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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 November 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 third quarter earnings for fiscal year 2018.

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Item 1

 

LOGO

Buenos Aires, November 23, 2018—BBVA Francés (NYSE: BFR.N; BCBA: FRA.BA;

LATIBEX: BFR.LA) reports consolidated third quarter results for the

January-December 2018 fiscal year.

The consolidated financial statements as of September 30, 2018 and as of June 30, 2018 are presented in accordance with Communication “A” 6114 of the Central Bank of Argentina (BCRA) (“financial statements under IFRS regulations”). For comparative purposes, the figures of the third quarter of 2017 are presented in accordance with IFRS.

 

 

Highlights of the Quarter

 

 

 

  •  

BBVA Francés’ net income amounted to AR$ 3,007.8 million for the third quarter of 2018, 41.6% higher than the net income registered for the second quarter of 2018 and 117.7% compared to the third quarter of 2017, restated for comparative purposes.

 

  •  

The return on average assets (ROA) was 4% and the return on average equity (ROE) was 34.8%, compared to 3.5% and 26.4%, in the previous quarter, respectively.

 

  •  

Net operating income amounted to AR$ 10,315.9 million, increasing by 27.2% compared to the second quarter of 2018, and by 71.4% compared to the third quarter of 2017. Operating expenses amounted to AR$ 6,185.4 million, showing an increase of 18.7% and 48.9% compared to such periods, respectively.

 

  •  

In terms of activity, the private sector loan portfolio increased by 10.2% in the third quarter, and by 61.2% in the last twelve months, reaching 8.38% market share, registering an increase of 33 bps compared to the market share of September 2017.

 

  •  

BBVA Francés maintains good asset quality indicators in an environment that shows certain signs of deterioration. As of September 30, 2018, the asset quality ratio (Non-Performing Loans/Total loans) stood at 0.99%, compared to 0.86% in the second quarter of 2018, with a coverage ratio of 220.5% (Total allowances/NPL).

 

  •  

Total deposits increased by 28.2% during the quarter and by 90.5% since the end of the third quarter of 2017.

 

  •  

As of September 30, 2018, BBVA Francés had a total consolidated capital ratio of 14.1%, which represents an excess of AR$ 15,295.1 million or 71.5% over the minimum required. The Tier I ratio reached 12.9%.

 

  •  

As of September 30, 2018, liquid assets accounted for 52.1% of the bank’s total deposits.

 

  •  

The bank continued to increase its client base, reaching a total of 2.9 million clients.

 

 

Other events

 

 

 

  •  

On July 5, 2018 BBVA Francés sold the properties located at Reconquista 40, Bolivar 501, Maipu 356 (unit 16), Perón 362, México 628 (unit 1) and Reconquista 281, to REPAR S.A, all of which are located in the City of Buenos Aires.

 

  •  

On October 30, 2018, BBVA Francés notarized its headquarters offices, Torre BBVA, located at Av. Leandro N. Alem 815, Buenos Aires. As a consequence of such notarization, USD 4.8 million was paid.

 

  •  

On November 8, 2018, BBVA Francés issued its Series 25 UVAs bond for AR$ 784.3 million, with 24 months maturity and 9.5% fixed interest rate payable quarterly.

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Regulatory Changes

 

 

 

  •  

On June 18, 2018 the Central Bank of Argentina (BCRA), through its Communication ”A” 6526, increased the minimum cash balance requirement in two tranches, by 3% since June 21, 2018 and by another 2% since July 18, 2018. Integration with Treasury bonds, maturing on November 2020 at a rate of 26% is allowed.

Subsequently, such requirement was increased on other two occasions, by 3% on July 23, 2018 through BCRA’s Communication “A” 6533, and by another 3% on August 16, 2018, through Communication “A” 6550. In both cases, integration shall be in cash and shall not yield interests.

The BCRA then increased the minimum cash requirements on three occasions, by 5% on September 1, 2018, which could be integrated with Leliq/Nobac, by another 5% on September 16, 2018, which could be only integrated in cash and not yield interests for savings and checking accounts yet could be integrated with Leliq/Nobac only in the case of time deposits, and by an additional 5% on October 1, 2018, which could be integrated with LeliqINobac only in the case of time deposits.

 

  •  

IAS 29, requires that financial statements of an entity whose functional currency is the currency of a hyperinflationary economy, whether they are based on a historical cost approach or a current cost approach, shall be restated for changes in the general pricing power of the functional currency. In order to determine if an economy is hyperinflationary in accordance with IAS 29, the Standard provides a number of qualitative factors as well as a quantitative factor (whether the cumulative inflation rate over three years approaches or exceeds, 100%.

As a result of the increase in inflation during the first months of 2018, the Argentine economy is considered as hyperinflationary. Therefore, IAS 29 should be applied in connection with annual financial statements or interim financial statements ending after July 1, 2018. Likewise, figures for the past periods presented for comparative purposes should be also be restated.

However, as of the date of these financial statements, the Decree 664/03 from the Executive Branch and Communication “A” 3921 from the BCRA are in effect, preventing the filing of financial statements adjusted for inflation. Therefore, given this decree and the accounting framework established by the BCRA, BBVA Francés has not applied IAS 29 in the preparation of these financial statements.

 

 

Economic Environment

 

 

 

          Quarter ended  

Main Macroeconomic figures

   09-30-18     06-30-18     09-30-17  

GDP

   var % y/y      n/d       -4.2 %      3.8 % 

Inflation (1) End of period

   var % y/y      40.5 %      29.5 %      23.8 % 
   var % q/q      14.1 %      8.8 %      5.1 % 

CER

   Quarterly adjustment      10.1 %      7.4 %      4.3 % 

Exchange Rate

   Pesos x US$      40.90       28.86       17.31  

Reserves

   US$      49,003       61,881       50,237  

Fiscal Balance

   Primary - billion of $      (47,490 )      (74,824 )      (78,093 ) 

Trade Balance

   US$ (billion)      (1,589 )      (2,492 )      (2,544 ) 

Total Private Loans

   var % q/q      11.1 %      14.9 %      12.5 % 
   var % y/y      58.7 %      60.7 %      48.6 % 

Total Private Deposits

   var % q/q      19.0 %      18.6 %      3.8 % 
   var % y/y      66.9 %      45.5 %      36.6 % 

Interest rate

   Monetary policy (eop)      65.0 %      40.0 %      26.3 % 
   Badlar (weighted avg. quarterly)      37.1 %      27.1 %      20.7 % 

 

(1)

IPC National since 1Q17

The global economy continues to show positive signs, although in a context of increasing uncertainty. Global growth has continued in recent months, despite increased protectionism between the USA and China and the appreciation of the U.S dollar; which reflected an increasing in financial tension in emerging economies. The U.S. Federal Reserve System (in a greater extent) and the European Central Bank continue to make progress toward normalization of the monetary policy, representing a gradual tightening of monetary conditions, which will continue to put some pressure on these economies.

