Form 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of May 2010

Commission File Number: 001-12568

 

 

BBVA French Bank S.A.

(Translation of registrant’s name into English)

 

 

Reconquista 199, 1006

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  x            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  x

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  x

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  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

BBVA Banco Francés S.A.

TABLE OF CONTENTS

 

Item

    
1.  

Press release entitled “BBVA Banco Francés reports consolidated first quarter earnings for fiscal year 2010”.

LOGO

Buenos Aires, May 7, 2010 - BBVA Banco Francés (NYSE: BFR.N; BCBA: FRA.BA; LATIBEX: BFR.LA) reports consolidated first quarter earnings for fiscal year 2010

 

 

Highlights

 

 

  •  

BBVA Banco Francés earnings have continued to grow. During the first quarter of 2010, the Bank’s net income reached AR$159.7 million, increasing 85.9% compared to the same quarter of 2009 and 8.6% compared to recurring gains in the fourth quarter of 2009.

 

  •  

Meanwhile net interest income grew 25.8% and 3.5% compared to the same recurring revenues in the first quarter of 2009 and the fourth quarter of 2009, respectively. This increase is based on an improvement in the private sector financial margin due to higher income, which is consequence of a steady growth of the loan portfolio, mainly in the most dynamic sectors, together with a lower cost of funds, resulting in an improvement in the funds structure.

 

  •  

As in the Argentine Financial Market as a whole, the private sector loan portfolio registered a slight growth in the first three months of the year, meanwhile in annual terms, growth reached 8.2%. In the past 12 months, companies financing showed a higher growth with an increase of 12.0% whereas the increase in consumer loans to individuals was 6.6% in the same period.

 

  •  

Regarding asset quality, BBVA Banco Francés remains the leading bank in the financial system. As of March 31, 2010 the non-performing loans ratio reached 1.04% with a coverage level of 292.3%. Prudent risk management is one of the key factors that allow the Bank to maintain excellent risk assumed ratios.

 

  •  

In terms of liabilities, during the first quarter of the year, Bank’s total deposits increased by 1.2%. Balances in sight accounts showed the strongest growth, reaching 56.1% of total deposits as of March 31, 2010.

 

  •  

BBVA Banco Francés maintained adequate levels of liquidity and solvency. As of March 31, 2010, liquid assets (Cash and due from banks plus central bank instruments) represented 44.3% of bank’s deposits. On the other hand, the capital ratio reached 19.6% of the weighted risk assets, increasing 30.2% in the last 12 months.

 

  •  

In an Ordinary and Special Shareholders’ Meeting held on April 30, 2010, the shareholders approved by majority vote the distribution of cash dividends totaling AR$480 million. The approved dividends will be distributed pro-rata to shares held at face value by each shareholder, equivalent to AR$0.89492 by share, “ad referendum” of the BCRA authorization. However, as of the date of this press release, we have not received the official BCRA authorization.

 

 

Economic Environment

 

In the first two months of the year, economic activity maintained a considerable rate of recovery. The Monthly Estimator of Economic Activity (EMAE) showed a growth in the first two months of the year of 2.1% compared to the previous quarter in a seasonally adjusted series. The high level of consumption and an increase in investment were the drivers of the recovery.

During the first quarter of 2010, fiscal revenues increased 23.7% compared to the same quarter of the previous year. Tax collections benefited from the improvement of economic activity since VAT and Income Tax grew above average in the same period.

The primary fiscal surplus of the national public sector was AR$3,471 million; a decrease of 22.9% compared to the first quarter of 2009. Despite the positive performance of fiscal resources, primary


 

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spending accelerated with an increase of 32.8% in annual terms during the first quarter of 2010.

Inflation, as measured by the Consumer Price Index (which is used to calculate the CER adjustment for some sovereign assets) averaged 3.5% during the first quarter of 2010.

The BCRA intervention in the FX market was a net purchase of US$1,234 million during the quarter. The exchange rate (according to the BCRA) closed at AR$3.8763 per U.S. dollar, an increase of 2.1% compared to December 31, 2009. The international reserve stock reached US$47,460 million, showing a small decrease of US$508 million during the quarter.

The Badlar rate at private banks was 9.4% at the end of the quarter, the slight downward trend during the quarter was due to increasing financial system liquidity and the recovery of the positive intervention from the Central Bank in the FX market.

Total deposits in the financial system increased 4.1% on average in the first quarter of 2010, while private sector deposits rose 2.9%. Private sector loans showed an increase of 3.1% during the fourth quarter, reflecting an improvement compared to the third quarter of 2009.

 

 

The Bank

 

BBVA Banco Francés maintains its leadership position in the Argentine financial system due to a good balance sheet structure, adequate levels of liquidity and solvency and a wide network of branches together with the necessary expertise to work in a competitive and complex environment.

In terms of assets, the Bank continues to focus on increasing financings in the productive and consumer segments. In this respect, during the last 12 months, financings to companies showed a higher growth with respect to consumer loans.

On the other hand, in terms of liabilities the targets are the retail funds, in order to further improve the funding structure.

A higher participation of transactional deposits in relation to total deposits supports this goal.

BBVA Banco Francés continues to carry out actions with the aim of strengthening the relationship with its customers. During the first three months of 2010 it completed a strategic alliance with Time for Fun (T4F), a leading producer of shows, which consists of giving customers the opportunity to purchase advance tickets for the best shows in the country and provides discounts and funding. In addition, the Bank launched “Frances GO”, the first search engine for discounts, keeping customers informed of major promotions through mobile phones and Internet.

Moreover, BBVA Banco Francés launched a new line of SME business loans for a total amount of AR$400 million to finance investment projects and incorporations to capital goods. This line of loans and leases to all economic activity areas in the country has a period of up to 48 months, with a fixed nominal annual rate of 14.4%. (TFC: 15.4%).

