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 December, 2019

Commission File Number: 001-12568

 

 

Banco BBVA Argentina S.A.

(Translation of registrant’s name into English)

 

 

Córdoba 111, 1054

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

 

 

 

Banco BBVA Argentina S.A.

TABLE OF CONTENTS

 

Item
1.		Financial Statements as of September 30, 2019.

 

CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED

SEPTEMBER 30, 2019

Banco BBVA Argentina S.A.

TABLE OF CONTENTS

 

Condensed interim financial statements for the nine-month period ended on September 30, 2019, comparatively presented.
Consolidated Condensed Statement of Financial Position			1
Consolidated Condensed Statement of Profit or Loss			3
Consolidated Condensed Statement of Other Comprehensive Income			5
Consolidated Condensed Statement of Changes in Shareholders’ Equity			6
Consolidated Condensed Statement of Cash Flows			7
Notes			9
Exhibits			53
Independent auditors’ limited review report on consolidated condensed interim financial statements
Separate Condensed Statement of Financial Position			64
Separate Condensed Statement of Profit or Loss			66
Separate Condensed Statement of Other Comprehensive Income			68
Separate Condensed Statement of Changes in Shareholders’ Equity			69
Separate Condensed Statement of Cash Flows			70
Notes			72
Exhibits			89
Independent auditors’ limited review report on separate condensed interim financial statements
Supervisory Committee’s Report
Reporting Summary			106

		- 1 -

 

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

(stated in thousands of pesos)

 

		Notes and Exhibits				09.30.19				12.31.18
ASSETS
Cash and deposits in banks			7				94,169,336				99,105,461
Cash							28,259,398				15,570,831
Financial institutions and correspondents							65,909,938				83,534,630
Argentine Central Bank (BCRA)							59,163,499				75,503,977
Other in the country and abroad							6,746,439				8,030,653
Debt securities at fair value through profit or loss			8				5,169,245				7,508,099
Derivatives			9				2,243,269				591,418
Repo transactions			10				6,665,009				12,861,116
Other financial assets			11				6,456,586				9,647,526
Loans and other financing			12				207,171,755				181,422,347
Non-financial government sector							503				207
Argentine Central Bank (BCRA)							—				383
Other financial institutions							2,777,947				9,583,842
Non-financial private sector and residents abroad							204,393,305				171,837,915
Other debt securities			13				63,440,103				23,742,631
Financial assets pledged as collateral			14				8,301,742				4,703,064
Current income tax assets			15 a)				385				385
Investments in equity instruments			16				1,875,290				129,538
Investments in associates			17				271,558				1,752,322
Property and equipment			18				11,820,645				9,816,116
Intangible assets			19				640,869				510,912
Deferred income tax assets							3,400,665				194,036
Other non-financial assets			20				2,390,942				2,135,859
Non-currrent assets held for sale			21				59,776				493,373
TOTAL ASSETS							414,077,175				354,614,203

Notes and exhibits are an integral part of these financial statements.

		- 2 -

 

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

(stated in thousands of pesos)

 

		Notes and Exhibits				09.30.19				12.31.18
LIABILITIES
Deposits			22 and Exhibit H				274,486,964				259,509,061
Non-financial government sector							2,642,132				1,544,761
Financial sector							313,529				294,122
Non-financial private sector and residents abroad							271,531,303				257,670,178
Liabilities at fair value through profit or loss			23				43,168				692,270
Derivatives			9				4,022,821				1,377,259
Repo transactions			10				—				14,321
Other financial liabilities			24				31,609,065				28,189,392
Financing received from the BCRA and other financial institutions			25				8,481,472				5,527,525
Corporate bonds issued			26				8,727,685				2,473,690
Current income tax liabilities			15 b)				5,240,371				3,676,444
Provisions			27 and Exhibit J				7,657,217				3,620,723
Deferred income tax liabilities							30,851				57,725
Other non-financial liabilities			28				15,232,774				10,894,016
TOTAL LIABILITIES							355,532,388				316,032,426
EQUITY
Share capital			30				612,660				612,660
Non-capitalized contributions							6,735,977				6,735,977
Capital adjustments							312,979				312,979
Reserves							28,488,024				17,424,932
Retained earnings							—				3,856,405
Other accumulated comprehensive income							(3,581,642	)			(4,975	)
Income for the period							23,527,473				9,613,687
Equity attributable to owners of the Parent							56,095,471				38,551,665
Equity attributable to non-controlling interests							2,449,316				30,112
TOTAL EQUITY							58,544,787				38,581,777
TOTAL LIABILITIES AND EQUITY							414,077,175				354,614,203

Notes and exhibits are an integral part of these financial statements.

