NYSE:BBAR Banco BBVA Argentina Q2 2023 Earnings Report $19.52 -0.12 (-0.61%) Closing price 05/2/2025 03:59 PM EasternExtended Trading$19.53 +0.01 (+0.05%) As of 05/2/2025 07:57 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Banco BBVA Argentina EPS ResultsActual EPS$0.64Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ABanco BBVA Argentina Revenue ResultsActual Revenue$969.84 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ABanco BBVA Argentina Announcement DetailsQuarterQ2 2023Date8/23/2023TimeN/AConference Call DateThursday, August 24, 2023Conference Call Time11:00AM ETUpcoming EarningsBanco BBVA Argentina's Q1 2025 earnings is scheduled for Wednesday, May 28, 2025, with a conference call scheduled on Thursday, May 22, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Banco BBVA Argentina Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 24, 2023 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to BBVA Argentina's 2nd Quarter 2023 Fiscal Year Results Conference Call. We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the company presentation. After company remarks are completed, there will be a question and answer session. At that time, further instructions will be given. Operator00:00:391st of all, let me point out that there are some statements made during this conference call that may be forward looking statements within the meaning of the Safe Harbor provisions found in Section 27A of the Securities Act of 19 33 under U. S. 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 statements. Additional information concerning these factors is contained in BBVA Argentina's Annual Report on Form 20F for the fiscal year 2022 filed with the U. Operator00:01:24S. Securities and Exchange Commission. Today, with us, we have Ms. Carmen Morello, CFO Ms. Ines Laniuzzi, IRO and Ms. Operator00:01:42Belen Forcade, Investor Relations. Ms. Forcade, you may begin your conference. Speaker 100:01:50Good morning, and welcome to VVA Argentina's 2nd Quarter 2023 Fiscal Year Result Conference Call. Today's webinar will be supported by a slide presentation available on our Investor Relations website on the Financial Information section. Speaking during today's call will be Ines La Nuce, our Investor Relations Officer and Carmen Melissa Arroso, our Chief Financial Officer, who will be available for the Q and A session. Please note that starting January 1, 2020, as per Central Bank Regulation, we have begun reporting results applying hyperinflation accounting pursuant to IFRS rule, IAS 29. For ease of comparability, 2022 2023 figures have been restated to reflect the accumulated effect of inflation adjustment for each period through June 30, 2023. Speaker 100:02:44Now let me turn the call over to Ines. Speaker 200:02:48Thank you, Belen, and thank you all for joining us today. As we are all aware, on Sunday, August 13, Javier Millet, the candidate for La Liberta Abanza, was the most voted in the primary presidential elections, quite above from what surveys were estimated. This implies a higher uncertainty scenario facing the general elections of October, and it is expected that higher volatility will persist. At the same time, the unfavorable macroeconomic conditions have continued to deteriorate, increasing the risk of economic and financial turbulence ahead of the presidential elections scheduled for the last quarter of the year. GDP is expected to fall by around 3.5% this year according to BBVA Research due to the impact of the negative weather shock on the production and export of agricultural goods, coupled with increasing exchange rate restrictions and political uncertainty. Speaker 200:03:50In this context, its impact on the external and fiscal accounts has contributed to accelerate the exchange rate, depreciation and inflation, which in annual terms reached 113.4% as of July 2023. Referring to BBVA's Argentina general performance, a better operating income as of June 2023 was a product of an improvement in interest income, boosted especially by government securities and liquidity instruments and better fee income. Now moving into business dynamics. As you can see on Slide 3 of our webcast presentation, our service offering has evolved in such a way that by the end of June 2023, retail digital clients penetration reached 62%, remaining stable from a year back, while that of retail mobile clients reached 56% from 54% as of the same period of last year. The response on the side of customers has been satisfactory, and we are convinced this is the path to pursue in the aim of sustaining and expanding our competitive position in the financial system. Speaker 200:05:11Retail digital sales measured in units have increased from 90.8% in the Q2 of 2022 to 93.9% in the Q2 of 2023 and represents 71.8% of the bank's total sales measured in monetary value versus 57.1% in the Q2 of 2022. New customer acquisitions through digital channels reached 75% in the Q2 of 2023 from 70% in the Q2 2022. The bank actively monitors its business, financial conditions and operating results in the aim of keeping a competitive position to face contextual challenges. Moving to Slide 4, I will now comment on the bank's Q2 2023 financial results. BBVA Argentina 2nd quarter 