 

 

Presentation of Financial Information

 

 

  •  

Foreign currency balances as of March 31, 2010 have been translated into pesos at the reference exchange rate of AR$3.8763 per U.S. dollar, published by the BCRA.

 

  •  

This press release contains unaudited information that consolidates all of the banking activities of BBVA Banco Francés and its subsidiaries on a line-by-line basis. The Bank’s share interest in the Consolidar Group is shown as Investments in other companies (booked by the equity method) and the corresponding results are included in Income from equity investments.

 

  •  

Information contained in this press release may differ from the information published by BBVA Group for Argentina, which is prepared according to Spanish accounting standards for all BBVA Group affiliates.


 

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Financial Information

 

 

Condensed Income Statement (1)    Quarter ended     % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except income per share, income per
ADS and percentages		    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Net Financial Income

    476,619      611,471      308,771      -22.1 %    54.4 % 

Provision for loan losses

    (30,706 )    (30,665 )    (32,218 )    0.1 %    -4.7 % 

Net income from services

    263,480      244,158      216,882      7.9 %    21.5 % 

Administrative expenses

    (460,088 )    (433,571 )    (376,648 )    6.1 %    22.2 % 

Operating income

    249,305      391,393      116,787      -36.3 %    113.5 % 

Income (Loss) from equity investments

    5,665      6,156      13,952      -8.0 %    -59.4 % 

Income (Loss) from Minority interest

    (4,486 )    (4,010 )    (4,930 )    11.9 %    -9.0 % 

Other Income/Expenses

    (5,270 )    (12,757 )    (37,125 )    -58.7 %    -85.8 % 

Income tax and Minimum Presumed Tax

    (85,540 )    (119,533 )    (2,810 )    -28.4 %    n.a.   

Net income for the period

    159,674      261,249      85,874      -38.9 %    85.9 % 

Net income per share (2)

    0.30      0.49      0.16      -38.9 %    85.9 % 

Net income per ADS (3)

    0.89      1.46      0.48      -38.9 %    85.9 % 

 

(1) Exchange rate: 3.8763 Ps. = 1 US$
(2) Assumes 531,361,306 ordinary shares outstanding
(3) Each ADS represents three ordinary shares.

 

Net income for the first quarter of 2010 increased 85.9% compared to the same quarter of 2009 and decreased 38.9% compared to the fourth quarter of 2009. It is important to mention that the fourth quarter of 2009 earnings included non-recurring effects generated by the increase in the public assets valuations that are not produced in the first quarter of 2010. Therefore, first quarter profits increased 8.6% compared to recurring gains for the fourth quarter of 2009.

Similarly, net financial income for the first quarter of 2010 grew 25.8% and 3.5% compared to similar recurring revenue in the first quarter of 2009 and the fourth quarter of 2009, respectively. The increase over the previous quarter is explained by the growth of the private sector financial margin together with higher income from foreign currency exchange differences. These increases were partially offset by lower income from reverse repo operations with the Central Bank.

Provisions for loan losses for the first quarter of 2010 remained at a similar level to the previous quarter as there were no significant changes in the loan portfolio quality.

 

Net income from services for the first quarter of 2010 grew 21.5% and 7.9% compared to the first quarter of 2009 and the fourth quarter of 2009, respectively, due to higher revenues related to credit cards, sight accounts and insurance operations, and higher fees related to foreign trade in the business segment.

During the first quarter of 2010, administration expenses increased 22.2% and 6.1% compared to the same quarter of 2009 and the fourth quarter of 2009, respectively, driven by increases in personnel expenses and, to a lesser extent, in general expenses.

Income tax charge decreased, in the first quarter of 2010 compared to the previous quarter due to lower tax gains. On the other hand, the important growth of the income tax charge from the first quarter of 2009 is mainly explained by the tax losses that the Bank had during that quarter.

Finally, the effective income tax rate was 34.9% in the first quarter of 2010 because there were no significant differences between the tax and accounting balance.


 

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     Quarter ended     % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Return on Average Assets (1)

    2.70 %    4.51 %    1.41 %    -40.1 %    91.6 % 

Return on Average Shareholders’ Equity

    21.3 %    37.6 %    16.4 %    -43.5 %    29.8 % 

Net fee Income as a % of Recurrent Operating Income

    35.6 %    34.7 %    36.4 %    2.7 %    -2.2 % 

Net fee Income as a % of Administrative Expenses

    57.3 %    56.3 %    57.6 %    1.7 %    -0.5 % 

Adm. Expenses as a % of Recurrent Operating Income (2)

    62.2 %    61.5 %    63.2 %    1.0 %    -1.7 % 

 

(1) Annualized.
(2) Adm. Expenses / (Net financial income + Net income from services)

 

 

Net Financial Income

 

Net financial income grew 25.8% and 3.5% with respect to similar recurring income in the first quarter of 2009 and the fourth quarter of 2009, respectively, due to the increase in the interest margin.

This growth is based on the private sector financial margin growth due to higher incomes, consequence of the increase in

the loan portfolio, mainly in the most dynamic sectors, together with a lower cost of funds, resulting in an improvement in the funding structure. This improvement was partially offset by lower income from repo operations with the Central Bank.

Income related to foreign currency exchange included in foreign exchange difference, showed an improvement over the previous quarter and a decrease compared to the first quarter of 2009.


 

     Quarter ended    % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10    12/31/09    03/31/09    12/31/09     03/31/09  

Net financial income

    476,619    611,471    308,771    -22.1 %    54.4 % 

Net income from financial intermediation

    197,759    184,735    128,902    7.1 %    53.4 % 

CER adjustment

    205    180    10,236    13.9 %    -98.0 % 

Income from securities and short term investments

    180,426    255,202    2,605    -29.3 %    n.a.   

