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    BBAR   ARP125991090

BANCO BBVA ARGENTINA S.A.

(BBAR)
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Banco BBVA Argentina S A : Form 6-K)

08/24/2021 | 07:04pm EDT

Banco BBVA Argentina S.A.

TABLE OF CONTENTS

Item

1. Banco BBVA Argentina S.A. reports consolidated second quarter earnings for fiscal year 2021.

Banco BBVA Argentina S.A. announces

Second Quarter 2021 results

Buenos Aires, August 24, 2021- Banco BBVA Argentina S.A (NYSE; BYMA; MAE: BBAR; LATIBEX: XBBAR) ('BBVA Argentina' or 'BBVA' or 'the Bank') announced today its consolidated results for the second quarter (2Q21), ended on June 30, 2021.

As of January 1, 2020, the Bank started to inform its inflation adjusted results pursuant to IAS 29 reporting. To facilitate comparison, figures of comparable quarters of 2020 and 2021 have been updated according to IAS 29 reporting to reflect the accumulated effect of inflation adjustment for each period up to June 30, 2021.

2Q21 Highlights

· BBVA Argentina's inflation adjusted net income in 2Q21 was $7.2 billion, 119.3% greater than the $3.3 billion reported on the first quarter of 2021 (1Q21), and 14.3% greater than the $6.3 billion reported on the second quarter of 2020 (2Q20).
· In 2Q21, BBVA Argentina posted an inflation adjusted average return on assets (ROAA) of 3.4% and an inflation adjusted average return on equity (ROAE) of 22.2%.
· In terms of activity, total consolidated financing to the private sector in 2Q21 totaled $319.9 billion, contracting in real terms 2.9% compared to 1Q21, and 15.0% compared to 2Q20. In the quarter, changes were mainly driven by the fall in credit cards, other loans and overdrafts by 4.3%, 6.6% and 17.7% respectively. BBVA's consolidated market share of private sector loans was 8.21% as of 2Q21.
· Total consolidated deposits in 2Q21 totaled $609.1 billion, increasing 8.1% in real terms during the quarter, and 8.6% in the year. Quarterly growth is mainly explained by sight deposits, especially checking accounts and savings accounts, which increased 21.2% and 6.2% respectively. The Bank's consolidated market share of private deposits was 7.41% as of 2Q21.
· As of 2Q21, the non-performing loan ratio (NPL) reached 2.49%, with a 187.88% coverage ratio.
· The accumulated efficiency ratio in 2Q21 was 70.1%, below 1Q21's 72.5%, and above 2Q20's 56.0%.
· As of 2Q21, BBVA Argentina reached a regulatory capital ratio of 23.3%, entailing a $78.8 billion or 184.5% excess over minimum regulatory requirement. Tier I ratio was 22.6%.
· Total liquid assets represented 75.7% of the Bank's total deposits as of 2Q21.

Message from the CFO

'The second quarter of 2021 has been impacted by the second wave of COVID-19, in the context of a sanitary crisis which the country has been going through during more than a year. This derived in a deceleration of activity, with a persistence in uncertainty generated by pending mid-term elections, and unsolved conflicts related to foreign debt with the International Monetary Fund.

BBVA Argentina operating results stand out on 2Q21, growing 14.5% compared to the previous quarter, boosted by an improvement in net fee income, with a focus on operating efficiency, denoting an adequate expense management, and by a preservation of margins in a context marked by volatility and rate controls.

In terms of credit performance, as of June 2021, BBVA Argentina reached an NPL ratio of 2.49%. In terms of liquidity and solvency, the Bank ended the quarter with ratios of 75.7% and 23.3% respectively, which would enable the growth of business that could come along a potential economic recovery.

Meanwhile, the Bank closely monitors its business, financial conditions and operating results, in the aim of anticipating possible effects of the gradual removal of regulation implemented by the Government during the pandemic, especially over asset quality and margins.

1

Regarding digitalization, our service offering has evolved in such way that by the end of June 2021, digital client penetration reached 74% from 69% a year back, while that of mobile clients reached 62% from 57% in the same period. Trend aims towards stabilization, considering that the pandemic has caused an important shift towards the adoption of digital channels by clients.

Lastly, in terms of responsible banking, in July 2021, BBVA at a global level, announced it would double its target of channeling sustainable financing to 200 billion euros, BBVA Argentina being part and collaborating with this target'

Ernesto R. Gallardo, BBVA Argentina's CFO

2Q21 Conference Call

Wednesday, August 25, 12:00 p.m. Buenos Aires time - (11:00 a.m. EST)

To participate, please dial in:

+ 54-11-3984-5677 (Argentina)

+ 1-844-450-3851 (United States)

+ 1-412-317-6373 (International)

Web Phone:click here

Conference ID:BBVA

Webcast & Replay:click here

2

Safe Harbor Statement

This press release contains certain forward-looking statements that reflect the current views and/or expectations of Banco BBVA Argentina and its management with respect to its performance, business and future events. We use words such as 'believe,' 'anticipate,' 'plan,' 'expect,' 'intend,' 'target,' 'estimate,' 'project,' 'predict,' 'forecast,' 'guideline,' 'seek,' 'future,' 'should' and other similar expressions to identify forward-looking statements, but they are not the only way we identify such statements. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this release. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) changes in general economic, financial, business, political, legal, social or other conditions in Argentina or elsewhere in Latin America or changes in either developed or emerging markets, (ii) changes in regional, national and international business and economic conditions, including inflation, (iii) changes in interest rates and the cost of deposits, which may, among other things, affect margins, (iv) unanticipated increases in financing or other costs or the inability to obtain additional debt or equity financing on attractive terms, which may limit our ability to fund existing operations and to finance new activities, (v) changes in government regulation, including tax and banking regulations, (vi) changes in the policies of Argentine authorities, (vii) adverse legal or regulatory disputes or proceedings, (viii) competition in banking and financial services, (ix) changes in the financial condition, creditworthiness or solvency of the customers, debtors or counterparties of Banco BBVA Argentina, (x) increase in the allowances for loan losses, (xi) technological changes or an inability to implement new technologies, (xii) changes in consumer spending and saving habits, (xiii) the ability to implement our business strategy and (xiv) fluctuations in the exchange rate of the Peso. The matters discussed herein may also be affected by risks and uncertainties described from time to time in Banco BBVA Argentina's filings with the U.S. Securities and Exchange Commission (SEC) and Comisión Nacional de Valores (CNV). Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as the date of this document. Banco BBVA Argentina is under no obligation and expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Information

This earnings release has been prepared in accordance with the accounting framework established by the Central Bank of Argentina ('BCRA'), based on International Financial Reporting Standards ('I.F.R.S.') and the resolutions adopted by the International Accounting Standards Board ('I.A.S.B') and by the Federación Argentina de Consejos Profesionales de Ciencias Económicas ('F.A.C.P.E.'), with the transitory exceptions: (i) the adjustment in valuation established by the B.C.R.A. applied to the valuation of the remaining investment the Bank keeps of Prisma Medios de Pago S.A. ('Prisma'), and (ii) the temporary exclusion of the application of the IFRS 9 impairment model for non-financial public sector debt instruments.

As of 1Q20, the Bank started to inform its inflation adjusted results pursuant to IAS 29 reporting. To facilitate comparison, figures of comparable quarters of 2020 and 2021 have been updated according to IAS 29 reporting to reflect the accumulated effect of inflation adjustment for each period up to June 30, 2021.

The information in this press release contains unaudited financial information that consolidates, line item by line item, all of the banking activities of BBVA Argentina, including: BBVA Asset Management Argentina S.A., Consolidar AFJP-undergoing liquidation proceeding, PSA Finance Argentina Compañía Financiera S.A. ('PSA') and Volkswagen Financial Services Compañía Financiera S.A ('VWFS').

BBVA Consolidar Seguros S.A. is disclosed on a consolidated basis recorded as Investments in associates (reported under the proportional consolidation method), and the corresponding results are reported as 'Income from associates'), same as Rombo Compañía Financiera S.A. ('Rombo'), Play Digital S.A. and Interbanking S.A.

Financial statements of subsidiaries have been elaborated as of the same dates and periods as Banco BBVA Argentina S.A.'s. In the case of consolidated companies PSA and VWFS, financial statements were prepared considering the B.C.R.A. accounting framework for institutions belonging to 'Group C', without considering the model established by the IFRS 9 5.5. 'Impairment' section for periods starting as of January 1, 2022.

The information published by the BBVA Group for Argentina is prepared according to IFRS, without considering the temporary exceptions established by BCRA.

3

Quarterly Results

Income Statement BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Net Interest Income 24,306 23,908 23,846 1.7% 1.9%
Net Fee Income 5,429 3,722 4,669 45.9% 16.3%
Net income from measurement of financial instruments at fair value through P&L 1,252 1,776 1,913 (29.5%) (34.6%)
Net income from write-down of assets at amortized cost and at fair value through OCI (16) (37) (309) 56.8% 94.8%
Foreign exchange and gold gains 1,181 994 2,245 18.8% (47.4%)
Other operating income 1,812 1,716 1,715 5.6% 5.7%
Loan loss allowances (2,126) (2,123) (3,974) (0.1%) 46.5%
Net operating income 31,838 29,956 30,105 6.3% 5.8%
Personnel benefits (6,359) (6,479) (5,956) 1.9% (6.8%)
Adminsitrative expenses (5,878) (5,916) (5,755) 0.6% (2.1%)
Depreciation and amortization (1,189) (1,186) (1,266) (0.3%) 6.1%
Other operating expenses (5,563) (5,157) (4,253) (7.9%) (30.8%)
Operarting expenses (18,989) (18,738) (17,230) (1.3%) (10.2%)
Operating income 12,849 11,218 12,875 14.5% (0.2%)
Income from associates 174 (33) 284 n.m (38.7%)
Income from net monetary position (8,734) (8,377) (3,750) (4.3%) (132.9%)
Net income before income tax 4,289 2,808 9,409 52.7% (54.4%)
Income tax 2,931 485 (3,091) n.m 194.8%
Net income for the period 7,220 3,293 6,318 119.3% 14.3%
Owners of the parent 7,219 3,339 6,246 116.2% 15.6%
Non-controlling interests 1 (46) 72 102.2% (98.6%)
Other comprehensive Income (OCI) (1) 75 (255) 1,898 129.4% (96.0%)
Total comprehensive income 7,295 3,038 8,216 140.1% (11.2%)

BBVA Argentina 2Q21 net income was $7.2 billion, growing 119.3% or $3.9 billion quarter-over-quarter (QoQ) and 14.3% or $902 million year-over-year (YoY).

Quarterly results are mainly explained by (i) a better net operating income due to a larger fee income and (ii) the reversal of the provision recorded in accordance to the Memorandum N°6/2017 issued by the BCRA, in connection with the repayment of income tax inflation adjustments for 2017 and 2018 fiscal years, for a total of $4.3 billion, as a result of an assessment, funded on legal and tax advisors' opinions, in which the Bank considers that probabilities of getting a final instance favorable court ruling are higher for those fiscal years.