 

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In the domestic environment, the agreement reached between Argentina and the International Monetary Fund (IMF) in June 2018 did not restore confidence as expected and triggered a new round of capital outflows and strong depreciation of the peso during the third quarter of 2018, which only settled down after a renewed commitment to perform greater fiscal adjustments, which will aim to reach balance in 2019. In this context a new agreement with the IMF was reached, going from USD 50 billion to USD 56.7 billion and doubling the funds available for 2018 and 2019.

In addition, following the change in the BCRA President, the inflation-targeting plan was abandoned and a new monetary exchange system was established that seeks to keep the monetary base constant in nominal terms until June 2019 and establishes an exchange rate range of non-intervention, with limited intervention of the BCRA outside such range.

Year to date, the government has over-fulfilled its fiscal goals. The program with the IMF guarantees that Argentina will be able to fulfill its financial program this year with a roll-over of only 50% of the maturities of Letes in U.S. dollars and 100% of those denominated in pesos.

The economic activity was affected by the bad harvest due to the severe drought that occurred in the first months of the year and by the FX crisis. In the second quarter of 2018, GDP decreased 4.2% year-over-year, but the Monthly Estimator of Economic Activity (EMAE for its acronym in Spanish) with data up to August 2018 shows an incipient recovery in seasonally adjusted monthly variations that were positive in July (1.4%) and August (1.3%).

The Inflation rate increased since the end of the first quarter mainly due to the pass-through effect from the currency depreciation to prices. Inflation amounted to 14.1% in the period July-September, thus the National CPI accumulated a variation of 32.4% for the first nine months of 2018.

The labor market also begins to show the effects of a recession. The unemployment rate amounted to 9.6% in September 2018 compared to 7.2% in the fourth quarter of 2017.

In the third quarter of 2018, the trade balance reached a deficit of USD 1.6 billion, a contraction of 37% compared to the third quarter of 2017.

Due to the economy slowdown, the demand for credit has plunged. Thus, during the third quarter, the stock of loans to the non-financial private sector increased by 11.1% compared to the previous quarter and by 58.7% year-over-year, which implies a deceleration in comparison to the increase by 14, 9% and 60.7% of the second quarter for such periods, respectively.

Private sector deposits increased by 19.0% during the quarter and by 66.9% year-over-year, very similar to the second quarter, when private sector deposits increased by 18.6% and by 45.5% for such periods, respectively. It should be noted that deposits remain stable due to the limited impact of the FX situation on the financial sector.

 

 

Presentation of the Information

 

 

 

  •  

The consolidated financial statements as of September 30, 2018 and as of June 30, 2018 are 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 the third quarter 2017 are presented in accordance with IFRS.

 

  •  

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 (Francés Valores and Francés Administradora de Inversiones). As of the first quarter of 2018, the Bank’s share interest in PSA Finance is no longer disclosed on a consolidated basis but is recorded as “Investments in associates” (recorded under the proportional equity method), and the corresponding results are recorded as “Income from associates”, as with Rombo Compañia Financiera. As of September 25, 2018, the Bank’s share interest in Volkswagen Financial Services is no longer disclosed on a consolidated basis.

 

  •  

The balances in foreign currency as of September 30, 2018 were converted into pesos at the reference exchange rate published by the BCRA for such date (AR$ 40.8967/USD).

 

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  •  

The information in this press release may differ from the information published by the BBVA Group for Argentina, which is prepared according to IFRS 9 and the impact of inflation adjustment according to IAS 29.

 

 

Quarterly Results

 

 

 

           D % Quarter ended 09/30/18  
Condensed Income Statement (1)          Quarter ended           vs Quarter ended  

In thousands of pesos except EPS, ADS

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Net interest income

     6,564,330       6,018,130       3,452,178       9.1 %      90.2 % 

Net fee income

     1,855,906       756,103       754,664       145.5 %      145.9 % 

Net income of financial instruments

     138,510       (559,281 )      988,948       n/a       -86.0 % 

Result from assets at amortised cost

     12,774       (68,298 )      35       n/a       n/a  

Foreign exchange difference

     1,624,223       2,009,608       634,133       -19.2 %      156.1 % 

Other operating income

     1,152,946       759,728       785,157       51.8 %      46.8 % 

Provision for loan losses

     (1,032,752 )      (804,248 )      (596,238 )      28.4 %      73.2 % 

Net operating income

     10,315,937       8,111,742       6,018,877       27.2 %      71.4 % 

Personnel expenses

     (2,503,707 )      (1,929,968 )      (1,673,055 )      29.7 %      49.6 % 

Administrative expenses

     (1,826,091 )      (1,646,632 )      (1,285,047 )      10.9 %      42.1 % 

Depreciation and amortization of assets

     (219,784 )      (207.860 )      (166,418 )      5.7 %      32.1 % 

Other operating expenses

     (1,635,777 )      (1,428,480 )      (1,029,978 )      14.5 %      58.8 % 

Operating Expenses

     (6,185,359 )      (5,212,940 )      (4,154,498 )      18.7 %      48.9 % 

Operating income

     4,130,578       2,898,802       1,864,379       42.5 %      121.6 % 

Income from associates and joint ventures

     48,892       121,443       139,237       -59.7 %      -64.9 % 

Net income before income tax

     4,179,470       3,020,245       2,003,616       38.4 %      108.6 % 

Income tax from continuing operations

     (1,131,938 )      (866,387 )      (610,956 )      30.7 %      85.3 % 

Net income including non-controlling shareholders

     3,047,532       2,153,858       1,392,660       41.5 %      118.8 % 

Net income attributable to non-controlling shareholders

     39,691       29,938       11,174       32.6 %      255.2 % 

Net Income

     3,007,841       2,123.920       1,381,486       41.6 %      117.7 % 

Other comprehensive income

     (117,469 )      64,125       (40,009 )      n/a       193.6 % 

Total net income

     2,890,372       2,188,045       1,341,477       32.1 %      115.5 % 

Earnings per share (2)

     4.91       3.47       2.25       41.6 %      117.7 % 

Earnings per ADS (3)

     14.73       10.40       6.76       41.6 %      117.7 % 

 

(1)

Exchange Rate: $ 40.8967 = u$s 1

(2)

Assumes 612,659,638 ordinary shares.

