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01/10 16:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several negative factors: rising NPL ratio, significant decline in NIM, net loss, and regulatory uncertainties. The Q&A reveals optimism for future growth but lacks specific details, and management's vague responses on key issues add uncertainty. Despite some positive elements like deposit growth and potential long-term ROE improvement, the immediate financial challenges and lack of clear guidance suggest a negative short-term market reaction.
Net Loss ARS 50.3 billion in Q3 2025, attributed to systemic pressures, high real interest rates, and historic reserve requirements ahead of elections.
Loan Growth 8% in real terms year-over-year, led by corporate segment growth, while retail declined slightly due to tightened origination standards.
Non-Performing Loan (NPL) Ratio 3.9%, an increase driven by the retail side, though the NPL ratio for individuals remains below the retail loan share.
Deposit Growth 15% quarter-on-quarter in real terms and over 40% year-on-year, with dollar deposits up 31% sequentially, driven by a remunerated account strategy.
Net Financial Income Declined 43% sequentially due to increased funding costs (ARS 56 billion), bond price volatility, and higher reserve requirements.
Net Interest Margin (NIM) Peso NIM declined to 11.7% and total NIM fell to 10.8%, down 1,100 and 1,000 basis points quarter-over-quarter, respectively, due to high real interest rates and reserve requirements.
Operating Costs Declined 2% quarter-on-quarter and 12% year-to-date in real terms, reflecting tight cost control measures.
CET1 Ratio 13.2% at quarter-end, rising to 14.5% in October, supported by lower deferred asset tax deductions.
SuperApp scaling: The company is scaling its SuperApp, enhancing customer engagement, and expanding cross-sell opportunities.
Loan growth: Loan growth remains solid, up 8% in real terms, led by the corporate segment.
Deposit growth: Deposit growth was strong, up 15% quarter-on-quarter in real terms and over 40% year-on-year. Dollar deposits climbed to another record high, up 31% sequentially.
Cost control: Operating expenses declined 2% quarter-on-quarter and 12% year-to-date in real terms.
Capital base: CET1 ratio reached 13.2% at quarter end and rose to 14.5% in October, supported by lower deferred asset tax deductions.
Focus on profitability and long-term value: The company is committed to returning to profitability and sustaining long-term value through strategic initiatives.
Operational efficiencies: Reinforcing focus on operational efficiencies, including reductions in headcount and non-staff expenses.
Systemic pressures and tight monetary policy: The company faced systemic pressures and a very tight monetary policy characterized by unsustainably high real interest rates and historic reserve requirements ahead of the elections. This led to significant compression of financial margins and constrained lending capacity.
Net financial loss: The company recorded a net loss of ARS 50.3 billion in Q3 2025, driven by macroeconomic and regulatory challenges.
High funding costs: One-day interest rates peaked at over 90%, and 150% when adjusted by reserve requirements, leading to a funding cost increase of ARS 56 billion. This created a temporary squeeze on spreads as deposit rates adjusted immediately while loan repricing lagged.
Increased reserve requirements: The Central Bank raised minimum reserve requirements by over 23 percentage points and moved compliance from a monthly average to a daily basis, negatively impacting liquidity by nearly ARS 21 billion.
Negative spread on UVA mortgage portfolio: The sharp rise in real interest rates generated a negative spread on the UVA mortgage portfolio, impacting financial margins by close to ARS 18 billion.
Weakened asset quality: The NPL ratio rose to 3.9%, mainly driven by the retail segment, reflecting weakened asset quality.
Challenging economic environment: The company anticipates an NPL ratio of 4.7% to 5.1% for the full year, reflecting ongoing challenges in asset quality and consumer trends.
Decline in profitability: Net interest margin (NIM) declined significantly, with peso NIM falling to 11.7% and total NIM to 10.8%, down 1,100 and 1,000 basis points respectively, quarter-over-quarter.
Regulatory and macroeconomic uncertainty: The company faces uncertainty around reserve requirements, liquidity conditions, and broader macroeconomic frameworks, impacting its ability to provide a clear 2026 outlook.
Loan Growth: Real loan growth is expected to be between 35% to 40% for the full year 2025, led by corporate lending, with retail gradually resuming growth as disposable income improves.
Deposit Growth: Deposits are forecasted to grow 30% to 35%, with further share gains in U.S. dollar-denominated deposit balances.
Asset Quality: The NPL ratio is projected to be between 4.7% to 5.1%, reflecting asset quality trends among consumers and the challenging environment in recent months.
Net Cost of Risk: Net cost of risk is anticipated to range between 5.8% to 6.3%.
Net Interest Margin (NIM): NIM is expected to be between 15% to 18%, influenced by high interest rates and reserve requirements through late October.
Net Fee Income Growth: Net fee income growth is forecasted at 5% in real terms.
Operating Expenses: Operating expenses in real terms are expected to decline by 8% to 10%.
Return on Equity (ROE): Full-year ROE is anticipated to range between negative 5% and 0%.
Capital Adequacy: The CET1 ratio is expected to end the year between 12.5% and 13.5%.
2026 Preliminary Outlook: The company plans to provide a preliminary outlook for 2026 early next year, contingent on greater clarity around reserve requirements, liquidity conditions, economic activity, and the broader macroeconomic framework.
The selected topic was not discussed during the call.
The earnings call highlights several negative factors: rising NPL ratio, significant decline in NIM, net loss, and regulatory uncertainties. The Q&A reveals optimism for future growth but lacks specific details, and management's vague responses on key issues add uncertainty. Despite some positive elements like deposit growth and potential long-term ROE improvement, the immediate financial challenges and lack of clear guidance suggest a negative short-term market reaction.
The earnings call presents a mixed picture: strong loan growth and NIM expansion are positive, but increased loan loss provisions and a rising NPL ratio are concerning. The Q&A section reveals uncertainties around NPL trends and cost of risk, with management providing vague responses on key issues. Although some strategic initiatives are promising, the revised growth guidance and macroeconomic challenges temper optimism. Overall, the sentiment remains neutral as positive elements are balanced by risks and uncertainties.
The earnings call presents mixed signals. Basic financial performance shows modest loan growth and a rise in deposits, but NPL ratios increased, indicating risk. Product development efforts like the remunerated account and AI integration are positive, but market volatility and regulatory risks persist. The Q&A section reveals management's optimism but also avoidance of specific issues. The absence of a share buyback program and uncertain economic conditions further temper expectations. Overall, these factors suggest a neutral stock price movement in the short term.
The earnings call highlights strong retail loan growth and improved NIM, but concerns about rising NPL ratios and cost of risk persist. The Q&A revealed management's evasiveness on sector-specific issues, particularly in agriculture. Although there is optimism in deposit growth and new product launches, economic and regulatory uncertainties loom. The lack of a share buyback program and a decline in net financial income further temper optimism. Given these mixed signals, the stock price is likely to remain stable, resulting in a neutral sentiment.
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