		- 3 -

 

CONSOLIDATED CONDENSED STATEMENT OF PROFIT OR LOSS

FOR THE NINE-MONTH INTERIM PERIODS ENDED SEPTEMBER 30, 2019 AND 2018

(stated in thousands of pesos)

 

		Notes and Exhibits				Accumulated as of 09.30.19				Accumulated as of 09.30.18				Quarter from 07.01.19 to 09.30.19				Quarter from 07.01.18 to 09.30.18
Interest income			31				68,471,401				29,718,075				27,077,626				12,547,186
Interest expense			32				(30,072,088	)			(12,051,588	)			(11,465,682	)			(5,735,581	)
Net interest income							38,399,313				17,666,487				15,611,944				6,811,605
Commission income			33				12,882,886				8,671,320				4,702,165				3,748,761
Commission expenses			34				(7,879,618	)			(4,868,367	)			(3,137,368	)			(1,991,381	)
Net commission income							5,003,268				3,802,953				1,564,797				1,757,380
Net income/(loss) from measurement of financial instruments at fair value through profit or loss			35				6,011,075				(90,424	)			1,431,770				322,255
Net (loss)/income from write-down of assets at amortized cost and at fair value through OCI			36				(36,769	)			(54,157	)			3,794				12,774
Foreign exchange and gold gains			37				5,899,657				4,329,081				3,403,555				1,624,223
Other operating income			38				8,903,731				3,144,057				1,123,003				1,004,197
Loan loss allowances			Exhibit R				(6,073,941	)			(2,363,194	)			(1,850,878	)			(1,032,752	)
Net operating income							58,106,334				26,434,803				21,287,985				10,499,682
Personnel benefits			39				(9,604,233	)			(6,390,864	)			(3,649,617	)			(2,503,707	)
Administrative expenses			40				(7,920,024	)			(4,980,915	)			(3,454,495	)			(1,826,091	)
Depreciation and amortization			41				(1,175,030	)			(626,686	)			(422,743	)			(219,784	)
Other operating expenses			42				(11,829,855	)			(5,217,967	)			(3,217,420	)			(1,635,777	)
Operating income							27,577,192				9,218,371				10,543,710				4,314,323
Income from associates and joint ventures							422,570				210,212				(6,916	)			(134,853	)
Income before income tax							27,999,762				9,428,583				10,536,794				4,179,470
Income tax			15 c)				(4,096,426	)			(2,661,049	)			575,149				(1,131,938	)
Income for the period							23,903,336				6,767,534				11,111,943				3,047,532
Income for the period attributable to:
Owners of the Parent							23,527,473				6,677,059				10,739,731				3,007,841
Non-controlling interests							375,863				90,475				372,212				39,691

Notes and exhibits are an integral part of these financial statements.

		- 4 -

 

EARNINGS PER SHARE

AS OF SEPTEMBER 30, 2019 AND 2018

(stated in thousands of pesos)

 

Accounts		09.30.19				09.30.18
Numerator:
Net income attributable to owners of the Parent			23,527,473				6,677,059
Net income attributable to owners of the Parent adjusted to reflect the effect of dilution			23,527,473				6,677,059
Denominator:
Weighted average of outstanding common shares for the period			612,659,638				612,659,638
Weighted average of outstanding common shares for the period adjusted to reflect the effect of dilution			612,659,638				612,659,638
Basic earnings per share (stated in thousands of pesos)			38.4022				10.8985
Diluted earnings per share (stated in thousands of pesos) (1)			38.4022				10.8985

 

(1)	Since Banco BBVA Argentina S.A. has not issued financial instruments with a dilutive effect on earnings per share, basic and diluted earnings per share are the same.

		- 5 -

 

CONSOLIDATED CONDENSED STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE NINE-MONTH INTERIM PERIODS ENDED SEPTEMBER 30, 2019 AND 2018

(stated in thousands of pesos)

 

		Accumulated as of 09.30.19				Accumulated as of 09.30.18				Quarter from 07.01.19 to 09.30.19				Quarter from 07.01.18 to 09.30.18
Income for the period			23,903,336				6,767,534				11,111,943				3,047,532
Other comprehensive income components to be reclassified to income/(loss) for the period:
Share in Other Comprehensive Income from associates and joint ventures at equity method
(Loss)/income on the share in OCI from associates and joint ventures at equity method			(386	)			135,764				—				32,931
			(386	)			135,764				—				32,931
Profit or losses from hedge instruments - Cash flow hedge
Loss for the period of hedge instrument			(9,697	)			—				(9,697	)			—
Income tax			2,909				—				2,909				—
			(6,788	)			—				(6,788	)			—
Profit or losses from financial instruments at fair value through OCI
Loss for the period on financial instruments at fair value through OCI			(5,108,845	)			(363,357	)			(4,841,128	)			(258,594	)
Reclassification adjustment for the period			924				54,155				(39,639	)			(12,776	)
Income tax			1,532,418				92,885				1,464,230				84,626
			(3,575,503	)			(216,317	)			(3,416,537	)			(186,744	)
Other comprehensive income components not to be reclassified to income/(loss) for the period:
Employee benefit plans
Accumulated actuarial profits or losses due to employee benefit plans			—				(5,322	)			—				—
Income tax			—				1,600				—				—
			—				(3,722	)			—				—
Profit or losses from equity instruments at fair value through OCI (Items 5.7.5 of IFRS 9)
Profit/(loss) from equity instruments at fair value through OCI			2,014				—				(1,687	)			—
Income tax			(604	)			—				506				—
			1,410				—				(1,181	)			—
Total Other Comprehensive Income for the period			(3,581,267	)			(84,275	)			(3,424,506	)			(153,813	)
Total Comprehensive Income			20,322,069				6,683,259				7,687,437				2,893,719
Total comprehensive income:
Attributable to owners of the Parent			19,950,806				6,592,784				7,315,225				2,854,028
Attributable to non-controlling interests			371,263				90,475				372,212				39,691

Notes and exhibits are an integral part of these financial statements.