The accumulated net income for the first six months of 2021 was $10.5 billion, 23.7% above the accumulated net income for the first half of 2020, of $8.5 billion. The accumulated ROE as of 2Q21 is 16.5% while the accumulated ROA is 2.5%.

4
Earnings per share BBVA ARG Consolidated Chg (%)
2Q21 1Q21 2Q20 QoQ YoY
Financial Statement information
Net income for the period attributable to owners of the parent (in AR$ millions, inflation adjusted) 7,219 3,339 6,246 116.2% 15.6%
Total shares outstanding (1) 612,710 612,710 612,710 - -
Market information
Closing price of ordinary share at BYMA (in AR$) 184.35 130.00 136.00 41.8% 35.6%
Closing price of ADS at NYSE (in USD) 3.25 2.73 3.75 19.0% (13.3%)
Book value per share (in AR$) 216.91 217.13 227.19 (0.1%) (4.5%)
Price-to-book ratio (BYMA price) (%) 0.85 0.60 0.60 42.0% 42.0%
Earnings per share (in AR$) 11.78 5.45 10.19 116.2% 15.6%
Earnings per ADS(2) (in AR$) 35.35 16.35 30.58 116.2% 15.6%
1) In thousands of shares. On October 9, 2019, the CNV issued Resolution No. 20484/2019 concerning the merger of BBVA Francés Valores S.A. into the Bank. As such, the Bank was authorized to issue 50,441 ordinary shares, with a nominal value of $ 1 and entitling to one (1) vote each for to be delivered to BBVA Francés Valores S.A.'s minority shareholders. The merger and the ensuing capital stock increase are still in the process of being registered with the Argentine Supervisory Board of Companies (IGJ).
(2) Each ADS accounts for 3 ordinary shares

Net Interest Income

Net interest income BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Net Interest Income 24,306 23,908 23,846 1.7% 1.9%
Interest Income 43,669 40,726 33,557 7.2% 30.1%
From government securities 11,014 10,841 8,878 1.6% 24.1%
From private securities 27 26 4 3.8% n.m
Interest from loans and other financing 17,804 19,657 21,306 (9.4%) (16.4%)
Financial Sector 134 161 355 (16.6%) (62.3%)
Overdrafts 1,552 1,982 4,420 (21.7%) (64.9%)
Discounted Instruments 2,890 3,037 2,703 (4.8%) 6.9%
Mortgage loans 374 351 418 6.5% (10.5%)
Pledge loans 1,159 1,123 851 3.2% 36.2%
Consumer Loans 2,978 2,861 3,001 4.1% (0.8%)
Credit Cards 4,616 5,891 5,351 (21.6%) (13.7%)
Financial leases 197 191 151 3.0% 30.5%
Loans for the prefinancing and financing of exports 242 219 568 10.3% (57.4%)
Other loans 3,662 3,840 3,488 (4.6%) 5.0%
Premiums on REPO transactions 7,276 3,459 661 110.3% n.m
CER/UVA clause adjustment 7,548 6,742 2,699 12.0% 179.7%
Other interest income - 2 9 (100.0%) (100.0%)
Interest expenses 19,363 16,818 9,711 15.1% 99.4%
Deposits 17,307 15,453 8,007 12.0% 116.1%
Checking accounts 2,871 2,030 253 41.4% n.m
Savings accounts 119 107 73 11.5% 63.0%
Time deposits and Investment accounts 14,317 13,316 7,681 7.5% 86.4%
Other liabilities from financial transactions 228 208 893 9.6% (74.5%)
Interfinancial loans received 622 532 429 16.9% 45.0%
CER/UVA clause adjustment 1,203 626 374 92.3% 221.7%
Other 3 0 8 n.m (62.5%)

Net interest income for 2Q21 was $24.3 billion, increasing 1.7% or $398 million QoQ, and 1.9% or $460 million YoY. In 2Q21, although in percentage terms interest expenses increased more than interest income, in monetary terms growth in interest income compensates the increase in interest costs and reflects a positive net interest income.

In 2Q21, interest income totaled $43.7 billion, increasing 7.2% compared to 1Q21 and 30.1% compared to 2Q20. Quarterly increase is mainly driven by a 110.3% surge in premiums from REPO transactions (due to a larger position, thanks to a greater liquidity derived from modifications in the Bank's treasury and increase in the limit of damaged banknotes accepted in exchange by the BCRA), and a 12.0% improvement in income from CER/UVA adjustments, the latter related to income from public securities linked to such indexes. The whole increase was offset by a fall in credit cards by 21.6%, and a 21.7% fall in income from overdrafts, the latter due to lower demand.

5

Income from government securities grew 1.6% compared to 1Q21, and 24.1% compared to 2Q20. This is explained by a larger position in BCRA liquidity bills (LELIQ). 92% of these results are explained by government securities at fair value through Other Comprehensive Income (OCI), mainly LELIQ, and 6% by securities at amortized cost (2022 National Treasury Bonds at fixed rate, used for reserve requirement integration).

Interest income from loans and other financing totaled $17.8 billion, contracting 9.4% QoQ and 16.4% YoY. Quarterly decrease is mainly due to a fall in credit cards by 21.6% and overdrafts by 21.7%. This was partially offset by a 4.1% increase in interests from consumer loans.

Income from CER/UVA adjustments grew 12.0% QoQ and 179.7% YoY, driven by an increment in the CER linked securities position. 54% of income from interests from CER/UVA adjustments is explained by interests generated by bonds linked to such indexes.

Interest expenses totaled $19.4 billion, denoting a 15.1% increase QoQ and a 99.4% increase YoY. Quarterly increase is described by (i) an increase in interest expenses from time deposits and investment accounts mainly due to larger portfolios (specially the of latter), (ii) an increase in checking account expenses, and (iii) greater expenses by UVA/CER adjustments derived from time deposits linked to such indexes, also due to a larger portfolio.

Interests from time deposits and investment accounts explain 73.9% of interest expenses, versus 79.2% the previous quarter. These expanded 7.5% QoQ and 86.4% YoY.

NIM

As of 2Q21, net interest income (NIM) was 17.5%, lower than the 19.2% recorded on 1Q21. In 2Q21, NIM in pesos was 18.8% and 3.1% in U.S. dollars.

Assets & Liabilities Performance - Total BBVA ARG Consolidated
In millions of AR$. Rates and spreads in annualized % 2Q21 1Q21 2Q20
Average Balance Interest Earned/Paid Average Real Rate Average Balance Interest Earned/Paid Average Real Rate Average Balance Interest Earned/Paid Average Real Rate
Total interest-earning assets 558,288 43,669 31.4% 504,454 40,726 32.7% 573,208 33,557 23.5%
Debt securities 239,987 22,410 37.5% 188,006 17,728 38.2% 130,246 9,726 30.0%
Loans to customers/financial institutions 309,839 21,248 27.5% 308,439 22,998 30.2% 390,152 23,810 24.5%
Other assets 8,462 11 0.5% 8,010 - - 52,810 21 0.2%
Total non interest-earning assets 246,193 - - 260,059 - - 268,760 - -
Total Assets 804,481 43,669 21.8% 764,513 40,726 21.6% 841,969 33,557 16.0%
Total interest-bearing liabilities 426,998 19,363 18.2% 395,928 16,818 17.2% 411,029 9,711 9.5%
Sight deposits 224,196 2,989 5.3% 212,764 2,139 4.1% 228,624 325 0.6%
Time deposits and investment accounts 192,435 15,924 33.2% 173,007 14,200 33.3% 158,889 8,280 20.9%
Debt securities issued 979 106 43.4% 1,120 126 45.8% 9,381 891 38.1%
Other liabilities 9,388 344 14.7% 9,037 353 15.8% 14,135 215 6.1%
Total non-interest-bearing liabilities 377,483 - - 368,585 - - 430,940 - -
Total liabilities and equity 804,481 19,363 9.7% 764,513 16,818 8.9% 841,969 9,711 4.6%
NIM - Total 17.5% 19.2% 16.7%
Spread - Total 13.2% 15.5% 14.0%
Nominal rates are calculated over a 365-day year
Does not include Net income from measurement of financial instruments at fair value through P&L nor Net income from write-down of assets at amortized cost and at fair value through OCI
Sight deposits include savings accounts and interest-bearing checking accounts. Non interest-bearing accounts are included in non-interest-bearing liabilities.
6
Assets & Liabilities Performance - AR$ BBVA ARG Consolidated
In millions of AR$. Rates and spreads in annualized % 2Q21 1Q21 2Q20
Average Balance Interest Earned/Paid Average Real Rate Average Balance Interest Earned/Paid Average Real Rate Average Balance Interest Earned/Paid Average Real Rate
Total interest-earning assets 511,099 43,226 33.9% 466,050 40,288 35.1% 498,561 32,516 26.2%
Debt securities 239,987 22,410 37.5% 188,002 17,728 38.2% 124,205 9,570 30.9%
Loans to customers/financial institutions 268,466 20,806 31.1% 276,160 22,560 33.1% 328,089 22,927 28.0%
Other assets 2,646 10 1.5% 1,888 - - 46,268 19 0.2%
Total non interest-earning assets 118,157 - 125,620 - 127,916 - -
Total Assets 629,256 43,226 27.6% 591,670 40,288 27.6% 626,477 32,516 20.8%
Total interest-bearing liabilities 304,046 19,289 25.4% 273,464 16,766 24.9% 265,886 9,622 14.5%
Savings accounts 122,064 2,987 9.8% 111,106 2,137 7.8% 112,037 323 1.2%
Time deposits 174,981 15,912 36.5% 154,990 14,184 37.1% 132,406 8,205 24.9%
Debt securities issued 979 106 43.4% 1,120 126 45.8% 9,381 891 38.1%
Other liabilities 6,022 284 18.9% 6,249 318 20.7% 12,062 202 6.7%
Total non-interest-bearing liabilities 325,215 - 319,262 - 373,056 - -
Total liabilities and equity 629,261 19,289 12.3% 592,726 16,766 11.5% 638,941 9,622 6.0%
NIM - AR$ 18.8% 20.5% 18.4%
Spread - AR$ 8.5% 10.2% 11.6%
Nominal rates are calculated over a 365-day year
Does not include Net income from measurement of financial instruments at fair value through P&L nor Net income from write-down of assets at amortized cost and at fair value through OCI
Sight deposits include savings accounts and interest-bearing checking accounts. Non interest-bearing accounts are included in non-interest-bearing liabilities.
Assets & Liabilities Performance - Foreign Currency BBVA ARG Consolidated
In millions of AR$. Rates and spreads in annualized % 2Q21 1Q21 2Q20
Average Balance Interest Earned/Paid Average Real Rate Average Balance Interest Earned/Paid Average Real Rate Average Balance Interest Earned/Paid Average Real Rate
Total interest-earning assets 47,189 443 3.8% 38,404 438 4.6% 74,647 1,041 5.6%
Debt securities - - - 4 - - 6,042 156 10.4%
Loans to customers/financial institutions 41,373 442 4.3% 32,278 438 5.5% 62,064 883 5.7%
Other assets 5,816 1 0.1% 6,121 - - 6,542 1 0.1%
Total non interest-earning assets 128,036 - 134,439 - 140,844 - -
Total Assets 175,225 443 1.0% 172,843 438 1.0% 215,491 1,041 1.9%
Total interest-bearing liabilities 122,952 74 0.2% 122,464 52 0.2% 145,143 89 0.2%
Savings accounts 102,132 2 0.0% 101,658 2 0.0% 116,587 2 0.0%
Time deposits and Investment accounts 17,454 12 0.3% 18,018 16 0.3% 26,483 75 1.1%
Other liabilities 3,366 60 7.1% 2,788 34 5.0% 2,073 12 2.4%
Total non-interest-bearing liabilities 52,268 - 49,323 - 57,884 - -
Total liabilities and equity 175,220 74 0.2% 171,787 52 0.1% 203,027 89 0.2%
NIM - Foreign currency 3.1% 4.1% 5.1%
Spread - Foreign currency 3.5% 4.5% 5.3%
Nominal rates are calculated over a 365-day year
Does not include Net income from measurement of financial instruments at fair value through P&L nor Net income from write-down of assets at amortized cost and at fair value through OCI
Sight deposits include savings accounts and interest-bearing checking accounts. Non interest-bearing accounts are included in non-interest-bearing liabilities.