2023 net income was ARS30.4 billion, increasing 63.3 percent quarter over quarter. Speaker 200:06:21This implied a quarterly ROE of 21.3% and a quarterly ROA of 3.9%. Operating income in the Q2 of 2023 was ARS 125,300,000,000, 28.6 percent above the ARS97,500,000,000 recorded in the Q1 of 2023. Quarterly operating results are mainly explained by: 1, better interest income results through public securities and liquidity instruments 2, better fee income and 3, higher net income from write down of assets at fair value through OCI, mainly due to the voluntary bond swap offered in June by the National Treasury. This effect was partially offset by 1, an increase in other operating expenses pushed by greater turnover tax due to a higher level position 2, an increase in personnel expenses and 3, an increase in administrative expenses. Net income for the period was highly impacted by income from net monetary recession and inflation increased from 21.7% in the Q1 of 2023 to 23.8% in the Q2 of 2023. Speaker 200:07:47Turning into the P and L lines in Slide 56. Net interest income for the Q2 of 2023 was ARS185.5 billion, increasing 14.2 percent quarter over quarter. In the Q2 of 2023, interest income in monetary terms increased more than interest expenses, mainly due to: 1, an increase in income from Seruba adjustment, driven by public securities with this adjustment and 2, a higher position and yield of public securities, in particularly of Leliq. Additionally, there is a positive effect from income from loans, mainly discounted instruments and from repo operations. In the Q2 of 2023, interest income totaled ARS371.2 billion, increasing 20.3% compared to the Q1 of 2023. Speaker 200:08:51In the quarter, monetary policy rate gradually increased from 78% at the beginning of the quarter up to 97% at quarterend. Interest expenses totaled ARS 185,700,000,000, denoting a 27.1% increase quarter over quarter. Quarterly increase is described by higher time deposit expenses. Interest from time deposits, including investment accounts, explained 77.7 percent of interest expenses versus 82.8% the previous quarter. Net fee income as of the Q2 of 2023 totaled ARS 23,700,000,000, increasing 69.3 percent quarter over quarter in real terms. Speaker 200:09:48In the Q2 of 2023, fee income totaled ARS 33,400,000,000, growing 22.6% quarter over quarter. The quarterly increase is mainly explained by an increment of fees from credit cards, considering that this line includes Pultos Bebe Ubea royalty program. Regarding fee expenses, these totaled ARS 9,600,000,000, Speaker 100:10:16falling 27%. Speaker 200:10:19In the Q2 of 2023, loan loss allowances increased only 9.6% due to the good performance of our portfolio. During the Q2 of 2023, total operating expenses were ARS92.6 billion, increasing 8.4% quarter over quarter, of which 31% were personal benefits costs. Personal benefits increased 6.3% quarter over quarter. The quarterly increase is mainly explained by the inflation adjustment of vacation stock provisions. Quarterly increases were also affected by a 25.8% collective agreement on wages, which implies a 56% accumulated increase as of the Q2 of 2023. Speaker 200:11:11As of the Q2 of 2023, administrative expenses increased 5% quarter over quarter. The quarterly increase is mainly explained by, 1, outsourced administrative expenses 2, greater rent expenses and 3, increase in software services, all of them related to services contracted with the parent company. Being this said, the quarterly efficiency ratio as of the Q2 of 2023 was 42.8%, improving compared to the 62.4% reported in the Q1 of 2023. The quarterly improvement is explained by a higher increase in income than expenses, especially due to a significant increase in interest and fee income. The accumulated efficiency ratio as of the Q2 of 2023 was 56.6%, improving compared to the 62.4% reported in the Q1 of 2023 and versus the 71.3% reported in the Q2 of 2022. Speaker 200:12:26In terms of activity on Slide 7, private sector loans as of the Q2 of 2023 totaled ARS 1,100,000,000,000, slightly decreasing 0.3% and 3.5% year over year. Loans to the private sector in pesos fell 1.1% in the Q2 of 2023. During the quarter, the decrease was especially driven by a 37.5% decline in overdraft, followed by a 6.8% fall in consumer loans. The fall was partially offset by a 17.8% increase in discounted instruments and a 10.4% increase in other loans, the later pushed by floor planning. Loans to the private sector denominated in foreign currency increased 12.1%. Speaker 200:13:24Quarterly increase is mainly explained by a 13.9% growth in financing and pre financing of exports. Loans to the private sector in foreign currency measured in U. S. Dollars increased 13% quarter over quarter. During the quarter, both the retail and commercial portfolio remained practically flat. Speaker 200:13:49As observed in previous quarters, loan portfolio were impacted by the effect of inflation during the Q2 of 2023, which reached 23.8%. In nominal terms, BBVA Argentina managed to increase the retail, commercial and total loan portfolio by 23%, 23.8% and 23.4%, respectively, during the quarter, practically reaching quarterly inflation levels. BBVA Argentina's