BFR Bbva Banco Frances S.A.

 

 

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of June 2018

Commission File Number: 001-12568

 

 

BBVA French Bank S.A.

(Translation of registrant’s name into English)

 

 

Reconquista 199, 1006

Buenos Aires, Argentina

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐             No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐             No  ☒

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes  ☐             No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

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BBVA Banco Francés S.A.

TABLE OF CONTENTS

 

Item
1.		BBVA Francés reports consolidated first quarter earnings for fiscal year 2018.

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Buenos Aires, June 1, 2018 - BBVA Francés (NYSE: BFR.N; BCBA:

FRA.BA; LATIBEX: BFR.LA) reports consolidated first quarter results for

the January-December 2018 fiscal year.

The consolidated financial statements as of March 31, 2018 are the first quarterly financial statements presented in accordance with Communication “A” 6114 of the Central Bank of Argentina (BCRA) (“financial statements under IFRS regulations”). For comparative purposes, the amounts for previous quarters included in the text are presented in accordance with IFRS, but the amounts included in the tables remain in the same format as presented for last quarter of 2017.

 

 

Highlights of the Quarter

 

 

 

•

BBVA Francés reached a net income in the first quarter of 2018 of AR$ 1,545.3 million, 18.9% lower than the net income registered in the previous quarter and 178.3% higher compared to the first quarter of 2017, in both cases restated for comparative purposes.

 

•

The previous quarter’s net income restated for IFRS (AR$ 1,905 million vs AR$ 1,420 million previously released) is mainly explained by a lower deferred income tax charge, due to the application of the reduced income tax rate approved by Congress last December.

 

•

The ROA, return on assets, reached 2.9% and the ROE, return on equity was 20.3% compared to 2.8% and 22.2%, respectively in the previous quarter, without considering the IFRS adjustment. It is important to mention that the equity increase originated mainly in the revaluation of real estate had a negative impact of approximately 300 bp in the ROE ratio.

 

•

Net financial income increased 6.6% compared to the previous quarter and 52% in the last twelve months, mainly due to the higher volume of activity.

 

•

Net income from services increased 1.3% during the first quarter of 2018 and 36.2% compared to the same quarter of 2017. The quarterly variation was mainly due to higher revenues from deposits and collections services, while credit and debit card fees decreased by 4.1% as a result of the reduction in the merchant discount rate partially offset by higher volume.

 

•

Administrative expenses grew 3.2% during the quarter and 25.8% compared to the same quarter of 2017, reaching an efficiency ratio of 57.4%, 150 bp lower that the restated ratio of the previous quarter.

 

•

The asset quality ratio (Non-Performing Loans/Total loans) stood at 0.72% with a coverage (Total allowances/NPL) of 250.5% as of March 31, 2018. The cost of risk was 1.32%, 1 bp lower than the previous quarter.

 

•

The private loan portfolio increased 8.9% during the first quarter of the year, in line with the market, and 69.4% in the last twelve months (vs 56% for the system). The performance of mortgages and consumer loans portfolios stood out during the quarter, increasing 31.9% and 16.5%; respectively.

 

•

Total deposits grew 3.9% during the quarter and 30.3% compared to the quarter ended March 31, 2017, both in line with the market.

 

•

As of March 31, 2018, BBVA Francés maintained a capital ratio of 15.7%, 100 bp over the level at December 31, 2017, which exceeds the minimum required by AR$ 15.6 billion.

 

•

As of March 31, 2018, liquid assets accounted for 38% of the Bank’s deposits.

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•

The Bank continued to increase its client base, adding 133,600 net clients during the quarter; and reaching a total of 2.76 million clients.

 

 

Other events

 

 

 

•

The Annual Ordinary and Extraordinary Shareholders Meeting, held on April 10, 2018 approved a cash dividend payment for a total amount of AR$ 970 million, such payment was effective on May 9, 2018.

 

•

The Shareholders’ Meeting also approved an increase in the amount and extension of the global program of negotiable bonds form USD 750 million to USD 1,500 million, including the possibility of UVA denominated issuances and the creation of a global program of short-term debt securities with repayment terms of up to one year (the “VCPs”) for up to USD 250 million.

 

•

BBVA Francés decided to determine the income tax for the 2017 fiscal year, ending in May 2018, considering the effects of inflation. At the same time, a declarative action of certainty was presented, requesting the inapplicability of the rules that suspend the inflation adjustment, based on the confiscatory effect arising thereof. Furthermore, it is hereby informed that upon request by the BCRA, in its memorandum dated May 29, 2017, with regard to the Income Tax Affidavit corresponding to the 2016 fiscal year. BBVA Francés established a AR$ 1,021.5 million provision to cover the possible contingency derived from the decision adopted concerning 2017 fiscal year Income Tax.

 

 

Regulatory Changes

 

 

 

•

In May 2018, the BCRA established ,through its Communication “A” 6501 , that as of May 7, 2018 the Net Global FX position when converted to pesos at the applicable exchange rate on a daily basis cannot be greater than 10% of the previous month integrated capital (RPC) or the Bank’s own liquid assets, whichever is less.

 

•

The BCRA also established that for the period May-July 2018, compliance with the minimum cash requirement will be made on a quarterly basis. For the month of May, compliance with the minimum daily requirement was eliminated.