Net Fee Income

Net fee income BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Net Fee Income 5,429 3,722 4,669 45.9% 16.3%
Fee Income 9,537 8,519 9,169 12.0% 4.0%
Linked to liabilities 3,382 3,405 3,610 (0.7%) (6.3%)
From credit cards 4,624 3,661 4,253 26.3% 8.7%
Linked to loans 554 492 382 12.7% 45.0%
From insurance 419 428 457 (2.0%) (8.3%)
From foreign trade and foreign currency transactions 446 428 364 4.3% 22.5%
Other fee income 112 105 103 6.4% 8.7%
Fee expenses 4,108 4,797 4,500 (14.4%) (8.7%)

Net fee income as of 2Q21 totaled $5.4 billion, growing 45.9% or $1.7 billion QoQ and 16.3% or $760 million YoY.

In 2Q21, fee income totaled $9.5 billion, growing 12.0% QoQ and 4.0% YoY. The quarterly increase is mainly explained by the income from credit cards line item, mostly due to an increase in consumption, driven by a recovery in the entertainment and recreation sectors, in addition to a contrasting effect against the previous quarter as restrictions in fee increments and charges were lifted.

Regarding fee expenses, these totaled $4.1 billion, contracting 14.4% QoQ and 8.7% YoY. Lower expenses are partially explained by lower digital sales expenses, and a positive effect in the revaluation of miles purchased in 2020 within the Latampass program, linked to the foreign exchange rate.

7

Net Income from Measurement of Financial Instruments at Fair Value and Foreign Exchange and Gold Gains/Losses

Net Income from financial instruments at fair value (FV) through P&L BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Net Income from financial instruments at FV through P&L 1,252 1,776 1,913 (29.5%) (34.6%)
Income from government securities 607 671 1,618 (9.6%) (62.5%)
Income from private securities (71) (223) (132) 68.1% 46.2%
Interest rate swaps 32 - 32 N/A -
Gains from foreign currency forward transactions 684 1,324 2 (48.4%) n.m
Income from debt and equity instruments - 3 25 (100.0%) (100.0%)
Other - - 368 N/A (100.0%)

In 2Q21, net income from financial instruments at fair value (FV) through P&L was $1.3 billion, decreasing 29.5% or $524 million QoQ and 34.6% or $661 million YoY.

The main impact on these results is partially explained by a fall in the gains from foreign currency forward transactions line item, driven by a lower quarterly devaluation of the argentine peso compared to the inflation during the same period (3.9%1 versus 11.0%2 respectively).

The fall in income from government securities is mainly explained by a lower inflation versus the prior quarter (11% versus 13%), while most of the securities' portfolio is allocated in CER-linked bonds.

Differences in quoted prices of gold and foreign currency BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Foreign exchange and gold gains/(losses) (1) 1,181 994 2,245 18.9% (47.4%)
From foreign exchange position (63) (402) 443 84.3% (114.2%)
Income from purchase-sale of foreign currency 1,244 1,396 1,802 (10.9%) (31.0%)
Net income from financial instruments at FV through P&L (2) 684 1,324 367 (48.4%) 86.4%
Income from foreign currency forward transactions 684 1,324 367 (48.4%) 86.4%
Total differences in quoted prices of gold & foreign currency (1) + (2) 1,865 2,318 2,612 (19.5%) (28.6%)

In 2Q21, the total differences in quoted prices of gold and foreign currency showed profit for $1.9 billion, decreasing 19.5% or $453 million compared to 1Q21, mainly due to a 48.4% fall in income from foreign currency forward transactions.

Other Operating Income

Other operating income BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Operating Income 1,812 1,716 1,715 5.6% 5.6%
Rental of safe deposit boxes (1) 344 316 387 8.9% (11.1%)
Adjustments and interest on miscellaneous receivables (1) 535 640 468 (16.4%) 14.3%
Punitive interest (1) 61 35 24 74.3% 154.2%
Loans recovered 392 257 249 52.5% 57.4%
Fee income from credit and debit cards (1) 72 67 61 7.5% 18.0%
Income from initial recognition of public securities - 13 - (100.0%) N/A
Other Operating Income(2) 408 388 526 5.2% (22.5%)
(1) Included in the efficiency ratio calculation
(2) Includes some of the concepts used in the efficiency ratio calculation

In 2Q21 other operating income totaled $1.8 billion, growing 5.6% or $96 million QoQ, and 5.6% or $97 million YoY. The quarterly increase is explained by a 52.5% increment in the loans recovered line item.

1 Taking into consideration wholesale U.S. dollar foreign exchange rates on BCRA's Communication 'A' 3500.

2Source: Instituto Nacional de Estadística y Censos (INDEC) - Consumer Price Index as of June 2021.

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This is partially offset by a fall in the adjustments and interest on miscellaneous receivables line item where interests received from the Government in compensation for zero rate credit lines were recorded, and which granting has diminished considerably during 2Q21.

As of 1Q21, the income from initial recognition of public securities line item showed gains for the inflation adjustments accumulated until December 2020, derived from the reclassification of securities from Fair Value through OCI to Amortized cost (in particular, the 2022 National Treasury Bonds at fixed rate).

Operating Expenses

Personnel Benefits and Administrative Expenses

Personnel Benefits and Adminsitrative Expenses BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Total Personnel Benefits and Adminsitrative Expenses 12,237 12,395 11,711 (1.3%) 4.5%
Personnel Benefits (1) 6,359 6,479 5,956 (1.9%) 6.8%
Administrative expenses (1) 5,878 5,916 5,755 (0.6%) 2.1%
Travel expenses 37 44 23 (15.9%) 60.9%
Administrative expenses 460 426 563 8.0% (18.3%)
Security services 199 214 316 (7.0%) (37.0%)
Fees to Bank Directors and Supervisory Committee 14 11 10 27.3% 40.0%
Other fees 266 252 230 5.6% 15.7%
Insurance 79 73 55 8.2% 43.6%
Rent 727 759 646 (4.2%) 12.5%
Stationery and supplies 6 20 28 (70.0%) (78.6%)
Electricity and communications 303 297 303 2.0% -
Advertising 215 224 191 (4.0%) 12.6%
Taxes 1,341 1,387 1,415 (3.3%) (5.2%)
Maintenance costs 704 693 721 1.6% (2.4%)
Armored transportation services 824 847 478 (2.7%) 72.4%
Other administrative expenses 703 669 776 5.1% (9.4%)
Headcount* 5,924 6,004 6,247 (80) (323)
BBVA (Bank) 5,828 5,905 6,146 (77) (318)
Associates 96 99 101 (3) (5)
Total branches** 243 247 247 (4) (4)
Efficiency ratio 67.9% 72.5% 54.1% (459)bps 1,383 bps
Accumulated Efficiency Ratio 70.1% 72.5% 56.0% (236)bps 1,417 bps
Efficiency ratio - Excl. Inflation adjustment 47.1% 50.1% 47.4% (299)bps (31)bps
Accumulated Efficiency Ratio - Excl. Inflation adjustment 48.5% 50.1% 47.4% (153)bps 116 bps
(1) Concept included in the efficiency ratio calculation
*corresponds to total effective employees, net of temporary contract employees
**do not include administrative offices

During 2Q21, personnel benefits and administrative expenses totaled $12.2 billion, decreasing 1.3% or $158 million compared to 1Q21, and increasing 4.5% or $526 million compared to 2Q20.

Personnel benefits contracted 1.9% QoQ, and increased 6.8% YoY. The quarterly decrease is partially explained by an 11.0% increase in inflation in the same period, and a lower payroll expenditure. This was offset by salary increases arranged through collective bargaining agreements which incremented wages in April by 11.5%.

As of 2Q21, administrative expenses fell 0.6% QoQ, and increased 2.1% YoY. The quarterly fall is also explained by a greater inflation during the quarter than the nominal increase in expenses.

The accumulated efficiency ratio as of 2Q21 was 70.1%, below the 72.5% and above the 56.0% reported in 1Q21 and 2Q20 respectively. The decrease is explained by a higher percentage increase in the denominator (income considering monetary position results) than the numerator (expenses), which has been positively affected by an improvement in net fee income.

9

Excluding inflation adjustments considered in the income from the monetary position line item, the 2Q21 accumulated efficiency ratio would have been 47.1%, improving compared to the 50.1% of 1Q21 and the 47.4% of 2Q20.

Other Operating Expenses

Other Operating Expenses BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Other Operating Expenses 5,563 5,157 4,253 7.9% 30.8%
Turnover tax 3,596 3,376 2,498 6.5% 44.0%
Initial loss of loans below market rate 429 324 139 32.4% 208.6%
Contribution to the Deposit Guarantee Fund (SEDESA) 228 228 214 - 6.5%
Interest on liabilities from financial lease 103 99 115 4.0% (10.4%)
Other allowances 512 294 (122) 74.1% n.m
Other operating expenses 695 836 1,409 (16.9%) (50.7%)

In 2Q21, other operating expenses totaled $5.6 billion, increasing 7.9% or $406 million QoQ, and 30.8% or $1.3 billion YoY.

The main factor explaining growth during the quarter is found in the turnover tax line item, with a 6.5% increase due to an increment in LELIQ and REPO position, and its consequent taxation. Another line that explains increase in expenses during the quarter is the 74.1% growth in other allowances.

Previously mentioned increases in expenses are offset by the other operating expenses line item which falls 16.9%.