(3)

Each ADS represents three ordinary shares

BBVA Francés’ net income amounted to AR$ 3,007.8 million for the third quarter of 2018, registering an increase of 41.6% compared to the second quarter of 2018 and of 117.7% compared to the third quarter of 2017.

The accumulated net income for the first nine months of the year amounted to AR$ 6,677.1 million, registering a return on equity of 27.4% and on assets of 3.4%.

 

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           D bp Quarter ended 09/30/18  
Main figures    Quarter ended     vs quarter ended  
     09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

ROA (Average Assets) (1)

     4.0 %      3.5 %      3.1 %      50       86  

Accumulated ROA

     3.4 %      3.1 %      2.4 %      36       106  

ROE (Average Shareholders’ Equity) (1)

     34.8 %      26.4 %      22.4 %      840       1,246  

Accumulated ROE

     27.4 %      23.5 %      18.1 %      394       930  

NIM (1)(2)

     11.6 %      11.6 %      12.0 %      6       (35 ) 

NIM with foreign exchange difference (1)(2)

     15.0 %      15.0 %      14.0 %      (3 )      96  

Efficiency ratio (3)

     46.7 %      49.5 %      54.9 %      (281 )      (822 ) 

Accumulated Efficiency ratio

     50.3 %      52.8 %      60.4 %      (250 )      (1,014 ) 

 

(1)

Annualized.

(2)

NIM: ((Net interest income + Gross income tax NII+ Cost of deposits insurance) + (Net income of financial instruments + Results from assets at amortised cost - Non deliverable forward )) / Interest Earning Assets

(3)

(Personnel and administrative expenses + Depreciations and amortizations) / ((Net interest income + Gross Income Tax + Cost of the deposits insurance) + (Fee income + Net income of financial instruments + Results from assets at amortised cost + FX Difference + Fees included in other operating income))

 

 

Net Operating Income

 

 

 

           D % Quarter ended 09/30/18 vs  
Net operating Income    Quarter ended     Quarter ended  

In thousands of pesos

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Net interest income

     6,564,330       6,018,130       3,452,178       9.1 %      90.2 % 

Net fee income

     1,855,906       756,103       754,664       145.5 %      145.9 % 

Net income of financial instruments

     138,510       (559,281 )      988,948       -124.8 %      -86.0 % 

Result from assets at amortised cost

     12,774       (68,298 )      35       -118.7 %      n/a  

Foreign exchange difference

     1,624,223       2,009,608       634,133       -19.2 %      156.1 % 

Other operating income

     1,152,946       759,728       785,157       51.8 %      46.8 % 

Provision for loan losses

     (1,032,752 )      (804,248 )      (596,238 )      28.4 %      73.2 % 

Net operating income

     10,315,937       8,111,742       6,018,877       27.2 %      71.4 % 

Net operating income amounted to AR$ 10,315.9 million, increasing by 27.2% compared to the second quarter of 2018 and by 71.4% compared to the third quarter of 2017.

As a clarification, a reclassification was performed during the third quarter due to the change in criteria regarding the deferral of credit card emission fees, which were previously recorded as net interest income and are now recorded as net fee income and other operating income.

The items that make up net operating income are disclosed in more detail below.

 

  •  

Net interest income

 

            D % Quarter ended  
Net Interest Income    Quarter Ended      09/30/18 vs Quarter ended  

(in thousands of pesos)

   09-30-18      06-30-18      09-30-17      06-30-18     09-30-18  

Interest Income

     12,299,911        9,525,300        5,245,596        29.1 %      134.5 % 

Loan interest income

     8,535,228        7,402,591        4,844,840        15.3 %      76.2 % 

Income from adjustments (CER/UVA)

     977,884        513,337        112,941        90.5 %      765.8 % 

Income from Public Securities

     2,092,036        1,187,403        84,426        76.2 %      n/a  

Others

     694,763        421,969        203,389        64.6 %      241.6 % 

Interest Expenses

     -5,735,581        -3,507,170        -1,793,418        63.5 %      219.8 % 

Interest Expenses

     -5,513,716        -3,250,544        -1,781,955        69.6 %      209.4 % 

Expenses from adjustments (CER/UVA)

     -221,865        -256,626        -11,463        -13.5 %      n/a  

Net Income Interest

     6,564,330        6,018,130        3,452,178        9.1 %      90.2 % 

Net interest income increased by 9.1% compared to the previous quarter and by 90.2% compared to the third quarter of 2017.

 

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Without considering the aforementioned fee reclassification, net interest income would have increased by 21.6% and by 112% for such periods, respectively.

Compared to the second quarter of 2018, interest income increased by 37% whereas interest expenses increased by 63.5% mainly due to an abrupt rise in the interest rate that occurred in the quarter and certain deterioration in the funding mix.

Net interest income recorded a positive performance, sustained by the increasing rates of the system, and by an adequate price management in the different products, both in assets as in liabilities, in a volatile environment.

NIM

 

Interest-Earning Assets & Interest-Bearing                Quarter ended              
Liabilities $ + USD    09-30-18     06-30-18     09-30-17  

(Average in thousands of pesos)

   Capital     Rate     Capital     Rate     Capital     Rate  

Interest-Earning Assets

     195,017,912       26.3 %      175,925,115       21.3 %      123,936,863       18.2 % 

Interest-Bearing Liabilities

     175,167,474       12.96 %      138,721,270       10.0 %      95,819,752       7.4 % 

NIM without foreign exchange differences

     11.62 %        11.56 %        11.97 %   

NIM including foreign exchange differences

     14.96 %        14.99 %        14.00 %   

NIM $ without foreign exchange differences

     14.27 %        14.64 %        14.32 %   

NIM USD without foreign exchange differences

     5.37 %        3.85 %        1.83 %   

The net interest margin (NIM) including the results for foreign currency exchange differences amounted to 14.96%, maintaining similar levels with respect to the second quarter of 2018; while net of this effect, it registered an increase of 6 bps, amounting to 11.62%.

The NIM in local currency (excluding FX differences) amounted to 14.27%, decreasing by 37 bps, mainly due to the higher growth rate of the liabilities rate and the negative result of interest rate swaps.

The NIM in foreign currency increased by 152 bps, amounting 5.37%, mainly as a result of the increase in the loans rate.