 

 

Economic Environment

 

 

 

				Quarter ended
Main Macroeconomic figures				03-31-18				12-31-17				03-31-17
GDP		var % y/y			n/d				3.9	%			0.4	%
Inflation (1)		var % y/y			25.3	%			24.8	%			32.2	%
End of period		var % q/q			6.6	%			6.1	%			6.1	%
CER		Quarterly adjustment			7.0	%			5.0	%			4.6	%
Exchange Rate		Pesos x US$			20.14				18.77				15.38
Reserves		US$			61,726				55,055				50,522
Fiscal Balance		Primary - billion of $			(31,001	)			(181,763	)			(41,344	)
Trade Balance		US$ (billion)			(2,500	)			(3,311	)			(1,179	)
Total Private Loans		var % q/q			8.8	%			14.2	%			5.7	%
		var % y/y			56.2	%			51.7	%			35.6	%
Total Private Deposits		var % q/q			3.4	%			14.2	%			1.8	%
		var % y/y			31.3	%			29.2	%			38.5	%
Badlar interest rate		Weighted avg. quarterly			22.8	%			22.4	%			19.8	%

 

(1)	IPC National since 1Q 17

 

- 2 -

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Presentation of the Information

 

 

 

•

The consolidated financial statements as of March 31, 2018 are the first quarterly financial statements presented in accordance with Communication “A” 6114 of the Central Bank of Argentina (BCRA) (financial statements under IFRS regulations). For comparative purposes, the amounts for previous quarters included in the text are presented in accordance with IFRS, but the amounts included in the tables remain in the same format as presented for the last quarter of 2017.

 

•

The information in this press release contains unaudited financial information that consolidates, line item by line item, all of the banking activities of BBVA Francés (Volkswagen Financial Services, Francés Valores and Francés Administradora de Inversiones). As of this quarter, the Bank’s share interest in PSA Finance is no longer disclosed on a consolidated basis but is shown as “Investments in Other Companies” (recorded under the equity method), and the corresponding results are included in “Income from Equity Investments”, as Rombo Compañia Financiera.

 

•

The balances in foreign currency as of March 31, 2018 were converted into pesos at the reference exchange rate published by the BCRA for that date (AR$ 20.14/USD).

 

•

The information in this press release may differ from the information published by the BBVA Group for Argentina, which is prepared according to Spanish accounting standards for all BBVA Group affiliates.

 

 

Disclaimer

 

 

This press release contains or may contain forward-looking statements, including but not limited to estimates of the prospects for the Argentine economy, BBVA Francés’ earnings, business plans, expense and operational structure adjustments, capitalization plan, and trends affecting BBVA Francés’ financial condition and results of operations. Any forward-looking statements included in this press release are based on current expectations and estimates, but actual results and events may differ materially from anticipated future results and events. Certain factors which could cause the actual results and events to differ materially from the expected results or events include: (1) macroeconomic, regulatory or political changes; (2) changes in domestic or international stock market prices, exchange rates or interest rates; (3) changes in the markets for BBVA Francés’ products and services; (4) increasing competition; (5) changes in technology; or (6) changes in the financial condition, creditworthiness or solvency of the customers, debtors or counterparts of BBVA Francés. These forward-looking statements on future events referring only to the date of the document should be taken cautiously. It is advisable to consult the Bank’s Financial Statements and all the documents filed from time to time with the Argentine Securities and Exchange Commission (“CNV”) and the Buenos Aires Stock Exchange.

 

- 3 -

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Quarterly Results

 

 

 

Condensed Income Statement (1)		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
In thousands of $ except income per share, ADS		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Net Financial Income			5,522,263				5,181,930				3,628,743				6.6	%			52.2	%
Provision for loan losses			(526,051	)			(372,954	)			(314,425	)			41.0	%			67.3	%
Net income from services			859,786				848,740				631,398				1.3	%			36.2	%
Administrative expenses			(3,663,781	)			(3,550,414	)			(2,912,140	)			3.2	%			25.8	%
Operating income			2,192,217				2,107,302				1,033,576				4.0	%			112.1	%
Income (Loss) from equity investments			39,877				52,077				72,856				-23.4	%			-45.3	%
Other Income/Expenses			(3,226	)			(165,607	)			(299,000	)			98.1	%			n/a
Income Tax / Minimum Presumed Tax			(662,724	)			(78,771	)			(243,885	)			741.3	%			171.7	%
Net income for the period			1,566,144				1,915,001				563,547				-18.2	%			177.9	%
Income (Loss) from Minority interest			20,846				9,956				8,372				109.4	%			149.0	%
Net income			1,545,298				1,905,045				555,175				-18.9	%			178.3	%
Net income per share (2)			2.52				3.11				1.03				-18.9	%			143.9	%
Net income per ADS (3)			7.57				9.33				3.10				-18.9	%			143.9	%
Other comprehensive incomes			5,175				16,213				(6,414	)			-68.1	%			-180.7	%
Total comprehensive net income			1,550,473				1,921,258				548,761				-19.3	%			182.5	%

 

(1)	Exchange rate: AR$ 20.14 Ps = 1 USD

(2)	Assumes 612,659,638 ordinary shares for the third and fourth quarter of 2017 and 536,877,850 for the rest of the

(3)	Each ADS represents three ordinary shares

In the first quarter of 2018, BBVA Francés reached a net income of AR$ 1,545.3 million, registering a decrease of 18.9% decrease compare to the previous quarter and a 178.3% increase compared to the first quarter of 2017.

The previous quarter’s net income restated to IFRS (AR$ 1,905 million vs AR$ 1,420 million previously released) is mainly explained by a lower deferred income tax charge, due to the application of the reduced income tax rate approved by Congress last December.

Regarding the restated net income for the first quarter of 2017, it reached AR$ 555.2 million compared to the AR$ 1,605.7 million released twelve months before, mainly due to the inclusion of a provision of AR$ 1,186 million; provision due to the gain originated by the inflation adjustment application on the 2016 income tax calculation, such provision was previously recorded in the second quarter of 2017.