Income from Associates

This line reflects the results from non-consolidated associate companies. During 2Q21, a profit of $174 million has been reported, mainly due to the Bank's participation in BBVA Consolidar Seguros S.A., Rombo Compañía Financiera S.A., Interbanking S.A. and Play Digital S.A.

Income Tax

Accumulated income tax during the first six months of 2021 recorded a gain of $3.4 billion. As of 2Q21, tax expenses show a positive result of $2.9 billion due to the reversal of the provision connected to the repayment of income tax inflation adjustments for 2017 and 2018 fiscal years, for a total of $4.3 billion, recorded during the first quarter of 2018 (1Q18) and the second quarter of 2019 (2Q19) respectively. The reversal is a result of an assessment, funded on legal and tax advisors' opinions, in which the Bank considers that probabilities of getting a final instance favorable court ruling are higher for those fiscal years.

Meanwhile, on May 26, 2021, the Bank filed a new action of declaratory judgment of unconstitutionality against the Administración Federal de Ingresos Públicos -Dirección General Impositiva (AFIP-DGI) expecting a favorable decision that declares the unconstitutionality of the section 194 of Income Tax Law (T.O. 2019) and/or the regulations that prevent the full implementation of the inflation adjustment for tax purposes mechanism, as it considers a confiscatory income tax effect for fiscal year 2020. Consequently, in the income tax line item, a positive adjustment of $784 million (in nominal terms) is recorded.

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Subsequently, Law No 27,630 enacted on June 16, 2021, overruled the general reduction in applicable tax rates3, and introduced a scale system for fiscal years as of January 1, 2021. Thus, the applicable scale for the Bank will be the highest with a 35% tax rate, and generating a one-time loss of $1.7 billion in 2Q21 due to deferred taxes.

The accumulated benefit in the income tax line as of 2Q21 includes the positive result obtained in 1Q21 due to the reversal of a provision of $1.2 billion (in nominal terms) recorded during the second quarter of 2017 (2Q17) corresponding to 2016 fiscal year, which was funded on a favorable final sentence in court.

Balance sheet and activity

Loans and Other Financing

Loans and other financing BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
To the public sector - 1 - (100.0%) N/A
To the financial sector 2,667 2,484 5,385 7.4% (50.5%)
Non-financial private sector and residents abroad 319,860 329,335 376,117 (2.9%) (15.0%)
Non-financial private sector and residents abroad - AR$ 277,875 292,649 323,388 (5.0%) (14.1%)
Overdrafts 12,041 14,634 46,753 (17.7%) (74.2%)
Discounted instruments 32,961 34,903 35,924 (5.6%) (8.2%)
Mortgage loans 20,505 20,339 23,269 0.8% (11.9%)
Pledge loans 13,826 12,913 11,582 7.1% 19.4%
Consumer loans 33,208 33,899 35,857 (2.0%) (7.4%)
Credit cards 124,994 131,507 113,793 (5.0%) 9.8%
Receivables from financial leases 2,559 2,240 1,980 14.2% 29.2%
Other loans 37,782 42,213 54,230 (10.5%) (30.3%)
Non-financial private sector and residents abroad - Foreign Currency 41,985 36,686 52,729 14.4% (20.4%)
Overdrafts 2 1 3 37.7% (41.9%)
Discounted instruments 2,885 2,073 26 39.2% n.m
Credit cards 2,063 1,277 1,944 61.5% 6.1%
Receivables from financial leases 85 131 354 (34.9%) (76.0%)
Loans for the prefinancing and financing of exports 24,580 21,712 32,756 13.2% (25.0%)
Other loans 12,370 11,492 17,645 7.6% (29.9%)
% of total loans to Private sector in AR$ 86.9% 88.9% 86.0% (199)bps 89 bps
% of total loans to Private sector in Foreign Currency 13.1% 11.1% 14.0% 199 bps (89)bps
% of mortgage loans with UVA adjustments / Total mortgage loans (1) 75.2% 80.8% 86.1% (557)bps (1,087)bps
% of pledge loans with UVA adjustments / Total pledge loans (1) 9.6% 11.8% 22.0% (218)bps (1,244)bps
% of consumer loans with UVA adjustments / Total consumer loans (1) 8.9% 12.0% 29.9% (312)bps (2,099)bps
% of loans with UVA adjustments / Total loans and other financing(1) 2.9% 3.2% 4.8% (28)bps (188)bps
Total loans and other financing 322,527 331,820 381,502 (2.8%) (15.5%)
Allowances (15,600) (15,990) (16,178) 2.4% 3.6%
Total net loans and other financing 306,927 315,829 365,325 (2.8%) (16.0%)

Private sector loans as of 2Q21 totaled $319.7 billion, decreasing 2.9% or $9.5 billion QoQ, and 15.0% or $56.3 billion YoY.

Loans to the private sector in pesos decreased 5.0% in 2Q21, and 14.1% YoY, especially driven by the decrease in real terms in credit cards, other loans and overdrafts. Loans to the private sector denominated in foreign currency increased 14.4% QoQ and fell 20.4% YoY. The increase of the latter during the quarter is mainly explained by a 39.2% increase in discounted instruments, a 13.2% increase in loans for the prefinancing and financing of exports and a 7.6% increase in other loans. These loans, measured in U.S. dollars, grew 10.0% QoQ and fell 41.4% YoY. The depreciation of the argentine peso versus the U.S. dollar was 3.9% QoQ and 26.4% YoY4.

3 Previously: 30% for fiscal years as of January 1, 2018 and 25% for fiscal years as of 2022.

4 Taking into consideration wholesale U.S. dollar foreign exchange rates on BCRA's Communication 'A' 3500.

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In 2Q21, total loans and other financing totaled $322.5 billion, decreasing 2.8% compared to 1Q21 and 15.5% compared to 2Q20.

Loans and other financing BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Non-financial private sector and residents abroad - Retail 194,596 199,934 186,445 (2.7%) 4.4%
Mortgage loans 20,505 20,339 23,269 0.8% (11.9%)
Pledge loans 13,826 12,913 11,582 7.1% 19.4%
Consumer loans 33,208 33,899 35,857 (2.0%) (7.4%)
Credit cards 127,057 132,784 115,737 (4.3%) 9.8%
Non-financial private sector and residents abroad - Commercial 125,265 129,401 189,672 (3.2%) (34.0%)
Overdrafts 12,043 14,636 46,756 (17.7%) (74.2%)
Discounted instruments 35,846 36,976 35,950 (3.1%) (0.3%)
Receivables from financial leases 2,644 2,371 2,334 11.5% 13.3%
Loans for the prefinancing and financing of exports 24,580 21,712 32,756 13.2% (25.0%)
Other loans 50,152 53,705 71,876 (6.6%) (30.2%)
% of total loans to Retail sector 60.8% 60.7% 49.6% 13 bps 1,127 bps
% of total loans to Commercial sector 39.2% 39.3% 50.4% (13)bps (1,127)bps

In real terms, retail loans (mortgage, pledge, consumer and credit cards) have fallen 2.7% QoQ and grown 4.4% YoY. During the quarter, the greatest decline is seen in credit cards with a 4.3% decrease, followed by a 2.0% fall in consumer loans. Credit cards grew in nominal terms by 6.2% driven by an increase in activity, although in real terms this does not compensate for the acceleration in the inflation rate during the quarter.

Commercial loans (overdrafts, discounted instruments, receivables from financial leases, loans for the prefinancing and financing of exports, and other loans) contracted 3.2% QoQ and 34.0% YoY both in real terms. Quarterly decline is explained by a 17.7% fall in overdrafts, followed by a 6.6% fall in other loans (particularly due to repayment of company loans or 'Prestamos a interés vencido', mainly linked to COVID-19 loans). This was partially offset by a 13.2% growth in prefinancing and financing of exports.

Decline in both retail and commercial portfolios, and in the total loan portfolio, are mainly impacted by the effect of inflation during the second quarter of 2021, which reached 11%. In nominal terms, the retail, commercial and total loan portfolio all increased 8.0%, 7.4% and 7.8% respectively during the quarter, yet unable to offset the impact of inflation during the same period.

Loans and other financing- Non restated figures BBVA ARG Consolidated Chg (%)
In millions of AR$ 2Q21 1Q21 2Q20 QoQ YoY
Non-financial private sector and residents abroad - Retail 194,596 180,197 124,130 8.0% 56.8%
Non-financial private sector and residents abroad - Commercial 125,265 116,627 126,295 7.4% (0.8%)
Total loans and other financing (1) 322,527 299,063 253,996 7.8% 27.0%
(1) Does not include allowances

As of 2Q21, the total loans and other financing over deposits ratio was 52.9%, below the 58.9% recorded in 1Q21 and the 68.0% in 2Q20.

Market share - Private sector Loans BBVA ARG Consolidated Chg (%)
In % 2Q21 1Q21 2Q20 QoQ YoY
Private sector loans - Bank 7.35% 7.35% 7.71% - (36)bps
Private sector loans - Consolidated* 8.21% 8.23% 8.54% (2)bps (33)bps
Based on daily BCRA information. Capital balance as of the last day of each quarter.
* Consolidates PSA, VWFS & Rombo
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Asset Quality

Asset Quality BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Commercial non-performing portfolio (1) 2,460 2,653 1,999 (7.3%) 23.0%
Total commercial portfolio 109,586 104,535 158,356 4.8% (30.8%)
Commercial non-performing portfolio / Total commercial portfolio 2.24% 2.54% 1.26% (29)bps 98 bps
Retail non-performing portfolio (1) 5,843 3,157 4,006 85.1% 45.8%
Total retail portfolio 223,433 232,799 227,541 (4.0%) (1.8%)
Retail non-performing portfolio / Total retail portfolio 2.62% 1.36% 1.76% 126 bps 85 bps
Total non-performing portfolio (1) 8,303 5,810 6,006 42.9% 38.3%
Total portfolio 333,019 337,334 385,897 (1.3%) (13.7%)
Total non-performing portfolio / Total portfolio 2.49% 1.72% 1.56% 77 bps 94 bps
Allowances 15,600 15,990 16,178 (2.4%) (3.6%)
Allowances /Total non-performing portfolio 187.88% 275.22% 269.38% (8,734)bps (8,149)bps
Quarterly change in Write-offs 702 569 6,069 23.3% (88.4%)
Write offs / Total portfolio 0.38% 0.17% 1.92% 21 bps (154)bps
Cost of Risk (CoR) 2.61% 2.47% 4.27% 14 bps (166)bps
(1) Non-performing loans include: all loans to borrowers classified as 'Deficient Servicing (Stage 3)', 'High Insolvency Risk (Stage 4)', 'Irrecoverable' and/or 'Irrecoverable for Technical Decision' (Stage 5) according to BCRA debtor classification system

In 2Q21, asset quality ratio or NPL (total non-performing portfolio / total portfolio) was 2.49%, compared to the 1.72% recorded in 1Q21. The increase is mainly explained by the expiration of grace periods related to deferred credit card payments (COVID-19 measures) which caused an increase in the retail non-performing portfolio, and the normalization of grace periods granted by the temporary flexibility in BCRA regulation regarding debtor classification during the COVID-19 pandemic. Regarding the commercial portfolio, this showed a satisfactory credit performance.

