Banco Bbva Argentina SA (BBAR) 2013 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the BBVA Frances Reports Consolidated Third Quarter Earnings for Fiscal Year 2013 conference call. Today's call is being recorded.

I would now 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 with the US Securities and Exchange Commission.

As usual, we will start the conference with a brief summary of the most important topics. BBVA Frances continued to develop its (inaudible) plan, taking action such as strengthen the Bank's relationship with clients and society. As of September 30, 2013, the Bank and its subsidiaries have signed (inaudible). The branch office network totaled 273 offices, including 244 consumer branches offices, and 29 branch offices specializing in the middle market segment.

Corporate Banking, including 7 business units, grouped by industry. Complementing its distribution network, the Bank has 12 in-company branches, and 2 point of sale outlets, 664 ATMs, and 726 quick deposit boxes.

On July 10, 2013, BBVA Frances and Consultatio signed a sales and purchase agreement. To (inaudible), the Bank will acquire 23 of the 33 floors of the building under construction by Consultatio, which will (inaudible). Construction has begun on the (inaudible), and is commencing according to schedule.

Now, I'd like to make a brief review of the macroeconomic environment. After a good second quarter, economic activity receded somewhat in the third quarter 2013, as the Monthly Estimator of Economic Activity decreased 1% July and August, compared to the same quarter of 2013, and 4.6% compared with the same two months of 2012. Similarly, the Monthly Industrial Estimator (inaudible) 1.1% with respect to the strong quarter, and we were only 0.7% in comparison with the third quarter of 2012.

By (inaudible), the construction sector continued to recover during the first quarter of the year.

Inflation, as measured by the official Consumer Price Index for Greater Buenos Aires increased by 2.6% in the third quarter of 2013, accumulated 10.5% in the last 12 months.

The primary surplus of the national public sector was ARS1.7 billion during July and August, a 31.4% increase compared to the same two months of 2012. The increase on both primary public sector spending and public sector revenue was 34.9% (inaudible).

In the [similar] sector, the accumulated trade surplus in the first quarter of 2013 reached $2.2 billion, 38.5% lower than that recorded in the third quarter of 2012.

In the foreign exchange market, the exchange rate Central Bank reference rate closed up [ARS5.7916] per US dollar on September 30, 2013, increasing 9.61% in comparison with the rate released at the end of June.

The Central Bank stock of international reserves decreased by $2.3 billion, to $34.7 billion at the end of the summer. The Badlar interest rate for private banks increased 129 basis points on the third quarter of 2013, averaging 17.7%.

Private sector loans, in pesos, increased 8.2% in the third quarter of 2013 with respect to the second quarter of the year, while private sector loans, in dollars, dropped by 15.2% during the same period.

Total deposits in pesos in the financial system increased by 7.7% in the same period, and private sector recorded impressive growth, 5.4%. In contrast, private sector deposits, in dollars, decreased [from] 1.9%.

Now, let's turn to the Bank's performance.

BBVA Frances' reached net income in the third quarter of 2013 of (inaudible), the (inaudible) data accumulated [ARS1.116] billion in the first 9 months of the year.

The result for the quarter includes a gain for the variation in public bonds valuation, (inaudible) nearly offset by a higher effective income tax rate due to the (inaudible) of the (inaudible) portfolio. In recovery terms, net income for the period was ARS507.7 million.

Net income for financial intermediation with the private sector grew 34.2%, compared to the third quarter of 2012, and 4.4% compared to the previous quarter. The higher volume of activity, efficient price management, and a good mix of liability explained the stable increase in the private net interest margin.

Income from securities from short-term investments, including non-recurring income originated by variations in the valuation of public securities. So, the quarter under analysis and the same quarter of 2012 registered gains of ARS73.9 million, and ARS55.1 million respectively, whereas the previous quarter recorded a loss of ARS139.8 million.

Net income from services increased 43% compared to the same quarter of 2012, and 11.7% compared to the previous quarter. As was previously mentioned, the service charge income line (inaudible) includes extraordinary income in credit cards.

