided at a 24% interest rate [38] Question: Tax rate explanation - The tax rate was around 44%, higher than the regulatory 30%, with expectations of around 40% for the remainder of the year [39]