consolidated market share of private sector loans reached 9.01% as of the Q2 of 2023, improving from the 8.35% a year ago. In the Q2 of 2023, asset quality ratio was 1.38% compared to the 1.31% recorded in the Q1 of 2023. The slight increase is mainly explained by an increase in the retail nonperforming portfolio. Speaker 200:14:56On the funding side, as seen on Slide 8, private nonfinancial sector deposits in the Q2 of 2023 totaled ARS2 trillion, increasing 3.5 percent quarter over quarter. The bank's consolidated market share of private deposits reached 7.03% after the Q2 of 2023. Private non financial sector deposits in pesos increased 6.7% compared to the Q1 of 2023. The quarterly change is mainly affected by 1, a 19.7% increase in saving accounts, which were partially pushed by exporters and agriculture producers' deposits linked to the Dolar Socha 3 program to a 14.8% increase in checking accounts and 3, our foreign investment accounts by 18.9%, which offsets the growth in peso funding. Private non financial sector deposits in foreign currency expressed in pesos fell 8.5%. Speaker 200:16:06In terms of capitalization, BBVA Argentina continues to show strong solvency indicators in the Q2 of 2023. Capital ratio reached 28.4 percent. Exposure to the public sector in the Q2 of 2023, excluding Central Bank Instruments, represents 11% of total assets, above the 9.1% in the Q1 of 2023 and below the 17.3% reported by the system as of June 2023. It is worth mentioning that as of the date of this report, PDUFA Argentina has distributed 3 of the 6 installments scheduled on dividend payments from the ARS50.4 billion total to be paid, according to the plan published on June 7, 2023, and based on the terms agreed with the Central Bank. The bank's total liquidity ratio remained healthy at 84.1% of total deposits as of June 30, 2023. Speaker 200:17:14This concludes our prepared remarks. We will now take your questions. Operator, please open the line for questions. Operator00:17:52The first question comes from Carlos Gomez. Speaker 300:17:55Please go ahead. Speaker 400:17:59Hello, Inesco, and thank you for organizing the call. A general question about how you contemplate the end of this year and the beginning of next year, how is the bank positioning in terms of liquidity, in terms of willingness to expand, to take risk or do the opposite and how you can hedge yourself against unexpected inflation or unexpected foreign currency movements? Thank you. Speaker 500:18:27Hello, Carlos. Nice to hear from you. Okay. It's quite uncertain, the projection for Argentina actually in this period of the year is when we prepare our budgets and it's difficult to project. No, our research department is updating, for example, inflation, practically on an everyday basis. Speaker 500:18:48We are already in levels to the end of the year around 100 and 35 percent to 200 percent monetary policy rates. Although it has already been increased last week to 119%, we are still expecting a higher monetary policy rate for the end of the year around $138,000,000 But it's still difficult to say when that increase is going to take place and how much it's going to be and at what basically to understand if interest rates will remain positive or negative. Also projection for official USD is projected today in Ps. 700 per dollar at the year end. But again, macro variables are moving every day and this is tied also to the political uncertainty. Speaker 500:19:45As you know, Malay won. This was unexpected. And today, we have not only a possibility that Millet can be President, but we have 3 very strong parties running for the presidential elections. Being that said, as you see the numbers of the bank, the bank has reported very good results, very good ROEs, ROAs, all positive in real terms. Our loan growth this quarter has remained flat. Speaker 500:20:13But if you see our market share from 1 year, I know it's still growing. We are around 9%. And the bank is basically trying to protect the balance sheet from inflation. This has been a quarter where inflation has increased and the strategy of the bank is to acquire mainly share bonds that protect our balance sheet for inflation. That keeps being the main focus of the bank going forward. Speaker 500:20:43And we need to see how the macroeconomic environment evolves to prepare the bank for the future. So it's a tough question to answer, because the macro variables are not clear enough for us to understand how the bank is going to be prepared. But the bank has good liquidity, both in pesos and dollars, has the protection of the balance sheet, is improving efficiency ratios, fees are improving, the margin obviously is improving. So we believe we are one of the banks that is in a good position to keep reporting good results this year and the next. Speaker 400:21:32Okay. So again, to summarize, at this point in time, meaning today is Thursday, your inflation forecast is 175% and your monetary policy 135%? Speaker 500:21:43For the year end, it's between $175,000,000 $200,000,000 still not defined because the last one was $175,000,000 but we know they're working on a higher probably inflation rate for the year end. Monetary regulatory update is still not defined, but