20-F 1 d32791d20f.htm FORM 20-F

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As filed with the Securities and Exchange Commission on April 15, 2021

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-12568

BANCO BBVA ARGENTINA S.A.

(Exact name of Registrant as specified in its charter)

BBVA ARGENTINE BANK

(Translation of Registrant’s name into English)

Republic of Argentina

(Jurisdiction of incorporation or organization)

Av. Córdoba 111, C1054AAA

Ciudad Autónoma de Buenos Aires, Argentina

(Address of principal executive offices)

Eduardo González Correas – 011-54-11-4348-0000 (ext. 14483) – egonzalezcorreas@bbva.com – Av. Córdoba 111 31° (C1054AAA)

Ciudad Autónoma de Buenos Aires, Republic of Argentina

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class |  | Name of each exchange on which registered
American Depositary Shares, each representing the right to receive three ordinary shares, par value Ps.1.00 per share |  | New York Stock Exchange
Ordinary shares, par value Ps.1.00 per share |  | New York Stock Exchange*

* | The ordinary shares are not listed for trading, but are listed only in connection with the registration of the American Depositary Shares, pursuant to requirements of the New York Stock Exchange.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock

as of the close of the period covered by the annual report:

Title of class |  | Number of shares outstanding
Ordinary Shares, par value Ps.1.00 per share |  | 612,710,079

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer |  | ☐ |  | Accelerated filer |  | ☒
Non-accelerated filer |  | ☐ |  | Emerging growth company |  | ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP |  | ☐ |  |  |  | International Financial Reporting Standards by the International Accounting Standards Board as issued |  | ☒ |  |  |  | Other |  | ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

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TABLE OF CONTENTS

|  | Page |
FORWARD-LOOKING STATEMENTS |  |  | 1 |
PRESENTATION OF FINANCIAL INFORMATION |  |  | 1 |
CERTAIN TERMS AND CONVENTIONS |  |  | 3 |
PART I |  |  |  |
ITEM 1. |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |  |  | 3 |
ITEM 2. |  | OFFER STATISTICS AND EXPECTED TIMETABLE |  |  | 3 |
ITEM 3. |  | KEY INFORMATION |  |  | 3 |
ITEM 4. |  | INFORMATION ON THE COMPANY |  |  | 34 |
ITEM 4A. |  | UNRESOLVED STAFF COMMENTS |  |  | 119 |
ITEM 5. |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |  |  | 119 |
ITEM 6. |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |  |  | 154 |
ITEM 7. |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |  |  | 168 |
ITEM 8. |  | FINANCIAL INFORMATION |  |  | 171 |
ITEM 9. |  | THE OFFER AND LISTING |  |  | 172 |
ITEM 10. |  | ADDITIONAL INFORMATION |  |  | 176 |
ITEM 11. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |  |  | 187 |
ITEM 12. |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |  |  | 196 |
PART II |  |  |  |
ITEM 13. |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |  |  | 198 |
ITEM 14. |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  |  | 198 |
ITEM 15. |  | CONTROLS AND PROCEDURES |  |  | 198 |
ITEM 16A. |  | AUDIT COMMITTEE FINANCIAL EXPERT |  |  | 200 |
ITEM 16B. |  | CODE OF ETHICS |  |  | 200 |
ITEM 16C. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES |  |  | 200 |
ITEM 16D. |  | EXEMPTIONS FROM LISTING REQUIREMENTS FOR AUDIT COMMITTEES |  |  | 201 |
ITEM 16E. |  | PURCHASES OF EQUITY SECURITIES BY ONE ISSUER AND AFFILIATED PERSONS |  |  | 201 |
ITEM 16F. |  | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |  |  | 201 |
ITEM 16G. |  | CORPORATE GOVERNANCE |  |  | 201 |
PART III |  |  |  |
ITEM 17. |  | FINANCIAL STATEMENTS |  |  | 205 |
ITEM 18. |  | FINANCIAL STATEMENTS |  |  | 205 |
ITEM 19. |  | EXHIBITS |  |  | 205 |

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FORWARD-LOOKING STATEMENTS

This Form 20-F contains words, such as “believe”, “expect”, “estimate”, “intend”, “plan”, “may” and “anticipate” and similar expressions that identify forward-looking statements, which reflect our views about future events and financial performance. Actual results could differ materially as a result of factors beyond our control, including but not limited to:

| • |  | changes in general economic, business or political or other conditions in the Republic of Argentina (“Argentina” or “the Republic”) or changes in general economic or business conditions in Latin America;

| • |  | effects of the Covid-19 pandemic;

| • |  | changes in exchange rates or capital markets in general that may affect policies towards or lending to Argentina or Argentine companies;

| • |  | increased costs and decreased income related to macroeconomic variables such as exchange rates and the Consumer Price Index in Argentina (“CPI”);

| • |  | unanticipated increases in financing and other costs or the inability to obtain additional debt, equity or wholesale financing on attractive terms or at all; and

| • |  | the factors discussed under “Item 3. Key Information—D. Risk Factors”.

Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Banco BBVA Argentina S.A. (“BBVA Argentina” or the “Bank”), formerly BBVA Banco Francés S.A. undertakes no obligation to update or revise these forward-looking statements or to publicly release the results of any revisions to these forward-looking statements. The accompanying information in this annual report, including, without limitation, the information under “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk” identifies important factors that could cause material differences between any forward-looking statements and actual results.

PRESENTATION OF FINANCIAL INFORMATION

General

The Bank’s audited consolidated financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 (the “Consolidated Financial Statements”) are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS-IASB”).

All 2020, 2019 and 2018 data included in this report have been prepared in accordance with IFRS-IASB for the sole purpose of filing this annual report on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”).

The statutory consolidated annual financial statements that the Bank prepares to comply with the requirements of the Argentine Central Bank (the “Central Bank” or “BCRA”) are prepared pursuant to the reporting framework established by the Central Bank requiring supervised entities to submit financial statements prepared pursuant to IFRS-IASB except for:

(i) | temporary exceptions from the application of the expected loss model set forth under paragraph 5.5. of IFRS 9 for debt instruments issued by the non-financial government sector. In addition, the BCRA issued Communication “A” 6938, extended by Communication “A” 7181, deferring the application of the impairment model set forth in paragraph 5.5 of IFRS 9 to fiscal years beginning on or after January 1, 2022 for Group “C” institutions (institutions consolidated by the Bank), which would remain subject to the impairment model established by the BCRA that requires financial institutions recognize an allowance for loan losses based on the minimum guidelines set forth by the BCRA;

(ii) | the treatment to be applied to uncertain tax positions, which follows the guidance prescribed by Memorandum No. 6/2017 Financial Reporting Framework Established by the BCRA issued on May 29, 2017;

(iii) | the accounting treatment to be applied to the remaining investment held by the Bank in Prisma Medios de Pago S.A.,by applying the instructions provided in Memorandum No. 7/2019 issued by the BCRA dated April 29, 2019; and

(iv) | the debt securities issued by the government sector received in exchange for other instruments, which are measured at the carrying value of the instruments delivered in replacement on such date, in accordance with Communication “A” 7014 issued by the BCRA. According to the IFRS-IASB, these instruments should be accounted for at fair value, recognizing in profit or loss the difference with the carrying value of the instruments delivered.

Because of such differences, our statutory consolidated annual financial statements for the fiscal year ended December 31, 2020 are not comparable with the Consolidated Financial Statements included herein. In addition, we will continue to have differences during the year 2021 between our statutory consolidated financial statements and the financial statements required by IFRS-IASB. We do not intend to report in accordance with IFRS-IASB on an interim basis during 2021. Consequently, our interim financial information for 2021 will not be comparable with the Consolidated Financial Statements and other information contained in this annual report on Form 20-F. We refer in this annual report on Form 20-F to IFRS-IASB as adjusted by the regulations of the BCRA as “IFRS-BCRA”.

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The Consolidated Financial Statements consolidate all the subsidiaries of the Bank in which the Bank holds direct or indirect control. See “Item 4. Information on the Company—C. Organizational Structure” for an organizational chart of BBVA Argentina and its subsidiaries.

In this annual report, references to “$”, “US$”, “U.S. dollars”, “US dollars” and “dollars” are to United States dollars and references to “Ps.”, “Pesos” and “pesos” are to Argentine pesos. Percentages and certain dollar and peso amounts have been rounded for ease of presentation. Unless otherwise stated, all market share and other industry information has been derived from information published by the Central Bank.

Unless otherwise indicated, financial information contained in this annual report reflects the consolidation of the following subsidiaries at the year end and for the fiscal years indicated below:

|  | As of December 31,
Entity |  | 2020 |  | 2019 |  | 2018
Volkswagen Financial Services Compañía Financiera S.A. |  | X |  | X |  |
Consolidar AFJP S.A. (undergoing liquidation proceedings) |  | X |  | X |  | X
BBVA Francés Valores S.A. (1) |  |  |  |  |  | X
BBVA Asset Management Argentina S.A. |  | X |  | X |  | X
PSA Finance Argentina Compañía Financiera S.A. |  | X |  | X |  |

(1) | Merged into the Bank as from October 1, 2019.

On September 25, 2018, BBVA Francés lost control of Volkswagen Financial Services Compañia Financiera S.A. (“VWFS”) due to the termination of the two year commitment by the Bank to provide financing to VWFS if it were unable to diversify its sources of funding. According to IAS 28 Investments in Associates and Joint Ventures, VWFS qualified thereafter as a joint venture and, as such, it was deconsolidated in 2018 as of the date of loss of control.

Pursuant to certain amendments to the relevant shareholders’ agreements, effective since July 1, 2019, the Bank has assumed the power to direct the relevant activities of VWFS and PSA Finance Argentina Compañía Financiera S.A. Pursuant to International Financial Reporting Standard (“IFRS”) 10, the Bank concluded that it controls such companies effective since July 1, 2019. Therefore, the Consolidated Financial Statements consolidate financial information for these companies since the date on which the Bank gained control over them.

Also on October 9, 2019 the Argentine National Securities Commission (“CNV”) issued Resolution No. 20484/2019 approving the merger by absorption of the Bank with BBVA Francés Valores S.A.

IAS 29 Financial Reporting in Hyperinflationary Economies requires that an entity whose functional currency is the currency of a hyperinflationary economy must state its assets, liabilities, income and expenses in terms of the measuring unit current at the end of the reporting period (December 31, 2020). The Bank has applied IAS 29 as follows for purposes of the Consolidated Financial Statements:

| • |  | Restated the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and consolidated statements of cash flow for the years ended December 31, 2019 and 2018, including the calculation and separate disclosure of the gain or loss on the net monetary position.

| • |  | Restated the consolidated statement of financial position as of December 31, 2019.

| • |  | Adjusted the consolidated statement of financial position as of December 31, 2020.

| • |  | Adjusted the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and consolidated statements of cash flow for the year ended December 31, 2020, including the calculation and separate disclosure of the gain or loss on the net monetary position.

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For further information regarding the methodology and criteria applied see Note 5.22 to the Consolidated Financial Statements.

See “Item 3. Key Information—A. Selected Financial Data—Exchange Rates” for information regarding the evolution of rates of exchange since 2012.

All figures and percentages of variations in this annual report on Form 20-F, unless otherwise stated, are presented in the measuring unit current at December 31, 2020. All comparisons of the financial system contained in this annual report on Form 20-F are presented in nominal terms.

CERTAIN TERMS AND CONVENTIONS

The terms below are used as follows throughout this report:

| • |  | “BBVA Argentina”, the “Bank” or the “Company” and terms such as “we”, “us” and “our” mean Banco BBVA Argentina S.A. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

| • |  | “BBVA” or the “BBVA Group” means Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

| • |  | “Consolidated Financial Statements” means our audited consolidated financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018, prepared in accordance with IFRS-IASB and included in this Form 20-F.

- PART I -

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. | Selected Financial Data

The financial information set forth below as of and for the years ended December 31, 2020, 2019, 2018 and 2017 has been selected from, and should be read together with, the Consolidated Financial Statements included herein.

For information concerning the preparation and presentation of the Consolidated Financial Statements, see “Presentation of Financial Information”. See also “D. Risk Factors—Risks Relating to Argentina”, and “D. Risk Factors—Risks Relating to the Argentine Financial System and to BBVA Argentina” below.

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|  | For the year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands of pesos) (1) |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | 118,522,759 |  |  |  | 156,367,921 |  |  |  | 118,269,467 |  |  |  | 74,795,581 |
Interest expenses |  |  | (41,471,892 | ) |  |  | (66,123,069 | ) |  |  | (51,808,825 | ) |  |  | (25,046,199 | )
NET INTEREST INCOME |  |  | 77,050,867 |  |  |  | 90,244,852 |  |  |  | 66,460,642 |  |  |  | 49,749,382 |
Fee and commission income |  |  | 23,663,181 |  |  |  | 23,976,155 |  |  |  | 26,334,964 |  |  |  | 22,560,248 |
Fee and commission expense |  |  | (11,423,234 | ) |  |  | (12,841,847 | ) |  |  | (11,521,703 | ) |  |  | (10,225,068 | )
Gains on financial assets and liabilities at fair value through profit or loss, net |  |  | 11,239,112 |  |  |  | 15,604,469 |  |  |  | 242,608 |  |  |  | 9,133,787 |
(Losses) gains on derecognition of financial assets not measured at fair value through profit or loss, net |  |  | (2,309,858 | ) |  |  | (80,874 | ) |  |  | (286,372 | ) |  |  | 25,096 |
Exchange differences, net |  |  | 6,227,725 |  |  |  | 14,026,409 |  |  |  | 13,589,850 |  |  |  | 7,072,763 |
Other operating income |  |  | 6,322,980 |  |  |  | 11,982,201 |  |  |  | 4,412,604 |  |  |  | 4,069,562 |
Other operating expenses |  |  | (15,590,218 | ) |  |  | (22,028,412 | ) |  |  | (16,720,831 | ) |  |  | (15,384,948 | )
GROSS INCOME |  |  | 95,180,555 |  |  |  | 120,882,953 |  |  |  | 82,511,762 |  |  |  | 67,000,822 |
Administration costs |  |  | (39,138,572 | ) |  |  | (41,728,066 | ) |  |  | (40,920,004 | ) |  |  | (41,114,132 | )
Personnel benefits |  |  | (20,379,135 | ) |  |  | (22,698,425 | ) |  |  | (22,801,895 | ) |  |  | (23,501,740 | )
Other administrative expenses |  |  | (18,759,437 | ) |  |  | (19,029,641 | ) |  |  | (18,118,109 | ) |  |  | (17,612,392 | )
Depreciation and amortization |  |  | (4,065,981 | ) |  |  | (5,728,534 | ) |  |  | (4,025,755 | ) |  |  | (2,993,487 | )
Impairment of financial assets |  |  | (11,864,861 | ) |  |  | (21,445,415 | ) |  |  | (8,029,553 | ) |  |  | (5,293,972 | )
Loss on net monetary position |  |  | (22,274,824 | ) |  |  | (27,518,847 | ) |  |  | (24,407,251 | ) |  |  | (12,900,314 | )
NET OPERATING INCOME |  |  | 17,836,317 |  |  |  | 24,462,091 |  |  |  | 5,129,199 |  |  |  | 4,698,917 |
Share of profit of equity accounted investees |  |  | 266,572 |  |  |  | 174,422 |  |  |  | 664,982 |  |  |  | 708,523 |
PROFIT BEFORE TAX |  |  | 18,102,889 |  |  |  | 24,636,513 |  |  |  | 5,794,181 |  |  |  | 5,407,440 |
Income tax expense |  |  | (8,034,094 | ) |  |  | (2,821,059 | ) |  |  | (9,081,582 | ) |  |  | (1,513,102 | )
PROFIT (LOSS) FOR THE YEAR |  |  | 10,068,795 |  |  |  | 21,815,454 |  |  |  | (3,287,401 | ) |  |  | 3,894,338 |
Attributable to owners of the Bank |  |  | 10,051,035 |  |  |  | 21,819,964 |  |  |  | (3,119,918 | ) |  |  | 3,987,136 |
Attributable to non-controlling interest |  |  | 17,760 |  |  |  | (4,510 | ) |  |  | (167,483 | ) |  |  | (92,797 | )
Profit (Loss) for the year attributable to owners of the Bank per ordinary share (2)(3) |  |  | 16.41 |  |  |  | 35.61 |  |  |  | (5.09 | ) |  |  | 7.00 |
Profit (Loss) for the year attributable to owners of the Bank per ADS (2)(3)(5) |  |  | 49.23 |  |  |  | 106.83 |  |  |  | (15.27 | ) |  |  | 21.00 |
Diluted profit (loss) for the year attributable to owners of the Bank per ordinary share (2)(3) |  |  | 16.41 |  |  |  | 35.61 |  |  |  | (5.09 | ) |  |  | 7.00 |
Diluted profit (loss) for the year attributable to owners of the Bank per ADS (2)(3)(5) |  |  | 49.23 |  |  |  | 106.83 |  |  |  | (15.27 | ) |  |  | 21.00 |
Declared dividends per ordinary share (2)(3)(4) |  |  | 11.42465 |  |  |  | 25.36946 |  |  |  | 8.22796 |  |  |  | 4.80275 |
Declared dividends per ADS (2)(3)(4)(5) |  |  | 34.27396 |  |  |  | 76.10830 |  |  |  | 24.68388 |  |  |  | 14.40825 |
Net operating income per ordinary share (2)(3) |  |  | 29.11 |  |  |  | 39.93 |  |  |  | 8.37 |  |  |  | 8.25 |
Net operating income per ADS (2)(3)(5) |  |  | 87.33 |  |  |  | 119.79 |  |  |  | 25.11 |  |  |  | 24.75 |
Average ordinary shares outstanding (000s) (3) |  |  | 612,671 |  |  |  | 612,671 |  |  |  | 612,660 |  |  |  | 569,910 |

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|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands of pesos) (1) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 152,040,070 |  |  |  | 212,733,025 |  |  |  | 207,554,781 |  |  |  | 118,229,933 |
Financial assets at fair value through profit or loss |  |  | 12,616,460 |  |  |  | 15,424,483 |  |  |  | 18,068,509 |  |  |  | 19,884,259 |
Financial assets at amortized cost |  |  | 349,113,843 |  |  |  | 280,486,554 |  |  |  | 433,864,823 |  |  |  | 421,056,810 |
Financial assets at fair value through Other Comprehensive Income (“OCI”) |  |  | 127,572,351 |  |  |  | 61,543,514 |  |  |  | 51,443,863 |  |  |  | 52,818,795 |
Tangible assets |  |  | 35,658,422 |  |  |  | 37,423,357 |  |  |  | 35,730,974 |  |  |  | 37,216,974 |
All other assets |  |  | 16,023,379 |  |  |  | 10,699,766 |  |  |  | 10,508,885 |  |  |  | 16,895,704 |
TOTAL ASSETS |  |  | 693,024,525 |  |  |  | 618,310,699 |  |  |  | 757,171,835 |  |  |  | 666,102,475 |
Financial liabilities at fair value through profit or loss |  |  | 188,694 |  |  |  | 4,974,233 |  |  |  | 4,334,178 |  |  |  | 710,491 |
Financial liabilities at amortized cost |  |  | 528,244,795 |  |  |  | 457,814,875 |  |  |  | 619,308,479 |  |  |  | 528,647,214 |
All other liabilities |  |  | 50,047,642 |  |  |  | 40,704,682 |  |  |  | 38,151,095 |  |  |  | 34,562,143 |
TOTAL LIABILITIES |  |  | 578,481,131 |  |  |  | 503,493,790 |  |  |  | 661,793,752 |  |  |  | 563,919,848 |
Share capital |  |  | 612,710 |  |  |  | 612,710 |  |  |  | 612,660 |  |  |  | 612,660 |
Share premium |  |  | 26,386,953 |  |  |  | 26,386,953 |  |  |  | 26,373,705 |  |  |  | 26,373,705 |
Inflation adjustment to share capital |  |  | 18,640,670 |  |  |  | 18,640,670 |  |  |  | 18,640,578 |  |  |  | 18,640,578 |
Reserves |  |  | 119,196,249 |  |  |  | 92,525,638 |  |  |  | 63,613,039 |  |  |  | 55,406,542 |
Accumulated (loss) gains |  |  | (58,285,838 | ) |  |  | (26,122,154 | ) |  |  | (13,988,581 | ) |  |  | 74,965 |
Accumulated other comprehensive income |  |  | 5,830,351 |  |  |  | 626,581 |  |  |  | 63,619 |  |  |  | 121,729 |
Equity attributable to owners of the Bank |  |  | 112,381,095 |  |  |  | 112,670,398 |  |  |  | 95,315,020 |  |  |  | 101,230,179 |
Non-controlling interests |  |  | 2,162,299 |  |  |  | 2,146,511 |  |  |  | 63,063 |  |  |  | 952,448 |
TOTAL EQUITY |  |  | 114,543,394 |  |  |  | 114,816,909 |  |  |  | 95,378,083 |  |  |  | 102,182,627 |
SELECTED RATIOS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Profitability and Performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on average total assets (6) |  |  | 1.53 | % |  |  | 3.17 | % |  |  | (0.44 | )% |  |  | 1.19 | %
Return on average total equity (7) |  |  | 8.93 | % |  |  | 20,98 | % |  |  | (3.17 | )% |  |  | 7.88 | %
Capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total equity as a percentage of total assets |  |  | 16.53 | % |  |  | 18.57 | % |  |  | 12.60 | % |  |  | 15.31 | %
Total liabilities as a multiple of total equity |  |  | 5.05x |  |  |  | 4.39x |  |  |  | 6.94x |  |  |  | 5.52x |
Credit Quality |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowances for loan losses as a percentage of financial assets at amortized cost (loans and advances) |  |  | 3.82 | % |  |  | 5.60 | % |  |  | 1.98 | % |  |  | 1.37 | %
Non-performing loans ratio (8) |  |  | 1.50 | % |  |  | 3.58 | % |  |  | 1.78 | % |  |  | 0.65 | %
Coverage ratio (9) |  |  | 245.53 | % |  |  | 148.30 | % |  |  | 109.17 | % |  |  | 207.61 | %

(1) | Except net income per ordinary share and net income per ADS data and financial ratios.

(2) | Based on the average number of ordinary shares outstanding during the year.

(3) | The average number of ordinary shares outstanding during a year was computed as the average number of shares outstanding during the twelve months taking into account the outstanding amounts as of the end of each month.

(4) | On March 9, 2021, the Board of Directors resolved to propose for shareholder approval at the next ordinary and extraordinary shareholders’ meeting, to be held on April 20, 2021, a distribution of cash dividends in the amount of Ps.7,000 million, subject to the prior authorization of the BCRA. For the fiscal year ended December 31, 2019, the dividends in cash declared at the ordinary and extraordinary shareholders’ meetings held on May 15, 2020 and November 20, 2020 were Ps.2,500 million (nominal value) and Ps.12,000 million (nominal value), respectively. For the year ended December 31, 2018, the dividends in cash declared at the ordinary and extraordinary shareholders’ meeting on April 24, 2019 were Ps.2,407 million (nominal value). For the fiscal year ended December 31, 2017, the dividends in cash declared at the ordinary and extraordinary shareholders’ meeting on April 10, 2018 were Ps.970 million (nominal value). Dividends per ordinary share for each year are calculated taking into account dividends declared in such year and the number of outstanding shares at the end of such year. BCRA Communication “A” 6886, in force since January 31, 2020, provides that financial institutions must have the prior authorization of the Central Bank for the distribution of their results. Subsequently, BCRA issued Communication “A” 7181 whereby [financial institutions] may not distribute dividends until at least June 30, 2021.

(5) | Each ADS represents three ordinary shares.

(6) | Profit or loss for the year attributable to owners of the Bank as a percentage of average total assets, computed as the average of fiscal-year-beginning and fiscal-year-ending balances.

(7) | Profit or loss for the year attributable to owners of the Bank as a percentage of average shareholders’ equity, computed as the average of fiscal-year-beginning and fiscal-year-ending balances.

(8) | Non-performing loans and advances as a percentage of loans and advances before allowances.

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(9) | Allowances for loan losses as a percentage of non-performing loans and advances. Non-performing loans and advances include all loans and advances to borrowers classified as Stage 3 in accordance with IFRS 9.

Dividends

The table below sets forth the dividends declared with respect to the years ended December 31, 2020, 2019, 2018, 2017 and 2016 on each ordinary share and the equivalent of those dividends expressed in terms of dividends per American Depositary Share, each representing three ordinary shares (the “ADSs”), in each case adjusted for all stock dividends during the relevant periods. For the year ended December 31, 2020, this table sets forth the dividends that have been approved by the Bank’s Board of Directors but which are pending shareholder approval. The Central Bank requires that we maintain 20% of our net income (according to IFRS-BCRA) in legal reserves.

|  | Declared Dividends Per Ordinary Share (2) |  |  | Declared Dividends Per ADS (2) |
|  | Ps. |  |  | US$ |  |  | Ps. |  |  | US$ |
December 31, 2020 (1)(3) |  |  | 11.42465 |  |  |  | 0.12340 |  |  |  | 34.27396 |  |  |  | 0.37020 |
December 31, 2019 (2)(4) |  |  | 25.36946 |  |  |  | 0.17227 |  |  |  | 76.10830 |  |  |  | 1.68986 |
December 31, 2018 (2) (5) |  |  | 8.22796 |  |  |  | 0.56329 |  |  |  | 24.68388 |  |  |  | 1.22253 |
December 31, 2017 (2) (6) |  |  | 4.46762 |  |  |  | 0.40751 |  |  |  | 13.40287 |  |  |  | 0.87259 |
December 31, 2016 (2) (7) |  |  | 6.54784 |  |  |  | 0.29086 |  |  |  | 19.64352 |  |  |  | 1.36388 |

(1) | On March 9, 2021, the Board of Directors resolved to propose for shareholder approval at the next ordinary and extraordinary shareholders’ meeting, to be held on April 20, 2021, a distribution of cash dividends in the amount of Ps.7,000 million, subject to the prior authorization of the BCRA. BCRA issued Communication “A” 6768, in force since August 30, 2019, which provides that financial institutions must have the prior authorization of the Central Bank for the distribution of their results. Subsequently, BCRA issued Communication “A” 7181 whereby financial institutions may not distribute dividends until at least June 30, 2021.

(2) | For the fiscal year ended December 31, 2019, the dividends in cash declared at the ordinary and extraordinary shareholders’ meetings held on May 15, 2020 and November 20, 2020 were Ps.2,500 million (nominal value) and Ps.12,000 million (nominal value), respectively. For the fiscal year ended December 31, 2018, the dividends in cash declared at the ordinary and extraordinary shareholders’ meeting on April 24, 2019 were Ps.2,407 million (nominal value). For the fiscal year ended December 31, 2017, the dividends in cash declared at the ordinary and extraordinary shareholders’ meeting on April 10, 2018 were Ps.970 million (nominal value). For the fiscal year ended December 31, 2016, the dividends in cash declared at the ordinary and extraordinary shareholders’ meeting on March 30, 2017 were Ps.911 million (nominal value). As of December 31, 2019 the number of outstanding shares was 612,710,079. As of both December 31, 2018 and 2017 the number of outstanding shares was 612,659,638. During the fiscal year ended December 31, 2016 the number of outstanding shares was 536,877,850. Dividends per ordinary share for each year are calculated taking into account dividends declared in such year and the number of outstanding shares at the end of such year.

(3) | Dollar amounts are based upon the reference exchange rate quoted by the Central Bank at April 12, 2021.

(4) | Dollar amounts are based upon the reference exchange rate quoted by the Central Bank at April 21, 2020.

(5) | Dollar amounts are based upon the reference exchange rate quoted by the Central Bank at May 8, 2019.

(6) | Dollar amounts are based upon the reference exchange rate quoted by the Central Bank at April 26, 2018.

(7) | Dollar amounts are based upon the reference exchange rate quoted by the Central Bank at April 12, 2017.

Exchange Rates

The following tables show the annual high, low, average and period-end exchange rate for US$1.00 for the periods indicated. The exchange rate is calculated by the Central Bank based on the information provided by financial institutions on the exchange rate for trading of U.S. dollars for settled transactions in Argentine pesos and U.S. dollars. Such information must be representative of the prevailing market conditions. After gathering this information, the Central Bank calculates the daily exchange rate using the formula set out in Annex I of Communication “A” 3500.

The Federal Reserve Bank of New York does not report a noon buying rate for pesos.

Year /Period |  | High (1) |  |  | Low (1) |  |  | Average (2) |  |  | Period-end |
| (in pesos per US$1.00) |
2016 |  |  | 16.0392 |  |  |  | 13.0692 |  |  |  | 14.7738 |  |  |  | 15.8502 |
2017 |  |  | 18.8300 |  |  |  | 15.1742 |  |  |  | 16.5665 |  |  |  | 18.7742 |
2018 |  |  | 40.8967 |  |  |  | 18.4158 |  |  |  | 28.0937 |  |  |  | 37.8083 |
2019 |  |  | 60.0033 |  |  |  | 37.0350 |  |  |  | 48.2423 |  |  |  | 59.8950 |
October 2020 |  |  | 78.3283 |  |  |  | 76.2450 |  |  |  | 77.5693 |  |  |  | 78.3283 |
November 2020 |  |  | 81.2967 |  |  |  | 78.6900 |  |  |  | 79.9332 |  |  |  | 81.2967 |
December 2020 |  |  | 84.1450 |  |  |  | 81.3950 |  |  |  | 82.6379 |  |  |  | 84.1450 |
2020 |  |  | 84.1450 |  |  |  | 59.8152 |  |  |  | 70.5941 |  |  |  | 84.1450 |
January 2021 |  |  | 87.2983 |  |  |  | 84.7033 |  |  |  | 85.9708 |  |  |  | 87.2983 |
February 2021 |  |  | 89.8250 |  |  |  | 87.6050 |  |  |  | 88.6746 |  |  |  | 89.8250 |
March 2021 |  |  | 91.9850 |  |  |  | 90.0850 |  |  |  | 91.0664 |  |  |  | 91.9850 |
April 2021 (through April 12, 2021) |  |  | 92.5817 |  |  |  | 92.2367 |  |  |  | 92.3770 |  |  |  | 92.5817 |

(1) | Source: BCRA.

(2) | For annual averages, this is the average of monthly average rates during the period.

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Fluctuations in the exchange rate between pesos and dollars affect the dollar equivalent of the peso price of the ordinary shares on the Bolsa y Mercados Argentinos S.A. (“BYMA”) and as a result, would most likely affect the market price of the ADSs. Fluctuations in exchange rates also affect dividend income measured in dollars. The Bank of New York Mellon, as depositary for the ADSs, is required, subject to the terms of the deposit agreement, to convert pesos to dollars at the prevailing exchange rate at the time of making any dividend payments or other distributions. The following table shows the rate of devaluation of the peso compared with the dollar at year end, the rate of exchange (number of pesos per dollar prevailing in the Argentine foreign exchange market at year end) and the rate of inflation for consumer price for the fiscal years ended December 31, 2020, 2019, 2018, 2017 and 2016.

Since the repeal of the Convertibility Law in January 2002, the peso has devalued 9,158.2% compared with the dollar.

|  |  |  |  |  |  |  | As at December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |
Devaluation Rate(1) |  |  | 40.49 | % |  |  | 58.42 | % |  |  | 101.38 | % |  |  | 18.45 | % |  |  | 21.88 | %
Exchange Rate(2) |  |  | 84.1450 |  |  |  | 59.8950 |  |  |  | 37.8083 |  |  |  | 18.7742 |  |  |  | 15.8502 |
Inflation Rate(3) |  |  | 36.14 | % |  |  | 53.83 | % |  |  | 47.65 | % |  |  | 24.80 | % |  |  | 34.59 | %

(1) | For the twelve-month period then ending according to the Argentine Central Bank.

(2) | Pesos per dollar according to the Argentine Central Bank.

(3) | The inflation rate presented is for the Consumer Price Index published by the Argentine National Statistics and Censuses Institute (“INDEC”) and is calculated over the prior twelve months.

B. | Capitalization and indebtedness

Not applicable.

C. | Reasons for the offer and use of proceeds

Not applicable.

D. | Risk Factors

The following summarizes some, but not all, of the risks provided below. Please carefully consider all of the information discussed in this Item 3.D. “Risk Factors” in this annual report for a more thorough description of these and other risks:

| • |  | Risks Relating to Argentina

| • |  | economic and political instability in Argentina;

| • |  | current levels of inflation;

| • |  | high levels of public spending;

| • |  | the effects on the Argentine economy of economic events in other markets;

| • |  | a decline in international prices for Argentina’s principal commodity exports;

| • |  | exchange controls and restrictions on capital inflows and outflows;

| • |  | the insufficiency of the measures adopted to resolve the crisis in the energy sector;

| • |  | any failure to adequately address actual and perceived risks of institutional deterioration and corruption;

| • |  | fluctuations in the value of the peso;

| • |  | the inability of the Republic to obtain financing on satisfactory terms;

| • |  | salary increases or additional employments benefits as a resut of government measures or pressure from union sectors;

| • |  | government intervention in the Argentine economy;

| • |  | amendments to the Central Bank’s Charter and the Convertibility Law; and

| • |  | the Covid-19 pandemic.

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| • |  | Risks Relating to the Argentine Financial System and to BBVA Argentina

| • |  | the short-term structure of the deposit base of the Argentine financial system, including the deposit base of the Bank, could lead to a reduction in liquidity levels and limit the long-term expansion of financial intermediation;

| • |  | reduced spreads between interest rates received on loans and those paid on deposits;

| • |  | volatility in interest rates;

| • |  | a mismatch between UVA (“Unidad de Valor Adquisitivo”, in Spanish) loans and UVA deposits;

| • |  | the inaccuracy and/or insufficiency of our estimates and established reserves for credit risk and potential credit losses;

| • |  | increased competition in the banking industry;

| • |  | the dependency of our credit ratings on Argentine sovereign credit ratings;

| • |  | the increasing dependency of the financial industry on information technology systems;

| • |  | security risks;

| • |  | an increase in fraud or transaction errors;

| • |  | any insolvency proceeding against us that could subject us to the powers of, and intervention by, the Central Bank;

| • |  | lawsuits brought against us outside Argentina;

| • |  | class actions against financial institutions for an indeterminate amount;

| • |  | the ability of BBVA, our controlling shareholder, to direct our business;

| • |  | our ability to grow our business is dependent on our ability to manage our relationships with partners and grow our deposit base;

| • |  | acquisitions that could adversely affect the value of the Bank;

| • |  | any adverse consequences related to our calculation of income tax for the years ended December 31, 2018 and 2017;

| • |  | the application of IAS 29 to our Consolidated Financial Statements; and

| • |  | restrictions on our ability to pay dividends.

| • |  | Legal, Regulatory and Compliance Risks

| • |  | material weaknesses in our internal control over financial reporting;

| • |  | our operations are conducted in a highly regulated environment;

| • |  | the instability of the regulatory framework, in particular the regulatory framework affecting financial institutions;

| • |  | our exposure to multiple provincial and municipal legislation and regulations;

| • |  | limitations arising from the Consumer Protection Law and the Credit Card Law;

| • |  | compliance risks;

| • |  | differences between U.S. and Argentine corporate disclosure, governance and accounting standards;

| • |  | special rules that govern the priority of different stakeholders of financial institutions in Argentina; and

| • |  | uncertainty regarding the possible effects that tax reform could have in the Argentine economy.

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Risks Relating to Argentina

Overview

We are an Argentine corporation (sociedad anónima), and the vast majority of our operations, properties and customers are located in Argentina. Accordingly, the quality of our assets, our financial condition and our results of operations are significantly affected by macroeconomic and political conditions prevailing in Argentina.

Economic and political instability in Argentina may adversely and materially affect our business, results of operations and financial condition.

The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high levels of inflation and currency devaluation. As a consequence, our business and operations have been, and could in the future be, affected from time to time to varying degrees by economic and political developments and other material events affecting the Argentine economy, such as inflation, price controls, foreign exchange controls, fluctuations in foreign currency exchange rates and interest rates, governmental policies regarding spending and investment, national, provincial or municipal tax increases and other initiatives increasing government involvement in business activities, and civil unrest and local security concerns.

In 2001 and 2002, the Argentine economy suffered a severe economic and political crisis. Among other consequences, the Argentine Crisis resulted in Argentina defaulting on its foreign debt obligations and introducing emergency measures and numerous changes in economic policies that affected utilities, financial institutions and many other sectors of the economy. Argentina also suffered a significant real devaluation of the peso, which in turn caused numerous Argentine private sector debtors with foreign currency exposure to default on their outstanding debt. Restrictions on deposit withdrawals from the banking system were implemented, as dollar denominated loans and deposits were “pesified” (reclassified as peso denominated) and maturities reprogrammed. Although following that crisis, Argentina substantially increased its real gross domestic product (“GDP”), growing 8.9% in 2005, 8.0% in 2006, 9.0% in 2007 and 4.1% in 2008, in 2009 it was affected by an extended drought, which reduced agricultural production, and the effects of the global economic crisis which led to a contraction of the economy of 5.9% during that year. Real GDP growth was strong in 2010 and 2011, increasing to 10.1% and 6.0%, respectively, but economic performance was erratic in subsequent years and after another recession in 2014, GDP contracted by 2.5%, leading to a GDP level below that of 2011 in constant prices. The economy grew again by 2.7% in 2015, primarily driven by an increase in public expenditures and investment.

The economic and financial environment in Argentina was significantly influenced by the presidential elections held on November 22, 2015, which resulted in Mr. Mauricio Macri being elected President of Argentina. Mr. Macri’s administration (the “Macri administration”) assumed office on December 10, 2015 and launched a wide array of measures intended to correct the longstanding fiscal and monetary policies that had resulted in recurrent public sector deficits, high inflation, pervasive foreign exchange controls and limited foreign investment. In 2016, the elimination of foreign exchange restrictions and rebalancing of utility rates led to an increase in inflation to 41% year-on-year according to the City of Buenos Aires index at year end and a considerable decline in consumption. As a result, GDP fell by 1.8% in 2016. Once the main imbalances were eliminated, the economy picked up again in 2017, with GDP growing 2.9% and inflation slowing to 24.8% year-on-year, though higher than the goal defined by the Central Bank. The Macri administration’s Cambiemos political party triumphed in the midterm elections of 2017, obtaining the necessary support to implement certain gradual tax and pension reforms, as well as a fiscal agreement with the provinces aimed at normalizing the finances of the provincial administrations.

The Macri administration carried out a gradual approach intended to reduce the significant fiscal and current account deficit and to correct the macroeconomic imbalances received from the previous administration. This gradual approach ended abruptly in the second quarter of 2018 due to a combination of domestic impacts (mainly a severe drought), a deterioration of the global financial environment (including an increase in US interest rates and the US-China trade war) coupled with policy errors (including a change to BCRA inflation targets and a capital gains tax), which brought about significant capital outflows from Argentina and the closing of global credit markets for Argentine issuers. From April 30 to July 31, 2018, the Argentine peso (based on the reference exchange rate of the Central Bank) depreciated 32.1% despite frequent exchange market interventions. Even after a strong adjustment of monetary policy and assistance from the International Monetary Fund (“IMF”) in the form of a stand-by high-access agreement of US$50 billion signed in mid-June 2018, tensions in the foreign exchange market reemerged in August, and the peso devalued 35.8% during that month in a strong sell-off of Argentine assets. Between April and September 2018, nearly US$14 billion of international reserves were lost due to sales of U.S. dollars by the Central Bank in the foreign exchange market.

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Monetary policy was highly influenced by the IMF plan, and by the end of September 2018, a new monetary and foreign exchange scheme was announced. It was adopted in order to control exchange rate volatility by absorbing all excess liquidity in pesos, holding the nominal monetary base constant until December 2018. It also set wide bands within which the foreign exchange rate could float. It allowed currency to be stabilized until February 2019. The peso appreciated 5% between September 30, 2018 and February 28, 2019 (from Ps.40.89/US$ to Ps.39.00/US$) and interest rates of Central Bank Liquidity Bills (Leliq) fell in that period more than 2,900 basis points from the peak. By the end of April 2019, the Central Bank changed its exchange rate scheme by eliminating intervention bands, which became exchange reference bands since intervention of the Central Bank in the exchange market was allowed at any level of the exchange rate of the peso, which led to the stability of the peso until the primary elections of August 11, 2019 (on August 9, 2019 the exchange rate closed at Ps.45.40/US$, 1.6% above the value as of April 29, 2019). However, the unexpected loss by 15 points gap of President Macri to Alberto Fernández in those elections caused the exchange market to react negatively, and the reference exchange rate rose 10.3 pesos on Monday, August 12, 2019, a 22.8% increase over the value recorded the prior Friday, and finished 2019 at Ps.59.89/US$ with high volatility. On August 28, 2019, Argentina announced a new schedule of payment on its short term local debt, including instruments like Lecap, Letes, Lecer and Lelink, where original dates of payment were postponed between three and six months.

During 2019 the IMF advanced disbursements planned to be made in 2020 and 2021 within the framework of a revised agreement that required an additional fiscal adjustment in 2019, including reaching the goal of a primary deficit of 0% of GDP, the strengthening of Central Bank reserves with the support of official creditors and the continuity of orthodox monetary and fiscal policies. This was part of a new program established in October 2018.

In October 2019, Alberto Fernández was elected president of Argentina and took office on December 10, 2019. Since then, his government (the “Fernandez administration”) has implemented a wide range of economic and political reforms, including limiting access to the exchange market for natural persons (seeking to contain the exchange rate without losing reserves) and the adoption of Law No. 27,541 on Social Solidarity and Productive Reactivation (the “Solidarity Law”), which covers a wide range of political and economic areas and adopts measures that have had, and continue to have, a significant impact on the Argentine economy, including the declaration of a public emergency in economic, financial, fiscal, administrative, pensions, utility rates and energy issues, as well as health and social services. The Solidarity Law also increased taxes, while providing incentives for production and benefits for the poorest and most vulnerable sectors. Moreover, the Solidarity Law also set up the “Tax for an Inclusive and Solidary Argentina” (the “PAIS Tax”) which will be in force for a five year period since its enactment, which applies a 30% rate on banknotes purchases in foreign currency for hoarding purposes, the acquisition of foreign services, and cross-border transportation services.

The Fernández administration has also undertaken a sovereign debt restructuring, designed to make Argentina’s debt sustainable, including through the reschedulement of maturities of sovereign securities, some of which were held by the Bank. As of December 31, 2020, sovereign debt securities affected by these measures and held by the Bank represented 2.67% of the Bank’s total assets. Pursuant to such debt restructuring, investors agreed to exchange their defaulted bonds by new bonds. The “Net Present Value” paid for such securities was around US$53.5 for every US$100 of nominal value, discounted at an exit rate of 10%, for those securities issued during 2015-2019 and around US$59.5 for those previously issued in 2005 and 2010.

Additionally, the Fernandez administration has also undertaken a restructuring of domestic debt that resulted in a 130% foreign exchange premium and a loss of US$1,300 million international reserves to smooth the official exchange rate depreciation. Initially, foreign exchange controls were partially eased and the market responded positively, the foreign exchange premium was reduced to 85% and the international reserves loss was drastically reduced.

As of the date of this annual report, it is not possible to predict the impact that these measures and any future measures that the Fernandez administration will have on the Argentine economy as a whole and on the financial system in particular. The Fernandez administration’s attempt to stabilize the economy and reduce the fiscal deficit, the trade deficit, inflation, poverty, and country risk, have to date proved unsuccessful. Any further measures could be detrimental to the economy and adversely affect our business, results of operations and financial condition.

Additionally, the Covid-19 crisis has adversely affected the Argentine economy. The Metropolitan Area of Buenos Aires was under Preventive and Mandatory Social Isolation (PMSA) from March, 20, 2020 to November, 8, 2020. Meanwhile, the rest of the country has suffered a significant increase in the number of Covid-19 positive cases since September and has, since then, also been subject to PMSA measures. This context has significantly affected the ability to function normally, mainly those that are more labor intensive which has significantly adversely affected the country’s economic performance. For example, GDP for the second quarter of 2020 fell 19.1% compared to GDP for the second quarter of 2019. As a result, our business, results of operations and financial condition could be significantly adversely affected. See “ —The Covid-19 pandemic is affecting the Bank.”.

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If current levels of inflation continue, the Argentine economy and the Bank’s business, results of operations and financial condition could be adversely affected.

Argentina has faced price increases since 2007. According to information published by the National Institute of Statistics and Censuses (“INDEC”), the consumer price index (“CPI”) increased 9.5% in 2011, 10.8% in 2012, 10.9% in 2013, 24% in 2014 and 11.9% in the ten-month period ended on October 31, 2015. INDEC stopped publishing the CPI in the period between November 2015 and April 2016, and resumed the publication of inflation rates with its new methodology for calculating the CPI as of June 2016, reflecting a cumulative increase of 16.9% from May to December 2016. The INDEC reported an annual variation of the CPI of 24.8%, 47.6%,53.8% and 36.1% in 2017, 2018, 2019 and 2020, respectively.

The efforts made by the government to contain and lower inflation have not obtained the desired results and inflation continues to be a significant problem for the Argentine economy. During the first two months of 2020, the freezing of public utility rates and fuels, as well as the controlled exchange rate slide (due to foreign exchange restrictions and the usage of international reserves), resulted in lower-than-expected monthly inflation levels, being 2.3% in January and 2.0% in February. This downward trend was reversed in March with a 3.3% inflation and then rejoined in April and May, when inflation fell to 1.5%. However, this initial disinflationary effect of the social isolation was compensated with an increasing money issuance (Ps.1,640 billion) to cope with the expenditures derived from the pandemic (mainly direct transfers to the most affected sectors). Inflation started a timid acceleration in June (2.2% month on month), which was partially reversed in July (1.9%) when the government retightened the mobility restrictions. However, once the contagion curve started to flatten, mobility restrictions were partially eased and the monetary overhang (resulting from the money issuance) began to take the scene. Inflation levels started to accelerate, being 2.7% in August, 2.8% in September, 3.8% in October, 3.2% in November and 4.0% in December (representing the maximum monthly variation of 2020), thus reaching a 36.1% year-on-year inflation rate in 2020. According to the Central Bank consensus, high inflation levels are expected to persist in 2021. The aforementioned expansive monetary policy carried out by the government since December imposes severe risks for the acceleration of inflation in the future. Moreover, if the value of the Argentine peso cannot be stabilized through fiscal and monetary policies, a further increase in inflation rates could be expected.

As a result of the devaluation of the exchange rate and the continuity of the process of adjustment of public service rates, as well as an unfavorable international context in terms of financing, the three-year accumulated inflation as of July 2018 ranked above 100%. Consequently, the Bank applied International Accounting Standard N° 29 (“IAS 29”) “Financial Reporting in Hyperinflationary Economies”, as from July 1, 2018 in the preparation of its financial statements accompanying this annual report, which requires the financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, either based on the historical cost method or on the current cost method, be expressed in terms of the unit of measure that is in effect at the end of the reporting period. IAS 29 does not establish an absolute inflation rate above which hyperinflation is presumed.

Likewise since January 1, 2020, financial entities supervised by the BCRA, such as the Bank, are required to prepare their statutory financial statements in accordance with IAS 29 in the preparation of their financial statements as established by Communication “A” 6651.

We cannot predict whether any measures to be implemented by the Fernandez administration to control inflation will have the desired effect. Currently and in the past, inflation has adversely affected the Argentine economy and the government’s ability to create conditions conducive to growth. An environment of high inflation rates also negatively affects Argentina’s international competitiveness, real wages, employment rates, the consumption rate, and interest rates. High levels of inflation and the high level of uncertainty regarding economic variables such as inflation has in the past, and may in the future, adversely affect economic activity, which could materially and adversely affect our business, results of operations and financial condition.

A high level of public spending could negatively affect the Argentine economy and its access to international financial markets.

During the last years of the mandate of Fernández de Kirchner (the “Kirchner administration”), the government significantly increased public spending, turning to the BCRA and Argentine Social Security Office (“ANSES”) to cover part of the funding requirements of the public administration, generated in part by the policy of subsidies to certain public services such as electricity, gas, water and transportation, which together with an expansionary monetary policy led to a greater increase in prices all of which adversely affected consumer purchasing power and economic activity levels.

However, the Macri administration adopted measures to mitigate the increase in the fiscal deficit and reduce its current level. For 2017 and 2018, the Macri government set a fiscal deficit target of 4.2% and 2.7% of GDP, respectively, achieving a fiscal deficit of 3.9% and 2.4% of GDP, respectively. Although the objective of the Macri administration was to achieve a primary fiscal deficit equivalent to 1.3% of GDP in 2019, by virtue of negotiations with the IMF and in accordance with the National Budget Law for 2019, the fiscal deficit target was reduced to 0% of GDP in 2019 with a surplus of 1% in 2020. Subsequently, this target was increased to 0.5% of GDP. The deficit in 2019 finally amounted to Ps.95,121 million, equivalent to 0.4% of GDP.

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In 2020, in the face of the crisis caused by the health emergency caused by Covid-19, the Fernandez administration announced a package of fiscal stimulus measures to alleviate the effects of the recession, focused on sustaining the income of the most vulnerable families and companies most affected by the PSMA. The combined effect of the increase in spending and the fall in revenue (due to the economic recession) has produced a significant increase in the fiscal deficit in 2020. The 2020 primary fiscal deficit was 6.5% of GDP, the highest in more than 40 years. Although the Treasury showed signs of fiscal austerity by the end of 2020, the inaccessibility to debt markets forced the government to finance the fiscal needs exclusively with monetary issuance from the Central Bank. This dynamic is leading to inflationary and exchange rate disruptions. In addition, any deterioration in the government’s fiscal position negatively affects its ability to access debt markets in the future and could result in greater restrictions on accessing those markets by Argentine companies, including BBVA.

A weaker fiscal position could have a material adverse effect on the government’s ability to obtain long-term financing and adversely affect economic conditions in Argentina, which could adversely affect the business, results of operations and financial condition of the Bank.

The Argentine economy could be adversely affected by economic events in other markets.

Weak or no economic growth or recession or adverse situations that affect any of Argentina’s main trading partners could negatively affect the balance of payments and, therefore, the economic growth of Argentina. In recent years, several Argentine trading partners (such as Brazil, Europe and China) have experienced significant slowdowns or periods of recession in their economies. If these slowdowns or recessions were to occur again, this could impact the demand for products that come from Argentina and thus affect its economy. Furthermore, there is uncertainty about how the commercial relationship will develop between the Mercosur member states, especially between Argentina and Brazil.

Furthermore, the global economy faces significant challenges. There is considerable uncertainty regarding the long-term effects of expansive monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s major economies, including the United States and China. There have been concerns about unrest and terrorist threats in the Middle East, Europe and Africa and conflicts involving Iran, Ukraine, Syria and North Korea. Likewise, economic and social crises emerged in several Latin American countries during 2019, as the economy in most of the region has slowed down after almost a decade of sustained growth, among other factors. There has also been concern about the relationship between China and other Asian countries, which can result in or intensify potential conflicts in relation to territorial disputes, and the possibility of a trade war between the United States and China. Furthermore, the UK withdrew from the European Union (“Brexit”) on January 31, 2020, and recently completed a transition period ending on December 31, 2020, the long-term effects of which are uncertain. The medium and long-term implications of Brexit could adversely affect European and global market and economic conditions and could contribute to instability in global financial and currency markets. The UK withdrew from the European Union (“Brexit”) on January 31, 2020. The medium and long-term implications of Brexit could adversely affect European and global market and economic conditions and could contribute to instability in global financial and currency markets.

The Covid-19 pandemic has led to economic contractions in most of the world’s economies, both developed and emerging. This has affected the Argentine economy mainly through trade, since the demand for its exports (mainly from Brazil and Europe) has dropped substantially. Argentina accumulated a trade balance surplus of Ps.12,528 million in 2020. The Brazilian economy is showing signs of a sharp recovery since 3Q20, which could turn out to be positive for Argentina, given the fact that the country is one of its main importers. Moreover, the current excess of liquidity could mean more and cheaper credit for emerging markets, a fact that could also be facilitated by the result of the recent US Presidential election. The Argentine economy could also benefit from the fact that the new IMF board is willing to reach a new agreement that allows Argentina to postpone its current maturities while giving a couple of years to retake the sustained growth path.

If international and local economic conditions fail to improve or deteriorate even more, the Argentine economy could be negatively affected as a result of lower international demand and lower prices for its products and services, higher international interest rates, less capital inflow and greater aversion to risk. Any of the foregoing could also adversely affect the Bank’s business, results of operations and financial condition.

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A decline in international prices for Argentina’s principal commodity exports could have a material adverse effect on Argentina’s economy and public finances, and, as a result, on our business.

Historically, the commodities market has been characterized by high volatility. Despite the volatility of prices of most of Argentina’s commodities exports, commodities have significantly contributed to the government’s revenues during the 2000s due to the imposition of export duties on agricultural products in 2002. Although most duties were eliminated and the export tax on soy was reduced from 35% to 30% by the Macri administration in 2016, and was further reduced in 2018 by 0.5% per month, the Argentine economy is still relatively dependent on the price of its main agricultural exports, primarily soy. This dependence, in turn, renders the Argentine economy vulnerable to commodity prices fluctuations. International soybean prices decreased slightly during 2017 and further in 2018 due to growing trade tensions between the United States and China. During 2019, soybean prices reached their lowest prices over the prior five years, but recovered from US$305.5 per ton in May 2019 to US$335.0 per ton in December 2019. The average price for soybeans was US$326.9 per ton in 2019, down from US$345.0 per ton in 2018. During the last months of 2020 prices have demonstrated an upward trend (due to recent purchases from China and the promising news regarding the Covid-19 vaccine) reaching US$444.0 per ton.

Declines in commodity prices may adversely affect the Argentine economy and the government’s fiscal revenues, which could in turn adversely impact the business, results of operations and financial condition of the Bank.

Exchange controls and restrictions on capital inflows and outflows could have a material adverse effect on Argentine public sector activity, and, as a result, on our business.

From 2011 to 2015, the Argentine government introduced exchange controls and restrictions on the transfer and entry of foreign currency that significantly limited the ability of companies to hold foreign currency in Argentina or make payments abroad.

After taking office in 2015, the Macri administration substantially eliminated all exchange restrictions that had been implemented under the previous administration. Nevertheless, on September 1, 2019, due to the economic instability and the significant devaluation of the peso that took place in August 2019 after the primary elections, the government and the BCRA adopted a series of measures reinstating certain exchange controls limiting the access to the local exchange market in order to reduce the purchases of foreign currency. The payment of external financial debt, dividends in foreign currency and the payment of imports of goods and services were severely restricted and the obligation to enter and settle in pesos the funds from the export of goods and services, was reinstated, among other measures. Other financial transactions such as derivatives and transactions in securities are also limited by the new exchange regime.

The Fernandez administration extended the period during which these measures would apply and established additional measures through the Solidarity Law, including a tax on certain transactions that imply the acquisition of foreign currency by individuals and companies. During 2020, foreign exchange market regulations have been strengthened and made increasingly more complex. Towards the end of May 2020, the BCRA issued Communication “A” 7030 by means of which access to foreign currency to pay for imports was severely limited. As of the date of this annual report this measure is still in effect. After that, on September 15, 2020, the Central Bank tightened the foreign exchange market controls. First of all, companies with external financial maturities of more than US$1 million due before March, 31, 2021 had to present a restructuring plan of at least 60% of the capital payment. Secondly, a 35% tax was added to individuals who buy dollars in the official market (already limited to US$200 per month, and on top of a 30% tax on the official exchange rate) and finally, communication “A” 7106 banned non-residents from selling bonds for foreign currency. These decisions resulted in a notorious sell off of sovereign bonds, which led to a 7% daily fall. The Central Bank sold US$1,318 million the following five weeks, in order to keep the exchange rate depreciation at desirable levels. Due to this unsustainable situation, the Government decided to partially ease the restrictions by reducing the interval between bond transactions and the resulting currency exchange between pesos and dollars from fifteen to three days, and also by repealing the aforementioned prohibition for non-residents. The Central Bank purchased US$608 million in the spot market in December 2020.

Any changes in the policies of the current government concerning economic, exchange and financial matters in order to preserve the balance of payments, the Central Bank’s reserves, a capital outflow or a significant depreciation of the Peso, such as the mandatory conversion into Pesos of obligations assumed by legal entities resident in Argentina in US Dollars which could be due to a period of crisis and political, economic and social instability affecting Argentina, or otherwise, any of which could be exacerbated as a result of the Covid-19 pandemic, could have an adverse effect on Argentina’s economic activity, and the Bank’s business, results of operations and financial condition.

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The measures adopted to resolve the crisis in the energy sector may not be sufficient, which could affect the business, the results of operations and the financial condition of the Bank.

The economic policies applied since the Argentine crisis of 2001-2002 have had an adverse effect on the Argentine energy sector. The failure to reverse the freeze on electricity and natural gas rates imposed during the crisis became a barrier to investment in the energy sector. The government tried to encourage investment by subsidizing energy consumption but the policy proved ineffective and served to further discourage investment in the energy sector, causing oil and gas production and electricity generation, transmission and distribution to stagnate while consumption continued to rise. To address the power supply shortage that began in 2011, the government attempted to increase imports of electrical power, with adverse consequences for the trade balance and international reserves.

In response to the growing energy crisis, the Macri administration declared a state of emergency for the national electricity system, which ended on December 31, 2017. The state of emergency allowed the government to take measures to stabilize the supply of electricity to the country. In this context, subsidy policies were re-examined and new electricity rates were adopted.

Additionally, the Macri administration eliminated part of the subsidies for natural gas consumption and the adjustment of rates. As a result, average prices for electricity and gas increased. However, some of the government initiatives related to the energy and gas sectors were challenged in Argentine courts and resulted in adverse court rulings, which were subsequently lifted as legal challenges were resolved.

Although actions have been carried out to attempt to address the crisis in the energy sector, the lack of a definitive resolution of the negative effects on the generation, transport and distribution of electricity in Argentina with respect to residential and industrial supply could undermine confidence and produce an adverse effect on Argentine’s economic and financial condition, generating political instability, and adversely affecting the Bank’s business and results of operations.

Likewise, the elimination of subsidies and the progressive increase in prices could continue to generate social unrest and be challenged in local courts. We can give no assurance that the measures adopted by the government to deal with the energy crisis will be sufficient to restore energy production in Argentina in the short or medium term. Since the Fernandez administration took office, the rates of public services have been frozen, so a rise in energy demand is expected to generate deficit pressures on the trade balance due to the need to import gas to maintain the levels of domestic production and prevent it from declining as a result of the lack of investment driven by the capped prices.

The current lack of resolution on tariffs results in uncertainty regarding the future situation of the energy market in Argentina and constitutes a source of potential risk for the country’s economy and could lead to exchange rate volatility, either of which could adversely affect the Bank’s business, results of operations and financial condition.

Any failure to adequately address actual and perceived risks of institutional deterioration and corruption may adversely affect Argentina’s economy and financial condition.

The lack of a sound institutional framework and corruption have been identified as, and continue to be, serious problems for Argentina. Argentina ranked 65 out of 180 countries in the 2019 Corruption Perceptions Index published by Transparency International. In the World Bank’s Doing Business 2020 report, Argentina ranked 126 out of 190 countries, as compared with 119 in 2019.

Recognizing that the failure to address these issues could increase the risk of political instability, distort decision-making processes and adversely affect Argentina’s international reputation and ability to attract foreign investment, the Macri administration announced several measures aimed at strengthening Argentina’s institutions and reducing corruption. These measures included reducing criminal sentences in exchange for cooperation with the government in corruption investigations, increasing access to public information, seizing assets from corrupt officials, increasing the powers of the Anticorruption Office (Oficina Anticorrupción) and the passing of a new public ethics law, among others. The government’s ability to implement these initiatives is uncertain as it requires the involvement of the judicial branch, which is independent, as well as legislative support from opposition parties. In 2018, a thorough investigation of a corruption scandal linked to a public works bribery scheme implemented by the previous administration led to the arrest of several prominent individuals. Public perception of the independence of the judicial system has been strengthened by these actions, but we cannot assure that the implementation of these measures will be successful.

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If the actual and perceived risks of institutional deterioration and corruption are not adequately addressed, Argentina’s economy and financial situation might be adversely affected, which could have a material adverse effect on the business, the results of operations and the financial condition of the Bank.

Fluctuations in the value of the peso could adversely affect the Argentine economy and Argentine’s ability to service its debt obligations.

Fluctuations in the value of the peso may adversely affect the Argentine economy. A devaluation of the peso may adversely affect the government’s revenues (measured in U.S. dollars), fuel inflation and significantly reduce real wages. After several years of moderate variations in the nominal exchange rate, the peso lost 35.3% of its value in 2014 and 33.7% in 2015. Persistent high inflation during this period, with formal and “de facto” exchange controls, resulted in an increasingly overvalued real official exchange rate. Compounded by the effects of foreign exchange controls and restrictions on foreign trade, these highly distorted relative prices resulted in a loss of competitiveness of Argentine production, impeded investment and resulted in economic stagnation during this period.

After the foreign exchange controls were lifted at the end of 2015, the peso depreciated by 38.5% in 2016 considering the average foreign exchange rate in December of 2016 compared with the average foreign exchange rate in December of 2015. In 2017, the depreciation of the peso fell to 11.8%, well below inflation, raising doubts about potential appreciation of the peso in real terms once again. In this scenario, the vulnerability of the Argentine economy to a tightening of international financial conditions was reflected in a current account deficit of 4.9% of GDP in 2017 and a low level of international reserves compared to other countries in the region. When ten-year U.S. treasury rates began to rise and the U.S. dollar strengthened, these vulnerabilities resulted in a negative differentiation of Argentina compared with other emerging countries, which led to a prolonged run on the currency despite frequent interventions by the Central Bank and a sizeable loan from the IMF signed in June 2018. Finally, after another sell-off of Argentine assets in August 2018 and a strong depreciation, in early October 2018 a revised program with the IMF which further tightened fiscal and monetary policy managed to stabilize the foreign exchange market and the peso appreciated by 7.5% in the last quarter of 2018. Considering the full year, the peso depreciated by 50.3% in nominal terms in 2018. Together with the decline in economic activity, the real depreciation of the peso resulted in a strong reduction in imports and a correction of the external deficit in the fourth quarter of 2018.

According to the revised IMF agreement, the Argentine peso floated freely within an accepted band of exchange rates, but the Central Bank may intervene to a limited extent in the foreign exchange market selling reserves if the exchange rate rises above a certain level, defined initially at Ps.44/US$ (and subsequently adjusted by inflation) which is the upper threshold of the accepted band in which the peso floats freely without intervention of the Central Bank. Conversely the Central Bank was charged with purchasing reserves if the foreign exchange rate fell below the lower threshold of the non-intervention band.

In early 2019, the peso crossed the lower threshold, prompting purchases by the Central Bank and a strong decline in interest rates pursuant to the monetary program. As the level of inflation has remained high, a stronger nominal appreciation of the peso could lead to renewed doubts regarding the appreciation of the peso against the U.S. dollar in real terms. This presents risks for the Argentine economy, including the possibility of a reduction in exports as a consequence of the loss of external competitiveness and deterioration of the current account deficit. Any such appreciation could also have a negative effect on economic growth and employment, reduce tax revenues in real terms and also raise fears regarding the impact of a sudden stop in capital flows

However, by the end of April 2019, exchange rate tensions, together with negative inflation reports of March 2019, led the Central Bank to agree with the IMF the possibility of an intervention even within the (then) exchange reference zone. The announcement of the measure significantly reduced volatility in the exchange rate and helped to contain inflation expectations. It further deepened the contractive profile of the monetary policy since the pesos obtained from the sales of dollars were not re-injected and instead, the monetary base objective was reduced. Thus, the supply of foreign currency from exporters increased and demand decreased. In spite of this, the adverse reaction of the markets to the primary elections in August 2019 led to an increase in exchange rates, and lack of confidence in Argentine assets increased. The prices of Argentine government securities fell by 20% while the value of local companies’ shares declined more than 40% over a few days, while the U.S. dollar exchange rate exceeded Ps.60, which implied a depreciation of more than 25% in just four days. The Central Bank intervened in the market, with relatively little success, by selling foreign currency, which brought about a fall in the international reserves of around US$2 billion. For individuals, the Argentine Central Bank established a maximum limit of US$200 for the purchase of foreign currency per calendar month across all entities authorized to trade in foreign exchange, as well as for purposes of formation of foreign assets, family assistance remittances, and transactions with derivatives. This measure was enacted in order to help control the exchange rate without using reserves. However, due to the high money issuance and the resulting monetary overhang, the Central Bank has been selling international reserves in order to smooth the depreciation of the peso. Nevertheless, the reserves stock is limited and the more the Central Bank uses them, the more the FX premium rises, so, the monetary authority has decreed a series of measures during 2020 to avoid further loss of reserves. Communication “A” 7030 and “A” 7106 are the clearest example of this idea (see, “—Exchange controls and restrictions on capital inflows and outflows could have a material adverse effect on Argentine public sector activity, and, as a result, on our business”). These types of measures, although they may be useful in the very short term, have a negative impact on investment and economic activity. The IMF has not allowed (with few exceptions) these types of foreign exchange market controls when negotiating new programs, which may be an issue in connection with the upcoming negotiation.

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Political uncertainty or changes in liquidity in international markets are likely to lead to greater volatility, and the depreciation of the peso or a reduction in the reserves of the Central Bank as a result of intervention in the exchange market could adversely affect inflation expectations, economic performance and the ability of the Republic of Argentina to service its debt.

Any of these factors could substantially and adversely affect the business, the results of operations and the financial condition of the Bank.

There can be no assurances that the Republic will be able to obtain financing on satisfactory terms in the future, which could have a material adverse effect on its ability to make payments on its outstanding public debt.

The Republic’s future tax revenue and fiscal results may be insufficient to meet its debt service obligations and the Republic may have to rely in part on additional financing from domestic and international capital markets in order to meet future debt service obligations. However, the Republic may not be able to access international or domestic capital markets at acceptable prices or at all, and, if that is the case, the Republic’s ability to service its outstanding public debt could be adversely affected, which could in turn adversely affect Argentina’s economy and financial condition and thereby have a material adverse effect on our business, results of operations and financial condition.

Measures taken by the government, as well as pressure from union sectors, could require salary increases or additional benefits, all of which could increase the Bank’s operating costs.

In the past, the government has passed laws and regulations requiring private companies to maintain certain salary levels and provide additional benefits to their employees. Likewise, public sector and private sector employers have been subject to intense pressure from their workforce or the unions that represent them, to increase wages and provide certain benefits to workers, particularly due to high inflation rates.

