Banco BBVA Argentina's first quarter is, on the surface, a banker telling investors that hyperinflation is still the entire story. Net income of AR$ 85.2 billion ($85.2M inflation-adjusted) fell 21% year over year, after a year ago quarter loaded with a one-off tax credit, and the GAAP print stayed in the language the company actually speaks. Read past the headline, and the quarter reads entirely differently. Net interest income rose 22.6% in real terms, net fee income rose 28.3%, and loan loss allowances - the line that has defined the Argentine credit cycle - declined 25% from the prior quarter, evidence that the credit-quality climb the market has been waiting for may have begun. Net interest margin widened 110 basis points sequentially to 18.6%, the strongest read in two quarters, and the bank closed the period with a Common Equity Tier 1 ratio of 18.8% - roughly 2.3x the regulatory minimum.
The story of the next six months is the credit-cost reversal. BBVA Argentina ended the quarter with non-performing loans at 5.60% of the book, up from 5.07% at year-end 2024 but improving at a slower pace than the system; the coverage ratio at 88.41% remains the cushion of choice if the cycle re-deteriorates. The bank's exposure to private-sector credit, where market share rose 11 basis points sequentially to 12.15%, is the structural lever, and management says the second half should bring NPLs to "stabilize and decline." The market is pricing the bank at roughly 21x trailing GAAP earnings and 1.3x book value at $15.34 per NYSE-listed ADS, the ordinary-share equivalent near $5.11 and a market capitalization of approximately $3.3 billion. The open question for the second quarter, due August 27, is whether the LLA-line reprieve and the NIM expansion hold under the same lower-rate regime, or whether the second-quarter LLA is the start of a two-quarter reprieve the market is not yet pricing in.