probably around 138 can be a possibility. But again, it's not a fixed number. Numbers are changing on an everyday basis. It's difficult to tell you the numbers today that may change tomorrow. Speaker 500:22:13What we know that we believe there is going to be an extra increase in monetary policy rates. It's not going to be remaining in $118,000,000 because we still see the FX increasing before the end of the year. Speaker 400:22:28Right. Okay. And again, this monetary policy rate, these are the monthly rates which compounded gives you a number above 200%. Speaker 500:22:36Yes, the inflation rate, yes. Year end, 200%. Speaker 400:22:42All right. The second question in terms of the results of the second quarter, and I have asked it to other banks as well. We have seen that all the banks have reported high profitability in this Q2. Again, is there any element of either seasonality or surprising rates or surprising inflation that has made the 2nd quarter special or is that something that we could project into the 3rd or the 4th quarter? Speaker 500:23:09It has to do with the increase in the monetary policy rate that you had in the second quarter that went from 78% to 97%, Remember, by the end of the Q1 to the 2nd quarter, and that had a repricing also in loans. So and the other factor is the Leliq. From our public sector exposure to daily Leliqs represents 76% and increasing. So that is part of the result that all the banks are presenting. Most of the NII of the banks is increasing mainly by public sector exposure, which is high, but a control. Speaker 500:23:47In the case of us, probably more control than other banks because of our parent company. So mainly the increase in NII and the good result has to do with that, with the increase of monetary borrowing rates and the position in public sector assets. Speaker 400:24:03Thank you so much, Ines. Speaker 200:24:05You're welcome. Operator00:24:08Next question comes from Lodovik Kasroj. Please go ahead. Speaker 300:24:17Yes. Good morning and congratulations for the results. I've got 2 questions. The first one is about the impact of a devaluation of the official FX rate on your result and on your book value, your equity? What would be the impact of a devaluation of the FX official rate? Speaker 300:24:44And the second question is regarding the consolidation that we have seen on the market with Banco Macro buying out Hitau Argentina, Would Bebe U. S. Argentina be interested in external growth buying out local subsidiary of foreign bank or merging with a competitor? Would you be interested in external growth? Speaker 500:25:18Sorry, I didn't understand the last part of your question. I understand I understood the part of B and A buying Itau, but the last part was? Speaker 300:25:28The last part was if you if Beluga Argentina could be interested in buying a subsidiary of an international bank or to merge with another local bank? Speaker 500:25:47Okay. Let me start by the last question. Regarding the Itau and VMA acquisition, I think it's a good position for VMA. It's a bank that offers a good branch network in the area where VMA has less branches. So and I think it's a good merger for them. Speaker 500:26:11If you see, okay, today with the last information of the system is March. But with those information, market shares and ranking stay quite stable. There's not much change by VMA acquiring Itau, but I believe it's a good acquisition for VMA strategy. Regarding us, again, it's a very unstable moment. So it's difficult to say what other M and A is going to take part. Speaker 500:26:44BBVA as a bank looks at every opportunity and is trying to remain in the market. So any opportunity that may rise up, we take a look at it and see if it's an opportunity for us. Okay. Regarding the evaluation that was the other part of your question, as you know, by recommendation, we have a cap in the position that we can have loan in assets, basically to avoid this high increase in results because of a sudden devaluation. Being that said, we have some bonds tied to FX that helps our results in FX. Speaker 500:27:33And basically that's what we can do. There is not much we can do there. It's quite limited what we can do regarding the valuation. Operator00:27:54This concludes the question and answer section. At this time, I would like to turn the floor back to Ms. Linouce for any closing remarks. Speaker 500:28:05Okay. Thank you for your time and let us know if you have further questions. Have a nice day. Operator00:28:15The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBanco BBVA Argentina Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Banco BBVA Argentina Earnings HeadlinesBanco BBVA Argentina Approves Key Financial Resolutions at Shareholders MeetingApril 24, 2025 | tipranks.comBanco BBVA Argentina Prepares for April 23 Shareholders MeetingApril 10, 2025 | tipranks.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.May 4, 2025 | Paradigm Press (Ad)Banco BBVA Argentina S.A. (NYSE:BBAR) Q4 2024 Earnings Call TranscriptMarch 10, 2025 | msn.comBanco BBVA Argentina S.A. (BBAR) Q4 2024 Earnings Call TranscriptMarch 6, 2025 | seekingalpha.comBanco BBVA Argentina S.A. 2024 Q4 - Results - Earnings Call PresentationMarch 6, 2025 | seekingalpha.comSee More Banco BBVA Argentina Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Banco BBVA Argentina? