BBVA Banco Frances Q2 Earnings Call Highlights

BBVA Banco Frances reported a 44.6% increase in net income to ARS 131.6 billion for Q2 2026, driven by Argentina's lower inflation and stable operating income. The bank's return on equity improved to 12.2% from 8.3% in Q1. BBVA anticipates loan book growth of about 10% in real terms during 2026, fueled by mortgages, auto loans, commercial lending, and foreign-currency loans.

Early signs of lending recovery emerged, despite elevated delinquency levels. Total financing to the private sector reached ARS 17.1 trillion, with local-currency loans up 2% and foreign-currency loans up 2.5%. Mortgage lending showed strong momentum, with the bank capturing business through commercial lending and foreign-currency loans.

BBVA's loan market share grew by 15 basis points over the past year, reaching 12%. Total deposits hit ARS 19.2 trillion, with private-deposit market share remaining unchanged at 9.91% but increasing year-over-year by 26 basis points. The bank's loan book growth is expected to be about 10% in real terms for 2026, with targeted growth in secured retail products and higher-income customers.

BBVA anticipates an expansion of the banking system by 10% to 15% in real terms for 2027, with a goal to outperform the market. Commercial loans account for roughly 57% of the portfolio, with retail lending beginning to recover through mortgages, auto loans, and consumer credit. The nonperforming loan ratio stood at 6.09% at the end of June, an increase of 49 basis points from the previous quarter.

The bank is being more selective in retail underwriting, prioritizing payroll customers and clients with greater income visibility. Early arrears and newer loan vintages showed signs of improvement, with credit-card delinquency levels in newer vintages declining to near 2.2%. BBVA expects nonperforming loans to stabilize and improve gradually in the second half of 2026, ending the year at around 5.5%.

The bank's coverage ratio ended the quarter at about 80%, considered adequate given its historical recovery experience. Management expects the coverage ratio to rebuild as asset quality improves, with full-year cost of risk projected at approximately 6.5%. Net interest margin remained stable at 14.7%, while net fees increased by about 35% year-over-year, excluding one-time items recorded in the first quarter.

The efficiency ratio improved to 45%, and management expects it to finish 2026 below that level. BBVA's full-year return on equity outlook remains in the low teens.