		- 6 -

 

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE-MONTH INTERIM PERIOD ENDED SEPTEMBER 30, 2019 AND 2018

(stated in thousands of pesos)

 

		2019																																												2018
		Share capital				Non-capitalized contributions								Other comprehensive income								Retained earnings
Transactions		Outstanding shares				Share premium				Adjustments to equity				Losses on financial instruments at fair value through OCI				Other				Legal reserve				Optional reserve				Unappropriated retained earnings				Total equity attributable to owners of the Parent				Total equity attributable to non- controlling interests				Total				Total
Balance at the beginning of the year			612,660				6,735,977				312,979				(112,612	)			107,637				4,802,904				12,622,028				13,470,092				38,551,665				30,112				38,581,777				26,056,548
Impact of the implementation of the financial reporting framework set forth by the BCRA			—				—				—				—				—				—				—				—				—				—				—				4,327,810
Adjusted balance at the beginning of the year			612,660				6,735,977				312,979				(112,612	)			107,637				4,802,904				12,622,028				13,470,092				38,551,665				30,112				38,581,777				30,384,358
Total Comprehensive income for the period
- Net income for the period			—				—				—				—				—				—				—				23,527,473				23,527,473				375,863				23,903,336				6,767,534
- Other comprehensive income for the period			—				—				—				(3,575,503	)			(1,164	)			—				—				—				(3,576,667	)			(4,600	)			(3,581,267	)			(84,275	)
- Distribution of retained earnings approved by the Shareholders’ Meetings held on April 24, 2019 and April 10, 2018 (Note 47)
Legal reserve			—				—				—				—				—				1,922,737				—				(1,922,737	)			—				—				—				—
Cash dividends (1)			—				—				—				—				—				—				—				(2,407,000	)			(2,407,000	)			—				(2,407,000	)			(970,000	)
Statutory special reserve due to application of IFRS			—				—				—				—				—				—				3,856,405				(3,856,405	)			—				—				—				—
Optional reserve			—				—				—				—				—				—				5,283,950				(5,283,950	)			—				—				—				—
- Distribution of subsidiary dividends			—				—				—				—				—				—				—				—				—				—				—				(935	)
- Capital increase of subsidiary			—				—				—				—				—				—				—				—				—				—				—				23,055
- Loss of control in subsidiary			—				—				—				—				—				—				—				—				—				—								(391,522	)
- Acquisition of control in subsidiaries (Note 1)			—				—				—				—				—				—				—				—				—				2,047,941				2,047,941				—
Balance at fiscal period-end			612,660				6,735,977				312,979				(3,688,115	)			106,473				6,725,641				21,762,383				23,527,473				56,095,471				2,449,316				58,544,787				35,728,215

 

(1)	Corresponds to $3.93 per share.

Notes and exhibits are an integral part of these financial statements.

		- 7 -

 

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE-MONTH INTERIM PERIODS ENDED SEPTEMBER 30, 2019 AND 2018

(stated in thousands of pesos)

 

Accounts		09.30.19				09.30.18
Cash flows from operating activities
Income before Income Tax			27,999,762				9,428,583
Adjustments to obtain cash flows from operating activities:			(24,816,426	)			(23,260,863	)
Depreciation and amortization			1,175,030				626,686
Loan loss allowance			6,073,941				2,363,194
Effect of foreign exchange changes			(30,489,317	)			(28,722,481	)
Loss from sale of Prisma			(2,644,937	)			—
Other adjustments			1,068,857				2,471,738
Net decreases from operating assets:			(54,912,743	)			(72,414,986	)
Debt securities at fair value through profit or loss			2,328,631				5,106,363
Derivatives			(1,531,178	)			132,799
Repo transactions			6,196,107				(3,055,859	)
Loans and other financing			(15,354,660	)			(52,294,324	)
Non-financial government sector			(296	)			41
Other financial institutions			2,966,404				(1,136,055	)
Non-financial private sector and residents abroad			(18,320,768	)			(51,158,310	)
Other debt securities			(44,803,379	)			(15,244,323	)
Financial assets pledged as collateral			(3,597,971	)			(3,051,759	)
Investments in equity instruments			—				(1,947	)
Other assets			1,849,707				(4,005,936	)
Net increases from operating liabilities:			20,410,566				101,664,834
Deposits			14,978,347				91,270,354
Non-financial government sector			1,097,371				988,014
Financial sector			19,407				29,921
Non-financial private sector and residents abroad			13,861,569				90,252,419
Liabilities at fair value through profit or loss			(649,102	)			1,345,749
Derivatives			3,015,475				(67,810	)
Repo transactions			(14,321	)			(285,410	)
Other liabilities			3,080,167				9,401,951
Income tax paid			(968,533	)			(794,250	)
Total cash flows (used in)/generated by operating activities			(32,287,374	)			14,623,318

		- 8 -

 

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE-MONTH INTERIM PERIODS ENDED SEPTEMBER 30, 2019 AND 2018

(stated in thousands of pesos)

 

