Banco BBVA Argentina S.A. (BBAR) Earnings

Management highlights

- Overall Macroeconomic & Business Resilience - The bank's business model demonstrated resilience amid a gradual macro transition and normalization of key financial variables - Interest rate volatility declined, continuing a downward trend started in the prior year, with ongoing monetary and regulatory adjustments to improve liquidity management - Fiscal discipline and stabilizing external indicators have created a more predictable framework for the financial sector, though management remains cautious on the timing and pace of broad private credit recovery - BBVA Argentina enters the rest of 2026 with a solid foundation of robust capital, healthy liquidity, and expanding market share, positioned to lead credit supply as the financial system normalizes - The Central Bank approved a 69 billion peso dividend distribution for 2025, reaffirming the bank's commitment to shareholder value - Balance Sheet & Business Dynamics - Pledge and mortgage loan lines continue to see steady momentum, with foreign currency loans driving new business capture - Robust solvency and liquidity positions are maintained, with regulatory capital well in excess of minimum requirements - Dollar deposits have seen slow, constant 2-3% monthly growth, with systemic dollar loan-to-deposit ratios remaining below 50%, leaving ample room for loan growth without aggressive competition for dollar deposits - The bank has gained substantial market share over the past three years, growing from the 4th to 2nd largest bank in private loan market share without any acquisitions - Organizational adjustments are limited, with recent headcount reductions framed as routine efficiency tuning rather than a broad restructuring program - Credit & Origination Strategy - Strengthened origination policies are in place to improve future credit quality, with a current focus on low-risk segments: mortgages and auto lending (pledges), which have maintained very low NPL rates - Retail consumer and credit card segments are expected to take longer to recover, with the bank prioritizing cautious origination until macro conditions improve further - As the market normalizes, the bank expects investment-focused credit lines (mortgages, auto loans) to grow as a share of the portfolio, displacing the outsized share consumer credit held during recent economic instability

Guidance

- Full-year 2026 real private loan growth guidance was revised downward from the prior 25-30% range to a new 15-20% range. The first quarter started slow seasonally, with growth expected to accelerate sequentially through the year, with stronger performance in the second half - Split loan and deposit growth guidance by currency: 10-15% real growth for both peso loans and deposits, 40% loan growth and 30% deposit growth for dollar denominated products - ROE guidance for 2026 is maintained at low to mid teens, with management noting results are likely to land closer to the low end of the range - Net interest margins (NIM) are expected to remain largely stable in real terms through 2026: flat to slightly positive in Q2, with minor potential deterioration in the second half as inflation and interest rates decline, leading to a full-year real NIM similar to 2025 - The full-year 2026 efficiency ratio is expected to improve to 48-49%, down from 53.9% for full-year 2025 - Management forecasts full-year 2026 GDP growth of 3%, with real wages starting to recover as inflation declines in the second half of 2026 - Non-performing loan ratio is expected to end 2026 at roughly 5% or slightly below, down from the Q1 2026 level of 5.60% - Coverage ratio is expected to bottom out in the near term and recover to at least 100% in coming quarters, with no specific fixed target or timeline

Segment performance

The call does not break out financial performance across distinct formal product segments. Overall consolidated performance for Q1 2026: Inflation-adjusted net income of 85.2 billion Argentine pesos, up 31.2% quarter-over-quarter; Net interest income grew 5.9% sequentially to 879.9 billion Argentine pesos; Total private sector financing closed at 15.7 trillion Argentine pesos: local currency loans fell 6.5% QoQ, while foreign currency private loans grew 6.8% QoQ (23.3% increase in dollar terms); Total deposits reached 17.5 trillion Argentine pesos; Consolidated loan market share rose to 12.15%, a 95 basis point increase over the prior 12 months; Private deposit market share dipped 8 basis points QoQ to 9.96%, but remains up 78 basis points year-over-year; Non-performing loan ratio was 5.60%, driven by retail card and consumer portfolios; commercial delinquency was 0.60%; Cost of risk fell from 8.11% last quarter to 6.14%; coverage ratio stands at 88.41%; Liquidity ratio closed at 45.5%, regulatory capital ratio was 18.8% (128.7% excess over minimum requirements).

Risks & headwinds

- Uncertainty remains around the timing and pace of broad private credit demand recovery amid Argentina's ongoing macroeconomic transition, with consumer credit segments still facing lingering pressure - Non-performing loans have risen driven by retail card and consumer portfolios, and while stabilization is expected, full recovery will take time - Argentina's long history of economic mismanagement means that recent structural reforms will take time to generate material improvements in economic activity and credit demand, with timing of full cycle normalization still uncertain - High systemic reserve requirements for local currency deposits remain in place, though management notes current liquidity levels are sufficient to support planned growth even without near-term regulatory changes - Hyperinflation accounting still applies to BBVA Argentina's financial statements, reducing comparability to banks in lower-inflation markets, with removal of this accounting treatment not expected until at least 2028 at the earliest

Analyst Q&A

• Q: Given higher NPLs but lower provisioning in Q1, how comfortable are you with asset quality from here, when will it improve, and how will this affect the timing of loan growth acceleration? /

  A: Management is more comfortable with asset quality than in prior quarters, with lower provisions driven by one-off positive wholesale rating upgrades and effective new origination policies. While the overall environment remains challenging, management expects asset quality to stabilize in Q2 and deliver better outcomes than Q1. Loan growth expectations have been cut to 15-20% real full-year growth from the prior 25-30% forecast, with sequential improvement through the year, and retail consumer and card segments expected to take longer to recover than commercial loans.

• Q: What are the dynamics for dollar deposits, how sustainable are recent NIM gains, and is the 2026 ROE guidance maintained? /

  A: Q1 deposit declines in real terms are expected given slower early loan growth, with no need to compete aggressively for deposits. Dollar deposits are growing 2-3% monthly, and systemic dollar loan-to-deposit ratios are well below 50%, leaving ample room for loan growth. Real NIM has been stable for over a year, and is expected to remain largely flat through 2026, with only minor potential deterioration in the second half. The full-year 2026 low-to-mid teen ROE guidance is maintained, with results expected to land near the low end of the range.

• Q: What is the recent trajectory of credit demand, how has retail dollar purchases evolved, and what regulatory changes is the bank pushing for? /

  A: Peso loan demand started slow in Q2 but has picked up in recent weeks as deposit rates fell from the 30% range to the 20% range, with expected further improvement from seasonal tax and salary payments. Dollar demand was strong through the first four months of 2026, but has softened slightly in May. Retail dollar demand remains high relative to historical levels, though below the peak seen in Q3 2025. Most restrictive emergency regulations have already been removed, high reserve requirements remain but do not constrain near-term growth, so there are no major outstanding regulatory requests.

• Q: How much of your reported NPL comes from the cross-bank mandatory classification rule, and can you split growth guidance by currency? /

  A: The cross-bank non-performing classification rule only applies to commercial loans, and it has had almost no material impact on BBVA Argentina's overall NPL ratio, which already stands at 0.6% for commercial loans. For 2026, management expects 10-15% real growth for both peso loans and deposits, and 30% deposit growth and 40% loan growth for dollar denominated products, with stronger peso growth expected in the second half after a slow start to the year.