 

														% Quarter ended 12/31/17
Main figures		Quarter ended												vs quarter ended
		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
ROA (Average Assets) (1)			2.9	%			3.8	%			1.4	%			-24.4	%			106.0	%
ROE (Average Shareholders’ Equity) (1)			20.3	%			25.9	%			12.7	%			-21.7	%			59.9	%
NIM			12.3	%			12.6	%			14.0	%			-1.8	%			-12.1	%
Net fee income / Net operating Income (2)			13.5	%			14.1	%			14.8	%			-4.3	%			-9.1	%
Coverage ratio (3)			23.5	%			23.9	%			21.7	%			-1.8	%			8.2	%
Efficiency ratio (4)			57.4	%			58.9	%			68.4	%			-2.5	%			-16.0	%

(1) Annualized, without considering the extraordinary results corresponding to 1st and 2nd quarter 2017.

(2) Net interest Margin: Financial Income-Financial Expenses (include Gross Income Tax and SEDESA) / Average Interest-Earning Assets (net of foreign exchange difference)

(3) Net income from services / Adm.Expenses

(4) Adm.Expenses / (Net financial income + Net income from services)

During the first quarter of 2018, the annualized return on assets (ROA) reached 2.9% compared to 2.8% published in the fourth quarter of 2017 (restated to 3.8% under IFRS), while return on equity (ROE) was 20.3% compared to 22.3% published in the previous quarter (restated to 25.9% under

 

- 4 -

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IFRS) although it should be noted that the increase in equity due to revaluation of the Bank’s real estate properties from the application of IFRS had a negative impact of approximately 300 bp in the ROE ratio.

 

 

Net Financial Income

 

 

 

Net financial income		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
(in thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Financial Income			8,920,787				7,825,343				5,750,791				14.0	%			55.1	%
Income from financial intermediation			6,294,049				5,640,746				4,488,627				11.6	%			40.2	%
CER adjustment			44,416				96,200				95,932				-53.8	%			-53.7	%
UVA adjustment			287,997				92,247				4,353				212.2	%			6516.1	%
Income Securities and short term inv.			1,275,235				995,171				597,346				28.1	%			113.5	%
Foreign exchange difference			695,269				727,711				306,126				-4.5	%			127.1	%
Others			323,821				273,268				258,407				18.5	%			25.3	%
Financial Expenses			-3,398,524				-2,643,413				-2,122,048				28.6	%			60.2	%
Net Financial Income			5,522,263				5,181,930				3,628,743				6.6	%			52.2	%

Net financial income grew by 6.6% compared to the previous quarter and 52.2% compared to the first quarter of 2017.

Financial income increased 14% during the first quarter mainly due to a higher volume of intermediation with the private sector, the UVA adjustment on the portfolio of private loans and higher income from public securities, whereas the foreign exchange difference decreased by 4.5%. Financial expenses grew 28.6% due to the increase in the interest rated for time deposits in pesos (240 bp) and a higher participation of these liabilities compared to sight accounts.

NIM

 

Interest-Earning Assets & Interest-Bearing										Quarter ended
Liabilities $ + USD		03-31-18								12-31-17								03-31-17
(Averege in thouhand of AR$)		Capital				Rate				Capital				Rate				Capital				Rate
Interest-Earning Assets			158,676,684				19.2	%			140,720,279				18.7	%			96,291,026				21.1	%
Interest-Bearing Liabilities			124,753,037				8.9	%			105,396,185				8.0	%			80,036,663				8.7	%
NIM without foreign exchange differences			12.34	%							12.56	%							14.03	%

The net interest margin (NIM) excluding the results for foreign exchange difference decreased 22 bp in the quarter, from 12.56% to 12.34%, with a decline of 20 bp in the local currency and an increase of 26 bp in the USD balance.

The total NIM had a slight negative impact cost due to the currency mix, a consequence of a greater activity in USD compared to AR$.

The interest rate for time deposits in pesos registered an increase of 240 bp in the quarter due to their short term duration while the interest rates for loans increased by 140 bp, reflecting a higher average duration.

The following table shows return on assets and cost of liabilities by currency: in pesos and dollars.

 

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Interest-Earning Assets & Interest-Bearing										Quarter ended
Liabilities $		03-31-18								12-31-17								03-31-17
(Average in thouhand of AR$)		Capital				Rate				Capital				Rate				Capital				Rate
Interest-Earning Assets			116,214,892				25.3	%			104,306,132				24.2	%			79,754,949				24.9	%
Public Bonds			17,074,738				27.1	%			14,254,745				26.8	%			10,195,793				25.7	%
Loans			98,088,733				25.1	%			82,344,943				23.7	%			63,688,772				24.8	%
Other interest-earning assets			1,051,420				21.9	%			7,706,444				24.5	%			5,870,383				24.6	%
Interest-Bearing Liabilities			75,384,640				14.5	%			65,213,962				12.9	%			54,803,079				12.6	%
Saving Accounts			26,907,592				0.2	%			24,329,949				0.2	%			19,404,565				0.2	%
Time Deposits			40,548,320				21.5	%			33,970,213				19.9	%			32,364,738				19.2	%
Current accounts with interest			5,420,745				21.7	%			4,027,291				22.4	%			389,255				15.4	%
Debt Securities			1,902,136				26.2	%			1,033,559				25.7	%			1.670,383				23.4	%
Other interest-bearing liabilities			2,121,619				25.5	%			1,852,950				24.8	%			974,137				21.8	%
NIM $			15.81	%							16.05	%							16.58	%
Interest-Earning Assets & Interest-Bearing										Quarter ended
Liabilities USD		03-31-18								12-31-17								03-31-17
(Averege in thouhand of AR$)		Capital				Rate				Capital				Rate				Capital				Rate
Interest-Earning Assets			42,461,792				3.3	%			36,414,148				2.8	%			16,536,078				2.6	%
Public Bonds			10,059,974				3.9	%			4,358,378				3.0	%			2,882,160				3.0	%
Loans			31,427,615				3.2	%			25,623,737				2.7	%			11,992,220				2.8	%
Other interest-earning assets			974,023				1.2	%			6,432,032				3.3	%			1,661,698				0.5	%
Interest-Bearing Liabilities			47,852,625				0.2	%			40,207,601				0.1	%			25,233,584				0.2	%
Saving Accounts			38,552,881				0.0	%			31,743,308				0.0	%			18,699,704				0.0	%
Time Deposits			8,279,777				0.8	%			7,067,956				0.6	%			6,151,515				0.4	%
Current accounts with interest			642,250								1,122,036				0.2	%			0				0.0	%
Other interest-bearing liabilities			377,717				2.8	%			274,301				2.7	%			382,365				4.6	%
NIM USD			2.83	%							2.35	%							1.76	%