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Banco BBVA Argentina and other key companies, straight to your email. Email Address About Banco BBVA ArgentinaBanco BBVA Argentina (NYSE:BBAR) provides various banking products and services to individuals and companies in Argentina. The company provides retail banking products and services, such as checking and savings accounts, time deposits, credit cards financing, consumer and pledge loans, mortgages, insurance, and investment products to individuals; and small and medium-sized companies products and services, including financing products, factoring, checking accounts, time deposits, transactional and payroll services, insurance, and investment products to private-sector companies. It also provides corporate and investment banking products and services, such as global transaction services; global markets solutions comprising risk management and securities brokerage; long-term financing products, including project finance and syndicated loans; and corporate finance services comprising mergers and acquisitions, and capital markets advisory services to corporations and multinational companies. The company was formerly known as BBVA Banco Francés S.A. and changed its name to Banco BBVA Argentina S.A. in July 2019. Banco BBVA Argentina S.A. was incorporated in 1886 and is based in Buenos Aires, Argentina.View Banco BBVA Argentina ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to BBVA Argentina's 2nd Quarter 2023 Fiscal Year Results Conference Call. We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the company presentation. After company remarks are completed, there will be a question and answer session. At that time, further instructions will be given. Operator00:00:391st of all, let me point out that there are some statements made during this conference call that may be forward looking statements within the meaning of the Safe Harbor provisions found in Section 27A of the Securities Act of 19 33 under U. S. 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 statements. Additional information concerning these factors is contained in BBVA Argentina's Annual Report on Form 20F for the fiscal year 2022 filed with the U. Operator00:01:24S. Securities and Exchange Commission. Today, with us, we have Ms. Carmen Morello, CFO Ms. Ines Laniuzzi, IRO and Ms. Operator00:01:42Belen Forcade, Investor Relations. Ms. Forcade, you may begin your conference. Speaker 100:01:50Good morning, and welcome to VVA Argentina's 2nd Quarter 2023 Fiscal Year Result Conference Call. Today's webinar will be supported by a slide presentation available on our Investor Relations website on the Financial Information section. Speaking during today's call will be Ines La Nuce, our Investor Relations Officer and Carmen Melissa Arroso, our Chief Financial Officer, who will be available for the Q and A session. Please note that starting January 1, 2020, as per Central Bank Regulation, we have begun reporting results applying hyperinflation accounting pursuant to IFRS rule, IAS 29. For ease of comparability, 2022 2023 figures have been restated to reflect the accumulated effect of inflation adjustment for each period through June 30, 2023. Speaker 100:02:44Now let me turn the call over to Ines. Speaker 200:02:48Thank you, Belen, and thank you all for joining us today. As we are all aware, on Sunday, August 13, Javier Millet, the candidate for La Liberta Abanza, was the most voted in the primary presidential elections, quite above from what surveys were estimated. This implies a higher uncertainty scenario facing the general elections of October, and it is expected that higher volatility will persist. At the same time, the unfavorable macroeconomic conditions have continued to deteriorate, increasing the risk of economic and financial turbulence ahead of the presidential elections scheduled for the last quarter of the year. GDP is expected to fall by around 3.5% this year according to BBVA Research due to the impact of the negative weather shock on the production and export of agricultural goods, coupled with increasing exchange rate restrictions and political uncertainty. Speaker 200:03:50In this context, its impact on the external and fiscal accounts has contributed to accelerate the exchange rate, depreciation and inflation, which in annual terms reached 113.4% as of July 2023. Referring to BBVA's Argentina general performance, a better operating income as of June 2023 was a product of an improvement in interest income, boosted especially by government securities and liquidity instruments and better fee income. Now moving into business dynamics. As you can see on Slide 3 of our webcast presentation, our service offering has evolved in such a way that by the end of June 2023, retail digital clients penetration reached 62%, remaining stable from a year back, while that of retail mobile clients reached 56% from 54% as of the same period of last year. The response on the side of customers has been satisfactory, and we are convinced this is the path to pursue in the aim of sustaining and expanding our