Labor relations in Argentina are governed by specific laws such as the Labor Contract Law No. 20,744 and the Law of Collective Labor Agreements No. 14,250 which, among other things, establish how to carry out wage negotiations and other labor issues. Each industrial or commercial sector is regulated by a collective bargaining agreement that classifies companies by sector and by union. Although the bargaining process is standardized, each chamber of industry or commerce negotiates wage increases and employment benefits with the corresponding union in the relevant sector.

According to data published by INDEC, the wage index registered a growth of 27.5% during 2017, as a result of the 26.5% increase in the public sector and a 31.5% increase in the private sector for which data is available. On January 30, 2020, INDEC published that the wage index of the public sector in the previous 12 months rose 43.7%, as a consequence of the 44.5% increase in the private sector for which data is available and an increase of 42.2% of the public sector. The total wage index has increased 31.6% in 2020.

Existing employment laws have led to salary increases that have resulted in an increase in operating costs that has adversely affected the results of operations of Argentine companies. Additionally, the adoption of new measures providing for wage increases or additional benefits for workers due to inflation or additional pressure from workers and unions or otherwise, could result in a further increase in costs and a decrease in the results of operations of Argentine companies, including those of the Bank, which could adversely affect the business, the results of operations and the financial condition of the Bank.

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Government intervention in the Argentine economy could adversely affect the business, results of operations and financial condition of the Bank.

During the Kirchner administration, the direct intervention of the government in the Argentine economy increased, including through the implementation of expropriation and nationalization measures, and price and exchange controls.

The Kirchner administration adopted several measures to directly or indirectly control foreign trade transactions and the foreign exchange market. From 2011 until President Macri took office, the government adopted increasingly stricter exchange controls, which, although subsequently largely eliminated or mitigated by the Macri administration, had the effect of widely restricting market access while generating a parallel market for trading the dollar with significant differences with the official exchange rate. As of the date of this annual report, the Argentine government applies greater intervention policies than the previous government.

Historically, the actions carried out by the government in economic matters, including decisions regarding interest rates, taxes, price controls, wage increases, increased benefits for workers, exchange controls and potential changes in the market of currencies have had a substantial adverse effect on Argentina’s economic growth.

Expropriations, price controls and exchange controls and other direct government interventions in the economy have had a negative impact on the level of investment in Argentina, access to international capital markets by Argentine companies and Argentine trade and diplomatic relations with other countries. If the government decides to increase the level of intervention in the economy, in accordance with historic practice or otherwise, the Argentine economy and, in turn, the business, the results of operations and financial condition of the Bank could be adversely affected.

There has been, since the beginning of the Fernández administration, a strong intervention in the foreign exchange and labor markets, as well as a relatively lax fiscal deficit path. Likewise, the successful debt restructuring process brought a sign of sustainability, perceived not only by the market itself, but also by the main credit rating agencies. The sovereign country risk fell more than 1,000 basic points following the agreement. However, only a week after the long awaited agreement, the aforementioned measures adopted by the Central Bank led to sharp fall in the sovereign bonds prices as well as the main Argentinians stocks in New York. All this contributes to the fact that the parities of the Sovereign Bonds have fallen to levels of the order of 40%.

Amendments to the Central Bank’s Charter and the Convertibility Law may adversely affect the economy of Argentina.

In March 2012, Law No. 26,739 was passed amending both the Central Bank’s Charter and the Convertibility Law. This law amended the mission of the Central Bank (as established in its Charter) and eliminated certain provisions previously in force. In accordance with the law, the Central Bank must promote monetary and financial stability, as well as promote development with social equity. Furthermore, the concept of “freely available reserves” was eliminated, allowing the Argentine government to use additional reserves to cancel debts. Additionally, this law establishes that the Central Bank may set the interest rate and the terms of the loans granted by financial institutions. As regards reserves, should the government use them to repay public debt or finance public spending, this may result in an increase in inflation, which would hinder economic growth. Moreover, a decrease in the reserves of the Central Bank might adversely affect the ability of the Argentine financial system to resist and overcome the effects of an economic crisis (whether domestic or international), negatively affecting economic growth and therefore the business, results of operations and financial condition of the Bank.

The Covid-19 pandemic is affecting the Bank.

The Covid-19 pandemic, which originated in China and subsequently spread to many other countries in the world, including Argentina and other countries where our clients operate, is adversely impacting the global economy as well as the Argentine economy. In addition to the impact on human lives and the health of millions of people globally, the pandemic has resulted in the following, among others: emergency actions by governmental authorities worldwide, including the shutdown of national borders and directives for residents in many countries, including Argentina, to shelter at home and for certain business to suspend some or all of their business activities; disruption of supply chains worldwide; falls in production and demand, which led to sharp declines in the GDP of those countries which were most affected by the pandemic and had an overall negative impact on global GDP in 2020; increases in unemployment levels; a sharp deterioration in the valuation of financial assets and investments; increased volatility in the financial markets, including with respect to the value and trading of our shares and other securities of the Bank; exchange rate volatility; an increase in market loan defaults by both companies and individuals as per information provided by BCRA; and increases in public debt due to actions taken by governmental authorities in response to the pandemic. The pandemic struck Argentina in early March 2020, as the country was still struggling to pull out of a recession in its third year and managing a large external debt.

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As of the date of this annual report, governmental authorities continue to take measures to mitigate the economic effects of the pandemic. In Argentina, several measures have been adopted to encourage bank lending through, among others, (i) lower reserve requirements on bank lending to households and micro-, small- and medium-sized enterprises (SMEs); (ii) limitations on banks’ holdings of BCRA notes (LELIQ) in order to make available liquidity and encourage the provision of credit lines to SMEs, with loans granted thereunder guaranteed in part by a State agency, Fondo de Garantías Argentino (FoGAr); and (iii) temporary easing of bank loan classification rules, in accordance with BCRA GAAP (providing an additional 60 days of non-payment before a loan is required to be classified as non-performing). Other measures aimed at protecting vulnerable persons include, among others, (i) a temporary prohibition on charging fees related to ATM services; (ii) mortgage relief by freezing, until September 30, 2020, the amount of mortgage payments based on those calculated as of March 2020, and postponing any foreclosures until such date; (iii) the postponement of payments on credit card loans for three months, with such postponed payments to be made up over the subsequent nine months; (iv) the suspension of account closures; (v) the reduction of maximum credit card interest rates from 49% to 43%; (vi) the postponement of all loan payments due during the second quarter without punitive interest; (vii) the provision of credit lines guaranteed by FoGAr to support the maintenance of payroll payments; (viii) the grant of credits at subsidized credit rates for companies under the Emergency Assistance Program for Work and Production, as determined according to the year-on-year variation in the company’s turnover, and credit lines in pesos at a zero interest rate to persons under a simplified tax return system called Monotributo and self-employed persons engaged in culture-related activities; (ix) a new scheme of credit line for the productive investment of micro, small and medium enterprises (“MiPyME”) that the financial institutions of Group A, the main financial entities of the Argentine financial system, shall offer from October 16, 2020 to March 31, 2021, in order to finance investment projects, working capital and discount of deferred checks and other instruments, and other special cases with maximum rates ranging from 30% to 35% and terms from 24 to 36 months, according to the allocation of the funds.

Additionally, during the pandemic-related lockdown, the BCRA and the government issued Decrees Nos. 319/2020 and 767/2020, pursuant to which customers within the portfolio of mortgage and pledge loan adjustable by UVA financings benefitted from the deferral of unpaid installments from April to September 2020 with no interest up to the final loan maturity. For more information regarding the impact of Covid-19 on our results of operations and financial condition see Note 11 in our Consolidated Financial Statements.

The pandemic and actions taken in response thereto are adversely affecting, and are expected to continue to adversely affect, economic conditions and business activity in Argentina, and therefore the Bank. We had to close all of our branches in Argentina during most of the second half of March 2020. While we were allowed to re-open our branches in April, initially branches were only open on certain specified dates. Although our branches reopened on April 13, 2020, we could generally provide only a limited number of services in our branches, and only by prior appointment, with teller services initially restricted to pensioners and social plan beneficiaries, and with teller services later being available to the general public for withdrawals of foreign currency. In addition, a significant number of Bank personnel, including the teams who provide central services, have been working remotely, disrupting our normal operations. In addition, we face various risks arising from the pandemic, such as a higher risk of impairment of our assets (including financial instruments valued at fair value, which may suffer significant fluctuations), a possible significant increase in loan defaults and credit losses, a decrease in our business activity, such as new retail lending. These risks may continue to affect us if the Argentine economy is not able to recover quickly from the pandemic. Moreover, the spread of Covid-19 could also negatively impact the business and operations of third-party service providers who perform critical services for us. In addition, remote working has increased cybersecurity risks given greater use of computer networks outside the corporate environment.

As a result of the above, the pandemic is adversely affecting us. The ultimate magnitude of the impact on our business, financial condition and results of operations, which could be material, will depend on future developments, which are uncertain, including among others, the intensity and duration of the consequences derived from the pandemic in Argentina and the different geographies in which our clients and counterparties operate.

Risks Relating to the Argentine Financial System and to BBVA Argentina

The short-term structure of the deposit base of the Argentine financial system, including the deposit base of the Bank, could lead to a reduction in liquidity levels and limit the long-term expansion of financial intermediation.

In recent years, growth of the Argentine financial sector has been heavily dependent on deposit levels because of the relatively small size of the Argentine capital markets and the lack of access to foreign capital markets. After the Macri administration took office, access to foreign capital markets was again possible, supporting credit growth in addition to the deposit base, but since 2018 international and local markets have been closed for Argentine companies due to growing risk aversion toward emerging markets generally, and to Argentina in particular, after the foreign exchange crisis that began in May 2018. There can be no assurance regarding when access to foreign credit markets may resume and, if resumed, access may be disrupted again in the future.

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From 2016, the implementation of the tax amnesty regime and restored investor confidence resulted in a significant growth of U.S. dollar deposits. That process came to a halt in the first half of 2018 during the currency crisis due to fears that these deposits might be immobilized by the government and financial institutions indeed suffered a slight withdrawal of these kind of deposits in September 2018. After the primary elections that were held on August 11, 2019, withdrawals of U.S. dollar denominated deposits accelerated, with deposits falling more than 40%. Banks, including BBVA Argentina, had sufficient liquidity to be able to repay them. Moreover, loans denominated in U.S. dollars had short terms, and banks quickly began to collect them. Dollar deposits fell during 2020 by around 25%, with an accumulated decrease of approximately 60% since 2018.

While banks’ liquidity in foreign currency is high, a significant share of it is deposited at the Central Bank, and as a result banks have to rely on the Central Bank in order to access those funds.

The local currency deposit base is mostly short-term and transactional. Deposits represent a small fraction of GDP when compared with other emerging countries. Deposits in pesos grew in line with inflation until August 2019. Following the reintroduction of currency controls after the primary elections, banks suffered a short run on local currency retail time deposits, with a decrease of approximately 15% to 20% in September and October 2019, which came to an end after the amount of foreign currency individuals could purchase was reduced to US$200 a month, on October 28, 2019. In periods of financial stress, customers typically buy foreign currency with their local currency deposits to protect against a possible devaluation of the peso. After that, deposits in pesos stabilized and they have resumed growth.

Liquidity in local currency of the Argentine financial sector is currently high, with a high level of minimum cash requirements applicable to Argentine financial institutions, which the Central Bank has raised several times since 2018. Loan demand has recovered to some extent after the 2019 collapse, but the aggregated balance of the financial system is very low related to GDP in historical terms.

Notwithstanding the above, because most deposits are short-term deposits, a substantial part of loans must also have short-term maturities to match the terms of the deposits. The proportion of long-term credit lines, such as mortgages, is small, and long term loan origination fell sharply during 2019 and 2020 as a consequence of high interest rates and the difficult financial environment.

We have a continuous demand for liquidity to fund our business activities. Our profitability or solvency could be adversely affected if access to liquidity and funding is constrained or made more expensive for a prolonged period of time. Furthermore, withdrawals of deposits or other sources of liquidity may make it more difficult or costly for us to fund our business on favorable terms. Although we believe that deposit liquidity levels are currently reasonable, no assurance can be given that those levels will not be reduced due to future negative economic conditions or otherwise. If depositors lose confidence as a result of negative economic conditions or otherwise and withdraw significant funds from financial institutions, there will be a substantial negative impact on the manner in which financial institutions, including us, conduct their business and on their and our ability to operate as financial intermediaries. If we are unable to access adequate sources of medium and long-term funding or if we are required to pay high costs in order to obtain the same and/or if we cannot generate profits and/or maintain our current volume and/or scale of our business, whether due to a decline in deposits or otherwise, our liquidity position and ability to honor our debts as they come due may be adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.

Reduced spreads between interest rates received on loans and those paid on deposits could adversely affect our profitability.

The spread between the interest rates on loans and deposits could be affected as a result of increased competition in the banking sector and the government’s tightening or loosening of monetary policy in response to inflation concerns. During recent years, as a consequence of higher inflation, interest rates have significantly increased in Argentina.

After the Macri administration took office, expectations were of a decline in both inflation and interest rates and therefore banking spreads. However, since 2018 devaluation of the peso and higher inflation led the Central Bank to substantially raise interest rates, ending the margin contraction trend. Since late December 2019, the Central Bank has resumed a process of reducing rates, and inflation expectations have been reduced slightly, although they remain high. The Covid -19 pandemic and the impact it had on economic activity kept inflation stable but still at very high levels compared to international standards. If the Central Bank is successful in keeping the pace of inflation reduction (annual inflation has decreased from 53.8% in 2019 to 36.1% in 2020 as a result of the economic downturn caused by the Covid-19 pandemic, but it is still at high levels and trending up again during the first months of 2021), it could result in a renewed pressure on banking spreads. Moreover, a change in the composition of the source of funding, which is currently heavily weighted by non-interest-bearing deposits, could also put downward pressure on margins. A change in the composition of the source of funding could result from lower interest rates, higher demand of credit and therefore a need to increase the amount of time deposits or other types of bearing interest liabilities.

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Another source of spread contraction could be an increase in the regulation of subsidized loans. In October 2020, the Central Bank re-introduced mandatory credit lines for SMEs, under which banks have to lend a portion of their deposits to small and mid size companies at regulated rates. It is probable that this obligation will continue through 2021, adversely affecting margins and an increase in the use of these measures by the Central Bank could further affect margins.

Any reductions in spreads could have a material adverse effect on our business, results of operation and financial condition.

Our business is particularly vulnerable to volatility in interest rates.

Our results of operations are substantially dependent upon the level of our net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Interest rates are highly sensitive to many factors beyond our control, including fiscal and monetary policies of governments and central banks, regulation of the financial sector in the market in which we operate, domestic and international economic and political conditions and other factors.

In the current Argentine scenario where the government seeks to stabilize high inflation rates, there is a risk of volatility in the interest rates. This scenario could adversely affect our financial margin as a result of differential movements in interest rates for deposits, loans or other bank assets and liabilities. In addition, a high proportion of loans referenced to variable interest rates makes debt service on such loans more vulnerable to changes in interest rates. In addition, high interest rates could reduce the demand for credit and our ability to generate credit for our clients, as well as contribute to an increase in the credit default rate. As a result of these and the above factors, significant changes or volatility in interest rates could have a material adverse effect on our business, results of operations and financial condition.

Mismatch between UVA loans and UVA deposits could adversely affect our profitability.

During 2017, new UVA (inflation-adjusted) mortgages grew significantly. At the same time, the Bank launched UVA deposits, but such deposits grew at a slower pace, leading to a mismatch in this activity. During 2018, as a consequence of the peso devaluation, higher inflation and interest rates, growth in both UVA loans and liabilities slowed and during 2019 new origination came to a halt, and the lack of new origination has continued in 2020. Independently of how this activity may develop in the future, a mismatch among UVA assets and liabilities will remain, which could have a material adverse effect on our business, results of operations and financial condition, particularly in the event that interest rates turn positive in real terms.

Our estimates and established reserves for credit risk and potential credit losses may prove to be inaccurate and/or insufficient, which may materially and adversely affect our results of operations and financial condition.

A number of our products expose us to credit risk, including consumer loans, commercial loans and other receivables. Changes in the income levels of our borrowers, increases in the inflation rate or an increase in interest rates could have a negative effect on the quality of our loan portfolio, causing us to increase provisions for loan losses and resulting in reduced profits or in losses. Our non-performing loan portfolio amounted to Ps.5,436.4 million at December 31, 2020 representing a 48.7% decrease compared with Ps.10,594.2 million at December 31, 2019 which in turn represented a 34.8% increase compared with Ps.7,860.9 million at December 31, 2018. The non-performing loan ratio decreased to 1.5% at December 31, 2020 from 3.6% at December 31, 2019 which in turn increased from 1.8% at December 31, 2018.

We estimate and establish reserves for credit risk and expected credit losses. This process involves subjective and complex judgments, including projections of economic conditions and assumptions on the ability of our borrowers to repay their loans. We may not be able to timely detect these risks before they occur, which may increase our exposure to credit risk. Overall, if we are unable to effectively control the level of non-performing or poor credit quality loans in the future, or if our loan loss reserves are insufficient to cover future loan losses, this could have a material adverse effect on our business, results of operations and financial condition.

Increased competition in the banking industry may adversely affect the Bank’s operations.

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The markets in which we operate are highly competitive and this trend will likely continue with new business models likely to be developed in coming years whose impact is unforeseeable. The markets in which we operate are highly competitive and this trend will likely continue. In particular, we expect that competition with respect to small- and medium-sized businesses is likely to increase. As a result, even if the demand for financial products and services from these markets continues to grow, competition may adversely affect our results of operations by decreasing the net margins we are able to generate. In addition, the trend towards consolidation in the Argentine banking industry has created larger and stronger banks with which we must now compete.

We also face competition from non-bank competitors, such as large technology firms (“BigTech firms”), financial-technology (or “Fintech”) companies, payment platforms, e-commerce businesses, department stores (for some credit products), automotive finance corporations, leasing companies, factoring companies, investment funds, pension funds, insurance companies, and public debt. In recent years, the financial services sector has experienced a significant transformation, closely linked to the development of the internet and mobile technologies. Part of that transformation involves the entrance of new players, such as non-bank digital providers that compete (and cooperate) between them and with banks in most of the areas of financial services as well as large digital players such as Google, Facebook or Apple, who have also started to offer financial services (mainly, payments and credit) ancillary to their core business. However, as of the date of this annual report, there is an uneven playing field between banks and such non-bank players. For example, banking groups are subject to prudential regulations that have implications for most of their businesses, including those in which they compete with non-bank players that are only subject to activity-specific regulations or benefit from regulatory uncertainty. Existing loopholes in the regulatory framework are another source of uneven playing field between banks and non-bank players. Some new services or business models are not yet covered under existing regulations. In these cases, asymmetries between players arise since regulated providers often face obstacles to engage in unregulated activities. BigTech firms are already engaged in a wide range of financial activities. This is particularly the case in China, where BigTech firms have market capitalizations comparable to those of the world’s largest financial groups, and offer a wide range of financial services through subsidiaries. BigTech firms have also been expanding their provision of financial service in other emerging markets, notably in South East Asia, East Africa and Latin America. Such firms have achieved scale in financial services very rapidly, in part due to their large customer base and the high degree of brand recognition associated with their existing core technology businesses. Still, competition from non-bank competitors may significantly increase in the future.

In recent years, the financial services sector has experienced a significant transformation, closely linked to the development of the internet and mobile technologies. Part of that transformation involves the entrance of new players, including BigTech firms and Fintechs. As of the date of this annual report, there is an uneven playing field between banks and non-bank players. For example, banking groups are subject to prudential regulations that have implications for most of their businesses, including those in which they compete with non-bank players that are only subject to activity-specific regulations or are subject to strict regulatory requirements.

Our future success may depend, in part, on our ability to use technology to provide products and services that provide convenience to customers. Despite the technological capabilities that we have been developing and our commitment to digitalization, as a result of the uneven playing field referred to above or for other reasons, we may not be able to effectively implement new technology-driven products and services or be successful in marketing or delivering these products and services to our customers, which would adversely affect our business, financial condition and results of operations.

In addition, companies offering new applications and financial-related services based on artificial intelligence are becoming more competitive. The often lower cost and higher processing speed of these new applications and services can be especially attractive to technologically-adept purchasers. As technology continues to evolve, more tasks currently performed by people may be replaced by automation, machine learning and other advances outside of our control. If we are not able to successfully keep pace with these technological advances, our business may be adversely affected.

We are a subsidiary of the BBVA Group, and activities across the BBVA Group could adversely affect us.

We are a part of a highly diversified international financial group which offers a wide variety of financial and related products and services including retail banking, asset management, private banking and wholesale banking. The BBVA Group strives to foster a culture in which its employees act with integrity and feel comfortable reporting instances of misconduct. The BBVA Group employees are essential to this culture, and acts of misconduct by any employee, and particularly by senior management, could erode trust and confidence and damage the BBVA Group and the Bank’s reputation among existing and potential clients and other stakeholders. Negative public opinion could result from actual or alleged conduct by the BBVA Group entities in any number of activities or circumstances, including operations, employment-related offenses such as sexual harassment and discrimination, regulatory compliance, the use and protection of data and systems, and the satisfaction of client expectations, and from actions taken by regulators or others in response to such conduct.

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For example, Spanish judicial authorities are investigating the activities of Centro Exclusivo de Negocios y Transacciones, S.L. (“Cenyt”). Such investigation includes the provision of services by Cenyt to BBVA. On July 29, 2019, BBVA was named as an investigated party (investigado) in a criminal judicial investigation (Preliminary Proceeding No. 96/2017 – Piece No. 9, Central Investigating Court No. 6 of the National High Court) for alleged facts which could constitute crimes of bribery, revelation of secrets and corruption. As at the date of this annual report on Form 20-F, no formal accusation against BBVA has been made. Certain current and former officers and employees of the BBVA Group, as well as former directors of BBVA, have also been named as investigated parties in connection with this investigation. BBVA has been and continues to be proactively collaborating with the Spanish judicial authorities. On February 3, 2020, BBVA was notified by the Central Investigating Court No. 6 of the National High Court of the order lifting the secrecy of the proceedings.

This criminal judicial proceeding is in the pre-trial phase. Therefore, it is not possible at this time to predict the scope or duration of such proceeding or any related proceeding or its or their possible outcomes or implications for the Group, including any fines, damages or harm to the Group’s reputation caused thereby.

This matter or any similar matters arising across the BBVA Group could damage our reputation and adversely affect the confidence of our clients, rating agencies, regulators, bondholders and other parties and could have a material adverse effect on our business, results of operations and financial condition.

Our credit ratings depend on Argentine sovereign credit ratings, and such dependence limits our access to international financial markets.

Our credit ratings are based on Argentina’s sovereign rating, which has fluctuated considerably since the Argentine Crisis. As a result, our ratings have also fluctuated in this period, although they have tended to be higher than the sovereign rating. These fluctuations impact our costs of funding, our collateral obligations and our ability to access international markets. Argentina is no longer in default following the final agreement reached with certain of the holders of bonds issued by the Republic (holdouts), and as a result between 2016 and 2017 Argentina’s sovereign ratings were upgraded, but from 2018 onwards, that trend was reversed, and the country was either downgraded or had its outlook put under review with negative outlook.

After the debt restructuring established by the national government in April 2020 for all public securities in foreign currency under local legislation, risk rating agencies lowered Argentina’s rating to “Selective Default”. However, in September 2020 the government agreed with the bondholders to restructure more than 99% of the public debt with private creditors, significantly reducing coupon payments and extending maturities. Once this agreement was settled, the rating agencies upgraded Argentina’s sovereign rating to CCC+. A further downgrade in Argentina’s sovereign rating in the future could limit the Bank’s access to financing on acceptable terms, or at all, which could have a material adverse effect on the business, the results of operations and the financial condition of the Bank.

The financial industry is increasingly dependent on information technology systems, which may fail, may not be adequate for the tasks at hand or may no longer be available.

Banks and their activities are increasingly dependent on highly sophisticated information technology (“IT”) systems. IT systems are vulnerable to a number of problems, such as software or hardware malfunctions, computer viruses, hacking and physical damage to vital IT centers. IT systems need regular upgrading and banks, including us, may not be able to implement necessary upgrades on a timely basis or upgrades may fail to function as planned.

Furthermore, we are under continuous threat of loss due to cyber-attacks, especially as we continue to expand customer capabilities to utilize internet and other remote channels to transact business. Two of the most significant cyber-attack risks that we face are e-fraud and breach of sensitive customer data. Loss from e-fraud occurs when cybercriminals breach and extract funds directly from customers’ or our accounts. A breach of sensitive customer data, such as account numbers, could present significant reputational impact and significant legal and/or regulatory costs to us.

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Over the past few years, there have been a series of distributed denial of service attacks on financial services companies. Distributed denial of service attacks are designed to saturate the targeted online network with excessive amounts of network traffic, resulting in slow response times, or in some cases, causing the site to be temporarily unavailable. Generally, these attacks have not been conducted to steal financial data, but meant to interrupt or suspend a company’s internet service. While these events may not result in a breach of client data and account information, the attacks can adversely affect the performance of a company’s website and in some instances have prevented customers from accessing a company’s website. Distributed denial of service attacks, hacking and identity theft risks could cause serious reputational harm. Cyber threats are rapidly evolving and we may not be able to anticipate or prevent all such attacks. Our risk and exposure to these matters remains heightened because of the evolving nature and complexity of these threats from cybercriminals and hackers, our plans to continue to provide internet banking and mobile banking channels, and our plans to develop additional remote connectivity solutions to serve our customers. We may incur increasing costs in an effort to minimize these risks and could be held liable for any security breach or loss.

Additionally, fraud risk may increase as we offer more products online or through mobile channels.

In addition to costs that may be incurred as a result of any failure of our IT systems, we could face fines from bank regulators if we fail to comply with applicable banking or reporting regulations as a result of any such IT failure or otherwise. Any of the above risks could have a material adverse effect on our business, results of operations and financial condition.

We face security risks, including denial of service attacks, hacking, social engineering attacks targeting its colleagues and customers, malware intrusion or data corruption attempts, and identity theft that could result in the disclosure of confidential information, adversely affect our business or reputation, and create significant legal and financial exposure.

Our computer systems and network infrastructure and those of third parties, on which we are highly dependent, are subject to security risks and could be susceptible to cyber-attacks, such as denial of service attacks, hacking, terrorist activities or identity theft. Our business relies on the secure processing, transmission, storage and retrieval of confidential, proprietary and other information in its computer and data management systems and networks, and in the computer and data management systems and networks of third parties. In addition, to access our network, products and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.

Attacks by cybercriminals are increasingly frequent, incorporating sophisticated techniques that put at risk the availability of the organizations’ systems and infrastructure, and the confidentiality of the data stored therein

This has been exacerbated by the Covid-19 pandemic and the shift towards an online and remote environment, which has accelerated the Bank’s digital transformation and forced clients to carry out transactions through online banking and digital channels, resulting in a gradual and steady increase in cybercrime and electronic fraud.

Protecting assets from potential cybersecurity threats is increasingly a challenge. Risks continue to increase as more mobile payment products and other internet-based products become available, expanding our in-house use of web products and applications. Therefore, it is essential to implement measures and controls to increase security and mitigate cybersecurity threats.

In 2020 there has been an increase in cases of phishing, and especially of telephone phishing or Vishing and Angler phishing, through social networks. Hackers use different techniques of social engineering to deceive clients and obtain confidential data. In this sense, the implementation of preventive measures of computer and documentary fraud are becoming increasingly important. Security components continue to be developed to improve the level of protection incorporating different security measures in digital channels.

In 2020, we drew up a plan with several initiatives, within a data security and protection program, with the aim of protecting the confidentiality of the most sensitive data, including through the protection of data in specific information systems, classification and discovery of data, and prevention of information leakage. However, we have been the subject of cyber-attacks, phishing and other threats and we cannot give assurance that we will not be the subject to further cyber attacks, phishing or other threats in the future.

Cyber-attacks or other information or security breaches, whether directed at us or at third parties, may result in a material loss or have material consequences. Furthermore, the public perception that a cyber-attack on our systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with whom we do business. Hacking of personal information and identity theft risks, in particular, could cause serious reputational harm. A successful penetration or circumvention of system security could cause us serious negative consequences, including loss of customers and business opportunities, significant business disruption to our operations and business, misappropriation or destruction of our confidential information and/or that of our customers, or damage to our or our customers’ and/or third parties’ computers or systems, and could result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss of confidence in our security measures, reputational damage, reimbursement or other compensatory costs, additional compliance costs, and could adversely impact our results of operations, liquidity and financial condition.

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An increase in fraud or transaction errors may adversely affect our reputation, results of operations and financial condition.

Due to the large number of transactions that occur in a financial institution such as the Bank, errors can occur and worsen before being detected and corrected. In addition, some of our transactions are not fully automated, which may increase the risk of human error, or manipulation, and it may be difficult to detect losses quickly. If we are unable to effectively and timely detect and remedy fraudulent and erroneous transactions, it could damage our reputation, entail serious costs and affect our transactions, as well as have a material adverse effect on our business, results of operations and financial condition.

Because we are a financial institution, any insolvency proceeding against us would be subject to the powers of, and intervention by, the Central Bank, which may limit remedies otherwise available and extend the duration of the proceedings.

Under Argentine law, the liquidation and commencement of bankruptcy proceedings against financial institutions, until their banking license has been revoked by the Central Bank, may only be commenced by the Central Bank. If BBVA Argentina were unable to pay its debts as they come due, the Central Bank could intervene and revoke our banking license, and file a bankruptcy petition before a commercial court. If the Central Bank intervenes, the reorganization proceeding could take longer and it is likely that the shareholders’ remedies would be restricted. During any such process, the Central Bank would have to consider its interests as a regulator and could well prioritize the claims of other creditors and third parties against us. As a result of any such intervention, shareholders may realize substantially less on the claims than they would in a bankruptcy proceeding of a non-financial institution in Argentina or a financial institution or non-financial institution in the United States or any other country.

Lawsuits brought against us outside Argentina, the enforcement of foreign judgments and complaints based on foreign legal concepts may be unsuccessful.

We are a commercial bank organized under the laws of Argentina. Most of our shareholders, directors, members of the supervisory committee and officers and certain experts named herein reside outside the United States (principally in Argentina). Substantially all of our assets are located outside the United States. If any shareholder were to bring a lawsuit against our directors, officers or experts in the United States, it may be difficult for them to effect service of legal process within the United States upon these persons or to enforce in Argentina a judgment against them obtained in the courts of the United States based upon the civil liability provisions of the United States federal securities laws, due to specific requirements of Argentine law regarding procedural law issues and principles of public policy.

Class actions against financial institutions for an indeterminate amount may adversely affect the profitability of the financial sector and of the Bank.

The Argentine national Constitution and the Argentine Consumer Protection Law No. 24,240, as supplemented or amended (the “Consumer Protection Law”), contain certain provisions regarding class actions. However, their guidance with respect to procedural rules for instituting and trying class action cases is limited. Nonetheless, Argentine courts have admitted class actions in certain cases, including various lawsuits against financial institutions related to “collective interests” such as alleged overcharging on products, interest rates, life insurance required in relation to loans, and advice in the sale of public securities. In recent years, some of these lawsuits have been settled by the parties out of court, with courts approving such settlement agreements. These settlements have typically involved an undertaking by the financial institution to adjust its fees and charges.

In February 2020, we were notified of a class action for the alleged damage suffered by investors in certain investment funds managed by the Bank, following the unilateral modification of the price of certain future dollar contracts in which the affected funds were invested. These modifications were carried out by the organized market in which these future dollar contracts were negotiated, and the class action plaintiffs allege a failure by the Bank to contest the unilateral modifications carried out by the organized market in order to defend the fund investors’ financial interests.

In September 2020 we were notified of a class-action lawsuit filed by the Argentine Consumer Defense Association, (“ADUC”) against Banco BBVA Argentina S.A. ADUC, as representative of consumers, claiming that interest rates applicable to automatically renewable fixed terms were incorrect and requesting to cease their application and to reimburse the differences plus related interest.

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If class action plaintiffs were to prevail in these or other matters against financial institutions generally, or against us specifically, this could have an adverse effect on the financial industry generally and on our business, results of operations and financial condition in particular.

In the future, court and administrative decisions may increase the degree of protection afforded to our debtors and other customers, or be favorable to the claims brought by consumer groups or associations. This could affect the ability of financial institutions, including us, to freely determine charges, fees or expenses for their services and products, thereby affecting our business and results of operations.

BBVA, our controlling shareholder, has the ability to direct our business and its interests could conflict with yours.

As of December 31, 2020, our parent company, BBVA, directly or beneficially owned 66.55% of our capital stock. As a result, BBVA controls virtually all decisions with respect to our company made by shareholders. It may, for example, without the concurrence of the remaining shareholders, elect a majority of our directors, effect or prevent a merger, sale of assets or other business acquisition or disposition, cause us to issue additional equity securities and determine the timing and amounts of dividends, if any, always subject to the applicable legal framework. Its interests may conflict with your interests as a holder of our shares or ADSs, and it may take actions that might be desirable to BBVA but not to our other shareholders.

Our ability to grow our business depends on our ability to manage our relationships with partners and grow our deposit base.

We seek to grow our business by, among other means, increasing our client base. Our strategic partnerships are important components of our client acquisition strategy. We have various strategic partnerships, which include Lan Argentina S.A LATAM Airlines Group S.A. as of January 2021), Despegar, MOVE Concerts Argentina S.A. (MOVE), Oymyakon S.A. (PopArt), Medios y Contenidos Producciones S.A. (RGB Entertainment) and En Vivo Producciones S.A., the last four within the entertainment sector. Distribution channels include credit card programs with Club Atlético River Plate Asociación Civil and Club Atlético Boca Juniors Asociación Civil, Argentine soccer clubs, Ritenere S.A. (La Caja Seguros) within the insurance sector, as well as the agreements with automobile companies Peugeot Citroen, Renault and Volkswagen, which we depend on to expand our client reach cost-effectively, further expand our points of presence and enhance our value proposition. Any deterioration in our relationships with our strategic partners could adversely affect our strategy and materially and adversely affect our business, results of operations and financial condition.

In addition, the successful growth of our business depends on our ability to grow our deposit base. Political, economic or legal developments in Argentina or other factors could lead customers to withdraw funds from the Argentine financial system, adversely affecting us. If there are improvements in the Argentine economy, including lower inflation and increased bancarization and lending activity in the Argentine banking sector, we expect this would contribute to the growth of our business and profitability. However, we can provide no assurance regarding the future performance of the Argentine economy or how any improvements will affect us. If the Argentine economy fails to improve, it could have a material adverse effect on our business, results of operations and financial condition.

We may enter into one or more acquisitions which could adversely affect the value of the Bank.

We regularly explore consolidation opportunities in the ordinary course of business and believe there are significant opportunities to expand our footprint in the Argentine banking sector. In the event that we choose to make an acquisition in the future, any such transaction would involve a number of risks and uncertainties, including:

| • |  | the possibility that we pay more than the value we will derive from any such transaction;

| • |  | the possibility that Argentine economic and political conditions will not develop in the manner we expect;

| • |  | the possibility that the Argentine financial services market will not develop in the manner we expect;

| • |  | a reduction in our cash available for operations and other uses;

| • |  | the potential incurrence of indebtedness to finance any such transaction;

| • |  | delays in achieving or our failure to achieve successfully achieve the anticipated benefits of any acquisition;

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| • |  | difficulties in integrating any business acquired, including difficulties in harmonizing the companies’ operating practices, technology platforms, internal controls and other policies, procedures and processes;

| • |  | diversion of management time and resources in coordinating a larger or more geographically dispersed organization;

| • |  | the quality of the assets of the acquired business may be lower than we anticipate; and

| • |  | the assumption of certain liabilities, whether known or unknown.

Any of the foregoing or other risks and uncertainties related to any acquisition could have a material adverse effect on our business, results of operations and financial condition or the value of the Bank.

We may suffer adverse consequences related to our calculation of income tax for the years ended December 31, 2018 and 2017.

As discussed in our Form 6-K furnished to the SEC on June 30, 2017, on May 12, 2017, we filed a request for declaratory judgment with the Contentious Administrative Federal Court No. 12, Secretariat No. 23, seeking that such court declare unconstitutional certain provisions of Argentine law that prevented us from applying an inflation adjustment mechanism. On May 12, 2017, we filed our income tax return for 2016 giving effect to an adjustment for inflation, in 2018 we filed our income tax return for 2017, and in 2019 we filed our income tax return for 2018, also giving effect to an adjustment for inflation. Our requests for declaratory judgment for 2017 and 2018 were filed with the Contentious Administrative Federal Court No. 12, Secretariat No. 23, and our request for 2019 was filed with the Contentious Administrative Federal Court No. is No. 2, Secretariat No. 3.

On June 8, 2020, the Bank obtained a favorable judgement from the Contentious Administrative Federal Court No. 12 with regards to our request for declaratory judgement filed on May 12, 2017 for our 2016 tax return. The Contentious Administrative Federal Court No. 12 concluded that the prohibition on applying the inflation adjustment mechanism in our income tax return for the fiscal year 2016 was not applicable. On December 9, 2020 the Appeal Court dismissed the appeals filed on August 6, 2020 by the tax authorities against this ruling, thereby confirming the decision taken by the Contentious Administrative Federal Court No. 12. Although the tax authorities filed an extraordinary appeal, such appeal was withdrawn on February 1, 2021.

As of the date of this annual report on Form 20-F, our request for declaratory judgment remains pending before the Contentious Administrative Federal Court No. 12, Secretariat No. 23 and the Contentious Administrative Federal Court No. is No. 2, Secretariat No. 3 for the years 2017 and 2018. We cannot predict the outcome of these legal actions or whether we will be required to amend our income tax returns for 2017 and 2018 or make any provisions with respect thereto in our financial statements prepared under IFRS-IASB. If we are required to amend our income tax returns for 2017 and 2018 we may be required to pay interest and charges to the Argentine tax authorities, and could be subject to other consequences. We cannot predict with certainty the outcome of our request for declaratory judgment pending before the Contentious Administrative Federal Court No. 12, Secretariat No. 23 and the Contentious Administrative Federal Court No. is No. 2, Secretariat No. 3, or whether it would have a material adverse effect on our business, results of operations or financial condition, or the trading prices of our ordinary shares and ADSs.

At the request of the Central Bank, the Bank recognized an income tax provision of Ps.1,185.8 million in nominal terms for the year ended December 31, 2016 in our statutory consolidated annual financial statements presented to the Central Bank. Subsequently, based on our consideration of the technical merits of the tax deduction, which was confirmed by the Bank’s legal and tax advisors, such provision was eliminated in the preparation of our Consolidated Financial Statements under IFRS-IASB. The Bank followed the same methodology in respect of the years ended December 31, 2017 and 2018, recording provisions of Ps.1,021.5 million and Ps.3,239.8 million in nominal terms in respect of such years, respectively, in our statutory consolidated annual financial statements, which in turn were eliminated in the preparation of our Consolidated Financial Statements under IFRS-IASB included herein, positively affecting our results of operations for the years ended December 31, 2018 and 2019.

The Argentine economy qualifies as a hyperinflationary economy under IAS 29. Given that the peso is our functional currency, we apply IAS 29 for periods ending after July 1, 2018, and our Consolidated Financial Statements and other financial information are presented in terms of the measuring unit current at December 31, 2020.

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IAS 29 requires that financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, whether based on the historical cost method or on the current cost method, be adjusted in terms of the measuring unit current at the end of the reporting period. IAS 29 does not establish a set inflation rate beyond which an economy is deemed to be experiencing hyperinflation. However, hyperinflation is commonly understood to occur when changes in price levels are close to or exceed 100% on a cumulative basis over the prior three years, when presented together with certain other qualitative macroeconomic factors.

The total cumulative inflation in Argentina in the 36 months prior to December 31, 2020, as measured by both consumer and wholesale price indexes published by INDEC, exceeded 100%. Qualitative macroeconomic factors, including the depreciation of the peso in recent months, also support the conclusion that Argentina is a hyperinflationary economy for accounting purposes. Accordingly, IAS 29 is applicable to any financial statements as from July 1, 2018 included in any of our filings with the SEC under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended (the “Exchange Act”). Argentine accounting standards authorities have reached a consensus that the “general price index” for IAS 29 purposes is determined considering the wholesale price index (WPI) up to December 2016 and the consumer price index (CPI) from then onwards. These indices have been determined or referred to the National Institute of Statistics and Census (INDEC). Therefore, our Consolidated Financial Statements included in this annual report are adjusted by applying the relevant indices and presented in terms of the measuring unit current at December 31, 2020.

We also have applied IAS 29 Financial Reporting in Hyperinflationary Economies to our statutory consolidated annual financial statements presented to the Central Bank for fiscal years beginning on or after January 1, 2020 as set forth by the BCRA through Communication “A” 6651 issued on February 22, 2019. The financial statements provided to the Central Bank are prepared in accordance with IFRS BCRA, which differs in significant respects from IFRS-IASB. See “Presentation of Financial Information”. As such, the Consolidated Financial Statements included in this annual report are not comparable with our financial statements furnished to the Central Bank.

The statutory consolidated annual financial statements that the Bank prepares to comply with the requirements of the Argentine Central Bank (the “Central Bank” or “BCRA”) are prepared pursuant to the reporting framework established by the Central Bank requiring supervised entities to submit financial statements prepared pursuant to IFRS-IASB except for:

| (i) | temporary exceptions from the application of the expected loss model set forth under paragraph 5.5. of IFRS 9 for debt instruments issued by the non-financial government sector. In addition, the BCRA issued Communication “A” 6938, extended by Communication “A” 7181, deferring the application of the impairment model set forth in paragraph 5.5 of IFRS 9 to fiscal years beginning on or after January 1, 2022 for Group “C” institutions (institutions consolidated by the Bank), which would remain subject to the impairment model established by the BCRA that requires financial institutions recognize an allowance for loan losses based on the minimum guidelines set forth by the BCRA;

| (ii) | the treatment to be applied to uncertain tax positions, which follows the guidance prescribed by Memorandum No. 6/2017 Financial Reporting Framework Established by the BCRA issued on May 29, 2017;

| (iii) | the accounting treatment to be applied to the remaining investment held by the Bank in Prisma Medios de Pago S.A., by applying the instructions provided in Memorandum No. 7/2019 issued by the BCRA dated April 29, 2019; and

| (iv) | the debt securities issued by the government sector received in exchange for other instruments, which are measured at the carrying value of the instruments delivered in replacement on such date, in accordance with Communication “A” 7014 issued by the BCRA. According to the IFRS-IASB, these instruments should be accounted for at fair value, recognizing in profit or loss the difference with the carrying value of the instruments delivered.

Because of such differences, our statutory consolidated annual financial statements for the fiscal year ended December 31, 2020 are not comparable with the Consolidated Financial Statements included herein. In addition, we will continue to have differences during the year 2021 between our statutory consolidated financial statements and the financial statements required by IFRS-IASB. We do not intend to report in accordance with IFRS-IASB on an interim basis during 2021. Consequently, our interim financial information for 2021 will not be comparable with the Consolidated Financial Statements and other information contained in this annual report on Form 20-F.

The Consolidated Financial Statements included in this annual report on Form 20-F have been prepared in accordance with IFRS-IASB.

We are subject to numerous restrictions on our ability to pay dividends.

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We are subject to legal and other restrictions on our ability to pay dividends. In Argentina, financial institutions may distribute dividends provided that (i) they are not covered by the terms of sections 34 “Regularization and recovery” and 35 bis “Institution restructuring to safeguard lending and bank deposits” of the Law on Financial Institutions (Law No. 21,526); (ii) they are not receiving financial assistance from the BCRA; (iii) they are not in arrears or non-compliance with the information regime established by the BCRA; (iv) they meet minimum capital requirements and cash requirements and (v) they have complied with the additional capital margins applicable to them as provided for in Section 4 (Additional Capital Margins) of the BCRA’s Structured Income Distribution text. See “Item 8. Financial Information—A. Financial Statements and other Financial Information—Dividends”. Amounts available for distribution as dividends are determined pursuant to Argentine law and IFRS-BCRA. As a result, dividends may be paid when we have no income as determined under IFRS-IASB and, conversely, dividends may not be payable even if we have income as determined under IFRS-IASB. Moreover, BBVA as our majority shareholder has the power to approve or fail to approve any proposed dividends.

Communication “A” 6886, in force since January 31, 2020, provides that financial institutions must have the prior authorization of the Central Bank for the distribution of dividends. On March 19, 2020, the BCRA issued Communication “A” 6939 whereby the distribution of dividends by financial institutions, including the Bank, was suspended until at least June 30, 2020; the BCRA Communication “A” 7035 dated June 4, 2020 extended said suspension until December 31, 2020, which was subsequently extended to June 30, 2021 by Communication “A” 7181.

Legal, Regulatory and Compliance Risks

We identified material weaknesses in our internal control in the past over financial reporting as part of management’s assessment, which have already been remediated. If we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of disclosure controls and procedures, investor confidence in the Bank and the market price of our ordinary shares and ADSs may be adversely affected.

We maintain disclosure controls and procedures designed to ensure that we timely report information as specified in applicable Argentine and U.S. rules. Within such disclosure controls and procedures, we maintain a system of internal control over financial reporting.

Our management previously concluded, in its report on its assessment of the effectiveness of our internal control over financial reporting as of December 31, 2018, that we did not maintain effective internal control over financial reporting as a result of material weaknesses. These material weaknesses related to the preparation of the Bank’s consolidated financial statements in accordance with IFRS-IASB. Our management also previously concluded as of December 31, 2017 that we did not maintain effective internal control over financial reporting as a result of certain material weaknesses. We adopted remediation plans for these material weaknesses and believe that these material weaknesses were remediated.

Our management has issued a report on its assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020 and concluded that the Bank’s internal control over financial reporting was effective as of such date. See “Item 15. Controls and Procedures”.

We can provide no assurance that we will be able to maintain effective internal control over financial reporting in the future, that misstatements due to error or fraud or otherwise will not occur, that all control issues have been detected or that we will be able to prepare our financial information on a timely basis. If our disclosure controls and procedures, including internal control over financial reporting, are not effective, it could have a material adverse effect on our business, results of operations and financial condition. Moreover, it could have an adverse effect on the price of our ordinary shares and ADSs and could subject us to regulatory scrutiny.

We operate in a highly regulated environment, and our operations are subject to regulations adopted, and measures taken, by several regulatory agencies.

Financial institutions in Argentina are subject to significant regulation relating to functions that historically have been determined by the Central Bank and other regulatory authorities (for capital requirements see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Requirements”). The Central Bank may penalize us, in case of any breach of applicable regulations. Similarly, the Argentine National Securities Commission (“CNV”), which authorizes securities offerings and regulates the public securities markets in Argentina, has the authority to impose sanctions on us and our Board of Directors for breaches of corporate governance. The Financial Information Unit (Unidad de Información Financiera, or “UIF”) regulates matters relating to anti-money laundering and has the ability to monitor compliance with any such regulations by financial institutions and, eventually, impose sanctions. Any such regulatory agencies could initiate proceedings and impose sanctions against us, our shareholders or our directors.

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The Central Bank has also imposed restrictions on the positive foreign currency net global position of financial institutions, which have been modified several times, to prevent the Central Bank’s foreign currency reserves from further decreasing. As of the date of this annual report, the positive foreign currency net global position may not exceed 5% of the basic net equity plus complementary net equity (“RPC”) of the immediately preceding month.

In addition, pursuant to Communication “A” 7020, sanctions imposed by the Central Bank, the UIF, the CNV and/or the Superintendencia de Entidades Financieras y Cambiarias (the Superintendence of Financial Institutions and Exchanges, referred to as the “Superintendence”) and/or their authorities, may result in the revocation of the licenses to operate as financial institutions. Such revocation may occur when, in the opinion of the board of directors of the Central Bank, there was a material change in the conditions deemed necessary to maintain such license, including those relating to the suitability, experience, moral character or integrity of (i) the members of a financial institution’s board of directors (directors, counselors or equivalent authorities), (ii) its shareholders, (iii) the members of its supervisory committee or (iv) others, such as its managers.

The absence of a stable regulatory framework or the imposition of measures that may affect the profitability of financial institutions in Argentina and limit the capacity to hedge against currency fluctuations could result in significant limits to financial institutions’ decision-making ability. In turn, this could cause uncertainty and negatively affect our future financial activities and result of operations. In addition, existing or future legislation and regulation could require material expenditures or otherwise have a material adverse effect on our business, results of operations and financial conditions.

In addition to regulations specific to our industry, we are subject to a wide range of federal, provincial and municipal regulations and supervision generally applicable to businesses operating in Argentina, including laws and regulations pertaining to labor, social security, public health, consumer protection, the environment, competition and price controls.

These or any other future governmental measures or regulations could have a material adverse effect on our business, results of operations and financial condition.

The instability of the regulatory framework, in particular the regulatory framework affecting financial institutions, could have a material adverse effect on financial institutions such as BBVA Argentina.

During the Kirchner administration new regulations were issued affecting financial institutions, mainly regulating the foreign exchange market and imposing new capital requirements for financial institutions. In this regard, Communications “A” 5272 and 5273 of the Central Bank, dated January 27, 2012, increased the capital requirements for financial institutions operating in Argentina. These Communications required certain minimum capital levels in order to support operational risks and the distribution of dividends, and an additional capital buffer equivalent to 75% of the total capital requirements. For more information regarding capital requirements for Argentine banks please see “Item 4. Information on the Company—F. The Argentine Banking System and its Regulatory Framework”.

Moreover, a new law was approved by the Congress introducing amendments to the Central Bank’s charter. The principal issues addressed by this bill were the use of Central Bank’s reserves for the cancellation of public debt together with the implementation of polices by the Central Bank in order to interfere in the determination of interest rates and terms of loans to financial institutions.

The Central Bank issued Communications “A” 5319 and “A” 5380, dated July 5, 2012 and December 21, 2012, respectively, and Communication “A” 5516, dated December 27, 2013, making it mandatory for banks to provide credit lines for productive purposes. This requirement has been renewed every six months since then. The purpose of these measures implemented by the former government was to foster investment and growth. Finally, on November 3, 2017 the Central Bank determined that mandatory credit lines for productive financing and financial inclusion will continue to be required until December 2018. The quota for 2018 was a percentage of monthly non-financial private deposits in pesos as of November 30, 2017, according to the following schedule: January 2018: 16.5%, decreasing by 1.5 percentage points monthly until reaching 0% in December 2018. This is a significant development for banks given that the portion of deposits that financial institutions must loan at low interest rates was significantly reduced, allowing banks to allocate such funds in a more profitable way.

On November 29, 2012, the Argentine Congress passed the new “Securities Law”, which modified the public offer regime set forth by Law No. 17,811, as amended. One of the most significant amendments introduced by the Securities Law referred to the powers of the CNV. The adoption of Section 20 of the Securities Law raised concern in the market, especially among listed companies, since it entitles the CNV to (i) appoint supervisors with veto power over the resolutions adopted by the board of directors of listed companies and (ii) disqualify the board of directors of listed companies for a period of 180 days when, as determined by the CNV, the interests of the minority shareholders and/or security holders are adversely affected.

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On October 1, 2013, the Central Bank issued Communication “A” 5460, granting broad protections to consumers of financial services, including, among other aspects, the regulation of fees and commissions charged by financial institutions for their services. As a result, fees and charges must represent a real, direct and demonstrable cost and should have technical and economic justification. Communication “A” 5514 introduced an exception to the application of Communication “A” 5460 for certain credit agreements that have pledges as collateral and are entered into before September 30, 2019.

On December 23, 2014, the Central Bank amended Communication “A” 5460 through Communication “A” 5685. As a result of this amendment, any increase in commissions for new products or services for retail customers must have the prior authorization of the Central Bank.

While the Macri administration repealed part of the regulatory framework enacted by the Kirchner administration, such as (i) the restrictions on the foreign exchange market, (ii) the regulations concerning minimum and maximum interest rates on certain loans and deposits, (iii) the requirements governing the flow of capital into Argentina, (iv) the percentage of foreign currency positions of financial institutions, (v) the monthly contributions that banks must set aside each month to fund the deposit guarantee fund, (vi) additional capital requirements for the dividend distribution, and (vii) the requirement of prior authorizations to increase commissions, it is still unclear whether the new regulatory framework will be stable and the impact that the new regulatory framework may have on our business.

Since the Fernández administration assumed office, numerous new laws have been enacted and rules modified, among the most relevant of which are (i) the enactment of the Law of Social Solidarity and Productive Reactivation within the framework of the public emergency, providing for a 30% tax on foreign transactions; (ii) the obligation for banks to open universal free accounts to certain people (who have no bank account, and who wish to have access to a no-fee free savings account in pesos); (iii) a special treatment for UVA-adjusted mortgage loans designed to limit the impact of inflation and generally limit payments to a maximum of 35% of family income until February 2021); (iv) minimum interest rates were set for certain time deposits; (v) new requirements regarding certain fintech “virtual wallet” payment service providers were approved; (vi) the use of interbank debit for the payment of new credits is prohibited; (vii) a maximum nominal interest rate of 55% was set for credit card financing; (viii) reporting of increases and additions to bank fees for a period of 180 days from February 19, 2020 was prohibited; and (ix) according to Communication “A” 6768, financial institutions must have the prior authorization of the Central Bank of the Argentine Republic for the distribution of their results. In addition, on March 19, 2020, the BCRA issued Communication “A”6939 whereby the distribution of dividends was suspended until at least June 30, 2020. Communication “A” 7035 extended such suspension to December 31, 2020, which was subsequently extended to June 30, 2021 by Communication “A” 7181.

Several rules were enacted during 2020 which, among others: (i) required the remaining balance arising from credit cards to be automatically refinanced between September 1, 2020 and September 30, 2020 up to a maximum rate of 40%; (ii) established the minimum rates for retail customers subject to certain variables; (iii) froze the installments of home mortgage loans and secured loans adjusted to UVA index, and any unpaid installments were rescheduled; and (iv) ordered financial institutions to request any loan unpaid installments to be paid at the end of the life of the loan. Additionally, on March 19, 2020, the Central Bank issued Communication “A” 6938, temporarily easing the criteria to classify banks’ debtors established in the “Debtors’ Classification” rules and introduced certain changes to the manner in which financial institutions calculate RPC. Furthermore, in response to the crisis triggered by the Covid-19 pandemic, the Central Bank adopted a series of credit stimulus measures aimed at the most vulnerable economic sectors, primarily micro, small and medium-sized companies and the self-employed and eased reserve requirements for financial institutions that extended such credit lines. For a description of the effects of these regulations on BBVA Argentina, see “Item 5. Operating and Financial Review—Effects of Recent Regulatory Changes on BBVA Argentina”.

The financial institutions were also ordered to grant certain clients approved by the Argentine Tax Authority (AFIP) who applied for them, credit facilities at regulated rates denominated in pesos called “Zero Rate Credit” and “Zero Rate Credit Culture” provided for in Decree No. 332/2020 (and amendments).

Fees on automatically processed operations were suspended for a certain period of time; and the possibility of notifying users of financial services of fee increases was suspended for 180 days, and after that period it was established that the expansion would be progressive for commodities.

As a result, since the beginning of the Fernandez administration, banking activity has been more restrictively regulated, with the stated goal of protecting users of financial services.

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The absence of a stable regulatory framework or the introduction of new regulations that affect the banking business could limit the ability of financial institutions, including BBVA Argentina, to make long-term decisions, such as asset-allocation decisions, and could cause uncertainty with respect to or otherwise adversely affect our future business, results of operations and financial condition. We cannot assure that laws and regulations currently governing the financial sector will not continue to change in the future or that any changes will not have a material adverse effect on our business, results of operations and financial condition.

Exposure to multiple provincial and municipal legislation and regulations could adversely affect our business and results of operations.

Argentina has a federal system of government with 23 provinces and one autonomous city (Buenos Aires), each of which, under the Argentine national constitution, has full power to enact legislation concerning taxes and other matters. Likewise, within each province, municipal governments have broad powers to regulate such matters. Due to the fact that our branches are located in multiple provinces, we are also subject to multiple provincial and municipal legislation and regulations. Future developments in provincial and municipal legislation concerning taxes, provincial regulations or other matters could have a material adverse effect on our business, results of operations and financial condition.

The Consumer Protection Law and the Credit Card Law may limit some of the rights afforded to us.

The Consumer Protection Law establishes a number of rules and principles for the protection of consumers. Although the Consumer Protection Law does not contain specific provisions for its enforcement in relation to financial activities, it does contain general provisions that might be used as grounds to uphold such enforcement, as it has been previously interpreted in various legal precedents. Moreover, the new Argentine Civil and Commercial Code has captured the principles of the Consumer Protection Law and established their application to banking agreements.

The application of both the Consumer Protection Law and the Credit Card Law No. 25,065, as amended by Law No. 26,010 (the “Credit Card Law”) by administrative authorities and courts at the federal, provincial and municipal levels has increased. Moreover, administrative and judicial authorities have issued various rules and regulations aimed at strengthening consumer protection. In this context, the Central Bank issued Communication “A” 5460, as supplemented and amended, granting broad protection to financial services customers, limiting fees and charges that financial institutions may validly collect from their clients. In addition, the Argentine Supreme Court of Justice issued the Acordada 32/2014, creating the Public Registry of Collective Proceedings for the purpose of registering collective proceedings (such as class actions) filed with national and federal courts. In the event that we are found to be liable for violations of any of the provisions of the Consumer Protection Law or the Credit Card Law, the potential penalties could limit some of our rights, such as reducing our ability to collect payments due from services and financing provided by us, or otherwise adversely affect our business, results of operations and financial condition.

On September 18, 2014, a new pre-judicial service of dispute resolution was created by Law No. 26,993, in order for consumers and providers to resolve any dispute within the course of 30 days, including fines for companies that do not attend the hearings.

Furthermore, the rules that govern the credit card business provide for variable caps on the interest rates that financial institutions may charge clients and the fees that they may charge merchants. Moreover, general legal provisions exist pursuant to which courts could decrease the interest rates and fees agreed upon by the parties on the grounds that they are excessively high. A change in applicable law or the existence of court decisions that lower the cap on interest rates and fees that clients and merchants may be charged would reduce our revenues and therefore negatively affect our results of operations.

The application of this regulation or any new regulation that may limit some of the rights afforded to us could have a material adverse effect on our business, results of operations and financial condition.

We are exposed to compliance risks

Due to the nature of our activities, we are exposed to certain compliance risks. We must comply with regulations regarding customer conduct, market conduct, the prevention of money laundering and the financing of terrorist activities, the protection of personal data, the restrictions established by national or international sanctions programs and anti-corruption laws (including the US Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010), the violations of which could lead to very significant penalties. These anti-corruption laws generally prohibit providing anything of value to government officials for the purposes of obtaining or retaining business or securing any improper business advantage. As part of our business, we directly or indirectly, through third parties, deals with entities whose employees are considered to be government officials. Our activities are also subject to complex customer protection and market integrity regulations.

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Generally, these regulations require banking entities to, among other measures, use diligence measures to manage compliance risk. Sometimes, banking entities must apply reinforced due diligence measures because they understand that, due to the very nature of the activities they carry out (among others, private banking, money transfer and foreign currency exchange operations), they may present a higher risk of money laundering or terrorist financing.

Although the BBVA Group, including us, has adopted policies, procedures, systems and other measures to manage compliance risk, it is dependent on its employees and external suppliers for the implementation of these policies, procedures, systems and other measures, and it cannot guarantee that these are sufficient or that the BBVA Group’s employees (123,174 as of December 31, 2020) or other persons of the BBVA Group or its business partners, agents and/or other third parties with a business or professional relationship with the BBVA Group do not circumvent or violate current regulations or the BBVA Group’s ethics and compliance regulations, acts for which such persons or the BBVA Group could be held ultimately responsible and/or that could damage the BBVA Group’s reputation, including ours. In particular, acts of misconduct by any employee, and particularly by senior management, could erode trust and confidence and damage our reputation among existing and potential clients and other stakeholders. Actual or alleged misconduct by the Bank in any number of activities or circumstances, including operations, employment-related offenses such as sexual harassment and discrimination, regulatory compliance, the use and protection of data and systems, and the satisfaction of client expectations, and actions taken by regulators or others in response to such misconduct, could lead to, among other things, sanctions, fines and reputational damage, any of which could have a material adverse effect on the Bank’s business, financial condition and results of operations.

Furthermore, we may not be able to prevent third parties from using the banking network in order to launder money or carry out illegal or inappropriate activities. Further, financial crimes continually evolve and emerging technologies, such as cryptocurrencies and blockchain, could limit our ability to track the movement of funds. Additionally, in adverse economic conditions, it is possible that financial crime attempts will increase significantly.

If there is a breach of the applicable regulations or the Banks’s ethics and compliance regulations or if the competent authorities consider that the Bank does not perform the necessary due diligence inherent to its activities, such authorities could impose limitations on our activities, the revocation of our authorizations and licenses, and economic penalties, in addition to having significant consequences for our reputation, which could have a significant adverse impact on our business, financial condition and results of operations. Furthermore, we from time to time conduct investigations related to alleged violations of such regulations and ethics and compliance regulations, and any such investigation or any related procedure could be time consuming and costly, and its results difficult to predict.

Finally, in 2020 the Covid-19 outbreak has led in many countries to new specific regulations, mainly focused on consumer protection measures. The difficulties associated with the need to adapt the Bank’s systems to these new regulations quickly along with the fact that the majority of our employees have been working remotely could pose new compliance risks. Likewise, despite the existing controls in place, the increase in remote account opening driven by the pandemic could increase money laundering risks. Additionally, criminals are continuing to exploit the opportunities created by the pandemic across the globe and increased money laundering risks associated with counterfeiting of medical goods, investment fraud, cyber-crime scams and exploitation of economic stimulus measures put in place by governments. Increased strain on our communications surveillance frameworks could in turn raise our market conduct risk.

Argentine corporate disclosure, governance and accounting standards may require us to provide different information than would be required under U.S. standards. This difference could limit investors’ ability to evaluate our business, results of operations and financial condition, and influence investors’ decisions whether to invest in our securities.

The securities laws of Argentina that govern publicly-listed companies such as us impose disclosure requirements that are more limited than those in the United States. The Argentine securities markets are not as highly regulated and supervised as the U.S. securities markets. There are also important differences between accounting and financial reporting standards applicable to financial institutions in Argentina and those in the United States. As a result, financial statements and reported earnings of Argentine financial institutions generally differ from those reported based on U.S. accounting and reporting standards.

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The Consolidated Financial Statements included in this annual report on Form 20-F have been prepared in accordance with IFRS-IASB. By contrast, the Bank’s statutory consolidated annual financial statements for the fiscal year ended December 31, 2020 were prepared pursuant to the reporting framework established by the Central Bank requiring supervised entities to submit financial statements prepared pursuant to IFRS-IASB with certain exceptions. We will continue to have differences during the year 2021 between our statutory consolidated financial statements and the financial statements required by IFRS-IASB. We do not intend to report in accordance with IFRS-IASB on an interim basis during 2021. Consequently, our interim financial information for 2021 will not be comparable with the Consolidated Financial Statements and other information contained in this annual report on Form 20-F. See “Presentation of Financial Information” and “Item 3. Key Information—D. Risk Factors—Risks Relating to the Argentine Financial System and to BBVA Argentina—The Argentine economy qualifies as a hyperinflationary economy under IAS 29. Given that the peso is our functional currency, we apply IAS 29 for periods ending after July 1, 2018, and our Consolidated Financial Statements and other financial information are presented in terms of the measuring unit current at December 31, 2020”.

Accordingly, the information available about us will not be the same as the information available about a U.S. company. The fact that we report in IFRS-IASB for purposes of this annual report on Form 20-F whereas we report in IFRS-BCRA for local and interim reporting purposes, together with the differences in the accounting and disclosure requirements among IFRS-BCRA, IFRS-IASB and U.S. GAAP, could limit investors’ ability to evaluate our business, results of operations and financial condition, and influence investors’ decisions whether to invest in our securities.

The special rules that govern the priority of different stakeholders of financial institutions in Argentina, which give priority to depositors with respect to most other creditors, may negatively affect other stakeholders in case of judicial liquidation or bankruptcy of the Bank.

Argentine Law No. 24,485, in force since April 18, 1995 and as amended by Law No. 25,089, provides that in case of judicial liquidation or bankruptcy of a financial institution such as BBVA Argentina, all depositors, irrespective of the type, amount or currency of their deposits, will have general and absolute preferential rights with respect to all other creditors, except for certain labor credits and credits secured with a pledge or mortgage, to be paid with 100% of the funds deriving from the liquidation of our assets. In addition, depositors of any kind of deposits have special preferential rights over the remaining creditors of us, except for certain labor credits, to be paid with (i) any of our funds which may be held by the Central Bank as total reserves, (ii) any remaining funds of ours in existence as of the date on which our license is revoked, or (iii) any funds derived from the compulsory transfer of certain of our assets according to instructions of the Central Bank, in the following order of priority: (a) deposits made by legal entities up to Ps.5,000 per entity, or its equivalent in foreign currency, (b) deposits for terms exceeding 90 days and (c) all other deposits on a pro rata basis.

In case of a judicial liquidation or bankruptcy of a financial institution such as BBVA Argentina, shareholders may not be able to partially or completely recover their investment due to the priority imposed by law.

There is uncertainty regarding the possible effects that tax reform could have in the Argentine economy.

On December 20, 2019, the Argentine Congress enacted Law N° 27,541 of Solidarity and Productive Reactivation (“Law N° 27,541”), declaring a state of public emergency on the economic, financial, fiscal, administrative, social and energetic fronts, among others, thus delegating in the executive branch the ability to ensure the sustainability of public indebtedness, authorizing it to conduct an integral review of the current electricity tariff regime and to intervene in the operations of supervisory entities, among others.

The tax-related measures include:

| • |  | Tax amnesty for micro, small- and medium-sized companies.

| • |  | Increase in the personal assets tax rate and delegation of power to the executive branch to increase tax rates on foreign financial assets.

| • |  | Changes to the formula of inflation adjustment in income tax.

| • |  | Suspension of the pension and retirement adjustment mechanism for a 180-day period.

| • |  | The portion of the tax on debits and credits is increased in the case of cash withdrawals with the exception of holders of micro and small enterprises according to the terms of section 2 of Law 24467.

| • |  | Creation of the tax for a solidary and inclusive Argentina (Impuesto para una Argentina Inclusiva y Solidaria or PAIS, per its acronym in Spanish) for a 5-fiscal-period term on the purchase of foreign currency for savings purposes and on the payment of goods and services purchased abroad through credit cards. The tax rate ranges between 8% and 30% depending on the transaction.