Interest on Government guaranteed loans

    21,692    92,069    4,998    -76.4 %    334.0 % 

Foreign exchange difference

    41,910    29,164    50,938    43.7 %    -17.7 % 

Others

    34,627    50,121    111,092    -30.9 %    -68.8 % 

 

 

Income from Public and Private Securities

 

Income from public and private securities in the first quarter of 2010 decreased 36.5% compared to the previous quarter, because increases in public bonds valuations were not generated during this quarter.

Incomes from Central Bank bills and notes holdings, increased 12.6% in the first quarter of 2010 compared to the previous

quarter and doubled earnings from the first quarter of 2009, due to growth in the Bank’s own portfolio of these instruments. Also, the increase in income from the holdings booked as available for sale, compared to the previous quarter, reflected the growth of these holdings.

Finally, higher revenues from CER adjustment were recorded during the first quarter of 2010, compared to the previous quarter and to the first quarter of 2009, due to the growth recorded in the index that measures inflation.


 

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     Quarter ended     % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10    12/31/09    03/31/09     12/31/09     03/31/09  

Income from securities and short-term investments

    144,563    227,663    2,606      -36.5 %    n.a.   

Trading account

    7,505    34,994    8,346      -78.6 %    -10.1 % 

Available for sale

    19,984    9,490    19,548      110.6 %    2.2 % 

Bills and Notes from the Central Bank

    91,764    81,490    43,436      12.6 %    111.3 % 

Other fixed income securities

    25,310    101,689    (68,724 )    -75.1 %    -63.2 % 

CER adjustment

    35,863    27,540    4,848      30.2 %    639.8 % 

CER adjustment - Trading account

    —      —      —        —        —     

CER adjustment - Investment account

    —      —      —        —        —     

CER adjustment - Other fixed securities

    35,863    27,540    4,848      30.2 %    639.8 % 

 

 

Net Income from Services

 

Net Income from services in the first quarter of 2010 increased 21.5% and 7.9% compared to the first quarter of 2009 and the fourth quarter of 2009, respectively.

The growth over the previous quarter is the result of higher income from services related to sight accounts, higher fees

related to foreign trade in the business segment and lower fees paid related to promotions in purchases with debit and credit cards.

The increase compared with first quarter of 2009, is explained by higher income related to credit cards, sight accounts and insurance operations and higher fees related to foreign trade in the business segment.


 

     Quarter ended     % Change Qtr ended
3/31/10 vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Net income from services

    263,480      244,158      216,882      7.9 %    21.5 % 

Service charge income

    332,169      319,747      277,865      3.9 %    19.5 % 

Service charges on deposits accounts

    120,004      105,674      108,578      13.6 %    10.5 % 

Credit cards and operations

    83,755      87,635      60,797      -4.4 %    37.8 % 

Insurance

    30,368      30,319      27,954      0.2 %    8.6 % 

Capital markets and securities activities

    3,826      5,802      1,533      -34.1 %    149.6 % 

Fees related to foreign trade

    13,851      14,706      14,758      -5.8 %    -6.1 % 

Other fees

    80,365      75,611      64,245      6.3 %    25.1 % 

Services Charge expense

    (68,689 )    (75,589 )    (60,982 )    -9.1 %    12.6 % 

 

 

Administrative Expenses

 

Administrative expenses increased 22.2% during the first quarter of 2010 compared to the same quarter of 2009 and 6.1% from the previous quarter, respectively, driven by increases in personnel expenses and, to a lesser extent, in general expenses.

The raise in personnel expenses for the first quarter of 2010 is explained by the wage increase of 23.5% derived from the 2010 labor agreement signed in March of this year effective retroactively from January 1, 2010.

 

The increase in general expenses, compared to the previous quarter, is due to higher charges in electricity and communications, taxes, organization and development expenses and amortizations related to a higher level of activity and investment associated with the remodeling of branches. These increases were partially offset by a decrease in advertising and promotion expenses due to seasonal factors.

Growth in general expenses compared to the first quarter of 2009, is also due to increases in advertising and promotion by higher spending on advertising campaigns, as well as on taxes, electricity and communication, organization and development expenses and amortizations, related to


 

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a higher activity level and investments associated with changing the branch offices image.

As of March 31, 2010, the Bank and its subsidiaries (except the Consolidar Group) had 4,085 employees. The branch office

network totaled 271 offices, including 240 consumer branch offices, 27 branch offices specialized in the middle-market segment, 15 in-company branches, 4 branch offices for large corporate and institutional clients and 2 points of sale.


 

     Quarter ended     % Change Qtr ended
3/31/10 vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Administrative expenses

    (460,088 )    (433,571 )    (376,648 )    6.1 %    22.2 % 

Personnel expenses

    (292,396 )    (269,049 )    (236,917 )    8.7 %    23.4 % 

Electricity and Communications

    (8,585 )    (7,669 )    (7,357 )    11.9 %    16.7 % 

Advertising and Promotion

    (17,730 )    (20,348 )    (12,845 )    -12.9 %    38.0 % 

Honoraries

    (8,507 )    (9,032 )    (7,228 )    -5.8 %    17.7 % 

Taxes

    (28,674 )    (25,281 )    (23,026 )    13.4 %    24.5 % 

Organization and development expenses

    (5,185 )    (4,396 )    (3,595 )    17.9 %    44.2 % 

Amortizations

    (13,280 )    (12,423 )    (10,704 )    6.9 %    24.1 % 

Other

    (85,731 )    (85,373 )    (74,976 )    0.4 %    14.3 % 

 

 

Other Income / Expenses

 

Other income/expenses totaled a loss of AR$5.3 million during the first quarter of 2010, mainly due to a loss from legal injunctions paid during the period together with provisions for other contingencies, which was partially offset by recovered credits.

