Banco Bbva Argentina SA (BBAR) 2013 Q4 法說會逐字稿

(Audio in progress) ladies and gentlemen, and welcome to the BBVA Frances reports consolidated fourth quarter earnings for fiscal year. Today's conference is being recorded, and I will turn the call over to Ms. Cecilia Acuna. Please go ahead.

Thank you. Good afternoon, 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 risk and uncertainty 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 fiscal year 2013, and then we'll be open to questions.

First of all, I would like to begin with a brief review of the macroeconomic environment. After the significant growth during the first 6 months of 2013, economic activity slowed down in the third and fourth quarters, as the Monthly Estimator of Economic Activity, which is monthly [proxy] for quarterly GDP increase in [July/October] by 0.5% with respect to the first [half], when it grew 3.6%.

Inflation, as measured by the official Consumer Price Index for Greater Buenos Aires, which is used to calculate the CER adjustment for [sub]-sovereign bonds, accumulated 10.9 in the last 12 months.

The primary fiscal deficit of the national public sector, worth ARS64.5 billion during 2013, compared to ARS65.6 billion in the previous year. The increase in [private/public] sector spending [was] 33.5%, and public sector revenue increased 30.4% in annual terms.

In the FX market, the exchange rates closed at [ARS6.54] per US dollar on December 30, 2013. During the year, the stock of international reserves of the central branch decreased by $12.7 billion to [$30.6] billion at the end of December 2013. The Badlar interest rate for private bank increased 307 basis points during the year, (inaudible) average 16.9%. At the end of December the rate was 20.2%.

Private sector loans in pesos increased [33.7%] in the last 12 months, while private sector loans in dollars dropped by 33.8%. Total deposits in pesos in the financial system increased 27.7% in the same period. Private sector deposits in pesos grew (inaudible) 29.3%, and private sector deposits in dollars decreased 13%.

Now, let's turning to the Bank performance. BBVA Frances' net income reached ARS [two thousand and twenty-four] million as of December 31, 2013, (inaudible) significantly increased compared to the (inaudible) 2012.

Net financial income grew 36.6% during the year, mainly due to growth in the business activities and in the increase in the FX difference on our [lines]. As a consequence of the increase in the loan portfolio, and in number of (inaudible) loans, provision for loan losses had a significant growth during the year, even though the Bank continues maintaining a little (inaudible) position in terms of asset quality.

Net income from services maintained a (inaudible) rate of growth, increasing 35% in annual terms. Higher consumption with credit cards, higher fees originated by the public services, and for insurance [sake], led the growth in the last 12 months.

Administrative expenses increased 27.7% during 2013. Personnel expenses grew in the last 12 months, mainly due to a rise in wages, according to the agreement reached with the labor unions, and to a higher number of employees; whereas general expenses grew during the same period due to tax charges as a consequence of the initial payment of the purchase of the new building, and increase in the activity volume, and all charges related (inaudible) to the business activity level, and to price adjustments related to structural fixed costs, partially offset by lower charges on advertisings and promotion.

As of December 31, the Bank has (inaudible) 5,233 employees. The branch office members total 275 (inaudible) [union], including 245 consumer branch offices and (inaudible) branch offices specialized in the middle market segment and [institutions]. Corporate banking includes seven business units grouped by industry. Complementing its distribution network, the Bank has 13 in-Company branches and two point-of-sale outlets, 655 ATMs, and 728 quick deposit boxes.

As regards to the activity level, the private sector loan portfolio totaled ARS36.4 billion at the end of December, an increase of 28.1% in the last 12 months.

Both consumer loans and loans of small- and medium-sized companies showed an excellent performance during the year, growing 41.2% and 34.3% respectively. Loans to large corporations grew 8.5% as a consequence of the decrease in loans to finance foreign trade transactions.

Regarding the line of credit to finance investment projects, the Bank successfully complied with the (inaudible). Total lending allocating in 2013 reached ARS2.9 billion.

