Banco BBVA Argentina S.A. ADS

Good morning, everyone, and welcome to BBVA Argentina's first quarter 2026 results conference call. Today with us are Mrs. Belen Forquet, Investor Relations Manager, and Diego Cesarini, IRO and Head of Asset and Liability Management. This presentation and the first quarter 2026 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 the BVA Argentina's Annual Report on Form 20F for the fiscal year 2025, 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 Belen Forcade. Please go ahead.

Good morning everyone and thank you for joining us today for VEBA Argentina's first quarter 2026 results conference call. During the first quarter of the year, our business model demonstrated resilience within a macroeconomic environment characterized by a gradual transition and the normalization of key financial variables. We observed a reduction in interest rate volatility, which sustains the downward trend initiated in the previous year, alongside ongoing adjustments in monetary and regulatory policy aimed at a better management of liquidity. While the combination of fiscal discipline and stabilizing external indicators establishes a more predictable framework for the financial sector, we maintain a cautious and prudent outlook regarding the pace, timing, and evolution of a broader private credit recovery in the upcoming quarters. Moving into our financial highlights for the quarter, BV Argentina posted an inflation-adjusted net income of 85.2 billion pesos for the first quarter of 2026. This represents a 31.2% increase quarter-over-quarter, driven by revenue performance and expense management. This bottom-line expansion boosted our quarterly ROE to 8.3%. At the same time, net interest income grew by 5.9% sequentially to 879.9 billion pesos. Our funding costs fell faster than asset yields due to the shorter average life of our liabilities, expanding our total net interest margin to 18.6%. Regarding efficiency, our quarterly efficiency ratio stood at 51.4%, with personal benefits and administrative expenses reflected the ongoing management of our corporate structure. Let's look at the dynamics of our balance sheet and credit portfolio. Total financing to the private sector closed the quarter at 15.7 trillion pesos. While local currency loans fell 6.5% due to seasonal low commercial activity, our foreign currency private loans grew by 6.8% sequentially, which represents a 23.3% increase in dollar terms. We continue to see continuous momentum in pledge and mortgage lines. Furthermore, we continue to capture business effectively, mainly driven by the commercial segment and foreign currency loans. Our consolidated loan market share rose to 12.15%, signaling a total gain of 95 basis points over the last 12 months. On the funding side, total deposits reached 17.5 trillion pesos. Private deposits saw a minor seasonal 8 basis points market share dip to 9.96%, but they remained up 78 basis points year over year. Regarding asset quality, systemic pressures caused our non-performing loan ratio to rise to 5.60%, primarily driven by the retail card and consumer portfolio. However, commercial delinquency remained exceptionally well-behaved at just 0.60%. Our cost of risk dropped from 8.11% last quarter to 6.14%, partially thanks to our strengthened origination policies leaving our coverage ratio at 88.41%. Looking at solvency and liquidity, our liquidity ratio closed at a very comfortable 45.5%. More importantly, our capital position remains robust, with a regulatory capital ratio of 18.8%, representing 128.7% excess over minimum regulatory requirements. Before opening the floor to your questions, I want to highlight that on May 15, the Central Bank approved our dividend distribution for 69 billion pesos, which underscores our unyielding commitment to generating shareholder value. In conclusion, BDB Argentina enters the rest of 2026 with an exceptionally solid foundation. Backed by robust capital, healthy liquidity, and an expanding market footprint, we possess all the necessary tools to lead the market and supply credit as the Argentine financial system normalizes. Thank you for your time. Operator, please open the line for questions.

Thank you. We are now going to start the Q&A session. To ask a question, you can click on the Raise Hand button. Our first question comes from Tito Labarta with Goldman Sachs.