 

 

Income from Equity Investments

 

Income from equity investments sets forth net income from related companies that are not consolidated. During the first quarter of 2010, a gain of AR$5.7 million was recorded, mainly due to BBVA Banco Frances’ stake in the Consolidar Group.


 

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Balance and Activity

 

 

 

Total Public Sector Exposure

 

During the first quarter of 2010, total exposure to the public sector national treasury debt maintained a similar level than in the previous quarter. However, in the last twelve months, such debt grew 27.0% mainly due to the recovery in the public assets valuation registered during this period.

Bank’s portfolio of Central Bank bills and notes, decreased by 3.0% during the first three months of 2010 mainly as a consequence of liquidity management.

 

As of March 31, 2010 public sector national treasury assets represented 10.3% of total assets. Meanwhile, the total exposure, including the portfolio of BCRA bills and notes, reached 23.2% of the Bank’s total assets.

Total exposure to the public sector includes public debt of the national treasury through public securities, guaranteed loans and trustees, and also, the BCRA bills and notes.


 

     Quarter ended    % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09    03/31/09    12/31/09     03/31/09  

Public Sector - National Government

    2,452,218      2,468,842    1,931,586    -0.7 %    27.0 % 

- Loans to the Federal government & Provinces

    333,869      315,960    435,189    5.7 %    -23.3 % 

- Total bond portfolio

    2,313,204      2,388,243    2,258,228    -3.1 %    2.4 % 

Unlisted

    1,917,096      1,961,046    2,078,843    -2.2 %    -7.8 % 

Available for sale

    347,832      285,145    83,417    22.0 %    317.0 % 

Other government bonds

    48,276      66,028    2,946    -26.9 %    n.a.   

Reverse repo w/Central Bank

    0      76,024    93,022    -100.0 %    -100.0 % 

- Trustees

    213,863      214,566    217,589    -0.3 %    -1.7 % 

- Allowances

    (408,718 )    -449,927    -979,419    -9.2 %    -58.3 % 

Bills and Notes from Central Bank

    3,200,183      3,186,328    3,156,570    0.4 %    1.4 % 

- Own portfolio

    3,089,605      3,186,328    1,167,201    -3.0 %    164.7 % 

- Reverse repo w/Central Bank

    110,579      0    1,989,369    100.0 %    -94.4 % 

Total exposure to the Public Sector

    5,652,401      5,655,170    5,088,157    0.0 %    11.1 % 

Total exposure to the Public Sector without repos

    5,541,823      5,579,146    3,005,766    -0.7 %    84.4 % 

 

 

Loan Portfolio

 

The private sector loan portfolio totaled AR$ 10,394 million at March 31, 2010, showing a minor increase compared with the previous quarter, and 8.2% growth as compared with the same quarter last year.

During the first three months of the year the consumer portfolio has grown boosted by an increase in personal loans, credit cards and car loans, whereas, mortgages showed a minor reduction. On the other hand, financings to large

corporations registered a non significant decrease partially offset by a rise in loans to middle and small size companies; such increase was driven by discounted documents and those loans to financing foreign trade operations.

Private sector loan’s performance reflected a significant increase of 8.2% compared to the same quarter of 2009, due to growth in financings to the three segments. Once again credit cards, personal loans and car loans led the expansion in the retail segment, while advances, discounted documents and other loans did the same in the middle market and corporate segments.


 

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The table below shows the composition of the loan portfolio balance at the end of each quarter:

 

     Quarter ended     % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Private & Financial sector loans

    10,393,802      10,336,588      9,609,422      0.6 %    8.2 % 

Advances

    1,648,420      1,703,751      1,299,454      -3.2 %    26.9 % 

Discounted and purchased notes

    1,205,363      1,068,567      916,839      12.8 %    31.5 % 

Consumer Mortgages

    821,273      838,410      927,115      -2.0 %    -11.4 % 

Car secured loans

    521,091      480,694      505,257      8.4 %    3.1 % 

Personal loans

    1,885,749      1,819,382      1,830,322      3.6 %    3.0 % 

Credit cards

    1,512,034      1,464,163      1,183,816      3.3 %    27.7 % 

Loans to financial sector

    346,627      335,367      460,431      3.4 %    -24.7 % 

Other loans

    2,623,303      2,806,667      2,521,933      -6.5 %    4.0 % 

Unaccrued interest

    (17,425 )    (16,471 )    (15,717 )    5.8 %    10.9 % 

Adjustment and accrued interest & exchange differences receivable

    183,924      173,744      188,676      5.9 %    -2.5 % 

Less: Allowance for loan losses

    (336,557 )    (337,686 )    (208,704 )    -0.3 %    61.3 % 

Loans to public sector

    333,869      315,960      435,189      5.7 %    -23.3 % 

Loans to public sector

    120,520      117,464      173,083      2.6 %    -30.4 % 

Adjustment and accrued interest & exchange differences receivable

    213,349      198,496      262,106      7.5 %    -18.6 % 

Net total loans

    10,727,671      10,652,548      10,044,611      0.7 %    6.8 % 

 

 

Asset Quality

 

During the first quarter of 2010, BBVA Banco Francés continued to show solid asset quality and coverage ratios, which continued to be the best of the Argentine Financial System.

 

As of March 31, 2010 asset quality ratio (non-performing loans over total loans) was 1.04%, and the coverage ratio (provisions over of non-performing loans) reached 292.3%.

Asset quality continued to improve compared to the previous quarter and also compared to the same quarter of 2009, reflecting the efficient risk policy implemented by the Bank.