 

 

Income from Public and Private

Securities

 

 

 

Income from securities and short-term Investments		Quarter ended												D %  Quarter ended 03-31-18 vs quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Income Securities and short term inv.			1,275,235				995,171				597,346				28.1	%			113.5	%
Income Interest Margin			1,068,345				779,942				450,723				37.0	%			137.0	%
Bills and Notes from the Central Bank			1,023,584				769,870				373,836				33.0	%			173.8	%
Other bonds			44.761				10,072				76,887				344.4	%			-41.8	%
Income Financial Operations			72,765				126,916				114,066				-42.7	%			36.2	%
Bills and Notes from the Central Bank			22,570				34,043				18,608				-33.7	%			-41.8	%
Other bonds			50,196				92,873				95,458				-46.0	%			-47.4	%
Other fixed income securities			134,125				88,314				32,557				51.9	%			312.0	%
CER adjustment			44,416				96,200				95,932				-53.8	%			-53.7	%

The gross financial margin generated by assets of the public sector increased by 28.1% and 113.5% compared to the previous quarter and to the first quarter of 2017, respectively, mainly as a consequence of higher results generated by the Central Bank’s bills portfolio, basically due to a higher holding of these assets on average and higher interest rates.

During the quarter. The Bank sold the Bogar 20 portfolio, an inflation-adjusted bond, which totaled AR$ 1.5 billion as of December 2017.

 

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Net Income from Services

 

 

 

Net income from services		Quarter ended												D %  Quarter ended 03-31-18 vs quarter ended
(in thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Net income from services			859,786				848,740				631,398				1.3	%			36.2	%
Service charge income			2,480,667				2,421,613				1,896,614				2.4	%			30.8	%
Service charges on deposits accounts			858,258				743,821				528,901				15.4	%			62.3	%
Credit cards and operations			702,739				732,608				629,466				-4.1	%			11.6	%
Insurance			167,575				161,271				168,532				3.9	%			-0.6	%
Capital markets and securities activities			15,383				22,231				16,783				-30.8	%			-8.3	%
Fees related to foreign trade			94,785				94,424				67,511				0.4	%			40.4	%
Safety deposit box			100,082				94,965				74,202				5.4	%			34.9	%
Services of collection			84,467				66,988				35,394				26.1	%			138.6	%
Generated by subsidiaries			113,398				99,247				70,900				14.3	%			59.9	%
Other fees			343,980				406,058				304,924				-15.3	%			12.8	%
Services Charge expense			(1,620,881	)			(1,572,873	)			(1,265,216	)			3.1	%			28.1	%

Net income from services increased 1.3% compared to the previous quarter and 36.2% compared to the first quarter of 2017.

Service charge income grew 2.4% and 30.8% during the same periods, driven by an 15.4% increase in charges generated by deposit accounts as well as a 26.1% in charges generated by collection services, while credit cards fees decreased by 4.1% due to the decrease in the merchant discount rate, which was partially offset by a higher volume of activity. BBVA Francés increased its market share in consumption with VISA and Mastercard cards to 13.1% as of March 31, 2018, compared to 12.7% in December 2017.

Service charge expenses increased 3.1% during the quarter as the decline in the fees paid for our loyalty programs (-16%) were partially offset by higher processing fees.

 

 

Administrative Expenses

 

 

 

Administrative expenses		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Administrative expenses			(3,663,781	)			(3,550,414	)			(2,912,140	)			3.2	%			25.8	%
Personnel expenses			(2,082,707	)			(2,115,689	)			(1,655,893	)			-1.6	%			25.8	%
General expenses			(1,581,074	)			(1.434,725	)			(1,256,247	)			10.2	%			25.9	%
Electricity and Communications			(64,192	)			(46,873	)			(51,758	)			36.9	%			24.0	%
Advertising and Promotion			(112,503	)			(113,582	)			(82,019	)			-0.9	%			37.2	%
Fees and external administrative services			(61,674	)			(62,822	)			(42,444	)			-1.8	%			45.3	%
Taxes			(380,362	)			(311,393	)			(277,609	)			22.1	%			37.0	%
Organization and development expenses			(30,221	)			(31,274	)			(24,827	)			-3.4	%			21.7	%
Amortizations			(168,179	)			(143,360	)			(97,017	)			16.9	%			73.4	%
Rents			(151,107	)			(130,098	)			(111,547	)			16.1	%			35.5	%
Maintainance, conservation and repairs			(159,145	)			(145,242	)			(133,842	)			9.6	%			18.9	%
Security Service			(77,006	)			(78,239	)			(71,101	)			-1.6	%			8.3	%
Carriage of valuables			(163,315	)			(178,757	)			(164,900	)			-8.6	%			-1.0	%
Other			(213,370	)			(192,530	)			(199,183	)			10.8	%			7.1	%
Total Employees			6,075				6,082				6,219				-0.1	%			-2.3	%
Total Branches			251				251				252				0.0	%			-0.4	%

Administrative expenses increased 3.2% during the previous three months and 25.8% compared to the first quarter of 2017.