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In September of 2020, it was determined that the Argentine Tax Authority (AFIP) shall apply a withholding tax of 35% to the purchase of dollar savings and payments by card for consumption in dollars abroad.

We cannot anticipate the impact that Law N° 27,541 may have, nor the measures that could be adopted by the current administration in order to meet its financial obligations, which might negatively affect Argentine’s economy and, in turn, our business, financial condition and results of operations.

In December 2020, a new Fiscal Consensus was signed between the national and provincial governments (except the City of Buenos Aires), enabling jurisdictions to establish tax rates that are not subject to the limits established in the original Consensus (12/2017). As a result, certain jurisdictions have increased and certain jurisdictions may increase their tax rates for 2021. The autonomous City of Buenos Aires increased its tax rate from 7% to 8% and the province of [Buenos Aires] from 7% to 9%. As a result, we may be required to pay higher taxes, which could have a material adverse effect in our business, financial condition and results of operations.

ITEM 4. INFORMATION ON THE COMPANY

Recent Political and Economic Developments in Argentina

In 2018 activity, measured by GDP (Gross Domestic Product), declined by 2.5% in Argentina due to a severe drought and depreciation of the peso, in a fiscal austerity and very tight monetary policy scenario. Towards the end of September 2018, a new exchange-rate and monetary scheme was announced defining a floating band for the peso and reinforcing the contractionary tone of monetary policy. This scheme was maintained until the end of April 2019, when tensions on the exchange rate increased again, adding to the challenging inflation data of March 2019, leading the BCRA and the IMF to agree that the BCRA could intervene on the foreign exchange market at its discretion, rendering the floating band just a reference. This scheme controlled exchange rate volatility, in addition to the announcement of a freeze in utility rates, began a process of inflation deceleration.

Meanwhile, in April 2019 the IMF disbursed US$10.8 billion and in July 2019 it disbursed an additional US$5.4 billion. As a result, the undisbursed balance was reduced to US$44.9 billion of the total US$57.0 billion committed in the program signed in 2018.

Primary elections were held on August 11, 2019 leading to an adverse market reaction, declines in the exchange rate and an increasing lack of confidence in Argentine assets. The prices of Argentine government securities fell by 20% while local companies’ shares dropped more than 40% over a few days, while the U.S. dollar exchange rate exceeded Ps.58 which implied a depreciation of almost 30% in just three days. The Central Bank was forced to intervene in the market, with relatively little success, by selling approximately US$2 billion from international reserves.

With access to international and domestic debt markets effectively closed due to, among other issues, Argentine country risk reaching 4,500 points, and in order to avoid default, the government decided to reprofile the short-term Argentine sovereign debt, and announced the beginning of a renegotiation with the IMF. The reprofiling measure affected approximately US$9 billion of short-term Argentine-law governed sovereign debt and primarily affected private sector investors.

Due to the strong macroeconomic instability, accompanied by the significant depreciation of the peso, the Central Bank decreed a series of measures aimed at restricting the exchange market. The main ones are the purchase limit of US$10,000 per month and the requirement that financial entities receive authorization in order to pay dividends.

Presidential elections took place on October 27, 2019, and the ticket of Alberto Fernández and Cristina Fernández de Kirchner (“Frente de Todos”) was elected in the first round, confirming the results obtained in the primary elections in the previous August.

In order to avoid an uncontrolled loss of reserves and minimize the volatility of the exchange rate, on September 1, 2019 the Central Bank decreed a tightening of the restriction on the purchase of currency. For individuals, the Argentine Central Bank established a maximum limit of US$200 for the purchase of foreign currency per calendar month across all entities authorized to trade in foreign exchange, as well as for purposes of formation of foreign assets, family assistance remittances, and transactions with derivatives.

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Alberto Fernández assumed office on December 10, 2019. The first measures of the new administration were aimed at increasing taxes as well as new expenditures benefitting the most vulnerable sectors of the population. These measures are mainly contained in the Social Solidarity and Productive Reactivation Law. In addition, in the same line with the former administration, the government decided to again reprofile US$9 billion of short-term Argentine-law governed sovereign debt which same debt had already previously been reprofiled).

In the year ended December 31, 2019, GDP fell 2.2 %, while inflation reached 53.8% and the peso depreciated 54.8%.

During the first quarter of 2020, the Fernandez administration started to negotiate with private creditors to restructure the scheduled maturities of public debt. However, on March 19, 2020, the government declared a lockdown in order to prevent the spread of the Covid-19 pandemic and work on strengthening the health system, all of which had a significant impact on the ongoing debt negotiations and economic activity. The measures adopted by the Executive Branch originally led to the slowdown or suspension of most non-essential activities carried out by individuals and, as such, have had significant impact on the economy at the national, regional and global levels, due to the disruption or slowdown of supply chains, coupled with rising economic uncertainty, as evidenced by the increased volatility in asset prices and exchange rates, and a decline in long-term interest rates.

After three months of lockdown and a series of unaccepted offers, Argentina’s credit rating was downgraded to selective default, following the default in a coupon payment of US$503 million. However, the government continued to try to reach an agreement with its main creditors.

The Treasury finally reached an agreement with its main creditors on August 4, 2020, obtaining a 93.55% adherence, which ended up being 99% thanks to the application of the collective action clauses of the restructured bonds (under which the terms of the restructuring were applied to all bondholders as a result of the level of consensus having reached a 75% threshold). The debt restructuring entailed a significant coupon reduction (from nearly 7% to 3%), with a small capital haircut (less than 2% on average).

This agreement was insufficient to offset the uncertainty resulting from the Covid-19 crisis that forced the Central Bank to issue pesos in an amount equal to approximately 6% of the GDP during 2020 to cover fiscal needs and mitigate the economic effects of the crisis. The foreign exchange premium rose to 130% in September 2020, which led to a loss of US$1,300 million during that month (a total of US$4,600 million in 2020). However, due to a partial easing of the foreign exchange controls, the market responded positively and the foreign exchange premium was reduced to 70% while the loss of international reserves was partially reversed.

The Covid-19 crisis also affected Argentina’s fiscal balance, which reached a primary fiscal deficit of 6.5% of GDP in 2020, mainly driven by the economic recession that led both to a decline in tax collection and a rise in public spending.

In the year ended December 31, 2020, GDP fell 9.9%, while inflation reached 36.1%.

Economic Data

• |  | Economic Activity

During 2018 economic activity measured by GDP fell 2.5% compared to 2017, which followed a 2.7% growth in 2017. For 2019 the GDP decreased by 2.2% primarily due to decreases in consumption and investment, due to uncertainty in a highly restrictive monetary and fiscal scenario.

The decline in activity eroded the labor market in 2019, with the unemployment rate increasing to 9.8%, an increase of 0.7 percentage points from the 9.2% recorded in 2018.

Economic activity has been significantly affected by the Covid-19 pandemic in 2020. GDP fell 9.9% in 2020, despite showing a positive trajectory in the second half of the year.

The average unemployment rate rose from 8.9 % in the last quarter of 2019 (9.8% annual average in 2019) to an average of 11.0% in the last quarter of 2020. The average employment rate fell from 43.0% in the fourth quarter of 2019 to an average of 40.1% in the fourth quarter of 2020, and the economically active population fell from an average of 47.2% in the last quarter of 2019 to an average of 45.0% in the fourth quarter of 2020.

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• |  | Prices

The domestic CPI increased by 47.6% in 2018, reflecting an acceleration of inflation compared to 24.8% in 2017, mainly due to the exchange market and financial crisis during 2018. Core inflation reached 47.7% in 2018. Healthcare prices were the most affected, increasing by 66.8% during 2018, followed by food and beverages which increased 51.2%.

The domestic CPI increased by 53.8% in 2019, reflecting an acceleration of inflation compared to 47.6% in 2018, mainly as a result of the depreciation of the peso, partially offset by government intervention in the prices of several utilities in the first quarter of 2019.

Core inflation reached 56.7% in 2019 as a result of the effect of devaluation on prices. Healthcare prices increased by 72.1%, communication prices increased by 63.9%, household furniture and maintenance prices increased by 63.7%, food and beverages prices increased by 56.8% and miscellaneous goods and services increased by 55.9%.

Inflation showed a substantial decrease in 2020 compared to 2019, reaching 36.1%, primarily as a result of the negative effects of the Covid-19 pandemic on activity levels, the freezing of public utility prices and the Central Bank’s willingness to avoid a sharper exchange rate depreciation.

The performance of CPI components was very uneven in 2020, with seasonal prices (prices that depend on whether it is high or low season) increasing 64.4%, while regulated prices (prices controlled by the government, usually public utility rates) only grew 14.8%. Core inflation was 39.4% in 2020.

• |  | Public Finances

The domestic public sector recorded a primary deficit of Ps.95,122 million in 2019, accounting for approximately 0.44% of GDP. This result reflects a 72.0% decrease compared to the deficit in the previous year.

Primary public spending showed a year-on-year 37.2% increase, while revenues from the public sector increased 51.4%. Repayment of interest on public debt increased by 86.2% as a result of both an increase in indebtedness and the effect of devaluation on liabilities denominated in foreign currency. The overall deficit reached Ps.819,407 million, accounting for a 12.6% increase compared to 2018.

With respect to spending, in 2019 there was a year-on-year 12.4% increase in capital spending while direct transfers to economic sectors rose by 20.3%, to partially offset the effect of devaluation on the price of energy. Total welfare benefits increased by 46.6%, operating expenditures increased by 31.6% and transfers from the federal government to the provinces increased by 61.3%.

Tax revenues rose by 48.2% in 2019 primarily due to increases in revenues from export duties, which increased by 304.6%.

The public sector recorded a primary fiscal deficit of Ps.1,750 billion (equivalent to 6.5% of GDP in 2020). The Covid-19 pandemic negatively affected both public income and expenses. The government had to increase subsidies to provinces and families as well as social assistance, leading to a 63.5% increase in public expenses compared to 2019. Additionally, public revenues only increased 23.0%, significantly below inflation levels, due to reduced economic activity levels.

Tax revenues increased 28.2% in 2020, being the only substantial nominal raise compared to 2019. The debt restructuring impacted capital inflows, which declined 20.2% in 2020 compared to 2019.

Economic subsidies grew 105.9% in 2020 and transfers to provinces increased 153.2% as a result of subsidies granted in the context of the Covid-19 pandemic.

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• |  | External Sector

The trade surplus in 2019 reached US$15,990 million, a sharp reversal compared to the deficit of US$3,823 million in the previous year. This result is a consequence of exports totaling US$65,115 million, 5.7% higher than the previous year. Exports of primary products increased by 25.1%, agricultural manufacturers, which represent 36.8% of total exports, grew by 4.5% while industrial exports fell by 6.8% and fuel and energy exports increased by 4.1%.

On the other hand, imports reached US$49,125 million in 2019, a 25.0% decrease compared to 2018. All categories of imports experienced decreases as a result the contraction of the economy and the impact of devaluation of the peso. The greatest decline was in passenger motor vehicles which decreased by 55.2%.

The current account deficit of the balance of payments amounted to US$3,631 million in 2019, 86.7% lower than the previous year. The external sector experienced a rapid adjustment accelerated by foreign exchange controls.

In the foreign exchange market, the peso depreciated by 58.4% in 2019, and the exchange rate reached 59.90 Ps./US$ as of December 30, 2019. The market experienced three main phases during the year. From the end of 2018 to April 2019, the Central Bank used exchange rate bands, allowing the exchange rate to fluctuate within certain limits, but foreign exchange was very volatile, the peso depreciated by 16%, and the exchange rate reached 44.01 Ps./US$. At the end of April the IMF and the BCRA agreed to allow a managed floating exchange rate, which allowed the Central Bank to freely intervene in order to mitigate the effect of volatile periods. During the three following months, from May to July, the peso fell 3.2% against the U.S. dollar to 45.40 Ps./US$. However, on August 12, 2019, the primary election result triggered a sell-off of Argentine assets, causing the peso to depreciate almost 30%.

International reserves were US$44,781 million as of the end of the year, a US$21,025 million decrease compared to the balance as of December 31, 2018, mainly due to payments on debt, intervention in the foreign exchange market and a decrease in banks’ legal required deposits due to the drain of deposits in U.S. dollars.

The trade surplus reached US$12,530 million in 2020, down from the trade surplus of US$15,990 million in 2019, mainly driven by a steeper decline in exports than imports during the year.

Exports amounted to US$54,884 million in 2020, a 15.7% decline compared to 2019, while imports amounted US$42,354 million in 2020, a 13.8% decline compared to 2019, partially offsetting the fall in exports.

In the foreign exchange market, the peso depreciated by 28% in 2020, reaching 82.63 Ps/US$ on December 31, 2020. The depreciation of the peso moved in line with inflation. However, the parallel exchange rates were very volatile, and particularly sensitive to money issuances. The Central Bank managed to contain the gap between the official and alternative exchange rates until August 2020, when the official exchange rate started to increase, reaching its peak in October at 130%. As of the date of this annual report, the foreign exchange premium (the gap between the official and the parallel exchange rate) is approximately 70%.

International reserves were US$39.41 billion as of December 31, 2020, a US$5,438 million decrease compared to the balance as of December 31, 2019, mainly due to interventions in the exchange rate spot market to mitigate the depreciation of the peso.

Monetary Policy

In 2019, the monetary policy regime was characterized by a stringent control of the monetary base and the definition of an exchange rate “floating zone”. This scheme was implemented in the context of a stand-by agreement with the IMF, coupled with an objective of fiscal consolidation. The aim of this plan was to stabilize inflation and reduce foreign exchange market pressures, after the sudden reversal of capital flows suffered by the country in 2018. The Central Bank set a target of 0% growth of the monetary base throughout the year (as adjusted to deal with seasonality issues and foreign exchange interventions).

During the first two months of 2019, this policy was successful in bringing down inflation and nominal volatility of the economy. But a new episode of foreign exchange volatility arose in March and April, contributing to a new acceleration of inflation. Against this backdrop, the BCRA tightened even more the monetary targets for the year (suspending the seasonal increases of monetary base pre-scheduled for June and December) and announced on April 29, 2019 that it would start to intervene directly in the foreign exchange market in the event of excessive volatility. These announcements stabilized the currency until the primary elections. The exchange rate started the year at 37.93 Ps./US$ and, after all the aforementioned events, it finally stood at 45.40 Ps./US$ on the last trading day before of the primary elections, August 9, 2019.

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In the primary elections of August 11, 2019, President Macri was clearly defeated by Alberto Fernández, the candidate of the “Frente de Todos” party. The unexpectedly wide difference in favor of Fernández was perceived by the market as a very disruptive event, and the currency lost nearly 30% of its value in the following three days, from 45.40 Ps./US$ on Friday, August 9, 2019, to 58.83 Ps./US$ on Monday, August 12, 2019, in a context of high uncertainty about the future of the Argentine economy. The BCRA started to sell reserves to stop the declines. A week after the elections, the Minister of Finance, Nicolás Dujovne, resigned, and Hernán Lacunza succeeded him.

In the face of significant (and increasing) capital outflows and high short-term debt maturities due within the subsequent weeks, Minister Lacunza unilaterally reprofiled short-term treasury bills (US$ and peso-denominated), postponing the maturities of those securities for 180 days (except for those in the hands of individuals). That decision triggered an acceleration of capital outflows and foreign exchange deposits withdrawals from domestic Argentine banks. In this context, international reserves fell 18.4% (US$12.2 billion) between August 9 and August 30, 2019.

In order to deal with this situation, President Macri issued a decree (No. 619/2019) instructing the BCRA to implement foreign exchange restrictions, combined with the obligation for exporters to sell in the official market all the dollars derived from their exports. Thus, the monetary authority set a monthly limit of US$10,000 for foreign currency purchases without specific application (i.e., it set no limits for imports or debt repayments), among other measures, effective beginning September 1, 2019. These regulations helped to reduce capital outflows and foreign exchange volatility until the presidential elections on October 27, 2019.

However, international reserves continued falling, reaching US$43.5 billion on October 25, 2019 (from reserves of US$66.3 billion registered on August 9, 2019), as the foreign exchange deposit withdrawals went on at a fast as the government used nearly US$8.2 billion to meet debt obligations, and the BCRA kept selling dollars and buying pesos in the market to stop devaluation pressures (US$7.4 billion) during this time frame.

Alberto Fernández won the presidential elections on October 27, 2019, and the same night the BCRA reduced drastically the limit for foreign currency purchases. For individuals, the Argentine Central Bank established a maximum limit of US$200 for the purchase of foreign currency per calendar month across all entities authorized to trade in foreign exchange, as well as for purposes of formation of foreign assets, family assistance remittances, and transactions with derivatives. As a result, foreign exchange demand in the official market dwindled nearly to zero, while alternative and parallel exchange rates started to rise and gain relevance in terms of volume.

The new president assumed office on December 10, 2019. A week later, the government sent the “Social Solidarity and Productive Reactivation Law” to the Congress, which was passed on December 23 (Law Nº 27.541). Among other measures, by this law the government increased export taxes and levied a 30% tax on foreign exchange purchases for tourism, expenditures abroad, or without specific application. The other previously implemented foreign exchange restrictions remained unchanged.

The main monetary policy instrument throughout 2019 was the LELIQ, a BCRA security created to manage monetary conditions of the economy, and its interest rate was the key reference for the financial system. As the monetary policy was particularly stringent all year long, the LELIQ rate remained at high levels throughout the year, with an average annual rate of 65%. Alberto Fernández stated clearly his intention to prompt a fast and marked monetary easing during the first months of his term. During December 2019, the monetary policy rate was lowered from 63% to 55%, with a subsequent increase in the monetary base. The other interest rates of the economy have evolved consistent with the evolution of the LELIQ rate.

As a result of all these events, the monetary base grew by 29.7% in the year, with a marked difference between its evolution during the period from December 2018 to October 2019 (when the monetary base grew by only 3.7%) and its behavior from October to December 2019 (when it grew by 25%). The current account balances of banks at BCRA increased by 23.7% (as the BCRA reduced minimum liquidity requirements throughout the year), while the cash held by the public rose by 35%. The monetary aggregate M2 (which includes cash plus sight deposits), measured in balances, grew by 34.9% in 2019, in line with the behavior of the cash demand.

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The first quarter of 2020 was significantly affected by a soft monetary policy, which was reflected in the Leliq rate which decreased from 55% as of January 1, 2020 to 38% as of March 31, 2020. The Central Bank purchased US$659 million of international reserves in the foreign exchange spot market, while the monetary base increased by 15%.

However, the Covid-19 pandemic impacted an already damaged economy. The Central Bank had to finance the Treasury expenditures by issuing pesos due to the difficulty of accessing the debt market, given the ongoing restructuring negotiation. During the second quarter of 2020, the Central Bank issued approximately 50% of the December 2019 monetary base.

Once the lockdown was softened during the third quarter of 2020, the Central Bank started to partially absorb those previously issued pesos, in order to avoid an inflationary acceleration. As a result, the Central Bank’s interest-bearing liabilities grew more than 90% nominally during 2020.

International reserves started to fall in April and May and, on May 28, 2020, the Central Bank released Communication “A” 7030, which limited the amount of dollars allowed to be bought by private importers, negatively affecting activity levels.

After successfully restructuring the sovereign debt with private creditors, the Central Bank decided to tighten foreign exchange controls. These measures triggered uncertainty in the markets and led to a US$1,442 million reserves loss and an increase in the foreign exchange premium to 130% in October 2020. In response to this uncertainty, the Treasury started a partial easing of the previous foreign exchange controls and committed to look for financing in the local debt market, rather than obtaining transfers from the Central Bank.

The foreign exchange premium was reduced to 80% in December 2020.

The monetary base grew 40% in 2020 compared to 2019, the increase was not higher due to the willingness of the Central Bank to absorb part of the issuance by its interest-bearing liabilities.

Financial System

All comparisons of the financial system contained in this annual report on Form 20-F are presented in nominal terms.

The rise in interest rates, strong depreciation of the peso and economic uncertainty had an impact on the operation of the financial system throughout 2019, especially after the primary election in August. Total deposits denominated in pesos grew 23.3% during 2019, while deposits held exclusively by the private sector increased by 35.3%, according to data from the Central Bank.

Sight deposits grew 45.9% during 2019 while term deposits grew just 24.7%. Term deposits indexed by the benchmark stabilization coefficient/purchasing power unit (CER/UVA) increased 18.9% during 2019 in comparison with 24.8% for traditional terms deposits.

Dollar-denominated deposits fell 32.9% during 2019, with most of the declines after August 2019.

The loans growth performance in 2019, both for individuals and companies, was negatively impacted mainly due to high interest rates, the Central Bank tight monetary policy and high uncertainty. The stock of peso-denominated loans granted to the non-financial private sector grew by 18.3% in the year. Disbursements were led by credit cards which rose by 47.0%. Dollar-denominated loans fell by 32.5% in dollar terms; in line with U.S. dollar-denominated deposits.

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The movement of lending and borrowing rates was highly influenced by the rise in the BCRA policy rate (Leliq rate) which was at 53.69% in January 2019 but reached almost 78.37% in September, before ending at 55.00% on December 30, 2019.

The Badlar interest rate (interest on deposits in excess of Ps.1 million) of private banks, stated in monthly averages, was 45.9% at the start of 2019 and rose to 59.85% in September, decelerating to 41.75% in December 2019.

Sight deposits grew 64.7% during 2020 while term deposits grew just 46.7% with strong growth of the term deposits indexed by the benchmark stabilization coefficient/purchasing power unit (CER/UVA), which grew 200.7% during 2020, in comparison with a 43.8% growth for traditional terms deposits.

Dollar-denominated deposits decreased 13.7% in 2020, after a 32.9% decline in 2019.

The loans growth performance in 2020, both for individuals and companies, was positive, growing 21.98%, given the lower interest rates and the market need for credit due to the lockdown.

The Central Bank reduced the Leliq interest rate in the first quarter of 2020, from 55% to 38%, seeking to increase economic activity levels. In October 16, 2020, the Central Bank started to use the REPO rate to absorb the issued money.

The Badlar interest rate (interest on deposits in excess of Ps.1 million) of private banks, stated in monthly averages, was 35.3% in January 2020, declining to 20% in April and raising to 33.4% in December 2020 in order to partially control the monetary overhang.

A. | History and development of the company

BBVA Argentina, an Argentine corporation (sociedad anónima or “S.A.”), was duly incorporated under the name Banco Francés del Río de la Plata S.A. on October 14, 1886. The Bank has registered its office in Avenida Córdoba 111 31st floor, C1054AAA, Ciudad Autónoma de Buenos Aires, Argentina; telephone number 54-11-4346-4000. The Bank’s agent in the United States for U.S. federal securities law purposes is CT Corporation System, currently with offices at 28 Liberty Street, New York, New York 10005.

BBVA Argentina’s original by-laws were approved on November 20, 1886 by a decree recorded in the Public Registry of Commerce of the City of Buenos Aires, and the last amendment was recorded on October 17, 2019. Pursuant to its current corporate by-laws, the Bank will terminate its activities on December 31, 2080, unless this term is extended by the shareholders. On April 24, 2019, the ordinary and extraordinary general meeting of shareholders approved the change of the Bank’s corporate name to “BBVA Argentina S.A.” and the consequent amendment to the Bylaws to reflect the new corporate name. Notwithstanding the foregoing, in response to a BCRA requirement and based on the authorization granted by the shareholders’ meeting, the Board of Directors, at its meeting held on May 28, 2019, decided to adopt the denomination “Banco BBVA Argentina S.A.”. The BCRA through resolution No. 166 dated July 25, 2019 made no remarks on said change of corporate name, which has been duly registered before the Argentine Superintendence of Corporations (“IGJ”). In addition, in the aforementioned shareholders’ meeting amendments to sections 6 and 15 of the bylaws was approved. The revised bylaws were duly registered before the IGJ on October 17, 2019, under No. 21332 Book 97 of stock companies.

The Bank is supervised by the Central Bank, an entity that establishes valuation and accounting criteria, the rules on liquidity and capital requirements as well as the reporting systems of Argentine financial institutions. It is also subject to inspections by the Central Bank, based on which it is assigned a “rating”. See “Item 4. Information on the Company—F. The Argentine Banking System and its Regulatory Framework”.

On March 8, 2019, the respective boards of directors of BBVA Argentina and BBVA Francés Valores S.A. proposed the merger of the two companies, and on April 24, 2019, the respective shareholders’ meetings approved the transaction. Currently, the transaction is pending authorization by the IGJ.

On March 26, 2019 Mr. Jorge Bledel presented, and the Board of Directors accepted, his resignation as member of the Board. The shareholders’ meeting held on April 24, 2019 elected Mrs. María Isabel Goiri Lartitegui to succeed Mr. Jorge Bledel, and she became the new chairwoman of the Board. Through Resolution No. 161 dated July 25, 2019, the BCRA declined to comment on the appointment of Ms. Goiri Lartitegui as chairwoman of the Board.

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On March 27 and April 16, 2020, the Board of Directors of BBVA Argentina approved the Bank’s participation in the “Play Sistémico” project, the purpose of which is to develop a payment solution for customers, led by the four main private banks in the market, including us, Banco Macro S.A., Banco Santander Río S.A. and Banco de Galicia y Buenos Aires S.A.U. In accordance with the business plan presented to the Board of Directors, on May 26, 2020, “Play Digital S.A.” was incorporated, a company in which the Bank owns a 10.762% shareholding interest as of the date of this Annual Report on Form 20-F. Play Digital S.A. was registered before the IGJ on June 9, 2020, under No. 5995, Book 99 of Stock Companies.

B. | Business overview

BBVA Argentina is a subsidiary of Banco Bilbao Vizcaya Argentaria S.A., its main shareholder since 1996. In Argentina, it has been one of the leading private financial institutions since 1886. Nationwide, BBVA Argentina offers retail and corporate banking to a broad customer base, including individuals, SMEs, and large companies.

BBVA Argentina’s corporate purpose is to bring the age of opportunities to everyone and its strategy is set on improving clients’ financial health, through operational excellence and increasing its client base, especially via digital channels. The institution relies on solid values: “The customer comes first, we think big and we are one team”. At the same time, its responsible banking model aspires to achieve a more inclusive and sustainable society. Sustainability and a robust and committed team also are key pillars for the Bank.

Data and technology are the main catalyzers of innovation and operational excellence. We want to be a “data-driven bank” and deliver high quality solutions ensuring reliability and security, while decreasing cost.

The Bank was one of the first companies to be listed on the Buenos Aires Stock Exchange (ByMA), quoting since 1888 (ticker: BBAR). It also has been listed on Mercado Abierto Electrónico (MAE) since 2018. Its shares in the form of American Depositary Shares (ADSs) have been listed on the New York Stock Exchange (NYSE) since 1993 (ticker: BBAR) and on the Madrid-based Mercado de Valores Latinoamericanos (LATIBEX) since December 1999 (ticker: XBBAR).

In 2019 the BBVA Group adopted a globally standardized trademark, “BBVA”, in addition to a new company logo in line with the digital world. This new identity reflects the BBVA Group’s values, especially “We are one team”, which emphasizes the importance of the people who work within the BBVA Group and their commitment to the BBVA project. In Argentina, the former BBVA Francés is now BBVA Argentina.

As of December 31, 2020, the Bank had total assets of Ps.693.0 billion, of which Ps.279.6 billion were the total loan portfolio. Regarding liabilities, the Bank had total liabilities of Ps.578.5 billion, of which Ps.478.2 billion were total deposits. Total shareholders’ equity was Ps.114.5 billion. Net income for the year ended December 31, 2020, was Ps.10.1 billion and net income for the year ended December 31, 2019 was Ps.21.8 billion.

As of December 31, 2020, BBVA Argentina was the third largest privately owned bank in Argentina in terms of private loans according to data from the Central Bank as of September 2020, with 7.7% of total banking system loans on an unconsolidated basis, and 8.5% of total banking system loans on a consolidated basis. Market share as of December 31, 2020 for retail loans (including personal, mortgage, credit card and pledge-loans) was 8.4% on an unconsolidated basis and 9.3% on a consolidated basis. For commercial loans (including discounted instruments, overdrafts and other loans) market share as of December 31, 2020 was 6.9% on an unconsolidated basis and 7.6% on a consolidated basis. As of December 31, 2020, BBVA Argentina was the third largest local private bank in Argentina in terms of private deposits on an unconsolidated basis according to data from the Central Bank as of September 2020, with a 7.1% market share of total banking system deposits.

As presented in this annual report on Form 20-F, market share data is based on data published by the Central Bank which has not been inflation adjusted. As such, certain information presented in this annual report as adjusted for inflation may not be directly comparable to information published by the Central Bank.

Through its universal banking platform, the Bank provides a broad range of financial and non-financial services both to individuals and companies throughout Argentina, going across all segments of the population, including retail and commercial banking, insurance, asset management, securities brokerage, and investment banking products and services. BBVA Argentina believes the wide range of financial solutions offered to its customers, complemented by unique strategic alliances and partners, as well as the capacity to leverage the BBVA Group’s global expertise, relationships and technological platform, gives it a significant competitive edge compared to other Argentine companies in the financial sector. Such competitive advantages place it in a privileged position to capture opportunities and capitalize on the potential consolidation of a fragmented banking sector.

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The Bank manages the following entity-wide business lines:

| • |  | Retail banking, through which it offers financial services to individuals across all income segments. The Bank’s main retail banking products include checking and savings accounts, time deposits, credit cards, personal and secured loans (primarily automobile loans), mortgages, insurance and investment products. Despite the Bank’s historically strong presence within the middle-income and affluent segments of the population, its products and distribution channels are designed to attract clients across all client segments. As of December 31, 2020, there were approximately 2.69 million active retail banking clients (clients of at least one product with at least “one movement” in the last 3 months or with a minimum deposit balance), compared with 2.65 million active retail banking clients as of December 31, 2019. The Bank’s retail banking strategy is focused on growing the client base, expanding its product and services offered, particularly in underdeveloped products (such as mortgages) and products where it sees potential increase in market share (such as consumer loans), apart from leveraging its technological platform to enhance clients’ banking experience. The Bank’s market share for consumer and mortgage loans as of December 31, 2020, was 5.4% and 2.7% respectively, according to data from the Central Bank. In terms of secured loans, the Bank’s market share was 14.0% according to data from the Central Bank. In terms of credit card loans, the Bank’s market share was 12.2% and 14.5% for financing and consumption according to data from the Central Bank, respectively. As of December 31, 2020, 2019 and 2018, we had total loans and advances of Ps.158.3 billion, Ps.149.0 billion and Ps.161.1 billion, respectively, and total deposits of Ps.285.6 billion, Ps.274.1 billion and Ps.378.2 billion, respectively.

| • |  | Small and medium-sized companies (SMEs) through which the Bank offers financial services primarily to local private-sector companies. The Bank’s main SME products include financing products, factoring, checking accounts, time deposits, transactional and payroll services, insurance and investment products. As of December 31, 2020, the Bank had more than 52 thousand SME clients. Small and medium-sized companies are a key element for economic growth in Argentina, and the Bank is focused on expanding the number of clients it serves and on being a strategic ally to its SME clients, supporting them with tailored products and transactional solutions, as well as with differentiated customer support through its 247 branches. As of December 31, 2020, 2019 and 2018, we had total loans and advances of Ps.88.1 billion, Ps.64.0 billion and Ps.109.8 billion, respectively, and total deposits of Ps.101.5 billion, Ps.92.8 billion and Ps.103.1 billion as of the same dates, respectively.

| • |  | Corporate and investment banking (CIB), through which the Bank offers financial services to some of the largest Argentine corporations and multinational companies operating in Argentina. Corporate banking is divided by industry sector: consumers, heavy industries, and energy, providing customized services to large companies. In addition to the products offered to SME company clients, corporate and investment banking clients are provided with global transaction services, global markets solutions such as risk management and securities brokerage, long term financing products including project finance and syndicated loans, and corporate finance services including mergers and acquisitions and capital markets advisory services. As of December 31, 2020, the Bank had more than 700 corporate banking clients, which included substantially all of the largest corporates and multinational companies in Argentina. Within the CIB business line, the Bank is focused on leveraging the deep expertise of its industry-focused relationship executives, supported by the BBVA Group’s global network, to continue to provide bespoke global financial solutions to its corporate client base. BBVA Argentina is focused on being a trusted partner for its corporate clients as they seek to finance investment opportunities, particularly within certain sectors of the economy where investment has lagged such as telecommunications, energy and infrastructure. As of December 31, 2020, 2019 and 2018, we had total loans and advances of Ps.33.2 billion, Ps.52.6 billion and Ps.109.3 billion, respectively, and total deposits of Ps.91.1 billion, Ps.33.4 billion and Ps.62.1 billion as of the same dates, respectively.

BBVA Argentina offers its products and services through a wide multiple-channel distribution network with presence in all the Argentine provinces and in the City of Buenos Aires, servicing 2.69 million active clients as of December 31, 2020. This network includes 247 branches, which provide services to the retail segment and to small and medium-sized companies, corporations and institutions. Complementing the distribution network, as of December 31, 2020 there were 15 in-company branches, 7 points of sales (contact points that only offer automated services and sales support, but have no approval by the BCRA to operate as a branch), two points of express support (branches without in-person customer service), 888 ATMs and 857 self-service terminals (“SSTs”, terminals that allow transactions without the need of a personal code or ID number). As of December 31, 2019, the Bank had 251 branches, 15 in-company branches, 6 points of sales, two points of express support, 887 ATMs and 862 SSTs.

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The Bank (including its subsidiaries) had a total of 6,019 employees as of December 31, 2020 compared to 6,321 employees as of December 31, 2019.

BBVA Argentina has invested in its physical and digital distribution network, making it possible to offer a differential, flexible, convenient banking experience to its customers. In addition, the Bank considers that with the existing distribution structure, it has the necessary reach and scale to facilitate expected growth while improving its operating efficiency, number of customers and products. The following table sets forth information regarding our footprint by province as of December 31, 2020:

|  | Branches |  |  | Points of Express Support |  |  | ATMs |  |  | SSTs |  |  | Points of Sale |  |  | In-Company Banks |
Ciudad Autónoma de Buenos Aires |  |  | 81 |  |  |  | 1 |  |  |  | 282 |  |  |  | 267 |  |  |  | 2 |  |  |  | 4 |
Buenos Aires |  |  | 84 |  |  |  | 0 |  |  |  | 339 |  |  |  | 294 |  |  |  | 2 |  |  |  | 9 |
Catamarca |  |  | 1 |  |  |  | 0 |  |  |  | 3 |  |  |  | 3 |  |  |  | 0 |  |  |  | 0 |
Córdoba |  |  | 15 |  |  |  | 0 |  |  |  | 33 |  |  |  | 50 |  |  |  | 0 |  |  |  | 0 |
Corrientes |  |  | 2 |  |  |  | 0 |  |  |  | 9 |  |  |  | 6 |  |  |  | 0 |  |  |  | 0 |
Chaco |  |  | 2 |  |  |  | 0 |  |  |  | 7 |  |  |  | 9 |  |  |  | 0 |  |  |  | 0 |
Chubut |  |  | 5 |  |  |  | 0 |  |  |  | 15 |  |  |  | 14 |  |  |  | 1 |  |  |  | 0 |
Entre Ríos |  |  | 6 |  |  |  | 0 |  |  |  | 15 |  |  |  | 16 |  |  |  | 0 |  |  |  | 0 |
Formosa |  |  | 1 |  |  |  | 0 |  |  |  | 5 |  |  |  | 6 |  |  |  | 0 |  |  |  | 0 |
Jujuy |  |  | 1 |  |  |  | 0 |  |  |  | 2 |  |  |  | 3 |  |  |  | 0 |  |  |  | 0 |
La Pampa |  |  | 2 |  |  |  | 0 |  |  |  | 3 |  |  |  | 7 |  |  |  | 0 |  |  |  | 0 |
La Rioja |  |  | 1 |  |  |  | 0 |  |  |  | 4 |  |  |  | 4 |  |  |  | 0 |  |  |  | 0 |
Mendoza |  |  | 11 |  |  |  | 0 |  |  |  | 35 |  |  |  | 37 |  |  |  | 0 |  |  |  | 0 |
Misiones |  |  | 2 |  |  |  | 0 |  |  |  | 6 |  |  |  | 10 |  |  |  | 0 |  |  |  | 0 |
Neuquén |  |  | 4 |  |  |  | 0 |  |  |  | 14 |  |  |  | 12 |  |  |  | 0 |  |  |  | 0 |
Río Negro |  |  | 3 |  |  |  | 0 |  |  |  | 10 |  |  |  | 11 |  |  |  | 0 |  |  |  | 1 |
Salta |  |  | 2 |  |  |  | 0 |  |  |  | 7 |  |  |  | 10 |  |  |  | 0 |  |  |  | 0 |
San Juan |  |  | 2 |  |  |  | 0 |  |  |  | 10 |  |  |  | 11 |  |  |  | 0 |  |  |  | 0 |
San Luis |  |  | 2 |  |  |  | 0 |  |  |  | 6 |  |  |  | 7 |  |  |  | 0 |  |  |  | 0 |
Santa Cruz |  |  | 3 |  |  |  | 0 |  |  |  | 9 |  |  |  | 7 |  |  |  | 0 |  |  |  | 0 |
Santa Fe |  |  | 11 |  |  |  | 0 |  |  |  | 43 |  |  |  | 45 |  |  |  | 2 |  |  |  | 1 |
Santiago del Estero |  |  | 1 |  |  |  | 0 |  |  |  | 4 |  |  |  | 8 |  |  |  | 0 |  |  |  | 0 |
Tucumán |  |  | 3 |  |  |  | 1 |  |  |  | 18 |  |  |  | 16 |  |  |  | 0 |  |  |  | 0 |
Tierra del Fuego |  |  | 2 |  |  |  | 0 |  |  |  | 9 |  |  |  | 4 |  |  |  | 0 |  |  |  | 0 |
Total |  |  | 247 |  |  |  | 2 |  |  |  | 888 |  |  |  | 857 |  |  |  | 7 |  |  |  | 15 |

BBVA Argentina provides an electronic banking service, a modern, secure and functional internet banking platform (bbva.com.ar) and mobile banking apps such as BBVA Móvil and Go. Since the end of 2020, a payment solutions app launched together with other banks, MODO (Play Digital S.A.), is now part of the digital offering the Bank has for its clients. Within the digital payments offering, the Bank has also implemented Near-Field Communication (“NFC”) technology for its clients’ use.

BBVA Argentina is also gradually transforming its branches into “digital branches”: a combination between human capital and structure facilities to promote client self-service, aiming to digitalize and migrate clients to remote channels. Strategic pillars of these branches are: the mixed roles of customer service staff oriented to guide the client, the availability of digital tools, the limitation of teller service solely for specific transactions, and the availability of a customer service protocol where the importance of each role and client dynamics are detailed.

As of December 31, 2020, active digital clients (clients of at least one product with at least “one movement” in the last 3 months or with a minimum deposit balance) reached 1.9 million with a 71.7% penetration over total active clients (2.7 million), versus a penetration of 66.5% as of December 31, 2019. Active mobile clients (clients of at least one product with at least “one movement” in the last 3 months or with a minimum deposit balance) were 1.6 million, representing a 59.9% penetration as of December 31, 2020, versus a penetration of 53.8% as of December 31, 2019.

In the year ended December 31, 2020, accumulated retail digital sales measured in units accounted for 80.8% of total sales (compared to 65.1% in the year ended December 31, 2019) and represented 70.2% of the Bank’s total sales measured in monetary value (compared to 54.5% in the year ended December 31, 2019). Digital and mobile transactions, including online banking and mobile, net cash online and mobile, and non-bank correspondents, increased 57.8% in the year ended December 31, 2020 compared to the year ended December 31, 2019.

The distribution network is complemented by commercial alliances and distribution channels. Commercial alliances include Lan Argentina S.A (LATAM Airlines Group S.A. as of January 2021), Despegar, MOVE Concerts Argentina S.A. (MOVE), Oymyakon S.A. (PopArt), Medios y Contenidos Producciones S.A. (RGB Entertainment) and En Vivo Producciones S.A., the last four within the entertainment sector. Distribution channels include credit card programs with Club Atlético River Plate Asociación Civil and Club Atlético Boca Juniors Asociación Civil, Argentine soccer clubs, Ritenere S.A. (La Caja Seguros) within the insurance sector, as well as the agreements with automobile companies Peugeot Citroen, Renault and Volkswagen. All of them have allowed the Bank to expand its client reach cost-effectively, and further expand its points of presence while enhancing its value proposition.

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Business Strategy and Model

In 2019, BBVA engaged in a strategic review to keep up with the major trends which are transforming the world and the financial services industry. As a result of such process, BBVA updated its six strategic priorities which, together with its purpose and values, constitute the pillars of BBVA’s global strategy, including ours.

The Covid-19 confirms our strategic vision

An unprecedented health crisis emerged in 2020, with sizable economic and social impacts. These unique circumstances expedited certain trends which are key to BBVA’s strategy, such as:

| • |  | A more challenging macroeconomic environment. Such more complex environment will have a direct impact on the banking sector, with lesser growth than expected in loans, and lower interest rates for longer periods, together with a higher cost of risk.

| • |  | Expedited customer digitalization. Social distancing paved the way for the massive use of e-commerce and other remote services (telework, telehealth, e-learning). This trend has also been perceived in the banking sector, with the incremental use of digital and remote channels.

| • |  | Growing concerns about climate and social sustainability. The pressing need for addressing the society’s major challenges, such as the climate change or social inequality, has been brought to light, along with the need for embracing more sustainable and inclusive growth. Sustainability is one of the cornerstones of the recovery and fiscal stimuli programs announced by most countries.

| • |  | Expedited innovation. The pandemic has revealed how vulnerable economies are to external shocks. In pursuit of increased resilience, governments, public institutions and the private sector see recovery plans as an opportunity to expedite innovation (such as, the investment in 5G, AI, data).

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The rapid progress of the above-mentioned trends reinforces BBVA’s forward-looking vision and strategy:

Good progress amidst a challenging year

The year 2020 has been unique and, as such, has warranted fast and efficient action. Despite the challenging environment and thanks to its agile response, the Bank has taken an important step in promoting and making progress in its six strategic priorities.

| 1. | Improving our clients’ financial health

BBVA aspires to become a trusted financial partner to its clients, giving them customized advice, helping them in their decision-making, and supporting them as they manage their finances to reach their vital and business goals.

In this respect, during 2020, BBVA continued consolidating its differentiated value proposition developing global financial health solutions, launching initiatives to support our clients’ in their day-to-day transactions, and enhancing its digital offering to wholesale customers, leveraging its international footprint.

| 2. | Helping our clients transition towards a sustainable future

BBVA is aware of the substantial role the banking sector plays in the transition towards a sustainable and inclusive future, through financing and advisory activities. Accordingly, BBVA has committed to gradually aligning its business to the Paris Agreement, leveraging its role to help clients transition towards a more sustainable future, inspired by selected Sustainable Development Goals.

Initially, BBVA will focus on such Sustainable Development Goals (SDGs) in which the Group may have the greatest positive impact, taking advantage of banks’ multiplier effect.

In this regard, BBVA is implementing this strategic priority in two ways:

| • |  | Climate Action: Mobilizing timely resources to face the climate change challenge and address the related SDGs (i.e., affordable and clean energy, responsible production and consumption, and climate action).

| • |  | Inclusive Growth: Mobilizing the investments required to build inclusive infrastructure and support inclusive economic development. In this case, the SDGs BBVA seeks to encourage include: Decent work and economic growth; and Industry, innovation and infrastructure.

| 3. | Reaching more clients

BBVA seeks to grow by having a footprint exactly where clients are. Its purpose is speeding up profitable growth, relying on its own and third parties’ channels, with special focus on digital channels and on the most profitable products and segments.

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In this regard, despite the challenging environment that prevailed in 2020, BBVA managed to substantially grow its customer base across all geographic locations in which it has a presence (up by 3.6% vis-a-vis the previous year). Such growth was driven by digital channels, with a 56% increase in the number of clients gained through such channel relative to 2019.

Not only has BBVA carried out successful strategies to attract new clients, but it has also laid the groundwork for its future growth. On the one hand, BBVA has reinforced its capacity to grow in the open market through its own channels (improvements to its proprietary biometric verification technology, optimized E2E digital processes). Besides, client acquisition has been strengthened through attractive alliances with third parties.

| 4. | Driving operational excellence

BBVA endeavors to offer the best customer experience, with simple and automated processes, while staying focused on its robust risk management practices and optimal capital allocation.

In this regard, BBVA embraces a simpler and scalable operating model, leveraging its digital capabilities, where clients can have remote access to their products and services. BBVA aspires to offer this service through an efficient and effective operating model, with simple and automated processes made possible by new technologies and data analytics.

Such operational excellence should be supported by a strong risk management approach, taking into account financial and non-financial risks. Therefore, BBVA endeavors to empower its global platforms leading to improve retail and SME risk management. Besides, an optimal capital allocation remains a key factor to BBVA.

| 5. | The best, most engaged team

To the BBVA Group, its team remains a strategic priority—a diverse and empowered team, guided by BBVA’s purpose and values, and driven by a talent development model that offers growth opportunities to everyone.

In 2020, employee engagement (measured in terms of the grand mean score from Gallup survey) increased at BBVA Group from 4.11 to 4.25 points (with a maximum possible score of 5.00), while internal reputation has improved, reflecting the efforts made through several initiatives.

BBVA inspires to become a high-performance team with a common purpose and shared values, fostering diversity plans and a leadership model. BBVA is rewriting its professional development model, building an ecosystem where people can create and grasp opportunities, leading transformation, developing core capabilities, and training teams in new skills. BBVA strives day after day to offer its employees a flexible and sustainable work environment.

| 6. | Data and technology

Data and technology are clear strategy accelerators. Advanced analytics capabilities, together with secure and reliable technologies, allow to create distinctive quality solutions and deliver against our strategy.

Data are key to offer an enhanced value proposition. BBVA is developing innovative data capabilities, through the creation of a global platform, training teams on data analytics and building robust governance processes to improve data quality. Data also help create business value, by contributing to reinforce other strategic priorities (for instance, financial health, development of personal finance management tools).

As to technology, BBVA will continue to work on the reliability and resilience of its platform, for it helps to be more effective and efficient and to offer enhanced quality and more functionalities to clients at a global level, as well as on its security and privacy model (cybersecurity, business processes, fraud, and data security).

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Values

Business Lines

Below is an overview of each of our principal business lines and their evolution during 2020.

Retail Banking

BBVA Argentina offers financial services to individuals across all income segments. The main retail banking products include checking and savings accounts, time deposits, credit cards, personal and automobile loans, mortgages, insurance and investment products. The products and distribution channels are designed to attract customers across all segments.

The retail banking strategy is based on growing our customer base, expanding the product and service offering, particularly, for underdeveloped products and products where we see potential increase in market share, and leveraging our technological platform to enhance customers’ banking experience.

Loans

| • |  | Personal Loans

BBVA Argentina offers personal loans in pesos at fixed interest rates. Until April 2020, UVA-adjusted loans were also part of the offering. The pricing policy is related to how the customer is related to its segment (Premium World, Premium and Classic), the origination channel (in-branch, digital), and whether it is a payroll account or not. Loan amounts differ only depending on whether the customer relies on self-service or not.

In 2020 the Bank designed several improvements to its lending activities, including salary advances, digital experience, pricing offers, pricing engine creation, regulatory compliance of facilities for individuals and entrepreneurs.

| • |  | Secured Loans

Despite the challenging economic environment, BBVA Argentina attained a 48.70% share in secured loans for the purchase of brand-new cars and a 9.98% share in secured loans for the purchase of second-hand cars according to SIOMAA (“Sistema de Information Online del Mercado Automotor de Argentina”). In the motorcycle financing segment, BBVA Argentina financed approximately 2,600 units, accounting for almost 64% of total secured transactions of the Bank.

| • |  | Impactful Loans

BBVA Argentina was the first private bank in offering a personal loan facility known as “eco-loans,” at preferential rates and payable in up to 60 months. These loans are designed to purchase environmentally-friendly sustainable assets, such as scooters or bicycles, electric cars, type “A” or higher energy-efficient electric appliances, and solar panels and hot water systems, among others, thus contributing to the SDG 13 “Climate Action.”

In partnership with VOLT Motors, BBVA Argentina also financed the purchase of fully-electric cars, suitable for roads, routes and highways, and marketed online. These innovative and sustainable cars entail lesser maintenance expenses than traditional cars. The models included in the financing program are the VOLT e1 and VOLT w1. Individuals nationwide can apply for a UVA-adjusted secured loan at a 0% rate, payable in up to 48 months. The cars can also be financed through a secured line at a preferential interest fixed rate, payable in up to 60 months, without origination or monthly administrative fees. VOLT Motors has recently secured the Model Configuration License (“Licencia de Configuración de Modelo” or LCM), which certifies compliance with international

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standards such as SAE and EU, and allows the company to deliver cars ready to travel on roads, routes and highways across the entire country. Models have a range of 300 km and reach a maximum speed of 105 km/h.

Insurance

Faced with the challenges posed by the Covid-19 pandemic, the insurance business responded with several improvements to streamline the insurance subscription process. These actions resulted in the prompt recovery of sales volumes, after the strong decline experienced during the first months of the lockdown.

Customers were able to agree to the insurance offer by e-mail. Excel quotes were also enabled to complete sales with greater flexibility.

As to customers’ benefits, during the year the insurance business offered a discount plan for new coverage—all products purchased on-line can access to this promotion since March 2020. In some cases, customers can get up to 50% discounts on the first 3 installments. As for car insurance, discounts ranging from 15 % to 30 % were offered on the first 6 installments, which also helped support activity levels.

Besides, installments due on the first month were deferred in April 2020. On the other hand, customers with comprehensive insurance policies received a 50% discount on April’s payment.

Within the insurance business, BBVA Argentina offers several lines including personal and work-related accidents; while also offering coverage for personal belongings, such as handbags, personal computers, technology and even golf equipment; homeowners’ insurance with several options, purchase protection and life insurance, among others.

The table below shows BBVA Argentina’s insurance sales by type for the year ended December 31, 2020.

Insurance Sales |  | 2020 Number of Policies |
Homeowners |  |  | 28,561 |
Car |  |  | 16,204 |
Life |  |  | 14,094 |
Personal Accidents |  |  | 23,784 |
ATMs |  |  | 42,262 |
Unemployment |  |  | 8,645 |
Handbag Protection |  |  | 9,361 |
Purchase Protection |  |  | 5,901 |
Hand-held Devices |  |  | 24,327 |
Notebooks |  |  | 165 |
Total |  |  | 173,304 |

In 2020, BBVA Argentina introduced a bicycle insurance policy that can be purchased through an entirely online process.

Asset Management

According to the interim asset ranking compiled by the CAFCI, the Bank is ranked fifth in the total Mutual Fund market, with a 5.1% share.

In 2020, commissions amounted to Ps.640.21 million, an increase of 82.81% compared to commissions accrued during the previous year. Assets under management in time-deposits funds increased by Ps.56,746.49 in the year ended December 31, 2020 due to the increase in net equity of managed funds, mainly FBA Renta Pesos.

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Asset Management |  | Amount accrued as of December 31, 2020 in million Pesos |  |  | Year-on-year changes |
| In million Pesos |  |  | As a % |
Total assets under management |  |  | 99,976.80 |  |  |  | 55,883.17 |  |  |  | +126.75 | %
Assets under management in time-deposits funds |  |  | 95,903.56 |  |  |  | 56,746.49 |  |  |  | +144.94 | %
Assets under management in market mutual funds |  |  | 4,073.24 |  |  |  | -863.32 |  |  |  | -17.49 | %
Assets under management in market mutual funds– Fixed income funds |  |  | 2,510.33 |  |  |  | -833.75 |  |  |  | -24.93 | %

In addition, as of December 31, 2020, the Bank had 18 mutual funds under management registered with the Argentine Securities Commission (CNV). The table below shows the Bank’s mutual funds under management as of December 31, 2020.

Fund |  | Status
FBA Renta Pesos, FBA Renta Fija Plus, FBA Calificado and FBA Acciones Argentinas |  | These funds are operating normally. Subscriptions and redemptions in Pesos are allowed.
FBA Bonos Argentina, FBA Ahorro Pesos and FBA Renta Mixta |  | In order to streamline and facilitate their operation, Class A units were unified. Requests for subscriptions to these mutual funds were reopened, after having been suspended since August 29, 2019.
FBA Horizonte, FBA Horizonte Plus, FBA Bonos Globales, FBA Retorno Total I and FBA Acciones Latinoamericanas |  | Only redemptions are admitted. Subscriptions were suspended in mid-April 2020 as a preventive measure to mitigate market fluctuations and protect investors’ interests in these funds.
FBA Gestión I, FBA Renta Pública I, FBA Renta Pública II and FBA Renta Fija Local |  | These mutual funds are not open for subscription or redemptions. The Bank is awaiting the right time to market them.
FBA Renta Fija Dólar and FBA Renta Fija Dólar Plus |  | These funds are at several stages of the liquidation process.

The liquidation of Fondos FBA Bonos Latam, FBA Retorno Total II and FBA Brasil I was completed, after completion of the asset realization process and full payment of each.

Payment Solutions

MODO is a banking wallet developed by Argentina’s major public and private banks. Through it, BBVA Argentina’s customers can make payments and transfer money easily and for free. No new application is required to use the wallet, since transactions can be completed from BBVA’s Go app, BBVA Mobile, and Online Banking.

MODO is a virtual payment solution that can be used to request or transfer money without a CBU (uniform banking key), alias, account number or CVU (uniform virtual key). The platform also allows to make payments from a mobile phone, without the need for using cards or cash, or charging a virtual wallet.

Debit and Credit Cards

BBVA Argentina offers VISA debit cards, VISA and Mastercard International/Gold/Platinum credit cards, and VISA Signature and Mastercard Black credit cards, as well as rechargeable and gift cards. In 2020, the Bank shifted to contactless technology, in addition to being the first bank in introducing sustainable cards—International and Gold cards made up of 85.5% recyclable materials.

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Regarding benefits, BBVA Argentina has a program in place known as “BBVA Go.” In 2020, the Bank reinforced the schedule of benefits, discounts and accounts through the Go app. The main categories included clothing, restaurants, and home & deco. Toy stores with presence at supermarkets became one of the major value propositions in the financial market. Additional features were added, including Near-Field Communication (NFC) payments with all BBVA’s credit and debit cards (NFC allows to make card payments by putting the device close to the store terminal); MODO, to send and receive money and make payments using QR code; and SUBE (“Sistema Único de Boleto Electrónico”, in Spanish) its card top-ups.

BBVA Argentina launched Shop, its new online marketplace store offering thousands of products and attractive deals.

With Shop, the Bank sought to offer customers a new shopping experience from the BBVA Go app. All products, services and exclusive promotions for BBVA’s customers can be found in the app, differentiated by category and at preferential prices. Access is available to customers having a Visa or Mastercard credit card issued by the Bank. During 2020, the Bank endeavored to get the most convenient prices, unique opportunities, exclusive kick-offs, and more benefits.

In 2020 LATAM Argentina announced it would go out of business, forcing the Bank to adjust the product value proposition and reach a new agreement to design a customer loyalty strategy in 2021, combining the LATAM Pass benefits for Premium and Premium World customers. For the Classic segment, BBVA will launch a new points reward program focused on customers’ experiences.

| • |  | Credit Card Spending

One of the Bank’s greatest achievements in 2020 was the development of a credit card spending indicator, compiling real-time information on credit card expenses incurred by BBVA Argentina’s customers. Amidst the prevailing uncertainty, the indicator proved a valuable tool to anticipate trend changes in the short term and to make business decisions. It was a cross-cutting project at the BBVA Group level, generating valuable reports with cross-country comparisons on consumption of several products and services. Weekly reports on the changes in the indicator were released since its introduction.

| • |  | Merchant Acquisition

Merchant acquisition sales were deployed across the branch network, in addition to the in-house sales force and related sales agents. Amidst the Covid-19 pandemic, thanks to the sale of Lapos terminals and the Payment Button, Prisma merchant acquisition distribution was quite active, with more than 33,000 new merchants and a record operated volume of Ps.73,000 million in 2020.

Time Deposits

BBVA Argentina completed 97% of sales through digital channels. In 2020, the Bank managed to rapidly accommodate to regulatory changes, introducing system changes targeting digital sales. Work was done on communication and assistance to the network, with a focus on the customer experience.

Small and Medium-sized Companies (SMEs)

BBVA Argentina supports the development of multiple companies of varying size and from different sectors, offering services and products that help their businesses grow, and giving advice on the best financial options for each profile. The highlights of this business line during 2020 were as follows:

2020 Highlights

Customer Growth |  | During 2020, the number of new customers increased 30% compared to the previous year, as a result of the following actions: •   Deployment of a new business service model. •   Incentives for commercial associates. •   Commercial campaigns with associated value offers such as fee waived accounts, mile awards, and preferential rates. •   Alliances with several prestigious brands to attract customers and suppliers.

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Self-service |  | Amidst the Covid-19 pandemic, enhanced self-service options were made available to secure financing, primarily in the form of check discounting and settlement of financial loans. The use of digital inquiry channels experienced substantial growth. Accordingly, in 2020 84% of check discounting transactions were made through the App or online, while 57% of loans were settled entirely online.
Market Share |  | BBVA Argentina’s share of assets in the financial system grew more than 60 bps (basic points system). Commercial efforts proved successful in asset placements vis-a-vis the system, driven by checks and loans at 12 months.

SMEs and Businesses

BBVA Argentina believes the SMEs segment is a key element for economic growth in Argentina. Therefore, the Bank offers financial services primarily to local private sector companies, seeking to expand the number of customers it serves and to become a strategic ally to its SME customers, supporting them with tailored products and transactional solutions, as well as with differentiated customer service through its branch network.

The Bank’s main SME products include financing products, factoring, checking accounts, time deposits, transactional and payroll services, insurance and investment products. In 2020, the Bank made available credit assistance at special rates. Over 9,000 customers received short-term working capital loans.

Additionally, in 2020 the Bank developed communication campaigns in the media, social networks and Internet to advertise its value offering targeted at the segment of SMEs and entrepreneurs. The Bank supported the needs associated with the economic emergency triggered by the Covid-19 pandemic by providing working capital loans, and deferring payment terms with outstanding performance. In addition, the Bank kicked off a Ps.2,000 million credit line for the purchase of teleworking materials, and a Ps.15,000 credit line to help micro, small and medium companies cover payroll gaps amidst this challenging scenario. The Bank also refinanced credit card outstanding balances in up to 9 installments.

Hence, during 2020, the Bank strived to accommodate to the challenges arising from the Covid-19 pandemic to attract more customers:

| • |  | It covered the SME segment across all branches, offering customized service.

| • |  | It accelerated the individuals network training process by delivering online courses.

| • |  | Premium and Premium World executives started to offer an integrated service to the business and to individuals.

Additionally, during 2020, in line with its commitment to sustainable development, the Bank designed a green loan facility for SMEs with a four year maturity at a preferential annual nominal rate of 35%. The proceeds of this facility will be used for social (social housing, sustainable employment generation, food security, social strengthening and progress, and financial inclusion projects) and environmental (renewable energies, energy efficiency, contamination prevention, management of natural resources, clean transportation, waste water management, and ecological buildings) activities.

Foreign Trade

BBVA Argentina supports customers wishing to make export or import transactions, regardless of their respective sectors. Transactions under this segment exceeded US$11,900 million in 2020.

In 2020, the Bank focused on digital channels due to the challenges arising from the Covid-19 pandemic. Accordingly, its web channel recorded an increase in transactions.

| • |  | Average year-on-year use increased from 68% to 88% across all segments.

| • |  | As for the individuals segment, the use of the web channel almost tripled, from 21% to 60% of active customers.

| • |  | Through this channel, individual customers were able to process non-complex foreign trade transactions by themselves, abiding by the controls imposed by regulatory authorities.

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Additionally, the Bank successfully implemented the Net Cash and Online Banking channels, with the following new features:

| • |  | Currency follow-up module on Net Cash.

| • |  | Service transfers and payment order collection through Online Banking.

| • |  | Instruction guides and training for customers and associates.

| • |  | Regulatory news.

Agricultural Business

BBVA Argentina supports the agricultural sector with exclusive lines and products tailored to the productive cycles of each activity being financed.

In Argentina, the agricultural sector contributes 60% of the country’s foreign currency inflows, generates a large number of direct and indirect jobs, and fosters the growth and maintenance of regional economies and the development of the country’s provinces.

During 2020, the Bank served more than 3,460 customers engaged in machinery and equipment manufacturing, production and sale of supplies, livestock, agriculture, services, and other regional crops.

The agricultural business segment develops products for the entire agricultural value chain, providing finance in different currencies and at varying terms for supplies, machinery and equipment, and livestock

Based on the type of investment, the Bank offers the BBVA Agro card with over 80 short-term financing agreements and working capital loans in pesos and U.S. dollars. BBVA Argentina also supported the purchase of machinery and equipment, livestock, land and investment projects by means of secured loans, reciprocal guarantee companies, mortgages or leasing agreements.

BBVA Argentina participated in Expoagro 2020, Latin America’s largest trade show of the agricultural sector, where the Bank adopted a new service approach focused on closing deals at the booth. The exhibition convened numerous suppliers, commercial agents and customers, doubling the investment made. The end of the trade show was affected by the outbreak of the Covid-19 pandemic. Therefore, in September 2020 the Bank participated in Expoagro Digital.

Transactional Products

This line of business includes collection and payment products. Collection products include:

| • |  | Collections: Receipt of deposits on behalf of corporate customers across the Bank’s branch network, Smart Self-service Terminals, Enabled Webs and non-banking entities, making reconciliation easier by means of online information.

| • |  | Direct Debit: A collection mechanism allowing corporate customers to arrange automatic debits from their accounts at BBVA Argentina or at other banks.

| • |  | Banelco Deposit: A Banelco card exclusively enabled to receive deposits in corporate accounts in an agile and easy manner, with increased geographic coverage.

| • |  | PMC: A collection service available through the Banelco ATM network and/or Internet (pagomiscuentas.com.ar).

| • |  | DEBIN: A new payment method that uses an instant transfer mechanism to and from accounts, upon the seller’s previous request and with the buyer’s authorization. It is available for debits in pesos and U.S. dollars.

As to collections, in 2020, the Bank completed 2.07 million transactions.

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Payment products include:

| • |  | Payments to Suppliers: Payments from a business to its suppliers. To enable this service, the business delivers payment instructions to the Bank by Net Cash, through which the business also receives daily payment status updates and is able to monitor them.

| • |  | Tax Payments (AFIP): A web-based payment tool through which customers can pay taxes, customs duties and social security contributions on line, pursuant to applicable laws and regulations.

| • |  | Transfers: A transaction whereby an individual or legal entity orders the Bank to debit funds from an account and to credit them to another account at BBVA Argentina or at other entity, through Electronic Banking (NetCash or InterBanking).

In payments to suppliers, the Bank completed 1.86 million transactions in 2020. Sixty three (63%) of these transactions were digital.

In 2020, the Bank adjusted its payment and collection services to the challenges arising from the COVID-19 pandemic. It introduced eCheq, a payment method to supplement customers’ paper check payments to suppliers (who may be or may not be customers of the Bank). The payee receives a payment online, without the need to attend the Bank’s premises. The payments to suppliers agreements that did not have this feature were modified to enable payments by transfer.

For collection agreements using cashiers, both for cash and checks (dated and postdated checks), the Bank enabled all ATMs and self-service terminals for customers that did not have them available in their contracted products.

Corporate & Investment Banking (CIB)

Through our corporate and investment banking business we offer banking services to approximately 820 multinational companies and local private-sector and state-owned enterprises.

In our corporate business line, we leverage the BBVA Group’s global presence and interconnected structure covering the corporate business line across the globe. Our corporate and investment banking products include checking, savings, time deposits and bilateral loan products that allow for structured finance for our global clients. In addition, as part of our investment banking services, we offer advisory services on mergers and acquisitions and initial public offering and corporate and project financing. In Argentina we cover local clients, including large and medium-sized companies, and large international clients. Our clients also include institutional and governmental clients including pension funds, insurance companies and banks.

Through our treasury unit we also offer trading services, and we are also engaged in capital markets, money markets and foreign exchange markets, brokerage services in connection with fixed-income securities, derivatives, leasing and trust services.

The Bank continued to enjoy a leading position in the Argentine wholesale segment with notable performance both in the credit business and transaction-based banking services. In 2020, CIB was focused on the achievement of strategic goals, including, among others, leadership in both Corporate Banking and Investment Banking, optimization of capital allocation and increasing cross-selling margins. The Bank is working to attain these goals through increased business consolidation, process efficiencies and the establishment of long-term relationships with customers.

The following describes the four main business areas within CIB.

Global Finance

This area provides credit solutions across the entire value chain, including advice, structuring and financing, with a wide range of products. This area is divided into Project Finance and Global Lending.

Global Transaction Banking

This area provides front-office services to companies to allow them to manage working capital by means of financing instruments denominated both in pesos and US dollars. It also provides products for cash management and transaction products through multiple channels: transaction platform, electronic banking (BBVA Net Cash), personal attention, direct channels, swift and mobile banking. global transaction banking is divided into working capital, cash management, client resources, and trade finance and correspondent banks. Global Transaction Banking has been focused on becoming a well-established leader in financing to clients both in pesos and dollars.

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Global Markets

This area is responsible for providing services related to origination, structuring, distribution and risk management of market products. Global Markets is divided into Foreign Exchange, Fixed Income and Credit (Debt Capital Markets).

Corporate Finance

Corporate Finance is in charge of meeting our clients’ needs related to the security markets, with focus on developing customized solutions for companies to enhance their value. Services include initial public offerings (IPOs), capital increases with or without rights, accelerated placements, convertible notes, flexible dividends, treasury shares and public offerings for withdrawal of outstanding shares from public offering (PTOs).

Corporate Finance also provides advice on acquisitions, divestments and mergers, both for registered and privately owned companies, to help them attain their strategic goals. In addition, it works on matching private equity (financial or strategic partners), valuation reports and fairness opinions, advice on acquisitions and privatizations.