 

     Quarter ended     % Change Qtr ended
3/31/10 vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Non-performing loans (1)

    115,147      121,500      131,005      -5.2 %    -12.1 % 

Allowance for loan losses

    (336,557 )    (337,686 )    (208,704 )    -0.3 %    61.3 % 

Non-performing loans/net total loans

    1.04 %    1.11 %    1.28 %    -5.9 %    -18.5 % 

Non-performing private loans/net private loans

    1.07 %    1.14 %    1.33 %    -5.7 %    -19.6 % 

Allowance for loan losses/non-performing loans

    292.28 %    277.93 %    159.31 %    5.2 %    83.5 % 

Allowance for loan losses/net total loans

    3.04 %    3.07 %    2.04 %    -1.0 %    49.4 % 

 

(1) Non-performing loans include: all loans to borrowers classified as “Problem”, “Deficient Servicing”, “High Insolvency Risk”, “Difficult Recovery”, “Irrecoverable” and “Irrecoverable for Technical Decision” according to the new Central Bank debtor classification system.

 

- 8 -

The following table shows the evolution of provisions for loan losses, including charges relating to transactions recorded under Other Receivables from financial intermediation.

 


 

     Quarter ended     % Change Qtr ended
3/31/10 vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Balance at the beginning of the quarter

    342,902      339,736      199,502      0.9 %    71.9 % 

Increase / decrease

    30,706      30,665      32,218      0.1 %    -4.7 % 

Provision increase / decrease - Exchange rate difference

    531      (236 )    1,657      -325.0 %    68.0 % 

Decrease

    (32,059 )    (27,263 )    (21,431 )    17.6 %    49.6 % 

Balance at the end of the quarter

    342,080      342,902      211,946      -0.2 %    61.4 % 

 

 

Deposits

 

Total deposits reached AR$ 18,507 million as of March 31, 2010, increasing by 1.2% during the quarter, while decreasing 4.1% compared with the first quarter of 2009.

It is important to highlight that current account balances include transitory deposits, which explains the decrease registered during the last twelve months.

Consequently, excluding such transitory funds, deposits grew 1.4% during the first quarter and 10.2% in the last twelve months.

Likewise, without considering transitory deposits, current accounts increased 24.0% during the last twelve months, representing 56.1% of total deposits at the end of March 31, 2010

 

On the other hand, sight deposits fell 1.8 % and 3.9% compared with the previous quarter and with the same quarter a year ago, respectively.

In terms of currency, deposits denominated in pesos, grew 2.5% in the first quarter of 2010 and 10.4% in the last twelve months. On the other hand, recurrent deposits in foreign currency fell 2.3% during the first quarter but increased 9.8% compared with the same quarter a year ago.

Nominal recurrent deposits in foreign currency, excluding the effect of the argentine peso devaluation, decreased by 4.3% in the first quarter of 2010 but increased 5.2% in the last twelve months. As of March 31, 2010, recurrent deposits in foreign currency reached AR$4,067 million (equivalent to US$1.049 million), representing 22.8% of total recurrent deposits of the Bank.


 

     Quarter ended    % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10    12/31/09    03/31/09    12/31/09     03/31/09  

Total deposits

    18,506,652    18,284,543    19,287,904    1.2 %    -4.1 % 

Current accounts

    4,730,698    4,439,513    6,498,270    6.6 %    -27.2 % 

Peso denominated

    4,269,667    4,047,009    4,268,206    5.5 %    0.0 % 

Foreign currency

    461,031    392,504    2,230,064    17.5 %    -79.3 % 

Saving accounts

    5,976,811    5,982,525    4,741,144    -0.1 %    26.1 % 

Peso denominated

    3,782,024    3,848,977    3,123,917    -1.7 %    21.1 % 

Foreign currency

    2,194,787    2,133,548    1,617,227    2.9 %    35.7 % 

Time deposits

    7,422,924    7,559,265    7,723,820    -1.8 %    -3.9 % 

Peso denominated

    5,720,563    5,685,119    5,796,240    0.6 %    -1.3 % 

CER adjusted time deposits

    1,040    971    8,185    7.1 %    -87.3 % 

Foreign currency

    1,701,321    1,873,175    1,919,395    -9.2 %    -11.4 % 

Investment Accounts

    41,017    19,022    6,683    115.6 %    513.8 % 

Peso denominated

    41,017    19,022    6,683    115.6 %    513.8 % 

Other

    335,202    284,218    317,987    17.9 %    5.4 % 

Peso denominated

    169,765    137,256    156,247    23.7 %    8.7 % 

Foreign currency

    165,437    146,962    161,740    12.6 %    2.3 % 

Rescheduled deposits + CEDROS (*)

    62,362    66,331    92,557    -6.0 %    -32.6 % 

Peso denominated

    62,362    66,331    92,557    -6.0 %    -32.6 % 

Total deposits + Rescheduled deposits & CEDROS

    18,569,014    18,350,874    19,380,461    1.2 %    -4.2 % 

 

(*) The payment of Rescheduled Deposits concluded in August 2005, in accordance with its original schedule, except those deposits that have a pending legal injunction.

 

- 9 -

 

Other Funding Sources

 

Other funding sources maintained a similar level by the end of the first quarter compared to the previous quarter, falling by 66.9% in the last twelve months.

 

Such decrease is a consequence of diminishing balances used at other banks.

It is important to mention that 57.0% of balances shown in the table below were foreign-currency denominated at the end of March 31, 2010.


 

     Quarter ended    % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10    12/31/09    03/31/09    12/31/09     03/31/09  

Lines from other banks

    72,148    72,330    217,652    -0.3 %    -66.9 % 

Senior Bonds

    —      —      —      —        —     

Other banking liabilities

    72,148    72,330    217,652    -0.3 %    -66.9 % 

Subordinated Debt

    —      —      —      —        —     

Total other funding sources

    72,148    72,330    217,652    -0.3 %    -66.9 % 

 

 

Capitalization

 

Total shareholder’s equity of the Bank totaled AR$3.079 million as of March 31, 2010; whereas the excess of capital over the BCRA requirements was AR$1,136 million.