 

- 7 -

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Personnel expenses decreased by 1.6% during the quarter. Although this line item already includes an advance for the salary increase corresponding to 2018, the decrease compared to the previous quarter is explained by the higher charges recorded in the 2017 fourth quarter as a result of the application of the trigger clause due to the difference between the 2017 24.8% inflation rate and the 19.5% cap set in the labor agreement with the union and other compensation originating from such agreement and paid during the period.

General expenses increased 10.2% compared to the previous quarter and 25.9% compared to the same quarter of 2017.

During the period, there were higher charges, mainly in municipal and debit and credit taxes (+22.1% vs previous quarter), due to higher volume of income and level of activity.

Other line items that performed above the average were amortizations, including technological investment and the revaluation of the Bank’s real estate assets, as well as electricity and communications, due to the increase in rates.

The carriage of valuables line continued to show a good evolution (-8.6%), as a result of improvements in the efficiency of processes introduced since the first half of 2017.

The efficiency ratio in the quarter reached 57.4%, showing an improvement of 150 bp compared to the previous quarter restated to IFRS.

 

 

Income from Equity Investments

 

 

Income from equity investments shows net income from related companies that are not consolidated. Over the first quarter of 2018, there was a AR$ 39.9 million profit that was recorded mainly due to the equity investment in PSA Finance, Rombo Compañía Financiera and Consolidar Seguros.

 

- 8 -

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Balance and Activity

 

 

 

 

Loan portfolio

 

 

 

														D % Quarter ended 03-31-18 vs
Net loans		Quarter ended												quarter ended
(in thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Private & Financial sector loans in $			105,211,430				99,281,543				67,789,871				6.0	%			55.2	%
Advances			13,597,142				11,693,061				9,667,107				16.3	%			40.7	%
Discounted and purchased notes			16,630,923				17,160,671				9,472,353				-3.1	%			75.6	%
Consumer Mortgages			5,881,749				4,457,821				1,924,583				31.9	%			205.6	%
Car secured loans			4,844,257				4,539,300				3,272,969				6.7	%			48.0	%
Personal loans			19,376,800				16,638,201				10,737,654				16.5	%			80.5	%
Credit cards			30,062,625				28,544,070				21,911,156				5.3	%			37.2	%
Loans to financial sector			4,846,056				4,555,025				2,659,191				6.4	%			82.2	%
Other loans			9,197,815				11,125,057				7,890,462				-17.3	%			16.6	%
Other receivables			3,627,055				3,152,815				2,170,073				15.0	%			67.1	%
Unaccrued interest			(658,285	)			(593,669	)			(315,649	)			10.9	%			108.5	%
Less: Allowance for loan losses			(2,194,707	)			(1,990,809	)			(1,600,028	)			10.2	%			37.2	%
Private & Financial sector loans in FX			34,140,656				28,745,750				12,947,463				18.8	%			163.7	%
Advances			8,223				14,203				7,233				-42.1	%			13.7	%
Discounted and purchased notes			2,179,343				1,660,474				858,838				31.2	%			153.8	%
Credit cards			1,812,303				1,600,754				1,301,292				13.2	%			39.3	%
Loans to financial sector			103,379				94,089				128,411				n/a				n/a
Other loans			30,271,696				25,552,454				10,755,116				18.5	%			181.5	%
Other receivables			119,327				125,002				47,638				-4.5	%			n/a
Less: Allowance for loan losses			(353,615	)			(301,226	)			(151,065	)			17.4	%			134.1	%
Total Private Loans			139,352,086				128,027,293				80,737,334				8.8	%			72.6	%
Total loans to public sector			142				218				196				-34.9	%			-27.6	%
Net Total Loans net of other non resident loans			139,352,228				128,027,511				80,737,530				8.8	%			72.6	%
Other non resident loans (*)			84,600				63,394				34,064				33.5	%			-94.6	%
Net total loans			139,436,828				128,090,905				82,318,579				8.9	%			69.4	%

 

(*)	Correspond to balances related to overnight operations celebrated with foreign correspondent banks

As of March 31, 2018, the private sector loan portfolio totaled to AR$ 139.4 billion, increasing 8.9% during the quarter and 69.4% in the last twelve months. BBVA Frances maintained its 8.3% market share of loans during the quarter and increased 62 bp compared to the first quarter of 2017, including loans from associated companies (VW Financial Services, PSA Finance and Rombo Compañia Financiera).

Peso and dollar-denominated loans grew during the first quarter by 6% and 8.8%, respectively.

The performance of finance to individuals was a highlight during the period, increasing 11.1% during the quarter and 58.3% compared to the first quarter of 2017, driven mainly by the increase in mortgages and in personal loans, which grew 31.9% and 16.5% during the quarter and 205.6% and 80.5% in the year, respectively.

Commercial loans grew 7.3% in the last three months and 78.4% compared to the previous year, boosted by foreign currency loans (export firms) that increased 19.1% and 179.2%, respectively. Whereas in local currency it remained at similar level compared to the previous quarter, due to lower seasonal growth of this type of loans and amortization of the productive investment loans portfolio. Compared to the first quarter of the previous year, it grew 47.4%.

 

- 9 -

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Public Sector Exposure

 

 

 

														D % Quarter ended 03-31-18 vs
Public Sector Exposure		Quarter Ended												quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Public Sector - National Government			9,929,970				11,331,010				6,467,265				-12.4	%			53.5	%
Public Sector - National Governments $			221,490				2.247,306				2,959,792				-90.1	%			-92.5	%
Public Sector - National Government USD			5,051,412				4,743,166				3,507,473				6.5	%			44.0	%
Repo National Goverment			4,657,069				4,340,538				—				7.3	%			n/a
Bills and Notes from Central Bank			11,671,911				15,286,917				7,256,189				-23.6	%			60.9	%
Public Sector exposure $			11,893,400				17,534,223				10,215,981				-32.2	%			16.4	%
Public Sector exposure USD			296,606				647,131				481,995				-54.2	%			-38.5	%
Total Public Sector exposure			21,601,881				26,617,927				13,723,454				- 18.8	%			57.4	%
Private debt			296,606				647,131				481,995				-54.2	%			-38.5	%
Total Public and Private exposure			21,898,487				27,265,058				14,205,449				-19.7	%			54.2	%

Exposure to the Public Sector totaled AR$ 21.6 billion by the end of the year, showing a decrease of 18.8% or AR$ 5 billion, due to a lower portfolio of BCRA instruments for AR$ 3.5 billion and the sale of the Bogar 20 portfolio for AR$ 1.5 billion.