The following table sets forth the relative proportions of loans and advances (net of allowance for loan losses) and deposits attributable to our principal business lines during the last three years.

|  | Financial assets at amortized cost - Loans and advances |
|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
|  | (in thousands of pesos, except percentages) |
CIB |  |  | 33,152,112 |  |  |  | 11.86 | % |  |  | 52,578,472 |  |  |  | 19.79 | % |  |  | 109,314,438 |  |  |  | 28.75 | %
Small and medium-sized companies |  |  | 88,081,690 |  |  |  | 31.50 | % |  |  | 64,031,846 |  |  |  | 24.10 | % |  |  | 109,834,616 |  |  |  | 28.88 | %
Retail banking |  |  | 158,351,709 |  |  |  | 56.64 | % |  |  | 149,040,274 |  |  |  | 56.11 | % |  |  | 161,140,872 |  |  |  | 42.37 | %
Total |  |  | 279,585,511 |  |  |  | 100.00 | % |  |  | 265,650,592 |  |  |  | 100.00 | % |  |  | 380,289,926 |  |  |  | 100.00 | %

|  | Financial liabilities at amortized cost - Deposits |
|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
|  | (in thousands of pesos, except percentages) |
CIB |  |  | 91,105,915 |  |  |  | 19.05 | % |  |  | 33,391,167 |  |  |  | 8.34 | % |  |  | 62,133,326 |  |  |  | 11.44 | %
Small and medium-sized companies |  |  | 101,543,218 |  |  |  | 21.23 | % |  |  | 92,791,600 |  |  |  | 23.18 | % |  |  | 103,122,598 |  |  |  | 18.97 | %
Retail banking |  |  | 285,574,131 |  |  |  | 59.72 | % |  |  | 274,054,030 |  |  |  | 68.48 | % |  |  | 378,229,487 |  |  |  | 69.59 | %
Total |  |  | 478,223,264 |  |  |  | 100.00 | % |  |  | 400,236,797 |  |  |  | 100.00 | % |  |  | 543,485,411 |  |  |  | 100.00 | %

Information Technology

Our information technology, or IT, area is responsible for our systems operation and availability as well as data security and integrity. Our main data center and our disaster recovery and back-up center are located in Buenos Aires, Argentina. Our modern technology platform is interconnected with the platform of the BBVA Group, which enables us to provide seamless coverage to our customers.

We have made significant investments in technology, and we plan to continue doing so to enable us to retain and enhance our competitive position in various markets and to improve the security and quality of our services.

Our operational platform efficiently combines our modern business-oriented IT systems with our multichannel distribution strategy, resulting in innovative ways to serve our clients. We have well-developed CRM tools that allow us to monitor our clients’ behavior and provide them with targeted product offerings through diverse channels. As a result, we are able to effectively leverage alternative distribution channels, such as ATMs, internet and mobile banking and our contact centers, which are complementary to our traditional proprietary branch network, which enables us to provide better service to our clients and to increase our sales ratios.

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We have implemented multiple controls to respond to the new threat of cybersecurity, based on a comprehensive, multi-faceted security framework that include people, technology, processes and procedures.

Intellectual Property

In Argentina, ownership of trademarks can be acquired only through a validly approved registration with the National Institute of Industrial Property (Instituto Nacional de la Propiedad Industrial, or INPI), the agency responsible for registering trademarks and patents in Argentina. After registration, the owner has exclusive use of the trademark in Argentina for ten years. Trademarks registrations can be renewed indefinitely for additional ten-year periods, if the registrant proves that it has used such trademark within the last five years.

We have several trademarks, most of which are brand names of our products or services. All our material trademarks are registered or have been submitted to INPI for registration by the BBVA Group or us.

C. | Organizational structure

Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)

As of December 31, 2020, BBVA owned 66.55% of our capital stock.

BBVA is a global financial group, organized in six operating segments: (i) Spain; (ii) the United States; (iii) Mexico, (iv) Turkey; (v) South America; and (vi) Rest of Eurasia. In addition to the operating segments referred to above, the BBVA Group has a Corporate Center which includes those items that have not been allocated to an operating segment. It includes the BBVA Group’s general management functions, including costs from central units that have a strictly corporate function; management of structural exchange rate positions carried out by the Financial Planning unit; specific issues of capital instruments to ensure adequate management of the BBVA Group’s overall capital position; certain proprietary portfolios; certain tax assets and liabilities; certain provisions related to commitments with employees; and goodwill and other intangibles. Some of the benefits we receive from the BBVA Group are:

| • |  | sharing of technology;

| • |  | development of new banking products that have been customized for the Argentine market;

| • |  | leveraging BBVA’s global client relationships to serve those clients operating in Argentina; and

| • |  | BBVA’s participation in BBVA Argentina as a shareholder is both long term and strategic.

Subsidiaries and investees of BBVA Argentina

The following chart reflects our subsidiaries as of December 31, 2020:

(1) | Undergoing liquidation proceedings.

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The following information is related to our subsidiaries, joint ventures and associates as of December 31, 2020:

| • |  | Subsidiaries

Subsidiary |  | Country of Incorporation/ Residence |  | BBVA Argentina Ownership and Voting Power (in percentages) |  |  | Principal Activity |  | Stockholders’ Equity (in millions of Ps.) (1) (2) |
PSA Finance Argentina Cía. Fiananciera S.A. |  | Argentina |  |  | 50.00 | % |  | Financial institution |  |  | 1,570.4 |
BBVA Asset Management Argentina S.A. |  | Argentina |  |  | 100.00 | % |  | Investment fund manager |  |  | 1,440.2 |
Consolidar AFJP S.A. (undergoing liquidation proceedings) |  | Argentina |  |  | 53.89 | % |  | Pension fund manager |  |  | 50.5 |
Volkswagen Financial Services S.A. |  | Argentina |  |  | 51.00 | % |  | Financial institution |  |  | 2,762.9 |

(1) | Total shareholders’ equity as of December 31, 2020.

(2) | Statutory shareholders’ equity, adjusted for purposes of consolidation so as to apply an accounting criterion uniform with that of BBVA Argentina, if applicable.

Below is a description of our subsidiaries:

• |  | PSA Finance Argentina Compañía Financiera S.A.

The share capital of PSA Finance Argentina Compañía Financiera S.A (PSA Finance) is held, in equal parts, by BBVA Argentina and Banque PSA Finance, a company related to the PSA Peugeot Citroën Group, based in France.

PSA Finance is primarily engaged in granting secured loans for the purchase of new Peugeot, Citroën and DS vehicles, as well as in arranging financial lease agreements. PSA Finance is also engaged in financing the purchase of second-hand vehicles to customers referred by networks of the aforementioned brands’ official dealers, and in supplying other financial products and services associated with the purchase, maintenance and insurance of vehicles, within the territory of the Argentine Republic. Additionally, the company has recently entered into a business known as “floor plan,” which consists of financing the vehicle stock to the official network of Peugeot, Citroen and DS dealers in Argentina.

The car industry ended the year 2020 with 324,000 car registrations in Argentina, which accounts for a 26.5% decline year-on-year.

The year 2020 was a complex and unusual one. The uncertainty and volatility prevailing in Argentina affected an already competitive market, with a broad range of financing alternatives.

During the first months of the year, PSA Finance’s lending level experienced a strong decline compared to 2019, primarily due to the prevailing conditions in Argentina and the car market downturn. However, demand for financing rose substantially during the second half of the year, partially offsetting the initial low origination. The year 2020 was marked by intense activity for the Peugeot, Citroën and DS brands, in terms of retail finance launches, advertising actions and rebates, seeking to attract customers and complete more sales.

PSA Finance attained a 23.9% share in Peugeot, Citroën and DS car registrations (measured in terms of financing of brand-new cars), which accounts for a 6 percentage point increase relative to 2019.

During 2020, PSA Finance financed a total of 8,624 transactions, including personal and secured loans for new and second-hand vehicles and vehicle leases, which is equivalent to Ps.4,548 million. As concerns wholesale activity, PSA Finance financed a total of 14,833 units to the network of dealers, equal to Ps.22,802 million.

As of December 31, 2020, the retail customer portfolio was comprised of 19,098 customers and valued at Ps.5,020 million, while the wholesale portfolio was valued at Ps.2,419 million and consisted of 1,289 financed units.

As to the product offering, in 2020 PSA Finance continued working jointly with the brands Peugeot, Citroën and DS in the development of exclusive and distinct financial products, targeted at certain vehicles.

PSA Finance also maintained an active and competitive product offering, with ongoing commercial efforts from dealer network.

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In 2020, the car industry recorded poor activity levels; however, PSA Finance managed to maintain the same volumes of retail contracts as in 2019, as well as to reinforce financing across the dealer network. PSA Finance’s net income reflects a 103% increase compared with 2019, as a result of the following factors:

| • |  | A lower level of service expenses due to the renegotiation of insurance policies and lower acquisition expenses.

| • |  | The efforts to contain administrative expenses in the face of growing inflation played a key role in maintaining the quality of PSA Finance’s results of operations, amidst declining activity in the car market and the economic downturn associated with the Covid-19 pandemic.

| • |  | An increase in the income tax expense due to the different impact of the application of the inflation adjustment for tax purposes on deferred tax in 2019 relative to 2020, and the accounting inflation adjustment of such tax.

As a result of all the aforementioned factors, net income from financial intermediation activities amounted to Ps.649 million. Considering other profits and losses, as well as the inflation adjustment, the company’s income before income tax amounted to Ps.112 million, while net income for the year, after income tax, amounted to Ps.5.9 million.

During 2021, PSA Finance will continue pursuing its sales strategy, encompassing financing promotional actions jointly with Peugeot, Citroën and DS, which have proven successful for several years. Under this business model, PSA Finance is able to concentrate more than 90% of all financing arrangements granted to networks of dealers for the purchase of new and second-hand vehicles. PSA Finance expects to continue working under this model, and to continue supporting these joint actions by launching new products, such as personal loans.

PSA Finance expects to continue supporting ongoing digitization, which is key to the mission of efficiently reaching a customer profile which changes its purchasing behaviors on a daily basis, choosing new technologies to stay abreast of the news and compare products. In this regard, PSA Finance expects to continue developing tools to allow customers to secure their first loan by means of several digital platforms, which started to be successfully implemented in 2019 and which continued to evolve in 2020. PSA Finance believes this approach will provide the company with a strong competitive position. Therefore, digital growth will remain one of its main goals in 2021.

• |  | BBVA Asset Management Argentina S.A.

During 2020, the mutual fund sector in Argentina continued to grow. According to preliminary data gathered by the Argentine Chamber of Mutual Funds (CAFCI, for its Spanish acronym), at December 31, 2020, assets under management industry-wide were 127.0% higher than at December 31, 2019.

Growth was led by the time deposits, market mutual and fixed income fund segments, which, at year-end, recorded increases in assets of 156.6%, 106.8% and 128.3%, respectively.

As of December 31, 2020, assets under management by BBVA Asset Management Argentina S.A. (“BBVA AMA”) amounted to Ps.99,976.8 million, equivalent to an increase of 126.8% or Ps.55,887.29 million, year-on-year. As of December 31, 2020, the breakdown of assets under management was as follows:

Name of investment fund |  | Millons of pesos |
FBA Renta Pesos |  |  | 95,872.0 |
FBA Horizonte |  |  | 637.7 |
FBA Renta Fija Dólar Plus |  |  | 138.9 |
FBA Acciones Latinoamericanas |  |  | 444.7 |
FBA Calificado |  |  | 560.8 |
FBA Renta Fija Dólar |  |  | 0.0 |
FBA Ahorro Pesos |  |  | 807.6 |
FBA Acciones Argentinas |  |  | 470.4 |
FBA Bonos Latam |  |  | 0.0 |
FBA Bonos Argentina |  |  | 259.3 |
FBA Bonos Globales |  |  | 201.3 |
FBA Retorno Total II |  |  | 0.0 |
FBA Brasil I |  |  | 0.0 |
FBA Horizonte Plus |  |  | 31.2 |
FBA Renta Fija Plus |  |  | 435.3 |
FBA Retorno Total I |  |  | 27.7 |
FBA Gestión I |  |  | 27.4 |
FBA Renta Mixta |  |  | 59.3 |
FBA Renta Publica I |  |  | 1.6 |
FBA Renta Fija Local |  |  | 1.6 |
FBA Renta Publica II |  |  | 0.0 |
Total |  |  | 99,976.8 |

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According to the interim asset ranking compiled by the CAFCI, BBVA AMA’s share in the overall Mutual Funds market was 5.2%, occupying the 5th position.

Within the category of time-deposit mutual funds, at December 31, 2020, BBVA AMA recorded assets under management in the amount of Ps.95,899.5 million, equal to an increase of 144.9%, or Ps.56,746.5 million, year-on-year.

On the other hand, during 2020, market mutual funds declined by 17.4%, or Ps.859.2 million. Total assets under management amounted to Ps.4,077.4 million at year-end. Within this category, fixed income funds experienced a substantial decline in assets of Ps.829.6 million (24.8%) during the period, to stand at Ps.2,514.4 million.

During 2020, BBVA AMA generated commissions in the amount of Ps.640.2 million, an increase of 82.8% compared to commissions accrued during the previous year, primarily due to the increase in net equity of managed funds, mainly FBA Renta Pesos.

As at December 31, 2020, BBVA AMA had 18 mutual funds under management registered with the Argentine Securities Commission (CNV).

To date, the status of the funds under BBVA AMA’s management is as follows:

| • |  | FBA Bonos Argentina, FBA Ahorro Pesos, FBA Renta Mixta, FBA Renta Pesos, Renta Fija Plus, FBA Calificado and FBA Acciones Argentinas: These funds are operating normally. Subscriptions and redemptions in Pesos are allowed. It should be noted that in order to streamline the operation of the first three funds, Class A units were unified after the award of other new units during the previous year. Requests for subscriptions to these mutual funds were reopened on January 28, 2020, after having been previously suspended by BBVA AMA since August 29, 2019, pursuant to Decree No. 596/2019 and General Resolution 806 (RESGC-2019-806-APN-DIR#CNV).

| • |  | FBA Horizonte, FBA Horizonte Plus, FBA Bonos Globales, FBA Retorno Total I and FBA Acciones Latinoamericanas only admit redemptions. Subscriptions were suspended in mid-April 2020 as a preventive measure to mitigate market fluctuations and protect investors’ interests in these funds.

| • |  | FBA Gestión I, FBA Renta Pública I, FBA Renta Pública II and FBA Renta Fija Local: These mutual funds are not open for subscription or redemption, and BBVA AMA is awaiting the right time to market them.

| • |  | FBA Renta Fija Dólar Plus: This fund is undergoing liquidation. Full payment was made on January 20, 2021, after completion of the asset realization process.

| • |  | The liquidation of FBA Bonos Latam, FBA Renta Fija Dólar, FBA Retorno Total II and FBA Brasil I was completed during 2020, after completion of the asset realization process and full payment of each.

Like in previous years and looking forward, BBVA AMA will pay special attention to the changes in international economic and financial conditions, as well as to the development of the currency market, the performance of crude oil and other commodities prices, the course of the pandemic, and the coping measures adopted by governments, as well as to the changes in economic trends and their impact on productive sectors.

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As concerns the local context, BBVA AMA expects to carefully monitor activity levels, inflation and the exchange rate, as well as public indebtedness and expenditures. The public policy concerning the sovereign debt and the debt renegotiation arrangement with the International Monetary Fund (IMF) will also be crucial aspects for close monitoring.

Looking to 2021, Mutual Funds are expected to constitute an efficient alternative for investors at the local level. In this regard, BBVA AMA expects to continue reshaping and developing products tailored to customers’ demands, striving to provide an offering that is suitable to the prevailing market conditions and to the improvements in investors’ risk management.

• |  | Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings)

On December 4, 2008, Law No. 26,425 was enacted, providing for the elimination of the capitalization regime that was part of the Integrated Retirement and Pension System, and its subsequent merger into and replacement with a single pay-as-you go system 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.

Based on the foregoing and taking into consideration that it was impossible for Consolidar A.F.J.P. S.A. to comply with the corporate purpose for which it was incorporated, the shareholders, gathered at a Unanimous General and Extraordinary Shareholders’ Meeting held on December 28, 2009, resolved to approve the dissolution and subsequent liquidation of that company effective as of December 31, 2009, as they considered that decision was in the best interest of the company’s creditors and shareholders. Furthermore, in compliance with the terms of the Argentine Companies Law, the Shareholders’ Meeting appointed Mr. Gabriel Orden and Mr. Rubén Lamandia, both of them certified public accountants, as liquidators of Consolidar A.F.J.P. S.A. Since December 31, 2009, they have assumed the role of the company’s legal representatives. To date, they are taking all necessary actions leading to the liquidation of Consolidar A.F.J.P. S.A.

In this regard, on January 28, 2010, the dissolution of Consolidar A.F.J.P. S.A. and the list of designated liquidators were registered with the Argentine Superintendence of Corporations (IGJ).

In addition, on October 19, 2009, the General Extraordinary Shareholders’ Meeting of Consolidar A.F.J.P S.A. approved a voluntary reduction of the company’s capital stock by Ps.75 million. The IGJ approved such capital reduction on January 11, 2010 so that on January 19, 2010, capital contributions were transferred to the shareholders, pursuant to the aforementioned reduction.

BBVA Argentina, as shareholder, asked Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings) to give notice to the Argentine Ministry of Economy and Public Finance and to the Argentine Social Security Office (ANSES), of its intention to engage in discussions, under the terms of Law No. 26,425, to find one or more remedies to redress the consequences from the events occurred after the enactment of such Law. Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings) gave such notice on June 11, 2010.

On December 7, 2010, Consolidar A.F.J.P. S.A. filed a complaint for damages against the National Government and the Ministry of Labor, Employment and Social Security, which was heard by Federal Court of Original Jurisdiction in Administrative Matters No. 4, Division No. 7, under File No. 40,437/2010. Such complaint was ratified by BBVA Argentina in its capacity as majority shareholder of the company. On July 15, 2011, Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings) and BBVA Argentina made a filing with such court to expand the scope of the complaint for the assessment of damages. On March 9, 2012, the Court ordered that notice of the complaint be served upon National Government.

On May 13, 2013, the intervening Court resolved to initiate the trial period, upon which the company started to produce the pertinent testimonial, documentary, and expert evidence. On May 28, 2013, the company filed its witnesses’ question sheets and testimony.

As of December 31, 2020, the case was awaiting judgment, and the intervening Court had asked to have the evidence recertified.

• |  | Volkswagen Financial Services Compañía Financiera S.A. (“VWFS”)

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Volkswagen Financial Services Compañía Financiera S.A. (VWFS) is primarily engaged in the business of granting secured loans for the purchase of new Volkswagen cars and offering wholesale financing to VW Group’s dealers for the purchase of cars from the manufacturers. VWFS is also engaged in financing the purchase of second-hand vehicles and in providing financed maintenance, all within the territory of the Argentine Republic.

The car market ended 2020 with a 26% decline compared to 2019 due to the pandemic-related restrictions, while experiencing growth in terms of percentage of total financed units, with a 20.4% share of the car market.

For the 17th consecutive year, the VW Group again positioned itself as the market leader (in terms of units sold), experiencing a lower decline than the market as a whole (-17% compared with the previous year). The percentage of financed units sold in 2019 was 17.4% compared to 18.6% in 2020.

In the retail business, VWFS increased its share in the sale of VW Group’s financed units by 5 percentage points, to 77% (including trucks), while also increasing its share in VW Group’s total sales by 2.1 percentage points, to 15.1%, primarily due to the strong cooperation between the brand and the Group’s dealers, offering campaigns at subsidized rates with attractive conditions to customers, despite the high levels of benchmark rates in the financial market.

The wholesale business ended 2020 with a healthy portfolio, due to the ongoing monitoring of the Group’s dealer portfolio and the joint efforts with the brand.

During 2020, advertising efforts were primarily focused on the leasing product, the corporate sales channel, and the financing of second-hand car sales. On the other hand, VWFS did not offer the UVA-linked product due to the freeze on loan installments mandated by the Central Bank.

As part of its ongoing improvement approach, VWFS enhanced the service quality to dealers through communication, training and good response levels by VWFS, as reflected in the positive outcomes of the relevant satisfaction survey. In-house, the company conducted several training programs for employees in order to attain efficiency gains and improve service levels to retail customers.

VWFS believes it is adequately capitalized for the development of its business. Moreover, during the year, VWFS increased its sources of funding from other commercial banks, with total credit facilities amounting to Ps.12,550 million.

During 2020, VWFS successfully completed two issues and placements of corporate bonds. The first one was completed in February for an aggregate principal amount of Ps.750 million, with a nine-month maturity and at a variable interest rate (Badlar). The second issue was completed in September in two series, one of them for an aggregate amount of Ps.650 million with a one-year maturity and at fixed interest rate, and the other one for a UVA-equivalent aggregate principal amount of Ps.300 million, with a 30 month maturity and at a fixed interest rate, to match the UVA-indexed secured loan portfolio.

During 2020, the Volkswagen Group had a 17.28% share in the car market, again ranking first in terms of sales volume, which rose from 15.6% in 2019 according to SIOMAA. Amidst a very competitive environment, VWFS had a 77% share in the Volkswagen Group’s financed sales (an increase of 5 p.p. compared to 2019), as a result of a new commercial policy and actions that fostered loyalty among the official network of dealers.

In 2020, VWFS achieved 15.1% penetration (including trucks), an increase of almost three percentage points compared to the previous year according to VWFS’s internal database and deliveries from Volkswagen Argentina.

During 2020, VWFS’ main goal was offering competitive financing products and services to customers, underpinned by a commercial policy aimed at fostering loyalty among dealers. In 2020, VWFS granted 9,280 secured loans, representing a 2% decline year-on-year.

Profit after income tax for the year ended December 31, 2020 amounted to Ps.55.7 million, or a 24.21% decrease compared to the previous year. The decline was primarily attributable to an extension of maturities of the wholesale loan portfolio during the lockdown to allow dealers to maintain a healthy financial position, the setting up of a provision for the UVA-indexed loan portfolio in the retail business as a conservative approach for customers with instalment deferrals, and the recognition of a loss resulting from the freeze imposed by the Central Bank on the installments due under UVA-indexed loans.

During 2021, the car market is expected to reach 300,000 new registrations in Argentina, a decline of approximately 11% registrations compared to 2020. Rates are expected to increase in 2021, due to an expected increase in inflation and the mismatch between official and unofficial exchange rates.

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VWFS’ goal for 2021 is defending its share in sales of financed units, with origination of retail loans expected to decrease compared to 2020, in line with the outlook for the overall car market in Argentina, while the wholesale portfolio is expected to be maintained at current levels. With a view to ensure sustainable development in the long term, VWFS plans to carry out strategic projects in 2021 aimed at providing better service quality for customers and enhanced processes with dealers.

In order to fund its secured loan portfolio, VWFS plans to continue diversifying its sources of funding with its main business partner, other commercial banks and the issuance of corporate notes.

| • |  | Joint venture

Joint Venture |  | Country of Incorporation/ Residence |  | BBVA Argentina Ownership and Voting Power (in percentages) |  |  | Principal Activity |  | Stockholders’ Equity (in millions of Ps.) (1) |
Rombo Compañía Financiera S.A. |  | Argentina |  |  | 40.00 | % |  | Financial institution |  |  | 1,892.9 |

(1) | Total shareholders’ equity as of December 31, 2020.

Below is a description of our joint venture:

• |  | Rombo Compañía Financiera S.A.

Rombo Compañía Financiera S.A (“RCF”) is the main finance company of Renault’s network of dealers, both for new and second-hand vehicles. During 2020, Renault had a 13.2% share in the car market, down from 14.4% in 2019, ranking third in terms of sales volume. In 2020, Nissan had a 3.9% market share compared to 3.8% in 2019. Amidst strong competition, RCF managed to improve its market share and positioning, thanks to the substantial contribution of secured loans from its finance company.

In 2020, RCF’s contribution to Renault’s and Nissan’s sales increased to 29.0% from 21.8% in 2019 for Renault, and from 25.3% to 17.9% in the case of Nissan. Despite the prevailing economic conditions taking their toll on the industry as a whole, RCF experienced strong commercial performance, primarily focused on maintaining the network’s loyalty.

RCF remains the industry leader in the ranking of loans and loyalty among brand captive companies, closing the year with an average of 96.8% (credits granted by RCF over total credits for the sale of Renault vehicles) (Source: AFIMA). Renault Argentina and Nissan strongly supported RCF’s lending activities, providing important commercial tools (subsidized rates) both for new and second-hand vehicles.

With this support, RCF financed 15,586 Renault and Nissan new vehicles in 2020 (compared with 16,823 in 2019) and 2,847 second-hand vehicles (compared with 2,702 in 2019). Accordingly, the total financing portfolio at December 31, 2020 amounted to Ps.8,064 million, i.e., a 12.5% or Ps.9,072 million decline compared to December 31, 2019.

Risk and portfolio quality indicators remained stable in 2020 compared to 2019. As a result of the Covid-19 pandemic, the Central Bank enacted several regulations setting forth that payment of unpaid loan installments were to be deferred until the maturity of the loan which helped to improve these ratios. The non-performing loan ratio increased from 1.9% in December 2019 to 1.92% at the end of 2020, due to a deterioration in economic conditions, the above-mentioned regulations enacted by the Central Bank and a decline in the non-performing loan portfolio.

In terms of financing, during 2020, RCF issued two series of corporate notes for an aggregate principal amount of Ps.1,593.3 million, with the total balance of corporate notes at December 31, 2020 amounting to Ps.1,815.0 million. The amount of the current program is Ps.6,000 million, and has been rated “raAA” by Fix SCR S.A. Agente Calificadora de Riesgo.

For the year ended December 31, 2020, profit for the year was Ps.345.6 million compared to a Ps.395.6 million in the year ended December 31, 2019.

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| • |  | Associates

Associate |  | Country of Incorporation/ Residence |  | BBVA Argentina Ownership and Voting Power (in percentages) |  |  | Principal Activity |  | Stockholders’ Equity (in millions of Ps.) (1) (2) |
BBVA Consolidar Seguros S.A. |  | Argentina |  |  | 12.22 | % |  | Insurance |  |  | 3,644.7 |
Interbanking S.A. |  | Argentina |  |  | 11.11 | % |  | Information services for financial markets |  |  | 2,221.3 |
Play Digital S.A. |  | Argentina |  |  | 13.00 | % |  | Development, offer and implementation of a digital payment solution |  |  | 572.2 |

(1) | Total shareholders’ equity as of December 31, 2020.

(2) | Statutory shareholders’ equity, adjusted for purposes of consolidation so as to apply an accounting criterion uniform with that of BBVA Argentina, if applicable.

Below is a description of our associates:

• |  | BBVA Consolidar Seguros S.A.

BBVA Consolidar Seguros S.A. (“BBVA Seguros”) operates in the following lines of business: Fire, Comprehensive and Combined Household Insurance, Theft, Personal Accidents, Group Life Insurance, Credit Life Insurance, Funeral and Other Coverage.

All figures related to BBVA Seguros included herein are constant currency figures in compliance with the Resolutions from the Argentine Bureau of Insurance (SSN) issued on June 5, 2020 and July 1, 2020, as further described below.

During 2020, written premiums amounted to Ps.6,003 million, accounting for a 0.78% increase compared with the previous year, remaining stable.

The business strategy combines a broad product offering with multiple distribution and service channels, all based on the segmentation of customers’ and prospects’ needs. Paid losses amounted to Ps.1,218.3 million, or 20.29% of written premiums.

Net income for the year was Ps.923 million, while shareholders’ equity amounted to Ps.3,645 million. The minimum capital surplus was Ps.2,480 million.

On June 5, 2020, the Argentine Bureau of Insurance (SSN) issued Resolution SSN No. 147/2020 RESOL-2020-147-APN-SSN#MEC regarding the presentation of financial statements adjusted by inflation, providing, among other things:

| • |  | That technical reserves and outstanding losses calculated on the basis of accounting records should be stated in constant currency.

| • |  | That, temporarily until June 30, 2021, the minimum capital requirement based on premiums, surcharges and losses should be calculated on the basis of historical costs, increasing the limits applicable to certain assets for purposes of calculating underwriting ratios.

| • |  | An increase in the percentage of financial income that can be allocated to calculate the technical reserve for insufficient premiums (known in Spanish as RTIP).

| • |  | Changes in the liabilities indexation rate, giving more relevance to the CPI.

On July 1, 2020, the SSN issued Resolution IF-2020-42010661-APNGE#SSN, as supplemented by Resolution IF-2020-51295872-APN-GE#SSN dated August 5, 2020, providing certain clarifications and accounting criteria to be complied with when presenting financial statements adjusted by inflation, including the following:

| • |  | the order of implementation of the inflation adjustment rules (Resolution 147 SSN, IF-2019-64632649-APN-SSN#MHA dated July 17, 2019; Resolution 118 SSN dated February 2, 2019; IF-2019-17698428-APN-SSN#MHA dated March 22, 2019; Technical Pronouncement No. 6; the Argentine Federation of Professional Councils in Economic Sciences’ (FACPCE) guidance; while ratifying the enforceability of Resolution No. 28,873 dated August 6, 2002 for issues that are not addressed by the above-described rules).

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| • |  | a change to the transition date from July 1, 2018 to July 1, 2019. Accordingly, the statement of profit or loss and the statement of changes in equity for the previous year’s will not be restated in the measuring unit effective at the reporting period end, and comparative information shall only be presented in the statement of financial position and its exhibits.

| • |  | changes in the statement of changes in equity shall be reflected at historical cost, with any adjustments being reported in a separate line.

| • |  | it provides that up to and including June 30, 2021, entities may choose to report their financial income in nominal or real terms (indicating such option in the notes to the financial statements). For periods/years beginning on July 1, 2021, financial income shall be reported in real terms, with no exception.

| • |  | it allows the omission of the disaggregation of implicit financial components of transactions provided that such omission does not have a material impact on the information reported.

For 2021, BBVA Seguros plans to continue growing its value proposition with new insurance products that meet the actual needs of its customers, while making additional channels available to facilitate the simulation, hiring and management process. BBVA Seguros’ goal is achieving growth that, in the medium and long-term, is expected to result in an increase in business volumes, while delivering a distinct and outstanding customer service by trained employees, aligned with BBVA Seguros’ goals.

On January 5, 2021, the IGJ approved the change of name of BBVA Consolidar Seguros S.A. to BBVA Seguros Argentina S.A.

• |  | Interbanking S.A.

As a member and shareholder of Interbanking S.A. (“Interbanking”), together with seven other leading Argentine banks, the Bank offers an electronic communications system which enables its customers to optimize their banking transactions. The Bank’s corporate customers can connect to the service from their personal computers at any time and review their accounts at any member bank, send messages, transfer funds, make electronic wage payments, supplier payments and tax payments, and display market data. Through Interbanking, the Bank offers distinct electronic products for each segment of its corporate clientele and processes online transfers, allowing debit and credit transactions to be settled automatically and to be reflected in the relevant accounts in real time. As a result of the Bank’s shareholding in Interbanking, on June 30, 2020, the Bank received Ps.142.3 million in dividends.

• |  | Play Digital S.A.

Play Digital S.A. (“Play Digital”), a company in which BBVA Argentina owned a 13.001% interest at December 31, 2020, was incorporated in 2020 to be primarily engaged in the following businesses, on its own account and/or on account and behalf of, or in association with, third parties, within or outside Argentina:

| • |  | Providing electronic payment services;

| • |  | Administering and operating transfers by means of mobile communication devices and/or any other electronic support, as well as electronic payment services and/or collections on account and behalf of third parties, accepting and executing agency agreements to make and receive collections and/or payments on account and behalf of third parties, in all cases through electronic transfer systems;

| • |  | Operating Internet-based electronic money transfer systems and/or any other digital or online means of payment; and

| • |  | Provide technology or IT support services related to financial activities.

The activities governed by the Financial Institutions Law No. 21,526, with its amendments and implementing regulations, are excluded from Play Digital’s purpose.

Play Digital, which is owned by most banks comprising the Argentine financial system, is currently developing and marketing MODO, a payment solution directly linked to the banking system. MODO intends to become a strong player in the digital payment segment by allowing to make money transfers from users’ existing accounts, using their mobile phone numbers as ID, without the need for a CBU (uniform banking key), and acting as a payment aggregator. Users will be able transfer and receive money from all their bank accounts and means of payment (debit and credit cards, etc.).

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MODO also seeks to facilitate money transfers between its users, who will be able to transfer money from their several bank accounts to third parties, choosing the intended recipient directly from the contact lists of their phone numbers. After each transfer, a Whatsapp notification will be sent to the recipient.

Play Digital also plans to enable payments at brick-and-mortar stores using QR codes scanned from mobile devices.

The board of directors of Play Digital is comprised of 10 directors, five of whom have been designated by shareholders who are private entities and five of whom have been designated by shareholders who are public entities. The four largest private shareholders have the right to appoint one director, while the fifth director to be appointed by private shareholders is appointed by a majority of all other private shareholders.

Since BBVA Argentina is the third largest private shareholder of Play Digital, it has designated a director at Play Digital’s board.

Equity Investments

The following are all positions that we hold in non-financial institutions where we own more than 2% of the invested companies’ equity as of December 31, 2020.

Investment |  | Country |  |  | % of Shares Owned (in percentages) |  |  | Principal Activity |  | Total Stockholders’ Equity (in millions of pesos) (1) |
Coelsa S.A. |  |  | Argentina |  |  |  | 8.70 | % |  | Clearing house |  |  | 0.7 |
Argencontrol S.A. |  |  | Argentina |  |  |  | 7.77 | % |  | Agent mandatory |  |  | 0.7 |
Sedesa S.A. |  |  | Argentina |  |  |  | 10.04 | % |  | Deposit guarantee fund |  |  | 1.1 |
Prisma Medios de Pagos S.A. |  |  | Argentina |  |  |  | 5.45 | % |  | Credit card issuer |  |  | 1,819.5 |

(1) | Total shareholders’ equity as of December 31, 2020.

D. | Property, plant and equipment

BBVA Argentina is domiciled in Argentina and has its principal executive offices at Av. Córdoba 111, C1054AAA Buenos Aires, Argentina. The principal executive offices, which we own, are approximately 28,002 square meters in area.

At December 31, 2020, our branch network consisted of 247 retail branches, of which 113 were located in properties that we own and 134 were located in properties leased to us. The branches are located throughout all of the 23 Argentine provinces as well as the City of Buenos Aires.

E. | Selected statistical information

The following information is included for analytical purposes and should be read in conjunction with the Consolidated Financial Statements as well as “Item 5. Operating and Financial Review and Prospects”. This information has been prepared from our financial records, which are maintained in accordance with IFRS-BCRA. The Consolidated Financial Statements and the selected statistical information below have been adjusted to comply with IFRS-IASB for the sole purpose of filing this annual report on Form 20-F with the SEC.

Average Balance Sheets, Interest Earned on Interest-Earning Assets and Interest Paid on Interest-Bearing Liabilities

The average balances of interest-earning assets and interest-bearing liabilities, including the related interest earned or paid, were calculated on a daily basis for the years ended December 31, 2020, 2019 and 2018. Average balances have been separated between those denominated in pesos and in foreign currencies.

This selected statistical information has been prepared taking into account the effect of hyperinflation adjustments, which requires that in the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy, the assets, liabilities, income and expenses of such entity be stated in terms of the measuring unit current at the end of the reporting period (December 31, 2020).

The real interest rate is the amount of interest earned or paid during the period divided by the related average balance.

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Included in interest earned are the net gains on our portfolio of government securities and related differences in market quotations. We manage our trading activities in government securities as an integral part of our business. We do not, as a matter of practice, distinguish between interest income and gain or loss on our government securities portfolio.

The following tables show average balances, interest amounts and average real rates for our interest-earning assets and interest-bearing liabilities for the fiscal years ended December 31, 2020, 2019 and 2018.

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|  | Fiscal Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |
|  | (in thousands of pesos, except percentages) |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government securities (3) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 92,373,875 |  |  |  | 40,856,334 |  |  |  | 44.23 | % |  |  | 96,220,383 |  |  |  | 49,647,207 |  |  |  | 51.60 | % |  |  | 53,898,545 |  |  |  | 20,526,103 |  |  |  | 38.08 | %
Foreign currencies |  |  | 3,540,531 |  |  |  | 300,758 |  |  |  | 8.49 | % |  |  | 12,140,345 |  |  |  | 697,941 |  |  |  | 5.75 | % |  |  | 14,821,353 |  |  |  | 740,821 |  |  |  | 5.00 | %
Total |  |  | 95,914,406 |  |  |  | 41,157,092 |  |  |  | 42.91 | % |  |  | 108,360,728 |  |  |  | 50,345,148 |  |  |  | 46.46 | % |  |  | 68,719,898 |  |  |  | 21,266,924 |  |  |  | 30.95 | %
Loans and advances (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
To customers/financial institutions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 202,325,916 |  |  |  | 74,928,341 |  |  |  | 37.03 | % |  |  | 226,158,605 |  |  |  | 98,459,924 |  |  |  | 43.54 | % |  |  | 283,344,413 |  |  |  | 90,828,930 |  |  |  | 32.06 | %
Foreign currencies |  |  | 34,295,327 |  |  |  | 2,378,637 |  |  |  | 6.94 | % |  |  | 109,267,829 |  |  |  | 6,216,388 |  |  |  | 5.69 | % |  |  | 116,590,954 |  |  |  | 5,057,117 |  |  |  | 4.34 | %
Total |  |  | 236,621,243 |  |  |  | 77,306,978 |  |  |  | 32.67 | % |  |  | 335,426,434 |  |  |  | 104,676,312 |  |  |  | 31.21 | % |  |  | 399,935,367 |  |  |  | 95,886,047 |  |  |  | 23.98 | %
To central bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 159 |  |  |  | — |  |  |  | 0.00 | % |  |  | 245 |  |  |  | — |  |  |  | 0.00 | % |  |  | 381 |  |  |  | — |  |  |  | 0.00 | %
Foreign currencies |  |  | 33 |  |  |  | — |  |  |  | 0.00 | % |  |  | 158 |  |  |  | — |  |  |  | 0.00 | % |  |  | 1,227 |  |  |  | — |  |  |  | 0.00 | %
Total |  |  | 192 |  |  |  | — |  |  |  | 0.00 | % |  |  | 403 |  |  |  | — |  |  |  | 0.00 | % |  |  | 1,608 |  |  |  | — |  |  |  | 0.00 | %
Other assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 16,996,781 |  |  |  | 56,001 |  |  |  | 0.33 | % |  |  | 3,674,733 |  |  |  | 214,381 |  |  |  | 5.83 | % |  |  | 5,356,673 |  |  |  | 238,746 |  |  |  | 4.46 | %
Foreign currencies |  |  | 3,577,135 |  |  |  | 2,688 |  |  |  | 0.08 | % |  |  | 11,437,151 |  |  |  | 1,132,080 |  |  |  | 9.90 | % |  |  | 16,070,907 |  |  |  | 877,750 |  |  |  | 5.46 | %
Total |  |  | 20,573,916 |  |  |  | 58,689 |  |  |  | 0.29 | % |  |  | 15,111,884 |  |  |  | 1,346,460 |  |  |  | 8.91 | % |  |  | 21,427,580 |  |  |  | 1,116,496 |  |  |  | 5.21 | %
Total interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 311,696,731 |  |  |  | 115,840,676 |  |  |  | 37.16 | % |  |  | 326,053,966 |  |  |  | 148,321,512 |  |  |  | 45.49 | % |  |  | 342,600,012 |  |  |  | 111,593,779 |  |  |  | 32.57 | %
Foreign currencies |  |  | 41,413,026 |  |  |  | 2,682,083 |  |  |  | 6.48 | % |  |  | 132,845,483 |  |  |  | 8,046,409 |  |  |  | 6.06 | % |  |  | 147,484,441 |  |  |  | 6,675,688 |  |  |  | 4.53 | %
Total |  |  | 353,109,757 |  |  |  | 118,522,759 |  |  |  | 33.57 | % |  |  | 458,899,449 |  |  |  | 156,367,921 |  |  |  | 34.07 | % |  |  | 490,084,453 |  |  |  | 118,269,467 |  |  |  | 24.13 | %

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|  | Fiscal Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | Average balance(1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance(1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance(1) |  |  | Interest earned/paid |  |  | Average real rate (2) |
|  | (in thousands of pesos, except percentages) |
Non interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash, cash balances at central bank and other demand deposits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 45,523,087 |  |  |  | — |  |  |  | — |  |  |  | 59,771,441 |  |  |  | — |  |  |  | — |  |  |  | 67,462,304 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | 91,128,355 |  |  |  | — |  |  |  | — |  |  |  | 116,544,989 |  |  |  | — |  |  |  | — |  |  |  | 84,989,561 |  |  |  | — |  |  |  | — |
Total |  |  | 136,651,442 |  |  |  | — |  |  |  | — |  |  |  | 176,316,430 |  |  |  | — |  |  |  | — |  |  |  | 152,451,865 |  |  |  | — |  |  |  | — |
Investments in joint ventures and associates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 1,157,604 |  |  |  | — |  |  |  | — |  |  |  | 309,246 |  |  |  | — |  |  |  | — |  |  |  | 3,183,558 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 1,157,604 |  |  |  | — |  |  |  | — |  |  |  | 309,246 |  |  |  | — |  |  |  | — |  |  |  | 3,183,558 |  |  |  | — |  |  |  | — |
Tangible and intangible assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 31,756,451 |  |  |  | — |  |  |  | — |  |  |  | 36,577,165 |  |  |  | — |  |  |  | — |  |  |  | 31,288,488 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |
Total |  |  | 31,756,451 |  |  |  | — |  |  |  | — |  |  |  | 36,577,165 |  |  |  | — |  |  |  | — |  |  |  | 31,288,488 |  |  |  | — |  |  |  | — |
Allowance for loan losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (7,782,662 | ) |  |  | — |  |  |  | — |  |  |  | (10,644,747 | ) |  |  | — |  |  |  | — |  |  |  | (6,274,329 | ) |  |  | — |  |  |  | — |
Foreign currencies |  |  | (3,477,004 | ) |  |  | — |  |  |  | — |  |  |  | (3,097,888 | ) |  |  | — |  |  |  | — |  |  |  | (1,471,756 | ) |  |  | — |  |  |  | — |
Total |  |  | (11,259,666 | ) |  |  | — |  |  |  | — |  |  |  | (13,742,635 | ) |  |  | — |  |  |  | — |  |  |  | (7,746,085 | ) |  |  | — |  |  |  | — |
Other assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 22,026,628 |  |  |  | — |  |  |  | — |  |  |  | 20,713,438 |  |  |  | — |  |  |  | — |  |  |  | 17,796,557 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | 3,522,296 |  |  |  | — |  |  |  | — |  |  |  | 6,311,555 |  |  |  | — |  |  |  | — |  |  |  | 6,422,334 |  |  |  | — |  |  |  | — |
Total |  |  | 25,548,924 |  |  |  | — |  |  |  | — |  |  |  | 27,024,993 |  |  |  | — |  |  |  | — |  |  |  | 24,218,891 |  |  |  | — |  |  |  | — |
Total non interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 92,681,108 |  |  |  | — |  |  |  | — |  |  |  | 106,726,543 |  |  |  | — |  |  |  | — |  |  |  | 113,456,578 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | 91,173,647 |  |  |  | — |  |  |  | — |  |  |  | 119,758,656 |  |  |  | — |  |  |  | — |  |  |  | 89,940,139 |  |  |  | — |  |  |  | — |
Total |  |  | 183,854,755 |  |  |  | — |  |  |  | — |  |  |  | 226,485,199 |  |  |  | — |  |  |  | — |  |  |  | 203,396,717 |  |  |  | — |  |  |  | — |
TOTAL ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 404,377,839 |  |  |  | 115,840,676 |  |  |  | 28.65 | % |  |  | 432,780,509 |  |  |  | 148,321,512 |  |  |  | 34.27 | % |  |  | 456,056,590 |  |  |  | 111,593,779 |  |  |  | 24.47 | %
Foreign currencies |  |  | 132,586,673 |  |  |  | 2,682,083 |  |  |  | 2.02 | % |  |  | 252,604,139 |  |  |  | 8,046,409 |  |  |  | 3.19 | % |  |  | 237,424,580 |  |  |  | 6,675,688 |  |  |  | 2.81 | %
Total |  |  | 536,964,512 |  |  |  | 118,522,759 |  |  |  | 22.07 | % |  |  | 685,384,648 |  |  |  | 156,367,921 |  |  |  | 22.81 | % |  |  | 693,481,170 |  |  |  | 118,269,467 |  |  |  | 17.05 | %

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|  | Fiscal Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |
|  | (in thousands of pesos, except percentages) |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Saving accounts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 64,906,635 |  |  |  | 3,067,146 |  |  |  | 4.73 | % |  |  | 64,872,748 |  |  |  | 3,733,761 |  |  |  | 5.76 | % |  |  | 95,574,493 |  |  |  | 9,171,747 |  |  |  | 9.60 | %
Foreign currencies |  |  | 74,870,806 |  |  |  | 6,532 |  |  |  | 0.01 | % |  |  | 145,542,082 |  |  |  | 12,551 |  |  |  | 0.01 | % |  |  | 142,256,435 |  |  |  | 14,705 |  |  |  | 0.01 | %
Total |  |  | 139,777,441 |  |  |  | 3,073,678 |  |  |  | 2.20 | % |  |  | 210,414,830 |  |  |  | 3,746,312 |  |  |  | 1.78 | % |  |  | 237,830,928 |  |  |  | 9,186,452 |  |  |  | 3.86 | %
Time deposits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 94,621,964 |  |  |  | 35,134,485 |  |  |  | 37.13 | % |  |  | 118,372,968 |  |  |  | 55,948,397 |  |  |  | 47.26 | % |  |  | 123,918,070 |  |  |  | 38,320,478 |  |  |  | 30.92 | %
Foreign currencies |  |  | 16,165,819 |  |  |  | 203,316 |  |  |  | 1.26 | % |  |  | 29,543,493 |  |  |  | 250,390 |  |  |  | 0.85 | % |  |  | 31,516,076 |  |  |  | 197,635 |  |  |  | 0.63 | %
Total |  |  | 110,787,783 |  |  |  | 35,337,801 |  |  |  | 31.90 | % |  |  | 147,916,461 |  |  |  | 56,198,787 |  |  |  | 37.99 | % |  |  | 155,434,146 |  |  |  | 38,518,113 |  |  |  | 24.78 | %
Banks loans - Central bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 1 |  |  |  | — |  |  |  | 0.00 | % |  |  | 1 |  |  |  | — |  |  |  | 0.00 | % |  |  | 888 |  |  |  | 82 |  |  |  | 9.23 | %
Foreign currencies |  |  | 29,105 |  |  |  | — |  |  |  | 0.00 | % |  |  | 60,478 |  |  |  | — |  |  |  | 0.00 | % |  |  | 75,980 |  |  |  | — |  |  |  | 0.00 | %
Total |  |  | 29,106 |  |  |  | — |  |  |  | 0.00 | % |  |  | 60,479 |  |  |  | — |  |  |  | 0.00 | % |  |  | 76,868 |  |  |  | 82 |  |  |  | 0.11 | %
Banks loans - Other financial institutions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 3,620,086 |  |  |  | 725,259 |  |  |  | 20.03 | % |  |  | 3,042,256 |  |  |  | 1,965,045 |  |  |  | 64.59 | % |  |  | 6,621,611 |  |  |  | 1,458,785 |  |  |  | 22.03 | %
Foreign currencies |  |  | 869,858 |  |  |  | 52,686 |  |  |  | 6.06 | % |  |  | 7,786,864 |  |  |  | 513,764 |  |  |  | 6.60 | % |  |  | 7,814,067 |  |  |  | 324,217 |  |  |  | 4.15 | %
Total |  |  | 4,489,944 |  |  |  | 777,945 |  |  |  | 17.33 | % |  |  | 10,829,120 |  |  |  | 2,478,809 |  |  |  | 22.89 | % |  |  | 14,435,678 |  |  |  | 1,783,002 |  |  |  | 12.35 | %
Debt securities issued |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 4,997,389 |  |  |  | 2,282,334 |  |  |  | 45.67 | % |  |  | 9,837,336 |  |  |  | 3,692,079 |  |  |  | 37.53 | % |  |  | 4,900,336 |  |  |  | 2,090,392 |  |  |  | 42.66 | %
Foreign currencies |  |  | — |  |  |  | — |  |  |  | 0.00 | % |  |  | — |  |  |  | — |  |  |  | 0.00 | % |  |  | — |  |  |  | — |  |  |  | 0.00 | %
Total |  |  | 4,997,389 |  |  |  | 2,282,334 |  |  |  | 45.67 | % |  |  | 9,837,336 |  |  |  | 3,692,079 |  |  |  | 37.53 | % |  |  | 4,900,336 |  |  |  | 2,090,392 |  |  |  | 42.66 | %
Other liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 33,977 |  |  |  | 134 |  |  |  | 0.40 | % |  |  | 113,246 |  |  |  | 7,082 |  |  |  | 6.25 | % |  |  | 704,801 |  |  |  | 230,784 |  |  |  | 32.74 | %
Foreign currencies |  |  | 88,606 |  |  |  | — |  |  |  | 0.00 | % |  |  | 95,004 |  |  |  | — |  |  |  | 0.00 | % |  |  | 41,802 |  |  |  | — |  |  |  | 0.00 | %
Total |  |  | 122,583 |  |  |  | 134 |  |  |  | 0.11 | % |  |  | 208,250 |  |  |  | 7,082 |  |  |  | 3.40 | % |  |  | 746,603 |  |  |  | 230,784 |  |  |  | 30.91 | %
Total interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 168,180,052 |  |  |  | 41,209,358 |  |  |  | 24.50 | % |  |  | 196,238,555 |  |  |  | 65,346,364 |  |  |  | 33.08 | % |  |  | 231,720,199 |  |  |  | 51,272,268 |  |  |  | 22.13 | %
Foreign currencies |  |  | 92,024,194 |  |  |  | 262,534 |  |  |  | 0.29 | % |  |  | 183,027,921 |  |  |  | 776,705 |  |  |  | 0.42 | % |  |  | 181,704,360 |  |  |  | 536,557 |  |  |  | 0.30 | %
Total |  |  | 260,204,246 |  |  |  | 41,471,892 |  |  |  | 15.94 | % |  |  | 379,266,476 |  |  |  | 66,123,069 |  |  |  | 17.32 | % |  |  | 413,424,559 |  |  |  | 51,808,825 |  |  |  | 12.53 | %

68

##### Table of Contents

|  | Fiscal Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |  |  | Average balance (1) |  |  | Interest earned/paid |  |  | Average real rate (2) |
|  | (in thousands of pesos, except percentages) |
Non-interest-bearing liabilities and stockholders´ equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Checking accounts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 78,715,835 |  |  |  | — |  |  |  | — |  |  |  | 60,957,443 |  |  |  | — |  |  |  | — |  |  |  | 63,702,437 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | 26,148,901 |  |  |  | — |  |  |  | — |  |  |  | 45,306,183 |  |  |  | — |  |  |  | — |  |  |  | 34,767,638 |  |  |  | — |  |  |  | — |
Total |  |  | 104,864,736 |  |  |  | — |  |  |  | — |  |  |  | 106,263,626 |  |  |  | — |  |  |  | — |  |  |  | 98,470,075 |  |  |  | — |  |  |  | — |
Other liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 94,451,402 |  |  |  | — |  |  |  | — |  |  |  | 81,959,460 |  |  |  | — |  |  |  | — |  |  |  | 75,085,356 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | 10,344,819 |  |  |  | — |  |  |  | — |  |  |  | 18,103,015 |  |  |  | — |  |  |  | — |  |  |  | 12,542,412 |  |  |  | — |  |  |  | — |
Total |  |  | 104,796,221 |  |  |  | — |  |  |  | — |  |  |  | 100,062,475 |  |  |  | — |  |  |  | — |  |  |  | 87,627,768 |  |  |  | — |  |  |  | — |
Shareholders’ equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 67,099,309 |  |  |  | — |  |  |  | — |  |  |  | 99,792,071 |  |  |  | — |  |  |  | — |  |  |  | 93,958,768 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 67,099,309 |  |  |  | — |  |  |  | — |  |  |  | 99,792,071 |  |  |  | — |  |  |  | — |  |  |  | 93,958,768 |  |  |  | — |  |  |  | — |
Total non-interest-bearing liabilities and shareholders’ equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 240,266,546 |  |  |  | — |  |  |  | — |  |  |  | 242,708,974 |  |  |  | — |  |  |  | — |  |  |  | 232,746,561 |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | 36,493,720 |  |  |  | — |  |  |  | — |  |  |  | 63,409,198 |  |  |  | — |  |  |  | — |  |  |  | 47,310,050 |  |  |  | — |  |  |  | — |
Total |  |  | 276,760,266 |  |  |  | — |  |  |  | — |  |  |  | 306,118,172 |  |  |  | — |  |  |  | — |  |  |  | 280,056,611 |  |  |  | — |  |  |  | — |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 408,446,598 |  |  |  | 41,209,358 |  |  |  | 10.09 | % |  |  | 438,947,529 |  |  |  | 65,346,364 |  |  |  | 14.89 | % |  |  | 464,466,760 |  |  |  | 51,272,268 |  |  |  | 11.04 | %
Foreign currencies |  |  | 128,517,914 |  |  |  | 262,534 |  |  |  | 0.20 | % |  |  | 246,437,119 |  |  |  | 776,705 |  |  |  | 0.32 | % |  |  | 229,014,410 |  |  |  | 536,557 |  |  |  | 0.23 | %
Total |  |  | 536,964,512 |  |  |  | 41,471,892 |  |  |  | 7.72 | % |  |  | 685,384,648 |  |  |  | 66,123,069 |  |  |  | 9.65 | % |  |  | 693,481,170 |  |  |  | 51,808,825 |  |  |  | 7.47 | %

(1) | For 2020, the average balances are presented in terms of the measuring unit current at December 31, 2020. For 2019 and 2018 average balances were restated in terms of the measuring unit current at the end of the reporting period (December 31, 2020).

(2) | Interest paid divided by average balance.

(3) | Includes trading gains and losses in all fiscal years. Unrealized gains and losses arising from changes in the market value of our trading portfolio of government securities and yield on our investment portfolio of government securities are included.

(4) | Loan amounts are stated before deduction of the allowance for loan losses

69

##### Table of Contents

Changes in Interest Income and Interest Expense; Volume and Rate Analysis

The following tables allocate, by currency of denomination, changes in our interest income and interest expense between changes in the average volume of interest-earning assets and interest-bearing liabilities and changes in their respective average interest rates for the year ended December 31, 2020 compared with the year ended December 31, 2019 and the year ended December 31, 2019 compared with the year ended December 31, 2018. Volume and rate variances have been calculated based on movements in average balances over the period and changes in average interest rates on average interest-earning assets and average interest-bearing liabilities. The net change attributable to changes in both volume and rate has been allocated to volume. Trading gains and losses and yield on government trading and investment accounts results are included in the computation of interest income in all fiscal years.

|  | Year ended December 31, 2020/2019 Increase (Decrease) Due to Changes in |  |  | Year ended December 31, 2019/2018 Increase (Decrease) Due to Changes in |
|  | Volume |  |  | Rate |  |  | Net change |  |  | Volume |  |  | Rate |  |  | Net change |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (1,701,284 | ) |  |  | (7,089,589 | ) |  |  | (8,790,873 | ) |  |  | 21,836,964 |  |  |  | 7,284,140 |  |  |  | 29,121,104 |
Foreign currencies |  |  | (730,530 | ) |  |  | 333,347 |  |  |  | (397,183 | ) |  |  | (154,130 | ) |  |  | 111,250 |  |  |  | (42,880 | )
Total |  |  | (2,431,814 | ) |  |  | (6,756,242 | ) |  |  | (9,188,056 | ) |  |  | 21,682,834 |  |  |  | 7,395,390 |  |  |  | 29,078,224 |
Loans and advances |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
To customers/financial institutions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (8,826,076 | ) |  |  | (14,705,507 | ) |  |  | (23,531,583 | ) |  |  | (24,896,290 | ) |  |  | 32,527,284 |  |  |  | 7,630,994 |
Foreign currencies |  |  | (5,199,903 | ) |  |  | 1,362,152 |  |  |  | (3,837,751 | ) |  |  | (416,622 | ) |  |  | 1,575,893 |  |  |  | 1,159,271 |
Total |  |  | (14,025,979 | ) |  |  | (13,343,355 | ) |  |  | (27,369,334 | ) |  |  | (25,312,912 | ) |  |  | 34,103,177 |  |  |  | 8,790,265 |
To central bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign currencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 43,893 |  |  |  | (202,273 | ) |  |  | (158,380 | ) |  |  | (98,123 | ) |  |  | 73,758 |  |  |  | (24,365 | )
Foreign currencies |  |  | (5,906 | ) |  |  | (1,123,486 | ) |  |  | (1,129,392 | ) |  |  | (458,662 | ) |  |  | 712,992 |  |  |  | 254,330 |
Total |  |  | 37,987 |  |  |  | (1,325,759 | ) |  |  | (1,287,772 | ) |  |  | (556,785 | ) |  |  | 786,750 |  |  |  | 229,965 |
Total interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (10,483,467 | ) |  |  | (21,997,369 | ) |  |  | (32,480,836 | ) |  |  | (3,157,449 | ) |  |  | 39,885,182 |  |  |  | 36,727,733 |
Foreign currencies |  |  | (5,936,339 | ) |  |  | 572,013 |  |  |  | (5,364,326 | ) |  |  | (1,029,414 | ) |  |  | 2,400,135 |  |  |  | 1,370,721 |
Total |  |  | (16,419,806 | ) |  |  | (21,425,356 | ) |  |  | (37,845,162 | ) |  |  | (4,186,863 | ) |  |  | 42,285,317 |  |  |  | 38,098,454 |

70

##### Table of Contents

|  | Year ended December 31, 2020/2019 Increase (Decrease) Due to Changes in |  |  | Year ended December 31, 2019/2018 Increase (Decrease) Due to Changes in |
|  | Volume |  |  | Rate |  |  | Net change |  |  | Volume |  |  | Rate |  |  | Net change |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Saving accounts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 1,601 |  |  |  | (668,216 | ) |  |  | (666,615 | ) |  |  | (1,767,044 | ) |  |  | (3,670,942 | ) |  |  | (5,437,986 | )
Foreign currencies |  |  | (6,166 | ) |  |  | 147 |  |  |  | (6,019 | ) |  |  | 283 |  |  |  | (2,437 | ) |  |  | (2,154 | )
Total |  |  | (4,565 | ) |  |  | (668,069 | ) |  |  | (672,634 | ) |  |  | (1,766,761 | ) |  |  | (3,673,379 | ) |  |  | (5,440,140 | )
Time deposits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (8,819,087 | ) |  |  | (11,994,825 | ) |  |  | (20,813,912 | ) |  |  | (2,620,865 | ) |  |  | 20,248,784 |  |  |  | 17,627,919 |
Foreign currencies |  |  | (168,250 | ) |  |  | 121,176 |  |  |  | (47,074 | ) |  |  | (16,718 | ) |  |  | 69,473 |  |  |  | 52,755 |
Total |  |  | (8,987,337 | ) |  |  | (11,873,649 | ) |  |  | (20,860,986 | ) |  |  | (2,637,583 | ) |  |  | 20,318,257 |  |  |  | 17,680,674 |
Banks loans - Central bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (82 | ) |  |  | (82 | )
Foreign currencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (82 | ) |  |  | (82 | )
Banks loans - Other financial institutions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 115,764 |  |  |  | (1,355,550 | ) |  |  | (1,239,786 | ) |  |  | (2,311,966 | ) |  |  | 2,818,226 |  |  |  | 506,260 |
Foreign currencies |  |  | (418,953 | ) |  |  | (42,125 | ) |  |  | (461,078 | ) |  |  | (1,795 | ) |  |  | 191,342 |  |  |  | 189,547 |
Total |  |  | (303,189 | ) |  |  | (1,397,675 | ) |  |  | (1,700,864 | ) |  |  | (2,313,761 | ) |  |  | 3,009,568 |  |  |  | 695,807 |
Debt securities issued |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (2,210,429 | ) |  |  | 800,684 |  |  |  | (1,409,745 | ) |  |  | 1,852,920 |  |  |  | (251,233 | ) |  |  | 1,601,687 |
Foreign currencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | (2,210,429 | ) |  |  | 800,684 |  |  |  | (1,409,745 | ) |  |  | 1,852,920 |  |  |  | (251,233 | ) |  |  | 1,601,687 |
Other liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (313 | ) |  |  | (6,635 | ) |  |  | (6,948 | ) |  |  | (36,994 | ) |  |  | (186,708 | ) |  |  | (223,702 | )
Foreign currencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | (313 | ) |  |  | (6,635 | ) |  |  | (6,948 | ) |  |  | (36,994 |  |  |  | (186,708 | ) |  |  | (223,702 |
Total interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | (10,912,464 | ) |  |  | (13,224,542 | ) |  |  | (24,137,006 | ) |  |  | (4,883,949 | ) |  |  | 18,958,045 |  |  |  | 14,074,096 |
Foreign currencies |  |  | (593,369 | ) |  |  | 79,198 |  |  |  | (514,171 | ) |  |  | (18,230 | ) |  |  | 258,378 |  |  |  | 240,148 |
Total |  |  | (11,505,833 | ) |  |  | (13,145,344 | ) |  |  | (24,651,177 | ) |  |  | (4,902,179 | ) |  |  | 19,216,423 |  |  |  | 14,314,244 |

Interest-Earning Assets: Net Interest Margin and Spread

The following table analyzes, by currency of denomination, our levels of average interest-earning assets and net interest income, and illustrates the comparative margins and spreads for each of the fiscal years indicated.

|  | Fiscal Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands of pesos, except percentages) |
Average interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 311,696,731 |  |  |  | 326,053,966 |  |  |  | 342,600,012 |
Foreign currencies |  |  | 41,413,026 |  |  |  | 132,845,483 |  |  |  | 147,484,441 |
Total |  |  | 353,109,757 |  |  |  | 458,899,449 |  |  |  | 490,084,453 |
Net interest income (1) |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 74,631,318 |  |  |  | 82,975,148 |  |  |  | 60,321,511 |
Foreign currencies |  |  | 2,419,549 |  |  |  | 7,269,704 |  |  |  | 6,139,131 |
Total |  |  | 77,050,867 |  |  |  | 90,244,852 |  |  |  | 66,460,642 |
Net interest margin (2) |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 23.94 | % |  |  | 25.45 | % |  |  | 17.61 | %
Foreign currencies |  |  | 5.84 | % |  |  | 5.47 | % |  |  | 4.16 | %
Weighted average rate |  |  | 21.82 | % |  |  | 19.67 | % |  |  | 13.56 | %
Yield spread, nominal basis (3) |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 12.66 | % |  |  | 12.19 | % |  |  | 10.45 | %
Foreign currencies |  |  | 6.19 | % |  |  | 5.63 | % |  |  | 4.23 | %
Weighted average rate |  |  | 17.63 | % |  |  | 16.64 | % |  |  | 11.60 | %

(1) | Net interest income is defined as interest earned less interest paid. Trading results from our portfolio of government securities are included in interest.

(2) | Net interest margin is net interest income stated as a percentage of average interest-earning assets.

(3) | Yield spread nominal basis is defined as the difference between the average nominal rate on interest-earning assets and the average nominal rate on interest-bearing liabilities.

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Investment Portfolio: Government and Corporate Securities

We own, manage and trade a portfolio of securities issued by the Argentine and other governments and corporate issuers. The following table sets out our investments in Argentine and other governments and corporate securities as of December 31, 2020, 2019 and 2018 by type and currency of denomination.

|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands of pesos) |
Government securities |  |  |  |  |  |  |  |  |  |  |  |
In pesos: |  |  |  |  |  |  |  |  |  |  |  |
Argentine bonds |  |  | 37,392,812 |  |  |  | 11,873,432 |  |  |  | 17,920,252 |
Argentine government treasury bills |  |  | 915,251 |  |  |  | — |  |  |  | — |
Other debt securities |  |  | — |  |  |  | 70,391 |  |  |  | 116,980 |
Instruments issued by the BCRA |  |  | 89,890,131 |  |  |  | 45,009,683 |  |  |  | 42,309,609 |
Total government securities in pesos |  |  | 128,198,194 |  |  |  | 56,953,506 |  |  |  | 60,346,841 |
In foreign currency: |  |  |  |  |  |  |  |  |  |  |  |
Argentine bonds |  |  | 71 |  |  |  | — |  |  |  | — |
Argentine government treasury bills |  |  | — |  |  |  | 9,998,978 |  |  |  | 6,772,108 |
Total government securities in foreign currency |  |  | 71 |  |  |  | 9,998,978 |  |  |  | 6,772,108 |
Total government securities |  |  | 128,198,265 |  |  |  | 66,952,484 |  |  |  | 67,118,949 |
Corporate securities |  |  |  |  |  |  |  |  |  |  |  |
Listed |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | 28,499 |  |  |  | 37,260 |  |  |  | 279,060 |
Total corporate securities—listed |  |  | 28,499 |  |  |  | 37,260 |  |  |  | 279,060 |
Unlisted |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | 288,521 |  |  |  | 4,324,157 |  |  |  | — |
Debt securities |  |  | — |  |  |  | 223,047 |  |  |  | 588,622 |
Total corporate securities—unlisted |  |  | 288,521 |  |  |  | 4,547,205 |  |  |  | 588,622 |
Investment funds |  |  | 1,471,868 |  |  |  | 1,329,518 |  |  |  | 855,942 |
Total investment funds |  |  | 1,471,868 |  |  |  | 1,329,518 |  |  |  | 855,942 |

The table below presents the issuer of which, as of December 31, 2020, we held securities in excess of 10% of our stockholder equity as of such date:

Issuer |  | Book value |  |  | Market value |
|  | (in thousands of pesos) |
BCRA |  |  | 89,885,499 |  |  |  | 89,885,499 |
Argentine Republic |  |  | 38,308,134 |  |  |  | 38,308,134 |

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Investment Portfolio: remaining maturities of our investment portfolio

The following table analyzes the remaining maturities of our investment portfolio as of December 31, 2020 in accordance with the relevant issuance terms.

|  | Maturing |
|  | Within 1 year |  |  | After 1 year but within 5 years |  |  | After 5 years but within 10 years |  |  | After 10 years |  |  | Total |
|  | Book value |
|  | (in thousands of pesos, except percentages) |
Government securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
In Pesos: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Argentine bonds (*) |  |  | 2,213,861 |  |  |  | 34,968,988 |  |  |  | 209,963 |  |  |  | — |  |  |  | 37,392,812 |
Argentine government treasury bills |  |  | 915,251 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 915,251 |
Instruments issued by the BCRA |  |  | 89,890,131 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 89,890,131 |
Total government securities in pesos |  |  | 93,019,243 |  |  |  | 34,968,988 |  |  |  | 209,963 |  |  |  | — |  |  |  | 128,198,194 |
In foreign currency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Argentine bonds |  |  | — |  |  |  | — |  |  |  | 71 |  |  |  | — |  |  |  | 71 |
Total government securities in foreign currency |  |  | — |  |  |  | — |  |  |  | 71 |  |  |  | — |  |  |  | 71 |
Total government securities |  |  | 93,019,243 |  |  |  | 34,968,988 |  |  |  | 210,034 |  |  |  | — |  |  |  | 128,198,265 |
Equity securities—unlisted |  |  | 283,249 |  |  |  | 5,189 |  |  |  | — |  |  |  | 83 |  |  |  | 288,521 |
Weighted average yield (for the securities indicated with *) (1) |  |  | 43.98 | % |  |  | 4.35 | % |  |  | 3.72 | % |  |  | 0.00 | % |  |  |  |

(1) | The maturity profile above is based on each bond contractual maturity and its amortization profile. The weighted average yield was calculated using the internal rate of return of each bond published by the Argentine Institute of Capital Markets (“IAMC”) weighted by the expected outstanding principal at each maturity bucket.