 

The capital ratio reached 19.6% of risk-weighted assets at March 31, 2010, increasing 30.2% during the last twelve months.

The unrealized valuation difference as of March 31, 2010 reached AR$21.8 million due to a slight decrease in the value of public bonds labeled as “available for sale”.


 

     Quarter ended     % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Capital Stock

    536,361      536,361      536,361      0.0 %    0.0 % 

Issuance premiums

    175,132      175,132      175,132      0.0 %    0.0 % 

Adjustments to stockholders equity

    312,979      312,979      312,979      0.0 %    0.0 % 

Subtotal

   1,024,472      1,024,472      1,024,472      0.0 %    0.0 % 

Reserves on Profits

    658,693      658,693      658,693      0.0 %    0.0 % 

Unappropriated retained earnings

    1,417,114      1,257,440      624,852      12.7 %    126.8 % 

Unrealized valuation difference

    (21,774 )    (14,133 )    (190,606 )    54.1 %    -88.6 % 

Total stockholders’ equity

    3,078,505      2,926,472      2,117,411      5.2 %    45.4 % 

 

The variations in the minimum capital required by the Central Bank compared with the prior quarters are mainly explained by a higher balance of securities in custody.

In this sense, it is important to mention that such increase does not affect the Bank’s solvency.

 

By the end of March 31, 2010 the excess of capital over Central Bank requirements represented 36.9% of total stockholders’ equity, demonstrating an acceptable level of solvency.


 

- 10 -

     Quarter ended     % Change Qtr ended 3/31/10
vs. Qtr ended		  
in thousands of pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

Central Bank Minimum Capital Requirements

    2,136,105      1,665,875      1,467,171      28.2 %    45.6 % 

Central Bank Minimum Capital Requirements (a, b)

    1,934,794      1,515,324      1,387,097      27.7 %    39.5 % 

Market Risk

    104,571      86,074      39,465      21.5 %    165.0 % 

Increase in capital requirements related to custody

    96,740      64,477      40,609      50.0 %    138.2 % 

a) Central Bank Minimum Capital Requirements

    1,534,719      1,515,324      1,387,097      1.3 %    10.6 % 

Allocated to Asset at Risk

    1,002,248      971,214      958,189      3.2 %    4.6 % 

Allocated to Immobilized Assets

    87,337      100,065      89,304      -12.7 %    -2.2 % 

Interest Rate Risk

    183,159      175,978      167,310      4.1 %    9.5 % 

Loans to Public Sector and Securities in Investment

    261,975      268,067      172,294      -2.3 %    52.1 % 

Non Compliance of Other Credit Regulations

    —        —        —        —        —     

b) Minimum capital required for Pension Funds (AFJPs) to act as securities custodian and registrar of mortgage notes

    1,934,794      1,289,541      812,177      50.0 %    138.2 % 

5% of the securities in custody and book-entry notes

    1,934,794      1,289,541      812,177      50.0 %    138.2 % 

Bank Capital Calculated under Central Bank Rules

    3,272,643      3,064,366      2,404,828      6.8 %    36.1 % 

Core Capital

    2,940,605      2,222,143      2,257,143      32.3 %    30.3 % 

Minority Interest

    289,665      288,959      316,824      0.2 %    -8.6 % 

Supplemental Capital

    116,639      631,549      (108,914 )    -81.5 %    -207.1 % 

Deductions

    (74,266 )    (78,285 )    (60,225 )    -5.1 %    23.3 % 

Excess over Required Capital

    1,136,538      1,398,491      937,657      -18.7 %    21.2 % 

Capital Ratio (Central Bank rules)

    19.6 %    18.6 %    15.1 %    5.6 %    30.2 % 

Excess over Required Capital as a % of Shareholders’ Equity

    36.9 %    47.8 %    44.3 %    -22.7 %    -16.6 % 

 

 

Additional Information

 


 

     Quarter ended     % Change Qtr ended 3/31/10
vs. Qtr ended		  
in pesos except percentages    03/31/10     12/31/09     03/31/09     12/31/09     03/31/09  

- Exchange rate

    3.8763      3.7967      3.7135      2.1 %    4.4 % 

- Quarterly CER adjustment

    3.16 %    2.39 %    1.29 %    32.5 %    145.7 % 

This press release contains or may contain certain forward-looking statements within the meaning of the United States Securities Litigation Reform Act of 1995, including, among other things, concerning the prospects of the Argentine economy, Banco Francés’ earnings, business plans, cost-reduction plans, and capitalization plan, and trends affecting BBVA Banco Francés’ financial condition or results of operations. Any forward-looking statements included in this press release are based on current expectations and estimates, but actual results and events may differ materially from anticipated future results and events. Certain factors which could cause the actual results and events to differ materially from the expected results or events include: (1) changes in domestic or international stock market prices, exchange rates or interest rates; (2) macroeconomic, regulatory, political or governmental changes; (3) changes in the markets for BBVA Banco Francés’ products and services; (4) increased competition; (5) changes in technology; or (6) changes in the financial condition, creditworthiness or solvency of the customers, debtors or counterparties of BBVA Banco Francés. Additional factors that could cause the actual results or events to differ materially from the expected results or events are described in the reports filed by BBVA Banco Francés with the United States Securities and Exchange Commission (SEC), including, but not limited to, BBVA Banco Francés’ annual report on Form 20-F and exhibits thereto. BBVA Banco Francés does not undertake to revise or update any of the information contained herein under any circumstances, including if at any moment following dissemination of such information it is no longer accurate or complete.

