Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to BBVA Argentina's Fourth Quarter 2020 Results Conference Call. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the Company's presentation. After company remarks are completed, there will be a question and answer section. At that time further instructions will be given. [Operator Instructions] First of all, let me stress that some of the statements made during this conference call may be forward-looking statements within the meaning of the Safe Harbor provisions found in Section 27A of the Securities Act of 1933 under U.S. Federal Securities law. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Additional information concerning these factors is contained in the BBVA Argentina's annual report on Form 20-F for the fiscal year 2019 filed with the U.S. Securities and Exchange Commission. Today with us, we have Mr. Ernesto Gallardo, CFO; Ms. Ines Lanusse, IRO; and Mr. Javier Kelly, Investor Relations Manager. Mr. Kelly, you may begin your conference.

Hello everyone, and welcome to the BBVA Argentina earnings conference call for the discussion of our quarter and fiscal year ended December 31, 2020. Before we begin our formal remarks, allow me to remind you that certain statements made during the course of the discussion may constitute forward-looking statements, which are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to materially differ, including factors that may be beyond the Company’s control. For a description of these risks, please refer to our filings with the SEC and our earnings release, which are available at our investor relations website ir.bbva.com.ar. Speaking today will be Ines Lanusse, also joining us today is Ernesto Gallardo our Chief Financial Officer, who will be available for the Q&A session. Please note that starting January 1st, 2020, as per Central Bank regulation, we have begun reporting results applying hyperinflation accounting in accordance with IFRS Rule IAS 29. For ease of comparability, figures for all quarters of 2019 have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through December 31, 2020. Now, let me turn the call over to Ines.

Thank you, Javier, and thank all of you for joining us on our fourth quarter 2020 and full year earnings conference call. We hope you and your beloved ones are healthy and safe on these challenging times. BBVA Argentina, has been able to maintain a solid position within a high uncertainty concept throughout 2020. While some signs of recovery have appeared on economic side, much still remains to be defined facing 2021, such as the development of the global sanitary crisis, the resolution of internal objects related to fiscal deficit financing, the agreement with the IMF, and last but not least, the result of 2021 mid-term elections. Meanwhile, the bank closely monitors its business, financial conditions and operating results in the aim of anticipate anticipating possible effects of the gradual removal of regulations implemented by the government during the pandemic, and especially over asset quality and profitability ratios. It is important to emphasize that the global sanitary crisis in 2020 confirmed that of which BBVA Argentina was convinced some years ago, the significance of technology in the delivery of financial services. In virtue of our vision of the future, we were able to rapidly adapt to the new normality and continue to offer our services to all our clients during the pandemic. These unexpected circumstances ratifies that the path we have taken in terms of digital transformation, internal process adaptation and personnel training is most adequate. Regarding digital transformation, total digital clients reached 1.9 million with a penetration of 72% from 66% a year ago. Total mobile clients reached 1.6 million, with a penetration of 60% from 54% in the prior year. Moreover, digital branches have been launched as of October 2020, combining several features between human capital and structure facilities to promote clients self-service aiming to digitalize and migrate…

We will now begin the question and answer session. [Operator Instructions]. Our first question is from Gabriel Nobrega with Citi. Please go ahead.

Hi, everyone. Good morning and thank you for jumping to the tough questions. One thing that caught my eye during this quarter was the rapid deterioration in your commercial loan book. And I think this is a bit surprising as the Central Bank has actually extended some of the flexibilization into the end of March. And so first, I was just wondering, is there a specific sector? Or was it related to a specific company? And if it was really related to a specific company, how are you provision for them? And I'll make a second question afterwards. Thank you.

Hello, Gabriel. How are you? Yes, the increase in NPL, in states in a particular case a company from the oil and gas sector, San Antonio, the debt were for 1.5 [ph] billion pesos from that 4.3 is dollar-denominated. And the company has been already provisioned into Stage 3. So that's the particular case. Just to give you some other information regarding NPL, we believe the ratio is very well under control. The asset number we have for NPL excluding Central Bank waivers as of December is 1.82. So it's very well under control. And we are projecting. I'm sure that, Javier [ph], you would like to add. We are projecting NPL towards the end of 2021, around 3.32% mainly driven by commercial lending and the removal of the waivers imposed by the Central Bank.

Alright. Perfect. Thank you for the explanation. And then my second question, when we look at the provisions, even though your billing reports before fourth quarter, we see that -- it seems that provisions increased a lot. And so, I was just wondering if the increase in provision is it because of this company, which you went classified as on Stage 3? And also, as Ines just said, that you're expecting NPL to pick up and then reach around maybe 3.3% by the end of the year. Are you seeing any need from further provision throughout the year? Thank you.

Okay. Just to be clear, in the press release, the only thing that we didn't disclose was the full P&L for the quarter. But there's a chart on provisioning by quarter. So you can see that information. Its available in the press release. Regarding the increasing provision, it is mainly to do with the change in the calculation of the parameters of IFRS 9, which is normally done at the end of the year. Particularly it was a November. Going forward to give you more color on asset quality, the cover ratio as you know, reached 324%, and we are seeing that ratio towards the end of the year moving towards 150. Mainly because of an increase on the denominator of the NPL. So that's our projection. And regarding cost of risk, we ended the quarter or the year in 4.89%. And we are projecting that ratio to go further down to 3.4%, mainly because a higher increase in the average loan book compared with the loans allowances. That as of December, you had a higher increase in the numerator rather than that denominator, so it's going to be invert the increases.