Loan Portfolio

The following table analyzes our loan portfolio by types of loan as of December 31, 2020, 2019, 2018 and 2017. Loans are stated before deduction of the allowance for loan losses.

|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands of pesos) |
Loans and advances to government sector |  |  | 511 |  |  |  | 581 |  |  |  | 432 |  |  |  | 674 |
Loans and advances to central bank |  |  | 6,005 |  |  |  | 23,695 |  |  |  | 802 |  |  |  | — |
|  |  | 6,516 |  |  |  | 24,276 |  |  |  | 1,234 |  |  |  | 674 |
Loans and advances to financial institutions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and advances to financial institutions |  |  | 2,337,748 |  |  |  | 7,076,612 |  |  |  | 20,250,306 |  |  |  | 14,184,556 |
Allowance for loan losses |  |  | (582,550 | ) |  |  | (174,380 | ) |  |  | (70,129 | ) |  |  | (103,239 | )
|  |  | 1,755,198 |  |  |  | 6,902,232 |  |  |  | 20,180,177 |  |  |  | 14,081,317 |
Loans and advances to customers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Overdrafts (1) |  |  | 17,411,178 |  |  |  | 19,600,558 |  |  |  | 24,690,146 |  |  |  | 36,200,207 |
Commercial papers (2) |  |  | 19,117,168 |  |  |  | 16,794,614 |  |  |  | 24,241,358 |  |  |  | 34,564,728 |
Notes |  |  | 14,702,105 |  |  |  | 15,466,297 |  |  |  | 26,679,749 |  |  |  | 21,796,723 |
Real estate mortgage |  |  | 16,745,745 |  |  |  | 19,265,842 |  |  |  | 21,162,156 |  |  |  | 13,760,880 |
Pledge loans |  |  | 11,412,208 |  |  |  | 11,785,802 |  |  |  | 3,456,030 |  |  |  | 14,093,344 |
Consumer loans |  |  | 28,120,635 |  |  |  | 32,122,283 |  |  |  | 49,343,231 |  |  |  | 50,796,573 |
Credit Cards |  |  | 114,535,142 |  |  |  | 98,110,800 |  |  |  | 87,685,886 |  |  |  | 92,446,637 |
Loans for the prefinancing and financing of exports |  |  | 15,979,854 |  |  |  | 24,908,414 |  |  |  | 94,428,193 |  |  |  | 71,574,505 |
Receivables from financial leases |  |  | 1,867,439 |  |  |  | 2,572,772 |  |  |  | 4,979,672 |  |  |  | 7,100,219 |
Loans to personnel |  |  | 2,131,958 |  |  |  | 2,333,951 |  |  |  | 2,524,659 |  |  |  | 1,939,743 |
Other financing (3) |  |  | 48,301,667 |  |  |  | 31,299,660 |  |  |  | 29,428,490 |  |  |  | 43,172,120 |
Allowance for loan losses |  |  | (12,501,302 | ) |  |  | (15,536,909 | ) |  |  | (8,511,300 | ) |  |  | (5,676,409 | )
|  |  | 277,823,797 |  |  |  | 258,724,084 |  |  |  | 360,108,271 |  |  |  | 381,769,269 |
Secured loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liquid collateral |  |  | 1,003,004 |  |  |  | 418,659 |  |  |  | 1,718,673 |  |  |  | 4,324,623 |
Preferred guarantees (4) |  |  | 28,481,799 |  |  |  | 30,963,075 |  |  |  | 21,927,753 |  |  |  | 33,483,951 |
|  |  | 29,484,803 |  |  |  | 31,381,734 |  |  |  | 23,646,426 |  |  |  | 37,808,573 |

(1) | Overdrafts include short and long-term loans to companies and overdraft lines of credit.

(2) | Commercial papers are endorsed promissory notes.

(3) | Other financing are loans not included in other categories.

(4) | Preferred guarantees mainly relate to mortgages and car loans, for which collection of the amounts owed is reasonably assured because the guarantees may be executed through established legal processes.

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For a description of the risk elements associated with our investment portfolio and our risk policies, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”

Loans by Economic Activity

The table below analyzes our loan portfolio according to the borrowers’ main economic activity as of December 31, 2020, 2019, 2018 and 2017. Where appropriate, loans to individuals are allocated to the economic activity of the borrower. Loans are stated before deduction of the allowance for loan losses.

|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
|  | Loan Portfolio |  |  | % of Loan Portfolio |  |  | Loan Portfolio |  |  | % of Loan Portfolio |  |  | Loan Portfolio |  |  | % of Loan Portfolio |  |  | Loan Portfolio |  |  | % of Loan Portfolio |
|  | (in thousands of pesos, except percentages) |
Agricultural and livestock |  |  | 15,095,901 |  |  |  | 5.16 | % |  |  | 12,554,492 |  |  |  | 4.46 | % |  |  | 23,427,070 |  |  |  | 6.02 | % |  |  | 9,325,615 |  |  |  | 2.32 | %
Construction |  |  | 2,090,416 |  |  |  | 0.71 | % |  |  | 2,071,593 |  |  |  | 0.74 | % |  |  | 3,204,566 |  |  |  | 0.82 | % |  |  | 2,669,623 |  |  |  | 0.65 | %
Consumer |  |  | 177,073,956 |  |  |  | 60.50 | % |  |  | 161,733,054 |  |  |  | 57.48 | % |  |  | 128,836,162 |  |  |  | 33.13 | % |  |  | 184,444,756 |  |  |  | 45.92 | %
Electricity, oil, water and sanitary services |  |  | 993,851 |  |  |  | 0.34 | % |  |  | 2,183,039 |  |  |  | 0.78 | % |  |  | 4,260,831 |  |  |  | 1.10 | % |  |  | 3,741,515 |  |  |  | 0.93 | %
Financial sector |  |  | 2,337,748 |  |  |  | 0.80 | % |  |  | 6,930,611 |  |  |  | 2.46 | % |  |  | 20,250,750 |  |  |  | 5.21 | % |  |  | 14,185,230 |  |  |  | 3.53 | %
Government services |  |  | 6,516 |  |  |  | — |  |  |  | 624 |  |  |  | 0.00 | % |  |  | 1,233 |  |  |  | 0.00 | % |  |  | 674 |  |  |  | 0.00 | %
Mining products |  |  | 27,381,550 |  |  |  | 9.36 | % |  |  | 26,300,013 |  |  |  | 9.35 | % |  |  | 42,403,951 |  |  |  | 10.90 | % |  |  | 2,366,291 |  |  |  | 0.59 | %
Others |  |  | 24,949,451 |  |  |  | 8.52 | % |  |  | 25,960,791 |  |  |  | 9.23 | % |  |  | 34,773,387 |  |  |  | 8.94 | % |  |  | 98,050,183 |  |  |  | 24.42 | %
Other manufacturing |  |  | 22,954,370 |  |  |  | 7.86 | % |  |  | 26,231,017 |  |  |  | 9.32 | % |  |  | 54,677,416 |  |  |  | 14.06 | % |  |  | 42,120,979 |  |  |  | 10.49 | %
Services |  |  | 1,681,245 |  |  |  | 0.57 | % |  |  | 986,567 |  |  |  | 0.35 | % |  |  | 35,163,133 |  |  |  | 9.04 | % |  |  | 597,110 |  |  |  | 0.15 | %
Transport |  |  | 2,550,708 |  |  |  | 0.87 | % |  |  | 2,510,571 |  |  |  | 0.89 | % |  |  | 3,824,708 |  |  |  | 0.98 | % |  |  | 6,608,065 |  |  |  | 1.65 | %
Wholesale and retail trade |  |  | 15,553,651 |  |  |  | 5.31 | % |  |  | 13,899,509 |  |  |  | 4.94 | % |  |  | 38,047,904 |  |  |  | 9.78 | % |  |  | 37,520,859 |  |  |  | 9.34 | %
|  |  | 292,669,363 |  |  |  | 100.00 | % |  |  | 281,361,881 |  |  |  | 100.00 | % |  |  | 388,871,111 |  |  |  | 100.00 | % |  |  | 401,630,900 |  |  |  | 100.00 | %

Maturity Composition of the Loan Portfolio

The following table analyzes our loan portfolio as of December 31, 2020 by type of loan and by the time remaining to maturity. Loans are stated before deduction of the allowance for loan losses. We expect most loans to be repaid at maturity in cash or through refinancing at market terms.

|  |  |  |  | Maturing |
|  | Amount as of December 31, 2020 |  |  | Within 3 months |  |  | After 3 months but within 1 year |  |  | After 1 year but within 5 years |  |  | After 5 years |
|  | (in thousands of pesos, except percentages) |
To government sector |  |  | 511 |  |  |  | 511 |  |  |  | — |  |  |  | — |  |  |  | — |
To central bank |  |  | 6,005 |  |  |  | 6,005 |  |  |  | — |  |  |  | — |  |  |  | — |
To financial institutions |  |  | 2,337,748 |  |  |  | 1,101,049 |  |  |  | 570,606 |  |  |  | 666,093 |  |  |  | — |
To customers |  |  | 290,325,099 |  |  |  | 182,971,033 |  |  |  | 49,843,152 |  |  |  | 43,093,342 |  |  |  | 14,417,572 |
Overdrafts |  |  | 17,411,178 |  |  |  | 16,861,253 |  |  |  | 469,756 |  |  |  | 80,169 |  |  |  | — |
With privileged guarantees |  |  | 30,289,911 |  |  |  | 3,385,565 |  |  |  | 5,568,564 |  |  |  | 7,981,851 |  |  |  | 13,353,931 |
Credit cards |  |  | 114,535,142 |  |  |  | 114,535,142 |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | 128,088,868 |  |  |  | 48,189,073 |  |  |  | 43,804,832 |  |  |  | 35,031,322 |  |  |  | 1,063,641 |
Total |  |  | 292,669,363 |  |  |  | 184,078,598 |  |  |  | 50,413,758 |  |  |  | 43,759,435 |  |  |  | 14,417,572 |
Percentage of total loan portfolio |  |  | 100.00 | % |  |  | 62.90 | % |  |  | 17.23 | % |  |  | 14.95 | % |  |  | 4.93 | %

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Interest Rate Sensitivity of Outstanding Loans

The following table analyzes, by currency of denomination, the interest rate sensitivity of our loan portfolio as of December 31, 2020. Loans are stated before deduction of the allowance for loan losses.

|  | As of December 31, 2020 |
|  | (in thousands of pesos) |
Variable Rate |  |  |  |
Pesos |  |  | 132,469 |
Foreign currency |  |  | 315,064 |
Sub-total |  |  | 447,533 |
Fixed Rate |  |  |  |
Pesos — including adjustable loans |  |  | 256,328,158 |
Foreign currency |  |  | 30,457,231 |
Sub-total |  |  | 286,785,389 |
Non-performing (1) |  |  |  |
Pesos |  |  | 4,667,370 |
Foreign currency |  |  | 769,071 |
Sub-total |  |  | 5,436,441 |
Total |  |  | 292,669,363 |

(1) | For additional information on non-performing loans see “—Non-performing and Restructured Loans” below.

The following table sets forth a breakdown of our fixed and variable rate loans which have a maturity of one year or more as of December 31, 2020.

|  | Interest Sensitivity of Outstanding Loans Maturing in More Than One Year |
|  | Fixed rate |  |  | Variable rate |
|  | (in thousands of pesos) |
To financial institutions |  |  | 666,093 |  |  |  | — |
To customers |  |  | 57,498,024 |  |  |  | 12,890 |
Total |  |  | 58,164,117 |  |  |  | 12,890 |

Foreign Country Outstanding Positions

As of December 31, 2020, 2019 and 2018 we did not hold “cross-border outstandings” exceeding 1% of our total assets. Cross-border outstandings are defined as loans (including accrued interest), acceptances, interest-bearing deposits with other banks, other interest-bearing investments and any other monetary assets which are denominated in dollars or other non-local currency.

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Classification of Loan Portfolio by Stage

The following table presents our loan portfolio classified by stage, before the deduction for the allowance for loan losses as of December 31, 2020, 2019, 2018 and 2017:

|  | As of December 31, |
|  | 2020 |  |  | % |  |  | 2019 |  |  | % |  |  | 2018 |  |  | % |  |  | 2017 |  |  | % |
|  | (in thousands of pesos, except percentages) |
Stage 1 |  |  | 248,015,075 |  |  |  | 84.74 | % |  |  | 243,409,013 |  |  |  | 86.51 | % |  |  | 354,161,326 |  |  |  | 91.07 | % |  |  | 397,067,561 |  |  |  | 98.86 | %
Stage 2 |  |  | 39,217,847 |  |  |  | 13.40 | % |  |  | 27,358,666 |  |  |  | 9.72 | % |  |  | 26,848,934 |  |  |  | 6.90 | % |  |  | 1,779,414 |  |  |  | 0.44 | %
Stage 3 |  |  | 5,436,441 |  |  |  | 1.86 | % |  |  | 10,594,202 |  |  |  | 3.77 | % |  |  | 7,860,850 |  |  |  | 2.03 | % |  |  | 2,783,925 |  |  |  | 0.70 | %
|  |  | 292,669,363 |  |  |  | 100.00 | % |  |  | 281,361,881 |  |  |  | 100.00 | % |  |  | 388,871,110 |  |  |  | 100.00 | % |  |  | 401,630,900 |  |  |  | 100.00 | %

We have concluded that, except for the refinanced loans related to the Government Covid measures, our remaining refinanced loans comply with the conditions for considering them as troubled debt restructuring (“TDR”). A restructured loan is considered a TDR if the debtor is experiencing financial difficulties and the Bank grants a concession to the debtor that would not otherwise be considered. Concessions granted could include: reduction in interest rate to rates that are considered below market, extension of repayment schedules and maturity dates beyond original contractual terms.

Loans considered TDR as of December 31, 2020, 2019, 2018 and 2017 were as follows:

|  | As of December 31, |
Troubled debt restructuring |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands of pesos) |
Wholesale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Others |  |  | 1,753,387 |  |  |  | 1,438,834 |  |  |  | 157,806 |  |  |  | 268,565 |
Retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Personal Loans |  |  | 1,164,914 |  |  |  | 1,440,900 |  |  |  | 1,476,363 |  |  |  | 1,294,920 |
Mortgage |  |  | 470 |  |  |  | 779 |  |  |  | 1,770 |  |  |  | 3,661 |
Others |  |  | 40 |  |  |  | 349 |  |  |  | 1,104 |  |  |  | 11,942 |
|  |  | 2,918,811 |  |  |  | 2,880,862 |  |  |  | 1,637,043 |  |  |  | 1,579,088 |

We classify our loan portfolio in two categories: (i) retail and (ii) wholesale.

The following table presents our retail and wholesale loan portfolio as of December 31, 2020, 2019, 2018 and 2017 before the deduction of the allowance for loan losses:

|  | As of December 31, |
|  | 2020 |  |  | % |  |  | 2019 |  |  | % |  |  | 2018 |  |  | % |  |  | % |  |  | 2017 |
|  | (in thousands of pesos, except percentages) (1) |
Stage 1 (Retail) |  |  | 137,787,910 |  |  |  | 82.00 | % |  |  | 138,990,186 |  |  |  | 86.18 | % |  |  | 141,806,194 |  |  |  | 85.11 | % |  |  | 160,170,251 |  |  |  | 97.67 | %
Stage 1 (Wholesale) |  |  | 110,227,165 |  |  |  | 88.43 | % |  |  | 104,418,827 |  |  |  | 86.95 | % |  |  | 212,355,132 |  |  |  | 95.55 | % |  |  | 236,897,310 |  |  |  | 99.69 | %
|  |  | 248,015,075 |  |  |  | 84.74 | % |  |  | 243,409,013 |  |  |  | 86.51 | % |  |  | 354,161,326 |  |  |  | 91.07 | % |  |  | 397,067,561 |  |  |  | 98.86 | %
Stage 2 (Retail) |  |  | 27,716,237 |  |  |  | 16.50 | % |  |  | 17,898,953 |  |  |  | 11.10 | % |  |  | 21,377,122 |  |  |  | 12.83 | % |  |  | 1,558,566 |  |  |  | 0.95 | %
Stage 2 (Wholesale) |  |  | 11,501,610 |  |  |  | 9.23 | % |  |  | 9,459,713 |  |  |  | 7.88 | % |  |  | 5,471,812 |  |  |  | 2.46 | % |  |  | 220,848 |  |  |  | 0.09 | %
|  |  | 39,217,847 |  |  |  | 13.40 | % |  |  | 27,358,666 |  |  |  | 9.72 | % |  |  | 26,848,934 |  |  |  | 6.90 | % |  |  | 1,779,414 |  |  |  | 0.44 | %
Stage 3 (Retail) |  |  | 2,522,231 |  |  |  | 1.50 | % |  |  | 4,388,818 |  |  |  | 2.72 | % |  |  | 3,438,336 |  |  |  | 2.06 | % |  |  | 2,265,238 |  |  |  | 1.38 | %
Stage 3 (Wholesale) |  |  | 2,914,210 |  |  |  | 2.34 | % |  |  | 6,205,384 |  |  |  | 5.17 | % |  |  | 4,422,514 |  |  |  | 1.99 | % |  |  | 518,687 |  |  |  | 0.22 | %
|  |  | 5,436,441 |  |  |  | 1.86 | % |  |  | 10,594,202 |  |  |  | 3.77 | % |  |  | 7,860,850 |  |  |  | 2.03 | % |  |  | 2,783,925 |  |  |  | 0.70 | %
Total retail loans |  |  | 168,026,378 |  |  |  | 100.00 | % |  |  | 161,277,957 |  |  |  | 100.00 | % |  |  | 166,621,652 |  |  |  | 100.00 | % |  |  | 163,994,055 |  |  |  | 100.00 | %
Total wholesale loans |  |  | 124,642,985 |  |  |  | 100.00 | % |  |  | 120,083,924 |  |  |  | 100.00 | % |  |  | 222,249,458 |  |  |  | 100.00 | % |  |  | 237,636,845 |  |  |  | 100.00 | %
|  |  | 292,669,363 |  |  |  | 100.00 | % |  |  | 281,361,881 |  |  |  | 100.00 | % |  |  | 388,871,110 |  |  |  | 100.00 | % |  |  | 401,630,900 |  |  |  | 100.00 | %

(1) | Percentages for each category are of total consumer, commercial or total loans, as the context requires.

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##### Table of Contents

Non-performing and Restructured Loans

The following table analyzes at each of the dates indicated below our gross non-performing loan portfolio, and further breaks down the total into loans with preferred guarantees and those which are unsecured:

|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands of pesos) |
Non-performing loans |  |  | 5,436,441 |  |  |  | 10,594,202 |  |  |  | 7,860,852 |  |  |  | 2,783,925 |
Total |  |  | 5,436,441 |  |  |  | 10,594,202 |  |  |  | 7,860,852 |  |  |  | 2,783,925 |
With preferred guarantees |  |  | 412,691 |  |  |  | 568,821 |  |  |  | 76,950 |  |  |  | 254,970 |
Unsecured |  |  | 5,023,750 |  |  |  | 10,025,381 |  |  |  | 7,783,902 |  |  |  | 2,528,955 |
Total |  |  | 5,436,441 |  |  |  | 10,594,202 |  |  |  | 7,860,852 |  |  |  | 2,783,925 |

The table below sets forth non-performing loans by economic activity as of each of the dates indicated:

|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
|  | Loan Portfolio |  |  | % of Loan Portfolio |  |  | Loan Portfolio |  |  | % of Loan Portfolio |  |  | Loan Portfolio |  |  | % of Loan Portfolio |  |  | Loan Portfolio |  |  | % of Loan Portfolio |
|  | (in thousands of pesos, except percentages) |
Agricultural and livestock |  |  | 107,810 |  |  |  | 1.98 | % |  |  | 276,371 |  |  |  | 2.61 | % |  |  | 94,837 |  |  |  | 1.21 | % |  |  | 131,971 |  |  |  | 4.74 | %
Construction |  |  | 237,204 |  |  |  | 4.36 | % |  |  | 72,191 |  |  |  | 0.68 | % |  |  | 40,085 |  |  |  | 0.51 | % |  |  | 27,038 |  |  |  | 0.97 | %
Consumer |  |  | 2,577,107 |  |  |  | 47.42 | % |  |  | 4,412,408 |  |  |  | 41.64 | % |  |  | 3,610,240 |  |  |  | 45.93 | % |  |  | 2,345,651 |  |  |  | 84.26 | %
Electricity, oil, water and sanitary services |  |  | 368 |  |  |  | 0.01 | % |  |  | 2,056 |  |  |  | 0.02 | % |  |  | 564 |  |  |  | 0.01 | % |  |  | 3,191 |  |  |  | 0.11 | %
Financial sector |  |  | — |  |  |  | 0.00 | % |  |  | — |  |  |  | 0.00 | % |  |  | — |  |  |  | 0.00 | % |  |  | 3,086 |  |  |  | 0.11 | %
Mining products |  |  | 1,665,040 |  |  |  | 30.63 | % |  |  | 16,604 |  |  |  | 0.16 | % |  |  | 128,197 |  |  |  | 1.63 | % |  |  | 20,089 |  |  |  | 0.72 | %
Others |  |  | 4,486 |  |  |  | 0.08 | % |  |  | 1,878,501 |  |  |  | 17.73 | % |  |  | 1,280,003 |  |  |  | 16.28 | % |  |  | 2,561 |  |  |  | 0.10 | %
Other manufacturing |  |  | 156,294 |  |  |  | 2.87 | % |  |  | 3,283,789 |  |  |  | 31.00 | % |  |  | 2,445,465 |  |  |  | 31.11 | % |  |  | 121,655 |  |  |  | 4.37 | %
Services |  |  | 379,375 |  |  |  | 6.97 | % |  |  | 18,284 |  |  |  | 0.17 | % |  |  | 14,453 |  |  |  | 0.18 | % |  |  | 28,614 |  |  |  | 1.03 | %
Transport |  |  | 29,123 |  |  |  | 0.54 | % |  |  | 74,018 |  |  |  | 0.70 | % |  |  | 67,067 |  |  |  | 0.85 | % |  |  | 3,097 |  |  |  | 0.11 | %
Wholesale trade |  |  | 279,634 |  |  |  | 5.14 | % |  |  | 559,980 |  |  |  | 5.29 | % |  |  | 179,941 |  |  |  | 2.29 | % |  |  | 96,972 |  |  |  | 3.48 | %
Total |  |  | 5,436,441 |  |  |  | 100.00 | % |  |  | 10,594,202 |  |  |  | 100.00 | % |  |  | 7,860,852 |  |  |  | 100.00 | % |  |  | 2,783,925 |  |  |  | 100.00 | %

As of December 31, 2020, the majority of our loan portfolio, and non-performing and restructured loan portfolio, consisted of loans to Argentine borrowers. At that date, Ps.939.9 million, or 0.32% of our total loan portfolio, consisted of loans to foreign borrowers.

Analysis of the Impairment Allowance

The table below sets forth the activity in the impairment allowance for the fiscal years ended December 31, 2020, 2019, 2018 and 2017. We charge-off non-performing loans when we believe that there is no reasonable expectation of recovery. We continue to try to collect all amounts past due, even if they have been charged-off, if we believe that the likelihood of collecting such amounts justifies the commitment of resources to do so.

|  | Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 (1) |
|  | (in thousands of pesos, except percentages) |
Balance at the beginning of the year |  |  | 23,928,237 |  |  |  | 10,197,983 |  |  |  | 5,794,964 |  |  |  | 2,758,201 |
Adoption IFRS 9 |  |  | — |  |  |  | — |  |  |  | 2,170,299 |  |  |  | — |
Subtotal |  |  | 23,928,237 |  |  |  | 10,197,983 |  |  |  | 7,965,263 |  |  |  | 2,758,201 |
Provisions for loan losses |  |  | 4,408,591 |  |  |  | 17,528,046 |  |  |  | 8,107,617 |  |  |  | 5,758,804 |
Charge-offs (2) |  |  | (7,298,071 | ) |  |  | (3,797,792 | ) |  |  | (5,874,897 | ) |  |  | (2,722,041 | )
Balance at the end of year |  |  | 21,038,757 |  |  |  | 23,928,237 |  |  |  | 10,197,983 |  |  |  | 5,794,964 |
Charge-off / average loans |  |  | 2.68 | % |  |  | 1.18 | % |  |  | 1.51 | % |  |  | 0.78 | %

(1) | In accordance with IAS 39

(2) | Charge-offs are not concentrated in any particular economic activity. Of the Ps.7,298.1 million charged-off in the fiscal year ended December 31, 2020, Ps.4,552.5 million or 62.38% were related to corporate borrowers and Ps.2,745.6 million or 37.62%, were related to individual consumers. The variation between 2020 and 2019 was due to the increase in the doubtful loan portfolio. Of the Ps.3,797.8 million charged-off in the fiscal year ended December 31, 2019, Ps.755.6 million or 19.90% were related to corporate borrowers and Ps.3,042.2 million or 80.10%, were related to individual consumers. The variation between 2019 and 2018 was due to the increases in the doubtful loan portfolio. Of the Ps.5,874.9 million charged-off in the fiscal year ended December 31, 2018, Ps.2,213.7 million or 37.68%, were related to corporate borrowers and Ps.3,661.2 million or 62.32%, were related to individual consumers. The variation between 2018 and 2017 was due to the increases in the doubtful loan portfolio. Of the Ps.2,722.0 million charged-off in the fiscal year ended December 31, 2017, Ps.121.4 million or 4.46%, were related to corporate borrowers and Ps.2,600.6 million or 95.54%, were related to individual consumers. Charge-offs include reversal and applications.

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##### Table of Contents

Allocation of the Impairment Allowance

The following table allocates the impairment allowance and sets forth the percentage distribution by each category as of December 31, 2020, 2019, 2018 and 2017.

|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 (1) |
|  | Total |  |  | % |  |  | Total |  |  | % |  |  | Total |  |  | % |  |  | Total |  |  | % |
|  | (in thousands of pesos, except percentages) |
Advances |  |  | 2,504,672 |  |  |  | 11.91 | % |  |  | 1,906,499 |  |  |  | 8.06 | % |  |  | 698,092 |  |  |  | 6.85 | % |  |  | 415,252 |  |  |  | 7.17 | %
Notes discounted and purchased |  |  | 617,672 |  |  |  | 2.94 | % |  |  | 561,452 |  |  |  | 2.37 | % |  |  | 258,216 |  |  |  | 2.53 | % |  |  | 484,172 |  |  |  | 8.36 | %
Secured with mortgages |  |  | 131,737 |  |  |  | 0.63 | % |  |  | 70,130 |  |  |  | 0.30 | % |  |  | 60,449 |  |  |  | 0.59 | % |  |  | 118,147 |  |  |  | 2.04 | %
Pledge loans |  |  | 66,949 |  |  |  | 0.32 | % |  |  | 39,837 |  |  |  | 0.17 | % |  |  | 49,670 |  |  |  | 0.49 | % |  |  | 385,715 |  |  |  | 6.66 | %
Consumers loans |  |  | 8,388,399 |  |  |  | 39.85 | % |  |  | 7,718,542 |  |  |  | 31.49 | % |  |  | 5,638,777 |  |  |  | 55.29 | % |  |  | 3,212,548 |  |  |  | 55.47 | %
Foreign trade |  |  | 1,014,080 |  |  |  | 4.82 | % |  |  | 5,034,837 |  |  |  | 21.28 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial loans |  |  | 2,523,885 |  |  |  | 12.00 | % |  |  | 1,598,997 |  |  |  | 6.75 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | 5,791,363 |  |  |  | 27.53 | % |  |  | 6,997,943 |  |  |  | 29.58 | % |  |  | 3,492,779 |  |  |  | 34.25 | % |  |  | 1,179,130 |  |  |  | 20.30 | %
Total |  |  | 21,038,757 |  |  |  | 100.00 | % |  |  | 23,928,237 |  |  |  | 100.00 | % |  |  | 10,197,983 |  |  |  | 100.00 | % |  |  | 5,794,964 |  |  |  | 100.00 | %

(1) | In accordance with IAS 39

Composition of Deposits

The following table sets out the composition of each category of deposits that exceeded 10% of average total deposits in each of the fiscal years ended December 31, 2020, 2019 and 2018.

|  | Fiscal Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands of pesos, except percentages) |
Deposits in Domestic Bank Offices |  |  |  |  |  |  |  |  |  |  |  |
Non-interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Checking accounts |  |  |  |  |  |  |  |  |  |  |  |
Average |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 78,715,835 |  |  |  | 60,957,443 |  |  |  | 63,702,437 |
Foreign currencies |  |  | 26,148,901 |  |  |  | 45,306,183 |  |  |  | 34,767,638 |
Total |  |  | 104,864,736 |  |  |  | 106,263,626 |  |  |  | 98,470,075 |
Interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Saving Accounts |  |  |  |  |  |  |  |  |  |  |  |
Average |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 64,906,635 |  |  |  | 64,872,748 |  |  |  | 95,574,493 |
Foreign currencies |  |  | 74,870,806 |  |  |  | 145,542,082 |  |  |  | 142,256,435 |
Total |  |  | 139,777,441 |  |  |  | 210,414,830 |  |  |  | 237,830,928 |
Average real rate |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 4.73 | % |  |  | 5.76 | % |  |  | 9.60 | %
Foreign currencies |  |  | 0.01 | % |  |  | 0.01 | % |  |  | 0.01 | %
Total |  |  | 2.20 | % |  |  | 1.78 | % |  |  | 3.86 | %
Time Deposits |  |  |  |  |  |  |  |  |  |  |  |
Average |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 94,621,964 |  |  |  | 118,372,968 |  |  |  | 123,918,070 |
Foreign currencies |  |  | 16,165,819 |  |  |  | 29,543,493 |  |  |  | 31,516,076 |
Total |  |  | 110,787,783 |  |  |  | 147,916,461 |  |  |  | 155,434,146 |
Average real rate |  |  |  |  |  |  |  |  |  |  |  |
Pesos |  |  | 37.13 | % |  |  | 47.26 | % |  |  | 30.92 | %
Foreign currencies |  |  | 1.26 | % |  |  | 0.85 | % |  |  | 0.63 | %
Total |  |  | 31.90 | % |  |  | 37.99 | % |  |  | 24.78 | %

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##### Table of Contents

Maturity of Deposits

The following table sets forth information regarding the maturity of our deposits at December 31, 2020.

|  | Maturing |
|  | Total |  |  | Within 3 months |  |  | After 3 but within 6 months |  |  | After 6 but within 12 months |  |  | After 12 months |
|  | (in thousands of pesos) |
Checking accounts |  |  | 112,583,740 |  |  |  | 112,583,740 |  |  |  | — |  |  |  | — |  |  |  | — |
Savings accounts |  |  | 205,927,223 |  |  |  | 205,927,223 |  |  |  | — |  |  |  | — |  |  |  | — |
Term deposits |  |  | 120,068,027 |  |  |  | 116,531,903 |  |  |  | 2,636,124 |  |  |  | 883,084 |  |  |  | 16,916 |
Investment accounts |  |  | 27,904,734 |  |  |  | 5,594,954 |  |  |  | 22,309,780 |  |  |  | — |  |  |  | — |
Other |  |  | 11,739,540 |  |  |  | 11,724,751 |  |  |  | 14,789 |  |  |  | — |  |  |  | — |
Total |  |  | 478,223,264 |  |  |  | 452,362,571 |  |  |  | 24,960,693 |  |  |  | 883,084 |  |  |  | 16,916 |

The following table sets forth information regarding the maturity of our certificates of deposit and other time deposits in denominations of US$100,000 or more at December 31, 2020.

|  | Maturing, |
|  | Total |  |  | Within 3 months |  |  | After 3 but within 6 months |  |  | After 6 but within 12 months |  |  | After 12 months |
|  | (in thousands of pesos) |
Domestic |  |  | 35,307,046 |  |  |  | 13,873,898 |  |  |  | 21,412,709 |  |  |  | 20,439 |  |  |  | — |
Total |  |  | 35,307,046 |  |  |  | 13,873,898 |  |  |  | 21,412,709 |  |  |  | 20,439 |  |  |  | — |

Return on Equity and Assets

The following table presents certain selected financial information and ratios of BBVA Argentina for the fiscal years indicated.

|  | Year ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands of pesos, except percentages) |
Profit (loss) for the year attributable to owners of the Bank |  |  | 10,051,035 |  |  |  | 21,819,964 |  |  |  | (3,119,919 | )
Average total assets (1) |  |  | 655,667,612 |  |  |  | 687,741,268 |  |  |  | 712,396,762 |
Average shareholders’ equity attributable to owners of the Bank (1) |  |  | 112,525,746 |  |  |  | 103,992,710 |  |  |  | 99,032,208 |
Shareholders’ equity attributable to owners of the Bank at the end of the fiscal year |  |  | 112,381,095 |  |  |  | 112,670,398 |  |  |  | 95,315,022 |
Profit or loss for the year attributable to owners of the Bank as a percentage of: |  |  |  |  |  |  |  |  |  |  |  |
Average total assets |  |  | 1.53 | % |  |  | 3.17 | % |  |  | (0.44 | )%
Average shareholders’ equity attributable to owners of the Bank |  |  | 8.93 | % |  |  | 20.98 | % |  |  | (3.15 | )%
Declared dividends (2) |  |  | 7,000,000 |  |  |  | 15,544,108 |  |  |  | 5,040,938 |
Dividend pay-out ratio (3) |  |  | 69.64 | % |  |  | 71.24 | % |  |  | (161.57 | )%
Average shareholders’ equity as a percentage of average total assets |  |  | 17.16 | % |  |  | 15.12 | % |  |  | 13.90 | %

(1) | Computed as the average of fiscal year-beginning and fiscal year-ending balances.

(2) | The Bank’s Board of Directors resolved to propose for shareholder approval the payment of a cash dividend of Ps.7,000 million for the year ended December 31, 2020.

(3) | See “Item 8. Financial Information—A. Financial Statements and other Financial Information—Dividends”).

(4) | Declared dividends stated as percentages of loss or profit for the year attributable to owners of the Bank. See “Item 8. Financial Information—Dividends”.

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##### Table of Contents

Short-Term Borrowings

Our short-term borrowings, which equaled or exceeded 30% of shareholders’ equity, totaled Ps.48.8 billion, Ps.61.0 billion and Ps.76.4 billion at December 31, 2020, 2019 and 2018, respectively. The table below shows those amounts at the end of each fiscal year and other related information.

|  | At December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | Amount |  |  | Weighted Average Interest Rate |  |  | Amount |  |  | Weighted Average Interest Rate |  |  | Amount |  |  | Weighted Average Interest Rate |
|  | (in thousands of pesos, except percentages) |
Total amount outstanding at the end of the reporting period |  |  | 48,835,852 |  |  |  | 6.3 | % |  |  | 61,010,621 |  |  |  | 4.3 | % |  |  | 76,418,912 |  |  |  | 5.3 | %
Average during year (1) |  |  | 45,270,615 |  |  |  | 6.8 | % |  |  | 55,606,518 |  |  |  | 4.8 | % |  |  | 59,648,682 |  |  |  | 6.8 | %
Maximum month-end balance |  |  | 52,277,892 |  |  |  |  |  |  |  | 61,010,621 |  |  |  |  |  |  |  | 76,418,912 |  |  |  |  |

(1) | Calculated as the average of balances at the end of each quarter during the relevant year.

F. | The Argentine Banking System and its Regulatory Framework

Argentine Banking System

According to data from the Central Bank as of October 2020, Argentina’s banking system consisted of 64 commercial banks, 13 of which were government-owned or government-related banks and 51 of which were Argentine private banks. The principal regulators of financial institutions in Argentina are the Central Bank, the Superintendence and, in the case of financial institutions that publicly offer their own securities in Argentina or otherwise engage in the offering or trading of third parties’ securities in Argentina, the CNV.

Private Sector Banks

According to data from the Central Bank as of October 2020, the largest Argentine private banks, in terms of total assets, were: Banco Santander S.A., Banco de Galicia y Buenos Aires S.A., Banco Macro S.A., BBVA Argentina and HSBC Bank Argentina. Some of these banks, including BBVA Argentina, have one or more significant foreign investors. Argentine private banks accounted for 58.51% of total deposits and 61.52% of total gross loans in the Argentine financial sector as of December 31, 2020, of which the ten largest Argentine private banks accounted for 46.93% of total deposits and 52.42% of total gross loans in the Argentine financial sector. Foreign banks compete under the same regulatory conditions as Argentine banks.

Public Sector Banks

The principal state-owned banks are Banco de la Nación Argentina, Banco de la Provincia de Buenos Aires and Banco de la Ciudad de Buenos Aires. As of October 2020, based on the available data of the Central Bank, these three institutions accounted for 34.80% of total deposits and 29.01% of total gross loans in the Argentine financial sector.

Under the provisions of the Argentine financial institutions Law No. 21,526 (the “Financial Institutions Law”), government-owned or government-related banks and private banks have similar rights and obligations except that the former have the sole right and obligation to handle public revenues and promote regional development. Government-owned banks are required to meet the credit needs of public sector entities. Moreover, the by-laws of some government-owned banks, which include federal, provincial and locally-owned banks, require their shareholders to guarantee their commitments.

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Central Bank

The Financial Institutions Law regulates banking activities in Argentina and places the supervision and control of the Argentine banking system in the hands of the Central Bank, an autonomous institution. The Financial Institutions Law provides the Central Bank with broad access to the accounting systems, books, correspondence, documents and other paperwork of banking institutions. The Central Bank regulates the provision of credit and supervises the liquidity and the general operation of the Argentine financial markets. The Central Bank enforces the Financial Institutions Law and authorizes banks to operate in Argentina. Since an amendment to the Financial Institutions Law of 1994, there is no distinction between domestically-owned and foreign-owned financial institutions.

The Central Bank establishes “technical ratios” to limit the levels of indebtedness, liquidity, maximum credit that may be granted per customer and foreign exchange assets and liabilities positions of financial institutions, among others. The Central Bank carries out formal inspections from time to time of all banking institutions to monitor their compliance with legal and regulatory requirements. The Central Bank supervises banks on a consolidated basis. It has a supervision department of internal and external auditors of financial institutions that evaluate performance comprehensively in internal audit areas as well as firms and professionals working as external auditors of financial institutions. When a financial institution does not comply with the mandatory technical ratios, it must explain such noncompliance to the Central Bank. There are specific regulations governing reorganization plans and other measures arising from non-compliance with these plans. Moreover, the Central Bank has the authority to impose sanctions for non-compliance, ranging from a warning to the revocation of banking licenses.

In addition, financial entities need the authorization from the Central Bank for certain actions, such as opening, moving or closing branches or ATMs, acquiring share interests in other financial institutions or non-financial corporations and establishing liens over their assets, among others.

The Central Bank requires financial institutions to submit information to it on a daily, monthly, quarterly, semiannual and annual basis. These reports contain, among other important information, balance sheets and income statements, information relating to reserve funds and use of deposits and indicators on portfolio quality, including details on principal debtors and any loan-loss provisions. The reports are designed to allow the Central Bank to monitor the financial institutions’ business practices. If the Central Bank’s rules are breached, various sanctions may be imposed depending on the gravity of the violation, ranging from simple reprimanding to the imposition of fines or even the revocation of a bank’s operating license. Moreover, noncompliance with certain rules may result in the mandatory submission by the infringing financial institution to the Central Bank of specific capital adequacy or regularization plans. These plans must be approved by the Central Bank for a financial institution to maintain its license.

Law No. 25,780 introduced amendments to the Financial Institutions Law and to the Central Bank’s Charter (carta orgánica). Among the most important modifications we can mention the following:

| • |  | Unless expressly provided otherwise by law, the Central Bank shall not be affected by regulations of a general nature that have been or may be enacted with reference to public administration entities and which introduce limitations on the authority or powers of the Central Bank established in its Charter.

| • |  | The Central Bank is authorized to make temporary advances to the federal government up to an amount equivalent to 12% of the monetary base, which for this purpose includes monetary circulation plus deposits at sight of financial institutions in the Central Bank, whether in current account or in special accounts. It may also grant advances up to an amount not exceeding 10% of the cash resources obtained by the federal government in the previous twelve months. At no time may the amount granted as temporary advances, excluding those exclusively destined to the payment of obligations with multilateral lending institutions, exceed 12% of the monetary base. All advances thus granted must be repaid within the following twelve months; if any of these advances remain unpaid after their expiration date, it will not be possible to use again these powers until all amounts owed have been repaid.

| • |  | The validity of Sections 44, 46 (c), 47 and 48 of the Central Bank’s Charter, with respect to the powers of the Superintendent of Financial and Exchange Entities (Superintendente de Entidades Financieras y Cambiarias) under the terms of the text approved as Article 1 of the Law No. 24,144.

| • |  | A transitional provision is introduced authorizing the Central Bank to: (i) provide assistance to financial entities with liquidity and / or solvency problems (already authorized under Decree No. 214/02), including those in process of restructuring by resolution of the Central Bank in terms of Article 35 bis of the Financial Institutions Law; (ii) to authorize the integration of reserve requirements of financial institutions with financial assets other than cash, in the form of demand deposits at the Central Bank or in foreign currency accounts according to Article 28 of the Central Bank’s Charter

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Amendments to the Central Bank’s Charter and the Convertibility Law

Law No. 26,739 amended in 2012 the functions and powers of the Central Bank and the ability of the federal government to obtain financing from the Central Bank. This law amended the charter of the Central Bank (as amended, the “Charter”), which had been previously approved by Law No. 24,114 and the Convertibility Law. The amendments introduced by Law No. 26,739 may be grouped under two subjects: (i) amendments to the functions and powers of the Central Bank as the regulatory and supervisory authority of the financial sector; and (ii) expansion of the federal government’s access to financing from the Central Bank. We briefly explain below the most relevant aspects of each.

| • |  | Functions and powers of the Central Bank:

| • |  | Purpose of the Central Bank. Prior to Law No. 26,739 according to the Charter, the “primary and fundamental purpose” of the Central Bank was to “preserve the value of the currency”. Following Law No. 26,739, the Central Bank has multiple purposes, including “promoting currency stability, financial stability, employment and economic development with social equity”.

| • |  | Relationship of the Central Bank with the executive branch and Congress. Under the Charter, the Central Bank remains a “self-governed entity” and (i) in the exercise of its powers and faculties, the Central Bank shall not be subject to the instructions of the executive branch, and (ii) the Central Bank may not enter into any obligation that implies a restriction or a delegation of its powers, without Congress’ express authorization. However, the Charter provides that the Central Bank’s purpose must be fulfilled “within the framework of the policies set by the federal government”.

| • |  | Obligations and powers of the Central Bank related to economic information. The amendments to the Charter limited the ability of the Central Bank to supply economic information. In particular, (i) the requirement to report the expected rate of inflation for each year; (ii) the publication of statistics regarding the balances of payment and the national accounts of the Republic and (iii) the requirement that the entity’s financial statements reflect the amount and composition of the reserves and of the monetary base were removed from the Charter.

| • |  | Functions and powers of the Central Bank. New powers were vested in the Central Bank, including: (i) to regulate the amount of money and the interest rates, and direct credit policies; (ii) to regulate payment systems, liquidating and clearing houses, fund remittance entities, and transportation of valuables and (iii) to protect the rights of consumers of financial services and fair competition within the financial sector.

| • |  | Powers of the Central Bank’s president. The amendments strengthened the powers of the president of the Central Bank’s board of directors. In this respect, (i) the Superintendence is now under the president’s supervision; (ii) the president was empowered to operate directly in the currency and foreign exchange markets (formerly, these powers were vested in the Central Bank’s board of directors) and (iii) the president’s powers in emergency situations were increased.

| • |  | Powers of the Central Bank’s board of directors. New regulatory powers were expressly conferred to the board, such as: (i) to establish the information and accounting regime for the entities subject to the Central Bank’s supervision; (ii) to regulate credit conditions and policies; (iii) to enact rules that preserve competition in the financial markets and (iv) to regulate the capture (through negotiable instruments or otherwise) of foreign currency funds by financial institutions.

| • |  | Financing of the federal government:

| • |  | Temporary Advances. The amendment of the Charter significantly increased the Central Bank’s ability to grant temporary advances to the federal government. See “—Central Bank” above.

| • |  | Powers of the Central Bank’s board of directors. See “—Central Bank—Functions and powers of the Central Bank” above.

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Determination and application of the “freely available” reserves. The amendments to the Convertibility Law abrogated the requirement that the Central Bank’s reserves must underpin up to 100% of the monetary base. Now the Central Bank’s board of directors shall determine the amount of reserves necessary to carry out the foreign exchange policy, taking into consideration the evolution of the external accounts. Consequently, the “freely available” reserves will no longer be constituted by those that exceed the amount necessary to underpin up to 100% of the monetary base. The “freely available” reserves will now be those which exceed the amount determined by the board of directors in the manner contemplated above. The amendments also expanded the scope of application of “freely available” reserves. In addition to the payment of obligations with international financial institutions, pursuant to the reform approved by Congress, the “freely available” reserves may also be applied to the payment of “official bilateral external debt”, which includes the debt that the Republic has with creditors grouped together in the “Paris Club”.

| • |  | Argentine Fund for Indebtedness Reduction. This fund was created through Decree No. 298/10 in order to apply “freely available” reserves of the Central Bank to the payment of sovereign debt held by private creditors. This Fund is composed by the “freely available” reserves allocated for each fiscal year. Law No. 26,739 provides that this fund will continue to operate until the purpose for which it was created has been fulfilled.

Supervision on a consolidated basis

Argentine financial institutions are subject to supervision on an individual and consolidated basis by the Central Bank. Therefore, the financial statements and other information of financial institutions must reflect the transactions of their head office as well as those of their branches domestically and offshore, and those of any domestic and foreign “significant subsidiaries” (as defined below). The requirements as to liquidity, solvency, minimum capital, risk concentration, and provisions for loan losses, among others, must be calculated on a consolidated basis.

Financial institutions must submit certain financial information to the Central Bank, including the following:

| • |  | financial statements and other quarterly and annual reports reflecting on a consolidated basis the transactions of the financial institution, its domestic and foreign branches and its domestic and foreign “significant subsidiaries” (as defined below); and

| • |  | financial statements and other quarterly and annual reports reflecting on a consolidated basis the transactions of the financial institution, its domestic and foreign branches, its domestic and foreign “significant subsidiaries” (as defined below) or entities or companies in the Republic and abroad where the financial institution owns or controls more than 12.5% of the shares entitled to vote (in those cases determined by the Superintendence), and those companies not subject to consolidated supervision which the financial institution may have chosen to include with the prior approval of the Superintendence.

For the purposes of these regulations:

| • |  | A “subsidiary” of a domestic financial institution is any domestic or foreign financial institution or company where:

| (1) | the domestic financial institution has direct or indirect control of more than 50% of the total votes of any instrument with voting rights in such entity or company,

| (2) | the domestic financial institution has direct or indirect control as to determining by itself the composition of most of the management bodies of such entity or company, or

| (3) | a majority of the directors of the domestic financial institution is also a majority of the directors of such entity or company

The possession or control by the financial institution is considered indirect if exercised through another legal person, its controlling shareholders or directors appointed by such controlling shareholders or persons linked to them, in control of more than 50% (measured as a whole) of the total votes of any instrument with voting rights in another entity or company. Any other form of control or interest where, in the opinion of the Superintendence, and even if the shareholders’ interest does not exceed 50%, a situation of control, and therefore the subsidiary character of an entity or company, is established or can be inferred from the evidence collected.

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| • |  | A “significant subsidiary” is any subsidiary:

| (1) | whose assets, possible commitments and other transactions recorded in memorandum accounts represent 10% or more of the total capital of the local financial institution and its subsidiaries abroad; or

| (2) | whose results of operations corresponding to the current fiscal year represent 10% or more of the aggregate results of operations for the current fiscal year of the local financial institution and its subsidiaries abroad.

Acquisition of Shares of Financial Entities

Central Bank regulations require the approval of the Central Bank as a condition to the consummation of an acquisition of shares of a financial entity if such acquisition is likely to modify the control or the structure of the shareholders’ groups controlling a financial entity (“Significant Acquisitions”). In addition, any acquisition, other than a Significant Acquisition, in a public offering of 2% or more of the capital stock of a financial entity, such entity must report the identity, nationality and domicile of each purchaser to the Central Bank.

Legal Reserve

The Central Bank requires that financial institutions allocate on an annual basis a certain percentage of their net income in accordance with BCRA rules to a legal reserve. Such percentage is currently set at 20%. This reserve can only be used during periods in which a financial institution has incurred losses and has exhausted all unappropriated retained earnings and other reserves. Financial institutions may not pay dividends if the legal reserve has been impaired. However when the legal reserve is used to absorb losses, no profits may be distributed until such losses are fully refunded. If the legal reserve balance before any loss absorption exceeds 20% of the capital stock plus a capital adjustment, profits may be distributed once the latter value (capital stock plus the capital adjustment) is reached.

Reserve Requirements and Liquidity Requirements

Financial institutions must keep available at all times, and therefore not available for lending, a portion of their deposits or obligations in cash. The minimum cash requirement is calculated on the monthly average of daily balances for certain obligations as recorded at the end of each calendar month, and must be observed separately for each currency of denomination and/or government securities and instruments issued by the BCRA. Compliance must take place in the same currency as the obligations, except for demand liabilities derived from transfers from abroad in foreign currencies other than the U.S. dollar, which must be accounted for in U.S. dollars making use of one of the following instruments:

| (i) | current accounts in pesos of the financial institutions with the Central Bank;

| (ii) | minimum cash accounts of the financial institutions with the Central Bank, denominated in U.S. dollars or other foreign currencies;

| (iii) | special guarantee accounts in favor of electronic clearing houses;

| (iv) | current accounts of non-banking financial institutions;

| (v) | special current accounts (opened in the Central Bank) in connection with the fulfillment of social security benefits; and

| (vi) | minimum cash accounts of public securities and instruments issued by the Central Bank, at market value and of the same type.

Since April 1, 2012, cash and cash equivalents in pesos and foreign currencies are not considered as part of the minimum cash requirement. Any default in cash and cash equivalents in foreign currency for a particular period will be taken into account when calculating, and will increase by the same amount, the minimum cash requirements for such foreign currency.

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The minimum cash requirement is reduced according to the participation of the financing in pesos granted to MiPyMEs in the total financing in pesos for the non-financial private sector, as indicated in the table below:

Participation of the financing to MiPyMEs in the total financing granted by the entity to the non-financial private sector. In % |  | Deduction (on the total of items included in pesos). In % |
Less than 4 |  |  | 0.00 |
Between 4 and less than 6 |  |  | 0.75 |
Between 6 and less than 8 |  |  | 1.00 |
Between 8 and less than 10 |  |  | 1.25 |
Between 10 and less than 12 |  |  | 1.50 |
Between 12 and less than 14 |  |  | 1.75 |
Between 14 and less than 16 |  |  | 2.00 |
Between 16 and less than 18 |  |  | 2.20 |
Between 18 and less than 20 |  |  | 2.40 |
Between 20 and less than 22 |  |  | 2.60 |
Between 22 and less than 24 |  |  | 2.80 |
Between 24 and less than 26 |  |  | 3.00 |
Between 26 and less than 28 |  |  | 3.20 |
Between 28 and less than 30 |  |  | 3.40 |
30 or more |  |  | 3.60 |

Depending on the granting of loans under the program “AHORA 12” the minimum cash requirement in pesos was reduced again in July 2018 in an amount equivalent to 20% of the sum of financings in pesos and a similar percentage was reduced in January 2017 for the consumptions made with credit cards since December 2016 through the program “AHORA 18” and in May 2017 for the consumptions made with credit cards since April 2017 through the program “AHORA 3” and “AHORA 6”.

Depending on the cash withdrawals made through the entity’s ATMs, the requirement will be reduced in accordance with the provisions of the BCRA, taking into account the provisions set forth above.

Likewise, in case of an excessive concentration of liabilities (in holders and/or terms), which implies a significant risk on the financial institution’s liquidity and/or an important negative effect on the system’s liquidity, additional minimum cash requirements may be imposed on the affected liabilities of the financial institution and/or any other measures considered relevant.

The balances of cash accounts opened with the Central Bank as eligible for cash integrations were only compensated up to the amounts corresponding to the legal requirements for forward transactions.

The Central Bank sets forth the application of different requirements for deposits in pesos as opposed to foreign currencies.

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The following schedule indicates the minimum cash requirements for each type of account as of December 2020. In the case of transactions in pesos, the minimum cash requirements will depend on the category assigned to the location of the operating office where the deposit was made:

Type of Account |  | December 2020 |
| Categories |
| I |  |  | II to VI |
Current accounts and demand accounts open in Credit Unions |  |  | 45 | % |  |  | 20 | %
Other demand deposits, basic account and universal free account |  |  |  |  |  |  |  |
In pesos |  |  | 45 | % |  |  | 20 | %
In foreign currency |  |  | 25 | % |  |  | 25 | %
Unused balances from current account advances effected |  |  | 45 | % |  |  | 20 | %
Current accounts of financial institutions |  |  | 100 | % |  |  | 100 | %
Fixed-term deposits, bonds for acceptances (including liabilities for the sale or assignment of credits to subjects other than financial institutions), reverse repurchases, bonds and stock-exchange reverse swaps, investments at constant term, with advanced cancellation or renewal option: |  |  |  |  |  |  |  |
In pesos |  |  |  |  |  |  |  |
Up to 29 days |  |  | 32 | % |  |  | 11 | %
From 30 to 59 days |  |  | 22 | % |  |  | 7 | %
From 60 to 89 days |  |  | 4 | % |  |  | 2 | %
More than 90 days |  |  | 0 | % |  |  | 0 | %
In foreign currency |  |  |  |  |  |  |  |
Up to 29 days |  |  | 23 | % |  |  | 23 | %
From 30 to 59 days |  |  | 17 | % |  |  | 17 | %
From 60 to 89 days |  |  | 11 | % |  |  | 11 | %
From 90 to 179 days |  |  | 5 | % |  |  | 5 | %
From 180 to 365 days |  |  | 2 | % |  |  | 2 | %
More than 365 days |  |  | 0 | % |  |  | 0 | %
Demand and term deposits made by judicial order with funds originated in legal actions currently under course and their immobilized balances |  |  |  |  |  |  |  |
In pesos |  |  |  |  |  |  |  |
Up to 29 days |  |  | 29 | % |  |  | 10 | %
From 30 to 59 days |  |  | 22 | % |  |  | 7 | %
From 60 to 89 days |  |  | 4 | % |  |  | 2 | %
More than 90 days |  |  | 0 | % |  |  | 0 | %
In foreign currency |  |  | 15 | % |  |  | 15 | %
Special deposits related to funds revenues from abroad – Decree No. 616/05 |  |  | 100 | % |  |  | 100 | %
Term investments instrumented by nominative non-transferable certificates in pesos corresponding to public sector security holders, entitled to exercise the prepayment option within a term not greater than 30 days after constitution thereof |  |  | 32 | % |  |  | 11 | %
Deposits and term investments of “UVA” and “UVI” - including savings accounts in “UVA” and “UVI” |  |  |  |  |  |  |  |
Up to 29 days |  |  | 7 | % |  |  | 7 | %
From 30 to 59 |  |  | 5 | % |  |  | 5 | %
From 60 to 89 days |  |  | 3 | % |  |  | 3 | %
More than 90 days |  |  | 0 | % |  |  | 0 | %
Labor Closure Fund for Workers of the Construction Industry in “UVA” |  |  | 7 | % |  |  | 7 | %
Deposits and term investments that are constituted on behalf of minors by funds received gratuitously |  |  | 0 | % |  |  | 0 | %

In addition to the above mentioned requirements, a reserve must be established for the total amount of any default in the application of resources in foreign currency for the month in respect to which the calculation of the minimum cash requirement is made. See “Item 4. Information on the Company—F. The Argentine Banking System and its Regulatory Framework—Lending Capacity Provided by Deposits in Foreign Currency”.

Lending Capacity Provided by Deposits in Foreign Currency

The lending capacity provided by deposits denominated in foreign currency must be calculated in the same currency of the underlying deposits. Deposits denominated in foreign currency also include deposits denominated in dollars but payable in pesos. Customers who engage in any of the transactions below must be financed in foreign currency:

| (1) | Prefinancing and financing of exports carried out directly or through agents, consignees or other proxies acting for the account and order of the owner of the goods. It also comprises the financing of suppliers of services to be exported. This includes those transactions for the purpose of financing working capital and/or the acquisition of objects related to the production of goods to be exported, provided the flow of income in foreign currency deriving from such exports is sufficient to settle such transactions.

| (2) | Other financing to exporters who can rely on a flow of future income in foreign currency and who, in the year prior to the finance being granted, can provide evidence of invoicing in foreign currency -brought into the Republic- for an amount reasonably proportional to such financing.

| (3) | Financing transactions granted to goods, producers or processors, provided:

| • |  | They have firm sale contracts for the goods to be produced for an exporter, with prices fixed or to be fixed in a foreign currency (regardless of the currency in which the transaction is settled) and involving fungible goods with a regular and customary quotation in foreign currency which is widely known and easily accessed by the public in local or international markets. In all cases of term purchase and sale agreements for a price to be fixed, such price must be in direct relation with the price of such products in local markets.

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| • |  | Their main activity is the production, processing and/or storage of fungible goods with a normal and regular foreign currency quotation in markets abroad that is widely known and easily accessible to the public and provided there is evidence, in the year prior to obtaining the financing, that total revenue from sales of such goods bears a reasonable proportion to that activity and its financing.

This category also includes transactions to finance suppliers of services directly used in the process of exporting goods.

| (4) | Financing transactions for producers of goods to be exported, either in the same condition or as part of other goods, by third-party purchasers, provided they have total pledges or guarantees in foreign currency from such third parties.

| (5) | Financings to suppliers of goods and/or services that form part of the production process of perishable items with prices quote in foreign currency, being customarily used in local markets or abroad, widely spread and with easy access to public knowledge, provided they enter into firm sales agreements for such goods and/or services in foreign currency.

| (6) | Financing of investment projects, working capital and/or the acquisition of any kind of goods, including temporary importation of commodities, which may increase or be related to the production of goods for exportation. Even though income from exporter companies does not totally derive from sales abroad, financing may only be allocated if the income flow deriving from exportation is sufficient.

This category also includes those transactions where financing is granted via the bank’s participation in “syndicated loans”, be they with domestic or foreign entities.

| (7) | Financing to clients from the commercial portfolio and of a commercial nature who receive treatment for their consumption or housing credits –under the provisions of the “Debtors’ Classification” regulations–destined for the importation of capital goods (“BK” according to the Common Nomenclature for the MERCOSUR attached as Annex I to Decree No. 690/02 and other complementary provisions) which will result in an increase in the production of goods destined for domestic consumption.

| (8) | Debt securities or certificates of participation in financial trusts in foreign currency -including other collection rights specifically acknowledged in the trust agreement to be constituted within the framework of loans established by multilateral credit institutions of which Argentina is a party, whose assets under management are loans originated by financial institutions under the terms described in (1) through (4) and the first paragraph of (6) above or documents denominated in foreign currency, bought by the trustee for the purpose of financing transactions on the terms and conditions mentioned in the above points above.

| (9) | Financing transactions for purposes other than mentioned in (1) to (4) and the first paragraph of (6) above, included in the credit program “IDB Loan No. 1192/OC-AR”, without exceeding 10% of the lending capacity.

| (10) | Loans to financial institutions (any interfinancing loans granted with such resources must be identified).

| (11) | Notes and bills issued by the Central Bank denominated in U.S. dollars.

| (12) | Direct investments abroad by companies residing in the Republic, whose purpose is to develop production activities of non-financial goods and/or services, be they through contributions and/or purchases of participations in companies, as far as they are incorporated in countries or territories considered as cooperators regarding tax transparency in terms of article 1 of Decree No. 589/13, as amended.

| (13) | Financing of investment projects, including their working capital, which permit increasing production in the power sector, and having firm sales agreements and/or full sureties or guaranties in foreign currency.

| (14) | Debt instruments in foreign currency of the national treasury, up to an amount equivalent to one third the total amount of applications made according to this article.

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| (15) | Financings of investment projects for bovine cattle, including their working capital, without exceeding 5% of the entity’s deposits in foreign currency.

| (16) | Financing to foreign importers for the acquisition of goods and/or services produced in the Republic, either directly or through lines of credit to foreign banks.

| (17) | Financing to residents guaranteed by stand-by letters of credit issued by foreign banks that comply with the provisions of section 3.1. of the rules on “Credit assessments”, requiring to this effect an international rating of investment grade risk, insofar as such letters of credit are unrestricted and the accreditation of the funds is carried out immediately at the simple request of the beneficiary entity.

The lending capacity of a financial institution will result from the sum of all deposits in foreign currency plus all inter-financial loans received, as reported by the granting financial institution, as originated in its lending capacity for this type of deposit, after deduction of the minimum reserve requirements applicable to deposits.

Any deficiencies in the application of foreign currency lending capacity, net of a portion of: (i) cash balances, (ii) cash under custody in other financial institutions, (iii) cash in transit and (iv) cash with armored car transport companies, up to the amount of such deficiency, require an equivalent increase in the minimum cash requirement discussed in “—Reserve Requirements and Liquidity Requirements” above. Any deficiencies arising from debt restructuring transactions arranged by the national executive power are excluded from this requirement and cannot be compensated by foreign currency purchases.

Limitations on Types of Business

Argentine commercial banks may conduct all activities and operations that are not specifically prohibited by law or by regulations of the Central Bank. Banks are permitted, among other things, to:

| • |  | make loans in pesos and foreign currency;

| • |  | receive deposits in pesos and foreign currency;

| • |  | issue guarantees;

| • |  | underwrite, place and broker equity and debt securities in the over-the-counter market, subject to the prior approval of the CNV;

| • |  | conduct transactions in foreign currency;

| • |  | act as fiduciary; and

| • |  | issue credit cards.

According to the Financial Institutions Law, banks in Argentina are prohibited from investing in commercial, industrial or agricultural entities, or other entities without the express authorization of the Central Bank. The Central Bank may then impose conditions and limits to guarantee the safety and soundness of the financial institutions.

These limitations include:

| • |  | the prohibition of a bank from pledging its shares;

| • |  | restriction on incurring any liens upon its properties without prior approval from the Central Bank; and

| • |  | limitations on transactions with directors or officers, including any company or person related to such directors or officers, on terms more favorable than those normally provided to clients. See “—Lending and Investment Limits—Related Persons” below in this section.

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Notwithstanding the foregoing, banks may own shares in other financial institutions with the prior approval of the Central Bank and in public service companies if necessary to obtain public services.

Capital Adequacy Requirements

Basel Accord

In July 1988, the Basel Committee on Banking Regulations and Supervisory Practices (the “Basel Committee” or “BCBS”), which includes the supervisory authorities of twelve major industrial countries, adopted an international framework (the “Basel Accord”) for capital measurement and capital standards of banking institutions (known as Basel I).

In 2007 the Central Bank published its road map for the implementation of the capital adequacy requirements contained in the document “International Convergence of Capital Measurement and Capital Standards”, issued by the Basel Committee and known as Basel II. The first stages were implemented according to the schedule and consisted of the publication of best practices for risk management, seminars, review of supervision processes on the basis of the best practices being encouraged by the BCBS, analysis of the areas subject to “national discretion” in the calculation of regulatory capital, and publication of the text “Guidelines for Operational Risk Management in Financial Institutions”.

Following the sub-prime lending crisis that spread in 2008 and 2009, the BCBS published in December 2010 a set of measures known as Basel III, designed to increase the capacity of the system to absorb shocks from stress situations and improve risk management and the transparency of bank disclosures.

Basel III incorporated the terms of Basel II, contained in three “pillars”:

| • |  | Pillar 1 provides supervisors with a number of options to quantify capital requirements for credit, operational and market risk, and defines which components of an institution’s net worth are eligible to satisfy those requirements.

| • |  | Pillar 2 describes the process to be followed by institutions to evaluate the sufficiency of their capital in relation to their risk profile.

| • |  | Pillar 3 establishes minimum information requirements that financial institutions must provide on the adequacy of their capital.

| • |  | Minimum Capital

Since the introduction of Basel I, financial institutions must keep an amount of total capital not less than 8% of their risk weighted assets. Items going towards compliance with this capital requirement are classified in two groups:

| • |  | Core capital (Tier 1), and

| • |  | Supplementary capital (Tier 2).

According to Basel II, at least half of the capital requirement should be composed of core capital, preferably common equity, a category that includes both common shares and retained earnings.

Had the Basel Accord been applied to us at December 31, 2019, our total capital would have been 2.02 times the minimum required.

Basel III established more demanding requirements, as banks must comply with three minimum ratios in relation to their risk-weighted assets:

| • |  | 4.5% for common equity (for which the qualifying criteria are more restrictive than for Basel II),

| • |  | 6% for Tier 1 capital, and

| • |  | 8% for total capital.

