Banco BBVA Argentina S.A. ADS

Good morning, everyone, and welcome to BBVA Argentina's 4th Q25 and Fiscal Year 2025 Results Conference Call. Today with us are Mrs. Belen Forcade, Investor Relations Manager, Diego Cesarini, IRO, and Mrs. Carmen Murillo, CFO, who will be available for the Q&A session. This presentation and the 4Q25 earnings release are available on BBVA's Investor Relations website, ir.bbva.com.ar, and will also be available for download in the chat. First of all, let me point out that some of the statements made during this conference call may be forward-looking statements within the meaning of the safe harbor provisions found in Section 27A of the Securities Act of 1933 under U.S. federal securities law. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Additional information concerning these factors is contained in BBVA Argentina's annual report on Form 20F for the fiscal year 2024, filed with the U.S. Securities and Exchange Commission. During the company's presentation, all microphones will be disabled. At this time, we are going to open it up for questions and answers. If you have a question, please write it down in the Q&A section or click on Raise Hand for audio questions. You will then receive a request to activate your microphone. Please activate it and pick up your headset to provide optimum sound quality when posing your question. I will now turn the call over to Mrs. Berlin for a cave. Please go ahead.

Good morning and thank you all for joining us today. After a third quarter that was marked by political instability, with its consequent monetary and exchange rate tensions, the results of the midterm legislative elections reaffirmed support for the government's fiscal reform and order policy. This translated into a rapid normalization of financial variables, which returned to pre-event levels. PEB Argentina continues to consolidate its growth strategy, reflecting its commitment to being a key player in Argentina's recovery of activity. This was achieved despite a year ultimately marked by interest rate volatility in the second half and a progressive deterioration of credit quality within specific segments of the retail portfolio. In this line, on December 22nd, 2025, the bank secured a credit line of up to $150 million from the International Finance Corporation. These funds allow VEBA to expand its financing capacity for small and medium-sized enterprises, thereby reaffirming its commitment to the productive sector. PDBA Argentina's non-performing loan ratio on credit loans reached 4.18% as of December 2025, a figure that remains below the system average of 5.29% for the same period. The bank stands out for having consistently lower delinquency ratios than the sector average, which reflects the quality of its credit risk management and its prudent approach to portfolio originations. Before diving into numbers, it is important to mention that on December 10, 2025, the transaction through which BEB Argentina acquired 50% of the share capital of FSA Compañía Financiera has been closed. This had a 1 billion peso impact in the P&L, and all balance sheet figures include FSA, including loans and deposits. Nonetheless, market shares expressed in this report and on this call do not include FFA, as the consolidation was made as of the last day of December. Moving to slides 2 to 5 of the webcast presentation, I will now comment on the bank's fourth quarter 2025 and 2025 fiscal year financial results. Previous Argentina's inflation-adjusted net income in 2025 was 267.4 billion pesos. decreasing 43.2% versus 2024. This implies an accumulated ROE of 7.3%, an accumulated ROE of 1.1%. The ROE or decline in results is mainly explained by the deterioration of long-loss allowances in a context of high delinquency ratios in the financial system. Also, in spite of observing a 29.4% lower net interest income as a result of lower interest rates and inflation, this should be considered in comparison to lower losses from the net monetary position, which more than offset the lower NII. It is worth noting the 36.9% increase in net free income, thanks to a proactive approach in improvements, and also in foreign currency and gold gains, the latter explained by an increase in activity after the partial lift in FX controls on April 14, 2025. In the fourth quarter of 2025, net income was 59.3 billion pesos, increasing 44.5% quarter over quarter. This implied a quarterly ROE of 6.5% and a quarterly ROE of 0.9%. Quarterly results remained explained by higher income along with lower expenses. Increase in income is mainly due to, one, better net interest income, and two, an increase in results from breakdown of assets at amortized costs and OCI. The latter due to the sale of bonds classified in the OCI model. Expenses improved mainly on the side of personal expenses and administrative expenses. These were negatively offset by, one, loan loss allowances, two, an increase in operating expenses mainly due to turnover tax, and three, lower net free income in the quarter. Net income from the net monetary position was 32% higher quarter over quarter, explained by a higher quarterly inflation. Net interest income in the quarter was 758.9 billion pesos, increasing 20.2% quarter over quarter. After the uncertainty surrounding the midterm elections wore off, average market interest rates declined. With liabilities repricing at a faster pace than assets, we observed the reverse effect from the one seen in the third quarter of 2025. with income from public securities and loans increasing, and expenses from funding increasing, but to a much lower extent. In the year, net interest income decreased 29.4%, as mentioned before, more than offset by the lower losses on the side of the net results from the net monetary position. Loan loss allowances increased 31.3% in the quarter, and 