Accounts		09.30.19				09.30.18
Cash flows from investing activities:
Payments:			(1,262,484	)			(96,337	)
Purchase of property and equipment. intangible assets and other assets			(1,262,484	)			(94,672	)
Purchase of debt or equity instruments issued by other entities			—				(1,665	)
Collections:			2,826,941				854,668
Sale of property and equipment. intangible assets and other assets			1,729,915				527,436
Acquisition of control of subsidiaries or other businesses			273,311				—
Other collections related to investing activities			823,715				327,232
Total cash flows generated by investing activities			1,564,457				758,331
Cash flows from financing activities
Payments:			(6,022,627	)			(1,321,247	)
Dividends			(2,407,000	)			(970,935	)
Non-subordinated corporate bonds			(3,173,111	)			(350,312	)
Lease payments			(442,516	)			—
Collections:			1,320,102				6,873,386
Non-subordinated corporate bonds			1,319,400				—
Financing received from local financial institutions			702				—
Other collections related to financing activities			—				6,873,386
Total cash flows (used in) / generated by financing activities			(4,702,525	)			5,552,139
Effect of exchange rate changes on cash and cash equivalents			30,489,317				28,722,481
Total changes in cash flows			(4,936,125	)			49,656,269
Cash and cash equivalents at the beginning of the year (Note 7)			99,105,461				38,235,942
Cash and cash equivalents at fiscal period end (Note 7)			94,169,336				87,892,211	(1)

 

(1)	Cash and cash equivalents as of September 30. 2018 includes 70.355 corresponding to VWFS. net of eliminations.

Notes and exhibits are an integral part of these financial statements.

		- 9 -

 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS FOR

THE FISCAL PERIOD ENDED SEPTEMBER 30, 2019

(Stated in thousands of pesos)

 

1.	General information

 

1.1.

Information on Banco BBVA Argentina S.A.

Banco BBVA Argentina S.A. (hereinafter, either “BBVA Argentina”, the “Entity” or the “Bank”) is a corporation (“sociedad anónima”) incorporated under the laws of Argentina, operating as a universal bank with a network of 251 national branches.

Since December 1996, BBVA Argentina is part of the global strategy of Banco Bilbao Vizcaya Argentaria S.A. (BBVA or the “Parent”), which directly and indirectly controls the Entity, by holding 66.55% of the share capital as of September 30, 2019.

On April 24, 2019, the Shareholders’ Meeting approved the Entity’s change of corporate name to “BBVA Argentina S.A.”. However, pursuant to a requirement from the Argentine Central Bank (BCRA) and upon the consent granted by the Shareholders’ Meeting, the Board of Directors, at a meeting held on May 28, 2019, resolved to adopt the name “Banco BBVA Argentina S.A.” On July 25, 2019, the BCRA served notice of the approval of the change of corporate name by way of Resolution No. 166. On September 18, 2019, the Argentine Securities Commission (CNV) submitted the proceedings related to the Entity’s by-laws amendment and restatement to the Argentine Superintendence of Corporations (IGJ) for registration. On October 17, 2019, the IGJ registered the Entity’s change of corporate name and the restatement of its by-laws under No. 21332 of Book 97, “Corporations” volume. On November 4, 2019, the Argentine Central Bank (BCRA) issued the related Communication “C” 85251, giving notice of the Entity’s new corporate name.

These consolidated interim financial statements include the Entity and its subsidiary companies (collectively referred to as the “Group”).

Pursuant to certain amendments to the shareholders’ agreements, effective since July 1, 2019, the Bank has taken over the power to direct the relevant activities of PSA Finance Argentina Compañía Financiera S.A., Volkswagen Financial Services Compañía Financiera S.A. and Rombo Compañía Financiera S.A. Considering the guidelines set out under International Financial Reporting Standard (IFRS) 10, the Entity concluded that it has power on such companies effective since the aforementioned date. Therefore, these interim financial statements include consolidated information with these companies since the date on which the Entity took control over them.

The Entity’s subsidiaries are listed below:

 

•

BBVA Francés Valores S.A.: corporation incorporated under the laws of Argentina as a comprehensive clearing and settlement agent. On March 8, 2019, the Bank’s Board of Directors submitted to its Shareholders’ Meeting a proposal to carry out a merger of this company in order to attain more efficiency in its administrative processes and thus, provide better service to its customers. In this regard, on April 24, 2019, the Shareholders’ Meeting approved the proposal made by the Bank’s Board of Directors. The CNV has authorized the merger prospectus published in the Buenos Aires Stock Exchange Bulletin on April 16, 2019. As of the date of these financial statements, the statutory opposition period granted by Section 83, paragraph 3, of the Argentine Companies Law has elapsed, no objections having been raised. On July 17, 2019, the Final Merger Agreement was filed with the CNV for registration with the IGJ. The merger is deemed effective since October 1, 2019.