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These new capital composition requirements help ensure that there will be greater capacity to absorb losses in stress situations.

| • |  | Capital Conservation Buffer

The so-called capital conservation buffer imposed an additional capital requirement equivalent to 2.5% of risk-weighted assets and it must be satisfied by common equity. Its purpose was to be able to count on sufficient reserves to absorb additional losses generated at times of economic and financial stress. In fiscal years where common equity is less than 7% of risk-weighted assets (the 4.5% base requirement from Basel III plus the conservation buffer), constraints are established for financial institutions, restricting their ability to pay dividends, award discretionary bonuses or perform share buybacks.

| • |  | Countercyclical Capital Buffer

The goal of the countercyclical capital buffer was to offset the pro-cyclical nature of the financial sector. In times of exceptional credit growth at the aggregate level, financial institutions will be required to increase their common equity until 2.5% of their risk-weighted assets.

| • |  | Leverage Ratio

Basel III complemented risk weighted asset capital requirements with a limit on total leverage. This limit, known as the leverage ratio, is the ratio between core capital (Tier 1) and total assets without risk weighting, both on and off balance sheet, plus derivatives. At the international level, this ratio was initially set at 3%. Although Basel II had previously established a capital requirement for the market risk generated by foreign currency positions, Basel III did not impose any limitation on foreign currency positions. Basel III introduced a limitation through the leverage ratio, set forth in relation to total exposure regardless of the currency in which the underlying assets are recorded. Argentine regulations limited direct exposure to currency risk. Furthermore, with the aim of preventing the indirect exposure generated by the granting of loans denominated in foreign currency to agents whose income is in pesos, regulations in Argentina only allowed funds obtained from deposits in foreign currency to be lent to customers who generate income in the same currency.

| • |  | Liquidity Coverage Ratio

The Liquidity Coverage Ratio (“LCR”) is based on the methodologies used by international banks. It is calculated so that financial institutions can tolerate stress scenarios over a thirty-day period. Liquidity requirements in Argentina are stricter than those established by the international standards. See “—Liquidity Coverage Ratio” below.

| • |  | Net Stable Funding Ratio

The Net Stable Funding Ratio (“NSFR”) is calculated on the basis of long-term liquidity and structural mismatching in the composition of sources of funding. The design of the NSFR is based on net liquid assets and liquid capital methodologies used by internationally active banks. Banks should hold sufficient stable sources of funding (net worth and long-term liabilities) to fund the proportion of their assets that they cannot monetize within a term of one year.

| • |  | Intensive Supervision of Systemically Important Institutions

The Financial Stability Board and the BCBS are working on the design of an appropriate regulatory framework for global systemically important financial institutions (“G-SIFIs”). It is being discussed whether G-SIFIs should be subject to more demanding capital requirements than those foreseen by Basel III. To that effect, a methodology to identify G-SIFIS and the additional capital requirements to ensure a greater loss-absorbing capacity would have to be agreed.

Central Bank Rules

Under the Financial Institutions Law, Argentine financial institutions must comply at all times with the minimum capital requirements described by the Central Bank.

Since February 1, 2013, by Communication “A” 5369 of the BCRA, minimum capital is equal to total capital (basic net equity plus complementary net equity, “RPC”), as per the Central Bank’s denomination.

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Basic Net Equity includes:

| • |  | Ordinary Capital Level 1:

| a) | Corporate capital (excepting preferred shares);

| b) | Non-capitalized contributions (excepting share premiums);

| c) | Equity adjustments;

| d) | Reserve (excepting the special reserve for debt instruments);

| e) | Retained earnings;

| f) | Other results (either positive or negative);

| g) | Other comprehensive income (“OCI”), including 100% of the results recorded in revaluation of property, plant and equipment and intangibles, and gains or losses by financial instruments at reasonable value with changes in OCI; and 100% of the outstanding balance of each of the items recorded in OCI not previously mentioned.

| h) | Share premiums for instruments included in ordinary capital level 1; and

| i) | Third-party participations for those companies subject to consolidated supervision systems.

For the purposes of determining the RPC, the financial entities of Group “A” (such as BBVA Argentina) may compute as Ordinary Capital Level 1 the positive difference between the accounting forecast computed according to point 5.5 of IFRS 9 and the regulatory provision calculated in accordance with the standards on “Minimum provisions for bad debt risk” or the accounting corresponding to the balance sheet of November 30, 2019, whichever is higher.

| • |  | Additional Capital Level 1:

| a) | Instruments issued by the financial institution and not included in ordinary capital level 1;

| b) | Share premiums for instruments included in additional capital level 1;

| c) | Instruments issued by subsidiaries in the hands of third parties not included in ordinary capital level 1 for those companies subject to consolidated supervision systems.

Less: certain deductible items

“Complementary Net Equity” includes:

| a) | Instruments issued by the financial institution and not included in the basic net equity;

| b) | Share premiums for instruments included in the complementary net equity;

| c) | Allowances for loan losses from the portfolio of debtors classified as in “normal” situation which do not exceed 1.25% of the credit-risk-weighted assets; and

| d) | Instruments issued by subsidiaries in the hands of third parties not included in the basic net equity for those companies subject to consolidated supervision systems.

Less: certain deductible items

Minimum limits were also established to be observed by the ordinary capital level 1, the basic net equity and the minimum capital (4.5%, 6% and 8% of the risk-weighted assets, respectively). Noncompliance with these minimum levels is considered as noncompliance with the minimum capital payment.

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Minimum capital must be, at least, the greater of:

| • |  | Minimum basic capital; and

| • |  | The sum of minimum capital required for credit risk, market risk and operational risk.

Differential requirements were established for banks and other financial institutions, mainly based on the area where their head offices are located, in order to benefit those areas with smaller banking coverage according to Central Bank criteria, which now enjoy less stringent requirements with respect to minimum basic capital.

Minimum capital requirement for credit risk will be determined as the sum of:

| (a) | 8% of the sum of credit-risk-weighted asset transactions without delivery against payment;

The risk-weighters table is reformulated with new items and weighters and with a new scheme. Some of the new items and weighters are, among others:

| • |  | Within the “Cash and cash equivalents” item, the cash on hand, in transit (if the financial institution assumes the transportation risk and liability) and in automated teller machines (weighted at 0%); and the cash items in the process of being received (collectible checks and drafts), cash in treasury transporting companies and cash in custody of financial institutions (weighted at 20%). Also included are the demand deposits and special demand deposits at the BCRA and payment orders charged by the BCRA (weighted at 0%).

| • |  | Exposure to governments and central banks (weighted from 0% to 100%)

| a) | To the BCRA denominated and funded in pesos; the national, provincial, municipal government denominated and funded in pesos; to the public non-financial sector arising from financing granted to social security beneficiaries or public employees (with discount code) and the shares of all financing entity that has a periodic amortization system that does not exceed, at the time of the agreements, 30% of the debtor’s income and/or, if applicable, the codebtor’s income) (weighted at 0%).

| b) | To governmental sector and Central Bank (weighted at 100%):

Qualification |  | AAA until AA- |  |  | A+ until A- |  |  | BBB+ until BBB- |  |  | BB+ until B- |  |  | Less than B- |  |  | Not rated |
Risk weighting |  |  | 0 | % |  |  | 20 | % |  |  | 50 | % |  |  | 100 | % |  |  | 150 | % |  |  | 100 | %

| c) | To other sovereign states (or their central banks):

Qualification |  | AAA until AA- |  |  | A+ until A- |  |  | BBB+ until BBB- |  |  | BB+ until B- |  |  | Less than B- |  |  | Not rated |
Risk weighting |  |  | 0 | % |  |  | 20 | % |  |  | 50 | % |  |  | 100 | % |  |  | 150 | % |  |  | 100 | %

| d) | Entities from the governmental sector of other sovereign states according to the credit rating assigned to the corresponding sovereign:

Qualification |  | AAA until AA- |  |  | A+ until A- |  |  | BBB+ until BBB- |  |  | BB+ until B- |  |  | Less than B- |  |  | Not rated |
Risk weighting |  |  | 20 | % |  |  | 50 | % |  |  | 100 | % |  |  | 100 | % |  |  | 150 | % |  |  | 100 | %

| e) | The public sector due to the purchase of public bonds issued in pesos by the central administration, when in the amount and with some of the guarantees established in item 4.1.1. of the rules on “Financing the public sector in the financial sector”, according to the credit rating assigned to the corresponding jurisdiction:

Qualification |  | AAA until AA- |  |  | A+ until A- |  |  | BBB+ until BBB- |  |  | BB+ until B- |  |  | Less than B- |  |  | Not rated |
Risk weighting |  |  | 20 | % |  |  | 50 | % |  |  | 100 | % |  |  | 100 | % |  |  | 200 | % |  |  | 200 | %

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| • |  | Exposure to Multilateral Development Banks (weighted from 0% to 100%)

| • |  | Exposure to financial institutions in the Republic (weighted from 20% to 100%). For those entities with 100% risk score, a risk weight corresponding to a less favorable category than those assigned to exposures with the National Government is applied in foreign currency with a 100% cap amount, provided that the risk assessment is B-, in which case the risk score will be 150%.

| • |  | Exposure to financial institutions from abroad (100%).

Qualification |  | AAA until AA- |  |  | A+ until A- |  |  | BBB+ until BBB- |  |  | BB+ until B- |  |  | Less than B- |  |  | Not rated |
Risk weighting |  |  | 20 | % |  |  | 50 | % |  |  | 100 | % |  |  | 100 | % |  |  | 150 | % |  |  | 100 | %

| • |  | Exposure to companies and other legal persons in the Republic and abroad –including foreign-exchange dealers, insurance companies, stock exchanges and local companies treated as part of the non-financial private sector (100%)

| • |  | Exposures included in the retail portfolio (with weighters from 75% to 100%)

| • |  | Mortgage-guaranteed financing, which, subject to certain conditions, has weighters between 35% and 100%

| • |  | Loans more than 90 days in arrears (with weighters from 50% to 150%)

| • |  | Exposures to individuals and legal persons originated by purchases in installments made through credit cards of tickets abroad and other tourist services abroad (such as accommodation, car rental, etc.), either made directly with the provider of the service or through travel and / or tourism agencies or web platforms (1,250%).

For the purposes of determining the minimum capital requirement for credit risk of all financing that is granted from May 18, 2020 to clients with agricultural activity, who are not MiPyME and who maintain a stock of their production for a value greater than 5% its annual harvesting capacity, the amount resulting from applying the provisions of Section 2 of the rules on minimum capital must be multiplied by a factor equal to 4.

| (b) | failed delivery-against-payment transactions; and

| (c) | requirement for counterpart credit risk in transactions with over-the-counter derivatives.

The sum of (a), (b) and (c) is multiplied by a coefficient which varies from 1 to 1.19 based on the rating the entity is granted by the Superintendence.

Minimum Capital Requirement for Market Risk: the Central Bank imposes additional minimum capital requirements in relation to market risk associated with positions held by financial institutions in securities imputed to the trading book. Likewise, foreign currency positions in the trading and investment portfolio (COAP) are also subject to the market risk calculation.

The market risk is the sum of the interest rate risk, exchange risk, options risk, basic products risk and stocks risk. BBVA Argentina is only exposed to the first two.

The risk rate is calculated as the addition of the specific risk and the general risk. The capital requirement for specific risk is intended to protect the entity against adverse movements in the price of a bond caused by factors related to its issuer. General risk is derived from the sensitivity to changes in interest rates.

Exchange risk is calculated by weighting the net position by 8%.

Minimum Capital Requirement for Interest Rate Risk: Interest rate risk extends to all assets and liabilities for financial intermediation not included in the computation of market risk. It tries to capture the risk arising when sensitivity of the asset to changes in the interest rate does not match with that related with the liabilities.

The BCRA abrogated effective since January 1, 2013 the regulations on minimum capital for interest rate risk. Even so, the financial institutions must continue to manage such risk, and will be subject to revision by the Superintendence, which may determine the need to pay a higher amount of capital.

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Minimum Capital Requirement for Operational Risk: Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The definition includes legal risk but excludes strategic and reputational risk. Financial institutions must establish a system for the management of operational risk that includes policies, processes, procedures and the structure for their adequate management.

Seven operational risks event types are defined, according to internationally accepted criteria:

| • |  | internal fraud;

| • |  | external fraud;

| • |  | employment practices and workplace safety;

| • |  | clients, products and business practices;

| • |  | damage to physical assets, resulting from acts of terrorism and vandalism, earthquakes, fire or flood;

| • |  | business disruption and system failures; and

| • |  | execution, delivery and process management.

The operational risk management process comprises the following stages:

| 1. | Identification and assessment: the identification process should consider both internal and external factors that could adversely affect the development of the processes and projections done according to the business strategies defined by the bank.

| 2. | Monitoring: an effective monitoring process is required, to quickly detect and correct deficiencies in the policies, processes and procedures for managing operational risk. In addition, the development of indicators should be analyzed to detect deficiencies and undertake corrective actions.

| 3. | Control and mitigation: financial institutions must have an appropriate control system to ensure compliance with internal policies, and they should re-examine control and operational risk reduction strategies with at least an annual frequency in order to make the necessary adjustments.

Financial institutions must have contingency plans and business continuity programs that are in accordance with the size and complexity of their operations, to ensure the continuity of their operating capacity and loss reduction in the event of a business interruption.

The BCRA by Communication “A” 5282 established that the additional capital requirement for operational risk (which is added to the credit risk and market risk requirements) is equivalent to 15% of the average of positive gross income for the last three years. This calculation will be made on a monthly basis by taking three periods of 12 consecutive months in which gross income was positive, considering the last 36 months preceding the month in which the calculation is made.

Gross income is defined as the sum of:

| (i) | financial and service income less financial and service charges; and

| (ii) | other profits less other losses.

The following items, however, must be excluded, as applicable, from the accounting entries mentioned in (i) and (ii) above:

| • |  | charges originated in the constitution of allowances, the cancellation of allowances from previous financial years and credits recovered in the financial year which were settled in previous years;

| • |  | the result from participations in financial institutions and in companies, to the extent that these may be items deductible from the computable equity liability;

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| • |  | extraordinary or irregular items –namely those originated in atypical and exceptional results occurred during the period, of infrequent occurrence in the past and not expected for the future–, including income from the collection or insurance (loss recoveries); and

| • |  | results from the sale of securities classified and measured at amortized cost or fair value with change in other comprehensive income.

According to the Central Bank regulations on minimum capital requirements, the financial institutions must comply with such regulations on an individual and consolidated basis.

Any defects of application derived from the requirement of additional capital will not make the financial institution fall into noncompliance with the Minimum Capital Regulations, even if they will not be allowed to distribute cash dividends and pay fees, ownership interest or bonuses originated in the bank’s distribution of results.

By Communication “A” 5827, the BCRA established that financial institutions must maintain the following as of that date:

| • |  | Capital conservation margin

The capital conservation margin is equivalent to 2.5% of the amount of risk-weighted assets (“APR”). This is in addition to the minimum capital requirement. Furthermore, financial institutions that the BCRA classifies as Domestic Systemically Important Banks (“D-SIBs”) or Global Systemically Important Financial Institutions (“G-SIFIs”) must increase their capital conservation margin by 1% of the APR, resulting in a capital conservation margin requirement of 3.5%. The capital conservation margin must be composed exclusively of regular level 1 capital (COn1), net of any deductible items (CDCOn1).

| • |  | Contra cyclical margin

Whenever credit growth is excessive in the Central Bank’s opinion which is causing an increase in systemic risk, the Central Bank may impose the obligation on financial institutions to establish a contra cyclical margin between 0% and 2.5% of their APR, subject to a 12-month prior notice. The Central Bank may also eliminate or reduce this obligation whenever, in its opinion, such systemic risk has disappeared or decreased. Banks must comply on an individual and consolidated basis with the ratios for minimum capital. If a financial institution does not comply with all these minimum capital requirements, it must submit a regulatory and restructuring plan to the Central Bank, which may impose various penalties, including:

| • |  | temporary limitation on the amount of deposits a bank may accept;

| • |  | institutional restrictions as per expansion capacity and dividends distribution in cash;

| • |  | revocation of the license of a bank to conduct foreign exchange transactions; and, in some extreme cases, and

| • |  | revocation of the license of a bank to operate.

The following table presents, at December 31, 2020, both the calculation of our ratio of capital to risk-weighted assets computed under the Basel Accord and our capital under the minimum capital rules of the Central Bank.

|  | December 31, 2020 |
|  | (in millions of pesos, except percentages) |
Basel Accord |  |  |  |
Total capital |  |  | 110,800.0 |
Risk-weighted assets |  |  | 555,733.7 |
Ratio of total capital to risk-weighted assets (1) |  |  | 19.9% |
Required capital |  |  | 44,458.7 |
Excess capital |  |  | 66,341.3 |
Central Bank’s Rules (2) |  |  |  |
Total capital |  |  | 91,762.7 |
Risk-weighted assets |  |  | 474,189.8 |
Ratio of total capital to risk-weighted assets (3) |  |  | 19.4% |
Required capital |  |  | 38,795.1 |
Excess capital |  |  | 52,967.6 |

(1) | Under the risk-based capital requirements of the Basel Accord, the Bank would be required to maintain a minimum ratio of total capital to risk-weighted assets of 8%.

(2) | Calculated on a consolidated basis in accordance with Central Bank requirements.

(3) | Under the risk-based capital requirements of the Central Bank, we are required to maintain a minimum ratio of total capital to risk-weighted assets of 8%.

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Liquidity Coverage Ratio (LCR)

By Communication “A” 5693, the BCRA ordered the application of the Liquidity Coverage Ratio, or “LCR”, which took effect as of January 30, 2015.

This Communication sets forth that financial institutions must have an adequate stock of high-quality liquid assets (HQLA) free of any restrictions which can be immediately converted into cash in order to cover their liquidity needs during a period of 30 days in case of a stress scenario. Also, financial institutions must carry out their own stress tests to determine the liquidity level that they should maintain in other scenarios, considering a period greater than 30 calendar days. The LCR must be equal to or greater than 1.00 (the stock of high-quality liquid assets must not be lower than the total net cash outlays) in the absence of a financial stress scenario. The LCR may fall below 1 in other scenarios.

The BCRA describes how to categorize a stress scenario, taking into account the following: the partial loss of retail deposits; the partial loss of wholesale non-guaranteed funding capacity; the partial loss of guaranteed funding; additional fund outlays due to situations contractually provided for as a consequence of a significant decline in the financial institution’s credit quality; market volatility increases that have an effect on the quality of guarantees or on the potential future exposure of positions in derivatives; the unforeseen use of credit and liquidity facilities compromised and available but not used that the financial institution may have granted to its clients; and/or the need that the financial institution may experience to repurchase debt or to comply with non-contractual obligations so as to mitigate its reputational risk.

The LCR calculation must be made on a permanent and monthly basis.

In order to calculate the LCR, the related assets include, among others, cash in hand, cash in transit, in armored transportation companies and ATMs; deposits with the BCRA, certain national public bonds in pesos or in foreign currency, securities issued or guaranteed by the Banco de Pagos Internacionales, the International Monetary Fund, the European Central Bank, the European Union or Multilateral Development Banks that comply with certain conditions and debt securities issued by other sovereign entities (or their central banks).

BBVA Argentina’s LCR was 314% as of December 31, 2020, 413% as of December 31, 2019, and 291% as of December 31, 2018.

CAMEL Quality Rating System

Under Law No. 24,144, the Central Bank established the “CAMEL” quality rating system which is based on weighting consistent and comparable criteria, creditworthiness, compliance with the Financial Institutions Law, its administrative order and the general operating solvency of the entity. Each letter of the CAMEL system corresponds to the following areas of the operations of each bank that is being rated: “C” represents capital, “A” represents assets, “M” represents management, “E” represents earnings and “L” represents liquidity. Each factor is evaluated and rated on a scale from 1 to 5, 1 being the highest rating an institution can receive. By combining the individual factors that are under evaluation, a combined index can be obtained which represents the final rating for the entity. The rating a bank receives from the CAMEL system is used by the Central Bank in making decisions such as determining the levels of minimum capital or the amount of contributions a bank is required to contribute to the insurance guarantee system.

Foreign Currency Position

General Exchange Position

The Central Bank defines the general foreign-exchange position as the sum of the following items:

| • |  | gold and foreign currency resources available in the Republic;

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| • |  | gold and foreign currency resources available abroad;

| • |  | foreign public and corporate securities;

| • |  | cash or future foreign-exchange purchases pending settlement;

| • |  | cash or future public and private security purchases pending settlement;

| • |  | cash or future foreign-exchange sales pending settlement;

| • |  | cash or future public and private security sales pending settlement; and

| • |  | foreign-exchange holdings in the form of deposits and investments at any term in banks from abroad and all kinds of liquid investments abroad.

The general foreign exchange position does not include foreign assets of third parties under custody, purchases and sales of foreign currencies or securities at a term and direct investments abroad.

In addition to the limit described above, all funds from foreign currency deposits and received financial loans granted with funds from foreign currency deposits must be applied mainly to the financing of foreign trade transactions, any deficiencies in the application of foreign currency lending capacity, net of a portion of: (i) cash balances, (ii) cash under custody in other financial institutions, (iii) cash in transit and (iv) cash with armored car transport companies, requires an equivalent increase in the minimum cash requirement. See “Item 4. Information on the Company—F. The Argentine Banking System and its Regulatory Framework—Lending Capacity Provided by Deposits in Foreign Currency” above.

Through Communication “A” 6244 dated May 19, 2017, the Central Bank provided that financial entities may freely determine the level and use of their general foreign exchange position. Thus, financial entities are enabled to manage their foreign currency positions, both in terms of the composition of their assets, and the possibility of entering and withdrawing their holdings of the Republic, with its consequent impact on reserves.

Global Net Position

The global net position of a financial institution may not exceed the following limits:

| • |  | Monthly average negative global net position of foreign currency (liabilities exceeding assets), may not exceed 30% of the RPC of the last immediately preceding month.

| • |  | Daily positive global net position of foreign currency (assets exceeding liabilities), may not exceed 5% of the RPC of the last immediately preceding month.

| • |  | An additional daily limit to the positive global net position for cash, which may not exceed 4% of the RPC of the last immediately preceding month.

The global net position in foreign currency will include all assets and liabilities from financial intermediation in foreign currency and securities in foreign currency (deriving from cash and term transactions) including those contracts for derivatives linked to these concepts, those items which must be included in the general foreign exchange position, all deposits in such currency in accounts opened with the Central Bank, as well as the gold position, any Central Bank bills in U.S. dollars as well as foreign currency subordinated debt and foreign currency debt securities. Term transactions made within a framework agreement in the area of self-regulatory markets of the Republic based on liquidation by difference will be also computed, without delivery of the negotiated underlying asset. Furthermore, the pass-through certificates or debt securities issued by financial trusts as well as the credit rights regarding ordinary trusts, in the pertinent proportion, when their underlying asset is constituted by assets in foreign currency, will also be considered.

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Any excess above the limits will be subject to a charge equivalent to 1.5 times the nominal annual overdue interest rate arising from tenders for BCRA bills (LELIQ) denominated in pesos.

In addition to the above-mentioned charge, sanctions set forth in Section 41 of the Financial Institutions Law shall apply (including: caution; warning; fine; temporary or permanent disqualification to dispose of a banking current account; temporary or permanent disqualification to act as promoters, founders, directors, administrators, members of surveillance committees, comptrollers, liquidators, managers, auditors, partner or shareholders; and license revocation).

Fixed Assets and Other Items

The Central Bank requires that the fixed assets and other items maintained by financial institutions must not exceed 100% of the entity’s RPC. The BCRA has resolved to increase by 50 percentage points the specified limit to the extent that the immobilization of the assets is originated in the holding of national public securities and/or monetary regulation instruments of the BCRA appropriated as guaranteed by financial institutions in favor of such entity according to the regulations in force for transactions implemented by the ALADI (Asociación Latinoamericana de Integración) reciprocal payments and credits agreement.

Such fixed assets and other items include the following:

| • |  | shares of local companies;

| • |  | various credits (including the net balance favorable to the given entity corresponding to the tax on minimum presumed income or “TOMPI”);

| • |  | property for own use;

| • |  | various other property items;

| • |  | debt securities or financial trust participation certificates whose underlying assets are the above-mentioned loans, computed in their respective proportion; and

| • |  | financing transactions for related clients.

Excluded from the above items are those assets deductible for calculating the entity’s RPC and assets used as a guarantee for certain transactions mainly related to derivatives, as well as the financing transactions with certain related companies, provided the participation in the company exceeds 50% of the corporate capital and 50% of the votes.

The calculation of such assets must be done according to the balances at the close of each month, net of depreciations, accumulated amortizations and bad debt risk allowances (except the allowance on the portfolio in a normal situation and grants covered by preferred guarantees “A”, which have been computed to determine the complementary net equity of the rules on minimum capital). It is also possible to deduct certain liabilities related to the assets being calculated. In the case of financing transactions with related clients, the calculation is based on the balance at the close of each month or the largest assistance provided to each client during the period in question.

Any excess in this relationship generates an equivalent increase of the minimum capital requirements. Furthermore, any entity incurring noncompliance violations in three consecutive or four non-consecutive months within a period of twelve consecutive months must submit a regularization program.

Lending and Investment Limits

Private sector

Central Bank rules limit the amount of credit, including guarantees, that a financial institution may extend to, and the amount of equity that it may invest in, any entity at any time. These limits are based on the Bank’s allowable capital base, or “ACB” (basic net equity) on the last day of the immediately preceding month.

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According to Central Bank rules, a financial institution may not extend credit to a single non-related client and its affiliates, or invest in that client’s equity, in an amount in excess of 15% of the bank’s ACB. However, it may extend additional credit to that client up to 25% of the bank’s ACB if that additional credit is secured with certain senior preferred liquid assets, including public or private debt securities. Total loans or other extensions of credit that a financial institution may grant to any particular borrower and its affiliates are also limited based on the borrower’s net worth. Total loans or other extensions of credit to any particular borrower and its affiliates may not exceed, in general, 100% of such borrower’s net worth, but such limit may be increased to 200% of the borrower’s net worth if such amount does not exceed 2.5% of the bank’s RPC or 300% in the case of reciprocal guarantee companies and public guarantee funds registered (in both cases) with the pertinent registry authorized at the Central Bank, and provided it does not exceed 10% of relevant entity’s RPC.

The Central Bank requires that extensions of credit in any form in excess of 2.5% of a bank’s ACB must be approved by the relevant branch manager, regional manager, relevant first line administrative officer of the credit area, general manager and credit committee, if any, of the bank, as well as by its board of directors, administration council or similar corporate body.

In addition, an equity investment of a financial institution in another company that does not provide services that are complementary to the services provided by a financial institution may not exceed 12.5% of the shareholders’ equity of such company.

Related Persons

The Central Bank limits the amount a bank can lend to, and the amount of equity it may invest in, a “Related Person”. A Related Person is defined to include:

| • |  | any individual or entity controlling a bank, controlled by a bank or affiliated with a bank, as defined by the Central Bank;

| • |  | any entity that both controls the bank and has common directors to the extent such directors, voting together, will constitute a simple majority of the boards of directors of the bank and such entity; or

| • |  | in certain exceptional cases, any individual or entity that the Central Bank has determined to be in a position to adversely affect the financial condition of the bank.

“Control” is defined as:

| • |  | holding or controlling, directly or indirectly, 25% of the voting stock of the controlled entity;

| • |  | having held 50% or more of the voting stock of the controlled entity at the time of the last election of such entity’s board of directors;

| • |  | any type of equity holding that creates the ability to vote or direct the vote so as to prevail on any issue considered at the controlled entity’s general shareholders’ meeting or meeting of the board of directors; or

| • |  | when a person is determined by the board of directors of the Central Bank to be exercising any influence, directly or indirectly, on the management or policies of the bank.

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The Central Bank requires that the total amount of financing that a financial institution may provide to a related company or person may not exceed the following percentages of the bank’s ACB as of the last day of the immediately prior month:

| 1. | Local financial sector

| a. | By a controlling relationship

Lender entity |  | Borrowing entity |  | General |  | Additional
| Tranche I |  | Tranche II |  | Tranche III
CAMEL 1 to 3 |  | CAMEL 1 (*) |  | 100% |  | 25% earmarked by the financial institution acquiring assistance to finance transactions that comply with certain conditions. |  | 25% in the event of financing transactions with guarantee or assignment of credit portfolio where assignor is responsible provided the requirements of Tranche I are met. |  | —
|  | CAMEL 2 (*) |  | 20% |  | 25% earmarked by the financial institution acquiring assistance to finance transactions that comply with certain conditions. |  | 25% if the financing transactions involve guarantee or assignment of credit portfolio where assignor is responsible provided the requirements of Tranche I are met. |  | 55% for financing transactions for an agreed initial term of up to 180 days.
|  | CAMEL 3 (*) |  | 10% |  | 20% earmarked by the financial institution acquiring assistance to finance transactions that comply with certain conditions. |  | 20% if the financing transactions involve guarantee or assignment of credit portfolio where assignor is responsible provided the requirements of Tranche I are met. |  | —
|  | Not meet any of the above conditions |  | 10% |  | — |  | — |  | —

(*) | Subject to consolidation with the lender.

| b. | By a relationship that is not controlling

Lender entity |  | Borrowing entity |  | Maximum limits |
CAMEL 1 to 3 |  | CAMEL 1 to 3 provided that it belongs to the same consolidation group of the lender. |  |  | 25 | %
|  | Not meet any of the above conditions |  |  | 10 | %
CAMEL 4 or 5 |  |  |  |  | 0 | %

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| 2. | Foreign financial sector

Lender entity |  | Borrowing entity |  | Maximum limits |
CAMEL 1 to 3 |  | To each foreign related bank: |  |  |  |
|  | •  With “Investment Grade” classification |  |  | 10 | %
|  | •  Without “Investment Grade” classification: |  |  |  |
|  | Financing without computable warranty |  |  | 5 | %
|  | Financing with/without computable warranty |  |  | 10 | %
CAMEL 4 or 5 |  | To each foreign related bank subject to consolidation and parent company: |  |  |  |
|  | •  With “Investment Grade” classification |  |  | 10 | %
|  | •  Without “Investment Grade” classification: |  |  |  |
|  | Financing without computable warranty |  |  | 5 | %
|  | Financing with/without computable warranty |  |  | 10 | %
|  | To each foreign related bank not subject to consolidation: |  |  |  |
|  | •  With “Investment Grade” classification |  |  | 10 | %
|  | •  Without “Investment Grade” classification |  |  | 5 | %
|  | To each foreign related bank that does not meet any of the above conditions |  |  | 0 | %

| 3. | Local complementary services companies

Lender entity |  | Borrowing entity |  | General |  |  | Additional
| Tranche I |  | Tranche II |  | Tranche III
CAMEL 1 |  | Stock exchange agent or other broker, leasing, factoring or temporary acquisition of participation in companies to sell the holdings afterwards (**) |  |  | 100 | % |  | — |  | — |  | —
|  | Debit/credit card issuers (**) |  |  | 100 | % |  | 25% earmarked by the financial institution acquiring assistance to finance transactions that comply with certain conditions. |  | 25% in the event of financing transactions with guarantee or assignment of credit portfolio where assignor is responsible provided the requirements of Tranche I are met. |  | —
|  | Not meet any of the above conditions |  |  | 10 | % |  | — |  | — |  | —
CAMEL 2 |  | Stock exchange agent or other broker, leasing, factoring or temporary acquisition of participation in companies to sell the holdings afterwards (**) |  |  | 10 | % |  | — |  | — |  | 90%
|  | Debit/credit card issuers (**) |  |  | 20 | % |  | 25% earmarked by the financial institution acquiring assistance to finance transactions that comply with certain conditions. |  | 25% if the financing transactions involve guarantee or assignment of credit portfolio where assignor is responsible provided the requirements of Tranche I are met. |  | 55% for financing transactions for an agreed initial term of up to 180 days.
|  | Not meet any of the above conditions |  |  | 10 | % |  | — |  | — |  | —

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Lender entity |  | Borrowing entity |  | General |  |  | Additional
| Tranche I |  | Tranche II |  | Tranche III
CAMEL 3 |  | Debit/credit card issuers (**) |  |  | 10 | % |  | 20% earmarked by the financial institution acquiring assistance to finance transactions that comply with certain conditions. |  | 20% if the financing transactions involve guarantee or assignment of credit portfolio where assignor is responsible provided the requirements of Tranche I are met. |  | —
|  | Not meet any of the above conditions |  |  | 10 | % |  | — |  | — |  | —
CAMEL 4 or 5 |  | Complementary services companies (**) |  |  | 10 | % |  | — |  | — |  | —
|  | Not meet any of the above conditions |  |  | 0 | % |  | — |  | — |  | —

(**) | Subject to consolidation with the lender.

| 4. | Foreign complementary services companies

Lender entity |  | Borrowing entity |  | Maximum limits |
CAMEL 1 to 3 |  | To each complementary services related companies: |  |  |  |
|  | •  Financing without computable warranty |  |  | 5 | %
|  | •  Financing with/without computable warranty |  |  | 10 | %
CAMEL 4 or 5 |  | To each complementary services companies subject to consolidation with the lender: |  |  |  |
|  | •  Financing without computable warranty |  |  | 5 | %
|  | •  Financing with/without computable warranty |  |  | 10 | %
|  | To each complementary services related companies that do not meet any of the above conditions |  |  | 0 | %

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| 5. | Other clients related by controlling relationship

Lender entity |  | Borrowing entity |  | Maximum limits |
CAMEL 1 to 3 |  | To each related borrower: |  |  |  |
|  | •  Financing without computable warranty |  |  | 5 | %
|  | •  Financing with/without computable warranty |  |  | 10 | %
CAMEL 4 or 5 |  | •  To each related company (only equity investment) (***) |  |  | 5 | %
|  | •  To each related borrower that does not meet any of the above conditions |  |  | 0 | %

(***) | Admitted activity under Section 3 of the rules on “Complementary services of the financial activity and permitted activities”.

| 6. | By personal relationship

Lender entity |  | Borrowing entity |  | Maximum limits
CAMEL 1 a 3 |  | To each related borrower |  | 5%
CAMEL 4 or 5 |  | •  To each related person to use exclusively for personal or family purposes |  | 30 times the minimum vital and mobile salary (****)
|  | •  To each related borrower that does not meet any of the above conditions |  | 0%

(****) | Established by the National Employment, Productivity and Minimum, Vital and Mobile Salary Council for monthly workers who complete the full legal working day, in effect at the time of granting the loan in question.

The total financing granted to all related clients (subject to maximum individual limits exceeding 10%) may not exceed 20% of the ACB of the entity.

Failure to properly observe these requirements can result in an increase of the minimum capital requirements for credit risk in an amount equal to 100% of the daily excess amounts over the requirements beginning on the month when the excess amounts are not corrected and continuing while the excess amounts remain. In the case of information registered out of term, this increase will be applied beginning on the month when the information is registered and for as long as the default exists. Moreover, once the default has been corrected, the increase will be applied for a number of months equal to the period during which the Central Bank was not informed. For repeated defaults the increase can reach up to 130% of the excess amount.

At December 31, 2020, the aggregate of computable loans, other extensions of credit and equity investments by BBVA Argentina on a consolidated basis to related persons totaled Ps.3,360 million, or 3.88% of BBVA Argentina’s RPC.

Non-financial Public Sector

The non-financial public sector includes, inter alia:

| • |  | the federal government;

| • |  | provincial governments;

| • |  | the city of Buenos Aires;

| • |  | municipal governments;

| • |  | central administration, ministries, departments and their decentralized and autonomous entities and other official bodies; and

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| • |  | trusts and trust funds whose final beneficiary or trustee, as determined by the respective contracts or applicable regulations, belongs to the non-financial public sector, including other trusts or trust funds where such sector is the final destination of the financed works.

In certain circumstances the Central Bank may apply to state-owned companies governed by Law No. 20,705 the provisions applicable to non-financial private sector corporations, provided such state-owned companies:

| • |  | do not require resources from the state budget whether national, municipal, provincial or belonging to the Autonomous City of Buenos Aires for such items as transfers, capital contributions (excepting those corresponding to their incorporation) or reimbursable financial assistance to be used for covering expenses and/or investments made in the course of their normal and customary businesses, except those which may have been contemplated in the 2001 and 2002 budgets;

| • |  | maintain technical and professional independence of their management for implementing corporate policies;

| • |  | trade their goods and/or services at market prices;

| • |  | possess fixed assets; the use of which in the activity is not subject to any condition from their shareholders; and

| • |  | do not distribute of dividends among their shareholders.

Compliance with all the above conditions must have been verified continuously during at least the ten years immediately preceding the date of the granting of financial assistance.

The Central Bank may also apply the provisions applicable to non-financial private sector corporations to state-owned companies that are not governed by Law No. 20,705, provided that such state-owned companies not governed by Law No. 20,705 comply with the following requirements:

| • |  | their creation must have been ordered by a national law or decree by the federal executive;

| • |  | they must create a limited liability company according to the rules of Chapter II, Sections V and VI of the Business Companies Law No. 19,550;

| • |  | the public state must hold a majority interest, direct or indirect;

| • |  | they must be the purpose of developing of activities for oil reserves, its transportation, distribution, commercialization and industrialization or the generation and/or sale of electric energy; and

| • |  | they must be subject to internal and external control by the national public sector in terms of the Financial Administration Law and the National Public Sector’s Control System Law No. 24,156.

Consequently, those corporations receiving the treatment set forth in this resolution are exempted from the application of the provisions regarding financial assistance to the owners of entities in the non-financial public sector.

All financing granted to the above entities may not exceed the following limits with respect to the entity’s RPC as at the last day of the preceding month:

| • |  | for transactions in the national public sector: 50%, which includes loans granted to governments from other jurisdictions guaranteed by their participation in the federal tax collection system;

| • |  | for all transactions granted to each provincial jurisdiction and the City of Buenos Aires (excluding those comprised in the previous paragraph which must be guaranteed by the collection of local taxes or by pledge or implemented under leasing agreements): 10%. This limit includes financing transactions granted to municipal governments in the respective jurisdiction and guaranteed by their participation in the collection of provincial taxes;

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| • |  | for all transactions with each municipal jurisdiction, which must be guaranteed by the collection of local taxes or by pledge, or implemented under leasing agreements: 3%;

| • |  | the limits mentioned above may be increased by 15 percentage points, provided that the increases are applied to a specific purpose;

| • |  | total financing granted through the acquisition of public securities issued in pesos by the central administration of the provincial non-financial public sector and / or the CABA, which do not have any of the guarantees provided: 5%;

| • |  | for all transactions to municipal jurisdictions: 15%; and

| • |  | for all transactions referred to in the first three points above: 75%.

The limits mentioned in the two bullets immediately above may be increased by 50 percentage points, provided that the increases are applied to a specific purpose and the available unused quota of the limit mentioned in the last bullet above may be used for transactions in the national public sector.

In addition, the monthly average of the daily balances of the set of transactions corresponding to holders of debt of the non-financial public sector (national, provincial, CABA and municipal), with the exception of those carried out with the BCRA, cannot exceed 35% of the total assets on the last day of the previous month.

The following financial assistance will be excluded from compliance with the limits provided above:

| • |  | financing covered by cash guarantees, which constitute preferred “A” guarantees;

| • |  | financing covered by bonds of fixed-term certificates of deposit issued by the financial institution itself, which constitute preferred “A” guarantees;

| • |  | export financing when the transactions are automatically reimbursed by the BCRA, in accordance with regimes of bilateral or multilateral foreign trade agreements;

| • |  | financing covered by guarantees of monetary regulation instruments of the Central Bank, which constitute preferred guarantees “A”;

| • |  | credits for cash transactions to be liquidated, without prejudice to the calculation of the credits for the liquidation mismatches that occur;

| • |  | loans corresponding to claims covered by the National State (Law 20,299) in export financing;

| • |  | premiums for purchase and sale options taken;

| • |  | financing and guarantees, bonds and other responsibilities granted by local branches or subsidiaries of foreign financial entities, on behalf of and order of its parent company or its branches in other countries or of the controlling entity, under certain conditions; and

| • |  | primary subscriptions of national government securities that shall be paid with funds produced from the collection of financial services of other national government securities, provided that the period between the subscription date and the collection date does not exceed three business days.

Loan Loss Allowances

The loan loss allowances presented in our Consolidated Financial Statements included in this Form 20-F are prepared in accordance with IFRS-IASB (see Note 5.4.g) to the Consolidated Financial Statements), which differs from the statutory consolidated annual financial statements and the regulatory framework applicable to the Argentine banking system. The below describes the treatment of loan loss allowances pursuant to BCRA-GAAP as they are applicable to our regulatory framework of the Argentine banking system.

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Classification System According to Central Bank Regulations

The Central Bank has established specific loan loss allowance requirements for loans to borrowers classified as “Substandard”, “Medium Risk”, “High Risk of Insolvency”, “High Risk”, “Irrecoverable” and “Irrecoverable for Technical Decision”. In addition, the Central Bank established a mandatory general allowance requirement for all performing loans.

A. | Debtor classification

The Central Bank establishes guidelines for classifying debtors depending on their credit quality and compliance with their commitments, according to the evaluation performed for that purpose by the financial institution.

1. | The guidelines vary depending on whether commercial loans are involved, or consumer and housing loans. Commercial loans of:

| a) | Up to Ps.14,528,000(1) for clients who qualify as micro-credit institutions.

(1) | 40% of the reference amount established in point 3.7. of the BCRA’s “Classification of Debtors” rules.

| b) | Up to Ps.72,640,000(2) for all other activities.

(2) | 40% of the reference amount established in point 3.7. of the BCRA’s “Classification of Debtors” rules.

may be considered, for classification purposes, as consumer loans at the bank’s discretion, and treated as such. The Bank has used that option.

2. | Debtors and all their loans are included in one of six categories or situations of decreasing credit quality:

Commercial Loans |  | Consumer or Housing Loans |  | Arrears
1. |  | Normal (1) |  |  |  |  |  | up to 91 days
2. |  | Special Tracking (2) |  | 2. |  | Low risk (6) |  | up to 150 days
3. |  | Substandard |  | 3. |  | Medium risk |  | up to 240 days
4. |  | High Insolvency Risk (3) |  | 4. |  | High risk |  | up to 1 year
5. |  | Irrecoverable (4) |  |  |  |  |  | more than a year
6. |  | Irrecoverable for Technical Decision (5) |  |  |  |  |  |

(1) | In the case of consumer or housing loans, current account overdrafts are considered to be performing until 61 days have elapsed from the date granted.

(2) | Commercial loans in category 2 are divided into loans:

| a) | under observation, which include debtors up to 90 days in arrears in situations that, if not controlled or corrected in a timely manner, could compromise their repayment capacity, and

| b) | under negotiation or with refinancing agreements, which include debtors that although unable to pay their obligations under the agreed conditions, have declared their intention of refinancing their debts no later than 60 days after becoming past due. The borrower must enter into an agreement with the lender within 90 days (if up to two lenders are involved) or 180 days (if more than two lenders are involved) after the date on which the obligations become overdue. If no agreement has been reached within the established deadline, the borrower must be reclassified to the next category below according to the indicators established for each level.

(3) | This category includes debtors that have filed for creditor protection or an out-of-court preventive measure, or for which payment has been demanded in court. In the case of the consumer portfolio, debtors that have filed for creditor protection or are covered by out-of-court measures can record arrears of up to 540 days.

(4) | This category includes mainly insolvent debtors facing bankruptcy or liquidation processes.

(5) | This category includes debtors with arrears in excess of 180 days that are customers of banks that have been liquidated or have had their license revoked by the BCRA, residual entities of privatized banks, or trusts in which SEDESA is a beneficiary.

(6) | The consumer or housing loan portfolio is divided into:

| • |  | Customers with more than 31 days’ and up to 90 days’ arrears in payment of principal, interest or otherwise in respect of any of their loans.

| • |  | “Special Tracking”: For refinancing arrangements granted for the first time within the calendar year, and once the customer has settled the first instalment under such refinancing arrangement, it may be reclassified into this category one time only. After such refinancing and for purposes of the classification, only arrears in customers’ obligations should be considered. For subsequent refinancing arrangements, customers will be afforded the general treatment set forth in these provisions.

According to Central Bank’s Communication “A” 6938, up to and including September 30, 2020, admissible arrears for the categories “Normal”, “Low Risk” and “Medium Risk” were increased by 60 days, for the commercial as well as for the consumer and housing loan portfolios, to the number of days set forth above. Communication “A” 7181 extended this measure until March 30, 2021. The Central Bank will from time to time provide a schedule for financial institutions to gradually classify their debtors according to preexisting arrears criteria as of the relevant communication date.

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3. | The basic criterion for the evaluation and classification of clients is their repayment capacity of the debt or commitments guaranteed by a financial institution.

| a) | For the commercial portfolio, evaluation is made on the basis of repayment capacity and debtor cash flows. Indicators used include liquidity, financing structure, compliance with payment of obligations, quality of management and administration, IT systems, prospects for the client’s business sector, its position within the sector, its legal standing and the existence of refinancing or debt discounts.

| b) | For the consumer and housing loans portfolio, evaluation is based on debt payment compliance and the legal status of the debtor. The evaluation criteria is exclusively objective – the degree of compliance with the obligations, the legal situation of the debtor and the existence of refinancing or debt discounts.

An evaluation of the payment capacity based on the borrower’s income is not mandatory as long as other specific evaluation methods are used or the borrower’s loans are for minimal amounts as determined by the BCRA.

4. | When loans are fully collateralized by preferred class A collateral, evaluation of the repayment capacity is not required.

5. | Minimum classification frequency. Debtors and loans must be valuated and classified with a minimum frequency depending on the type of clients, as described below.

| a) | Consumer portfolio clients: monthly

| b) | Commercial portfolio clients: annually. However classification should be performed:

| • |  | During the course of each quarter for clients whose debts are equivalent to 5% or more of the financial institution’s total capital;

| • |  | During the course of each half-year in the case of clients whose debt at some moment has totaled between 1% of the financial institution’s total capital or the equivalent to Ps.29,740,000 (1) whichever is lower, and less than 5% of the financial institution’s total capital.

(1) | 100% of the reference amount established in point 3.7. of the BCRA’s “Classification of Debtors” rules.

| • |  | During the course of the year for the rest of clients who are considered part of the commercial portfolio.

| • |  | In addition, the bank should review a debtor’s situation when any of the following circumstances occur:

| a) | when a debtor has debts equivalent to at least 10% of the total notified to the credit information debtor base in another financial institution, and that institution lowers the client’s rating on the mentioned database;

| b) | when there are changes to any of the objective classification criteria (arrears or legal situation);

| c) | when a credit rating agency lowers the rating of securities issued by the client by more than one level; or

| d) | when there is more than a one-level discrepancy between the classification assigned by the financial institution and at least two other institutions, and certain requirements have been met.

Re-appraisal must be immediate in the case of clients with debts totaling 1% or more of the financial institution’s RPC or the equivalent to Ps.29,740,000 (2), whichever is lower.

(2) | 200% of the reference amount established in point 3.7. of the BCRA’s “Classification of Debtors” rules.

6. | Mandatory reclassification of clients. One-level discrepancy is allowed in relation to the information submitted by financial institutions to the credit information data base. If there is a greater discrepancy between the rating of the bank and the lower classification awarded by at least two other banks, and total loans from such banks account for 40% or more of the total informed, the bank will be required to reclassify the debtor to at least the level immediately above that registering the highest level of indebtedness with the comparison institutions. Communication “A” 7181 suspended the application of this provision until March 30, 2021.

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7. | Criterion for an improving credit rating. For a debtor to be categorized as “normal”, up to two refinancings must have taken place within the last twelve months and it must be no more than 31 days in arrears since the date of the last refinancing. For all other scenarios, the basic criterion is that the highest penalty must be applied to borrowers who have delays after refinancing, such that:

The borrower must accumulate a greater number of down payments (as shown in table (i) below) or increase his repayment percentage (as shown in table (ii) below) in order to improve his situation. The BCRA regulations provide that those clients whose debts have been refinanced via obligations subject to regular payments (monthly or bi-monthly) may be reclassified at the immediately upper level if they have complied punctually (or with delays not exceeding 31 days) with the payment of the established installments or who have repaid at least a certain specified percentage of their refinanced principal obligations.

Table (i) – Enhanced situation by the payment of installments. Consumer portfolio (*)

|  | Quantity of payments |
Change of category |  | from Irrecoverable |  |  | from High Risk |  |  | from Medium Risk |  |  | from Low Risk |
Change to High Risk |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | — |
Change to Medium Risk |  |  | 6 |  |  |  | 3 |  |  |  | — |  |  |  | — |
Change to Low Risk |  |  | 8 |  |  |  | 5 |  |  |  | 2 |  |  |  | — |
Change to Normal |  |  | 9 |  |  |  | 6 |  |  |  | 3 |  |  |  | 1 |

(*) | The refinancing requires a punctual payment or with delays of not more than 31 days according to the German or French Amortization System. Regularity may be monthly or bimonthly.

Table (ii) – Enhanced situation by cancellation percentage of repayment of outstanding amount. Consumer and commercial portfolios (**)

|  | Percentage of repayment of outstanding amount |
Change of category |  | from Irrecoverable |  |  | from High Risk |  |  | from Medium Risk |  |  | from Low Risk |
Change to High Risk |  |  | 15 | % |  |  | — |  |  |  | — |  |  |  | — |
Change to Medium Risk |  |  | 25 | % |  |  | 10 | % |  |  | — |  |  |  | — |
Change to Low Risk |  |  | 30 | % |  |  | 15 | % |  |  | 5 | % |  |  | — |
Change to Normal |  |  | 35 | % |  |  | 20 | % |  |  | 10 | % |  |  | 5 | %

(**) | For amortization systems with periods greater than bimonthly or irregular.

Recoverables are not applied and rebates may not be counted in order to improve the situation (they belong to the debt preceding the signing of the refinancing agreement), so no quantification was made. Up-front payments may be computed as per their equivalent in installments or amortization percentage in order to improve the borrower’s situation.

8. | Refinancing. This refers to the criterion for deteriorating situation as a result of non-compliance with refinancing requirements. Arrears are considered to exist in a refinancing scenario if a delay exceeding 31 days from the due date occurs.

| a) | Tranches of arrears are allocated in any applicable situation according to the table below:

Situation |  | Minimum delay time (in days) Situation until June 2021 |  |  | Minimum delay time (in days) Situation after June 2021 |
Normal |  |  | 0 |  |  |  | 0 |
Low Risk |  |  | 92 |  |  |  | 32 |
Medium Risk |  |  | 151 |  |  |  | 91 |
High Risk |  |  | 241 |  |  |  | 181 |
Irrecoverable |  |  | More than 1 year |  |  |  | More than 1 year |

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| b) | Afterwards the refinancing arrears must be taken into account to determine the situation in which the refinanced client must be placed at.

B. | Provisioning

1. | Loan provisioning must be performed on the basis of the classification assigned to the debtor. No provision is required for loans for up to 30 days granted to other financial institutions (if not past due), for loans granted to the public non-financial sector, or unused balances of current account overdraft agreements.

2. | The following minimum provisioning levels are to be applied on total debt:

Debtor Category |  | With preferred collateral “A” (1) |  |  | With preferred collateral “B” (2) |  |  | Without preferred collateral |
1. Normal |  |  | 1 | % |  |  | 1 | % |  |  | 1 | %
2. a) Under observation and low risk |  |  | 1 | % |  |  | 3 | % |  |  | 5 | %
b) Under negotiation or with refinancing agreements |  |  | 1 | % |  |  | 6 | % |  |  | 12 | %
c) Special treatment |  |  | 1 | % |  |  | 8 | % |  |  | 16 | %
3. Substandard and medium risk |  |  | 1 | % |  |  | 12 | % |  |  | 25 | %
4. High insolvency risk and high risk |  |  | 1 | % |  |  | 25 | % |  |  | 50 | %
5. Irrecoverable |  |  | 1 | % |  |  | 50 | % |  |  | 100 | %
6. Irrecoverable for technical decision |  |  | 1 | % |  |  | 100 | % |  |  | 100 | %

(1) | Consists of titles or documents that the creditor can easily liquidate to settle an unpaid debt without following the normal procedure of bankruptcy. They include foreign currencies, certificates of deposit, government securities and other.

(2) | Includes mortgages and pledges in the first degree for which it must comply with legal enforcement procedures;

Banks are required to establish provisions equal to 100% of any interest accrued on loans to borrowers classified as “Substandard and Medium Risk” or lower. The Bank chooses to interrupt interest accrual accounting as permitted by the regulation.

By Communication “A” 4683, the BCRA introduced the possibility for debtors of the consumer and consumer-like portfolio to be assigned a percentage above the minimum estimate for a particular category without having to be automatically reclassified to the next category. BBVA Argentina has used this possibility.

3. | Procedure for constituting provisions above the minimum ones established by the regulations for a portfolio in a normal situation.

The main criterion is based on the provisions of point 7.1. of the “Debtor Classification Standard” and “Debt Provisions Standard”, more stringent criteria may be adopted on the basis of the objective guidelines mentioned in the first paragraph of the same point, provided this constitutes a generally applied policy which must be duly detailed in the “Debtor Classification and Provision Procedures Manual”, without this affecting the rating that must be allocated to eligible borrowers as provided hereunder, and provided this is duly grounded on objective criteria based on behavioral studies that give support to the higher provisions (be it for the active portfolio as a whole or by type of financing). In accordance with the regulations in force, we do not apply provision percentages above the established minimum.

The policy in force for the management of provisions by BBVA Argentina sets forth two control levels:

| • |  | Regulatory and technical control

Two basic references when it comes to the management of provisions are, on the one hand, compliance with the regulatory requirements on minimum capital and non-performance provisions; and, on the other hand, the Bank’s capital ratio. BBVA Argentina strives at all times to comply with the regulatory requirements on minimum capital and non-performance provisions. Therefore, both values per se determine a lower limit for the management of provisions. Likewise, a second lower limitation is established for the management of provisions: the capital ratio. In this regard, any disablement of provisions may only take place if the capital ratio (defined as the computable equity liability divided by the risk-weighted assets) is 10.5% or higher.

| • |  | Behavioral control of portfolio indicators.

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In order to provide the Bank with an appropriate level of provisions, the behavior of the Bank’s main credit portfolio indicators are monitored on a regular basis.

At least the following portfolio behavior indicators are analyzed:

| • |  | NPL ratio behavior

| • |  | Cycle-adjusted expected loss behavior

| • |  | Expected loss behavior without cycle adjustment

| • |  | Coverage performance

Absolute variations (increases and decreases) for these indicators and their tendencies are analyzed, considering the last 12 months prior to the lowest month under analysis.

Based on the results of these assessments, the Technical Secretary and Reporting Unit will submit, at least quarterly, a report to the Risk Management Committee with the following information:

| • |  | Capital position (including the Bank’s minimum capital requirement and payment and capital ratio)

| • |  | Changes in credit portfolios during the period (12 months)

| • |  | Status of allowances (breakdown of allowances by situation and portfolio)

| • |  | Proposed allowances, if applicable

The Risk Management Committee will draft minutes stating the decision made on the basis of the assessment of the behavioral indicators, which may result in a proposal to the Board of Directors if it is found that the Bank’s provisions require an adjustment. Such proposal can be accompanied by a structuring schedule for the proposed increase or decrease in the Bank’s provisions, to avoid an impact on the Bank’s profit and loss account.

4. | Allowance percentages used by BBVA Argentina.

In accordance with Communication “A” 6938, the allowance percentages being used by the Bank for the commercial, consumer and consumer-like portfolios are the following:

| • |  | Percentages of allowance for consumer portfolio and consumer-like portfolio clients:

Situation |  | Category |  | Without Preferred Guarantees |  |  | With Preferred Guarantees B |  |  | With Preferred Guarantees A |
|  |  |  | (in percentages) |
1 |  | Normal |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
2 |  | Low Risk |  |  | 5 |  |  |  | 3 |  |  |  | 1 |
2.b. |  | Special treatment |  |  | 16 |  |  |  | 8 |  |  |  | 1 |
3 |  | Medium Risk |  |  | 25 |  |  |  | 12 |  |  |  | 1 |
4 |  | High Risk |  |  | 50 |  |  |  | 25 |  |  |  | 1 |
5 |  | Irrecoverable |  |  | 100 |  |  |  | 50 |  |  |  | 1 |

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| • |  | Percentages of allowance for commercial portfolio clients:

Situation |  | Category |  | Without Preferred Guarantees |  |  | With Preferred Guarantees B |  |  | With Preferred Guarantees A |
|  |  |  | (in percentages) |
1 |  | Under Observation |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
2.a. |  | Under Observation |  |  | 5 |  |  |  | 3 |  |  |  | 1 |
2.b. |  | Under Negotiation |  |  | 12 |  |  |  | 6 |  |  |  | 1 |
2.c. |  | Special treatment |  |  | 16 |  |  |  | 8 |  |  |  | 1 |
3 |  | Substandard |  |  | 25 |  |  |  | 12 |  |  |  | 1 |
4 |  | High Risk of Insolvency |  |  | 50 |  |  |  | 25 |  |  |  | 1 |
5 |  | Irrecoverable |  |  | 100 |  |  |  | 50 |  |  |  | 1 |

4.1. | Classification/Allowance Manual Adjustment Procedure

The “Classification/Allowance Manual Adjustment Procedure” will apply in exceptional cases, as authorized by the Wholesale Risk Monitoring Committee, a sub-committee of the Risk Management Committee, defining the classifications and/or percentages of allowances to be manually applied to certain customers. This procedure supplements the one established in our classification manual.

The “Classification/Allowance Manual Adjustment Procedure” for customers within the commercial or consumer-like portfolio is based on:

| • |  | Expert analysis criteria warranting changes to the classification/allowance required by the Central Bank;

| • |  | Requests for changes to the customer’s situation, based on court decisions; and

| • |  | Changes to the customer’s situation pursuant to national and/or provincial laws.

All these aspects will be discussed by the Wholesale Risk Monitoring Committee in order to determine any potential change to a customer’s situation or allowance from time to time.

Once approved by the Wholesale Risk Monitoring Committe, notice is given to Portfolio & Reporting Management (Risk Department), which is in charge of administering and monitoring that the allowances and situations determined by the Wholesale Risk Monitoring Committe comply with the regulations on minimum allowances laid down by the Central Bank.

Following review of our Portfolio & Reporting Management (Risk Department), the list is approved and reported to accounting at the end of each month, which is responsible for changing the relevant customers’ situation or allowance, based on the information reported in the list of manual adjustments in the Bank’s computing system.

Once the relevant change has been implemented, accounting is required to report these changes to Portfolio & Reporting Management (Risk Department), which is to ensure that the changes so made are as requested in the list of manual adjustments. If the change has not been adequately implemented, Portfolio & Reporting Management will cause the pertinent corrections to be made.

5. | The Superintendence may require additional provisioning if it determines that the current level is inadequate.

6. | Accrual of interest on client debts classified as “under negotiation or with refinancing agreements” when arrears of more than 90 days in the payment of obligations are recorded, and those in the “substandard” or “medium risk”, “high risk”, and “unrecoverable” categories must be provided for at 100% as from the moment they are classified in any of those categories. The financial institution may opt to interrupt interest accrual.

7. | Client debt classified as “unrecoverable” and fully provided for must be written off as from the seventh month subsequent to that in which such actions were taken. These loans should be booked in memorandum accounts.

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8. | Inclusion of debtors in the “unrecoverable based on technical criteria” category results in the obligation to provision loans at 100%, including renewals, stays, forbearance –express or tacit – granted after such classification, once 90 or 180 days have elapsed as from the date on which the first of such financing measures were taken.

9. | Provisioning for the normal portfolio is of a global nature, while for other categories, the allocation of provisions for each debtor is made on an individual basis.

Priority of Deposits

Law No. 24,485, as amended, sets forth that in case of judicial liquidation or bankruptcy of a financial institution, all depositors, irrespective of the type, amount or currency of their deposits, would be senior to the other remaining creditors (such as the shareholders of the bank), with exceptions made for certain labor creditors (Article 53 paragraphs “a” and “b”) and for those creditors backed by a pledge or mortgage, in the following order of priority: (a) deposits of up to Ps.450,000 per person (including any amount of said person deposited with a financial institution), or their equivalent in foreign currency; (b) any and all deposits higher than Ps.450,000, or their equivalent in foreign currency; and (c) the liabilities originated in commercial lines granted to the bank and that directly affect international commerce.

Furthermore, pursuant to article 53 of the Financial Institutions Law, as amended, Central Bank credits will have absolute priority over the other credits, except for pledged or mortgaged credits, certain labor credits, the depositors’ credits as per art. 49, paragraph e), points i) and ii), credits granted under Article 17, paragraphs (b), (c) and (f) of the Central Bank’s Charter (including discount granted by financial institutions due to temporary lack of liquidity, advances in favor of financial institutions with security interest, assignment of rights, pledge or special assignment of certain assets) and credits granted by the fund Fondo de Liquidez Bancaria backed by pledge or mortgage.

The amendment introduced to art. 35 bis of Financial Institutions Law by Law No. 25,780, sets forth that if a financial institution is in a situation where the Central Bank may revoke its authorization to operate and become subject to dissolution or liquidation by judicial resolution, the Central Bank’s Board may decide by absolute majority to transfer assets and liabilities of the bank in favor of financial trusts or other financial institutions, the Central Bank may totally or partially exclude the liabilities mentioned in article 49, paragraph e) of the Financial Institutions Law, as well as its credits defined in art. 53, observing the order of priority among its creditors. Regarding the partial exclusion, the order of priority of point e) art. 49 of the Financial Institutions Law must be followed, without assigning, in any case, a differentiated treatment to liabilities of the same grade.

Capital Markets

Under the Financial Institutions Law, financial institutions may underwrite and place both equity and debt securities. There are currently no statutory limitations on the size of a financial institution’s underwriting commitments. However, a financial institution’s underwriting commitment would be treated as an extension of credit subject to the limitations discussed under “Item 4. Information on the Company—F. The Argentine Banking System and its Regulatory Framework—Lending and Investment Limits”.

Commercial banks are authorized to trade public and private debt securities in the Argentine over-the-counter market if they are members of the Mercado Abierto Electrónico (“MAE”) and authorized to act as over-the-counter brokers (agentes de mercado abierto). In our capacity as an over-the-counter broker, we are subject to MAE rules and the supervision of the CNV as our primary regulator, and accordingly, we must comply with certain reporting requirements.

Since 1990, the Buenos Aires Stock Exchange (BCBA) (now the BYMA) has authorized brokerage firms or houses organized as sole purpose corporations to operate as securities brokers on the BYMA. Commercial banks may freely own a securities brokerage company, as there are no current restrictions on ownership, and most of the principal commercial banks operating in Argentina have already established their own securities brokerage company. An agreement between the BYMA and representatives of the MAE dealers provides that trading in shares and other equity securities will be conducted exclusively on the BYMA and that all debt securities listed on BYMA may also be traded on the MAE. Trading in Argentine government securities, which are not covered by the agreement, is conducted mainly on the MAE. The agreement does not extend to other Argentine exchanges.

Commercial banks may operate as both managers and custodians of Argentine investment funds; provided, however, that a bank may not act simultaneously as manager and custodian for the same fund.

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We have been registered as an over-the-counter broker since 1989. In 1991, we created Francés Valores Sociedad de Bolsa S.A., renamed later as BBVA Francés Valores S.A., by virtue of the last change of name registered before the IGJ on April 4, 2014 under No. 5,883 Book 68 of Corporations. In the shareholders’ meetings held on April 24, 2019 and May 15 2019, the shareholders of BBVA Francés Valores S.A. resolved to change the company’s corporate name to “BBVA Valores Argentina SA”, being registered by the IGJ on February 20, 2020, under No. 3405 Book 99 of Corporations.

On December 28, 2012 Law No. 26,831, the “Capital Markets Law” was enacted, and was supplemented by the CNV by Resolution No. 622/13 dated September 5, 2013, According to section 47 of the said law, all agents acting in the different markets, must have the prior approval and registration of the CNV. During 2014 BBVA Argentina and BBVA Valores Argentina S.A. completed their registration as settlement and integral compensation agents.

On March 8, 2019, the respective boards of BBVA Argentina and BBVA Valores Argentina S.A. approved the merger of the two companies, and on April 24, 2019, the respective shareholders’ meetings approved the transaction. Currently, the transaction is pending authorization by the IGJ.

Financial Institutions with Economic Difficulties

Under the Financial Institutions Law, if a financial institution:

| • |  | evidences a cash reserve deficiency,

| • |  | has not satisfied certain technical standards,

| • |  | has not maintained minimum net worth standards, or

| • |  | is deemed by the Central Bank to have impaired solvency or liquidity;

then such financial institution must submit a regularization plan under such terms and conditions as may be established by the Central Bank within a term that may not exceed thirty days. This notwithstanding, the Central Bank may appoint overseers with veto powers and/or demand the creation of guarantees and restrict or prohibit the distribution of dividends or profits. The lack of submission, the rejection of or any noncompliance with the regularization plan entitle the Central Bank to revoke the authorization to operate as a financial institution and to apply sanctions. If the plan is accepted, the Central Bank may grant a temporary exemption with respect to the observance of the technical regulations and excuse or postpone the payment of fines (if any).

Likewise, and prior to the revocation of the authorization to operate as a financial institution, the Central Bank may authorize the restructuring of the entity for the protection of its depositors, by applying any of the following decisions or a combination thereof in a sequential, gradual or direct manner: reduction, increase and assignment of the corporate capital, exclusion of assets and liabilities and their transfer to other financial institutions, judicial intervention, and responsibility for and transfer of excluded assets or liabilities.

Dissolution and Liquidation of Financial Institutions

As provided in the Financial Institutions Law, the Central Bank must be notified of any decision adopted by a financial institution’s legal or corporate authorities concerning its dissolution. The Central Bank, in turn, must then submit such decision to a competent court, which must determine whether the corporate authorities or an appointed independent liquidator will liquidate the entity. The court’s decision must be based on whether or not there is sufficient assurance that the corporate authorities are capable of carrying out such liquidation properly.

Pursuant to the Financial Institutions Law, the Central Bank no longer acts as liquidator of financial institutions. However, if a restructuring plan has failed or is not deemed feasible, or violations of local laws and regulations have been incurred, or significant changes have occurred in the institution’s condition since the original authorization was granted, then the Central Bank may revoke a bank’s license to operate as a financial institution. In this event, the law allows for judicial or extra-judicial liquidation. During the liquidation process and once the license to operate as a financial institution has been revoked, a court of competent jurisdiction may adjudge the former financial institution in bankruptcy or a petition in bankruptcy may be filed by any creditor of the bank after a period of 60 calendar days has elapsed since the license was revoked.

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Money Laundering

The concept of money laundering is generally used to denote transactions intended to introduce criminal proceeds into the institutional system and thus to transform profits from illegal activities into assets of a seemingly legitimate origin. On April 13, 2000, the Argentine Congress passed Law No. 25,246 (as amended, the “Anti-Money Laundering Law”), which defines money laundering as a type of crime. The Anti-Money Laundering Law established severe penalties for anyone participating in any such criminal activity and created the UIF as the agency responsible for the analysis, treatment and transmission of information, with the aim of preventing money laundering resulting from different crimes and the financing of terrorism.