competitive position in the financial system. Speaker 200:05:11Retail digital sales measured in units have increased from 90.8% in the Q2 of 2022 to 93.9% in the Q2 of 2023 and represents 71.8% of the bank's total sales measured in monetary value versus 57.1% in the Q2 of 2022. New customer acquisitions through digital channels reached 75% in the Q2 of 2023 from 70% in the Q2 2022. The bank actively monitors its business, financial conditions and operating results in the aim of keeping a competitive position to face contextual challenges. Moving to Slide 4, I will now comment on the bank's Q2 2023 financial results. BBVA Argentina 2nd quarter 2023 net income was ARS30.4 billion, increasing 63.3 percent quarter over quarter. Speaker 200:06:21This implied a quarterly ROE of 21.3% and a quarterly ROA of 3.9%. Operating income in the Q2 of 2023 was ARS 125,300,000,000, 28.6 percent above the ARS97,500,000,000 recorded in the Q1 of 2023. Quarterly operating results are mainly explained by: 1, better interest income results through public securities and liquidity instruments 2, better fee income and 3, higher net income from write down of assets at fair value through OCI, mainly due to the voluntary bond swap offered in June by the National Treasury. This effect was partially offset by 1, an increase in other operating expenses pushed by greater turnover tax due to a higher level position 2, an increase in personnel expenses and 3, an increase in administrative expenses. Net income for the period was highly impacted by income from net monetary recession and inflation increased from 21.7% in the Q1 of 2023 to 23.8% in the Q2 of 2023. Speaker 200:07:47Turning into the P and L lines in Slide 56. Net interest income for the Q2 of 2023 was ARS185.5 billion, increasing 14.2 percent quarter over quarter. In the Q2 of 2023, interest income in monetary terms increased more than interest expenses, mainly due to: 1, an increase in income from Seruba adjustment, driven by public securities with this adjustment and 2, a higher position and yield of public securities, in particularly of Leliq. Additionally, there is a positive effect from income from loans, mainly discounted instruments and from repo operations. In the Q2 of 2023, interest income totaled ARS371.2 billion, increasing 20.3% compared to the Q1 of 2023. Speaker 200:08:51In the quarter, monetary policy rate gradually increased from 78% at the beginning of the quarter up to 97% at quarterend. Interest expenses totaled ARS 185,700,000,000, denoting a 27.1% increase quarter over quarter. Quarterly increase is described by higher time deposit expenses. Interest from time deposits, including investment accounts, explained 77.7 percent of interest expenses versus 82.8% the previous quarter. Net fee income as of the Q2 of 2023 totaled ARS 23,700,000,000, increasing 69.3 percent quarter over quarter in real terms. Speaker 200:09:48In the Q2 of 2023, fee income totaled ARS 33,400,000,000, growing 22.6% quarter over quarter. The quarterly increase is mainly explained by an increment of fees from credit cards, considering that this line includes Pultos Bebe Ubea royalty program. Regarding fee expenses, these totaled ARS 9,600,000,000, Speaker 100:10:16falling 27%. Speaker 200:10:19In the Q2 of 2023, loan loss allowances increased only 9.6% due to the good performance of our portfolio. During the Q2 of 2023, total operating expenses were ARS92.6 billion, increasing 8.4% quarter over quarter, of which 31% were personal benefits costs. Personal benefits increased 6.3% quarter over quarter. The quarterly increase is mainly explained by the inflation adjustment of vacation stock provisions. Quarterly increases were also affected by a 25.8% collective agreement on wages, which implies a 56% accumulated increase as of the Q2 of 2023. Speaker 200:11:11As of the Q2 of 2023, administrative expenses increased 5% quarter over quarter. The quarterly increase is mainly explained by, 1, outsourced administrative expenses 2, greater rent expenses and 3, increase in software services, all of them related to services contracted with the parent company. Being this said, the quarterly efficiency ratio as of the Q2 of 2023 was 42.8%, improving compared to the 62.4% reported in the Q1 of 2023. The quarterly improvement is explained by a higher increase in income than expenses, especially due to a significant increase in interest and fee income. The accumulated efficiency ratio as of the Q2 of 2023 was 56.6%, improving compared to the 62.4% reported in the Q1 of 2023 and versus the 71.3% reported in the Q2 of 2022. Speaker 200:12:26In terms of activity on Slide 7, private sector loans as of the Q2 of 2023 totaled ARS 1,100,000,000,000, slightly decreasing 0.3% and 3.5% year over year. Loans to the private sector in pesos fell 1.1% in the Q2 of 2023. During the quarter, the decrease was especially driven by a 37.5% decline in overdraft, followed by a 6.8% fall in consumer loans. The fall was partially offset by a 17.8% increase in discounted instruments and a 10.4% increase in other loans, the later pushed by floor planning. Loans to the private sector denominated in foreign currency increased 12.1%. Speaker 200:13:24Quarterly increase is mainly