 

- 11 -

 

Conference call

 

A conference call to discuss first quarter earnings will be held on Monday, May 10th, 2010, at 11:30 AM New York time – 12.30 PM Buenos Aires time. If you are interested in participating, please dial (866) 316 1365 within the U.S. or +1 (913) 312 1499 outside the U.S. at least 5 minutes prior to our conference. Confirmation code: 8042664.

A conference call replay facility will be available from May 10th through May 24th, 2010. In order to listen to this digital replay, please call (888) 203 1112 within the U.S. or +1 (719) 457 0820 outside the U.S. Access Code: 8042664.

 

 

Internet

 

This press release is also available on www.bancofrances.com.ar

 

 

CONTACTS

 

Daniel Sandigliano

Investor Relations

(5411) 4341-5036

daniel.sandigliano@bancofrances.com.ar

Cecilia Acuña

Investor Relations

(5411) 4348-0000 int. 25384

cecilia.acuna@bancofrances.com.ar


 

- 12 -

BBVA Banco Francés S.A. and subsidiaries (Grupo Consolidar: by the equity method)

BALANCE SHEET

 

ASSETS: (in thousands of pesos)

    03/31/10     12/31/09     09/30/09     03/31/09  

Cash and due from banks

    5,419,543      5,166,121      5,526,059      6,440,732   

Government and Private Securities

    5,110,007      5,130,730      4,141,214      4,442,714   

- Trading account (listed securities)

    48,274      8,352      1,542      913   

- Available for sale

    746,908      640,175      466,775      434,366   

- Reverse repo w/Central Bank

    —        68,250      195,895      93,022   

- Unlisted

    1,917,096      1,961,046      2,001,129      2,078,843   

- Listed Private Securities

    5,338      6,086      5,824      7,335   

- Bills and Notes from the Central Bank

    2,801,109      2,896,748      2,044,503      2,807,654   

Less: Allowances

    (408,718 )    (449,927 )    (574,454 )    (979,419 ) 

Loans

    10,727,671      10,652,548      10,342,985      10,044,611   

- Loans to the private & financial sector

    10,393,802      10,336,588      10,030,646      9,609,422   

- Advances

    1,648,420      1,703,751      2,108,709      1,299,454   

- Discounted and purchased notes

    1,205,363      1,068,567      946,848      916,839   

- Secured with mortgages

    821,273      838,410      869,012      927,115   

- Car secured loans

    521,091      480,694      484,777      505,257   

- Personal loans

    1,885,749      1,819,382      1,768,773      1,830,322   

- Credit cards

    1,512,034      1,464,163      1,240,854      1,183,816   

- Loans to financial sector

    346,627      335,367      384,148      460,431   

- Other loans

    2,623,303      2,806,667      2,411,673      2,521,933   

Less: Unaccrued interest

    (17,425 )    (16,471 )    (16,425 )    (15,717 ) 

Plus: Interest & FX differences receivable

    183,924      173,744      167,804      188,676   

Less: Allowance for loan losses

    (336,557 )    (337,686 )    (335,527 )    (208,704 ) 

- Public Sector loans

    333,869      315,960      312,339      435,189   

Principal

    120,520      117,464      99,376      173,083   

Plus: Interest & FX differences receivable

    213,349      198,496      212,963      262,106   

Other banking receivables

    1,076,975      884,467      1,191,546      2,904,596   

- Repurchase agreements

    99,874      76,397      265,463      2,152,752   

- Unlisted private securities

    89,957      88,131      75,870      68,624   

- Unlisted Private securities: Trustees

    40,459      39,357      37,844      33,131   

- Other banking receivables

    852,208      685,798      816,578      653,331   

- Less: provisions

    (5,523 )    (5,216 )    (4,209 )    (3,242 ) 

Investments in other companies

    404,610      399,496      413,668      440,309   

Intangible assets

    65,030      55,097      52,252      48,042   

- Organization and development charges

    65,030      55,097      52,252      48,042   

Other assets

    1,070,108      1,083,195      1,266,948      1,167,927   
                        

TOTAL ASSETS

    23,873,944      23,371,654      22,934,672      25,488,931   
                        

LIABILITIES:

    03/31/10     12/31/09     09/30/09     03/31/09  

Deposits

    18,569,014      18,350,874      18,041,713      19,380,461   

- Current accounts

    4,730,698      4,439,513      4,466,340      6,498,270   

- Saving accounts

    5,976,811      5,982,525      5,434,830      4,741,144   

- Time deposits

    7,422,924      7,559,265      7,693,792      7,723,820   

- Investment Accounts

    41,017      19,022      4,856      6,683   

- Rescheduled deposits - CEDROS

    62,362      66,331      72,882      92,557   

- Other deposits

    335,202      284,218      369,013      317,987   

Other banking Liabilities

    1,377,212      1,195,048      1,382,675      3,373,442   

Other provisions

    328,308      318,659      309,571      271,528   

- Other contingencies

    327,879      318,231      309,207      271,171   

- Guarantees

    429      428      364      357   

Other liabilities

    464,023      528,205      527,497      306,552   

Minority interest

    56,882      52,396      48,384      39,537   
                        

TOTAL LIABILITIES

    20,795,439      20,445,182      20,309,840      23,371,520   
                        

TOTAL STOCKHOLDERS' EQUITY

    3,078,505      2,926,472      2,624,832      2,117,411   
                        

Total liabilities + stockholders' equity

    23,873,944      23,371,654      22,934,672      25,488,931   
                        

 

- 13 -

BBVA Banco Francés S.A. and subsidiaries (Grupo Consolidar: by the equity method)

 

INCOME STATEMENT (in thousands of pesos)

