BBVA(US:BBAR)2019-11-08 20:05Financial Data and Key Metrics Changes - BBVA Argentina's net income for Q3 2019 was ARS 11.1 billion, a 63.9% increase from ARS 6.8 billion in Q2 2019 and a 264.8% increase from ARS 3 billion in Q3 2018, driven by higher net interest income and foreign exchange results [6] - The accumulated net income for the nine months ended September 30, 2019, was ARS 23.9 billion, reflecting a 253.3% increase year-over-year [6] - The bank reported a return on equity (ROE) of 63.2% and a return on assets (ROA) of 8.0% [6] Business Line Data and Key Metrics Changes - Net interest income for Q3 2019 totaled ARS 15.6 billion, a 19.8% increase from Q2 2019 and a 129.2% increase year-over-year [8] - Net fee income was ARS 1.5 billion, down 19.5% from the previous quarter, but a normalized view would show a 33.2% increase quarter-over-quarter [9][10] - FX gains totaled ARS 3.8 billion, an 83.8% increase quarter-over-quarter, attributed to the depreciation of the Argentine Peso [10] Market Data and Key Metrics Changes - BBVA Argentina's financing to the private sector reached ARS 211.8 billion, a 14.7% increase quarter-over-quarter and a 22.5% increase year-over-year [12] - The bank's market share over private sector loans was 8.13% as of September 2019 [12] - Private sector deposits totaled ARS 271.5 billion, down 3.8% sequentially but up 10.8% year-over-year [15] Company Strategy and Development Direction - The bank aims to optimize the use of its excess capital, which amounted to ARS 26.6 billion, with a total regulatory capital ratio of 17.1% [16] - BBVA Argentina is focusing on maintaining a strong balance sheet quality amid a complex economic environment, with a stable non-performing loans (NPL) ratio [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the new administration's impact on the banking sector is still uncertain, with some extra deposits flowing out of the system [19] - The bank anticipates a potential decrease in loan growth for Q4 2019 but expects deposit growth to continue [19] - The management highlighted the importance of monitoring the macroeconomic environment, particularly regarding inflation and interest rates, which could affect NPLs and provisions going forward [30] Other Important Information - The bank's efficiency ratio improved to 35.7%, down from 47.2% in Q3 2018 [12] - The asset quality, measured as non-performing loans over total loans, was 3.31% with a coverage ratio of 105.08% [14] Q&A Session Summary Question: Insights on the new administration's impact on the banking sector - Management indicated it is early to assess the new administration's impact, noting some deposit outflows but projecting loan growth to decrease in Q4 2019 [19] Question: Clarification on SME directed lending - No official information was available regarding the return of SME directed lending, but historical trends suggest it could happen [21] Question: Impact of debt reprofiling on P&L - Management explained that the effects of debt reprofiling were reflected in other comprehensive income rather than P&L, with future interest recognition expected upon maturity [23] Question: Strategy regarding exposure to Central Bank Instruments - Management noted a decrease in exposure to LELINK and emphasized the uncertainty surrounding its future [27] Question: NPL ratio outlook considering macroeconomic factors - Management indicated that the NPL ratio would have been 2.25% excluding the impact of Molinos Cañuelas, with expectations of further provisioning [28][30] Question: Inflation adjustment and its effects - Management confirmed that inflation adjustments would be disclosed in future quarterly results, with current adjustments provided for the nine months [34]