explained by a 13.9% growth in financing and pre financing of exports. Loans to the private sector in foreign currency measured in U. S. Dollars increased 13% quarter over quarter. During the quarter, both the retail and commercial portfolio remained practically flat. Speaker 200:13:49As observed in previous quarters, loan portfolio were impacted by the effect of inflation during the Q2 of 2023, which reached 23.8%. In nominal terms, BBVA Argentina managed to increase the retail, commercial and total loan portfolio by 23%, 23.8% and 23.4%, respectively, during the quarter, practically reaching quarterly inflation levels. BBVA Argentina's consolidated market share of private sector loans reached 9.01% as of the Q2 of 2023, improving from the 8.35% a year ago. In the Q2 of 2023, asset quality ratio was 1.38% compared to the 1.31% recorded in the Q1 of 2023. The slight increase is mainly explained by an increase in the retail nonperforming portfolio. Speaker 200:14:56On the funding side, as seen on Slide 8, private nonfinancial sector deposits in the Q2 of 2023 totaled ARS2 trillion, increasing 3.5 percent quarter over quarter. The bank's consolidated market share of private deposits reached 7.03% after the Q2 of 2023. Private non financial sector deposits in pesos increased 6.7% compared to the Q1 of 2023. The quarterly change is mainly affected by 1, a 19.7% increase in saving accounts, which were partially pushed by exporters and agriculture producers' deposits linked to the Dolar Socha 3 program to a 14.8% increase in checking accounts and 3, our foreign investment accounts by 18.9%, which offsets the growth in peso funding. Private non financial sector deposits in foreign currency expressed in pesos fell 8.5%. Speaker 200:16:06In terms of capitalization, BBVA Argentina continues to show strong solvency indicators in the Q2 of 2023. Capital ratio reached 28.4 percent. Exposure to the public sector in the Q2 of 2023, excluding Central Bank Instruments, represents 11% of total assets, above the 9.1% in the Q1 of 2023 and below the 17.3% reported by the system as of June 2023. It is worth mentioning that as of the date of this report, PDUFA Argentina has distributed 3 of the 6 installments scheduled on dividend payments from the ARS50.4 billion total to be paid, according to the plan published on June 7, 2023, and based on the terms agreed with the Central Bank. The bank's total liquidity ratio remained healthy at 84.1% of total deposits as of June 30, 2023. Speaker 200:17:14This concludes our prepared remarks. We will now take your questions. Operator, please open the line for questions. Operator00:17:52The first question comes from Carlos Gomez. Speaker 300:17:55Please go ahead. Speaker 400:17:59Hello, Inesco, and thank you for organizing the call. A general question about how you contemplate the end of this year and the beginning of next year, how is the bank positioning in terms of liquidity, in terms of willingness to expand, to take risk or do the opposite and how you can hedge yourself against unexpected inflation or unexpected foreign currency movements? Thank you. Speaker 500:18:27Hello, Carlos. Nice to hear from you. Okay. It's quite uncertain, the projection for Argentina actually in this period of the year is when we prepare our budgets and it's difficult to project. No, our research department is updating, for example, inflation, practically on an everyday basis. Speaker 500:18:48We are already in levels to the end of the year around 100 and 35 percent to 200 percent monetary policy rates. Although it has already been increased last week to 119%, we are still expecting a higher monetary policy rate for the end of the year around $138,000,000 But it's still difficult to say when that increase is going to take place and how much it's going to be and at what basically to understand if interest rates will remain positive or negative. Also projection for official USD is projected today in Ps. 700 per dollar at the year end. But again, macro variables are moving every day and this is tied also to the political uncertainty. Speaker 500:19:45As you know, Malay won. This was unexpected. And today, we have not only a possibility that Millet can be President, but we have 3 very strong parties running for the presidential elections. Being that said, as you see the numbers of the bank, the bank has reported very good results, very good ROEs, ROAs, all positive in real terms. Our loan growth this quarter has remained flat. Speaker 500:20:13But if you see our market share from 1 year, I know it's still growing. We are around 9%. And the bank is basically trying to protect the balance sheet from inflation. This has been a quarter where inflation has increased and the strategy of the bank is to acquire mainly share bonds that protect our balance sheet for inflation. That keeps being the main focus of the bank going forward. Speaker 500:20:43And we need to see how the macroeconomic environment evolves to prepare the bank for the future. So it's a tough question to answer, because the macro variables are not clear enough for us to understand how the bank is going to be prepared. But the bank has good liquidity, both in pesos and dollars, has the protection of