    03/31/10     12/31/09     09/30/09     03/31/09  

Financial income

    657,877      819,349      980,933      576,047   

- Interest on Cash and Due from Banks

    —        —        —        20   

- Interest on Loans Granted to the Financial Sector

    15,739      20,138      25,036      27,818   

- Interest on Overdraft

    65,703      85,868      102,554      84,992   

- Interest on Discounted and purchased notes

    36,327      36,877      35,720      44,779   

- Interest on Mortgages

    27,465      29,768      30,280      32,288   

- Interest on Car Secured Loans

    23,291      23,289      22,833      22,443   

- Interest on Credit Card Loans

    48,697      48,285      42,966      44,645   

- Interest on Other Loans

    157,398      148,105      144,990      137,172   

- From Other Banking receivables

    302      259      300      408   

- Interest on Government Guaranteed Loans Decree 1387/01

    21,692      92,069      2,785      4,998   

- Income from Securities and Short Term Investments

    180,426      255,202      484,027      2,605   

- Net Income from options

    —        —        —        (2 ) 

- CER

    285      247      213      10,398   

- Foreign exchange difference

    41,910      29,164      36,030      50,938   

- Other

    38,642      50,078      53,199      112,545   

Financial expenses

    (181,258 )    (207,878 )    (223,225 )    (267,276 ) 

- Interest on Current Account Deposits

    (3,960 )    (4,702 )    (4,840 )    (5,676 ) 

- Interest on Saving Account Deposits

    (1,813 )    (2,540 )    (2,623 )    (2,441 ) 

- Interest on Time Deposits

    (137,594 )    (166,980 )    (179,867 )    (218,183 ) 

- Interest on Other Banking Liabilities

    (2,171 )    (2,172 )    (2,649 )    (6,295 ) 

- Other interests (includes Central Bank)

    (602 )    (715 )    (744 )    (870 ) 

- CER

    (80 )    (67 )    (61 )    (162 ) 

- Bank Deposit Guarantee Insurance system mandatory contributions

    (8,079 )    (7,904 )    (8,560 )    (7,338 ) 

- Mandatory contributions and taxes on interest income

    (22,944 )    (22,841 )    (23,907 )    (24,860 ) 

- Other

    (4,015 )    43      26      (1,451 ) 

Net financial income

    476,619      611,471      757,708      308,771   

Provision for loan losses

    (30,706 )    (30,665 )    (135,956 )    (32,218 ) 

Income from services, net of other operating expenses

    263,480      244,158      245,429      216,882   

Administrative expenses

    (460,088 )    (433,571 )    (390,798 )    (376,648 ) 

Income (loss) from equity investments

    5,665      6,156      (2,173 )    13,952   

Net Other income

    (5,270 )    (12,757 )    (47,658 )    (37,125 ) 

Income (loss) from minority interest

    (4,486 )    (4,010 )    (4,494 )    (4,930 ) 

Income before tax

    245,214      380,782      422,058      88,684   

Income tax

    (85,540 )    (119,533 )    (112,565 )    (2,810 ) 
                        

Net income

    159,674      261,249      309,493      85,874   
                        

 

- 14 -

BBVA Banco Francés S.A. and subsidiaries (Grupo Consolidar consolidated on a line by line basis)

 

     (in thousands of pesos)  

ASSETS

    03/31/10     12/31/09     09/30/09     03/31/09  

Cash and due from banks

    5,432,205      5,255,412      5,690,389      6,491,378   

Government Securities

    7,157,067      7,214,232      6,076,182      5,998,907   

Loans

    11,935,352      11,751,889      11,438,169      11,433,459   

Other Banking Receivables

    1,114,226      931,465      1,235,986      2,960,497   

Assets Subject to Financial Leasing

    296,331      311,784      339,183      343,673   

Investments in other companies

    106,606      106,289      105,379      101,539   

Other assets

    875,148      820,522      1,006,382      937,207   
                        

TOTAL ASSETS

    26,916,935      26,391,593      25,891,670      28,266,660   
                        

LIABILITIES

    03/31/10     12/31/09     09/30/09     03/31/09  

Deposits

    18,557,557      18,334,845      18,027,372      19,264,258   

Other banking liabilities

    1,383,564      1,224,668      1,386,702      3,393,066   

Minority interest

    216,657      213,182      246,351      255,787   

Other liabilities

    3,680,652      3,692,426      3,606,413      3,236,138   
                        

TOTAL LIABILITIES

    23,838,430      23,465,121      23,266,838      26,149,249   
                        

TOTAL STOCKHOLDERS’ EQUITY

    3,078,505      2,926,472      2,624,832      2,117,411   
                        

STOCKHOLDERS’ EQUITY + LIABILITIES

    26,916,935      26,391,593      25,891,670      28,266,660   
                        

NET INCOME

    03/31/10     12/31/09     09/30/09     03/31/09  

Net Financial Income

    604,925      713,915      857,469      447,003   

Provision for loan losses

    (30,706 )    (30,665 )    (135,956 )    (32,218 ) 

Net Income from Services

    263,415      244,459      244,897      216,303   

Administrative expenses

    (486,443 )    (459,938 )    (409,200 )    (401,236 ) 

Net Other Income

    (100,082 )    (85,893 )    (140,535 )    (130,860 ) 
                        

Income Before Tax

    251,109      381,878      416,675      98,992   
                        

Income Tax

    (87,960 )    (119,216 )    (116,635 )    (5,468 ) 
                        

Net income

    163,149      262,662      300,040      93,524   
                        

Minoritary Interest

    (3,475 )    (1,413 )    9,453      (7,650 ) 
                        

Net income for Quarter

    159,674      261,249      309,493      85,874   
                        

 

- 15 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    BBVA Banco Francés S.A.
Date: May 10, 2010     By:   /s/    MARTÍN E. ZARICH        
      Name:   Martín E. Zarich
      Title:   Chief Financial Officer