Economic activity in Argentina has been positive and grown steadily in 2013. According to the National Institute for Statistics and the Census (INDEC), in the second quarter of 2013 (latest available information), GDP grew by 8.3% in year-on-year terms, due to the better performance of the primary and construction sectors.
The Argentinean financial system has in general posted good solvency and liquidity indicators. However, the liquidity ratio has been declining due to the slowdown in the growth of deposits. As a result of the foreign currency shortage, the Central Bank has still not applied an expansionary monetary policy as in recent years. Loans to the private sector have also posted slower growth than in the previous year. However, the commercial segment has been stronger as a result of the Central Bank’s policy of promoting productive credit facilities at a fixed interest rate.
The foreign-exchange market has maintained the restrictions on the purchase and sale of foreign currencies and new regulations have been put into place to reduce demand for foreign currency. This has had an impact on the depreciation of the exchange rate of the Argentinean peso against the dollar and the euro. The peso/euro fixing price has fallen by 27.9% year-on-year and the average exchange rate by 19.7%.
In this situation, BBVA Francés has once again proved its great flexibility and capacity to adapt quickly to market conditions, developing new products and services and managing its funds very efficiently.
Thus performing loans in the unit as of 31-Dec-2013 are up 24.6% in year-on-year terms. Private-sector loans, which have a significant weight in the portfolio, have performed very positively, particularly credit cards (up 55.5%). This has led to a gain in market share in this portfolio of 73 basis points in the previous 12 months (according to the latest available information as of November 2013).
With respect to asset quality indicators, the prudent risk management of BBVA Francés has maintained its ratios at a good level and the bank has kept its leading position in the sector, with a high positive gap compared with its peer group, as in the Argentinean financial sector as a whole the main metrics of asset quality deteriorated in 2013.
On-balance-sheet customer funds increased by 27.8% year-on-year thanks to the good performance of transactional accounts and time deposits.
As regards earnings in 2013, BBVA in Argentina improved its net attributable profit by 39.2% on the figure for the previous year to €214m. This positive performance is basically due to the increase in net interest income from the business with customers and NTI, together with the favorable performance of net income from services. This is despite the significant current restrictions in Argentina on the collection and increase of fees. Operating expenses increased 27.5% year-on-year due to higher activity and inflation. Lastly, impairment losses on financial assets also rose, in line with the aforementioned increase in activity.
In Argentina BBVA has made progress in its relationship and management model, with a clear aim of improving service quality in all the segments, within its commitment to being a universal customer-centric bank. The main initiatives carried out in 2013 are summarized below.
- BBVA Francés has become the “soccer bank” through boosting the strategic alliance with the most important clubs in Argentina. As a result the customers receive benefits such as the “River” and “Xeneize” cards.
- The high-net-worth customer segment has begun the process of installing the “BBVA Francés VIP spaces” with the aim of providing the exclusive environment of privacy and personalized service required by customers in this area.
- In mobile banking, BBVA Francés Móvil has implemented tools for BlackBerry, iPhone and Android devices that allow operations to be conducted with the bank simply, quickly and securely using smartphones.
- In the SME segment, the bank has focused on incorporating new functionalities to e-banking. The aim is to become the most transactional online banking service in the market, through which customers can carry out most of their operations. An example of this is the new “Avisos y Mensajes” (Alerts and Messages) service that provides users with more detailed information on their transactions. A new customer service center has also been launched for companies to optimize the service provided for customers of SME and corporate banking segments.
- In consumer services, the bank has continued with the advertising campaigns for credit cards and “Préstamos Simples” (Simple Loans) to boost the sale of personal loans and position BBVA Francés as the bank that makes life easier for its customers. The creativity and teamwork of the Advertising unit have won significant recognition. The campaign “Préstamos Simples - Estás Dulce” (Simple Loans - You’re sweet) won the “Lápiz de Plata” award in August. This award is granted by the specialized publishing house Dossier, which chooses the three best advertising spots each month.
Lastly, as in the case of the rest of the franchises in the area, Argentina has been very active in social responsibility initiatives. Particularly outstanding in 2013 has been the new “Becas de Integración” (Integration Scholarships), whose aim is to help students complete their secondary-school studies, improve financial literacy and boost basic values.