The coverage ratio (allowances / total non-performing portfolio) was 187.88% in 2Q21, versus the 275.22% recorded in 1Q21. The change in this ratio reflects a subtle reduction in allowances, but mainly the increase in NPLs (in particular on the retail loan portfolio).

Cost of risk (loan loss allowances / average total loans) reached 2.61% as of 2Q21, higher than 1Q21's 2.47%. This is mainly explained by the greater reduction in the loan portfolio, in contrast to the contraction in loan loss allowances, in real terms. In nominal terms, loan loss allowances saw a higher increase than the loan portfolio.

Analysis for the allowance of loan losses BBVA ARG
Balance at 12/31/2020 Stage 1 Stage 2 Stage 3 Monetary result generated by allowances Balance at 06/30/2021
In millions of AR$
Other financial assets 331 (6) - 34 (68) 291
Loans and other financing 16,044 (235) (57) 2,948 (3,511) 15,189
Other debt securities - - - - - -
Eventual commitments 1,710 125 43 25 (361) 1,542
Total allowances 18,085 (116) (14) 3,007 (3,940) 17,022
Note: to be consistent with Financial Statements, it must be recorded from the beginning of the year instead of the quarter

Allowances for the Bank in 2Q21 reflect expected losses driven by the adoption of the IFRS 9 standards as of January 1, 2020, except for debt instruments issued by the nonfinancial government sector which were temporarily excluded from the scope of such standard.

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Analysis for the allowance of loan losses Group 'C' Subsidiary Companies
Balance at 12/31/2020 Stage 1 Stage 2 Stage 3 Monetary result generated by allowances Balance at 06/30/2021
In millions of AR$
Loans and other financing 407 74 (9) (9) (54) 410
Non-financial private sector and residents abroad 407 74 (9) (9) (54) 410
Pledge loans 395 70 (8) (9) (43) 406
Financial leases 1 1 (1) - - 1
Other 11 3 - - (11) 3
Total allowances 407 74 (9) (9) (54) 410
Note: to be consistent with Financial Statements, it must be recorded from the beginning of the year instead of the quarter

The financial statements of consolidated subsidiaries PSA and VWFS were prepared considering the financial reporting framework set forth by the BCRA for Group 'C' financial institutions, without considering the model established in paragraph 5.5. 'Impairment' of IFRS 9 for fiscal years commencing on and after January 1, 2022.

Public Sector Exposure

Net Public Debt Exposure BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Treasury and Government securities 56,380 52,747 26,719 6.9% 111.0%
Treasury and National Government 56,380 52,747 26,719 6.9% 111.0%
National Treasury Public Debt in AR$ 56,380 52,747 14,803 6.9% 280.9%
National Treasury Public Debt in dollars - - 11,916 N/A (100.0%)
Loans to the Public Sector 1 (100.0%) N/A
AR$ Subtotal 56,380 52,748 14,803 6.9% 280.9%
USD Subtotal* - - 11,916 N/A (100.0%)
Total Public Debt Exposure 56,380 52,748 26,719 6.9% 111.0%
B.C.R.A. Exposure 212,700 142,246 167,598 49.5% 26.9%
Instruments 107,435 108,439 116,129 (0.9%) (7.5%)
LELIQs 107,435 108,439 116,129 (0.9%) (7.5%)
Repo 105,265 33,807 51,469 211.4% 104.5%
B.C.R.A. - AR$ 105,265 33,807 51,469 211.4% 104.5%
% Public sector exposure (Excl. B.C.R.A.) / Total assets 6.5% 6.4% 3.3% 11 bps 323 bps
*Includes USD-linked Treasury public debt in AR$

2Q21 public sector exposure (excluding BCRA) totaled $56.4 billion, growing 6.9% or $3.6 billion QoQ, and 111.0% or $29.7 billion YoY. The quarterly increase is explained by a greater position in CER-linked treasury bills (LECER) and 2022 National Treasury Bonds at fixed rate (Bonte 22, used for reserve requirement integration).

Short-term liquidity is mostly allocated in BCRA instruments, which grew 49.5% QoQ and 26.9% YoY in real terms. The quarterly increase is explained by a higher position in REPOs with the BCRA, which grew 211.4%.

Exposure to the public sector (excluding BCRA) represents 6.5% of total assets, above the 6.4% in 1Q21 and the 3.3% in 2Q20.

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Deposits

Total Deposits BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Total deposits 609,118 563,440 560,637 8.1% 8.6%
Non-financial Public Sector 7,121 7,303 8,206 (2.5%) (13.2%)
Financial Sector 436 199 450 119.1% (3.1%)
Non-financial private sector and residents abroad 601,561 555,938 551,981 8.2% 9.0%
Non-financial private sector and residents abroad - AR$ 442,085 395,473 381,364 11.8% 15.9%
Checking accounts 138,549 114,303 112,970 21.2% 22.6%
Savings accounts 114,716 100,206 118,384 14.5% (3.1%)
Time deposits 144,597 141,724 141,731 2.0% 2.0%
Investment accounts 40,583 35,911 2,956 13.0% n.m
Other 3,640 3,329 5,323 9.3% (31.6%)
Non-financial private sector and res. abroad - Foreign Currency 159,476 160,465 170,616 (0.6%) (6.5%)
Checking accounts 36 19 26 91.9% 39.7%
Savings accounts 140,261 139,791 140,736 0.3% (0.3%)
Time deposits 17,098 18,387 26,017 (7.0%) (34.3%)
Other 2,080 2,268 3,837 (8.3%) (45.8%)
% of total portfolio in the private sector in AR$ 73.5% 71.1% 69.1% 235 bps 440 bps
% of total portfolio in the private sector in Foregin Currency 26.5% 28.9% 30.9% (235)bps (440)bps
% of time deposits with UVA adjustments / Total AR$ Deposits 4.4% 2.7% 2.1% 170 bps 237 bps
% of sight deposits over total deposits 66.4% 64.7% 69.1% 163 bps (270)bps
% of time deposits over total deposits 33.6% 35.3% 30.9% (163)bps 270 bps

As of 2Q21, total deposits reached $609.1 billion, increasing 8.1% or $45.7 billion QoQ, and 8.6% or $48.5 billion YoY.

Private non-financial sector deposits in 2Q21 totaled $601.6 billion, increasing 8.2% QoQ, and 9.0% YoY.

Private non-financial sector deposits in pesos totaled $442.1 billion, growing 11.8% compared to 1Q21, and 15.9% compared to 2Q20. The quarterly increase is mainly affected by the growth in sight deposits, especially checking accounts (interest bearing), and savings accounts. All deposits in local currency grew in real terms during the quarter.

Private non-financial sector deposits in foreign currency expressed in pesos fell 0.6% QoQ and 6.5% YoY. Measured in U.S. dollars, these deposits fell 4.5% QoQ and 31.2% YoY.

Private Deposits BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Non-financial private sector and residents abroad 601,561 555,938 551,981 8.2% 9.0%
Sight deposits 399,282 359,916 381,276 10.9% 4.7%
Checking accounts 138,585 114,322 112,995 21.2% 22.6%
Savings accounts 254,977 239,997 259,121 6.2% (1.6%)
Other 5,720 5,598 9,160 2.2% (37.6%)
Time deposits 202,278 196,022 170,705 3.2% 18.5%
Time deposits 161,695 160,111 167,748 1.0% (3.6%)
Investment accounts 40,583 35,911 2,956 13.0% n.m
% of sight deposits over total deposits 66.8% 65.2% 69.6% 158 bps (276)bps
% of time deposits over total deposits 33.2% 34.8% 30.4% (158)bps 276 bps
Private Deposits - Non restated figures BBVA ARG Consolidated Chg (%)
In millions of AR$ 2Q21 1Q21 2Q20 QoQ YoY
Sight deposits 399,282 324,387 255,753 23.1% 56.1%
Time deposits 202,278 176,672 111,744 19.4% 81.0%
Total deposits 609,118 507,820 373,260 6.2% 63.2%

As of 2Q21, the Bank's transactional deposits (checking accounts and savings accounts) represented 65.4% of total non-financial private deposits, totaling $393.6 billion, versus 63.7% in 1Q21.

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Market Share - Private sector Deposits BBVA ARG Consolidated Chg (%)
In % 2Q21 1Q21 2Q20 QoQ YoY
Private sector Deposits - Consolidated* 7.41% 6.90% 6.52% 51 bps 89 bps
Based on daily BCRA information. Capital balance as of the last day of each quarter.
* Consolidates PSA, VWFS & Rombo

Other Sources of Funds

Other sources of funds BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Other sources of funds 140,852 142,382 150,579 (1.1%) (6.5%)
Central Bank 30 27 49 10.7% (38.7%)
Banks and international organizations 2,927 2,084 - 40.5% N/A
Financing received from local financial institutions 6,758 8,733 7,828 (22.6%) (13.7%)
Corporate bonds 871 1,134 6,313 (23.2%) (86.2%)
Equity 130,266 130,405 136,389 (0.1%) (4.5%)

In 2Q21, other sources of funds totaled $140.9 billion, falling 1.1% or $1.5 billion QoQ, and 6.5% or $9.7 billion YoY.

The decline is mostly explained by the 22.6% decrease financing received from local financial institutions.

The 0.1% decline in equity is explained by the reclassification into liabilities of the $7.0 billion declared dividend, which distribution is pending pursuant to Communication 'A' 6939 and amendments by the BCRA.

Liquid Assets

Total Liquid Assets BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Total liquid assets 461,393 405,921 357,383 13.7% 29.1%
Cash and deposits in banks 198,330 217,174 169,013 (8.7%) 17.3%
Debt securities at fair value through profit or loss 4,518 5,375 14,486 (15.9%) (68.8%)
Government securities 4,518 5,375 0 (15.9%) n.m
Liquidity bills of B. C. R. A. - - 14,485 N/A (100.0%)
Net REPO transactions 105,265 33,807 51,469 211.4% 104.5%
Other debt securities 153,280 149,565 122,415 2.5% 25.2%
Government securities 45,844 41,125 20,771 11.5% 120.7%
Liquidity bills of B. C. R. A. 107,435 108,439 101,644 (0.9%) 5.7%
Liquid assets / Total Deposits 75.7% 72.0% 63.7% 370 bps 1,200 bps

In 2Q21, liquid assets were $461.4 billion, increasing 13.7% or $55.5 billion compared to 1Q21, and 29.1% or $104.0 billion compared to 2Q20, mainly due to an increase in net REPO transactions.

In 2Q21, the liquidity ratio (liquid assets / total deposits) reached 75.7%. Liquidity ratio in local and foreign currency reached 74.8% and 79.8% respectively.

