Business context and reporting period
Banco BBVA Argentina S.A. filed its annual Form 20-F on April 12, 2022, covering the fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; the supplied text does not provide a clear set of Q4-only financial results. The Bank is a universal bank operating primarily in Argentina, controlled by BBVA, which owned 66.55% of its capital at year-end.
Financial statements are audited and prepared under IFRS-IASB. Because Argentina is hyperinflationary, figures are restated in pesos of purchasing power at December 31, 2021; comparisons with nominal banking-system statistics and the Bank’s local statutory statements may not be directly comparable. KPMG issued an unqualified opinion on the financial statements and internal controls.
Key financial metrics
Amounts below are in Argentine pesos; billions are used for readability. Unless noted, comparisons are with 2020 and reflect the filing’s hyperinflation-adjusted presentation.
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Interest income | Ps.214.8bn | Ps.178.9bn | +20.0% |
| Interest expense | Ps.91.4bn | Ps.62.6bn | +46.0% |
| Net interest income | Ps.123.4bn | Ps.116.3bn | +6.1% |
| Gross income | Ps.137.6bn | Ps.143.7bn | -4.3% |
| Net operating income | Ps.14.0bn | Ps.26.9bn | -47.9% |
| Profit before tax | Ps.14.0bn | Ps.27.3bn | -48.8% |
| Income tax expense | Ps.4.6bn | Ps.12.1bn | -61.9% |
| Profit for the year | Ps.9.4bn | Ps.15.2bn | -38.4% |
| Net interest margin, weighted average | 18.20% | 21.82% | Down 3.62 percentage points |
- Reported returns were 0.90% on average assets and 5.71% on average equity, versus 1.53% and 8.93%, respectively, in 2020.
- Total assets were Ps.1,031.0bn, down 1.4%; net loans and advances were Ps.379.0bn, down from Ps.422.0bn. Deposits were Ps.708.3bn, down 1.9% from Ps.721.8bn.
- Total liabilities were Ps.868.0bn and total equity Ps.163.0bn, down 0.6% and 5.7%, respectively. Cash and cash equivalents were Ps.218.3bn, versus Ps.229.5bn.
- Liquid assets were 32.31% of deposits, compared with 34.43% in 2020; the Liquidity Coverage Ratio was 320%, versus 321%.
- Capital under BCRA rules was Ps.142.1bn, with Ps.84.9bn of excess capital; the BCRA capital ratio was 20.29%. Total capital was 20.1% of risk-weighted assets under the filing’s Basel calculation.
- Non-performing loans were Ps.9.62bn, and the NPL ratio rose to 1.87% from 1.40%. Coverage was 181.89%, down from 311.95%. Allowances for loan and credit losses were Ps.16.86bn.
- Operating cash flow was Ps.112.1bn, compared with a Ps.15.3bn outflow in 2020. Investing cash outflow was Ps.5.6bn and financing cash outflow Ps.2.6bn. Cash and cash equivalents declined Ps.11.2bn over the year.
- At year-end, bank loans were Ps.11.8bn and debt securities issued Ps.0.5bn; deposits were the Bank’s principal funding source.
Material changes versus prior period
- Profit fell 38.4%, despite higher net interest income. Interest expense grew faster than interest income, and the weighted-average net interest margin narrowed.
- Fair-value gains on financial assets and liabilities fell 76.3%, to Ps.4.0bn from Ps.17.0bn. The filing cites lower returns on financial instruments, the sale of the remaining Prisma Medios de Pago S.A. interest and the write-off of the related put option.
- The loss on the net monetary position increased 23.2%, to Ps.41.4bn. Argentina’s CPI rose 50.9% in 2021, compared with 36.1% in 2020.
- Impairment of financial assets fell 28.7%, to Ps.12.8bn, but the NPL ratio increased as COVID-era payment deferrals ended and the Bank adopted a revised default definition in November 2021.
- Net loans declined about 10.2%; deposits declined about 1.9%. The Bank attributed asset reductions mainly to lower loan balances and lower fair-value securities, partly offset by increased reverse repurchase agreements.
Outlook, commentary, risks and unusual items
- Management described 2021 as a rebound year for Argentina after the pandemic-driven 2020 contraction, while emphasizing persistent inflation, exchange-rate pressure and macroeconomic uncertainty. Argentina’s GDP grew 10.3% in 2021, while inflation was 50.9% and the peso depreciated about 22.1% against the U.S. dollar at year-end.
- The IMF approved a new Extended Fund Facility agreement in March 2022 to refinance about US$44bn of obligations. Disbursements depend on quarterly targets; the filing says the agreement’s longer-term economic and banking effects remained uncertain.
- For 2022, management expected continued digital adoption and focused on customer growth, operational efficiency, liquidity and solvency. The Bank expected regulated rates, inflation, exchange controls and government-directed credit programs to remain relevant to margins and lending. The filing does not provide consolidated numerical earnings guidance.
- The Board resolved on March 3, 2022 not to propose a cash dividend for 2021. BCRA rules permit eligible institutions to distribute up to 20% of distributable profit in 2022, in 12 monthly installments and with prior authorization; this is not a commitment to pay.
- Key risks include Argentine inflation, peso volatility and exchange controls; sovereign and government-debt exposure; fiscal and political uncertainty; deposit liquidity and interest-rate sensitivity; credit losses; regulatory changes; cybersecurity and fraud; litigation; and climate-related physical, transition and reputational risks.
- Unusual items and contingencies include the March 18, 2022 sale of the Bank’s remaining Prisma stake for approximately US$40.0m, payable over six years under peso- and dollar-linked terms. The filing also reports pending tax-adjustment litigation for 2018 and 2020 returns and 168 possible claims for which no provision was recorded; estimated claims total Ps.31.4m, with approximately Ps.19.7m of potential outflows estimated within 12 months.
- Management concluded internal control over financial reporting was effective as of year-end; KPMG’s audit opinion was unqualified. The filing reports that the Board proposed Ernst & Young’s local member firm for the 2022 audit, subject to shareholder approval.
Most important facts for investors to verify
- Confirm the annual, IAS 29-restated basis of the figures and distinguish them from nominal local reporting; the filing does not provide clear standalone Q4 results.
- Reconcile the 2021 profit decline with narrower net interest margins, lower fair-value gains and the larger monetary-position loss.
- Track asset quality after the end of payment deferrals, including the rising NPL ratio, lower coverage ratio and adequacy of IFRS 9 loss allowances.
- Assess liquidity and funding resilience, especially the short-term deposit base, foreign-currency controls and declining liquid-assets-to-deposits ratio.
- Monitor the IMF program, inflation, exchange-rate restrictions and any changes to regulated lending, deposit rates or dividend approvals.
- Verify the final proceeds and accounting impact of the Prisma sale, the status of tax and class-action matters, and the Board’s dividend decision.