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

 

Interest-Earning Assets & Interest-Bearing                 Quarter ended               
Liabilities $    09-30-18     06-30-18     09-30-17  

(Average in thousands of pesos)

   Capital      Rate     Capital      Rate     Capital      Rate  

Interest-Earning Assets

     136,862,249        35.1 %      125,671,511        28.1 %      94,737,428        23.3 % 

Public sector instruments

     20,441,917        41.5 %      16,097,421        31.6 %      18,610,366        22.6 % 

Loans

     115,681,170        33.9 %      108,949,580        27.6 %      69,905,567        23.5 % 

Other interest-earning assets

     739,163        40.8 %      624,511        29.3 %      6,221,495        23.4 % 

Interest-Bearing Liabilities

     93,028,375        24.0 %      80,458,593        17.2 %      60,295,707        11.8 % 

Saving Accounts

     25,874,014        0.2 %      25,837,725        0.2 %      22,684,140        0.1 % 

Time Deposits

     48,467,831        32.5 %      44,114,943        24.4 %      31,547,072        18.2 % 

Current accounts with interest

     13,185,778        34.2 %      5,670,911        28.2 %      3,686,389        20.6 % 

Debt Securities

     1,714,760        39.7 %      1,772,129        30.2 %      1,128,352        23.8 % 

Other interest-bearing liabilities

     3,785,992        36.3 %      3,062,885        29.2 %      1,249,754        23.4 % 
Interest-Earning Assets & Interest-Bearing                 Quarter ended               
Liabilities USD    09-30-18     06-30-18     09-30-17  

(Average in thousands of pesos)

   Capital      Rate     Capital      Rate     Capital      Rate  

Interest-Earning Assets

     58,155,663        5.5 %      50,253,604        4.4 %      29,199,435        2.7 % 

Public sector instruments

     6,606,976        7.4 %      10,489,064        5.3 %      4,081,066        2.9 % 

Loans

     50,268,084        5.4 %      38,466,819        4.3 %      20,810,951        2.7 % 

Other interest-earning assets

     1,280,602        1.2 %      1,297,721        1.1 %      4,307,418        2.7 % 

Interest-Bearing Liabilities

     82,139,099        0.4 %      58,262,678        0.2 %      35,407,677        0.1 % 

Saving Accounts

     62,958,906        0.0 %      46,406,985        0.0 %      28,491,001        0.0 % 

Time Deposits

     14,323,872        0.8 %      9,831,850        0.5 %      6,698,506        0.3 % 

Current accounts with interest

     109,912        0.0 %      132,734        0.0 %      

Other interest-bearing liabilities

     4,746,409        5.1 %      1,891,108        3.7 %      218,170        3.9 % 

 

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  •  

Net fee income

 

Net fee income    Quarter ended      D %  Quarter ended 09/30/18 vs
quarter ended 		 

(in thousands of pesos)

   09-30-18      06-30-18      09-30-17      06-30-18     09-30-17  

Net fee income

     1,855,906        756,103        754,664        145.5 %      145.9 % 

Fee income

     3,847,287        2,278,267        1,852,853        68.9 %       107.6 %  

Fee charges on deposits accounts

     934,307        886,958        667,729        5.3 %      39.9 % 

Credit cards and operations

     1,991,447        563,183        571,621        253.6 %      248.4 % 

Checks

     256,400        221,466        185,734        15.8 %      38.0 % 

Capital markets and securities activities

     35,673        27,307        46,592        30.6 %      -23.4 % 

Fees related to foreign trade

     136,280        108,711        76,818        25.4 %      77.4 % 

Services of collection

     373,897        317,097        183,104        17.9 %      104.2 % 

Generated by subsidiaries

     74,784        111,828        85,995        -33.1 %      -13.0 % 

Other fees

     44,499        41,717        35,260        6.7 %      26.2 % 

Fee Expenses

     -1,991,381        -1,522,164        -1,098,189        30.8 %       81.3 %  

As mentioned above, a reclassification was performed during the third quarter due to the change in criteria regarding the deferral of credit card emission fees and, as a result, net fee income increased by 145.5% compared to the second quarter of 2018 and by 145.9% compared to the third quarter of 2017. Excluding this effect, the increase would have been of 7.9% and of 8.1% for such periods, respectively.

Excluding the effect of the reclassification, fee income increased by 25% compared to the second quarter of 2018 and by 51.5% compared to the third quarter of 2017, driven mainly by grater fees generated by services of collection, for fees charged on deposits accounts and for higher credit cards consumptions, that reflects the higher volume of activity and the higher prices. The quarter includes recurrent annual income, realized during the quarter.

BBVA Francés continues to gain market share in credit card consumption (during the quarter it increased by 51 bps) reaching 13.7% of the market.

Fee expenses increased by 30.8% over the quarter and by 81.3% compared to the third quarter of 2017, mainly due to fees related to the loyalty program and higher credit card processing charges.

In the new disclosure format applied beginning this quarter, certain fee items are accounted for in “Other operating income”.

 

  •  

Net income from measurement of financial instruments at fair value through profit or loss

 

Net income from measurement of financial instruments    Quarter ended     D %  Quarter ended 09/30/18 vs
quarter ended 		 

at fail value through profit or loss (In thousands of pesos)

   09-30-18     06-30-18     09-30-17     06-30-17     09-30-17  

Net income of financial instruments at fail value

     138,510       -559,281       988,948       -124.8 %      -86.0 % 

Income from public securities

     212,634       248,089       1,030,607       -14.3 %      -79.4 % 

Income from private securities

     163,077       118,936       (9,665 )      37.1 %      n/a  

Income from interest rate swaps

     (251,232 )      (433,324 )      (47,905 )      -42.0 %      424.4 % 

Non deliverable forward

     20,431       (502,779 )      (467 )      -104.1 %      n/a  

Income from corporate bonds

     (6,400 )      9,797       16,378       -165.3 %      -139.1 % 

Net income from measurement of financial instruments at fair value recorded a gain in the third quarter of AR$ 138.5 million compared to a loss of AR$ 559.3 million registered in the second quarter of 2018.

This gain is due to the income from public and private securities, which was partially offset by the loss registered in connection with interest rate swaps.

 

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  •  

Foreign Exchange Difference

 

Foreign Exchange Diffrerence    Quarter Ended      D %  Quarter ended  

(In thousands of pesos)

   09-30-18      06-30-18      09-30-17      06-30-18     09-30-17  

Foreign Exchange Difference

     1,624,223        2,009,608        634,133        -19.2 %      156.1 % 

FX trading

     1,268,577        964,124        727,982        31.6 %      74.3 % 

long/Short FX net balance

     355,646        1,045,484        -93,849        -66.0 %      -479.0 % 

Foreign exchange difference registered a higher result compared to the third quarter of 2017 due to both the devaluation of the peso during the quarter as well as greater buying and selling activity.