16

Solvency

Minimum capital requirement BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Minimum capital requirement 42,686 44,299 47,642 (3.6%) (10.4%)
Credit risk 31,640 33,149 35,202 (4.6%) (10.1%)
Market risk 570 196 862 190.2% (33.9%)
Operational risk 10,476 10,953 11,577 (4.4%) (9.5%)
Integrated Capital - RPC (1)* 121,442 121,087 124,765 0.3% (2.7%)
Ordinary Capital Level 1 ( COn1) 135,122 137,902 141,368 (2.0%) (4.4%)
Deductible items COn1 (16,911) (20,177) (20,339) 16.2% 16.9%
Additional Capital Level 2 (COn2) 3,231 3,362 3,735 (3.9%) (13.5%)
Excess Capital
Integration excess 78,756 76,788 77,123 2.6% 2.1%
Excess as % of minimum capital requirement 184.5% 173.3% 161.88% 1,116 pbs 2,262 pbs
Risk-weighted assets (RWA, according to B.C.R.A. regulation) (2) 522,063 541,672 582,713 (3.6%) (10.4%)
Regulatory Capital Ratio (1)/(2) 23.3% 22.4% 21.4% 91 bps 185 bps
TIER I Capital Ratio (Ordinary Capital Level 1/ RWA) 22.6% 21.7% 20.8% 91 bps 187 bps
* RPC includes 100% of quarterly results

BBVA Argentina continues to show strong solvency indicators on 2Q21. Capital ratio reached 23.3%. Tier 1 ratio was 22.6% and capital excess over regulatory requirement was $78.8 billion or 184.5%.

BBVA Argentina Asset Management S.A.

Mutual Funds Assets BBVA Asset Management Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
FBA Renta Pesos 138,461 148,793 165,810 (6.9%) (16.5%)
FBA Renta Fija Plus 10,317 5,633 75 83.2% n.m
FBA Ahorro Pesos 1,526 1,439 979 6.0% 55.9%
FBA Horizonte 373 691 1,145 (46.0%) (67.4%)
FBA Calificado 591 546 746 8.2% (20.8%)
FBA Acciones Argentina 488 452 664 8.0% (26.5%)
FBA Acciones Latinoamericanas 476 422 544 12.8% (12.5%)
FBA Bonos Argentina 373 330 347 13.0% 7.5%
FBA Bonos Globales 122 226 332 (46.0%) (63.3%)
FBA Renta Mixta 155 60 59 158.3% 162.7%
FBA Gestión I 32 33 38 (3.0%) (15.8%)
FBA Horizonte Plus 26 31 81 (16.1%) (67.9%)
FBA Retorno Total I 21 30 62 (30.0%) (66.1%)
FBA Renta Pública I 2 2 2 - -
FBA Renta Fija Local 2 2 2 - -
FBA Renta Fija Dólar Plus - - 1,104 N/A (100.0%)
FBA Brasil I - - 83 N/A (100.0%)
FBA Renta Fija Dólar - - 751 N/A (100.0%)
Total assets 152,965 158,690 171,990 (3.6%) (11.1%)
Market Share - Mutual funds BBVA Asset Management Chg (%)
In % 2Q21 1Q21 2Q20 QoQ YoY
Mutual funds 6.19% 6.29% 8.22% (10)bps (203)bps
Source: Cámara Argentina de Fondos Comunes de Inversión
17

Other events

Main Relevant Events

· As of June 29, 2021, the Board of Directors accepted the resignation of the Regular Director Nuria Alonso Jiménez, and appointed Mr. Gustavo Alberto Mazzolini Casas, who was acting as Alternate Director, as Regular Director until the next Ordinary General Meeting of Shareholders is held, in accordance with the provisions set forth in Section 10 of the corporate By-laws.
· As of July 16, 2021, the Bank has been notified of a class action and extension of the same, filed by the Asociación de Defensa del Asegurado, Consumidores y Usuarios -ADACU- Asociación Civil (Association for the Defense of the Insured, Consumers and Users -ADACU- Non Profit). The Association, acting on behalf of consumers, demands the obligation of BBVA to inform its customers about the duty to extinguish the amount in the event of death or permanent total invalidity of the debtor, by the execution of an insurance or self-insurance agreement. In this sense, it requests the updated refund to the invalidated users or to the heirs of the deceased users, of the amounts already received from them by cancellation of debit balances existing at the time of disability or death of the user; and requests the cancellation of any debt due for users who have died or been disabled since the effective date of paragraph 2.3.11.1 of BCRA communication 'A' 5928, plus any currency or interests adjustments. It is important to remark that this action is informed even though it is materially impossible to determine to date, whether the claim has a significant economic importance, since such claim is brought for an indeterminate amount, materially impossible to be determined with certainty today.
· As of July 22, 2021, the Bank reported technical inconveniences with its systems which prevented banking and capital market transactions to be carried out as usual, and which were solved during the course of the day.

Digital Transformation

Digitalization continued to accelerate during 2Q21. Active digital client total more than 1.9 million with a 73.7% penetration over total active clients (2.8 million), versus a penetration of 69.3% in 2Q20. Active mobile clients reach 1.7 million, representing a 62.3% penetration in 2Q21, versus a penetration of 57.4% in 2Q20. Digital and mobile transactions5 increased 16.6% in 2Q21 YoY.

On 2Q21, retail digital sales measured in units reached 78.1% of total sales (vs. 77.9% in 2Q20) and represent 54.6% of the Banks total sales measured in monetary value (vs. 59.8% in 2Q20).

SMEs Productive investment financing credit lines - June 2021

Pursuant to Communication 'A' 7240. The amount to be granted by the Bank regarding the 2021 quota is $24.4 billion, according to BCRA's Communication 'B' 12164. The Bank is satisfactorily working to achieve such quota.

5 Includes online and mobile banking, Net Cash online & mobile, and non-bank correspondents.

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Main Regulatory Changes

Reserve requirement integration with public securities. (Communication 'A' 7290, 05/27/2021). The Central Bank states that as of June 1, 2021, all reserve requirement that financial institutions can integrate in LELIQ, will also be able to be integrated with sovereign securities in pesos that are not USD-linked, with a residual maturity of at least 180 days and 450 days at most, purchased at primary offering as of that date. Public securities used to integrate reserve requirements in pesos will be excluded from 'Non-financial public sector financing' regulation limits.

Immediate liquidity. (Communication 'A' 7291, 05/27/2021). As of June 1, 2021, the BCRA will enable a mechanism called 'immediate liquidity' through which financial institutions will be able to sell public securities to the BCRA (which they had purchased to integrate reserve requirements), according to the following conditions:

· The securities should have been introduced through the primary market as of June 1, 2021 by the selling institution.
· The passing of at least 5 working days since settlement day of the primary auction in which they were purchased.
· Having been applied as reserve requirement.

2022 National Treasury Bonds at 22% fixed rate with maturity on May 2022 (TY22P) are excluded.

Damaged banknotes. (Communication 'A' 7292, 05/28/2021). The BCRA stated the limits that financial institutions must consider, as of June 1 and until September 30, 2021, regarding the holding of banknotes of 'proper handling' and 'damaged' affected by the interbank compensation of banknotes (ICB). Consequently, it authorizes the declaration of excess damaged banknotes to the ICB, kept in armored transportation registered in the 'Registro de transportadoras de valores'of all provinces including Ciudad Autónoma de Buenos Aires (CABA), under the conditions established in the Annex of Communication 'A' 5670 and amendments.

Financial issuers of credit and/or purchase cards. Maximum period for settlement of transactions made in one payment. (Communication 'A' 7305, 06/11/2021). The BCRA stated that as of July 1, 2021, the maximum period for financial institutions to transfer funds from sales made in one payment, in deposit accounts of providers or businesses (through credit and/or purchase cards that these issue) will be: i) 8 working days if they are SMEs or individuals. Ii) 10 working days for medium companies and those whose activity is 'accommodation services, tourism, gastronomy and/or health', not included in the preceding item. Iii) 18 working days for all other cases. In all cases, said period will be counted since the date of the purchase. Financial institutions will not be able to charge any fee related to settlement periods. Neither will they prevent or difficult the means of payment through these cards.

Dividend distribution. (Communication 'A' 7312, 06/24/2021). The BCRA extended until December 31, 2021, the ban on the distribution of results for financial institutions.

Reserve requirement. (Communication 'A' 7318, 07/01/2021). As of July 1, 2021, obligations with businesses for sales with credit, debit or pre-paid cards are excluded from reserve requirement calculation.

Reserve requirement. Ahora 12. (Communication 'A' 7334, 07/29/2021). The BCRA states that as of September 1, 2021, the deduction of average reserve requirements in pesos related to financings within the 'Ahora 12' Program, cannot exceed 8% of all concepts in pesos subject to reserve requirement, in average, from the month prior to calculation (previously 6%).

Zero rate financing 2021. (Communication 'A' 7342, 08/13/2021). The BCRA states that financial institutions must grant 'Zero rate credits 2021' financing in pesos, in the frame of the Decree No 512/21, under the same conditions as the 'Zero rate credits' specified in the 'Financial services within the sanitary emergency disposed by Decree No 260/2020 Coronavirus (COVID-19)' regulation, with the following characteristics:

19
· Financing must be granted in one unique installment.
· Fee charges are banned on these credits, even if they are classified as non-performing.
· Clients granted these financings will pay an interest rate and total financial cost of 0%.
· Financing will get a grace period of 6 months since accreditation. As of month 7, it will be repaid in at least 12 monthly equal consecutive installments.
· Refinancing of 'Zero rate credits' specified in Decree No 332/2020 through 'Zero rate credits 2021' lines must absorb the amounts due and will not be considered as refinancing in accordance to regulation regarding debtor classification.
· Financial institutions will not be able to deduct from these financings any kind of charge or fee against the client. The interest rate that the FONDEP will recognize to financial institution will be 15% nominal annual over the balances of granted credits.
20

Glossary

Active clients: holders of at least one active product. An active product is in most cases a product with at least 'one movement' in the last 3 months, or a minimum balance.

Cost of Risk (accumulated): Year to date accumulated loan loss allowances / Average total loans.

Average total loans: average between previous year-end Total loans and other financing and current period Total loans and other financing.

Cost of Risk (quarterly): Current period Loan loss allowances / Average total loans. Average total loans: average between previous quarter-end Total loans and other financing and current period Total loans and other financing.

Coverage ratio: Quarterly allowances under the Expected Credit Loss model / total non-performing portfolio.

Digital clients: we consider a customer to be an active user of online banking when they have been logged at least once within the last three months using the internet or a cell phone and SMS banking.

Efficiency ratio (Excl. inflation adjustments, accumulated): Accumulated (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / Accumulated (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI + Foreign exchange and gold gains + some concepts included in Other net operating income).

Efficiency ratio (Excl. inflation adjustments, quarterly): (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI + Foreign exchange and gold gains + some concepts included in Other net operating income).