As of March 31, 2018, exposure to the National Government’s public debt totaled AR$ 9.9 billion, which accounted for 4.4% of the Bank’s total assets compared to 5.3% at the end of the previous quarter; 98% of such portfolio corresponds to investments in short term foreign currency assets with an average term of six months.

The exposure of the Central Bank bills and notes portfolio, amounted to AR$ 11.7 billion with an average term of one month.

 

 

Portfolio Quality

 

 

 

Asset quality ratios		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Non-performing loans (1)			1,017,379				873,007				680,628				16.5	%			49.5	%
Allowance for loan losses			(2,548,322	)			(2,292,035	)			(1,751,093	)			11.2	%			45.5	%
Non-performing loans/net total loans			0.72	%			0.67	%			0.81	%			7.0	%			-11.5	%
Non-performing priv. loans/net priv. loans			0.72	%			0.67	%			0.81	%			7.0	%			-11.5	%
Allowance for loan losses/non-performing loans			250.48	%			262.54	%			257.28	%			-4.6	%			-2.6	%
Allowance for loan losses/net total loans			1.79	%			1.76	%			2.08	%			2.1	%			-13.8	%

 

(1)	Non-performing loans include: all loans to borrowers classified as “Problem”. “Deficient Servicing”. “High Insolvency Risk”. “Difficult Recovery”. “Irrecoverable” and “Irrecoverable for Technical Decision” according to the new Central Bank debtor classification system.

As of March 31, 2018, the asset quality ratio (non-performing loans/total loans) was 0.72%, with a coverage ratio (allowances/non-performing loans) of 250.5%.

The ratio increased 5 bp compared to the previous quarter due to some deterioration in the retail portfolio, whereas compared to the first quarter of 2017, the ratio reflected an improvement mainly due to the significant growth of the loan portfolio. The cost of risk reached 1.32%, a reduction of 1 bp compared to the previous quarter.

The following table shows the evolution of allowances for loan losses.

 

- 10 -

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Evolution of provisions		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Balance at the beginning of the quarter			2,292,035				2,141,948				1,615,152				7.0	%			41.9	%
Increase/decrease			526,034				383,121				318,218				37.3	%			65.3	%
Increase/decrease-Foreign exchange diff.			22,159				24,445				(4,188	)			-9.4	%			629.1	%
Aplications / Reversals			(291,906	)			(257,479	)			(178,089	)			13.4	%			63.9	%
Balance at the end of the quarter			2,548,322				2,292,035				1,751,093				11.2	%			45.5	%

 

 

Deposits

 

 

 

Total deposits		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				31-12-17				31-03-17
Deposits $ denominated			102,343,549				99,585,301				82,194,610				2.8	%			24.5	%
Current accounts			24,518,461				24,815,717				21,468,037				-1.2	%			14.2	%
Saving accounts			31,971,917				35,134,581				23,201,860				-9.0	%			37.8	%
Time deposits			43,664,919				37,297,630				35,149,171				17.1	%			24.2	%
Peso denominated			40,678,320				36,829,241				34,949,912				10.5	%			16.4	%
CER adjusted time deposits			2,986,599				468,439				199,259				537.6	%			n/a
Investment Accounts			—				—				85,194				n/a				n/a
Other			2,188,252				2, 337,323				2,290,348				-6.4	%			-4.5	%
Deposits FX denominated			57,609,134				54,349,370				40,573,257				6.0	%			42.0	%
Current accounts			145,994				163,881				89,817				-10.9	%			62.5	%
Saving accounts			46,680,073				43,913,177				23,779,226				6.3	%			96.3	%
Time deposits			8,653,393				8,032,972				5,961,593				7.7	%			45.2	%
Other			2,129,674				2,239,340				10,742,621				-4.9	%			-80.2	%
Tolal deposits			159,952,683				153,934,671				122,767,867				3.9	%			30.3	%

As of March 31, 2018 total deposits amounted to AR$ 160 billion, growing 3.9% and 30.3% during the quarter and in the last twelve months, respectively, both in line with the market.

Sight accounts remained at similar level compared to the previous quarter, while it grew 50.7% in the last twelve months. On the other hand, time deposits grew 15.4% during the quarter and 27.3% in the year.

Deposits in pesos grew 2.8% in the quarter. Transactional deposits declined 5.8% mainly due to the seasonal decrease in savings accounts after the significant growth occurred in December as a consequence of the half-annual extra salary, while time deposits grew 17.1% due to higher balances in both retail and corporate deposits, with an outstanding performance of UVAs time deposits.

It is important to mention that even though BBVA Francés had launched the UVAs time deposits during 2017, these started to show a better performance since the first quarter of 2018, represented 7% of total time deposits in AR$.

Deposits in foreign currency grew 6% during the quarter reflecting the peso devaluation, and they account for 36% of the Bank’s total deposits.