 

  •  

Other operating income

 

Other Operating Income    Quarter ended      D %  Quarter ended  

(In thousands of pesos)

   09-30-18      06-30-18      09-30-17      06-30-18     09-30-17  

Operating Income

     1,152,946        759,728        785,157        51.8 %      46.8 % 

Safe deposits

     112,481        111,029        89,290        1.3 %      26.0 % 

Insurance

     172,985        168,979        173,376        2.4 %      -0.2 % 

Fees on USD credit cards consumption

     220,917        50,822        81,453        334.7 %      171.2 % 

Interest on loans and fees related

     214,465        118,979        113,484        80.3 %      89.0 % 

Other fees

     105,650        69,140        55,132        52.8 %      91.6 % 

Total other fees

     826,498        518,950        512,735        59.3 %      61.2 % 

Other operating income

     326,448        240,778        272,422        35.6 %      19.8 % 

Other operating income registered an increase of 51.8% in the quarter and 46.8% over the year, mainly due to the increase in fees generated by the aforementioned reclassification.

 

 

Operating Expenses

 

 

 

Operating Expenses    Quarter ended     D % Quarter ended 09/30/18 vs  

In thousands of pesos

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Personnel expenses

     (2,503,707 )      (1,929,968 )      (1,673,055 )      29.7 %      49.6 % 

Administrative expenses

     (1,826,091 )      (1,646,632 )      (1,285,047 )      10.9 %      42.1 % 

Depreciation and amortization of assets

     (219,784 )      (207,860 )      (166,418 )      5.7 %      32.1 % 

Other operating expenses

     (1,635,777 )      (1,428,480 )      (1,029,978 )      14.5 %      58.8 % 

Operating Expenses

     (6,185,359 )      (5,212,940 )      (4,154,498 )      18.7 %      48.9 % 

Operating expenses amounted to AR$ 6,185.4 million, registering an increase of 18.7% and 48% compared to the previous quarter and to the third quarter of 2017, respectively.

The items that make up net operating expenses are analyzed in more detail below.

 

  •  

Personnel expenses and administrative expenses

 

Administrative and personnel expenses   

Quarter ended

    D % Quarter ended 09/30/18
vs quarter ended 		 

(In thousands of pesos)                          

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Personnel expenses

     (2,503,707 )      (1,929,968 )      (1,673,055 )      29.7 %      49.6 % 

Administrative expenses

     (1,826,091 )      (1,646,632 )      (1,285,047 )      10.9 %      42.1 % 

Electricity and Communications

     (76,620 )      (68,331 )      (43,408 )      12.1 %      76.5 % 

Advertising and Promotion

     (88,421 )      (124,392 )      (109,252 )      -28.9 %      -19.1 % 

Fees and external administrative services

     (81,433 )      (76,380 )      (61,855 )      6.6 %      31.7 % 

Taxes

     (431,360 )      (349,683 )      (315,103 )      23.4 %      36.9 % 

Rents

     (222,143 )      (165,446 )      (125,628 )      34.3 %      76.8 % 

Maintainance, conservation and repairs

     (201,822 )      (175,265 )      (132,530 )      15.2 %      52.3 % 

Security Service

     (78,428 )      (66,631 )      (85,253 )      17.7 %      -8.0 % 

Carriage of valuables

     (249,620 )      (237,258 )      (160,235 )      5.2 %      55.8 % 

Other

     (396,244 )      (383,246 )      (251,783 )      3.4 %      57.4 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Employees

     6,095       6,084       6,142       11       1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Branches

     251       251       251       0       0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Personnel expenses increased by 29.7% compared to the second quarter of 2018 and 49.6% compared to the third quarter of 2017, whereas administrative expenses increased by 10.9% and by 42.1% in such periods, respectively.

The increase in personnel expenses is mainly due to the update in salaries arising from the agreements signed with the labor union and its compensation schemes.

Administrative expenses increased during the quarter mainly due to an increase in rents, mainly as a result of the currency exchange rate effect, and an increase in taxes, as a result of higher activity levels, inflation and the increase in foreign currency exchange rates.

In addition, the maintenance, conservation and repairs line item includes a small impact in technology expenses due to the increase in the foreign currency exchange rate.

The efficiency ratio in the quarter amounted 47.9%, showing a decrease of 281 bps compared to the second quarter of 2018.

 

  •  

Other operating expenses

 

           D % Quarter ended 09/30/18 vs  
Other Operating expenses    Quarter ended     Quarter ended  

(In thousands of pesos)

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Operating expenses

     (1,635,777 )      (1,428,480 )      (1,029,978 )      14.5 %      58.8 % 

Gross income tax

     (1,190,211 )      (957,432 )      (597,028 )      24.3 %      99.4 % 

Gross income tax NII

     (899,410 )      (753,360 )      (397,806 )      19.4 %      126.1 % 

Gross income tax fees

     (290,801 )      (204,072 )      (199,222 )      42.5 %      46.0 % 

Cost of deposits insurence

     (86,186 )      (71,851 )      (55,018 )      20.0 %      56.7 % 

Other operating expenses

     (359,380 )      (399,197 )      (377,932 )      -10.0 %      -4.9 % 

Other operating expenses registered an increase in gross income tax, due to the rise in interest rates, fees and the income by foreign currency exchange difference, during the period.

 

 

Income from associates

 

 

Income from associates shows the result of non-consolidated companies. During the third quarter a gain of AR$ 48.9 million was recorded, mainly due to the equity investment in PSA Finance, Rombo Compañia Financiera and Consolidar Seguros. The second quarter of 2018 included income resulting from the participation in Interbanking S.A.

 

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Balance and activity

 

 

 

 

Loan portfolio

 

 

 

           D % Quarter ended 09/30/18 vs  
Net loans    Quarter ended     quarter ended  

(In thousands of pesos)

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Private & Financial sector loans in $

