Business context and reporting period
Banco BBVA Argentina S.A. filed this annual report on Form 20-F on April 26, 2023, covering the fiscal year ended December 31, 2022. It is an annual filing, not a standalone fourth-quarter earnings report; the filing text does not provide clear standalone Q4 results. The consolidated financial statements are audited and prepared under IFRS as issued by the IASB. Because Argentina is hyperinflationary, financial figures are restated to December 31, 2022 purchasing power; peso amounts below are rounded to billions unless stated otherwise.
The Bank provides retail, SME and corporate banking, alongside asset management and automotive financing through subsidiaries. BBVA owned 66.55% of the Bank at year-end.
Financial performance and position
| Metric | 2022 | 2021 | Change or context |
|---|---|---|---|
| Interest income | Ps.629.3bn | Ps.418.3bn | +50.4% |
| Interest expense | Ps.290.5bn | Ps.178.1bn | +63.2% |
| Net interest income | Ps.338.8bn | Ps.240.3bn | +41.0% |
| Gross income | Ps.368.3bn | Ps.268.0bn | +37.4% |
| Net operating income | Ps.55.9bn | Ps.27.3bn | +104.5% |
| Profit for the year | Ps.58.0bn | Ps.18.2bn | +218.0%; attributable to Bank owners: Ps.58.8bn |
| Weighted average net interest margin | 24.68% | 18.20% | As reported; inflation-adjusted figures and methodology matter when interpreting the comparison. |
| Cash and cash equivalents | Ps.296.2bn | Ps.425.2bn | Down 30.3% |
| Operating cash flow | Ps.113.0bn | Ps.218.4bn | Annual cash flow, not standalone Q4 |
| Total assets | Ps.1,951.9bn | Ps.2,008.3bn | Down 2.8% |
| Loans and advances, net | Ps.717.1bn | Ps.738.3bn | Down 2.9% |
| Total deposits | Ps.1,313.8bn | Ps.1,379.8bn | Down 4.8% based on reported balances |
| Total liabilities | Ps.1,590.5bn | Ps.1,690.7bn | Down 5.9% |
| Total equity | Ps.361.4bn | Ps.317.5bn | Up 13.8% |
Interest income growth was driven mainly by government securities and inflation-linked adjustments; higher rates and deposit costs also lifted interest expense. The loss on the net monetary position increased to Ps.133.6bn from Ps.80.7bn, reflecting the inflationary environment. Impairment of financial assets was Ps.31.7bn, up 27.3%.
Credit quality improved: non-performing loans were Ps.12.6bn and the NPL ratio was 1.13%, versus 1.87% in 2021. The coverage ratio rose to 242.23% from 181.89%.
Liquidity and capital remained substantial by the Bank’s reported measures. The liquidity coverage ratio was 348%, versus 320% in 2021. The Central Bank capital ratio was 25.1%, with reported excess capital of Ps.207.7bn. Deposits are the Bank’s main funding source. The Bank itself reported no outstanding corporate bonds at year-end; subsidiaries’ outstanding principal and accrued interest totaled Ps.191.2m.
Annual cash flows included Ps.27.2bn used in investing activities and Ps.8.5bn used in financing activities. Cash and cash equivalents fell Ps.129.0bn during the year; the cash flow statement separately reports a Ps.207.6bn inflation effect on cash.
Material changes versus the prior comparable period
- Profit more than tripled, as net interest income and gross income rose, while the 2021 comparison included a larger loss from derecognition of financial assets.
- Interest expenses grew faster than interest income, but reported net interest income still increased 41.0%.
- Cash, loans, deposits and total assets declined in reported year-end balances. The Bank attributed the asset decrease chiefly to lower reverse repurchase agreements and foreign-currency cash balances; it reported lower deposits and private-sector lending balances.
- The NPL ratio improved, although impairment expense increased and the monetary-position loss widened.
- Other comprehensive income turned to a Ps.14.1bn loss from a Ps.6.8bn loss in 2021, principally reflecting fair-value movements in financial instruments.
Outlook, commentary, risks and unusual items
- Management described the operating environment as volatile and emphasized preserving liquidity and solvency while managing volatility. It expects loan demand to grow in line with, or somewhat below, inflation in the near term; it also cautioned that high rates and weak investment may constrain lending.
- Argentina’s 2022 GDP grew 5.2%, while CPI inflation reached 94.8%. The peso depreciated 72.4% against the U.S. dollar at the official rate. These conditions affect borrowers, margins, purchasing power and the Bank’s inflation-adjusted reporting.
- Key risks include persistent inflation, peso depreciation and multiple exchange rates, capital and import controls, political and regulatory uncertainty, sovereign exposure and ratings dependence, short-term deposit funding, interest-rate and UVA mismatches, credit losses, cybercrime, and climate-related risks.
- In March 2023, the government announced a debt-exchange plan involving public-sector holdings of certain dollar-denominated sovereign bonds. The filing reports that S&P subsequently downgraded BBVA Argentina’s local ratings to raCCC+ and raC, with a negative outlook.
- The Bank completed the sale of its remaining Prisma Medios de Pago S.A. stake in March 2022. Consideration was payable over six years, with 30% in CER-adjusted pesos and 70% in U.S. dollars. The Bank also sold the Fundación BBVA building in July 2022.
- The Board decided not to propose a cash dividend for 2022. Central Bank authorization is required for distributions; a March 2023 rule allowed eligible institutions to distribute up to 40% of distributable profit in installments, subject to prior approval.
- Management reported effective internal control over financial reporting at December 31, 2022. The auditor issued an unqualified opinion on the consolidated financial statements and internal controls.
Important facts for investors to verify
- Confirm that comparisons use the filing’s IAS 29 restatement basis and distinguish annual results from standalone Q4 performance.
- Review the composition, duration and valuation of the large government and Central Bank securities portfolio, including the effects of the March 2023 sovereign debt measures.
- Check deposit trends, liquidity under stress, and the consequences of exchange controls for foreign-currency deposits, payments and dividend remittances.
- Assess whether lower reported loan balances and improved NPL ratios remain sustainable as inflation, interest rates and borrower conditions evolve.
- Verify dividend capacity under BCRA rules and the status and financial implications of disclosed tax, regulatory and legal proceedings.