Efficiency ratio (accumulated): Accumulated (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / Accumulated (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI + Foreign exchange and gold gains + some concepts included in Other net operating income+ Income from net monetary position).

Efficiency ratio (quarterly): (Personnel benefits+ Administrative expenses + Depreciation & Amortization) / (Net Interest Income + Net Fee Income + Net Income from measurement of Financial Instruments at Fair Value through P&L + Net income from write-down of assets at amortized cost and at fair value through OCI + Foreign exchange and gold gains + some concepts included in Other net operating income+ Income from net monetary position).

Liquidity Ratio: (Cash and deposits in banks + Debt securities at fair value through P&L (Excl. Private securities) + Net REPO transactions + Other debt securities (Excl. Private securities) / Total Deposits.

Mobile clients: customers who have been active in online banking at least once in the last three months using a mobile device.

Net Interest Margin (NIM) - (quarterly): Quarterly Net Interest Income / Average quarterly interest earning assets.

Public Sector Exposure (excl. BCRA): (National and Provincial Government public debt + Loans to the public sector + REPO transactions) / Total Assets.

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ROA (accumulated): Accumulated net Income of the period attributable to owners of the parent / Total Average Assets. Total Average Assets is calculated as the average between total assets on December of the previous year and total assets in the current period, expressed in local currency. Calculated over a 365-day year.

ROA (quarterly): Net Income of the period attributable to owners of the parent / Total Average Assets. Total Average Assets is calculated as the average between total assets on the previous quarter-end and total assets in the current period, expressed in local currency. Calculated over a 365-day year.

ROE (accumulated): Accumulated net Income of the period attributable to owners of the parent / Average Equity. Average Equity is calculated as the average between equity in December of the previous year and equity in the current period, expressed in local currency. Calculated over a 365-day year.

ROE (quarterly): Net Income of the period attributable to owners of the parent / Average Equity. Average Equity is calculated as the average between equity on the previous quarter end and equity in the current period, expressed in local currency. Calculated over a 365-day year.

Spread: (Quarterly Interest Income / Quarterly average Interest-earning Assets) - (Quarterly Interest Expenses / Quarterly average interest-bearing liabilities).

Other terms

n.m.: not meaningful. Implies an increase above 500% and a decrease below -500%.

N/A: not applicable.

Bps: basis points.

22

Balance Sheet

Balance Sheet BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Assets
Cash and deposits in banks 198,330 217,174 169,013 (8.7%) 17.3%
Cash 59,218 73,159 75,804 (19.1%) (21.9%)
Financial institutions and correspondents 139,112 144,015 93,209 (3.4%) 49.2%
Other local and foreign financial institutions 135,200 139,461 86,988 (3.1%) 55.4%
Debt securities at fair value through profit or loss 3,912 4,554 6,221 (14.1%) (37.1%)
Derivatives 4,523 5,405 14,653 (16.3%) (69.1%)
Repo transactions 2,636 2,747 1,587 (4.0%) 66.1%
Other financial assets 105,265 33,807 51,469 211.4% 104.5%
Loans and other financing 15,249 15,332 9,579 (0.5%) 59.2%
Non-financial public sector 306,927 315,829 365,325 (2.8%) (16.0%)
B.C.R.A - 1 - (100.0%) N/A
Other financial institutions 2,368 2,204 5,282 7.4% (55.2%)
Non-financial private sector and residents abroad 304,559 313,624 360,043 (2.9%) (15.4%)
Other debt securities 153,769 149,863 122,415 2.6% 25.6%
Financial assets pledged as collateral 16,679 18,468 16,145 (9.7%) 3.3%
Current income tax assets 4,831 1,510 14 219.9% n.m
Investments in equity instruments 2,127 2,528 2,711 (15.9%) (21.5%)
Investments in subsidiaries and associates 2,052 1,758 1,846 16.7% 11.2%
Property and equipment 41,226 41,764 42,462 (1.3%) (2.9%)
Intangible assets 2,373 2,116 1,603 12.1% 48.0%
Deferred income tax assets 651 4,644 4,519 (86.0%) (85.6%)
Other non-financial assets 7,471 9,986 7,168 (25.2%) 4.2%
Non-current assets held for sale 283 283 283 - -
Total Assets 864,392 823,214 810,792 5.0% 6.6%
Liabilities
Deposits 609,118 563,440 560,637 8.1% 8.6%
Non-financial public sector 7,121 7,303 8,206 (2.5%) (13.2%)
Financial sector 436 199 450 119.1% (3.1%)
Non-financial private sector and residents abroad 601,561 555,938 551,981 8.2% 9.0%
Derivatives 142 443 345 (67.9%) (58.8%)
Other financial liabilities 46,893 49,832 42,230 (5.9%) 11.0%
Financing received from the B.C.R.A. and other financial institutions 9,715 10,843 7,877 (10.4%) 23.3%
Corporate bonds issued 871 1,134 6,313 (23.2%) (86.2%)
Current income tax liabilities 82 1,762 4,863 (95.3%) (98.3%)
Provisions 6,337 11,612 16,522 (45.4%) (61.6%)
Deferred income tax liabilities 3,430 81 7 n.m n.m
Other non-financial liabilities 54,903 51,028 32,797 7.6% 67.4%
Total Liabilities 731,491 690,175 671,591 6.0% 8.9%
Equity
Share Capital 613 613 613 - -
Non-capitalized contributions 33,069 33,069 33,069 - -
Capital adjustments 23,516 23,516 23,516 - -
Reserves 63,848 108,195 123,837 (41.0%) (48.4%)
Retained earnings (1,256) (38,141) (51,980) 96.7% 97.6%
Other accumulated comprehensive income (82) (185) (1,050) 55.8% 92.2%
Income for the period 10,558 3,338 8,384 216.3% 25.9%
Equity attributable to owners of the Parent 130,266 130,405 136,389 (0.1%) (4.5%)
Equity attributable to non-controlling interests 2,635 2,634 2,812 0.0% (6.3%)
Total Equity 132,901 133,039 139,201 (0.1%) (4.5%)
Total Liabilities and Equity 864,392 823,214 810,792 5.0% 6.6%
23

Balance Sheet - 5 quarters

Balance Sheet BBVA ARG Consolidated
In millions of AR$ - Inflation adjusted 2Q21 1Q21 4Q20 3Q20 2Q20
Assets
Cash and deposits in banks 198,330 217,174 190,629 185,810 169,013
Cash 59,218 73,159 77,993 54,911 75,804
Financial institutions and correspondents 139,112 144,015 112,636 130,899 93,209
B.C.R.A 135,200 139,461 108,010 125,036 86,988
Other local and foreign financial institutions 3,912 4,554 4,626 5,863 6,221
Debt securities at fair value through profit or loss 4,523 5,405 1,182 8,424 14,653
Derivatives 2,636 2,747 4,860 1,969 1,587
Repo transactions 105,265 33,807 61,644 26,507 51,469
Other financial assets 15,249 15,332 12,588 17,339 9,579
Loans and other financing 306,927 315,829 350,306 350,084 365,325
Non-financial public sector - 1 1 1 -
B.C.R.A - - 8 - -
Other financial institutions 2,368 2,204 2,200 4,113 5,282
Non-financial private sector and residents abroad 304,559 313,624 348,097 345,970 360,043
Other debt securities 153,769 149,863 151,146 147,633 122,415
Financial assets pledged as collateral 16,679 18,468 22,449 20,285 16,145
Current income tax assets 4,831 1,510 1 7 14
Investments in equity instruments 2,127 2,528 3,198 2,461 2,711
Investments in subsidiaries and associates 2,052 1,758 1,807 1,872 1,846
Property and equipment 41,226 41,764 42,320 42,055 42,462
Intangible assets 2,373 2,116 1,947 1,807 1,603
Deferred income tax assets 651 4,644 6,646 4,764 4,519
Other non-financial assets 7,471 9,986 11,185 8,432 7,168
Non-current assets held for sale 283 283 283 283 283
Total Assets 864,392 823,214 862,191 819,732 810,792
Liabilities
Deposits 609,118 563,440 599,330 557,531 560,637
Non-financial public sector 7,121 7,303 7,054 8,272 8,206
Financial sector 436 199 1,080 767 450
Non-financial private sector and residents abroad 601,561 555,938 591,196 548,492 551,981
Derivatives 142 443 236 50 345
Other financial liabilities 46,893 49,832 49,161 53,896 42,230
Financing received from the B.C.R.A. and other financial institutions 9,715 10,843 12,064 4,684 7,877
Corporate bonds issued 871 1,134 1,465 5,722 6,313
Current income tax liabilities 82 1,762 4,665 4,015 4,863
Provisions 6,337 11,612 14,381 14,623 16,522
Deferred income tax liabilities 3,430 81 49 26 7
Other non-financial liabilities 54,903 51,028 50,809 33,537 32,797
Total Liabilities 731,491 690,175 732,160 674,084 671,591
Equity
Share Capital 613 613 613 613 613
Non-capitalized contributions 33,069 33,069 33,069 33,069 33,069
Capital adjustments 23,516 23,516 23,516 23,516 23,516
Reserves 63,848 108,195 108,195 123,837 123,837
Retained earnings (1,256) (38,141) (51,979) (51,980) (51,980)
Other accumulated comprehensive income (82) (185) 98 432 (1,050)
Income for the period 10,558 3,338 13,839 13,351 8,384
Equity attributable to owners of the Parent 130,266 130,405 127,351 142,838 136,389
Equity attributable to non-controlling interests 2,635 2,634 2,680 2,810 2,812
Total Equity 132,901 133,039 130,031 145,648 139,201
Total Liabilities and Equity 864,392 823,214 862,191 819,732 810,792
24

Balance Sheet - In Foreign Currency Exposure

Foreign Currency Exposure BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Assets
Cash and deposits in banks 127,224 140,726 130,755 (9.6%) (2.7%)
Debt securities at fair value through profit or loss 1 1 - (6.3%) N/A
Other financial assets 2,511 2,720 2,804 (7.7%) (10.4%)
Loans and other financing 38,141 32,188 49,346 18.5% (22.7%)
Other financial institutions 313 327 1,770 (4.1%) (82.3%)
Non-financial private sector and residents abroad 37,827 31,861 47,576 18.7% (20.5%)
Other debt securities 144 - 6,299 N/A (97.7%)
Financial assets pledged as collateral 4,943 5,492 10,022 (10.0%) (50.7%)
Investments in equity instruments 31 33 27 (4.8%) 14.6%
Total foreign currency assets 172,994 181,159 199,253 (4.5%) (13.2%)
Liabilities
Deposits 163,306 162,838 174,213 0.3% (6.3%)
Non-Financial Public Sector 3,730 2,494 3,479 49.5% 7.2%
Financial Sector 58 60 72 (4.3%) (19.7%)
Non-financial private sector and residents abroad 159,518 160,284 170,662 (0.5%) (6.5%)
Other financial liabilities 11,093 14,027 11,795 (20.9%) (5.9%)
Financing received from the B.C.R.A. and other financial institutions 3,489 2,729 817 27.9% 327.0%
Other non financial liabilities 1,178 1,758 1,337 (33.0%) (11.9%)
Total foreign currency liabilities 179,066 181,352 188,162 (1.3%) (4.8%)
Foreign Currency Net Position - AR$ (6,072) (192) 11,091 n.m (154.7%)
Foreign Currency Net Position - USD (63) (2) 157 n.m (140.3%)