		- 10 -

 

•

BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión: corporation incorporated under the laws of Argentina as an agent for the management of mutual funds;

 

•

Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings): corporation incorporated under the laws of Argentina undergoing liquidation proceedings. On December 4, 2008, Law No. 26425 was enacted, providing for the elimination and replacement of the capitalization regime that was part of the Integrated Retirement and Pension System, with a single government regime named the Argentine Integrated Retirement and Pensions System (SIPA). Consequently, Consolidar A.F.J.P. S.A. ceased to manage the resources that were part of the individual capitalization accounts of affiliates and beneficiaries of the capitalization regime of the Integrated Retirement and Pension System, which were transferred to the Guarantee Fund for the Sustainability of the Argentine Retirement and Pension Regime as they were already invested, and the Argentine Social Security Office (ANSES) is now the sole and exclusive owner of those assets and rights. Likewise, on October 29, 2009, the ANSES issued Resolution No. 290/2009, whereby retirement and pension funds managers interested in reconverting their corporate purpose to manage the funds for voluntary contributions and deposits held by participants in their capitalization accounts had 30 business days to express their intention to that end. On December 28, 2009, based on the foregoing and taking into consideration that it is impossible for Consolidar A.F.J.P. S.A. to comply with the corporate purpose for which it was incorporated, it was resolved, at a Unanimous General and Extraordinary Shareholders’ Meeting to approve the dissolution and subsequent liquidation of that company effective as of December 31, 2009;

 

•

PSA Finance Argentina Compañía Financiera S.A.: a financial company incorporated under the laws of Argentina engaged in pledge loans;

 

•

Volkswagen Financial Services Compañía Financiera S.A. (VWFS): a financial company incorporated under the laws of Argentina engaged in pledge loans; and

 

•

Rombo Compañía Financiera S.A.: a financial company incorporated under the laws of Argentina engaged in pledge loans.

Argentine Capital Markets Law No. 26831, enacted on December 28, 2012 and amended by Law No. 27440 dated May 11, 2018, subsequently regulated through General Resolution No. 622/13 and General Resolution No. 731/2018 issued by the CNV, establishes in Section 47 that agents have an obligation to register with the CNV, to act in the market in any of the capacities set forth in such law. On September 9 and 19, 2014, the Entity was registered as an Agent for the Custody of Mutual Funds under No. 4 and as a Comprehensive Clearing and Settlement Agent under No. 42. On August 7, 2014, the subsidiary BBVA Banco Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión was registered as a Mutual Fund Agent under No. 3. On September 19, 2014, the subsidiary BBVA Francés Valores S.A. was registered as a comprehensive Settlement, Clearing and Trading Agent under No. 41.

Part of the Entity’s stock capital is publicly traded and has been registered with the Buenos Aires Stock Exchange, the New York Stock Exchange and the Madrid Stock Exchange.

		- 11 -

 

1.2.

Economic context

The future development of Argentina’s macroeconomic conditions is uncertain as a consequence of the political events arising from the election scenario, which resulted in declining prices and incremental volatility of Argentine financial assets, the establishment of restrictions to access the foreign exchange market, reconsidered expectations as to Argentina’s economic growth level, and the likelihood of a potential restructuring of its sovereign debt.

In particular, and concerning financial assets, the Argentine Government issued Decree No. 596/2019 dated August 28, 2019, putting off the maturity of short-term securities (Letes, Lecap, Lecer, and Lelink).

As of September 30, 2019, the Group has holdings of Argentine securities subject to restructuring for an aggregate amount of 9,984,980. These securities are measured at fair value through other comprehensive income, and were recognized for a lower amount of 4,877,185 to reflect the decline in prices.

For the purposes of this calculation, the Entity considered the changes in prices occurring from August 1 through September 30, 2019.

On the other hand, on September 1, 2019, the Argentine Government published Executive Decree No. 609/2019 setting forth certain extraordinary and interim guidelines in connection with the export of goods and services, transfers overseas, and access to the foreign exchange market. In addition, the BCRA issued Communication “A” 6770, as amended, whereby, among other measures, it provided that up to and including December 31, 2019, the BCRA’s prior consent will be required to access the foreign exchange market for the remittance of profits and dividends, settlement of services with foreign related companies, and the early payment of financial debts (principal or interest) over 3 business days before their due date.

Such Communication also set forth certain adjustments and changes to the overall net position in foreign currency.

Subsequent to the reporting period-end and until the date of these financial statements, the US dollar-peso exchange rate went from $ 57.56 to $ 59.76 per USD 1 (exchange rate under Communication “A” 3500).

The Group’s management monitors the development of these events on an ongoing basis in order to define the potential actions to be taken and identify their impact on its financial position.

 

2.	Basis for the preparation of the Financial Statements

These consolidated condensed interim financial statements for the nine-month period ended September 30, 2019 were prepared pursuant to the reporting framework set forth by the BCRA that requires supervised entities to submit financial statements prepared pursuant to the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), with the following exceptions (“financial reporting framework set forth by the BCRA”):

 

a)

application of the impairment model set forth in Section 5.5 “Impairment” of IFRS No. 9 “Financial instruments” until the fiscal years commencing on January 1, 2020. On December 5, 2018, the Entity filed with the BCRA the impairment model to be applied within the framework of IFRS No. 9 as from January 1, 2020. On March 29, 2019, the Entity filed quantification as of December 31, 2018 with the BCRA;

		- 12 -

 

b)

application of International Accounting Standard No. 29 (IAS No. 29) “Financial reporting in hyperinflationary economies”, which shall be applicable for the fiscal years beginning on or after January 1, 2020, taking into consideration the provisions of Communication “A” 6651 issued by the BCRA (see Note 3.2);

 

c)

the standards prescribed through Memorandum No. 6/2017 issued by the regulatory entity on May 29, 2017 regarding the treatment to be applied to uncertain tax positions. Had the IFRS treatment regarding uncertain tax positions been applied, liabilities would have decreased by 5,447,078 and 2,207,318 as of September 30, 2019 and December 31, 2018, respectively. Likewise, the income/(loss) for the nine-month period ended September 30, 2019 and 2018 would have increased by 3,239,760 and 1,021,518, respectively (Note 15.c), and

 

d)

the instructions provided in Memorandum No. 7/2019 issued by the BCRA dated April 29, 2019, which set forth the accounting treatment to be applied to the remaining investment held by the Entity in Prisma Medios de Pago S.A. recorded under “Investments in Equity Instruments” as of September 30, 2019, (see Note 16).

