Banco Bbva Argentina SA (BBAR) 2013 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the BBVA Frances Reports Consolidated Second Earnings for Fiscal Year 2013 Conference Call. Today's call is being recorded. Now, I'd like to turn the call over to Ms. Cecilia Acuna. Please, go ahead.

Thank you. Good morning, everybody. First of all, let me stress that some of the statements made during this conference call may be forward-looking statements within the meaning of the Safe Harbor Provisions found in Section 27-A of the Securities Act of 1933 under US Federal 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 statement. Additional information concerning these factors is contained in BBVA Frances' annual report on Form 20-F for the fiscal year 2012, 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 2nd quarter of 2013 and then we'll be open to questions.

BBVA Frances is part of BBVA Group since 17 years ago, a financial global group focused on client with (inaudible) actively to offer a wide range of financial and non-financial products and services. During the 2nd quarter of 2013, the bank reinforced a strategy of always (inaudible) the client's needs. As of June 30, 2013, the bank and its subsidiaries have (inaudible) 177 employees.

The branch office network totaled 273 offices including 244 consumer branch offices and 29 offices specializing in the middle market segment. Corporate banking included 7 businesses unit group by industry. Complementing its distribution network, the bank has 11 in-company branches and 2 point of sale outlets, 654 ATM's and 701 quick deposit boxes.

In July 10, 2013, BBVA Frances and Consultatio signed a sale and purchase agreement. The bank will acquire 23 of the 33 floors of the building to be constructed by Consultatio where the store of BBVA will be established. The investment will be approximately ARS1.2 billion and will have a payment timeline related to the profits of the (inaudible). The real state development beyond construction recently and it's considered concluded at the end of 2015. That building will be on 815 Leandro Alem Avenue of Buenos Aires City.

Now, I'd like to make a brief review of the market economic environment. The Economic Activity gained momentum in the 2nd quarter of 2013 as the Monthly Estimator of Economic Activity through (inaudible) and make 1.8 percent with respect to the first quarter of 2013 and (inaudible) 9% in comparison with the second quarter of 2012.

Inflation, as measured by the official Consumer Price Index for Greater Buenos Aires which is used to calculate the CER adjustment for some sovereign bond, increased by 2.3% in the 2nd quarter of 2013 and 10.5 % in the last 12 months.

The primary surplus of the national public sector worth ARS3.1 billion during April and May, a 10% decrease compared to the same month last year. The increase on primary public sector spending was 34.7% in (inaudible) slightly higher than the increase in public sector revenue with 33%. In the similar sector, the accumulated trade surplus in the second quarter of the (inaudible) 2013 reached $3.6 billion 12% lower than the one recorded in the second quarter of 2012.

In the foreign exchange market, the exchange rate Central Bank reference rate closed at ARS5.38 per US dollar on June 28, 2013 increasing 5.1% in comparison with the previous as of March 25, 2013. In the second quarter of the year, the stock of international reserves of the Central Bank decreased by $3.4 billion to $37 billion. The Badlar interest rate of private banks increased 100 basic bonds on the second quarter of the 2013 averaging 15.9%.

Private sector loans in peso decreased 0.2% in the second quarter with respect to the first quarter, while private sector loan in dollar has climbed by 1.7% during the same period. Total deposits in pesos in the financial system decreased by 1.6% by private sector deposits in pesos grew 10.1%. In contrast, private sector deposits in dollar decreased (inaudible) 2%.

Now, let's go to the bank performance. BBVA Frances reached net income of ARS255.5 million as of June 30, 2013. That result includes a loss due to devaluation in public bond evaluation [frankly] with a higher chart of the consequence of the (inaudible) bond. In recurring results, net income for the [PDO] worth ARS415.9 million increased in 29.7% and 27.6% compared to the same quarter of 2012 and the previous quarter respectively.

That financial income originating in the intermediation with the private sector help supported the increase of the net interest margins based mainly on an efficient asset rights management, a good [leaks] of liabilities and a higher volume of lending. Thus, income grew 37.3% compared to the same quarter of 2012 and 8.5% compared to the previous quarter.

Income from security for short-term investment included no recurrent income originating by variation in the public in the evaluation of public securities. The result total of loss of ARS139.8 million during the quarter, and income from services grew 38.8% compared to the same quarter a year ago may lead you to the higher consumption with credit cards and an increase in fees originated by (inaudible). Partially offset, the higher fees (inaudible) for promotion especially those related to the LANPASS program.

Similar behavior showed a performance of these compared to the previous quarter. Administrative expenses reflected an increase of 30.3 % compared to the second quarter of 2012 and 2.8% compared to the previous quarter.

Number two, the same quarter a year ago, personnel expenses grew 29.3% reflecting the salary increase and a higher number of employees.

Meanwhile, general expenses grew 31.7% in the same field mainly because of higher taxes, consequence of the increase in the activity volume and it changed in proportional tax rate and increase in other (inaudible) expenses such as the (inaudible) of River Plate in July 2012 and the effects of price rise and change (inaudible). In the last three months, personnel expenses grew 5.2% whereas (inaudible) expenses remained stable.

As we got to the activity level, private sector loan portfolio totaled ARS31.5 billion, growing 32.7% compared to the same quarter of the previous year. So clearly only volume in pesos, the increase was 39%, the price was driven nearly by the expansion and [gone few] more loans as well as the increase of loan to small and medium sized companies.

Compared to the same quarter of 2012, they grow both ARS7.8 billion, 55 coverage response to higher (inaudible) for consumption, 25% to loans for small and medium sized companies and 19% to finance large corporation. The BBVA Frances expected (inaudible) policy has allow it to continue being a leader in terms of profit quality despite a slight deterioration in the ratio.

As of June 30th, 2013, the asset quality ratio was 0.8% while the coverage ratio reached 240.2%. Exposure to the public sector national treasury decreased compared to the same quarter of 2012 and to the previous quarter mainly due to the sale of part of the portfolio. The bank portfolio of Central Bank (inaudible) also register a decrease during the (inaudible) analysis mainly due to the liquidity strategy implemented in order to maximize profitability.

After June 30, 2013, public sector national treasure assets represented 3% of the bank's total assets. Total exposure to Central Bank bills and notes net of holdings linked to reverse repo transaction represented 4.6% of the bank's total asset. (Inaudible) in liabilities total deposit to grow 22.9% in the last 12 months. Totally, ARS36.9 billion at the end of the second quarter considering only peso denominated deposit, it grew 27.5% in the same period.

In annual terms, both time deposits as well as sight account registered growth increase 32.1% and 80.1% respectively. On July 31st, 2013, BBVA Frances placed the exportation of the series of negotiable obligations for a total amount of ARS250 million with a high level of demand that exist significantly the issue on amount.

BBVA Frances maintained high levels of liquidity and solvency. As of June 30, 2013, liquid assets represented 13.5% of the bank's total deposit. The capital ratio reached 19% of weighted risk asset with an excess of capital over minimum regulatory requirement of ARS2.2 billion.

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

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

Hello, Cecilia. Thank you for the call. How do you see margins of [holding] by end of the year?

We'll see a compression in the net interest budget for the rest of the year mainly because the increase in the interest rights and the liability side and the increase in the (inaudible) participation that belongs to (inaudible) companies (inaudible) 15% interest rate.

Okay, thank you.

(Operator Instructions). And at this time there are no other questions.

Thanks again for joining us and if you have any further question please contact us in our offices.

And that concludes today's call. We appreciate your participation.