 

- 11 -

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Other Sources of Funds

 

 

 

Other funding sources		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Lines from other banks			829,574				687,495				311,276				20.7	%			166.5	%
Senior Bonds			1,839,184				2,055,599				1,644,356				-10.5	%			11.8	%
Total other funding sources			2,668,758				2,743,094				1,955,632				-27	%			36.5	%

 

 

Mismatch of CER/UVA

 

 

 

		Quarter ended												D % Trim. finalizado 31/03/18 vs Trim.
(in thousands of pesos except percentages)		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
CER/UVA adjusted assets			6,034,055				4,956,165				2,616,315				21.7	%			130.6	%
- Public bond portfolio			446,478				1,589,929				2,418,040				-71.9	%			-81.5	%
- Private sector loans			4,957,098				2,883,960				146,371				71.9	%			3286.7	%
- Other credits			630,479				482,276				51,904				30.7	%			1114.7	%
CER/UVA adjusted deposits			3,013,094				479,195				196,426				528.8	%			1434.0	%
CER/UVA mismatch			3,020,961				4,476,970				2,419,889				-32.5	%			24.8	%

The mismatch between assets and liabilities adjustable for inflation decreased by AR$ 1,5 billion or 32.5% in the quarter, as a result of the sale of the Bogar 20 and the increased volume of UVAs deposits AR$ 2,5 million.

 

 

Capitalization

 

 

 

Central Bank Requirements		Quarter ended												D %  Quarter ended 03-31-18 vs quarter ended
(In thousands of pesos)		03-31-18				12-31-17				03-31-17				31-12-17				31-03-17
CB Minimum Capital Requirements			17,026,890				15,653,816				11,206,375				8.8	%			51.9	%
Allocated to Asset at Risk			14,042,621				12,726,716				8,785.277				10.3	%			59.8	%
Market Risk			241,847				369,204				270,773				-34.5	%			-10.7	%
Operational Risk			2,742,422				2,557,896				2,150,325				7.2	%			27.5	%
Bank Capital			32,586,251				4,834,539				4,056,041				574.0	%			703.4	%
Ordinary Capital Level 1			32,314,108				369,204				270,773				8652.4	%			11834.0	%
Dedusctions Ordinary Capital Level 1			(2,203,850	)			2,557,896				2,150,325				-186.2	%			- 202.5	%
Capital Level 2			1,700,390				1,578,420				1,169,850				7.7	%			45.4	%
Aditional Capital Level 1			775,603				329,019				465,093				135.7	%			66.8	%
Excess over Required Capital			15,559,361				(10,819,277	)			(7,150,334	)			-243.8	%			-317.6	%
Excess as % of the capital required			91.4	%			-69.1	%			-63.8	%			-232.2	%			-243.2	%
Risk weighted assets			207,723,520				191,039,187				136,881,200				8.7	%			51.8	%
Capital Ratio (Central Bank rules)			15.7	%			14.7	%			13.8	%			7.0	%			14.0	%
TIER I			14.5	%			13.7	%			12.6	%			6.0	%			15.3	%

BBVA Francés continues to show an adequate level of solvency. As of March 31, 2018 the capital ratio was 15.7%, 100 bp higher compared to the ratio of December 31, 2017, mainly due of the impact of the real estate revaluation (+200 bp) partially offset by a higher level of deductions, as a consequence of the incorporation of the liabilities balance of the deferred tax (-65 pb).

The ratio Tier 1 was 14.5%, and the excess of capital over the minimum required by the Central Banks of AR$ 15.6 billion.

 

- 12 -

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Additional Information

 

 

 

		Quarter ended												D % Quarter ended 03-31-18 vs quarter ended
		03-31-18				12-31-17				03-31-17				12-31-17				03-31-17
Exchange rate $/USD			20.14				18.77				15.38				7.3	%			31.0	%
Quarterly CER adjustment			7.0	%			5.0	%			4.6	%			41.3	%			51.6	%

 

 

Conference Call

 

 

On Monday June 4, 2018 at 12:30 p.m. (Argentine time) a conference call will be held to comment on the quarter’s results.

Those who wish to participate should contact the following numbers:

0800-444-2930 (from Argentina)

+ 1-844-413-3973 (from United States)

+ 1412-902-6509 (from other countries)

Conference ID: BBVA.

To access the webcast:

http://webcastlite.mziq.com/cover.html?webcastId=84b6e4df-9417-4325-9532-710beca472f6

To request the Replay, please call

+1-877-344-7529 (from United States)

+1-412-317-0088 (from other countries)

The replay will be available until June 14, 2018.

Replay Access code: 10119533

 

 

Internet

 

 

This Press Release is available on the web page of BBVA Francés.

www.bbvafrances.com.ar

 

 

Contacts

 

 

Cecilia Acuña

Investor Relations

(5411) 4341-5036

ceciliaviviana.acuna@bbva.com

Diego Cesarini

Financial Management and Investor Relations

dcesarini@bbva.com

 

- 13 -

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BBVA Banco Francés S.A. and subsidiaries

BALANCE SHEET (in thousands of pesos)

Communication “A” 6114

 