The exceptions described above imply a deviation from IFRS.

As this is an interim period, the Group has opted to present condensed information, pursuant to the guidelines of IAS No. 34 “Interim Financial Information”; therefore, not all the information required for the preparation of complete financial statements under IFRS is included. Therefore, these financial statements should be read jointly with the financial statements as of December 31, 2018. However, explanatory notes of events and transactions that are material for understanding any changes in the financial position as from December 31, 2018 are included.

Furthermore, the BCRA, through Communications “A” 6323 and 6324 set forth guidelines for the preparation and presentation of the financial statements of financial institutions for fiscal years beginning on or after January 1, 2018, including the additional reporting requirements as well as the information to be submitted as Exhibits.

These financial statements have been approved by the Board of Directors of Banco BBVA Argentina S.A. as of November 7, 2019.

 

3.	Functional and presentation currency and Unit of account

 

3.1.

Functional and presentation currency

The Group considers the Argentine Peso as the functional and presentation currency. All amounts are stated in thousands of pesos, unless otherwise stated.

 

3.2.

Unit of account

IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of an entity whose functional currency is that of a hyperinflationary economy be stated in the measuring unit current at the reporting period end. The standard sets out certain factors to be considered in order to conclude whether an economy qualifies as hyperinflationary, including the existence of a cumulative inflation rate over the last three years close to, or in excess of, 100%.

As a result of the increase in inflation that has been experienced in the first months of fiscal year 2018, there has been consensus on that the Argentine economy would qualify as a hyperinflationary economy according to the guidelines set forth under IAS No. 29. This consensus implies the need to apply IAS No. 29 in preparing financial statements under IFRS for annual and interim periods commencing on or after July 1, 2018.

		- 13 -

 

This standard sets forth that the financial statements of an entity with a functional currency of a high inflationary economy shall be restated in terms of the measuring unit current at the end of the reporting period, regardless of whether the financial statements are based on an historical cost or current cost approach. For such purposes, monetary items shall not be restated, non-monetary items shall be restated by applying the variation of a general price index between the date of acquisition or the date of revaluation and the date of the financial statements to be submitted. The components of shareholders’ equity, except accumulated income/(loss) and surplus of appreciation of assets, shall be restated by applying the general price index to the various items between the date of contribution, or between the date of acquisition for any other cause and the date of the financial statements to be submitted. Income and expenses for the period shall be adjusted by applying the general price index between the date those items were acquired and the date of the financial statements to be submitted.

Furthermore, the figures for the preceding fiscal years or periods presented for comparative purposes shall be restated.

As mentioned in Note 2, the application of the guidelines in IAS 29 is exempted and shall be effective for fiscal years beginning on or after January 1, 2020 as set forth by the BCRA through Communications “A” 6651 and “A” 6778 issued on February 22, 2019 and September 5, 2019, respectively, and therefore the Group does not and shall not restate its financial statements until the date referred to above

The interim financial statements as of September 30, 2019 of the following subsidiaries: BBVA Francés Valores S.A., BBVA Francés Asset Management S.A. and Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (Undergoing liquidation proceedings) were prepared in constant currency in accordance with the provisions of Resolution 107/18 of the Professional Council of Economic Sciences of the City of Buenos Aires (CPCECABA), which state the need to restate in constant currency financial statements for fiscal years ended on or after July 1, 2018, in accordance with JG Resolution issued by the Federation of Professional Councils of Economic Sciences (FACPCE)No. 539/18 dated September 29, 2018. For the purposes of the preparation of the consolidated condensed interim financial statements in accordance with the financial reporting framework set forth by the BCRA, the Entity has made the necessary adjustments to eliminate the inflation restatement in the consolidation process.

The Entity’s Management estimates that the Group shareholders’ equity and income/(loss) may significantly differ if IAS No. 29 is applied.

The existence of such inflationary economic environment affects the Group’s financial position and results of operations. Therefore, the impact of inflation may distort the financial information and should be taken into consideration in understanding the Group’s information reported in these financial statements about its financial position, comprehensive income, changes in shareholders’ equity and cash flows.

Accordingly, as of September 30, 2019 and for the nine-month period then ended, the Entity estimated the impact of the restatement into constant currency on its financial statements, which would result in an increase of 9,584,000 in shareholders’ equity and a decrease of 15,687,000 in its total comprehensive income.

		- 14 -

 

4.	Accounting estimates and judgments

Significant judgments made by the Board of Directors in the application of accounting policies as well as the premises and estimates on uncertainties as of September 30, 2019 were the same as those described in Note 4.1. and 4.2. to the consolidated financial statements as of December 31, 2018.