     116,528,630       114,137,222       83,076,333       2.1 %      40.3 % 

Advances

     16,396,066       14,190,618       10,801,453       15.5 %      51.8 % 

Discounted and purchased notes

     16,482,797       17,676,632       13,554,898       -6.8 %      21.6 % 

Consumer Mortgages

     8,718,885       7,357,341       3,026,278       18.5 %      188.1 % 

Car secured loans

     1,774,642       5,348,745       4,045,025       -66.8 %      -56.1 % 

Personal loans

     21,923,282       20,666,082       14,052,806       6.1 %      56.0 % 

Credit cards

     35,449,792       33,282,575       23,993,465       6.5 %      47.7 % 

Loans to financial sector

     9,587,944       6,094,170       3,432,610       57.3 %      179.3 % 

Other loans

     6,263,657       9,688,354       9,930,032       -35.3 %      -36.9 % 

Other receivables

     4,092,402       3,423,950       2,510,421       19.5 %      63.0 % 

Unaccrued interest

     (1,151,897 )      (919,522 )      (409,973 )      25.3 %      181.0 % 

Less: Allowance for loan losses

     (3,008,940 )      (2,671,723 )      (1,860,682 )      12.6 %      61.7 % 

Private & Financial sector loans in FX

     62,109,756       47,986,010       27,529,435       29.4 %      125.6 % 

Advances

     9,541       11,018       8,534       -13.4 %      11.8 % 

Discounted and purchased notes

     7,213,658       5,372,185       1,306,379       34.3 %      452.2 % 

Credit cards

     1,971,601       2,007,866       1,549,060       -1.8 %      27.3 % 

Loans to financial sector

     136,702       96,538       115,713       41.6 %      18.1 % 

Other loans

     53,447,923       40,821,518       24,750,909       30.9 %      115.9 % 

Other receivables

     322,309       186,381       80,115       72.9 %      n/a  

Less: Allowance for loan losses

     (991,978 )      (509,496 )      (281,275 )      94.7 %      252.7 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Private Loans

     178,638,386       162,123,232       110,605,768       10.2 %      61.5 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans to public sector

     177       78       267       126.9 %      -33.7 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Total Loans net of other non resident loans

     178,638,563       162,123,310       110,606,035       10.2 %      61.5 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of the third quarter, Volkswagen Financial Services Compañia Financiera is no longer recorded on a consolidated basis. Such figures were recorded under car secured loans.

As of September 30, 2018, the private sector loan portfolio amounted to AR$ 178.6 billion, increasing by 10.2% during the quarter and by 61.2% in the last twelve months. If the participation of Volkswagen Financial Services would have been included, the private sector loan portfolio would have increase by 12.4% and 64.8% in such periods, respectively.

As of September 30, 2018 the market share of loans reached 8.38%, including loans from associated companies (VW Financial Services, PSA Finance and Rombo Compañia Financiera), showing an increase of 33 bps in the last 12 months.

Credit growth was affected during the third quarter by the devaluation of the peso and higher interest rates, resulting in a strong increase of loans in U.S dollars (increased by 29.4% in the quarter and by 125.6% in the last twelve months) mainly due to the re-expression of the new value of the currency and a mild growth in pesos of 2.1% and 39.9% respectively. Without taking into account the deconsolidation of Volkswagen, these would have increased 5.3% and 44.6% respectively.

On the one hand, with regard to loans to individuals, positive growth was recorded in connection with credit card and personal loans, while mortgages loans reflected the impact of the increasing inflation.

On the other hand, the increase showed by commercial loans is mainly due to the depreciation of the peso.

 

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Asset quality ratios

 

 

 

Asset quality ratios   

Quarter ended

    D %  Quarter ended 09/30/18
vs quarter ended 		 

(in thousands of pesos)

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Non-performing loans (1)

     1,814,467       1,423,719       762,890       27.4 %      137.8 % 

Allowance for loan losses

     (4,000,918 )      (3,181,219 )      (2,141,957 )      25.8 %      86.8 % 

Non-performing loans/net total loans

     0.99 %      0.86 %      0.68 %      0.1 %      0.3 % 

Non-performing priv. loans/net priv. loans

     0.99 %      0.86 %      0.68 %      0.1 %      0.3 % 

Allowance for loan losses/non-performing loans

     220.50 %      223.44 %      280.77 %      -2.9 %      -60.3 % 

Allowance for loan losses/net total loans

     2.19 %      1.92 %      1.90 %      0.3 %      0.3 % 

 

(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 September 30, 2018, the asset quality ratio (non-performing loans/total loans) was 0.99% with a coverage ratio (allowances/non-performing loans) of 220.5%.

BBVA Francés continues to show strong asset quality indicators even in a deteriorating environment. The asset quality ratio increased 13 bps compared to the previous quarter due to some deterioration of the portfolio while, compared to the third quarter of 2017 the ratio increased by 32 bps.

The cost of risk reached 1.71% recording an increase of 22 bps during the quarter.

The following table shows the evolution of provisions:

 

Evolution of provisions    Quarter ended     D % Quarter ended 09/30/18 vs
quarter ended 		 

(In thousands of pesos)

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Balance at the beginning of the quarter

     3,181,219       2,548,322       1,891,753       24.8 %      68.2 % 

Increase/decrease

     1,006,313       801,330       503,140       25.6 %      100.0 % 

Increase/decrease-Foreign exchange diff.

     213,237       154,646       7,461       37.9 %      n/a  

Aplications / Reversals

     (399,851 )      (323,079 )      (260,397 )      23.8 %      53.6 % 

Balance at the end of the quarter

     4,000,918       3,181,219       2,141,957       25.8 %      86.8 % 

 

 

 

Public sector exposure

 

 

 

Public Sector Exposure   

Quarter Ended

    D % Quarter ended 09/30/18 vs
quarter ended 		 

(In thousands of pesos)

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Bills and Notes from Central Bank

     17,519,092       14,291,916       14,659,705       22.6 %      19.5 % 

Treasury and national government

     23,413,901       14.776.891       11,354,112       58.4 %      106.2 % 

National Treasury Public Debt $

     5,842,776       2,995,774       2,801,616       95.0 %      108.6 % 

National Treasury Public Debt USD

     9,517,768       5,651,068       4,222,922       68.4 %      125.4 % 

Treasury Repos USD

     8,053,358       6,130,049       4,329,575       31.4 %      86.0 % 

Pesos subtotal

     23,361,868       17,287,691       17,461,321       35.1 %      33.8 % 

Dollars subtotal

     17,571,125       11,781,117       8,552,497       49.1 %      105.5 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Public Sector exposure

     40,932,994       29,068,808       26,013,817       40.8 %      57.4 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% National Government debt / Assets

     7.0 %      5.5 %      6.1 %     

Total exposure to the public sector amounted to AR$ 40.9 billion, increasing by 40.8% during the quarter.

 

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Short-term liquidity was allocated in BCRA instruments, which increased by AR$ 3.2 billion or by 22.6% increase during the quarter.

National Government Debt, which represents 7% of the assets, increased AR$ 8.6 billion during the quarter.

The increase in debt in local currency is due to the acquisition of a 2-year bond that will be used to comply with the increase of 500 bps in the minimum cash requirement, disposed by the BCRA in June and July.