		03-31-18				12-31-17				03-31-17
Cash and due from banks			36,917,931				38,235,942				40,964,989
Debt securities at fair value through other comprehensive income			1,162,994				5,798,747				1,391,025
Derivatives			168,314				142,745				81,098
Repurchase agreements			7,144,101				6,329,939				9,772,474
Other financial assets			7,142,873				2,631,498				8,018,682
Loans and other financial intermediation			139,436,828				128,090,905				82,318,579
Loans to the private & financial sector			139,436,686				128,090,687				82,318,424
Advances			13,605,365				11,707,264				9,674,340
Discounted and purchased notes			18,810,266				18,821,145				10,331,191
Secured with mortgages			5,881,749				4,457,821				1,924,583
Car secured loans			4,844,257				4,539,300				3,272,969
Personal loans			19,376,800				16,638,201				10,737,654
Credit cards			31,874,928				30,144,824				23,212,448
Loans to financial sector			4,949,435				4,649,114				2,787,602
Other (*)			39,554,111				36,740,905				20,226,668
Other receivables			3,746,382				3,277,817				2,217,711
Less: Unaccrued interest			(658,285	)			(593,669	)			(315,649	)
Less: Allowance for loan losses			(2,548,322	)			(2,292,035	)			(1,751,093	)
Public Sector loans			142				218				155
Other debt securities			15,578,336				16,298,649				12,534,538
Financial assets pledged as collateral			3,925,255				3,250,464				2,105,339
Current income tax assets			1,375				9,340				251,472
Investments in equity instruments			145,256				127,287				80,388
Investments in associates and joint ventures			921,199				889,436				901,008
Property, plant and equipment			9,024,411				9,419,862				8,352,186
Intangible assets			448,944				436,120				331,354
Deferred income tax asset			57,407				58,524				46,300
Other non financial assets			1,457,379				1,530,260				1,492,240
Non-current assets held for sale			741,840				196,379				—
Total Assets			224,274,443				213,446,097				168,641,672
Deposits			159,952,683				153,934,671				122,767,867
Current accounts			24,664,455				24,979,598				21,557,854
Saving accounts			78,651,990				79,047,758				46,981,086
Time deposits			52,318,312				45,330,652				41,110,764
Investment Accounts			—				—				85,194
Rescheduled deposits CEDROS			1,951				1,951				1,951
Other deposits			4,315,975				4,574,712				13,031,018
Derivatives			245,444				229,775				29,794
Repurchase agreements			579,184				285,410				—
Other financial liabilities			16,497,979				14,006,153				14,760,011
Financing received the BCRA and other financial insitutions			829,574				687,495				311,276
Corporate bonds issued			1,839,184				2,055,599				1,644,356
Current income tax liabilities			884,250				1,469,886				231,640
Provisions			3,268,894				2,127,857				2,003,399
Deferred income tax liabilites			514,787				505,078				856,326
Other non-financial liabilities			7,492,249				7,741,277				6,218,958
Total Liabilities			192,104,228				183,043,201				148,823,627
Total Stockholders’ equity			31,645,338				30,094,865				19,538,595
Equity investments			524,877				308,031				279,450
Total liabilities + stockholders’ equity			224,274,443				213,446,097				168,641,672

 

(*)	Includes balances related to overnight operations celebrated with foreign correspondent banks

 

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BBVA Banco Francés S.A. and subsidiaries

INCOME STATEMENT (in thousands of pesos)

Communication “A” 6114

 

		03-31-03				12-31-17				03-31-17
Financial income			7,914,035				6,279,947				5,296,190
Interest on loans to the financial sector			246,176				227,912				139,247
Interest on overdraft			917,500				896,504				769,018
Interest on documents			865,226				749,754				463,665
Interest on mortgages loans			142,561				113,303				87,054
Interest on car secured loans			316,562				267,971				195,269
Interest on credit card loans			1,671,465				1,510,119				1,465,047
Interest on financial leases			124,947				102,154				97,430
Interest on personal loans			1,355,898				1,206,194				822,971
Interest on other loans			651,892				564,288				448,378
From other banking receivables from financial intermediation			1,822				2,547				548
Interest on Government Guaranteed Loans Decree 1387/01			—				—				1,081
Income from Securities and Short Term Investments			1,005,015				212,482				501,744
CER adjustment			44,416				96,200				95,932
UVA adjustment			287,997				92,247				4,353
Other			282,558				238,272				204,453
Financial expenses			(2,808,837	)			(2,134,194	)			(1,711,106	)
Interest on Current Account Deposits			(288,583	)			(227,419	)			(14,811	)
Interest on Saving Account Deposits			(10,820	)			(10,310	)			(7,760	)
Interest on Time Deposits			(2,074,916	)			(1,697,659	)			(1,533,688	)
Interest on interfinancing received loans			(6,892	)			(4,319	)			(8,848	)
Interest on other financing from the financial institutions			(10,001	)			(2,285	)			(25	)
Interest on other liabilites from financial intermediation			(233,765	)			(130,112	)			(120,992	)
Other interest			(40	)			(67	)			(422	)
UVA adjustment			(158,404	)			(12,062	)			(1,915	)
Other			(25,416	)			(49,961	)			(22,645	)
Net income from services			679,719				638,005				555,009
Net operating income			2,222,207				1,892,740				1,862,959
Net income from measurement of financial instruments at fail value thr			309,176				827,170				130,666
Result from assets at amortised cost			1,367				—				—
Foreign exchange difference			695,250				727,711				305,895
Other operating income			1,742,608				646,850				1,806,624
Provision for loan losses			(526,194	)			(308,991	)			(380,226	)
Operating income			(5,818,133	)			(4,734,803	)			(5,268,476	)
Personnel expenses			(1,957,189	)			(2,005,951	)			(1,559,287	)
Administrative expenses			(1,508,192	)			(1,369,329	)			(1,231,009	)
Depreciations and amortizations			(168,821	)			(150,659	)			(97,641	)
Depreciation on Intangible assets			(30,221	)			(31,274	)			(24,827	)
Other operating expenses			(2,153,710	)			(1,177,590	)			(2,355,712	)
Income from associates and joint ventures			39,877				52,077				72,856
Net income before income tax from continuing operations			2,228,868				1,993,772				807,432
Income tax from continuing operations			(662,724	)			(78,771	)			(243,885	)
Net income Including non-controlling shareholders			1,566,144				1,915,001				563,547
Net income attributable to non-controlling shareholders			20,846				9,956				8,372
Net income			1,545,298				1,905,045				555,175
Other comprehensive income			5,175				16,213				(6,414	)
Total comprehensive net income			1,550,473				1,921,258				548,761

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

				BBVA Banco Francés S.A.
Date: June 1, 2018				By:		/s/ Ernesto Gallardo Jimenez
						Name: Ernesto Gallardo Jimenez
						Title: Chief Financial Officer