In addition, the Group applies the same methodologies for the assessment of fair values and the same criteria for the classification of fair value levels as those described in Note 4.3. to the consolidated financial statements as of December 31, 2018.

 

5.	Significant accounting policies

Except as stated in Notes 5.1 and 5.2 below, the Group has consistently applied the accounting policies described in Note 5 to the consolidated financial statements as of December 31, 2018, in all the periods presented in these financial statements. The policy on the recognition of income tax in interim periods is described in Note 15.c).

 

5.1.

Leases

As of January 1, 2019, the Group has adopted IFRS No. 16 “Leases”. Said standard supersedes IAS No. 17 “Leases” and was adopted by the BCRA through Communication “A” 6560.

IFRS No. 16 introduces a single lessee accounting model, requiring lessees to recognize the asset related to the Right of use of the leased asset and a Lease liability representing the obligation to make lease payments. The Entity has opted to apply the exceptions related to the recognition of short-term leases and leases where the underlying asset is of low value.

As to the lessor´s recognition, IFRS No. 16 substantially keeps the requirements of IAS No. 17. Therefore, lessors continue classifying leases as operating or finance, and each of them is recognized differently.

The Group has opted to apply the modified retrospective method whereby the Right of use and the Lease liability determined as of January 1, 2019 are recognized. The Lease liability is determined as the current amount of future payments agreed, discounted at the Group’s incremental borrowing rate as of such date. Besides, the Group has opted to measure the Right of use as of the transition date for an amount equivalent to the Lease liability as of such date. Accordingly, the transition to IFRS 16 did not result in an adjustment to Accumulated income/(loss) as of the transition date.

As a result of this change, the Group recognizes the Right of use as an asset and the Lease liability as a liability, mainly from leases of offices in its branch network (Note 29).

Below is a detail of the changes in the accounting policies:

 

a)

Contracts that contain a lease

At the beginning of the contract, the Group evaluates whether a contract is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

		- 15 -

 

b)

Leases under which the Group acts as lessor

When the Group acts as lessor, at the beginning of the contract the Group determines whether it is a finance or an operating lease.

To classify each lease, the Group evaluates if it transfers substantially all the risks and rewards incidental to the ownership of the leased asset. If so, it classifies it as a finance lease, otherwise, it is an operating lease.

In a finance lease, the leased asset is derecognized and recognized as a receivable in an amount equivalent to the net investment in the lease under “Loans and other financing”.

Collections received under a finance lease are broken down into interest and the reduction of the net investment in the lease. Interest is recognized over the lease term applying an effective interest rate. Contingent leases are not considered in determining the net investment in the lease.

 

c)

Leases under which the Group acts as lessee

The Group recognizes the Right of use of the leased asset and the Lease liability at the beginning of the contract. The Right of use is initially measured at cost, which includes the initial amount of the Lease liability adjusted for any lease payments made before the beginning of the contract, plus initial direct costs incurred and an estimate of the costs for dismantling or restoring the underlying asset, less any incentives received.

The Right of use of the leased asset is then depreciated on a straight-line basis from the beginning of the contract to the expiration of the lease term.

The Lease liability is initially measured at the present value of the lease payments that were not paid at the beginning of the contract, discounted using the Group’s incremental borrowing rate.

Lease payments included in the measurement of the Lease liability include the following items:

 

•

Fixed payments, including payments that are not substantially fixed.

 

•

Variable payments, which depends on a rate or index, initially measured by applying the rate or index as of the commencement date.

 

•

Any amounts expected to be paid as guaranteed residual value.

 

•

The exercise price of call options, if it is reasonably certain that they will be exercised.

 

•

Any amounts expected to be paid for the renewal periods if it is reasonably certain that the renewal options will be exercised.

 

•

Any penalties for early termination, if it is reasonably certain that the contract will be early terminated.

The Lease liability is measured at amortized cost, using the effective interest rate method. It is remeasured when there is a change in future lease payments due to a change in the rate or index, in the amounts that the Group is expected to pay as guaranteed residual value or if the Group changes the evaluation as regards whether it will exercise a call, renewal or early termination option.

		- 16 -

 

When the Lease liability is remeasured, the relevant adjustment is recognized in the Right of use of the leased asset.

 

5.2.

Investments in equity instruments

By virtue of the partial sale of the shareholding in Prisma Medios de Pago S.A. as explained in Note 16, the remaining stake has been measured at fair value through profit or loss on the basis of the valuation reports issued by independent appraisers, net of the valuation adjustment mandated by the BCRA in its Memorandum No. 7/2019. The accounting criteria applied as required above, imply a deviation from IFRS.

 

5.3.

Comparative information

The Consolidated Statement of Financial Position as of September 30, 2019 is presented on a comparative basis to the previous year-end, while the consolidated statements of profit or loss, other comprehensive income, changes in shareholders’ equity, and cash flows, and their related notes for the nine-month period ended September 30, 2019, are presented on a comparative basis to the balances for the same period of the previous year.

For comparative purposes, certain reclassifications were made to the information presented for the previous year/period, in order to present them on a consistent basis. The changes of comparative information do not imply changes in any decisions taken on the basis thereof.