Foreign currency debt has an average term of 3 months and is composed of a Repo with the National Treasury for USD 197 million and short term Letes for USD 165.8 million. During the quarter these positions decreased by USD 28 million, however, due to the depreciation of the peso, their peso value increased by approximately AR$ 1.2 billion.

 

 

Deposits

 

 

 

Total deposits    Quarter ended      D % Quarter ended 09/30/18 vs
quarter ended 		 

(in thousands of pesos)

   09-30-18      06-30-18      09-30-17      06-30-18     09-30-17  

Deposits $ denominated

     131,447,950        110,782,893        84,232,941        18.7 %      56.1 % 

Current accounts

     25,851,282        24,855,245        22,675,842        4.0 %      14.0 % 

Saving accounts

     49,061,002        36,962,990        26,529,775        32.7 %      84.9 % 

Time deposits

     54,608,085        46,739,380        32,960,166        16.8 %      65.7 % 

Peso denominated

     52,232,712        42,908,357        32,800,572        21.7 %      59.2 % 

CER adjusted time deposits

     2,375,373        3,831,023        159,594        -38.0 %      n/a  

Other

     1,927,581        2,225,278        2,067,158        -13.4 %      -6.8 % 

Deposits FX denominated

     115,780,018        82,074,380        45,560,684        41.1 %      154.1 % 

Current accounts

     524,978        189,557        69,669        176.9 %      n/a  

Saving accounts

     94,767,387        67,209,837        35,441,394        41.0 %      167.4 % 

Time deposits

     17,744,720        12,315,792        6.976,320        44.1 %      154.4 % 

Other

     2,742,933        2,359,194        3,073,301        16.3 %      -10.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

     247,227,968        192,857,273        129,793,625        28.2 %      90.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits amounted to AR$ 247.2 billion as of September 30, 2018, increasing by 28.2% compared to the previous quarter and by 90.5% compared to the third quarter of 2017.

Foreign currency deposits remained stable during the quarter, but their balance reflects the depreciation of the peso.

Deposits in local currency increased by 18.7% mainly due to increases in savings accounts and current accounts with interest.

 

 

Other funding sources

 

 

 

Other funding sources   

Quarter ended

     D % Quarter ended 09/30/18 vs
quarter ended 		 

(in thousands of pesos)

   09-30-18      06-30-18      09-30-17      06-30-18     09-30-17  

Lines from other banks

     5,757,714        5,732,921        379,735        0.4 %      n/a  

Senior Bonds

     1,735,343        1,751.596        1,060,593        -0.9 %      63.6 % 

Total other funding sources

     7,493,057        7,484,517        1,440,328        0.1 %      420.2 % 

The increase in lines from other banks corresponds mainly to funds to finance foreign trade operations.

 

- 12 -

Table of Contents

 

Solvency

 

 

 

Central Bank Requirements   

Quarter ended

    D % Quarter ended 09/30/18 vs
quarter ended 		 

(In thousands of pesos)

   09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

CB Minimum Capital Requirements

     21,388,509       19,213,740       15,653,816       11.3 %      36.6 % 

Allocated to Asset at Risk

     17,914,664       16,092,833       12,726,716       11.3 %      40.8 % 

Market Risk

     192,083       154,790       369,204       24.1 %      -48.0 % 

Operational Risk

     3,256,660       2,966,117       2,557,896       9.8 %      27.3 % 

Non compliance with others cautios regulations

     25,102       —         —         n/a    

Bank Capital

     36,683,596       34,211,408       28,020,200       7.2 %      30.9 % 

Ordinary Capital Level 1 (*)

     36,292,382       33,516,442       26,817,835       8.3 %      35.3 % 

Dedusctions Ordinary Capital Level 1

     (2,774,583 )      (2,165,117 )      (705,074 )      28.1 %      293.5 % 

Capital Level 2

     2,143,744       1,959,093       1,578,420       9.4 %      35.8 % 

Additional Capital Level 1

     1,022,053       906,990       329,019       12.7 %      210.6 % 

Excess over Required Capital

     15,295,087       15,003,668       12,366,384       1.9 %      23.7 % 

Excess as % of the capital required

     71.5 %      78.1 %      79.0 %      -8.4 %      -9.5 % 

Risk weighted assets

     260,520,258       234,312,709       191,039,187       11.2 %      36.4 % 

Capital Ratio (Central Bank rules) (*) (**)

     14.1 %      14.6 %      14.7 %      -3.6 %      -4.0 % 

TIER I (***)

     12.9 %      13.4 %      14.0 %      -3.8 %      -8.3 % 

 

(*)

Bank capital I Risk weighted assets

(**)

Includes the 100% of the quarterly result

(***)

Ordinary capital level 1 I Risk weighted assets

BBVA Francés continues to show adequate solvency ratios. As of September 30, 2018 the capital ratio reached 14.1%, 52 bps lower than the ratio of June 30, 2018, mainly due to higher risk weighted-assets, mainly those denominated in foreign currency as a consequence of the devaluation of the peso.

The Tier 1 ratio was 12.9% and the excess over required capital was AR$ 15,295.1 million.

 

 

Additional information

 

 

 

     Quarter ended     D % Quarter ended 09/30/18
vs quarter ended 		 
     09-30-18     06-30-18     09-30-17     06-30-18     09-30-17  

Exchange rate $/USD

     40.90       28.86       17.32       41.7 %      136.1 % 

Quarterly CER adjustment

     9.8 %      7.4 %      4.3 %      2.5 %      5.5 % 

 

 

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

 

- 13 -

Table of Contents

 

Conference Call

 

 

On Friday November 23, 2018 at 15:30 hs (Argentine time) a conference call will be held to comment on the quarter’s results.

Those who wish to participate should use the following dial-in numbers:

+ 54-11-39845677 (from Argentina)

+ 1-844-450-3851 (from the United States)

+ 1-412-317-6373 (from other countries)

Conference ID: BBVA .

To access the webcast:

http://webcastlite.mziq.com/cover.html?webcastId=5b82b6c4-2874-4acc-a236-70270063c596

To request the Replay, please dial -in

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

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

The replay will be available until December 5, 2018.