the balance sheet, is improving efficiency ratios, fees are improving, the margin obviously is improving. So we believe we are one of the banks that is in a good position to keep reporting good results this year and the next. Speaker 400:21:32Okay. So again, to summarize, at this point in time, meaning today is Thursday, your inflation forecast is 175% and your monetary policy 135%? Speaker 500:21:43For the year end, it's between $175,000,000 $200,000,000 still not defined because the last one was $175,000,000 but we know they're working on a higher probably inflation rate for the year end. Monetary regulatory update is still not defined, but probably around 138 can be a possibility. But again, it's not a fixed number. Numbers are changing on an everyday basis. It's difficult to tell you the numbers today that may change tomorrow. Speaker 500:22:13What we know that we believe there is going to be an extra increase in monetary policy rates. It's not going to be remaining in $118,000,000 because we still see the FX increasing before the end of the year. Speaker 400:22:28Right. Okay. And again, this monetary policy rate, these are the monthly rates which compounded gives you a number above 200%. Speaker 500:22:36Yes, the inflation rate, yes. Year end, 200%. Speaker 400:22:42All right. The second question in terms of the results of the second quarter, and I have asked it to other banks as well. We have seen that all the banks have reported high profitability in this Q2. Again, is there any element of either seasonality or surprising rates or surprising inflation that has made the 2nd quarter special or is that something that we could project into the 3rd or the 4th quarter? Speaker 500:23:09It has to do with the increase in the monetary policy rate that you had in the second quarter that went from 78% to 97%, Remember, by the end of the Q1 to the 2nd quarter, and that had a repricing also in loans. So and the other factor is the Leliq. From our public sector exposure to daily Leliqs represents 76% and increasing. So that is part of the result that all the banks are presenting. Most of the NII of the banks is increasing mainly by public sector exposure, which is high, but a control. Speaker 500:23:47In the case of us, probably more control than other banks because of our parent company. So mainly the increase in NII and the good result has to do with that, with the increase of monetary borrowing rates and the position in public sector assets. Speaker 400:24:03Thank you so much, Ines. Speaker 200:24:05You're welcome. Operator00:24:08Next question comes from Lodovik Kasroj. Please go ahead. Speaker 300:24:17Yes. Good morning and congratulations for the results. I've got 2 questions. The first one is about the impact of a devaluation of the official FX rate on your result and on your book value, your equity? What would be the impact of a devaluation of the FX official rate? Speaker 300:24:44And the second question is regarding the consolidation that we have seen on the market with Banco Macro buying out Hitau Argentina, Would Bebe U. S. Argentina be interested in external growth buying out local subsidiary of foreign bank or merging with a competitor? Would you be interested in external growth? Speaker 500:25:18Sorry, I didn't understand the last part of your question. I understand I understood the part of B and A buying Itau, but the last part was? Speaker 300:25:28The last part was if you if Beluga Argentina could be interested in buying a subsidiary of an international bank or to merge with another local bank? Speaker 500:25:47Okay. Let me start by the last question. Regarding the Itau and VMA acquisition, I think it's a good position for VMA. It's a bank that offers a good branch network in the area where VMA has less branches. So and I think it's a good merger for them. Speaker 500:26:11If you see, okay, today with the last information of the system is March. But with those information, market shares and ranking stay quite stable. There's not much change by VMA acquiring Itau, but I believe it's a good acquisition for VMA strategy. Regarding us, again, it's a very unstable moment. So it's difficult to say what other M and A is going to take part. Speaker 500:26:44BBVA as a bank looks at every opportunity and is trying to remain in the market. So any opportunity that may rise up, we take a look at it and see if it's an opportunity for us. Okay. Regarding the evaluation that was the other part of your question, as you know, by recommendation, we have a cap in the position that we can have loan in assets, basically to avoid this high increase in results because of a sudden devaluation. Being that said, we have some bonds tied to FX that helps our results in FX. Speaker 500:27:33And basically that's what we can do. There is not much we can do there. It's quite limited what we can do regarding the valuation. Operator00:27:54This concludes the question and answer section. At this time, I would like to turn the floor back to Ms. Linouce for any closing remarks. Speaker 500:28:05Okay. Thank you for your time and let us know if you have further questions. Have a nice day. Operator00:28:15The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read morePowered by