Below is a summary of certain provisions of the anti-money laundering regime set forth by the Anti-Money Laundering Law, as amended and supplemented by other rules and regulations, including regulations issued by the UIF, the Central Bank, the CNV and other regulatory entities. Investors are advised to consult their own legal counsel and to read the Anti-Money Laundering Law and its statutory regulations.

In line with internationally accepted practices, the Anti-Money Laundering Law does not merely assign responsibility for controlling criminal transactions to government agencies, but also assigns certain duties to various private sector entities such as financial institutions, stockbrokers, brokerage houses and insurance companies, which become legally bound reporting parties. These duties basically consist of information-capturing functions.

According to the Anti-Money Laundering Law, the following persons, among others, are subject to report to the UIF: (i) financial institutions and insurance companies; (ii) exchange agencies and individuals or legal entities authorized by the Argentine Central Bank to operate in the purchase and sale of foreign currency in the form of cash or checks drawn in foreign currency or by means of credit or debit cards or in the transfer of funds within Argentina or abroad; (iii) broker-dealers, over-the-counter market agents, and intermediaries engaged in the purchase, lease, or borrowing of securities; (iv) armored transportation services companies and companies or concessionaires rendering postal services that carry out foreign currency transfers or remittance of different types of currency or notes; (v) governmental organizations, such as the Central Bank, the Argentine Tax Authority, the National Superintendency of Insurance (Superintendencia de Seguros de la Nación), the CNV and the IGJ; (vi) professionals in economics sciences and notaries public; and (vii) individuals and legal entities acting as trustees of any kind and individuals or legal entities related directly or indirectly to trust accounts, trustees and trustors under trust agreements.

Individuals and entities subject to the Anti-Money Laundering Law must comply with some duties that include: (i) obtaining documentation from their customers that irrefutably evidences their identity, legal status, domicile, and other data stipulated in each case (know your customer policy); (ii) reporting any suspicious event or transaction (which according to the customary practices of the field involved, as well as to the experience and competence of the parties who have the duty to inform, are those transactions attempted or consummated that, having been previously identified as unusual transactions by the legally bound reporting party, or have no economic or legal justification or are unusually or unjustifiably complex, whether performed on a single occasion or repeatedly (regardless its amount)); and (iii) abstaining from disclosing to customers or third parties any act performed in compliance with the Anti-Money Laundering Law. Within the framework of analysis of a suspicious transaction report, the aforementioned individuals and entities cannot refrain from disclosing to the UIF any information required from it by claiming that such information is subject to bank, stock market or professional secret, or legal or contractual confidentiality agreements. The Argentine Tax Authority (AFIP) shall only disclose to UIF the information in its possession when the suspicious transaction report has been made by such entity and refers to the individuals or entities involved directly with the reported transaction. In all other cases the UIF shall request that the federal judge holding authority in a criminal matter order the AFIP to disclose the information in its possession.

Argentine financial institutions must comply with all applicable anti-money laundering regulations as provided by the Central Bank, the UIF, and, if applicable, the CNV. In this regard, in accordance with Resolution No. 229/2014 of the UIF, both the Central Bank and the CNV are considered “Specific Control Organs”. In such capacity, they must cooperate with the UIF in the evaluation of the compliance with the anti-money laundering proceedings by the legally bound reporting parties subject to their control. In that respect, they are entitled to supervise, monitor and inspect such entities, and if necessary, to implement certain corrective measures and actions. Resolution No. 30/2017 issued by the UIF, as amended (“Resolution No. 30”), is applicable to financial entities subject to the FIL, to entities subject to the Law No. 18,924, as amended, and to individuals and legal entities authorized by the Central Bank to intervene in the purchase and sale of foreign currency through cash or checks issued in foreign currency or through the use of credit or payment cards, or in the transfer of funds within or outside the national territory. Resolution No. 21/2018 of the UIF, as amended (“Resolution No. 21”), is applicable to brokers and brokerage firms, agents of the over-the-counter market, intermediaries in the purchase or leasing of securities affiliated with stock exchange entities with or without associated markets, and intermediary agents registered on forwards or option markets. Resolution No. 30 and Resolution No. 21 regulate, among other things, the obligation to collect documentation from clients and the terms, obligations and restrictions for compliance with the reporting duty regarding suspicious money laundering and terrorism financing transactions.

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Resolution No. 30 and Resolution No. 21 establishes general and specific guidelines, based on a risk-regarding customer identification approach, due diligence to be applied depending on the level of risk assigned and procedures to detect and report suspicious transactions.

Additionally, as mentioned, each financial institution must appoint a member of the Board of Directors as the person responsible for money laundering prevention, in charge of centralizing any information the Central Bank may require on its own initiative or at the request of any competent authority and reporting any suspicious transactions to the UIF. Notwithstanding the officer’s role as a liaison with the UIF, all board members have personal, joint, several and unlimited responsibility for the entity’s compliance with its reporting duties with the UIF. In addition, this officer will be responsible for the implementation, tracking and control of internal procedures to ensure compliance with the regulations in financial institutions and its subsidiaries.

In addition, pursuant to Communication “A” 5738 (as amended and supplemented) of the Central Bank, Argentine financial institutions must comply with certain additional “know your customer policies”. In this sense, pursuant to such Communication, under no circumstance may new commercial relationships be initiated if the “know your customer policies” and the risk management legal standards have not been complied with. In addition, in respect of the existing clients: if the “know your customer policies” could not be complied with, the Argentine financial institution must discontinue transactions with such client (i.e. terminate the relationship with the client in accordance with Central Bank’s regulations for each type of product) within 150 calendar days as of the notice of such circumstances. Transactions do not have to be discontinued when the “know your customer” policies are complied with in such period or when simplified due diligence procedures were implemented pursuant to applicable laws. Furthermore, pursuant to this Communication, Argentine financial entities must keep the documentation related to the discontinuance for 10 years and include in their prevention manuals the detailed procedures to initiate and discontinue transactions with clients in accordance with the above-mentioned additional “know your customer policies” implemented.

The CNV Rules include a specific chapter regarding “Prevention of Money Laundering and the Financing of Terrorism” and state that the persons set forth therein (Negotiation Agents, Clearing and Settlement Agents (which are stockbrokers), Distribution and Placement Agents, Brokerage Agents, Collective Depositary Agents, issuers with respect to capital contributions, irrevocable capital contributions for future capital increases or significant loans that have been made in its benefit, specifically with respect to the identity of contributors and/or creditors and the origin and legality of the funds so contributed or loaned) are to be considered legally bound to report under the Anti-Money Laundering Law, and therefore must comply with all the laws and regulations in force in connection with anti-money laundering and terrorism financing, including resolutions issued by the UIF, presidential decrees referring to resolutions issued by the United Nations Security Council in connection with the fight against terrorism and the resolutions (and its annexes) issued by the Ministry of Foreign Affairs.

Deposit Guarantee Insurance System

The Bank is included in the Deposit Guarantee System established by Law No. 24,485, Regulatory Decrees No. 540/95, No. 1292/96, 1127/98 and No. 30/18 and Communication “A” 5943 issued by the BCRA.

Such law provided for the creation of the company “Seguros de Depósitos S.A.” (“SEDESA”) for purposes of managing the Deposit Guarantee Fund (the “DGF”), whose shareholders, in accordance with the changes introduced by Decree No. 1292/96, shall be the BCRA with one share as a minimum and the trustees of the trust created by the financial institutions in such proportion as may be determined for each by the BCRA according to their contributions to the Deposit Guarantee Fund. This guarantee system does not include:

| • |  | transferable certificates of deposit whose ownership has been acquired by way of endorsement;

| • |  | the higher of (i) demand deposits for which the interest rate is higher than the benchmark interest rate and deposits and term investments that exceed 1.3 times that rate or (ii) the benchmark interest rate plus five percent points. They will also be excluded when those interest rate limits are distorted by incentives or additional remuneration;

| • |  | deposits made by other financial institutions, including certificates of deposit acquired by secondary trading;

| • |  | deposits made by persons directly or indirectly related to the financial institution;

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| • |  | certificates of deposit of securities, acceptances or guarantees; or

| • |  | fixed amounts from deposits and other excluded transactions.

We held a 9.4769% equity interest in Seguros de Depósitos Sociedad Anónima as of December 31, 2020.

The amount covered by the deposit guarantee system is Ps.1,500,000 per person and per deposit. In the case of transactions in the name of two or more persons, the guarantee will be prorated among the respective holders. The total guarantee amount by persons may not exceed Ps.1,500,000 regardless of the number of accounts and/or deposits.

The deposits for amounts over Ps.1,500,000 are also included in the guarantee system up to the Ps.1,500,000 limit. The Central Bank may decide at any time to amend the guarantee system cover amount based on the continued consolidation of the Argentine financial sector or any other indicators.

The Argentine insurance system is financed by monthly contributions from all financial institutions operating in Argentina. These contributions are equivalent to 0.015% of average daily balances of demand deposits, time deposits, term investments, salary account of social security and fixed assets of previous concepts.

Furthermore, institutions must make an additional contribution which will depend on the rating assigned by the Central Bank, the excess recorded in the integration of the RPC and the portfolio quality. This additional contribution may not exceed the standard contribution.

Seguros de Depósitos Sociedad Anónima may issue nominative non-endorsable securities to be offered to depositors as payment of the deposit guarantee whenever it did not have sufficient funds for such purpose. Such securities, whose conditions would be established for general purposes by the Central Bank, must be accepted by the financial institutions in order to constitute deposits.

Credit Cards Law No. 25,065

Law No. 25,065, enacted in 1999, governs different aspects of the credit, purchase and debit card system. This law (i) creates an obligation to sign a contract between the bank and the holder of the credit card before the card is issued, (ii) fixes a maximum limit to financial interest charged on balances, which may not exceed by more than 25% the rate applied to personal loan transactions, (iii) sets a maximum 3% fee to be charged by the banks to commercial establishments and forbids charging different rates to commercial establishments in the same line of business and (iv) prohibits providing information to financial background databases regarding credit card holders in delinquent payment situations.

Law No. 26,361, enacted in 2008, amended article 50 of Law No. 25,065, empowering the Secretariat of the Domestic Commerce, dependent on the Ministry of Economy and Production, to issue regulatory provisions and to exercise powers of control, survey and ensure compliance with the law. The City of Buenos Aires and the Provinces act as local authorities of application, with powers which they may delegate, if applicable, to their dependent bodies or to municipalities. Irrespective of the above, the national authority of application may act concurrently, even if the presumed infringements occur only within the scope of the Autonomous City of Buenos Aires or the Provinces.

Since the enforcement of Law No. 25,065, the Central Bank is the relevant authority in matters related to the credit, purchase and debit card system.

Disclosure of Iranian Activities Pursuant to Section 13(r) of the Exchange Act

The Bank discloses the following information pursuant to Section 13(r) of the Exchange Act, which requires an issuer to disclose whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with natural persons or entities designated by the U.S. government under specified executive orders, including activities not prohibited by U.S. law and conducted outside the United States by non-U.S. affiliates in compliance with local law. In order to comply with this requirement, the Company has requested relevant information from its affiliates globally.

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During the year ended December 31, 2020, the Bank did not knowingly engage in activities, transactions or dealings required to be disclosed pursuant to Section 13(r) of the Exchange Act.

Because the Bank is controlled by BBVA, the Company’s disclosure includes activities, transactions or dealings conducted outside the United States by non-U.S. affiliates of BBVA and its consolidated subsidiaries that are not controlled by the Bank. During the year ended December 31, 2020, the BBVA Group had the following activities, transactions and dealings with Iran requiring disclosure:

Iranian embassy-related activity. On a continuing basis, the BBVA Group maintains a bank account in Spain for one employee of the Iranian embassy in Spain. This employee is a Spanish citizen. Estimated gross revenues for the year ended December 31, 2020, from embassy-related activity, which include fees and/or commissions, totaled US$128.98. The BBVA Group does not allocate direct costs to fees and commissions and therefore has not disclosed a separate profit measure.

G. Cybersecurity and Fraud Management

The accelerated digital transformation experienced as a result of the COVID-19 pandemic and related lockdowns changed the population’s social behaviour and business management. As a result, there was a significant increase in the various transactions that the Bank’s clients carry out through Online Banking and digital service channels.

In this sense, a series of initiatives aimed at preventing cybercrime and electronic fraud were promoted, with three main goals:

| • |  | Cybersecurity: aimed at protecting the Bank’s assets and technological infrastructure;

| • |  | Fraud prevention: aimed at avoiding and/or minimizing the impact of fraudulent conduct; and

| • |  | Security and data protection: aimed at ensuring the protection of digital privacy.

Complementarily, the awareness plan continued for employees, clients and third parties, through informational and educational actions aimed at preventing scams and cybercrimes. In this sense, during 2020, the Bank carried out the following initiatives:

| • |  | The incorporation of safety advice in the BBVA Argentina App, on the Bank’s website and in OTP SMS messages.

| • |  | Running an active campaign on social networks (Facebook, Instagram and Twitter) and institutional sites that resulted in more than 350,000 hits.

| • |  | Development of simulated phishing exercises for specific groups.

| • |  | Sending communications by email to BBVA Argentina digital clients on security issues.

Additionally, certain specific actions were implemented for collaborators:

| • |  | Development of simulated phishing exercises for 100% of collaborators.

| • |  | Carrying out cyber exercises together with the Security Operations area.

| • |  | Virtual talks and workshops on cybersecurity.

| • |  | Creation of a new safety education section.

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Cybersecurity

The Bank worked on an infrastructure protection plan focused on managing vulnerabilities, controlling and monitoring assets, and implementing solutions to secure its platforms, which included the implementation of the following measures:

| • |  | Firewall solution in blocking mode on Bank websites.

| • |  | Security improvements in critical systems.

| • |  | Assessment outside of the Customer Security Program SWIFT.

| • |  | The implementation of a new and more robust solution for managing privileged accounts.

In addition, BBVA Argentina conducted a cybersecurity campaign in alliance with other Argentine financial entities, aimed at spreading key safety messages to the Argentine population through two main axes:

| • |  | #CuidateDeLasEstafas: to reinforce that contact with financial institutions should only be made through official channels.

| • |  | #ProtegeTuInformación: aimed at avoiding sharing passwords or personal data. This initiative was promoted by the Association of Banks of Argentina (ABA), the Association of Public and Private Banks of Argentina (ABAPPRA), the Association of Specialized Banking (ABE) and the Association of Argentine Banks (ADEBA).

Fraud prevention

During 2020, the Bank carried out the following initiatives aimed at monitoring fraudulent behavior:

| • |  | Analysis and definition of security and anti-fraud measures for the MODO application and the Bank’s online channels.

| • |  | Implementation of the second factor to obtain a pre-approved loan online and in each DEBIN operation on the Prisma microsite.

| • |  | Reduction in channel fraud due to the implementation of the sixth question in the Online Banking User and Digital Password recovery process.

| • |  | Implementation of 3DSecure technology for e-commerce purchases with Mastercard and Visa credit cards.

| • |  | Tokenization of VISA and Mastercard cards in e-commerce sites.

| • |  | Pilot implementation of biometric authentication in digital admission processes.

Client protection

During 2020, we believe the regulations enacted as a result of the COVID-19 pandemic were implemented satisfactorily. Improvements were also made on obtaining the information necessary to develop management indicators that will be implemented in 2021.

In addition, we worked collaboratively with the BBVA Group to train, advise and help clients, third parties and collaborators in cybersecurity matters. In particular, an infrastructure protection plan was developed to increase security and strengthen the platforms, which was primarily focused on managing vulnerabilities and controlling and monitoring assets through the following actions:

| • |  | The WAF (Web Application Firewall) solution was implemented in blocking mode at Bank sites.

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| • |  | Made security enhancements to critical systems (e.g., SWIFT).

| • |  | An external evaluation of the SWIFT CSP (Customer Security Program).

| • |  | The implementation of a new and more robust privileged account management solution.

Customer data security

Within Corporate Security, a set of initiatives on security and data protection were promoted, including:

| • |  | Risk assessment in multiple Bank initiatives.

| • |  | The deployment of the Data Security and Privacy Model in the Bank’s information system.

In 2020, no cases of leaks, theft or loss of customer data were identified.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Economic conditions

2020

During 2020 economic activity measured by GDP fell 9.9% compared to 2019. The activity was negatively impacted by the Covid-19 pandemic, particularly during the second quarter of the year.

With respect to the labor market, in 2020 there was an increase in the average unemployment rate to 11.0% in the last quarter of 2020, compared to 11.2% in 2019, primarily due to the lockdown measures adopted as a result of the Covid-19 pandemic.

The national CPI increased by 36.1% in 2020, reflecting a deceleration of inflation compared to 53.8% in 2019, mainly driven by the decline in economic activity levels as a result of the Covid-19 pandemic and the intervention in the prices of utility services.

The domestic public sector recorded a primary deficit of Ps.1,750 billion, accounting for 6.5% of GDP

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2019

During 2019 economic activity measured by GDP fell 2.2% compared to 2018. The activity was negatively impacted by declines in consumption and investment, due to economic uncertainty and the decline in the value of the peso.

With respect to the labor market, in 2019 there was an increase in the unemployment rate to around 11.2% compared to 9.2% in 2018.

The national CPI increased by 53.8% in 2019, reflecting an acceleration of inflation compared to 47.6% in 2018, mainly as a result of the decline in the value of the peso, partially offset by government intervention in the prices of utility services in the first quarter of 2019.

The domestic public sector recorded a primary deficit of Ps.95,122 million, accounting for approximately 0.4% of GDP. As a consequence, the annual fiscal goal of 0.5% agreed with the IMF was exceeded. This result reflects a 71.9% decrease compared to the deficit in the previous year.

The trade surplus in 2019 was US$15.9 billion, showing a strong correction compared to the deficit of US$3.8 billion in the previous year.

2018

During 2018 economic activity measured by GDP fell 2.5% compared to 2017. In the first half of the year the deterioration in economic activity was mainly related to the effects of the drought. However, in the second half of the year the deterioration of domestic financial conditions worsened the economic recession, mainly affecting the levels of consumption and investment.

With respect to the labor market, in 2018 there was an increase in the unemployment rate to around 9.2% compared to 8.4% in 2017.

The national CPI increased by 47.6% in 2018, reflecting an acceleration of inflation compared to 24.8% in 2017, as a result of the foreign exchange and financial crisis during the year.

The domestic public sector recorded a primary deficit of Ps.338,987 million, accounting for approximately 2.3% of GDP. As a consequence, the annual fiscal goal of 2.7% was exceeded based on the commitment for the year in the agreement with the IMF. This result reflects a 16.1% decrease compared to the deficit in the previous year.

The trade deficit in 2018 was US$3.8 billion, a reduction compared to the deficit of US$8.5 billion in the previous year.

Effects of Recent Regulatory Changes on BBVA Argentina

Below is a summary of the main rules and regulations enacted during the year.

Debtors’ Classification and Allowances (BCRA GAAP only – does not affect the Consolidated Financial Statements)

On March 19, 2020, the Central Bank issued Communication “A” 6938, temporarily easing the criteria to classify banks’ debtors established in the “Debtors’ Classification” rules. Accordingly, the admissible arrears level for classification in levels 1, 2 and 3 was increased by 60 days for the commercial as well as for the consumer and housing loan portfolios. This measure, originally effective until September 30, 2020, was subsequently extended until March 31, 2021.

Concurrently, the “Special Tracking” category was included to the classification in level 2, for debtors receiving refinancing for the first time in the calendar year and who have settled the first installment. The applicable regulatory allowances for this category are set at 8% and 16% (with or without preferred guarantees, respectively).

Furthermore, for purposes of calculating RPC, Group “A” financial institutions may compute as Ordinary Capital Level 1 the positive difference between the new accounting forecast computed according to point 5.5 of IFRS 9 and the regulatory provision calculated in accordance with the standards on “Minimum provisions for bad debt risk” or the accounting corresponding to the balance sheet of November 30, 2019, the higher of both. For Group “B” and “C” financial institutions, the adoption of the impairment guidelines set forth in IFRS 9 will be postponed until January 1, 2022 (Communication “A” 7181).

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New Financing Lines

In response to the crisis triggered by the COVID-19 pandemic, the Central Bank adopted a set of credit stimulus measures aimed at the most vulnerable sectors, primarily, micro, small and medium-sized companies (MSMEs) and the self-employed. With the exception of the credit lines for MSME’s Productive Investment which are still in effect, these measures ceased to be effective on November 6, 2020. The main characteristics of the new financing lines are described below:

| • |  | 24% Credit Lines for MSMEs:

In an attempt to channel resources to the most badly hit sectors, since March, the Central Bank has established a credit line for MSMEs and health service providers at a maximum annual interest rate of 24%, which proceeds are used to pay wages, meet working capital needs, and cash deferred checks. In order to strengthen the financials institution’s capacity to lend, the Central Bank mandated them to unwind a portion of their LELIQ position. In addition, the minimum cash requirement of financial institutions offering these credit lines until November 5, 2020 was reduced by 40% of the aggregate amount being lent by the relevant financial institution under these credit lines (Communication “A” 6937, Communication “A” 6943, Communication “A” 7006 and Communication “A” 7157).

| • |  | 24% Credit Lines for non-MSMEs:

By means of Communication “A” 7054 dated June 2020, the Central Bank established a new credit line at a maximum annual interest rate of 24% for non-MSME customers. The proceeds of these credit lines are used to purchase machinery and equipment manufactured by local MSMEs. The minimum cash requirements of financial institutions offering these credit lines until November 5, 2020 was reduced by 40% of the aggregate amount being lent by the relevant financial institution under these credit lines.

| • |  | Credit Lines for MSMEs’ Productive Investment:

In October, the Central Bank issued Communication “A” 7140 approving the rules on the new “Credit Line for MSMEs’ Productive Investment” which proceeds are used to:

| 1. | Finance MSMEs’ investment projects (capital expenditures and/or construction projects) (with a maximum annual nominal rate of 30% and an average term of 24 months or longer)

| 2. | Working capital and post-dated check and other document discounting to MSMEs (with a maximum annual nominal rate of 35%).

| 3. | Special lines (health providers for the purchase of medical supplies and equipment; non-MSMEs using the proceeds to purchase machinery and equipment manufactured by local MSMEs; other financial institutions not included in Group “A”, to the extent the proceeds are applied to MSMEs’ credit lines (investment projects or working capital) within 10 business days) for which an auditor report is required (incorporated by Communication “A” 7161, November 12, 2020).

For these credit lines, financial institutions are required to maintain a regulatory quota equal to 7.5% of their non-financial private sector deposits (measured in terms of the monthly average of daily balances as of September 2020) until March 31, 2021. For the Bank, that quota is equal to Ps.19,730,132 thousand. At least 30% of the quota is used for investment projects (for purposes of that calculation, entities may include up to 65% of the amount of import finance facilities and credit lines disbursed as of October 16, 2020 to meet working capital needs and cash deferred checks – Communication “A” 7161 and Communication “A” 7197). From April 1, 2021, in the event of a quota shortfall, the minimum cash requirement is increased by an amount equal to 1.2 times the shortfall and for a term of 5 months. In addition, effective since November 1, 2020, credit lines for investment projects are subject to a reduced cash requirement equal to 14% of the aggregate amount being lent by the relevant financial institution under these credit lines.

| • |  | Zero-rate Credit Lines - Small taxpayers and self-employed individuals:

As part of the household credit stimulus measures, in April 2020, the executive branch and the Central Bank established a zero-rate credit line for small taxpayers and self-employed individuals (Decree No. 376/20 and Communication “A” 6993).

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Financial institutions are required to grant a zero-rate credit line to all applicants within two business days from the application (subject to the list of potential beneficiaries issued by AFIP). The credit line must be credited in the applicants’ credit cards in three monthly, equal and consecutive installments for a maximum amount of Ps.150,000 depending on the taxpayer category, and is repayable in 12 equal installments, with a 6-month grace period. 15% of the rate is covered by the Fondo Nacional de Desarrollo Productivo (“FONDEP”). In addition, these credit lines are guaranteed by the Fondo de Garantías Argentino (“FoGAr”). Financial institutions offering these credit lines until November 5, 2020 benefit from a reduced minimum cash requirement equal to 60% of the aggregate amount being lent by the relevant financial institution under these credit lines (Communication “A” 7157).

| • |  | Zero-rate Credit Lines - Individuals engaged in cultural activities:

Pursuant to Communication “A” 7082, financial institutions are mandatorily required to grant these zero-rate credit lines to all applicants, provided that such applicants have not previously benefitted from other “zero-rate credit lines” and are included in the list of beneficiaries published by AFIP (indicating eligibility, amount and relevant financial institution). The credit line must be granted for up to the amount indicated in the list published by AFIP by the lending financial institution appearing on the list as being required to extend the credit line. Financial institutions must grant the credit line within 2 business days from application. The credit line must be credited in the applicants’ credit cards in three monthly, equal and consecutive installments for a maximum amount of Ps.150,000 depending on the taxpayer category, and is repayable in 12 equal installments, with a 12-month grace period. 15% of the rate is covered by FONDEP. Financial institutions offering these credit lines until November 5, 2020 benefit from a reduced minimum cash requirement equal to 60% of the aggregate amount being lent by the relevant financial institution under these credit lines (Communication “A” 7157).

| • |  | Regulatory Rates to Credit Lines for Businesses

Financial institutions are required to provide “subsidized credit lines” to all applicant businesses, provided they are included in the list of beneficiaries published by AFIP. Proceeds from these credit lines are directly credited to workers’ payroll accounts within 5 business days from application. The interest rate is determined on the basis of the year-on-year changes in the applicant business’ revenues. The difference between an annual nominal rate of 15% and the rate payable by borrower is covered by FONDEP. In addition, these credit lines are guaranteed by Fondo de Garantías Argentino (“FOGAR” per its initials in Spanish). Financial institutions offering these credit lines until November 5, 2020 benefit from a reduced minimum cash requirement equal to 60% of the aggregate amount being lent by the relevant financial institution under these credit lines. Starting from November 6, 2020, financial institutions offering these credit lines will benefit from a reduced minimum cash requirement equal to (i) 24% of the aggregate amount being lent by the relevant financial institution at an annual interest of 27% and (ii) and 7% of the aggregate amount being lent by the relevant financial institution at an annual interest of 33%. (Communication “A” 7082 and Communication “A” 7157). Applicable to wages accrued from August to December 2020.

| • |  | Home Mortgage Loans and UVA-linked Secured Loans (Decrees No. 319/2020 and 767/2020 and Communication “B” 12099)

By means of Decree No. 319/2020, the executive branch provided that, in view of the mandatory lockdown measures implemented as a result of the COVID-19 pandemic, monthly payments in respect of home mortgage loans must remain at the same amount as in March 2020, until September 30, 2020. The difference between the amount of the effective payments and the actual accrued amount could be settled in, at least, three monthly, equal and consecutive payments commencing in October 2020 not subject to interest accrual due to the deferred payment. Any payment defaults until September 30, 2020 could be settled in 3 installments, at compensatory interest only, up until December 31, 2020.

Pursuant to Decree No. 767/2020, the executive branch extended the measure above until January 31, 2021 and capped monthly payments in respect of home mortgage loans for an 18-month period (February 2021 to July 2022) on the basis of a convergence schedule. Both the installment difference and the indebtedness accrued as of September 30, 2020 will be converted into UVA and will be refinanced with no interest or charges payable from the end of the current loan schedule, in installments not to exceed the amount of the original ones.

| • |  | Outstanding Balances under Credit Lines

By means of Communication “A” 6949, the Central Bank established that outstanding balances of credit lines granted by financial institutions with installments falling due between April 1 and June 30, 2020 (currently postponed until March 31, 2021) not accruing late-payment interest, and any unpaid installments payable at the end of the credit life (except for credit cards).

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| • |  | Outstanding Credit Card Balances

Pursuant to Communication “A” 6964, the Central Bank provided that financial institutions are required to automatically refinance unpaid credit card balances due between April 13, 2020 and April 30, 2020, deferring payment within one year, with a 3-month grace period, in 9 equal, monthly and consecutive installments, at an annual nominal rate of 43%. The same treatment is afforded to unpaid balances due from September 1, 2020 to September 30, 2020, except that accrued compensatory interest may not exceed an annual nominal rate of 40% (Communication “A” 7095).

The Central Bank established a limit of up to 43% for credit card financing rates (in March, the rate was capped at 55% and then reduced to 49% and subsequently to 43%) (Communication “A” 7181).

Minimum Cash Rules

| • |  | Minimum Cash Requirement:

The Central Bank has eased reserve requirements for financial institutions that extend credit lines to MSMEs and to small-taxpayers and self-employed individuals at the established maximum interest rates.

The minimum cash requirement is reduced by an amount in pesos equal to 30% of the aggregate amount being lent by the relevant financial institution under credit lines granted to MSMEs, as defined in the “Criteria to qualify as a micro, small and medium-sized enterprise”, agreed upon at:

| • |  | a maximum annual nominal rate of 40% up to and including February 16, 2020 (which could be applied until repayment) (Communication “A” 6858).

| • |  | a maximum fixed annual nominal rate of 35 % as from February 17, 2020 (Communication “A” 6901).

Financial institutions may include in such amount credit lines granted to financial institutions not included in Group “A”, provided that: i) within 10 business days from the date on which the credit line is received, these financial institutions use the proceeds to grant credit lines to MSMEs under the conditions set forth in this section, and ii) they have an external auditor’s special report (registered with the “Auditor Register” maintained by the Superintendence of Financial and Exchange Entities (SEFyC)) certifying compliance (Communication “A” 7047).

Credit lines granted on or after November 6, 2020 are considered voluntary and may not be deducted from the requirement (Communication “A” 7157).

| • |  | Special Deduction amidst the health emergency declared by Decree No. 260/2020:

The minimum cash requirement is reduced by an amount in pesos equal to 40% of the aggregate amount being lent by the relevant financial institution under credit lines at an annual nominal rate of up to 24% for the following purposes: (i) MSMEs, provided that at least 50% of the aggregate amount of such credit lines is allocated to working capital loans and health service providers, and to purchase medical supplies and equipment; and (ii) non-MSME customers, to the extent the aggregate amount of such credit lines is used to purchase machinery and equipment manufactured by local MSMEs (Communication “A” 6937). Credit lines granted on or after November 6, 2020 are considered voluntary and may not be deducted from the requirement (Communication “A” 7157).

| • |  | Special Deduction under Decree No. 332/2020 (as amended):

The minimum cash requirement is reduced by an amount equal to:

| i) | 60% of total “zero-rate credit lines for small tax-payers and self-employed individuals”, “subsidized credit lines for businesses” and “zero-rate credit lines for individuals engaged in cultural activities” agreed upon pursuant to Decree No. 332/2020 (as amended) and lent until November 5, 2020;

| ii) | 24% of total “subsidized credit lines for businesses” lent from November 6, 2020 at an annual nominal rate of 27%; and

| iii) | 7% of total “subsidized credit lines for businesses” lent from November 6, 2020 at an annual nominal rate of 33%.

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| • |  | Credit Lines for MSMEs’ Productive Investment:

The minimum cash requirement is reduced by an amount equal to 14 % of the aggregate amount being lent by the relevant financial institution under credit lines at an annual nominal rate of up to 30% and intended for financing productive investment projects, as measured in terms of the monthly average of daily balances for the previous month (Communication “A” 7161).

| • |  | Payment of Minimum Cash Requirement:

With regards to the payment of the minimum cash requirement, the Central Bank, by means of Communication “A” 7016, provided that financial institutions included in Group “A” (such as the Bank) may pay the minimum cash requirement -for the period and daily -in pesos, out of “fixed-rate Treasury Bonds in pesos due in May 2022”. Bonds used to pay the minimum cash requirement in pesos will be excluded from the limits set forth in the rules on “Financing to the non-financial public sector”. Effective since May 18, 2020, financial institutions may pay their minimum cash requirements in pesos entirely out of Central Bank’s bills (LELIQ)—except to the extent of the maximum proportion allowed to be paid in out of “fixed-rate Treasury bonds in pesos”—in respect for time deposits and term investments from the non-financial private and public sectors (Communication “A” 7018).

| • |  | Joint calculation:

Effective since June 18, 2020, the Central Bank enacted Communication “A” 7046 abrogating the joint calculation of minimum cash positions in pesos for the periods July/August and December of any given year to January of the following year, as set forth in the rules on “Minimum Cash”.

LELIQ – Special provisions:

On March 19, 2020, by means of Communication “A” 6937, the Central Bank provided that LELIQ holdings in excess of those permitted to pay in the minimum cash requirement may not exceed 90% of surplus holdings as of March 19, 2020. To conform to the new standard, entities must reduce their positions as they cash out their LELIQs. Furthermore, effective May 2020, maximum holdings are established as a percentage of the surplus holdings as of March 19, 2020, which arises from the relationship between:

| 1. | Financings: defined as the incremental difference between the previous period’s average monthly balance and the balance as of March 19, 2020 of credit lines to MSMEs (24%). Working capital and other credit lines where the financial institution acts as paying agent are considered at 130% for calculation purposes.

| 2. | Potential credit to MSMEs: It is defined as the sum of:

| • |  | 10% of LELIQ holdings in excess of those permitted to pay the minimum cash requirement as of March 19, 2020; 15% since September 1, 2020 (Communication “A” 7054); and

| • |  | The lower of the amount of the decrease in the average minimum cash requirement in pesos set forth in section 1.5.5. of the rules on “Minimum Cash”, or 4% of the aggregate amount of the items subject to the minimum cash requirement.

On May 8, 2020, by means of Communication “A” 7006, the Central Bank provided that, effective May 11, 2020, financial institutions would be required to reduce by an additional 1% their surplus position as at March 19, 2020. As from July 1, 2020, the admitted net surplus position is reduced up to 3 points based on total financings (previous period’s average) as a percentage of the sum of the aforementioned 1% reduction and the decrease in the average minimum cash requirement (40% for credit lines to MSMEs at an annual nominal rate of up to 24%). To conform to the new standard, entities must reduce their net positions as they cash out LELIQs.

On May 28, 2020, the Central Bank issued Communication “A” 7027 providing that, effective since June 1, 2020, entities capturing deposits at the minimum borrowing rate would be allowed to increase the admitted surplus net position by an amount equal to 18% of time deposits and investments in pesos established by the non-financial private sector, and the federal, provincial, municipal and/or the City of Buenos Aires’ governments. For government placements, the rule applies only to the extent a rate not lower than the floor rate has been paid (monthly average of daily balances for the past month).

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On July 30, 2020, by means of Communication “A” 7077, the Central Bank modified the increase in LELIQ net position, effective August 1, 2020, increasing the limit by an amount equal to the positive difference between the global net foreign currency position cash limit (the higher of US$2.5 billion or 4% of the previous month’s RPC) and the monthly average of daily balance of the observed cash position, or zero, if negative. Also on July 30, 2020, the Central Bank issued Communication “A” 7078 providing that, effective from September 1, 2020, the LELIQ net surplus position would be increased to an amount equal to 13% of the monthly average of the previous month’s daily balances of deposits of up to Ps.1 million captured at the established minimum rate.

Finally, by means of Communication “A” 7122 dated October 1, the Central Bank provided that financial institutions are required to reduce their surplus net position of LELIQs by 20 percentage points compared to the position recorded in September 2020.

Reporting Obligations - Extended Terms

The Central Bank has decided to extend the term to file interim financial statements for the period ended in March 2020 onwards to 70 days after the reporting period end (Communication “A” 7195). Furthermore, the Argentine Securities Commission (CNV), by means of General Resolution No. 842/2020 dated June 2020, provided that financial statements of entities subject to the Financial Institutions Law would be filed within the deadlines established by the Central Bank.

Similarly, the Central Bank extended the term to comply with monthly reporting obligations to the last business day of the subsequent month from July up to and including December 2020 (Communication “A” 7136).

Profit Distribution and Remote Meetings

The Central Bank suspended the distribution of profits by financial institutions until June 30, 2020. Such term was then extended until December 31, 2020 and then again, until June 30, 2021 (Communication “A” 6939, Communication “A” 7035 and Communication “A” 7181).

The IGJ issued General Resolution 11/2020, establishing that, in order to comply with the mandatory social distancing measures in place, remotely held meetings of the Board of Directors or governance body of corporations, non-profit associations, or foundations would be admitted, using digital or IT means or platforms, even if not contemplated under their respective by-laws. Then, the IGJ issued General Resolution 46/2020, extending the decision for as long as the social distance measures mandated by Decree No. 875/2020 remain in place. Furthermore, the CNV, by means of General Resolution 830/2020, provided that issuers would be allowed to hold remote meetings during the lockdown period to mitigate the spread of COVID-19.

Exchange Market Regulations

During the year, the Central Bank implemented a number of regulatory changes related to the exchange market.

For instance, Communication “A” 7001 set forth new guidelines to access the exchange market for the repayment of principal and interest in respect of any foreign indebtedness applicable to those having benefitted from credit lines for MSMEs, in which case the Central Bank’s prior consent will be required.

Communication “A” 7001 also restricts blue-chip swap and its local equivalent (known as “Dollar Bolsa”) transactions. A sworn statement is required for currency outflows through the exchange market attesting that no sale of securities with settlement in foreign currency has been completed in the past, or will be carried out in the next 30 days (which term was extended to 90 days under Communication “A” 7030 dated May 28, 2020). Furthermore, the threshold that triggers entities’ reporting obligation, known as “advance notice of exchange transactions”, was reduced from US$2 million to US$500,000 (since October 16, 2020, US$50,000) (Communication “A” 7138)

The Central Bank’s prior consent will also be required to access the exchange market to make payments abroad for the use of credit, purchase, debit or pre-paid cards issued locally to purchase jewels and precious gems and metals (gold, silver, platinum, etc.)

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On May 28, 2020, the Central Bank issued Communication “A” 7030, establishing, among other changes, that its prior consent would be required to access the exchange market by those whose total foreign currency holdings are not held deposited at accounts with local financial institutions, and who own liquid external assets available. The Central Bank further provided that its prior consent would be required for companies to access the exchange market for the payment of foreign commercial obligations if the amount of the same as of January 1, 2020 had been reduced, as well as for the service of principal in respect of foreign financial indebtedness when the counterpart is related to the borrower. This communication was gradually enhanced in subsequent weeks based on the specific business needs from the several productive sectors, through Communications “A” 7042 and “A” 7052, as amended by Communication “A” 7068, issued on July 8, 2020.

By means of Communication “A” 7106 dated September 15, 2020, even though the US$200 limit individuals could buy per month was maintained, effective September 1, 2020 payments for foreign currency-denominated purchases made abroad with credit or debit cards would be considered within such limit (any excess would be deducted from the subsequent months’ limit). Communication “A” 7106 further stated that individuals who had refinanced outstanding credit card balances (Communication “A” 6949) and/or who had benefitted from frozen installments (Decree No. 319/20) could not access the exchange market, or otherwise engage in transactions or complete sales of securities in the country to be settled in foreign currency or transfer such securities to foreign depositary institutions, until the total payment of the outstanding balances or for as long as the benefit is in place, as the case may be. This communication also established the requirement to submit a refinancing plan to the BCRA for those who recorded scheduled capital maturities between October 15, 2020 and March 31, 2021 based on the following criteria:

| • |  | Access to the MULC (“Mercado Único y Libre de Cambio”, in Spanish) in the original term for up to 40% of the expiring capital

| • |  | Rest refinanced with an average life of at least 2 years

| • |  | Applicable to amounts greater than US$1 million per month.

This requirement was extended to those who register capital maturities for amounts greater than US$2 million per month between April, 1 2021 and December 31, 2021 through Communication “A” 7230.

On the other hand, the Argentine revenue administration (AFIP), by means of General Ruling 4815/2020 dated September 16, 2020, established a mechanism to collect prepayments creditable against income tax and personal asset tax at the 35% rate applicable to transactions liable to the tax locally known as “PAIS” (formation of external assets by individuals and foreign currency-denominated purchases with debt and credit cards). The measures seek to discourage individuals’ demand for foreign currency for saving purposes and credit card spending.

Other Regulations

| • |  | Minimum Capital Requirements

By means of Communication “A” 6940 dated March 20, 2020, and effective since April 1, 2020, the Central Bank established a new credit risk weighting for credit card purchases made abroad (1250%).

On May 14, 2020, the Central Bank, through Communication “A” 7018, provided that, for purposes of calculating the minimum capital requirement for credit risk in respect of any financing arranged on or after May 18, 2020 with customers engaged in the agricultural business—other than MSMEs—and with a stocking ratio in excess of 5% of their annual harvest capacity, the minimum capital requirement will be multiplied by a factor equal to 4.

| • |  | Deposits and Interest Rates

In order to encourage savings in pesos, by means of Communication “A” 6980 dated April 16, 2020 and effective since April 20, 2020, the Central Bank provided that entities should pay a minimum interest rate on individuals’ time-deposits of up to Ps.1 million not adjustable by UVA or UVI (“Unidad de Vivienda”, in Spanish) based on a percentage of the LELIQ rate.

On May 14, 2020, by means of Communication “A” 7018, the Central Bank established that the minimum rate would apply to all deposits from the non-financial private sector. The Central Bank also provided that, effective since May 18, only such individuals engaged in the agricultural business would be able to make time deposits at a variable rate linked to the price of grains or oilseeds for a maximum amount equal to two times the amount of their sales as from November 1, 2019.

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On May 28, 2020 by means of Communication “A” 7029, the Central Bank provided that only individuals engaged in the agricultural business would be able to make time deposits at a variable interest rate linked to the changes in the U.S. dollar exchange rate. These transactions do not require a foreign exchange hedge (and are included in the global net foreign currency position calculation).

Current minimum rates for Group “A” financial institutions are as follows:

| 1. | 97.37 % of the shorter term LELIQ auction rate in pesos prevailing the day before the one in which the deposit is made, or the most recently released rate, as the case may be, to the extent the financial institution’s total time deposits by each individual do not exceed Ps.1 million as of the deposit date. For time-deposits held by two or more individuals, the time-deposit amount is proportionally distributed among holders (37% rate).

| 2. | 89.48 % of the shorter-term LELIQ auction rate in pesos prevailing the day before the one in which the deposit is made, or the most recently released rate, as the case may be, for deposits other than those included in the paragraph above (34% rate).

For other financial institutions, the minimum annual nominal rate is 75.26% of the shorter-term LELIQ auction rate in pesos prevailing the day before the one in which the deposit is made, or the most recently released rate, as the case may be (28.60% rate).

The above-mentioned rates were established by Communication “A” 7160 dated November 12, 2020. Such communication also provided that, effective since November 13, 2020, financial institutions with non-financial private sector deposits in pesos accounting for less than 10% of that sector’s total deposits in pesos will not be allowed to buy LELIQ for their LELIQ surplus net position or carry out 7-day repo transactions with the Central Bank.

| • |  | Credit Lines in pesos for “Large Exporters”

On April 16, 2020, by means of Communication “A” 6981, the Central Bank established that as a condition to qualify as “Large Exporters”, companies should have repos and/or repos with haircuts, regardless of their amount in local or foreign currency. Non-financial private sector companies whose total amount of qualified financings in pesos borrowed from the entire financial system exceeds Ps.1,500 million and/or with repos and/or repos with haircut in local or foreign currency, regardless of the amount, may also qualify.

On September 15, 2020, the Central Bank issued Communication “A” 7104 providing that, effective from September 16, 2020, qualifying financings in foreign currency borrowed from the financial system should also be considered in determining customers included in the “Large Exporters” category. The rule also provides that the previous Central Bank’s consent is required for financial institutions to be able to agree upon new financing arrangements in foreign currency with “Large Exporters” and to make disbursements thereunder. Finally, it provides that no disbursements under the current agreements are allowed if the limits set forth in section 7.1 of the credit policy are exceeded (Ps.1,500 million or Ps.5,000 million for business groups).

| • |  | Foreign Currency Net Global Position

By means of Communication “A” 7003 dated May 7, 2020, the Central Bank provided that any change in the positive net global position arising from exchange transactions allowed by the executive branch could only be covered with any of the applications set forth in the “Credit Policy” (export financing or Central Bank’s instruments in foreign currency) or with foreign currency forward transactions to be settled in pesos. It further establishes that any shortage in foreign currency resources arising from exchange transactions will not be subject to an equal increase in the minimum cash requirement, which may not be offset through the purchase of foreign currency. Finally, the Central Bank’s previous consent is required to access the exchange market for the early payment of credit lines in foreign currency granted by local financial institutions, other than for the payment of credit card purchases in foreign currency.

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Effective since July 20, 2020, and by means of Communication “A” 7071, the Central Bank established that in calculating the cash position set forth in section 2.2.2 of the rules on “Foreign currency net global position,” entities should exclude their net position in instruments linked to foreign currency fluctuations.

By means of Communication “A” 7093 dated August 27, 2020, the Central Bank decided to afford foreign currency-denominated government securities received by financial institutions in exchange for Treasury bills pursuant to Law No. 27,556 (LETES exchange), and included in the calculation of the permitted increase in the global net foreign currency position (section 4.1), the same treatment as to LETES (additional 25% of RPC), up to the amount of such increases recorded the immediately preceding business day to that on which they are delivered in exchange.

By means of Communication “A” 7101 dated September 10, 2020, the Central Bank established that, in calculating the cash position set forth in section 2.2.2 of the rules on “Foreign currency net global position,” entities can deduct an amount equal to the amount of pre-export financings whose funding in foreign currency is applied to liabilities linked to foreign currency fluctuations–which may not be considered in the exclusion set forth in b) of that section (“Net position in instruments linked to foreign currency fluctuations”).

According to Communication “B” 12074 dated October 5, 2020, dollar-linked Treasury Bonds are allowed to be considered in the exemption set forth in section 4.1 of the rules on global net foreign currency position (admitted increase of up to 30% of the RPC).

Critical Accounting Policies

The Consolidated Financial Statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 were prepared by the Bank’s directors in compliance with IFRS-IASB, and by applying the basis of consolidation, accounting policies and measurement bases described in Notes 2 and 5 to the Consolidated Financial Statements, so that they present fairly the Bank’s total equity and financial position as of December 31, 2020 and 2019, and its results of operations and consolidated cash flows for the years ended December 31, 2020, 2019 and 2018. The Consolidated Financial Statements were prepared in accordance with IFRS-IASB.

In preparing the Consolidated Financial Statements, estimates were made in order to recognize and measure assets, liabilities, income, expenses and commitments reported therein. These estimates relate mainly to the following:

| • |  | The loss allowance of certain financial assets.

| • |  | The fair value of certain unlisted financial assets and liabilities.

| • |  | Derivatives and other future transactions.

| • |  | The availability of future taxable profit against which deferred tax assets and the effect of the final resolution of uncertain tax positions.

| • |  | The assumptions used to measure other provisions.

Although these estimates were made on the basis of the best information available as of December 31, 2020 and 2019 respectively, events that take place in the future might make it necessary to revise these estimates (upwards or downwards) in coming years.

Note 5 to our Consolidated Financial Statements contains a summary of our significant accounting policies. We consider certain of these policies to be particularly important due to their effect on the financial reporting of our financial condition and results of operations and because they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Our reported financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the preparation of our Consolidated Financial Statements. The nature of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our Consolidated Financial Statements and the discussion below.

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We have identified the accounting policies enumerated below as critical to the understanding of our financial condition and results of operations, since the application of these policies requires significant management assumptions and estimates that could result in materially different amounts to be reported if the assumptions used or underlying circumstances were to change.

| • |  | Financial instruments - Impairment

IFRS 9 became effective as of January 1, 2018 and replaced IAS 39 regarding the classification and measurement of financial assets and liabilities, the impairment of financial assets and hedge accounting. For information regarding the classification and measurement of financial instruments under IFRS 9, see Note 5.4.g) to our Consolidated Financial Statements.

| • |  | Fair value of financial instruments

The fair value of an asset or a liability on a given date is taken to be the price that would be received upon the sale of an asset, or paid, upon the transfer of a liability in an orderly transaction between market participants at the measurement date. The most objective and common reference for the fair value of an asset or a liability is the price that would be paid for it on an organized, transparent and active market (“quoted price” or “market price”).

If there is no market price for a given asset or liability, its fair value is estimated on the basis of the price established in recent transactions involving similar instruments and, in the absence thereof, by using mathematical measurement models sufficiently tried and trusted by the international financial community. Such estimates would take into consideration the specific features of the asset or liability to be measured and, in particular, the various types of risk associated with the asset or liability. However, the limitations inherent to the measurement models developed and the possible inaccuracies of the assumptions required by these models may signify that the fair value of an asset or liability thus estimated does not coincide exactly with the price for which the asset could be sold or the price that would be paid for the transfer of a liability on the date of its measurement.

| • |  | Derivatives and other future transactions

These instruments include outstanding foreign currency purchase and sale transactions, outstanding securities purchase and sale transactions, futures transactions relating to securities, exchange rates or interest rates, forward interest rate agreements, options relating to exchange rates, securities or interest rates and various types of financial swaps.

All derivatives are recognized at fair value from the date of arrangement. If the fair value of a derivative is positive, it is recorded as an asset and if it is negative, it is recorded as a liability. Unless there is evidence to the contrary, it is understood that on the date of arrangement the fair value of the derivatives is equal to the transaction price. Changes in the fair value of derivatives after the date of arrangement are recognized in the heading “Gains (losses) on financial assets and liabilities designated at fair value through profit or loss, net” in the consolidated statement of profit or loss.

Specifically, the fair value of the standard financial derivatives included in the held for trading portfolios is equal to their daily quoted price. If, under exceptional circumstances, their quoted price cannot be established on a given date, these derivatives are measured using methods similar to those used to measure over-the-counter (“OTC”) derivatives.

The fair value of OTC derivatives is equal to the sum of the future cash flows arising from the instruments discounted at the measurement date (“present value” or “theoretical value”). These derivatives are measured using methods recognized by the financial markets, including the net present value method and option price calculation models.

| • |  | Income tax

In estimating accrued taxes, we assess the relative merits and risks of the appropriate tax treatment considering statutory, judicial and regulatory guidance in the context of the tax position.

Because of the complexity of tax laws and regulations, interpretation can be difficult and subject to legal judgment. It is possible that others, given the same information, may reach different reasonable conclusions regarding the estimated amounts of accrued taxes.

Changes in the estimate of accrued taxes may occur due to changes in tax rates, interpretations of the status of examinations being conducted by various taxing authorities, and newly-enacted statutory and regulatory guidance that affect the relative merits and risks of tax positions. These changes, when they affect accrued taxes, could affect our operating results.

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| • |  | Contingent liabilities

We are subject to proceedings, lawsuits and other claims related to labor, commercial, civil and other matters. We make determinations of the amount of reserves required, if any, for these contingencies after a careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in the settlement strategy.

A. | Operating Results

The Consolidated Financial Statements have been prepared in accordance with IFRS-IASB.

Results of Operations for the Fiscal Years Ended December 31, 2020, 2019 and 2018

Overview

The table below shows the Bank’s consolidated statement of profit or loss for 2020, 2019 and 2018.

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Interest income |  |  | 118,522,759 |  |  |  | 156,367,921 |  |  |  | 118,269,467 |  |  |  | (37,845,162 | ) |  |  | (24.2 | %) |  |  | 38,098,454 |  |  |  | 32.2 | %
Interest expenses |  |  | (41,471,892 | ) |  |  | (66,123,069 | ) |  |  | (51,808,825 | ) |  |  | 24,651,177 |  |  |  | (37.3 | %) |  |  | (14,314,244 | ) |  |  | 27.6 | %
NET INTEREST INCOME |  |  | 77,050,867 |  |  |  | 90,244,852 |  |  |  | 66,460,642 |  |  |  | (13,193,985 | ) |  |  | (14.6 | )% |  |  | 23,784,210 |  |  |  | 35.8 | %
Fee and commission income |  |  | 23,663,181 |  |  |  | 23,976,155 |  |  |  | 26,334,964 |  |  |  | (312,974 | ) |  |  | (1.3 | %) |  |  | (2,358,809 | ) |  |  | (9.0 | %)
Fee and commission expense |  |  | (11,423,234 | ) |  |  | (12,841,847 | ) |  |  | (11,521,703 | ) |  |  | 1,418,613 |  |  |  | (11.0 | %) |  |  | (1,320,144 | ) |  |  | 11.5 | %
Gains on financial assets and liabilities at fair value through profit or loss, net |  |  | 11,239,112 |  |  |  | 15,604,469 |  |  |  | 242,608 |  |  |  | (4,365,357 | ) |  |  | (28.0 | %) |  |  | 15,361,861 |  |  |  | 6,332.0 | %
(Losses) gains on derecognition of financial assets not measured at fair value through profit or loss, net |  |  | (2,309,858 | ) |  |  | (80,874 | ) |  |  | (286,372 | ) |  |  | (2,228,984 | ) |  |  | 2756.1 | % |  |  | 205,498 |  |  |  | (71.8 | %)
Exchange differences, net |  |  | 6,227,725 |  |  |  | 14,026,409 |  |  |  | 13,589,850 |  |  |  | (7,798,684 | ) |  |  | (55.6 | %) |  |  | 436,559 |  |  |  | 3.2 | %
Other operating income |  |  | 6,322,980 |  |  |  | 11,982,201 |  |  |  | 4,412,604 |  |  |  | (5,659,221 | ) |  |  | (47.2 | %) |  |  | 7,569,597 |  |  |  | 171.5 | %
Other operating expenses |  |  | (15,590,218 | ) |  |  | (22,028,412 | ) |  |  | (16,720,831 | ) |  |  | 6,438,194 |  |  |  | (29.2 | %) |  |  | (5,307,581 | ) |  |  | 31.7 | %
GROSS INCOME |  |  | 95,180,555 |  |  |  | 120,882,953 |  |  |  | 82,511,762 |  |  |  | (25,702,398 | ) |  |  | (21.3 | )% |  |  | 38,371,191 |  |  |  | 46.5 | %
Administration costs |  |  | (39,138,572 | ) |  |  | (41,728,066 | ) |  |  | (40,920,004 | ) |  |  | 2,589,494 |  |  |  | (6.2 | %) |  |  | (808,062 | ) |  |  | 2.0 | %
Personnel benefits |  |  | (20,379,135 | ) |  |  | (22,698,425 | ) |  |  | (22,801,895 | ) |  |  | 2,319,290 |  |  |  | (10.2 | %) |  |  | 103,470 |  |  |  | (0.5 | %)
Other administrative expenses |  |  | (18,759,437 | ) |  |  | (19,029,641 | ) |  |  | (18,118,109 | ) |  |  | 270,204 |  |  |  | (1.4 | %) |  |  | (911,532 | ) |  |  | 5.0 | %
Depreciation and amortization |  |  | (4,065,981 | ) |  |  | (5,728,534 | ) |  |  | (4,025,755 | ) |  |  | 1,662,553 |  |  |  | (29.0 | %) |  |  | (1,702,779 | ) |  |  | 42.3 | %
Impairment of financial assets |  |  | (11,864,861 | ) |  |  | (21,445,415 | ) |  |  | (8,029,553 | ) |  |  | 9,580,554 |  |  |  | (44.7 | %) |  |  | (13,415,862 | ) |  |  | 167.1 | %
Loss on net monetary position |  |  | (22,274,824 | ) |  |  | (27,518,847 | ) |  |  | (24,407,251 | ) |  |  | 5,244,023 |  |  |  | (19.1 | %) |  |  | (3,111,596 | ) |  |  | 12.7 | %
NET OPERATING INCOME |  |  | 17,836,317 |  |  |  | 24,462,091 |  |  |  | 5,129,199 |  |  |  | (6,625,774 | ) |  |  | (27.1 | %) |  |  | 19,332,892 |  |  |  | 376.9 | %
Share of profit of equity accounted investees |  |  | 266,572 |  |  |  | 174,422 |  |  |  | 664,982 |  |  |  | 92,150 |  |  |  | 52.8 | % |  |  | (490,560 | ) |  |  | (73.8 | %)
PROFIT BEFORE TAX |  |  | 18,102,889 |  |  |  | 24,636,513 |  |  |  | 5,794,181 |  |  |  | (6,533,624 | ) |  |  | (26.5 | %) |  |  | 18,842,332 |  |  |  | 325.2 | %
Income tax expense |  |  | (8,034,094 | ) |  |  | (2,821,059 | ) |  |  | (9,081,582 | ) |  |  | (5,213,035 | ) |  |  | 184.8 | % |  |  | 6,260,523 |  |  |  | (68.9 | %)
PROFIT (LOSS) FOR THE YEAR |  |  | 10,068,795 |  |  |  | 21,815,454 |  |  |  | (3,287,401 | ) |  |  | (11,746,659 | ) |  |  | (53.8 | %) |  |  | 25,102,855 |  |  |  | (763.6 | %)
Attributable to owners of the Bank |  |  | 10,051,035 |  |  |  | 21,819,964 |  |  |  | (3,119,918 | ) |  |  | (11,768,929 | ) |  |  | (53.9 | %) |  |  | 24,939,882 |  |  |  | (799.4 | %)
Attributable to non-controlling interest |  |  | 17,760 |  |  |  | (4,510 | ) |  |  | (167,483 | ) |  |  | 22,270 |  |  |  | (493.8 | %) |  |  | 162,973 |  |  |  | (97.3 | %)

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Our profit attributable to owners of the Bank for the fiscal year ended December 31, 2020 was a profit of Ps.10,051.0 million compared with a profit of Ps.21,819.9 million for the year ended December 31, 2019, and with a loss of Ps.3,119.9 million for the year ended December 31, 2018.

The changes in our consolidated statement of profit or loss for 2020, 2019 and 2018 were as follows:

Interest income

Our interest income decreased by 23.9% to Ps.118,522.8 million in the fiscal year ended December 31, 2020 from Ps.156,367.9 million in the fiscal year ended December 31, 2019. Our interest income increased by 32.2% to Ps.156,367.9 million in the fiscal year ended December 31, 2019 from Ps.118,269.4 million in the fiscal year ended December 31, 2018.

The components of our interest income are reflected in the following table.

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Interest on loans to the financial institutions |  |  | 1,207,423 |  |  |  | 3,700,450 |  |  |  | 4,775,119 |  |  |  | (2,493,027 | ) |  |  | (67.4 | %) |  |  | (1,074,669 | ) |  |  | (22.5 | %)
Interest from overdrafts |  |  | 10,814,487 |  |  |  | 13,839,785 |  |  |  | 15,053,918 |  |  |  | (3,025,298 | ) |  |  | (21.9 | %) |  |  | (1,214,133 | ) |  |  | (8.1 | %)
Interest from commercial papers |  |  | 10,182,777 |  |  |  | 15,051,005 |  |  |  | 13,629,461 |  |  |  | (4,868,228 | ) |  |  | (32.3 | %) |  |  | 1,421,544 |  |  |  | 10.4 | %
Interest from mortgage loans |  |  | 931,823 |  |  |  | 1,890,592 |  |  |  | 1,942,756 |  |  |  | (958,769 | ) |  |  | (50.7 | %) |  |  | (52,164 | ) |  |  | (2.7 | %)
Interest from car loans |  |  | 2,995,000 |  |  |  | 1,972,697 |  |  |  | 3,113,187 |  |  |  | 1,022,303 |  |  |  | 51.8 | % |  |  | (1,140,490 | ) |  |  | (36.6 | %)
Interest from credit card loans |  |  | 18,707,357 |  |  |  | 28,656,180 |  |  |  | 19,619,248 |  |  |  | (9,948,823 | ) |  |  | (34.7 | %) |  |  | 9,036,932 |  |  |  | 46.1 | %
Interest from financial leases |  |  | 541,336 |  |  |  | 801,446 |  |  |  | 1,351,442 |  |  |  | (260,110 | ) |  |  | (32.5 | %) |  |  | (549,996 | ) |  |  | (40.7 | %)
Interest from consumer loans |  |  | 9,562,611 |  |  |  | 12,301,110 |  |  |  | 15,941,930 |  |  |  | (2,738,499 | ) |  |  | (22.3 | %) |  |  | (3,640,820 | ) |  |  | (22.8 | %)
Interest from other loans |  |  | 11,269,542 |  |  |  | 7,377,124 |  |  |  | 7,690,032 |  |  |  | 3,892,418 |  |  |  | 52.8 | % |  |  | (312,908 | ) |  |  | (4.1 | %)
Premium for reverse repurchase agreements |  |  | 4,956,430 |  |  |  | 2,462,919 |  |  |  | 1,410,373 |  |  |  | 2,493,511 |  |  |  | 101.2 | % |  |  | 1,052,546 |  |  |  | 74.6 | %
Interest from government securities |  |  | 33,664,109 |  |  |  | 49,098,038 |  |  |  | 20,684,183 |  |  |  | (15,433,929 | ) |  |  | (31.4 | %) |  |  | 28,413,855 |  |  |  | 137.4 | %
Interest from private securities |  |  | 23,115 |  |  |  | 14,594 |  |  |  | 87,700 |  |  |  | 8,521 |  |  |  | 58.4 | % |  |  | (73,106 | ) |  |  | (83.4 | %)
Interest from loans for the prefinancing and financing of exports |  |  | 1,429,432 |  |  |  | 4,295,451 |  |  |  | 3,663,772 |  |  |  | (2,866,019 | ) |  |  | (66.7 | %) |  |  | 631,679 |  |  |  | 17.2 | %
Stabilization Coefficient (CER) clause adjustment |  |  | 2,546,829 |  |  |  | 108,472 |  |  |  | 234,610 |  |  |  | 2,438,357 |  |  |  | 2,247.9 | % |  |  | (126,138 | ) |  |  | (53.8 | %)
UVA clause adjustment |  |  | 9,232,639 |  |  |  | 14,787,161 |  |  |  | 9,071,650 |  |  |  | (5,554,522 | ) |  |  | (37.6 | %) |  |  | 5,715,511 |  |  |  | 63.0 | %
Other financial income |  |  | 457,849 |  |  |  | 10,897 |  |  |  | 86 |  |  |  | 446,952 |  |  |  | 4,101.6 | % |  |  | 10,811 |  |  |  | 12,570.9 | %
|  |  | 118,522,759 |  |  |  | 156,367,921 |  |  |  | 118,269,467 |  |  |  | (37,845,162 | ) |  |  | (24.2 | %) |  |  | 38,098,454 |  |  |  | 32.2 | %

The decrease in interest income during the fiscal year ended December 31, 2020 was mainly due to (i) a decrease in interest from government securities (principally instruments issued by the Argentine Central Bank) mainly due to a lower average nominal rate of return or amounts invested in BCRA liquidity instruments (LELIQ) and lower volumes, (ii) a decrease in interest from credit card loans (mainly from the VISA brand), (iii) the effect of the UVA clause adjustment due to inflation, (iv) a decrease in interest from commercial paper (mostly interest from discounted instruments) due to lower volume, (v) a decrease in interest from overdrafts, (vi) a decrease in interest from loans for the prefinancing and financing of exports, (vii) a decrease in interest from consumer loans (principally personal loans), (viii) a decrease in interest on loans to financial institutions (due to an decrease in volume of loans), and (ix) a decrease in interest from mortgage loans. These decreases were partially offset by (i) an increase in interest from other loans, (ii) an increase in premium from reverse repurchase agreements, (iii) decreases in stabilization coefficient (CER) clause adjustments, (iv) an increase in interest from car loans, (v) an increase in other financial income, and (vi) an increase in interest from private securities.

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The increase in interest income during the fiscal year ended December 31, 2019 was mainly due to an increase in interest from government securities (principally instruments issued by the Argentine Central Bank) mainly due to increases in interest rates, the effect of UVA clause adjustments (due to inflation), interest from commercial paper (mostly interest from discounted instruments) due to increases in interest rates, interest from credit card loans, interest from premium for reverse repurchase agreements and other financial income. These increases were partially offset by decreases in stabilization coefficient (CER) clause adjustments, , interest from car loans, interest from private securities, interest from financial leases, interest from overdrafts, interest on loans to financial institutions, interest from consumer loans (principally personal loans), interest from other loans and interest from mortgage loans.

The UVA is an index determined by the Central Bank, reflecting the variation of one one-thousandth of the average value of a square meter built for housing in Argentina (such that 1,000 UVAs are equivalent to one square meter). This value was initially set at Ps.14.05 and is updated daily based on the variation in the Reference Stabilization Coefficient (CER) since March 31, 2016. The CER is an index that reflects the variation in inflation in Argentina and is calculated based on the daily variations in the CPI as determined by the INDEC.

The indexation by UVA clause requires the recognition of the adjustment for loans indexed by UVA. As of December 31, 2020, 2019 and 2018, the Bank held Ps.24,651.0 million, Ps.33,825.1 million and Ps.49,278.4 million, respectively of UVA-indexed assets, which represented 3.56%, 5.47% and 4.23%, respectively, of our total assets as of such dates.

For the year ended December 31, 2020 the variation in the interest component of interest income resulted mostly from both a decrease in the average real rates of interest-earning assets and a decrease in the average volume of interest earning assets.

For the year ended December 31, 2019 the variation in the interest component of interest income resulted from an increase in the average real rates of interest-earning assets partially offset by a decrease in the average volume of interest earning assets.

The following table sets forth the changes in the interest component of interest and other income due to increases or decreases in the volume of interest-earning assets and increases or decreases in the average real rates of interest-earning assets.

|  | December 31, 2020 vs. December 31, 2019 Increase (Decrease) |  |  | December 31, 2019 vs. December 31, 2018 Increase (Decrease) |
Change in interest income due to change in: |  | (in thousands of pesos) |
the volume of interest-earning assets |  |  | (16,419,806 | ) |  |  | (4,186,863 | )
average real rates of interest-earning assets |  |  | (21,425,356 | ) |  |  | 42,285,317 |
Net Change |  |  | (37,845,162 | ) |  |  | 38,098,454 |

Interest expenses

Interest expenses decreased by 37.3% to Ps.41,471.9 million in the fiscal year ended December 31, 2020 from Ps.66,123.1 million in the fiscal year ended December 31, 2019. Interest expenses increased by 27.6% to Ps.66,123.1 million in the fiscal year ended December 31, 2019 from Ps.51,808.8 million in the fiscal year ended December 31, 2018.

The components of our interest expenses are reflected in the following table.