Replay Access code: 10126428

 

 

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

 

- 14 -

Table of Contents

BBVA Banco Francés S.A. and subsidiaries (Grupo Consolidar: by the equity method)

BALANCE SHEET (in thousands of pesos)

Communication “A” 6114

 

     09-30-18      06-30-18      09-30-17  

Cash and due from banks

     87,821,856        54,530,632        27,723,142  

Debt securities at fair value through other comprehensive income

     475,431        2,735,529        5,498,255  

Derivatives

     63,881        104,250        92,221  

Repurchase agreements

     9,582,646        6,367,328        5,116,152  

Other financial assets

     6 ,707,106        5,897,674        5,789,131  

Loans and other financial intermediation

     178,638,563        162,123,310        110,606,035  

Loans to the private & financial sector

     178,638,386        162,123,232        110,605,768  

Public Sector loans

     177        78        267  

Other debt securities

     30,982,187        18,544,550        14,825,176  

Financial assets pledged as collateral

     6 ,301,957        5,155,840        3,731,108  

Current income tax assets

     385        1,056        6,298  

Investments in equity instruments

     129,234        120,978        68,500  

Investments in associates and joint ventures

     1,781,225        1,087,893        1,091,497  

Property, plant and equipment

     9,172,910        9,136,878        9,095,509  

Intangible assets

     596,310        542,054        407,917  

Deferred income tax asset

     100,826        22,311        14,263  

Other non financial assets

     1,375,031        1,350,209        1,133,037  

Non-current assets held for sale

     252,805        507,630        —    

Total Assets

     333,982,353        268,228,122        185,198,241  

Deposits

     247,227,968        192,857,273        129,793,625  

Current accounts

     26,376,260        25,044,802        22,745,511  

Saving accounts

     143,828,389        104,172,827        61,971,169  

Time deposits

     72,352,805        59,055,172        39,936,486  

Investment Accounts

     —          —          1,112  

Rescheduled deposits CEDROS

     1,951        1,951        1,951  

Other deposits

     4,668,563        4,582,521        5,138,508  

Liabilities at fair value trhough other comprehensive income

     1,345,749        143,495        44,415  

Derivatives

     4,431,577        2,277,241        161,965  

Repurchase agreements

     —          936,751        1,243,160  

Other financial liabilities

     21,934,634        17,727,818        13,344,875  

Financing received the BCRA and other financial insitutions

     5,757,714        5,732,921        380,642  

Corporate bonds issued

     1,735,343        1,751,596        1,057,492  

Current income tax liabilities

     2,548,311        1,409,535        973,245  

Provisions

     3,448,015        3,374,177        2,182,974  

Other provisions

     3,446,583        3,372,628        2,181,870  

For eventual compromises

     1,432        1,549        1,104  

Deferred income tax liabilities

     48,074        343,100        829,957  

Other non-financial liabilities

     9,776,753        8,258,653        6,378,518  

Total Liabilities

     298,254,138        234,812,560        156,390,868  

Total Stockholders’ equity

     35,699,118        32,861,689        28,509,307  

Equity Investments

     29,097        553,873        298,066  

Total liabilities + stockholders’ equity

     333,982,353        268,228,122        185,198,241  

 

- 15 -

Table of Contents

BBVA Banco Francés S.A. and subsidiaries (Grupo Consolider: by the equity method)

INCOME STATEMENT (in thousands of pesos)

Communication “A” 6114

 

     09-30-18     06-30-18     09-30-17  

Interest Income

     12,299,911       9,525,300       5,245,596  

Interest on loans to the financial sector

     451,780       351,772       182,139  

Interest on overdraft

     1,861,503       1,177,920       737,188  

Interest on documents

     1,513,877       1,090,927       530.848  

Interest on mortgages loans

     207,595       169,956       91,288  

Interest on car secured loans

     360,215       337,965       231,298  

Interest on credit card loans

     1,395,515       1,885,704       1,437,338  

Interest on financial leases

     134,487       129,239       101,070  

Interest on personal loans

     1,624,393       1,532,737       1,033,427  

Interest on other loans

     983,350       724,107       498,529  

From other banking receivables from financial intermediation

     2,513       2,264       1,715  

CER adjustment

     12,124       6,705       78,412  

UVA adjustment

     965,760       506,632       34,529  

Income from Public Securities

     2,092,036       1,187,403       84,426  

Other

     694,763       421,969       203,389  

Interest Expenses

     (5,735,581 )      (3,507,170 )      (1,793,418 ) 

Interest on Current Account Deposits

     (1,139,396 )      (417,615 )      (191,736 ) 

Interest on Saving Account Deposits

     (26,624 )      (26,894 )      (8,785 ) 

Interest on Time Deposits

     (3,768,514 )      (2,438,015 )      (1,437,926 ) 

Interest on interfinancing received loans

     (26,756 )      (18,567 )      (5,794 ) 

Interest on other financing from the financial institutions

     (117,761 )      (49,652 )      (113 ) 

Interest on other liabilites from financial intermediation

     (416,389 )      (256,177 )      (88,996 ) 

Other interest

     (45 )      (50 )      (166 ) 

UVA adjustment

     (221,865 )      (256,626 )      (11,463 ) 

Other

     (18,231 )      (43,574 )      (48,439 ) 

Net interest income

     6,564,330       6,018,130       3,452,178  

Net fee income

     1,855,906       756,103       754,664  

Net income of financial instruments

     138,510       (559,281 )      988,948  

Result from assets at amortised cost

     12,774       (68,298 )      35  

Foreign exchange difference

     1,624,223       2,009,608       634,133  

Other operating income

     1,152,946       759,728       785,157  

Provision for loan losses

     (1,032,752 )      (804,248 )      (596,238 ) 

Net operating income

     10,315,937       8,111,742       6,018,877  

Personnel expenses

     (2,503,707 )      (1,929,968 )      (1,673,055 ) 

Administrative expenses

     (1,826,091 )      (1,646,632 )      (1,285,047 ) 

Depreciations and amortizations

     (187,696 )      (176,910 )      (134,022 ) 

Depreciation on Intangible assets

     (32,088 )      (30,950 )      (32,396 ) 

Other operating expenses

     (1,635,777 )      (1,428,480 )      (1,029,978 ) 

Operating income

     4,130,578       2,898,802       1,864,379  

Income from associates and joint ventures

     48,892       121,443       139,237  

Net income before income tax from continuing operations

     4,179,470       3,020,245       2,003,616  

Income tax from continuing operations

     (1,131,938 )      (866,387 )      (610,956 ) 

Net income Including non-controlling shareholders

     3,047,532       2,153,858       1,392,660  

Net income attributable to non-controlling shareholders

     39,691       29,938       11,174  

Net Income

     3,007,841       2,123,920       1,381,486  

Other comprehensive income

     (117,469 )      64,125       (40,009 ) 

Total income attributable to controlling shareholders

     2,890,372       2,188,045       1,341,477  

 

- 16 -

Table of Contents

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: November 23, 2018     By:   /s/ Ernesto Gallardo Jimenez
      Name: Ernesto Gallardo Jimenez
      Title: Chief Financial Officer
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