181.2% accumulated year over year. explained by the deterioration of non-performing loans, in particular on the retail book, which implied higher provision. The effect of loan loss allowances can be observed in the evolution of the cost of risk, which reached 8.11% in the fourth quarter of 2025 and 5.54% on an annual basis. During 2025, personal and administrative expenses decreased by 11% and 12.6% respectively. This was achieved thanks to the active pursuit of efficiencies during the year. During the fourth quarter of 2025 in particular, total operating expenses were of 537.5 billion pesos. remaining stable quarter over quarter. Both the efficiency ratio as well as the fee-to-expenses ratio evidence the stability and improvements that are taking place on these lines of the income statement, and we expect them to improve even further for 2026. Going on to slides 6 and 7, private sector loans as of the fourth quarter of 2025 totaled 14.8 trillion pesos, increasing 7.6% in real terms quarter over quarter and 47.6% year over year. In the quarter, growth was mainly driven by an increase in loans in pesos. In total currency, the products that increased the most were mostly commercial loans, such as financing of projects and exports and discounted instruments. On the peso portfolio, discounted instruments, pledge loans and credit cards stood out. Pledge loans are mainly affected by introduction of FSA into the loan book. In the case of consumer loans, prudency policies taken in a context of higher deterioration of non-performing loans were noticeable on this line, with a 2.2% quarter-over-quarter decline. BV Argentina's consolidated market share of private sector loans reached 11.91% as of the fourth quarter of 2025, improving 64 basis points from 11.27% a year ago. As for asset quality, the NPL ratio of BVA Argentina on private loans reached 4.18% as of December of 2025. As mentioned before, BVA is renowned for presenting the liquidity ratios consistently below the sector average, which reflects the quality of its credit risk management and its prudent approach to portfolio origination. By the end of 2025, total gross loans and after financing over deposit ratio was 88%, above the 78% in December 2024. Participation of total loans over assets is 57%, the highest since 2020, and above the 51% recovery in 2024. As of the fourth quarter of 2025, the total NIM was 17.5%, higher than the 15.2% in the third quarter of 2025 and below the 20.2% in the fourth quarter of 2024. While the NIM in pesos increased by 277 basis points to 20.2% quarter over quarter, the NIM in dollars fell 91 basis points to 4.8%. In the quarter, the increase in NIM is mainly explained by a better yield on public securities and loans in pesos, while the drop in dollar NIM is explained by a higher volume and rate of interest-bearing liabilities. In the accumulated annual comparison, although the total NIM presents a considerable drop, it should be understood that this is a consequence of the rapid decrease in inflation and therefore the level of rates, and is more than offset by the lower cost of inflation adjustments. This can be seen in the adjusted noon, which dropped from 17.30% to 13.75%. On the funding side, as of the fourth quarter of 2025, total private deposits reached 16.7 trillion pesos, increasing 3.1% quarter-over-quarter and 29.7% year-over-year. The bank's consolidated market share of private deposits as of the fourth quarter of 2025 reached 10.04%, from 8.60% a year ago. Private non-financial sector deposits in pesos totaled 10.5 trillion pesos, a decrease of 1.4% quarter-over-quarter, explained by a decrease in time deposits and in other deposits, including interest-bearing checking accounts. This effect was partially offset by an increase in savings accounts. Private non-financial sector deposits in foreign currency expressed in pesos increased by 11.6% quarter-over-quarter. This is mainly due to an increase in savings accounts and in-time deposits. In hard currency, US dollar loans increased 12.7% quarter-over-quarter and 26.6% year-over-year. As of the fourth quarter of 2025, capital ratio reached 18.3%. The quarterly increase in the ratio was due to a 9.4% increase in common equity tier 1. mainly impacted by the recovery in the value of government bonds at fair value through OCI. Public sector exposure excluding central bank totaled 3.9 trillion pesos, implying a 15.5% exposure below the 16.4% recorded in the third quarter of 2025 and 17.9% in the fourth quarter of 2024. For the year, the drop in exposure is mainly explained by the increase in assets, led by the growth of loans over that of financial instruments. It is important to highlight that more than 90% of the national treasury's public debt portfolio in pesos is at tamar floating rate. These bonds represent approximately 65% of the bank's sovereign portfolio, and in the context of higher real interest rates in the second half of the year added value to the financial margin. In the quarter, the liquidity ratio reached a level of 44.2%. The liquidity ratio in local and foreign currency reached 37.7% and 55.2% respectively. In line with our commitment of generating value for our shareholders, the bank continued the payment of dividends corresponding to the 2024 fiscal year in 10 installments, having paid 9 of the 10 installments required by the central bank's regulation up to the date of this report. This concludes our prepared remarks. We will now take your questions. Operator, please open the line for questions.

We are now going to start the Q&A session for investors and analysts. To ask a question, please click on Raise Hand for audio questions. You will then receive a request to activate your microphone. Please pick up your headset to provide optimum sound quality. Our first question comes from Tito Labarta with Goldman Sachs.