Alright. Thank you very much for your answer, Ines.

You're welcome, Gabriel.

[Operator Instructions] The next question comes from Carlos Gomez with HSBC. Please go ahead.

Hello, good morning, Ines. If we can move back, so why exactly you're not closing the P&L, because it's a pretty extreme measures. And I think, I completely understood what is the reason. Now I understand that you intend to publish full quarterly information in the coming quarters? Could you confirm that? And will you be providing history? And second, regarding your expectations for this coming year in terms of growth, in terms of profitability. I know it's very hard. And I know there are so many variables that -- what is the general idea of what the bank expects relative to 2020? Thank you.

Hi, Carlos. Thank you for your question. Okay. So basically, we did not disclose the P&L by quarter, because there was an implementation of our norm Communication A 7222 of Central Bank. That basically was changing the way you were recognizing the effects of inflation on all the bonds you have and how to collect themselves. As you know, we had the bonds in other comprehensive income. And before the change in this regulation [ph], you were just accumulating the effects of inflation since you acquire the bond. And you were only moving that negative effects into the P&L once you sold or defaulted the bond. That norm -- that regulation changed. And it was not compulsory for all banks in December that those central banks allowed it to make the changes in December, the change that we did in our P&L and it is compulsory for all banks as of January 2021. So as of January, or as of the first quarter of next year, you're not going to have this differences between the way our bank reports the information. So basically what you did now is the accumulated effect you had of the inflation for that particular bond, you had to distribute it in the corresponding period. You recognize some part of that loss in 2020, and another part in 2019. So basically, you increased -- you had an extra increase of your net income, for example, the variation because of the implementation of this regulation was 5.4 billion pesos more in 2020, but 9.2 billion pesos less in 2019. If we have shown the fourth quarter 2020 information, it wouldn't have been comparable with the third quarter or the other quarters, because you were not obliged to restate the previous quarter. Going forward, as the quarters are presented for historical quarters will be restated with the application of this new recommendation, and it's going to be aligned with all of the banks. You will not have more distortions when comparing with the other banks you cover. I hope I answered that question. I know it has been a complicated and it has been a complicated decision for us. But it was not accurate to show a fourth quarter with a full effect, but actually you can do that calculation, if you want. You just need to take the third quarter information you have to multiplied by the inflation of the quarter, which was 1.11%. And you subtract that with accumulated results and you can get our fourth quarter with full effect of the implementation of regulation. Going towards…

Okay. Before you move on. Obviously, this is complex, obviously, this requires a lot of calculations. So, could you please and could management, please commit to providing us with that quarterly information in the future? And you mentioned that it affects the 2019 results as well. So could we have 2019, 2020, both in nominal and in real terms so that we can make comparisons because at this point we have quite lost?

In nominal terms is impossible, Carlos, and none of the other banks have presented nominal information. The balance sheets, presented adjusted by inflation. And all the figures we're providing are adjusting for inflation. And clearly, the projections we're seeing for loan deposits numbers I'm going to give you are adjusted by inflation as well, because that's a local regulation. What we are going to do is to provide the quarter information with implementation of the norm and corresponding comparative. Okay?

Okay. Thank you. And [Indiscernible].

Okay. So going forward projections. Carlos, again, this is all projections are real terms. We ended the fiscal year 2020 with the loan book growing around 6%, growing above the system. We're expecting for 2021, an increase of around 11% in real terms, growing above the system as well. Our research department is seeing a contraction in loan for 2021 in the system. That growth is going to be led by U.S. dollar lows, because the agribusiness [ph] should pick up. And on a better lesser extend by the debatable. On total deposits, we ended the year growing around 19.5%, that were flat compared to the system. And for 2021, we are expecting 10% growth. Again, growing above the system, and our research department is seeing also a contraction in deposit growth for the system in 2021. The currency and then it's going to be led by the book in dollars, more than the peso. Regarding ROE and our ROA, as you mentioned is difficult to predict and change rules and regulations change very rapidly. But we are seeing a decrease in ROE and the ROA to half. And that's mainly has to do with the inflation. We're expecting inflation to go up to 50% in 2021 compared to a 36% you saw in 2020. So it's basically an effect of the inflation. The P&L should -- always in real terms now should behave very similar to what was 2020, but the decrease will mainly come from a higher inflation assets in the net monetary position.

Okay. So similar nominal returns, so to speak, but lower real returns because of inflation?

Alright.

Thank you very much.

You're welcome.

This concludes the question and answer session. At this time I would like to turn the floor back to Ms. Lanusse for any closing remarks.

Thank you for your time. Hope you have a nice day. And please let us know if you have further questions. We will happy to answer. Bye.

Thank you. This concludes today's presentation. You may disconnect your line at this time and have a nice day.