(inaudible), compared to the same quarter of the previous year, is mainly due to higher consumption with credit cards, plus higher fees originated by special finance. These charge on the (inaudible) accounts (inaudible) insurance (inaudible) partially offset by the higher (technical difficulty).

This is the operator. We are experiencing some technical difficulties. Please stand by.

Ladies and gentlemen, please remain on the line.

Please remain online. We'll rejoin the conference in just one moment.

And Ms. Acuna, your line is live. Please proceed.

Okay, thank you. I will continue with the administrative expenses. We reflected increases of 34.6% and 10.6% compared to both the third quarter of 2012 and the previous quarter respectively.

Compared to the same quarter of the previous year, personnel expenses grew 31.4%, mainly reflecting higher increases due to the labor and (inaudible) and a higher number of employees.

General expenses grew 38.7% in the same period, mainly due to higher taxes as a consequence of the impact of the purchase of the new building, and [interest index activity] volume and a change in proportional tax rates, in addition to the effects of price increases.

In the last three months, personnel expenses grew 2.9% [upward], general expenses, 21.3%. Such increase is mainly explained by the impact by the purchase of the new building, as was mentioned previously, and higher advertisement expenses, due to the launch of the new (inaudible) campaign, the opening of new VIP spaces and the (inaudible) of the (inaudible) branch.

As regards to the activity level, the private sector loan portfolio totaled ARS33.5 billion as of September 30, 2013, growing 31.1% in the last 12 months, and 6.4% during the quarter.

Compared to the same quarter of 2012, the growth was driven by higher financing for consumption and for small and medium sized companies, which grew 41.8% and 31.1% respectively, whereas financing to large corporation increased 27.3%.

BBVA Frances maintains a leading position in terms of risk taken, as a consequence of respective (inaudible) implemented at the Bank. At the end of September, the asset quality ratio, non-performing loans over total loans, was 0.74%, while the recovery ratio provision over non-performing loans reached 258%.

Exposure to the public sector national treasury, net of holdings linked to reverse repo transactions, decreased by 23.8% compared to the same quarter of 2012, mainly due to the sale of (inaudible) portfolio, partially offset by (inaudible) foreign currency denominated bonds.

The Central Bank portfolio of (inaudible) valuation during the period under analysis, mainly due to the liquidity management implemented. As of September 30, 2013, public sector national treasury assets, representing 2.9% of the Bank's total assets, while total exposure of (inaudible) represented 3.7% of the Bank's total assets.

Regarding liabilities, total deposits reached ARS39.5 billion, an increase of 27.3% and 7.2% compared to the same quarter of 2012 and to the previous quarter, respectively. In annual terms, both time deposits, as well as [high] accounts, registered an important growth, increasing 31.9% and 24.8% respectively.

On July 31, 2013, BBVA Frances placed the fourth issuance of its series of (inaudible) obligations, for a total amount of ARS250 million. Besides, on November 8, 2013, it also issued (inaudible) period 6 and 7, (inaudible) six months, respectively. The total amount was ARS121 million and ARS250 million respectively.

BBVA Frances maintained high levels of liquidity and solvency. As of September 30, 2013, liquid assets, cash (inaudible) from banks, plus Argentine Central Bank, reached a now record-setting 30.7% of the Bank's total deposits. The capital ratio reached 18.6% of weighted risk assets, with an excess of capital over the Central Bank minimum regulatory requirements of ARS2.5 billion.

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

(Operator instructions) And we do have a question, from Federico Rey with Raymond James. Your line is open.

Yes, hi, good afternoon. Thank you for the call. (inaudible) regarding fees. In the quarter, you mentioned that the robust growth recorded includes some externally gains, especially related to the (inaudible) business. I would like to know if you can quantify that.

Yes. Well, it's not recovering in (inaudible), it's a timing problem (inaudible).

Well, that -- can you quantify it? How much of the amount that you recorded is related to this external gain?

Yes. ARS20 million.

Okay, thank you.

(inaudible)

(Operator instructions). And Ms. Acuna, there appears to be no further questions.

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

Thank you. And that does conclude today's conference. Thank you for your participation.