Banco Bbva Argentina SA (BBAR) 2012 Q4 法說會逐字稿

Good day, and welcome to the BBVA Frances Reports Consolidated Fourth Quarter Earnings for Fiscal Year 2012 conference call. Today's conference is being recorded. At this time, I'd like to turn the call over to Cecilia Acuna. Please go ahead.

Thank you. Good morning, everybody. First of all, let me stress that financial statements made during this conference call may be forward-looking statements within the meaning of the Safe Harbor provisions found in Section 27A of the Securities Act of 1933 and the US Credit and Securities Law.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.

Additional information concerning these factors is contained in BBVA Frances's annual report on Form 20-F for the fiscal year 2011 filed to the US Securities and Exchange Commission.

As usual, we will start the conference with a brief summary of the most important topics of the fiscal year 2012 and then will be open to questions.

First of all, I would like to begin with a brief review of the macroeconomic environment. Economic activity increased by 1.8% during 2012 compared to the previous year. [The good growth avails] to the lower harvest affected by the drop and lower growth in the commercial partners.

Regarding inflation, which is measured by the official Consumer Price Index for Greater Buenos Aires, used to calculated CER adjustments for some sovereign bonds, increased 10.8% in annual rate.

The primary fiscal surpluses of the national public sector was ARS6.7 million during the period of January-November 2012, [49%] lower compared to the same period in 2011.

This 29% annual increase in primary public sector spending was higher than the increase in public sector revenue, which was 26%.

In the external sector, the accumulated trade surplus during the year reached [$2.7 million], 26.7% higher than that recorded in 2011.

In the foreign exchange markets, the exchange rate, central bank reference rate, closed at ARS4.9170 per US dollar on December 31st, 2012, increasing 14% compared to the rate at December 31st, 2011.

Private sector loans in pesos rose 41% in 2012, while private sector loans in dollars fell by 42% in the same period. Total deposits in pesos in the financial system increased by 35%, and private sector deposits also increased (inaudible) 41%. In contrast, private sector deposits in dollars decreased by 35%.

The Badlar interest rate had reached 19% average in December 2011. And when the foreign exchange market restrictions were applied, it declined to an average of 11.7% in May. Then it reversed the [trend] to close at 15.4% at the end of December.

Now, let's turn to the Bank's performance. BBVA Frances's net income increased ARS1,264 million as of December 31st, 2012, registered an increase of 25.7% compared to the gained risk in 2011.

The Bank's recurring net income for the period reached ARS1,268 million, representing a (inaudible) 13.8% during the year. Such increase reflects BBVA Frances's continuing capacity to generate gains [placed] mainly on its core business, intermediation with the private sector.

The growth in the business activity resulted in an increase of net financial income of 48.4% during the year. Net income from services maintained the same pace of growth, increasing 28.4% in annual terms. Higher consumption with credit cards, higher fees originated by deposit services and for insurance sales led the growth in the last 12 months.

Administrative expenses increased 32.9% during 2012. Personnel expenses grew mainly due to the increase in wages according to the agreement reached with the labor union and to a higher number of employees.

General expenses increased 31.8% during the same period due to tax charges, amortization, fees and all charges related directly to the business activity level and to price adjustments related to structural fixed costs, cleaning, rent, and security.

As of December 31st, 2012, the Bank and its subsidiaries have 5,158 employees. The branch office network totaled 273 offices, including 244 consumer branch offices and 29 branch offices specializing in the middle market segment.

Corporate banking included seven business units grouped by industry. Complementing its distribution network, the Bank has 10 in-company branches and two point of sale outlets, 655 ATMs, and 700 quick deposit boxes.

As regards to the activity level, the private sector loan portfolio totaled ARS28.4 billion at the end of December 2012, an increase of 24.5% in the last 12 months. Both consumer loans and loans for small- and medium-sized companies show an excellent performance during the year.

Loans for small- and medium-sized companies grew 22.4%. And it is important to mention that the management of the line of credit for the productive investment for micro-, small-, and medium-sized companies was instrumental in placing loans and leasing, reaching the target established that was partially offset by the decrease in the financings for foreign trade transactions.

The retail segment registered an increase in the last 12 months of 31.5%, mainly due to credit cards, personal loans, and card loans (inaudible).

Finally, loan to large corporations fell 9.3% during the year, mainly due to the decline in foreign trade transactions, partially offset by increases in financial loans and advances.

BBVA Frances has maintained excellent asset-quality ratios, despite the increase in the nonperforming loan portfolio. The asset-quality ratio was 0.65% at the end of December with the coverage ratio reached 279%.

Exposure to the public sector national treasury decreased [10.6%] compared to the same quarter of 2011, mainly due to the amortizations and sale of part of the portfolio.

The Bank's portfolio of central bank's bills and notes remained similar to the one held in the same quarter of 2011.

As of December 31st, 2012, public sector national treasure assets represented 4.7% of the Bank's total assets. Total exposure to the central bank's bills and notes net of holdings linked to reverse transactions represented 4.9% of the Bank's total assets.

Regarding liabilities, total deposits grew 16.8% in annual terms, reaching ARS34.1 billion. Both current accounts and term deposits registered significant increases during the period.

Deposits in pesos grew 28% in the last 12 months, whereas deposits denominated in foreign currency fell 33.6% in the same period.

In addition, during January 2012, BBVA Frances placed the second issuance of its Series 2 of Negotiable Obligations, which achieved a high level of demand (inaudible) ARS150 million.

BBVA Frances once again maintained high levels of liquidity and solvency during the year. At the end of December, total stockholders' equity reached ARS5.1 billion, while the excess of capital over the central bank minimum regulatory requirements reached ARS1.6 billion or 31% of the Bank's total stockholders' equity.

The capital ratio reached 17.5% of weighted risk assets.

At the end of December, liquid assets, cash and due from banks plus central bank bills and notes, represented 31.6% of the Bank's total deposits.

Thank you very much. We are now ready to answer your questions.

(Operator Instructions). We'll take our first question from Federico Rey with Raymond James.

Yes, hi, good afternoon. I have a question regarding other income expense. During the quarter, you recorded a loss of around ARS51 million. I would like to know if you can provide more color on that charge and understand why you are including this as a recurring loss and not as a nonrecurring. Thank you.

Hello, Federico. No, they are recurring losses. They are a provision for other contingencies.

But, what kind of contingencies?

Would be legal, for example, some -- for human resources, that kind of thing.

Okay. So, you are expecting to use that in the short term or not?

Sorry?

Are you expecting to make use of those reserves in the short term or not?

No, no, no.

Okay. Thank you.

Because in the [third time], the thing was that we made some adjustments for the increase in salaries on the total [vacation] that it was different.

Okay. Thank you.

And we'll take our next question from [George Trino] with Morgan Stanley.

Hi, how are you? It's actually a follow up from the previous question. So, these provisions are recurring, or are there -- is there something nonrecurring in the amount that you booked during the quarter? Thank you.

Can you repeat that because we can't listen clearly?

Sorry. Can you hear me better? I mean, the question is if, in the amount that you booked for these provisions for other contingencies -- .

-- Yes -- .

-- Is there anything on nonrecurring, or everything is recurring?

No, we can consider it recurring.

Okay. Thank you.

Part of the business activity.

Perfect. Thank you.

You're welcome.

And at this time, there are no other questions in queue.

Okay. Thanks, again, for joining us. And if you have any further questions, please contact us in our offices.

That concludes today's conference call. We appreciate your participation.

Thank you.