 

6.	IFRS issued but not yet effective for Financial Institutions

Pursuant to Communication “A” 6114 issued by the BCRA, as the new IFRS are approved, or the current IFRSs are modified or repealed and, once such changes are adopted by the FACPCE, the BCRA shall issue a statement of its approval for financial institutions. In general, early adoption of an IFRS shall not be allowed, unless specifically admitted when adopted.

 

a)

IFRS No. 9 Financial Instruments - Impairment

Regarding Section 5.5 “Impairment” of IFRS No. 9, Communication “A” 6430 issued by the BCRA established its application as from fiscal periods beginning on or after January 1, 2020. On the subject, the Entity submitted to the BCRA a description of the expected losses calculation model under that standard on December 5, 2018 and made the quantification of its impact and submitted such information to the regulatory entity on March 29, 2019, as required by Communication “A” 6590 issued by the BCRA.

 

b)

IAS No. 29 Financial reporting in hyperinflationary economies

In addition, Communications “A” 6651 and “A” 6778 issued by the BCRA on February 22, 2019 and September 5, 2019, respectively, set forth the application of a the restatement in constant currency set forth by IAS 29 in hyperinflationary economies for fiscal periods beginning on or after January 1, 2020. As stated in Note 2 to these financial statements, the Entity estimates that the effect of adopting this regulation has a significant impact on its statements of financial position, income and other comprehensive income, changes in shareholders’ equity and cash flows as of September 30, 2019.

		- 17 -

 

7.	Cash and deposits in banks

Breakdown in the Consolidated Condensed Statement of Financial Position and the balance of cash and cash equivalents computed for the purposes of the preparation of the Consolidated Condensed Statement of Cash Flows is as follows:

 

		09.30.19				12.31.18
Cash			28,259,398				15,570,831
BCRA - Current account			59,163,499				75,503,977
Balances with other local and foreign institutions			6,746,439				8,030,653
TOTAL			94,169,336				99,105,461

 

8.	Debt securities at fair value through profit or loss

 

		09.30.19				12.31.18
Government securities			162,489				952,798
Private securities - Corporate bonds			48,103				167,913
BCRA Bills			4,958,653				6,387,388
TOTAL			5,169,245				7,508,099

 

9.	Derivatives

In the ordinary course of business, the Bank carried out foreign currency forward transactions with daily or upon-maturity settlement of differences, with no delivery of the underlying asset and interest rate swap transactions. These transactions do not qualify as hedging pursuant to IFRS No. 9 - “Financial Instruments”.

The aforementioned instruments are measured at fair value and were recognized in the Consolidated Condensed Statement of Financial Position in the item “Derivative instruments” Changes in fair values were recognized in the Consolidated Condensed Statement of Profit or Loss in “Net income/(loss) from measurement of financial instruments at fair value through profit or loss”.

On the other hand, PSA Finance Argentina Compañía Financiera S.A. and Rombo Compañía Financiera S.A. entered into interest rate swaps with the Bank and with third parties, which are recognized by the subsidiaries as cash flow hedge. The actual portion of the cumulative change in the fair value of swaps pending subsequent recognition in income is included in other comprehensive income under the caption “Profits or losses from hedge instruments - Cash flow hedge.” The balance sheet, profit & loss, and comprehensive income balances related to swaps entered into by and between the Bank and its subsidiaries were eliminated during the consolidation process.

Breakdown is as follows:

Assets

 

		09.30.19				12.31.18
Debit balances linked to foreign currency forwards pending settlement in pesos			1,747,042				591,418
Debit balances linked to interest rate swaps			496,227				—
TOTAL			2,243,269				591,418

		- 18 -

 

Liabilities

 

		09.30.19				12.31.18
Credit balances linked to foreign currency forwards pending settlement in pesos			3,600,866				889,731
Credit balances linked to interest rate swaps			421,955				487,528
TOTAL			4,022,821				1,377,259

The notional amounts of the forward transactions and foreign currency forwards, stated in US Dollars (US$) and in Euros as applicable, as well as the base value of interest rate swaps are reported below:

 

		09.30.19				12.31.18
Foreign Currency Forwards
Foreign currency forward purchases - US$			844,045				620,651
Foreign currency forward purchases - Euros			128				—
Foreign currency forward sales - US$			868,655				760,615
Foreign currency forward sales - Euros			4,287				5,463
Interest rate swaps
Fixed rate for floating rate			2,017,656				3,261,154
Floating rate for fixed rate			618,198				—

 

10.	Repo transactions

Breakdown is as follows:

Reverse repurchase transactions

 

		09.30.19				12.31.18
Amounts receivable for reverse repurchase transactions of government securities and BCRA bills with financial institutions			—				154,753
Amounts receivable for reverse repurchase transactions of BCRA bills with the BCRA			6,665,009				—
Amounts receivable for reverse repurchase transactions of government securities with non-financial institutions (1)			—				12,706,363
TOTAL			6,665,009				12,861,116

 

(1)	For two repo transactions of Argentine Bonds in US Dollars 2024 carried out with Argentina for an original total of US$ 50,000,000 and US$ 300,000,000, which were cancelled on March 1 and August 20, 2019, respectively.

Repurchase transactions

 

		09.30.19				12.31.18
Amounts payable for repurchase transactions of BCRA bills			—				14,321
TOTAL			—				14,321