In the retail segment, growth was driven by a 57% increase in credit cards and 40% increase in car loans, and by a 26% growth in personal loans. [Growth of] small- and medium-sized companies were mainly due to leasing and commercial loans.

Finally, loans to large corporation registered a poor performance, mainly due to the decline in foreign trade transactions, partially offset by an increase in financial loans and advances.

BBVA Frances has maintained a little (inaudible) position in terms of risk taken, in an environment that has shown signs of [deterioration]. The asset-quality ratio was 0.76% at the end of December, while the coverage ratio reached 254%.

Exposure to the public sector national treasury increased 7.7% in the -- during the year, even though during the -- 2013, amortizations and sale, specifically the total (inaudible) portfolio, were (inaudible). These were partially offset by new instruments incorporated into the Bank's portfolio.

The Bank's portfolio of Central Bank bills and notes decreased 44% compared to December 2012, in accordance with the liquidity policy implemented by the Bank. At the end of December, public sector national treasury assets represented 3.8% of the Bank's total assets. Total exposure to Central Bank's bills and notes net of holdings linked to reverse of the above transactions, represented 2% of the Bank's total assets.

Regarding liabilities, total deposits reached ARS43.8 billion, an increase of 28.2% in the last 12 months. During the year, [time] deposits grew 39.5% and [sight] accounts 20%. Deposits denominated in pesos grew 27.5% annually, whilst -- while foreign currency deposits reversed the previous downward trend and increased by 34.3% in the last 12 months.

During the year, the Bank issued three placement of negotiable obligations for a total amount of ARS624 million, [with] an amount that exceeded the amount issued. In addition, on February 11, 2014 the Bank issued its Series 8 and 9, which were subscribed for a total amount of ARS259 million due in 18 months, and for ARS145 million due in 36 months, respectively.

BBVA Frances once again maintains high levels of liquidity and solvency. At the end of December, total shareholders' equities reached ARS7.2 billion, while the excess of capital over the Central Bank minimal regulatory requirements reached ARS2.8 billion, or 39.3% of the Bank's total shareholders' equity. The capital ratio reached 19.4% of the weighted risk assets.

Liquid assets represented 32.7% of the Bank's total deposits.

Based on the result of the 2013 (inaudible), the Board of Director has resolved a propose at the annual shareholders meeting, a cash dividend payment in the amount of ARS28.8 million. Such payment is subject to applicable regulatory and transaction authorizations.

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

(Operator Instructions). Sergio Cornejo, VR Capital Group.

Hi. Thanks for taking my question. I would like to ask you about this recent Central Bank regulation that limits the foreign exchange holding, that you mention on your report. It's dated February 4.

(Inaudible) mind, I would like your -- ask you, what was the regulation? What exactly -- did mention a limit on -- what was the Bank's financial provision before the regulation was issued, and how much it will be adjusted afterwards; and, when will -- the adjustment will be make? And, of course, what impact do you think, if any, it would have in your [relative] position and in -- on the Bank's risk exposure and profitability?

Okay. Hello. How are you?

Fine.

Well, the Bank -- we complied with the regulation, and (inaudible) working (inaudible) position that the limit (inaudible) April, so we are working on it.

Uh-huh. Could you tell us what the provision was before this regulation was issued?

I can send you -- I don't have here, but this -- you have the balance sheet, you can get it on there, in the foreign (inaudible) part.

Okay. I couldn't -- could you please explain in general what the regulation means, and what if -- what does it limit, and what does it measure?

Yes. The regulation (inaudible) the (inaudible) again, and the limit is [30%] of FX position (inaudible) of the Bank. This is limited, including the FX (inaudible).

Uh-huh. And do you think that would have -- sorry, I'm finishing with this -- do you think that would have an impact on the profitability of the Bank?

(Inaudible). But, you know that in the last quarter, part of the gain's coming from the FX gains.

Uh-huh. Okay. Thank you very much.

(Operator Instructions). And I have no further questions at this time.

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

Again, ladies and gentlemen, that concludes today's conference. We appreciate your participation today.

Thank you for calling.