Income Statement

Income Statement BBVA ARG Consolidated Chg (%)
In millions of AR$ - Inflation adjusted 2Q21 1Q21 2Q20 QoQ YoY
Interest income 43,669 40,726 33,557 7.2% 30.1%
Interest expense (19,363) (16,818) (9,711) (15.1%) (99.4%)
Net interest income 24,306 23,908 23,846 1.7% 1.9%
Fee income 9,537 8,519 9,169 11.9% 4.0%
Fee expenses (4,108) (4,797) (4,500) 14.4% 8.7%
Net fee income 5,429 3,722 4,669 45.9% 16.3%
Net income from financial instruments at fair value through P&L 1,252 1,776 1,913 (29.5%) (34.6%)
Net loss from write-down of assets at amortized cost and fair value through OCI (16) (37) (309) 56.8% 94.8%
Foreign exchange and gold gains 1,181 994 2,245 18.8% (47.4%)
Other operating income 1,812 1,716 1,715 5.6% 5.7%
Loan loss allowances (2,126) (2,123) (3,974) (0.1%) 46.5%
Net operating income 31,838 29,956 30,105 6.3% 5.8%
Personnel benefits (6,359) (6,479) (5,956) 1.9% (6.8%)
Administrative expenses (5,878) (5,916) (5,755) 0.6% (2.1%)
Depreciation and amortization (1,189) (1,186) (1,266) (0.3%) 6.1%
Other operating expenses (5,563) (5,157) (4,253) (7.9%) (30.8%)
Operating expenses (18,989) (18,738) (17,230) (1.3%) (10.2%)
Operating income 12,849 11,218 12,875 14.5% (0.2%)
Income from associates and joint ventures 174 (33) 284 n.m (38.7%)
Income from net monetary position (8,734) (8,377) (3,750) (4.3%) (132.9%)
Income before income tax 4,289 2,808 9,409 52.7% (54.4%)
Income tax 2,931 485 (3,091) n.m 194.8%
Income for the period 7,220 3,293 6,318 119.3% 14.3%
Owners of the parent 7,219 3,339 6,246 116.2% 15.6%
Non-controlling interests 1 (46) 72 102.2% (98.6%)
Other comprehensive Income (1) 75 (255) 1,898 129.4% (96.0%)
Total comprehensive income 7,295 3,038 8,216 140.1% (11.2%)
25

Income Statement - 6 month accumulated

Income Statement - 6 month accumulated BBVA ARG Consolidated
In millions of AR$ - Inflation adjusted 2021 2020 Var %
Interest income 84,395 72,512 16.4%
Interest expense (36,181) (22,644) (59.8%)
Net interest income 48,214 49,868 (3.3%)
Fee income 18,056 17,717 1.9%
Fee expenses (8,905) (10,079) 11.6%
Net fee income 9,151 7,638 19.8%
Net income from financial instruments at fair value through P&L 3,028 3,479 (13.0%)
Net loss from write-down of assets at amortized cost and fair value through OCI (53) (1,469) 96.4%
Foreign exchange and gold gains 2,175 4,203 (48.3%)
Other operating income 3,528 3,359 5.0%
Loan loss allowances (4,249) (6,544) 35.1%
Net operating income 61,794 60,534 2.1%
Personnel benefits (12,838) (12,982) 1.1%
Administrative expenses (11,794) (11,437) (3.1%)
Depreciation and amortization (2,375) (2,568) 7.5%
Other operating expenses (10,720) (9,178) (16.8%)
Operating expenses (37,727) (36,165) (4.3%)
Operating income 24,067 24,369 (1.2%)
Income from associates and joint ventures 141 328 (57.0%)
Income from net monetary position (17,111) (9,680) (76.8%)
Income before income tax 7,097 15,016 (52.7%)
Income tax 3,416 (6,517) 152.4%
Income for the period 10,513 8,500 23.7%
Owners of the parent 10,558 8,384 25.9%
Non-controlling interests (45) 116 (138.8%)
Other comprehensive Income (1) (180) 5,112 (103.5%)
Total comprehensive income 10,333 13,611 (24.1%)
26

Income Statement - 5 quarters

Income Statement BBVA ARG Consolidated
In millions of AR$ - Inflation adjusted 2Q21 1Q21 4Q20 3Q20 2Q20
Interest income 43,669 40,726 40,133 36,435 33,557
Interest expense (19,363) (16,818) (15,660) (13,202) (9,711)
Net interest income 24,306 23,908 24,473 23,233 23,846
Fee income 9,537 8,519 9,438 8,747 9,169
Fee expenses (4,108) (4,797) (5,928) (4,555) (4,500)
Net fee income 5,429 3,722 3,510 4,192 4,669
Net income from financial instruments at fair value through P&L 1,252 1,776 5,206 1,236 1,913
Net loss from write-down of assets at amortized cost and fair value through OCI (16) (37) (183) (1,242) (309)
Foreign exchange and gold gains 1,181 994 1,345 2,257 2,245
Other operating income 1,812 1,716 2,415 2,093 1,715
Loan loss allowances (2,126) (2,123) (4,607) (1,294) (3,974)
Net operating income 31,838 29,956 32,159 30,475 30,105
Personnel benefits (6,359) (6,479) (6,088) (6,394) (5,956)
Administrative expenses (5,878) (5,916) (6,066) (6,083) (5,755)
Depreciation and amortization (1,189) (1,186) (1,359) (1,169) (1,266)
Other operating expenses (5,563) (5,157) (7,626) (3,776) (4,253)
Operating expenses (18,989) (18,738) (21,139) (17,422) (17,230)
Operating income 12,849 11,218 11,020 13,053 12,875
Income from associates and joint ventures 174 (33) 30 (15) 284
Income from net monetary position (8,734) (8,377) (8,563) (6,441) (3,750)
Income before income tax 4,289 2,808 2,487 6,597 9,409
Income tax 2,931 485 (2,129) (1,631) (3,091)
Income for the period 7,220 3,293 358 4,966 6,318
Owners of the parent 7,219 3,339 488 4,967 6,246
Non-controlling interests 1 (46) (130) (1) 72
Other comprehensive Income (1) 75 (255) (334) 1,482 1,898
Total comprehensive income 7,295 3,038 24 6,448 8,216

Ratios

Quarterly Annualized Ratios BBVA ARG Consolidated Chg (%)
In % 2Q21 1Q21 2Q20 QoQ YoY
Profitability
Efficiency Ratio 67.9% 72.5% 54.1% (459)bps 1,383 bps
Efficiency Ratio (excl. Inflation adjustments) 47.1% 50.1% 47.4% (299)bps (31)bps
ROA 3.4% 1.6% 3.3% 182 bps 17 bps
ROE 22.2% 10.5% 19.6% 1,171 bps 262 bps
Liquidity
Liquid assets / Total Deposits 75.7% 72.0% 63.7% 370 bps 1,200 bps
Capital
Regulatory Capital Ratio 23.3% 22.4% 21.4% 91 bps 185 bps
TIER I Capital Ratio (Ordinary Capital Level 1/ RWA) 22.6% 21.7% 20.8% 91 bps 187 bps
Asset Quality
Total non-performing portfolio / Total portfolio 2.49% 1.72% 1.56% 77 bps 94 bps
Allowances /Total non-performing portfolio 187.88% 275.22% 269.38% (8,734)bps (8,149)bps
Cost of Risk 2.61% 2.47% 4.27% 14 bps (166)bps
27
Accumulated Annualized Ratios BBVA ARG Consolidated Chg (%)
In % 2Q21 1Q21 2Q20 QoQ YoY
Profitability
Efficiency Ratio 70.1% 72.5% 56.0% (236)bps 1,417 bps
Efficiency Ratio (excl. Inflation adjustments) 48.5% 50.1% 47.4% (153)bps 116 bps
ROA 2.5% 1.6% 2.2% 86 bps 29 bps
ROE 16.5% 10.5% 13.1% 602 bps 345 bps
Liquidity
Liquid assets / Total Deposits 75.7% 72.0% 63.7% 370 bps 1,200 bps
Capital
Regulatory Capital Ratio 23.3% 22.4% 21.4% 91 bps 185 bps
TIER I Capital Ratio (Ordinary Capital Level 1/ RWA) 22.6% 21.7% 20.8% 91 bps 187 bps
Asset Quality
Total non-performing portfolio / Total portfolio 2.49% 1.72% 1.56% 77 bps 94 bps
Allowances /Total non-performing portfolio 187.88% 275.22% 269.38% (8,734)bps (8,149)bps
Cost of Risk 2.62% 2.47% 3.54% 14 bps (166)bps

About BBVA Argentina

BBVA Argentina (NYSE; BYMA; MAE: BBAR; LATIBEX: XBBAR) is a subsidiary of the BBVA Group, the main shareholder since 1996. In Argentina, it is one of the leading private financial institutions since 1886. Nationwide, BBVA Argentina offers retail and corporate banking to a broad customer base, including: individuals, SME's, and large-sized companies.

BBVA Argentina's purpose is to bring the age of opportunities to everyone, based on our customers' real needs, providing the best solutions, and helping them make the best financial decisions through an easy and convenient experience. The institution relies on solid values: 'The customer comes first, We think big and We are one team'. At the same time, its responsible banking model aspires to achieve a more inclusive and sustainable society.

Investor Relations Contact

Ernesto Gallardo

Chief Financial Officer

Inés Lanusse

Investor Relations Officer

investorelations-arg@bbva.com

ir.bbva.com.ar

28

Disclaimer

Banco BBVA Argentina SA published this content on 24 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 August 2021 23:03:08 UTC.


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Sales 2021 112 B 1 127 M 1 127 M
Net income 2021 29 303 M 296 M 296 M
Net Debt 2021 - - -
P/E ratio 2021 9,49x
Yield 2021 1,03%
Capitalization 151 B 1 525 M 1 526 M
Capi. / Sales 2021 1,35x
Capi. / Sales 2022 1,02x
Nbr of Employees 5 924
Free-Float 33,9%
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Mean consensus HOLD
Number of Analysts 2
Last Close Price 246,85 ARS
Average target price 176,18 ARS
Spread / Average Target -28,6%
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Martín Ezequiel Zarich Chief Executive Officer
Ernesto Ramón Gallardo Jimenez Chief Financial Officer & Finance Director
Maria Isabel Goiri Lartitegui Chairman
Leandro Álvarez Chief Engineering & Data Officer
Gustavo Siciliano Director-System & Operations
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