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Savings accounts deposits |  |  | 2,700,162 |  |  |  | 3,749,806 |  |  |  | 9,186,451 |  |  |  | (1,049,644 | ) |  |  | (28.0 | %) |  |  | (5,436,645 | ) |  |  | (59.2 | %)
Time deposits |  |  | 33,236,039 |  |  |  | 52,834,019 |  |  |  | 35,573,477 |  |  |  | (19,597,980 | ) |  |  | (37.1 | %) |  |  | 17,260,542 |  |  |  | 48.5 | %
Bank loans |  |  | 1,394,983 |  |  |  | 1,230,240 |  |  |  | 383,690 |  |  |  | 164,743 |  |  |  | 13.4 | % |  |  | 846,550 |  |  |  | 220.6 | %
Other liabilities |  |  | 2,662,424 |  |  |  | 5,728,338 |  |  |  | 3,722,117 |  |  |  | (3,065,914 | ) |  |  | (53.5 | %) |  |  | 2,006,221 |  |  |  | 53.9 | %
Premium for reverse repurchase agreements |  |  | — |  |  |  | 3,598 |  |  |  | 230,784 |  |  |  | (3,598 | ) |  |  | (100.0 | %) |  |  | (227,186 | ) |  |  | (98.4 | %)
UVA clause adjustment |  |  | 1,011,135 |  |  |  | 2,096,368 |  |  |  | 2,688,015 |  |  |  | (1,085,233 | ) |  |  | (51.8 | %) |  |  | (591,647 | ) |  |  | (22.0 | %)
Interest on the lease liability |  |  | 373,512 |  |  |  | 432,547 |  |  |  | — |  |  |  | (59,035 | ) |  |  | (13.6 | %) |  |  | 432,547 |  |  |  | 100.0 | %
Other |  |  | 93,637 |  |  |  | 48,153 |  |  |  | 24,291 |  |  |  | 45,484 |  |  |  | 94.5 | % |  |  | 23,862 |  |  |  | 98.2 | %
|  |  | 41,471,892 |  |  |  | 66,123,069 |  |  |  | 51,808,825 |  |  |  | (24,651,177 | ) |  |  | (37.3 | %) |  |  | 14,314,244 |  |  |  | 27.6 | %

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The decrease in interest expenses during the fiscal year ended December 31, 2020 was mainly due to a decrease in interest on time deposits (mainly due to a decrease in the volume of these products from individuals) and, to a significant lesser extent, a decrease in interest on other liabilities (mainly corporate bonds and loans for export and import activities), a decrease in savings account deposits and the effect of the UVA clause adjustment.

The increase in interest expenses during the fiscal year ended December 31, 2019 was mainly due to an increase in interest on time deposits (mainly due to an increase in the rates at which these products are remunerated, driven in turn by the increase of the reference rate by BCRA), an increase in interest on other liabilities (mainly corporate bonds and loans for export and import activities), bank loans and other, partially offset by a decrease on premium for reverse repurchase agreements, in interest on saving accounts deposits and the effect of UVA clause adjustments.

The variation in interest component of interest expenses for the year ended December 31, 2020 reflected a decrease in the average real rates of interest bearing liabilities and a decrease in average volume of interest-bearing liabilities.

The variation in interest component of interest expenses for the year ended December 31, 2019 reflected an increase in the average real rates of interest-bearing liabilities partially offset by a decrease in average volume of interest-bearing liabilities.

The following table sets forth the changes in the interest component of interest expenses due to increases or decreases in the volume of interest-bearing liabilities and increases or decreases in the average nominal rates of interest-bearing liabilities.

|  | December 31, 2020 vs. December 31, 2019 Increase (Decrease) |  |  | December 31, 2019 vs. December 31, 2018 Increase (Decrease) |
Change in interest expenses due to change in: |  | (in thousands of pesos) |
the volume of interest-bearing liabilities |  |  | (11,505,833 | ) |  |  | (4,902,179 | )
average real rates of interest-bearing liabilities |  |  | (13,145,344 | ) |  |  | 19,216,423 |
Net Change |  |  | (24,651,177 | ) |  |  | 14,314,244 |

Net interest income

Our net interest income (defined as interest and other income minus interest expenses) of Ps.77,050.9 million in the fiscal year ended December 31, 2020 represented a 14.1% decrease over our net interest income of Ps.90,244.8 million in the fiscal year ended December 31, 2019.

The following table sets forth the changes in the components of our net interest income for the periods discussed herein:

|  | December 31, 2020 vs. December 31, 2019 Increase (Decrease) |  |  | December 31, 2019 vs. December 31, 2018 Increase (Decrease) |
Net interest income due to changes in: |  | (in thousands of pesos) |
the volume of interest-earning assets and interest-bearing liabilities |  |  | (4,913,973 | ) |  |  | 715,316 |
average real rates of interest-earning assets and interest-bearing liabilities |  |  | (8,280,012 | ) |  |  | 23,068,894 |
Net Change |  |  | (13,193,985 | ) |  |  | 23,784,210 |

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The changes in net interest income are due to the changes in interest income and interest expense as explained above.

See “Item 4. Information on the Company—E. Selected Statistical Information—Average Balance Sheets, Interest Earned on Interest-Earning Assets and Interest Paid on Interest-Bearing Liabilities” and “Item 4. Information on the Company—E. Selected Statistical Information—Interest-Earning Assets: Net Interest Margin and Spread”.

Fee and commission income

Fee and commission income decreased by 1.3% to Ps.23,663.2 million for the fiscal year ended December 31, 2020 from Ps.23,976.1 million for the fiscal year ended December 31, 2019. Fee and commission income decreased by 9.0% to Ps.23,976.1 million for the fiscal year ended December 31, 2019 from Ps.26,334.9 million for the fiscal year ended December 31, 2018. During 2020 the decrease was driven mainly by a significant decrease in fee and commission income linked to deposits as a consequence of the decrease in saving accounts service charges as a result of the Covid-19 measures implemented by the Government, which was mostly offset by the increase in fee and commission income linked to credit cards. During 2019 the decrease was driven mainly by a significant decrease in net commissions linked to credit cards as a consequence of the increase in commissions paid to LATAM.

The following table provides a breakdown of our fee and commission income by category.

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Linked to deposits |  |  | 12,013,206 |  |  |  | 15,625,680 |  |  |  | 15,320,959 |  |  |  | (3,612,474 | ) |  |  | (23.1 | %) |  |  | 304,721 |  |  |  | 2.0 | %
Linked to credit cards |  |  | 8,574,713 |  |  |  | 5,161,923 |  |  |  | 7,641,939 |  |  |  | 3,412,790 |  |  |  | 66.1 | % |  |  | (2,480,016 | ) |  |  | (32.5 | %)
Linked to securities |  |  | 321,586 |  |  |  | 166,561 |  |  |  | 326,800 |  |  |  | 155,025 |  |  |  | 93.1 | % |  |  | (160,239 | ) |  |  | (49.0 | %)
From guarantees granted |  |  | 3,821 |  |  |  | 2,727 |  |  |  | 6,490 |  |  |  | 1,094 |  |  |  | 40.1 | % |  |  | (3,763 | ) |  |  | (58.0 | %)
Insurance agent fee |  |  | 1,437,672 |  |  |  | 1,545,159 |  |  |  | 1,817,747 |  |  |  | (107,487 | ) |  |  | (7.0 | %) |  |  | (272,588 | ) |  |  | (15.0 | %)
From foreign currency transactions |  |  | 1,312,183 |  |  |  | 1,474,105 |  |  |  | 1,221,029 |  |  |  | (161,922 | ) |  |  | (11.0 | %) |  |  | 253,076 |  |  |  | 20.7 | %
|  |  | 23,663,181 |  |  |  | 23,976,155 |  |  |  | 26,334,964 |  |  |  | (312.974 | ) |  |  | (1.3 | %) |  |  | (2,358,809 | ) |  |  | (9.0 | %)

The main variations for 2020 are explained below:

Fee and commissions linked to deposits include fees accrued on deposits and other liabilities from financial transactions, such as those arising from activity in current accounts and collections on behalf of third parties. These fees decreased by 23.1% to Ps.12,013.2 million in the fiscal year ended December 31, 2020 from Ps.15,625.7 million in the fiscal year ended December 31, 2019. The decrease was primarily attributable to a decrease in saving deposits accounts service charges.

Fee and commissions linked to credit cards, including commissions on credit and debit cards, loans and other receivables from financial transactions, increased 66.1% to Ps.8,574.7 million in the fiscal year ended December 31, 2020 from Ps.5,161.9 million in the fiscal year ended December 31, 2019 mainly due to an increase in transactions related to these operations.

Fee and commissions linked to securities include commissions accrued on security brokerage activities, which increased by 93.1% to Ps.321.5 million in the fiscal year ended December 31, 2020 from Ps.166.5 million in the fiscal year ended December 31, 2019 due to an increase in the operations of security brokerage activities related to mutual funds.

Commissions from guarantees granted increased by 40.1% to Ps.3.8 million in the fiscal year ended December 31, 2020 from Ps.2.7 million in the fiscal year ended December 31, 2019, primarily as a consequence of the increase in the volume of transactions.

Insurance agent fees fell by 7.0% to Ps.1,437.7 million in the fiscal year ended December 31, 2020 from Ps.1,545.2 million in the fiscal year ended December 31, 2019, primarily as a consequence of the decrease in the volume of transactions.

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Finally, commissions from foreign currency transactions fell by 11.0% to Ps.1,312.2 million in the fiscal year ended December 31, 2020 from Ps.1,474.1 million in the fiscal year ended December 31, 2019 primarily as a consequence of the decrease in the amount and activity level in this business line.

The main variations for 2019 are explained below:

Commissions linked to deposits rose by 2.0% from Ps.15,321.0 million in the fiscal year ended December 31, 2018 to Ps.15,625.7 million in the fiscal year ended December 31, 2019. The increase was primarily attributable to an increase in savings account service charges.

Commissions linked to credit cards, including commissions on credit and debit cards, loans and other receivables from financial transactions, decreased 32.5% from Ps.7,641.9 million in the fiscal year ended December 31, 2018 to Ps.5,161.9 million in the fiscal year ended December 31, 2019 as a consequence of the increase in commissions paid to LATAM.

Commissions linked to securities include commissions accrued on security brokerage activities, which decreased by 49.0% from Ps.326.8 million in the fiscal year ended December 31, 2018 to Ps.166.6 million in the fiscal year ended December 31, 2019.

Commissions from guarantees granted decreased by 58.0% from Ps.6.5 million in the fiscal year ended December 31, 2018 to Ps.2.7 million in the fiscal year ended December 31, 2019, primarily as a consequence of the decrease in the volume of transactions.

Insurance agent fees fell by 15.0% from Ps.1,817.7 million in the fiscal year ended December 31, 2018 to Ps.1,545.1 million in the fiscal year ended December 31, 2019, primarily as a consequence of the decrease in the volume of transactions.

Finally, commissions from foreign currency transactions rose by 20.7% from Ps.1,221.0 million in the fiscal year ended December 31, 2018 to Ps.1,474.1 million in the fiscal year ended December 31, 2019 primarily as a consequence of the increase in the amount and activity level in this business line.

Fee and commission expense

Our fee and commission expense amounted to Ps.16,407.0 million, Ps.12,841.8 million and Ps.11,521.7 million, for the fiscal years ended December 31, 2020, 2019 and 2018, respectively. The amount recorded in 2020 accounted for a 11.0% increase compared with 2019 and the amount recorded in 2019 accounted for an 11.5% increase compared with 2018.

The table below shows a breakdown of our fee and commission expense by category.

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
For credit and debit cards |  |  | 8,524,712 |  |  |  | 8,266,906 |  |  |  | 7,191,092 |  |  |  | 257,806 |  |  |  | 3.1 | % |  |  | 1,075,814 |  |  |  | 15.0 | %
Linked to transactions with securities |  |  | 4,534 |  |  |  | 4,000 |  |  |  | 3,902 |  |  |  | 534 |  |  |  | 13.4 | % |  |  | 98 |  |  |  | 2.5 | %
For foreign trade transactions |  |  | 278,455 |  |  |  | 485,530 |  |  |  | 328,438 |  |  |  | (207,075 | ) |  |  | (42.6 | %) |  |  | 157,092 |  |  |  | 47.8 | %
For promotions |  |  | 1,746,686 |  |  |  | 2,623,670 |  |  |  | 2,724,585 |  |  |  | (876,984 | ) |  |  | (33.4 | %) |  |  | (100,915 | ) |  |  | (3.7 | %)
Other commission expenses |  |  | 868,847 |  |  |  | 1,461,741 |  |  |  | 1,273,686 |  |  |  | (592,894 | ) |  |  | (40.6 | %) |  |  | 188,055 |  |  |  | 14.8 | %
|  |  | 11,423,234 |  |  |  | 12,841,847 |  |  |  | 11,521,703 |  |  |  | 1,418,613 |  |  |  | 11.0 | % |  |  | 1,320,144 |  |  |  | 11.5 | %

The main variations for 2020 are explained below:

Fee and commissions expenses for credit and debit cards include commissions paid for the use of trademarks and processing services, which rose by 3.1% from Ps.8,266.9 million in the fiscal year ended December 31, 2019 to Ps.8,524.7 million in the fiscal year ended December 31, 2020 primarily as a consequence of an increase in the royalty fees paid for the use of the Visa trademark for customer transactions using Visa cards.

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Fee and commissions expenses linked to transactions with securities, including commissions paid on transactions in MERVAL, rose by 13.4% from Ps.4.0 million in the fiscal year ended December 31, 2019 to Ps.4.5 million in the fiscal year ended December 31, 2020 due to an increase in stock trades.

Fee and commissions expenses for foreign trade transactions decreased by 42.6% from Ps.485.5 million in the fiscal year ended December 31, 2019 to Ps.278.5 million in the fiscal year ended December 31, 2020 mainly due to lower activity.

Fee and commissions expenses for promotions (related to raffles arranged by us among customers with product bundles) decreased by 33.4% from Ps.2,623.7 million in the fiscal year ended December 31, 2019 to Ps.1,746.7 million in the fiscal year ended December 31, 2020 mainly due to lower consumption and commercial campaigns.

Other commission expenses decreased by 40.6% from Ps.1,461.7 million in the fiscal year ended December 31, 2019 to Ps.868.8 million in the fiscal year ended December 31, 2020 mainly due to lower commissions for cobranding.

The main variations for 2019 are explained below:

Commissions for credit and debit cards include commissions paid for the use of trademarks and processing services, which rose by 15.0% from Ps.7,191.1 million in the fiscal year ended December 31, 2018 to Ps.8,266.9 million in the fiscal year ended December 31, 2019 primarily as a consequence of an increase in the royalty fees paid by the Bank to the Visa trademark for customer transactions using Visa cards.

Commissions linked to transactions with securities, including commissions paid on transactions in MERVAL, rose by 2.5% from Ps.3.9 million in the fiscal year ended December 31, 2018 to Ps.4.0 million in the fiscal year ended December 31, 2019 due to an increase in stock trades.

Commissions for foreign trade transactions rose by 47.8% from Ps.328.4 million in the fiscal year ended December 31, 2018 to Ps.485.5 million in the fiscal year ended December 31, 2019 mainly due to increase in the exchange rate.

Commissions for promotions (related to raffles arranged by us among customers with product bundles) decrease by 3.7% from Ps.2,724.6 million in the fiscal year ended December 31, 2018 to Ps.2,623.7 million in the fiscal year ended December 31, 2019 mainly due to lower consumption and commercial campaigns.

Other commission expenses increased by 14.8% from Ps.1,273.6 million in the fiscal year ended December 31, 2018 to Ps.1,461.7 million in the fiscal year ended December 31, 2019.

Gains on financial assets and liabilities at fair value through profit or loss, net

For the fiscal year ended December 31, 2020, we recorded a gain from measurement of financial instruments at fair value through profit or loss in the amount of Ps.11,239.1 million compared with a gain of Ps.15,604.5 million for the fiscal year ended December 31, 2019. For the fiscal year ended December 31, 2018 we recorded a gain of Ps.242.6 million.

Accumulated gains (losses) from changes in the fair value of financial instruments measured at fair value through profit or loss are charged to income under this item. The decrease in 2020 is mainly due to decreases in transactions with government securities (mainly due to a lower volume invested in BCRA LELIQ liquidity instruments and a lower average nominal rate of return).

The increase in 2019 is mainly attributable to gains on transactions with government securities (principally due to a higher average volume of these securities in the trading portfolio during 2019 and the variation in the exchange rate).

The table below shows a breakdown of our gain from measurement of financial instruments at fair value through profit or loss by category:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Income / (Loss) from foreign currency forward transactions |  |  | 3,061,714 |  |  |  | 2,169,298 |  |  |  | (620,289 | ) |  |  | 892,416 |  |  |  | 41.1 | % |  |  | 2,789,587 |  |  |  | (449.7 | %)
Income from debt and equity instruments |  |  | 7,607,079 |  |  |  | 13,198,302 |  |  |  | 2,993,171 |  |  |  | (5,591,223 | ) |  |  | (42.4 | %) |  |  | 10,205,131 |  |  |  | 340.9 | %
Interest rate swaps |  |  | 73,319 |  |  |  | (695,693 | ) |  |  | (2,130,274 | ) |  |  | 769,012 |  |  |  | (110.5 | %) |  |  | 1,434,581 |  |  |  | (67.3 | %)
Gains on put options |  |  | 497,000 |  |  |  | 932,562 |  |  |  | — |  |  |  | (435,562 | ) |  |  | (46.7 | %) |  |  | 932,562 |  |  |  | 100.0 | %
|  |  | 11,239,112 |  |  |  | 15,604,469 |  |  |  | 242,608 |  |  |  | (4,365,357 | ) |  |  | (28.0 | %) |  |  | 15,361,861 |  |  |  | 6,332.0 | %

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(Losses) gain on derecognition of financial assets not measured at fair value through profit or loss, net

Net loss from derecognition of assets not measured at fair value through profit or loss increased to Ps.2,309.9 million for the fiscal year ended December 31, 2020 from Ps.80.9 for the fiscal year ended December 31, 2019 mainly due to the restructuring of government debt, which in turn reflected a decrease from Ps.286.4 million for the fiscal year ended December 31, 2018 mainly due to the sale of bonds denominated LELINK recorded in income from sale of government securities

The table below shows a breakdown of our gain (loss) from derecognition of financial assets not measured at fair value through profit or loss by category:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Loss from sale of government securities |  |  | (2,308,809 | ) |  |  | (79,314 | ) |  |  | (284,476 | ) |  |  | (2,229,495 | ) |  |  | 2,811.0 | % |  |  | 205,162 |  |  |  | (72.1 | %)
Loss from sale of private securities |  |  | (1,049 | ) |  |  | (1,560 | ) |  |  | (1,896 | ) |  |  | 511 |  |  |  | (32.8 | %) |  |  | 336 |  |  |  | (17.7 | %)
|  |  | (2,309,858 | ) |  |  | (80,874 | ) |  |  | (286,372 | ) |  |  | (2,228,984 | ) |  |  | 2,756.1 | % |  |  | 205,498 |  |  |  | (71.8 | %)

Exchange differences, net

Exchange differences, net decreased by 55.6% to Ps.6,227.7 million for the fiscal year ended December 31, 2020 from Ps.14,026.4 million for the fiscal year ended December 31, 2019 which in turn increased by 3.2% from Ps.13,589.9 million for the fiscal year ended December 31, 2018.

The decrease in 2020 was driven mainly by a 57.7% decrease in the income from purchases and sales of foreign currency to Ps.6,064.6 million for the fiscal year ended December 31, 2020 from Ps.14,325.8 million for the fiscal year ended December 31, 2019 (mainly due to the decrease in traded volume and government restrictions, see “Item 3. Key Information—D.Risk Factors—Risks relating to Argentina—Exchange controls and restrictions on capital inflows and outflows could have a material adverse effect on Argentine public sector activity, and, as a result, on our businesss”) partially offset by a change in conversion of foreign currency assets and liabilities into peso from a loss of Ps.299.3 million for the fiscal year ended December 31, 2019 to a gain of Ps.163.1 million for the fiscal year ended December 31, 2020.

The increase in 2019 was driven mainly by a 34.6% increase in the income from purchase-sales of foreign currency to Ps.14,325.8 million, for the fiscal year ended December 31, 2019 from Ps.10,643.7 million for the fiscal year ended December 31, 2018 (mainly due to the increase in volume and spreads resulting from higher volatility in the exchange rate) partially offset by a change in conversion of foreign currency assets and liabilities into peso from a gain of Ps.2,946.2 million for the fiscal year ended December 31, 2018 to a loss of Ps.299.4 million for the fiscal year ended December 31, 2019.

The following table provides a breakdown of our exchange differences by category:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Conversion of foreign currency assets and liabilities into pesos |  |  | 161,346 |  |  |  | (299,355 | ) |  |  | 2,946,171 |  |  |  | 462,470 |  |  |  | (154.5 | %) |  |  | (3,245,526 | ) |  |  | (110.2 | %)
Income from purchase-sale of foreign currency |  |  | 6,066,379 |  |  |  | 14,325,764 |  |  |  | 10,643,679 |  |  |  | (8,261,154 | ) |  |  | (57.7 | %) |  |  | 3,682,085 |  |  |  | 34.6 | %
|  |  | 6,227,725 |  |  |  | 14,026,409 |  |  |  | 13,589,850 |  |  |  | (7,798,684 | ) |  |  | (55.6 | %) |  |  | 436,559 |  |  |  | 3.2 | %

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Other operating income

Other operating income amounted to Ps.6,323.0 million, Ps.11,982.2 million and Ps.4,412.6 million for the fiscal year ended December 31, 2020, 2019 and 2018, respectively.

The amount recorded in 2020 decreased by 47.2% compared with 2019 driven mainly by an decrease in the result from the sale of non-current assets held for sale (which in 2019 included the result of the sale of Prisma Medios de Pago S.A.) and the decrease in other operating income to Ps.2,694.3 million for the fiscal year ended December 31, 2020 from Ps.3,154.2 million for the fiscal year ended December 31, 2019.

The amount recorded in 2019 increased by 171.5% compared with 2018 driven mainly by a 100.0% increase in the result from the sale of non-current assets held for sale to Ps.5,202.0 million for the fiscal year ended December 31, 2019 from nil for the fiscal year ended December 31, 2018 due to the result of the sale of Prisma Medios de Pago S.A.

The following table shows a breakdown of other operating income by category:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Rental of safe deposit boxes |  |  | 1,122,188 |  |  |  | 961,725 |  |  |  | 1,124,781 |  |  |  | 160,463 |  |  |  | 16.7 | % |  |  | (163,056 | ) |  |  | (14.5 | %)
Adjustments and interest on miscellaneous receivables |  |  | 1,882,344 |  |  |  | 1,729,851 |  |  |  | 1,039,065 |  |  |  | 152,493 |  |  |  | 8.8 | % |  |  | 690,786 |  |  |  | 66.5 | %
Result from the sale of non-current assets held for sale |  |  | — |  |  |  | 5,202,018 |  |  |  | — |  |  |  | (5,202,018 | ) |  |  | (100.0 | %) |  |  | 5,202,018 |  |  |  | 100.0 | %
Proceeds from electronic transactions |  |  | 186,922 |  |  |  | 199,891 |  |  |  | 255,558 |  |  |  | (12,969 | ) |  |  | (6.5 | %) |  |  | (55,667 | ) |  |  | (21.8 | %)
Income related to foreign trade |  |  | 167,080 |  |  |  | 433,560 |  |  |  | 462,620 |  |  |  | (266,480 | ) |  |  | (61.5 | %) |  |  | (29,060 | ) |  |  | (6.3 | %)
Services rendered |  |  | 270,110 |  |  |  | 300,983 |  |  |  | 323,403 |  |  |  | (30,873 | ) |  |  | (10.3 | %) |  |  | (22,420 | ) |  |  | (6.9 | %)
Other operating income |  |  | 2,694,336 |  |  |  | 3,154,173 |  |  |  | 1,207,177 |  |  |  | (459,837 | ) |  |  | (14.6 | %) |  |  | 1,946,996 |  |  |  | 161.3 | %
|  |  | 6,322,980 |  |  |  | 11,982,201 |  |  |  | 4,412,604 |  |  |  | (5,659,221 | ) |  |  | (47.2 | %) |  |  | 7,569,597 |  |  |  | 171.5 | %

Other operating expenses

Other operating expenses amounted to Ps.15,590.2 million, Ps.22,028.4 million and Ps.16,720.8 million for the fiscal years ended December 31, 2020, 2019 and 2018, respectively.

The amount recorded in 2020 decreased by 29.2% compared with 2019. The decrease was driven mainly by the decrease in sales taxes to Ps.8,116.8 million for the fiscal year ended December 31, 2020 from Ps.10,866.6 million for the fiscal year ended December 31, 2019 and also by the decrease in provisions for legal and administrative proceedings to Ps.1.0 million for the fiscal year ended December 31, 2020 from Ps.2,903.2 million for the fiscal year ended December 31, 2019 mainly related to lawsuits against the Bank for labor or commercial lawsuits.

The amount recorded in 2019 increased by 31.7% compared with 2018. The increase was driven mainly by a provision for reorganization of Ps.3,188.5 million for the fiscal year ended December 31, 2019.

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The components of other operating expenses are detailed below:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Contributions to the Deposits Guarantee Fund |  |  | 696,691 |  |  |  | 824,817 |  |  |  | 826,050 |  |  |  | (128,126 | ) |  |  | (15.5 | %) |  |  | (1,233 | ) |  |  | (0.1 | %)
Sales taxes |  |  | 8,116,846 |  |  |  | 10,866,557 |  |  |  | 10,430,538 |  |  |  | (2,749,711 | ) |  |  | (25.3 | %) |  |  | 436,019 |  |  |  | 4.2 | %
Provisions for legal and administrative proceedings |  |  | 1,004,990 |  |  |  | 2,903,150 |  |  |  | 1,301,014 |  |  |  | (1,898,160 | ) |  |  | (65.4 | %) |  |  | 1,568,504 |  |  |  | 120.6 | %
Provisions for reorganization |  |  | 2,858,723 |  |  |  | 3,188,547 |  |  |  | — |  |  |  | (329,824 | ) |  |  | (10.3 | %) |  |  | 3,188,547 |  |  |  | 100.0 | %
Expected credit losses on financial guarantee and loan commitments issued |  |  | 537,694 |  |  |  | 482,866 |  |  |  | 78,062 |  |  |  | 54,828 |  |  |  | 11.4 | % |  |  | 438,436 |  |  |  | 561.7 | %
Damage claims |  |  | 85,793 |  |  |  | 229,208 |  |  |  | 405,915 |  |  |  | (143,415 | ) |  |  | (62.6 | %) |  |  | (176,707 | ) |  |  | (43.5 | %)
Loss on initial recognition of loans bearing below market interest rate |  |  | 627,182 |  |  |  | 2,069,574 |  |  |  | 1,342,077 |  |  |  | (1,442,392 | ) |  |  | (69.7 | %) |  |  | 727,497 |  |  |  | 54.2 | %
Loss on sale of non-current assets held for sale |  |  | — |  |  |  | — |  |  |  | 536,147 |  |  |  | — |  |  |  | 0.0 | % |  |  | (536,147 | ) |  |  | (100.0 | %)
Other operating expenses |  |  | 1,662,299 |  |  |  | 1,463,693 |  |  |  | 1,801,028 |  |  |  | 198,606 |  |  |  | 13.6 | % |  |  | (337,335 | ) |  |  | (18.7 | %)
|  |  | 15,590,218 |  |  |  | 22,028,412 |  |  |  | 16,720,831 |  |  |  | (6,438,194 | ) |  |  | (29.2 | %) |  |  | 5,307,581 |  |  |  | 31.7 | %

Administration costs

Administration costs, which include personnel benefits and other administrative expenses, for the fiscal year ended December 31, 2020 amounted Ps.39,138.6 million, a 6.2% decrease compared with Ps.41,728.1 million recorded for the fiscal year ended December 31, 2019, mainly as a result of a 10.2% decrease in personnel benefits to Ps.20,379.1 million for the fiscal year ended December 31, 2020 from Ps.22,698.4 million for the fiscal year ended December 31, 2019, and a decrease in administrative expenses by 1.4% to Ps.18,759.4 million in the fiscal year ended December 31, 2020 from Ps.19,029.6 million in the fiscal year ended December 31, 2019.

Administration costs for the fiscal year ended December 31, 2019 increased 2.0% to Ps.41,728.1 million compared with Ps.40,920.0 million recorded for the fiscal year ended December 31, 2018, mainly as a result of a 5.0% increase in administrative expenses to Ps.19,029.6 million for the fiscal year ended December 31, 2019 from Ps.18,118.1 million for the fiscal year ended December 31, 2018, which was offset in part by an decrease in personnel benefits by 0.5% to Ps.22,698.4 million in the fiscal year ended December 31, 2019 from Ps.22,801.9 million in the fiscal year ended December 31, 2018.

The table below provides a breakdown of personnel benefits for the years ended December 31, 2020, 2019 and 2018:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Salaries |  |  | 12,951,727 |  |  |  | 13,364,230 |  |  |  | 13,036,484 |  |  |  | (412,503 | ) |  |  | (3.1 | %) |  |  | 327,746 |  |  |  | 2.5 | %
Social security charges |  |  | 3,535,606 |  |  |  | 3,901,108 |  |  |  | 3,851,123 |  |  |  | (365,502 | ) |  |  | (9.4 | %) |  |  | 49,985 |  |  |  | 1.3 | %
Personnel compensations and rewards |  |  | 436,790 |  |  |  | 719,905 |  |  |  | 1,836,160 |  |  |  | (283,115 | ) |  |  | (39.3 | %) |  |  | (1,116,255 | ) |  |  | (60.8 | %)
Personnel services |  |  | 433,919 |  |  |  | 496,513 |  |  |  | 478,813 |  |  |  | (62,594 | ) |  |  | (12.6 | %) |  |  | 17,700 |  |  |  | 3.7 | %
Other short term personnel benefits |  |  | 2,778,210 |  |  |  | 4,028,583 |  |  |  | 3,424,584 |  |  |  | (1,250,373 | ) |  |  | (31.0 | %) |  |  | 603,999 |  |  |  | 17.6 | %
Termination benefits |  |  | 82,785 |  |  |  | 4,106 |  |  |  | 33,314 |  |  |  | 78,679 |  |  |  | 1916.2 | % |  |  | (29,208 | ) |  |  | (87.7 | %)
Fees to Bank Directors and Supervisory Committee |  |  | 60,188 |  |  |  | 22,247 |  |  |  | 41,895 |  |  |  | 37,941 |  |  |  | 170.5 | % |  |  | (19,648 | ) |  |  | (46.9 | %)
Other long term benefits |  |  | 99,910 |  |  |  | 161,733 |  |  |  | 99,522 |  |  |  | (61,823 | ) |  |  | (38.2 | %) |  |  | 62,211 |  |  |  | 62.5 | %
|  |  | 20,379,135 |  |  |  | 22,698,425 |  |  |  | 22,801,895 |  |  |  | (2,319,290 | ) |  |  | (10.2 | %) |  |  | (103,470 | ) |  |  | (0.5 | %)

During 2020, other short term personnel benefits decreased 31.0% compared with the fiscal year ended December 31, 2019 mainly due to a decrease in the variable remuneration paid to personnel., and salaries declined 3.1% compared with the fiscal year ended December 31, 2019 as a result of a change in the method used to calculate salary increases agreed with the unions for the year 2019 that resulted in lower salaries in 2020.

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During 2019, personnel compensations and rewards decreased 60.8% compared with the fiscal year ended December 31, 2018 and salaries increased 2.5% compared with the previous year. Salaries vary annually mainly as a result of the negotiation between banking associations and trade unions, and generally follow the inflation trends in Argentina.

The table below provides a breakdown of other administrative expenses for the fiscal years ended December 31, 2020, 2019 and 2018:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Travel expenses |  |  | 118,790 |  |  |  | 226,699 |  |  |  | 226,880 |  |  |  | (107,909 | ) |  |  | (47.6 | %) |  |  | (181 | ) |  |  | (0.1 | %)
Administrative expenses |  |  | 1,622,077 |  |  |  | 1,725,522 |  |  |  | 1,349,599 |  |  |  | (103,445 | ) |  |  | (6.0 | %) |  |  | 375,923 |  |  |  | 27.9 | %
Security services |  |  | 768,112 |  |  |  | 658,966 |  |  |  | 759,803 |  |  |  | 109,146 |  |  |  | 16.6 | % |  |  | (100,837 | ) |  |  | (13.3 | %)
Other fees |  |  | 966,453 |  |  |  | 944,428 |  |  |  | 737,943 |  |  |  | 22,025 |  |  |  | 2.3 | % |  |  | 206,485 |  |  |  | 28.0 | %
Insurance |  |  | 222,001 |  |  |  | 194,810 |  |  |  | 181,218 |  |  |  | 27,191 |  |  |  | 14.0 | % |  |  | 13,592 |  |  |  | 7.5 | %
Rent |  |  | 1,876,131 |  |  |  | 1,334,943 |  |  |  | 1,967,802 |  |  |  | 541,188 |  |  |  | 40.5 | % |  |  | (632,859 | ) |  |  | (32.2 | %)
Stationery and supplies |  |  | 68,797 |  |  |  | 98,409 |  |  |  | 94,482 |  |  |  | (29,612 | ) |  |  | (30.1 | %) |  |  | 3,927 |  |  |  | 4.2 | %
Electricity and communications |  |  | 1,024,242 |  |  |  | 966,919 |  |  |  | 824,218 |  |  |  | 57,323 |  |  |  | 5.9 | % |  |  | 142,701 |  |  |  | 17.3 | %
Advertising |  |  | 718,833 |  |  |  | 861,349 |  |  |  | 1,037,373 |  |  |  | (142,516 | ) |  |  | (16.5 | %) |  |  | (176,024 | ) |  |  | (17.0 | %)
Taxes |  |  | 4,490,270 |  |  |  | 4,433,658 |  |  |  | 4,226,702 |  |  |  | 56,612 |  |  |  | 1.3 | % |  |  | 206,956 |  |  |  | 4.9 | %
Maintenance costs |  |  | 2,226,065 |  |  |  | 2,034,666 |  |  |  | 1,931,138 |  |  |  | 191,399 |  |  |  | 9.4 | % |  |  | 103,528 |  |  |  | 5.4 | %
Armored transportation services |  |  | 2,205,072 |  |  |  | 3,447,768 |  |  |  | 2,701,123 |  |  |  | (1,242,696 | ) |  |  | (36.0 | %) |  |  | 746,645 |  |  |  | 27.6 | %
Other administrative expenses |  |  | 2,452,594 |  |  |  | 2,101,504 |  |  |  | 2,079,828 |  |  |  | 351,090 |  |  |  | 16.7 | % |  |  | 21,676 |  |  |  | 1.0 | %
|  |  | 18,759,437 |  |  |  | 19,029,641 |  |  |  | 18,118,109 |  |  |  | (270,204 | ) |  |  | (1.4 | %) |  |  | 911,532 |  |  |  | 5.0 | %

The main variations for 2020 are explained below:

Rent increased 40.5% to Ps.1,876.1 million in the fiscal year ended December 31, 2020 from Ps.1,334.9 million in the fiscal year ended December 31, 2019 as a consequence of the increase in the exchange rate, due to the fact that most contracts are denominated in foreign currency.

Armored transportation services decreased by 36.0% to Ps.2,205.1 million in the fiscal year ended December 31, 2020 from Ps.3,447.8 million in the fiscal year ended December 31, 2019 due to a decrease in the amount of services used by the Bank.

Other administrative expenses increased by 16.7% to Ps.2,452.6 million in the fiscal year ended December 31, 2020 from Ps.2,101.5 million in the fiscal year ended December 31, 2019 due to increase in personnel expenses.

Advertising decreased 16.5% to Ps.718.8 million in the fiscal year ended December 31, 2020 from Ps.861.3 million in the fiscal year ended December 31, 2019 mainly due to lower expenses related to credit product campaigns and television advertising.

Travel expenses decreased 47.6% from Ps.226.7 million in the fiscal year ended December 31, 2019 to Ps.118.8 million in the fiscal year ended December 31, 2020 as a consequence of a decrease in trips abroad.

The main variations for 2019 are explained below:

Rent decreased 32.2% to Ps.1,335.0 million in the financial year ended December 31, 2019 from Ps.1,967.8 million in the fiscal year ended December 31, 2018 mainly due to rental properties.

Armored transportation services increased by 27.6% to Ps.3,447.8 million in the fiscal year ended December 31, 2019 from Ps.2,701.1 million in the fiscal year ended December 31, 2018 due to an increase in the amount of services used by the Bank and by an increase in the price of such services.

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Administrative expenses increased by 27.9% to Ps.1,725.5 million in the fiscal year ended December 31, 2019 from Ps.1,349.6 million in the fiscal year ended December 31, 2018 mainly due to an increase in reprocessing services.

Advertising decreased 17.0% to Ps.861.3 million in the fiscal year ended December 31, 2019 from Ps.1,037.4 million in the fiscal year ended December 31, 2018.

Depreciation and amortization

Depreciation and amortization amounted to Ps.4,066.0 million, Ps.5,728.5 million and Ps.4,025.8 million in the fiscal year ended December 31, 2020, 2019 and 2018, respectively.

The amount recorded in 2020 decreased 29.0% compared with 2019. The decrease was primarily due to the large number of accelerated amortizations made during 2019.

The amount recorded in 2019 increased 42.3% compared with 2018. The increase was primarily due to the purchase of several assets, such as furniture and facilities and equipment, which began to be depreciated, and the effect of the adjustment for inflation on depreciation as well as by application of the new standard, IFRS16.

The components of depreciation and amortization are detailed below:

|  | Year ended December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Depreciation of property and equipment |  |  | 3,026,203 |  |  |  | 4,242,671 |  |  |  | 3,698,337 |  |  |  | (1,216,468 | ) |  |  | (28.7 | %) |  |  | 544,334 |  |  |  | 14.7 | %
Depreciation of investment properties |  |  | 35,892 |  |  |  | 29,277 |  |  |  | 9,256 |  |  |  | 6,615 |  |  |  | 22.6 | % |  |  | 20,021 |  |  |  | 216.3 | %
Amortization of intangible assets |  |  | 308,544 |  |  |  | 686,628 |  |  |  | 317,458 |  |  |  | (378,084 | ) |  |  | (55.1 | %) |  |  | 369,170 |  |  |  | 116.3 | %
Amortization of rights of use |  |  | 695,110 |  |  |  | 766,294 |  |  |  | — |  |  |  | (71,184 | ) |  |  | (9.3 | %) |  |  | 766,294 |  |  |  | 100.0 | %
Depreciation of other assets |  |  | 232 |  |  |  | 3,664 |  |  |  | 704 |  |  |  | (3,432 | ) |  |  | 93.7 | % |  |  | 2,960 |  |  |  | 420.5 | %
|  |  | 4,065,981 |  |  |  | 5,728,534 |  |  |  | 4,025,755 |  |  |  | (1,662,553 | ) |  |  | (29.0 | %) |  |  | 1,702,779 |  |  |  | 42.3 | %

Impairment of financial assets

Impairment of financial assets totaled Ps.11,864.8 million in the fiscal year ended December 31, 2020, representing a 44.7% decrease compared with Ps.21,445.4 million of impairment of financial assets in the fiscal year ended December 31, 2019 which in turn increased 167.1% compared with Ps.8,029.5 million of impairment of financial assets in the fiscal year ended December 31, 2018.

In 2020, the Bank showed an improved portfolio quality, with no management adjustments, such as those made during 2019, applied. In 2019, the Argentine financial sector experienced deteriorating conditions due to a large increase in the inflation rate, the consequent loss of purchasing power and the fall in GDP.

The non-performing loan portfolio amounted to Ps.5,436.4 million at December 31, 2020 representing a 48.6% decrease compared with Ps.10,594.2 million at December 31, 2019 which in turn represented a 34.7% increase compared with Ps.7,860.8 million at December 31, 2018 due to a decrease in non-performing loans in the wholesale portfolio. The non-performing loan ratio decreased to 1.5% at December 31, 2020 from 3.6% at December 31, 2019 which in turn increased from 1.8% at December 31, 2018. This ratio at December 31, 2020 benefited from the temporary regulatory flexibility of the BCRA on the classification of debtors in the midst of the COVID-19 pandemic that extended the grace period by 60 days before the loan is classified as irregular and suspends the mandatory reclassification of clients that show irregular behavior with other entities but have regular behavior with the Bank.

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Loss on net monetary position

In a hyperinflationary economy, reporting of operating results and financial position in the local currency without restatement is generally not considered useful to investors. Money loses purchasing power at such a rate that comparison of amounts from transactions and other events that have occurred at different times, even within the same accounting period, can be different or misleading.

The table below sets forth the Bank’s net monetary inflation adjustment effect, which has been calculated by applying the CPI to monetary assets and liabilities:

|  |  |  | Year ended December 31, |
|  |  |  | 2020 |  |  | 2019 |  |  | 2018 |
|  |  |  | (stated in thousands of pesos) |
|  | ASSETS |  |  |  |  |  |  |  |  |  |  |  |
|  | Cash and cash equivalents |  |  | (55,709,910 | ) |  |  | (76,713,951 | ) |  |  | (67,838,904 | )
|  | Loans and other receivables, net |  |  | (85,781,174 | ) |  |  | (138,417,739 | ) |  |  | (152,933,446 | )
|  | Investment securities |  |  | (42,619,087 | ) |  |  | (33,285,218 | ) |  |  | (20,258,114 | )
|  | Financial assets pledged as collateral |  |  | (3,052,305 | ) |  |  | (4,375,711 | ) |  |  | (3,928,662 | )
|  | All other assets |  |  | (6,473,129 | ) |  |  | (21,941,920 | ) |  |  | (25,682,121 | )
(A) |  | TOTAL ASSETS |  |  | (193,635,605 | ) |  |  | (274,734,539 | ) |  |  | (270,641,247 | )
|  | LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
|  | Deposits |  |  | 139,538,779 |  |  |  | 203,558,631 |  |  |  | 204,223,795 |
|  | Other financial liabilities |  |  | 12,296,996 |  |  |  | 18,576,409 |  |  |  | 20,840,684 |
|  | Bank loans |  |  | 2,850,529 |  |  |  | 3,719,060 |  |  |  | 3,071,588 |
|  | Corporate bonds issued |  |  | 1,533,762 |  |  |  | 2,828,864 |  |  |  | 2,235,799 |
|  | Income tax liabilities |  |  | 1,933,925 |  |  |  | 5,132,050 |  |  |  | 4,172,565 |
|  | All other liabilities |  |  | 13,206,790 |  |  |  | 13,400,678 |  |  |  | 11,689,565 |
(B) |  | TOTAL LIABILITIES |  |  | 171,360,781 |  |  |  | 247,215,692 |  |  |  | 246,233,996 |
(A) + (B) |  | Net monetary inflation adjustments |  |  | (22,274,824 | ) |  |  | (27,518,847 | ) |  |  | (24,407,251 | )

Share of profit of equity accounted investees

Share of profit of equity accounted investees increased by 52.8% to Ps.266.6 million for the fiscal year ended December 31, 2020 from Ps.174.4 million for the fiscal year ended December 31, 2019 which in turn decreased by 73.8% from Ps.665.0 million for the fiscal year ended December 31, 2018. These variations are directly related to the profits or losses of the Bank’s subsidiaries.

Income tax

Income tax expense for the fiscal year ended December 31, 2020 was Ps.8,034.1 million, a 184.8% increase compared to Ps.2,821.1 million recorded for the fiscal year ended December 31, 2019 which in turn decreased 68.9% from Ps.9,081.6 million for the fiscal year ended December 31, 2018. The increase in 2020 compared to the previous year was mainly due to the recognition of the adjustment for tax inflation as established by Argentine regulations for the years 2018 and 2019 in 2019.

Profit

As a result of the foregoing, profit for the fiscal year ended December 31, 2020 amounted to Ps.10,068.8 million compared with the profit of Ps.21,815.5 million for the fiscal year ended December 31, 2019 and with a loss of Ps.3,287.4 million recorded for the fiscal year ended December 31, 2018.

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Profit attributable to the owners of the Bank

Profit attributable to owners of the Bank for the fiscal year ended December 31, 2020 amounted to Ps.10,051.0 million compared with a profit of Ps.21,819.9 million for the fiscal year ended December 31, 2019 and with a loss of Ps.3,119.9 million recorded for the fiscal year ended December 31, 2018.

Loss attributable to non-controlling interests

Profit attributable to non-controlling interests for the fiscal year ended December 31, 2020 amounted to Ps.17.7 million compared with a loss of Ps.4.5 million for the fiscal year ended December 31, 2019 and with a loss of Ps.167.4 million recorded for the fiscal year ended December 31, 2018.

Financial Position

|  | As of December 31, |  |  | Variation |
|  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2020 vs 2019 |  |  | 2019 vs 2018 |
|  | (in thousands of pesos, except percentages) |
Cash and cash equivalents |  |  | 152,040,070 |  |  |  | 212,733,025 |  |  |  | 207,554,779 |  |  |  | (60,692,955 | ) |  |  | (28.5 | %) |  |  | 5,178,244 |  |  |  | 2.5 | %
Financial assets at fair value through profit or loss |  |  | 12,616,460 |  |  |  | 15,424,483 |  |  |  | 18,068,509 |  |  |  | (2,808,023 | ) |  |  | (18.2 | %) |  |  | (2,644,026 | ) |  |  | (14.6 | %)
Financial assets at amortized cost |  |  | 349,113,843 |  |  |  | 280,486,554 |  |  |  | 433,864,825 |  |  |  | 68,627,289 |  |  |  | 24.5 | % |  |  | (153,378,271 | ) |  |  | (35.4 | %)
Financial assets at fair value through other comprehensive income |  |  | 127,572,351 |  |  |  | 61,543,514 |  |  |  | 51,443,863 |  |  |  | 66,028,837 |  |  |  | 107.3 | % |  |  | 10,099,651 |  |  |  | 19.6 | %
Investment in joint ventures and associates |  |  | 1,442,345 |  |  |  | 1,410,346 |  |  |  | 3,678,092 |  |  |  | 31,999 |  |  |  | 2.3 | % |  |  | (2,267,746 | ) |  |  | (61.7 | %)
Tangible assets |  |  | 35,658,422 |  |  |  | 37,423,357 |  |  |  | 35,730,974 |  |  |  | (1,764,935 | ) |  |  | (4.7 | %) |  |  | 1,692,383 |  |  |  | 4.7 | %
Goodwill and intangible assets |  |  | 1,553,897 |  |  |  | 1,061,983 |  |  |  | 1,327,656 |  |  |  | 491,914 |  |  |  | 46.3 | % |  |  | (265,673 | ) |  |  | (20.0 | %)
Income tax assets |  |  | 5,920,397 |  |  |  | 4,152,062 |  |  |  | 806 |  |  |  | 1,768,335 |  |  |  | 42.6 | % |  |  | 4,151,256 |  |  |  | 515,044.2 | %
Other assets |  |  | 6,880,802 |  |  |  | 3,791,770 |  |  |  | 4,367,365 |  |  |  | 3,089,032 |  |  |  | 81.5 | % |  |  | (575,595 | ) |  |  | (13.2 | %)
Non-current assets held for sale |  |  | 225,938 |  |  |  | 283,605 |  |  |  | 1,134,967 |  |  |  | (57,667 | ) |  |  | (20.3 | %) |  |  | (851,362 | ) |  |  | (75.0 | %)
TOTAL ASSETS |  |  | 693,024,525 |  |  |  | 618,310,699 |  |  |  | 757,171,836 |  |  |  | 74,713,826 |  |  |  | 12.1 | % |  |  | (138,861,139 | ) |  |  | (18.3 | %)
Financial liabilities at fair value through profit or loss |  |  | 188,694 |  |  |  | 4,974,233 |  |  |  | 4,334,178 |  |  |  | (4,785,539 | ) |  |  | (96.2 | %) |  |  | 640,055 |  |  |  | 14.8 | %
Financial liabilities at amortized cost |  |  | 528,244,795 |  |  |  | 457,814,875 |  |  |  | 619,308,479 |  |  |  | 70,429,920 |  |  |  | 15.4 | % |  |  | (161,493,604 | ) |  |  | (26.1 | %)
Provisions |  |  | 6,027,601 |  |  |  | 7,234,088 |  |  |  | 3,577,277 |  |  |  | (1,206,487 | ) |  |  | (16.7 | %) |  |  | 3,656,811 |  |  |  | 102.2 | %
Income tax liabilities |  |  | 3,196,825 |  |  |  | 10,218,097 |  |  |  | 11,628,551 |  |  |  | (7,021,272 | ) |  |  | (68.7 | %) |  |  | (1,410,454 | ) |  |  | (12.1 | %)
Other liabilities |  |  | 40,823,216 |  |  |  | 23,252,497 |  |  |  | 22,945,268 |  |  |  | 17,570,719 |  |  |  | 75.6 | % |  |  | 307,229 |  |  |  | 1.3 | %
TOTAL LIABILITIES |  |  | 578,481,131 |  |  |  | 503,493,790 |  |  |  | 661,793,753 |  |  |  | 74,987,341 |  |  |  | 14.9 | % |  |  | (158,299,963 | ) |  |  | (23.9 | %)
Equity attributable to owners of the Bank |  |  | 112,381,095 |  |  |  | 112,670,398 |  |  |  | 95,315,020 |  |  |  | (289,303 | ) |  |  | (0.3 | %) |  |  | 17,355,378 |  |  |  | 18.2 | %
Non-controlling interests |  |  | 2,162,299 |  |  |  | 2,146,511 |  |  |  | 63,063 |  |  |  | 15,788 |  |  |  | 0.7 | % |  |  | 2,083,448 |  |  |  | 3303.8 | %
TOTAL EQUITY |  |  | 114,543,394 |  |  |  | 114,816,909 |  |  |  | 95,378,083 |  |  |  | (273,515 | ) |  |  | (0.2 | %) |  |  | 19,438,826 |  |  |  | 20.4 | %

Total Assets

At December 31, 2020 we had total assets of Ps.693,024.5 million, which represented a 12.1% increase from Ps.618,310.7 million of total assets as of December 31, 2019.

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The increase was mainly due to a 24.5% increase in financial assets at amortized cost to Ps.349,113.8 million at December 31, 2020 from Ps.280,486.6 at December 31, 2019. Retail loans (considering mortgage, pledge, personal and credit cards) grew due to credit cards that offset the drops in the rest of the products. Mortgage loans, which are mainly UVA (inflation-adjusted), reflect the impact of rising inflation. Loans to the private sector in foreign currency fell due to the reduction of loans in dollars mainly explained by the drop in demand. The increase in commercial loans is mainly explained by the increase in other financing, particularly loans at past due interest PVI and commercial paper, which was partially offset by the reduction of the pre-financing and export financing lines in dollars, which was also driven by the increase in reverse repurchase agreements.

Additionally there was (i) a 107.3% increase in financial assets at fair value through other comprehensive income to Ps.127,572.4 million at December 31, 2020 from Ps.61,543.5 million at December 31, 2019 mainly due to the position in instruments of the BCRA. (LELIQ); (ii) a 81.5% increase in other assets to Ps.6,880.8 million at December 31, 2020 from Ps.3,791.8 million at December 31, 2019; (iii) a 42.6% increase in income tax assets to Ps.5,920.4 million at December 31, 2020 from Ps.4,152.0 million at December 31, 2019; (iv) a 46.3% increase in goodwill and intangible assets to Ps.1,553.9 million at December 31, 2020 from Ps.1,062.0 million at December 31, 2019; and (v) a 2.3% increase in investment in joint ventures and associates to Ps.1,442.3 million at December 31, 2020 from Ps.1,410.3 million at December 31, 2019.

These increases were partially offset by (i) a 28.5% decrease in cash and cash equivalents to Ps.152,040.0 million at December 31, 2020 from Ps.212,733.0 million at December 31, 2019 mainly due to an increase in the minimum cash requirement established by BCRA; (ii) a 18.2% decrease in financial assets at fair value through profit or loss to Ps.12,616.5 million at December 31, 2020 from Ps.15,424.5 million at December 31, 2019; (iii) a 4.7% decrease in tangible assets to Ps.35,658.4 million at December 31, 2020 from Ps.37,423.4 million at December 31, 2019 and (iv) a decrease in non-current assets held for sale to Ps.225.9 million at December 31, 2020 from Ps.283.6 million at December 31, 2019.

Total Liabilities and Equity

At December 31, 2020, we had total liabilities of Ps.578,481.1 million, which represented a 14.9% increase from the Ps.503,493.8 million at December 31, 2019. The increase was mainly due to a 15.4% increase in financial liabilities at amortized cost to Ps.528,244.8 million at December 31, 2020 from Ps.457,814.9 million at December 31, 2019 mainly due to an increase in time deposits and savings accounts and a 75.6% increase in other liabilities to Ps.40,823.2 million at December 31, 2020 from Ps.23,252.5 million at December 31, 2019. These increases were partially offset by a 96.2% decrease in financial liabilities at fair value through profit or loss to Ps.188.7 million at December 31, 2020 from Ps.4,974.2 million at December 31, 2019; a 16.7% decrease in provisions to Ps.6,027.6 million at December 31, 2020 from Ps.7,234.1 million at December 31, 2019 and a 68.7% decrease in income tax liabilities to Ps.3,196.8 million at December 31, 2020 from Ps.10,218.1 million at December 31, 2019.

Shareholders’ equity decreased by 0.2% to Ps.114,543.4 million at December 31, 2020 from Ps.114,816.9 million at December 31, 2019. The decrease resulted mainly from an increase of Ps.10,068.7 million in profit for the year, an increase of Ps.5,203.7 million of other comprehensive income, less the distribution of Ps.15,544.1 million of dividends in cash, and an decrease of Ps.1.9 million of other net increases. In addition the Bank increased its reserves during the year by Ps.42,214.7 million against retained earnings.

Significant changes in financial position

Credit growth was affected due to the devaluation of the peso and higher interest rates. In retail banking, positive growth was recorded in connection with credit cards, while mortgage loans, which are mainly UVA (inflation-adjusted), reflected the impact of the increasing inflation.

In 2020 the Bank carried out 5 reverse repurchase transactions with the Argentine Republic for an aggregate amount of Ps.49,051.6 million. During 2019, the Bank did not carry out any reverse repurchase transactions with the Argentine Republic.

On November 9, 2020, the Bank completed the payment of interest and capital amortization of the Class 25 ON for Ps.40.5 million and Ps.1,674.2 million respectively. In addition to the above, on December 28, 2020, the Bank completed the payment of interest and amortization of capital of the Class 24 ON for Ps.49.6 million and Ps.546.5 million respectively.

Total deposits grew during 2020, primarily private deposits, mainly driven by deposits in pesos, which more than offset the decrease in deposits in foreign currency, mainly explained by current accounts and the implementation of investment accounts.

As for the financing of the productive investment line MiPyME, as established by Communication “A” 7140 of the BCRA, as of December 31, 2020, the Bank disbursed financing for more than Ps.13,000 million accumulated, to more than 2,800 companies.

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B. | Liquidity and Capital Resources

Asset and Liability Management

The purpose of the asset and liability management is to structure our consolidated statement of financial position in light of interest rates, liquidity and foreign exchange risks, as well as market risk, public sector risk and our capital structure. Our Asset and Liability Committee establishes specific limits with respect to risk exposure, sets forth our policy with respect to pricing and approves commercial policies which may have a financial impact on our balance sheet. It is also responsible for the follow-up of monetary aggregates and financial variables, our liquidity position, regulations from the Central Bank and monitoring the competitive environment in assets, liabilities and interest rates.

Liquidity

Our asset and liability management policy attempts to ensure that sufficient liquidity is available to meet our funding requirements. As a measure of our liquidity, our ratio of liquid assets to total deposits was 31.17%, 49.84% and 36.43% at December 31, 2020, 2019 and 2018. Liquid assets include cash and cash equivalents and financial assets at fair value through profit or loss.

Our primary source of funds is our deposit base, which primarily consists of peso- and dollar-denominated deposits in checking accounts, savings accounts and time deposits from individuals and corporations. Deposits at December 31, 2020 totaled Ps.478,223.0 million compared with Ps.400,237.0 million at December 31, 2019.

On July 15, 2003, an extraordinary shareholders’ meeting approved the establishment of a program for the issuance and re-issuance of ordinary non-convertible corporate bonds with ordinary guarantees, or such guarantees as may be decided by the Bank, and unsecured subordinated corporate bonds, convertible or not into shares (the “Program”). In 2018, the Program was extended for five additional years and the maximum aggregate amount of issuances was successively increased to US$1,500 million

As of December 31, 2020, the Bank, excluding its subsidiaries, had no outstanding corporate bonds.

Including the Bank’s subsidiaries, as of December 31, 2020 and 2019, the outstanding principal and accrued interest amounted to Ps.1,168,782 and Ps.9,964,233 respectively.

Dividends and other payments from our Argentine non-banking subsidiaries also provide an additional potential source of liquidity, even though relatively insignificant in amount. Each Argentine non-banking subsidiary is required to allocate 5% of its annual net income to a legal reserve until such reserve equals 20% of the subsidiary’s capital stock. This reserve cannot be used to pay us dividends.

Capital Stock

As at December 31, 2020 the Bank’s capital stock consisted of 612,710,079 ordinary shares, par value Ps.1.00 each, all of which were issued to the stockholders. The capital stock of the Bank, after taking into account the adjustment for inflation, amounted to Ps.26,999,663 as of December 31, 2020.

Interest Rate Sensitivity

A key component of our asset and liability policy is the management of interest rate sensitivity. Interest rate sensitivity measures the exposure of net interest income to interest rate changes. For any given period, the pricing structure is matched when an equal amount of assets and liabilities reprice. Any mismatch of interest-earning assets and interest-bearing liabilities is known as a gap position and is shown in the following tables. A negative gap denotes liability sensitivity and normally means that a decline in interest rates would have a positive effect on net interest income while an increase in interest rates would have a negative effect on interest income.

Our interest rate sensitivity strategy, which seeks to maintain exposure within levels that are consistent with the Bank’s risk appetite framework approved by the Board of Directors, takes into account not only the rates of return and their underlying risk, but also liquidity requirements, including minimum regulatory cash reserves, mandatory liquidity ratios, withdrawal and maturity of deposits and additional demands for funds.

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The following table shows the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities. Variations in interest rate sensitivity may also arise within the repricing periods presented.

During 2020, the gap generated by the mismatch between assets and liabilities has widened, mainly due to the increase in loans denominated in pesos.

|  | Remaining Maturity or Earliest Repricing Intervals at December 31, 2020 |
|  | 0-3 months |  |  | 3 Months- One Year |  |  | 1-5 Years |  |  | 5-10 Years |  |  | Over 10 Years |  |  | Total |
|  | (in thousands of pesos, except percentages) |
Interest-earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest earning deposits in banks |  |  | 5,497,598 |  |  |  | 322,479 |  |  |  | 6,617,487 |  |  |  | — |  |  |  | — |  |  |  | 12,437,564 |
Government securities |  |  | 90,805,454 |  |  |  | 1,891,382 |  |  |  | 28,351,501 |  |  |  | 209,963 |  |  |  | — |  |  |  | 121,258,300 |
Corporate bonds |  |  | 287,963 |  |  |  | 558 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 288,521 |
Loans and advances (1) |  |  | 184,078,596 |  |  |  | 50,413,758 |  |  |  | 43,759,436 |  |  |  | 4,891,631 |  |  |  | 9,525,942 |  |  |  | 292,669,363 |
Total |  |  | 280,669,611 |  |  |  | 52,628,177 |  |  |  | 78,728,424 |  |  |  | 5,101,594 |  |  |  | 9,525,942 |  |  |  | 426,653,748 |
Interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 299,018,128 |  |  |  | 25,239,107 |  |  |  | 15,700 |  |  |  | — |  |  |  | — |  |  |  | 324,272,935 |
Corporate bonds |  |  | 71,610 |  |  |  | 831,752 |  |  |  | 265,420 |  |  |  | — |  |  |  | — |  |  |  | 1,168,782 |
Due to other banks |  |  | 9,562,477 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,562,477 |
Total |  |  | 308,652,215 |  |  |  | 26,070,859 |  |  |  | 281,120 |  |  |  | — |  |  |  | — |  |  |  | 335,004,194 |
Asset/liability gap |  |  | (27,982,604 | ) |  |  | 26,557,318 |  |  |  | 78,447,304 |  |  |  | 5,101,594 |  |  |  | 9,525,942 |  |  |  | 91,649,554 |
Cumulative sensitivity gap |  |  | (27,982,604 | ) |  |  | (1,425,286 | ) |  |  | 77,022,018 |  |  |  | 82,123,612 |  |  |  | 91,649,554 |  |  |  |  |
Cumulative sensitivity gap as a percentage of total interest-earning assets |  |  | (6.56 | )% |  |  | (0.33 | )% |  |  | 18.05 | % |  |  | 19.25 | % |  |  | 21.48 | % |  |  |  |

(1) | Loan and advances amounts are stated before deducting the allowance for loan losses.

The following table shows the interest rate sensitivity of our peso-denominated interest-earning assets and interest-bearing liabilities.

|  | Remaining Maturity or Earliest Repricing Intervals at December 31, 2020 |
|  | 0-3 months |  |  | 3 Months- One Year |  |  | 1-5 Years |  |  | 5-10 Years |  |  | Over 10 Years |  |  | Total |
|  | (in thousands of pesos, except percentages) |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest earning deposits in banks |  |  | 1,986,273 |  |  |  | 322,479 |  |  |  | 6,617,487 |  |  |  | — |  |  |  | — |  |  |  | 8,926,239 |
Government securities |  |  | 90,805,383 |  |  |  | 1,891,382 |  |  |  | 28,351,501 |  |  |  | 209,963 |  |  |  | — |  |  |  | 121,258,229 |
Corporate bonds |  |  | 287,963 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 287,963 |
Loans and advances (1) |  |  | 171,137,730 |  |  |  | 38,294,946 |  |  |  | 37,277,747 |  |  |  | 4,891,631 |  |  |  | 9,525,942 |  |  |  | 261,127,996 |
Total |  |  | 264,217,349 |  |  |  | 40,508,807 |  |  |  | 72,246,735 |  |  |  | 5,101,594 |  |  |  | 9,525,942 |  |  |  | 391,600,427 |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 195,000,359 |  |  |  | 24,407,160 |  |  |  | 8,441 |  |  |  | — |  |  |  | — |  |  |  | 219,415,960 |
Corporate bonds |  |  | 71,610 |  |  |  | 831,752 |  |  |  | 265,420 |  |  |  | — |  |  |  | — |  |  |  | 1,168,782 |
Due to other banks |  |  | 8,992,649 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,992,649 |
Total |  |  | 204,064,618 |  |  |  | 25,238,912 |  |  |  | 273,861 |  |  |  | — |  |  |  | — |  |  |  | 229,577,391 |
Asset/liability gap |  |  | 60,152,731 |  |  |  | 15,269,895 |  |  |  | 71,972,874 |  |  |  | 5,101,594 |  |  |  | 9,525,942 |  |  |  | 162,023,036 |
Cumulative sensitivity gap |  |  | 60,152,731 |  |  |  | 75,422,626 |  |  |  | 147,395,500 |  |  |  | 152,497,094 |  |  |  | 162,023,036 |  |  |  |  |
Cumulative sensitivity gap as a percentage of total interest-earning assets |  |  | 15.36 | % |  |  | 19.26 | % |  |  | 37.64 | % |  |  | 38.94 | % |  |  | 41.37 | % |  |  |  |

(1) | Loan and advances amounts are stated before deducting the allowance for loan losses.

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The following table shows the interest rate sensitivity of our foreign currency denominated interest-earning assets and interest-bearing liabilities.

|  | Remaining Maturity or Earliest Repricing Intervals at December 31, 2020 |
|  | 0-3 months |  |  | 3 Months- One Year |  |  | 1-5 Years |  |  | 5-10 Years |  |  | Over 10 Years |  |  | Total |
|  | (in thousands of pesos, except percentages) |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest earning deposits in banks |  |  | 3,511,325 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,511,325 |
Government securities |  |  | 71 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 71 |
Corporate bonds |  |  | — |  |  |  | 558 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 558 |
Loans and advances (1) |  |  | 12,940,866 |  |  |  | 12,118,812 |  |  |  | 6,481,689 |  |  |  | — |  |  |  | — |  |  |  | 31,541,367 |
Total |  |  | 16,452,262 |  |  |  | 12,119,370 |  |  |  | 6,481,689 |  |  |  | — |  |  |  | — |  |  |  | 35,053,321 |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 104,017,769 |  |  |  | 831,947 |  |  |  | 7,259 |  |  |  | — |  |  |  | — |  |  |  | 104,856,975 |
Due to other banks |  |  | 569,828 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 569,828 |
Total |  |  | 104,587,597 |  |  |  | 831,947 |  |  |  | 7,259 |  |  |  | — |  |  |  | — |  |  |  | 105,426,803 |
Asset/liability gap |  |  | (88,135,335 | ) |  |  | 11,287,423 |  |  |  | 6,474,430 |  |  |  | — |  |  |  | — |  |  |  | (70,373,482 | )
Cumulative sensitivity gap |  |  | (88,135,335 | ) |  |  | (76,847,912 | ) |  |  | (70,373,482 | ) |  |  | (70,373,482 | ) |  |  | (70,373,482 | ) |  |  |  |
Cumulative sensitivity gap as a percentage of total interest-earning assets |  |  | (251.43 | )% |  |  | (219.23 | )% |  |  | (200.76 | )% |  |  | (200.76 | )% |  |  | (200.76 | )% |  |  |  |

(1) | Loan and advances amounts are stated before deducting the allowance for loan losses.

Exchange Rate Sensitivity

At December 31, 2020, our total foreign exchange-denominated asset position was Ps.149,842 million and our total foreign exchange-denominated liability position was Ps.151,231 million, resulting in a net liabiltiy currency position of Ps.1,389 million. For a description of foreign exchange risk, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign Exchange Risk”.

Capital Requirements

As of December 31, 2020, we had consolidated excess capital of Ps.52,967.6 million pursuant to the Central Bank’s rules. At such date, total capital, subject to applicable deductions, amounted to Ps.91,762.7 million under the Argentine risk-based capital guidelines, which are based on the Basel Accord.

As of December 31, 2019, we had consolidated excess capital of Ps.25,286.7 million pursuant to the Central Bank’s rules. At such date, total capital, subject to applicable deductions, amounted to Ps.49,989.7 million under the Argentine risk-based capital guidelines, which are based on the Basel Accord.

As of December 31, 2020, we complied with the Central Bank’s capital requirements on a consolidated basis. See a description of the minimum capital requirements currently in effect in “Item 4. Information on the Company—F. The Argentine Banking System and its Regulatory Framework”.

As of December 31, 2020, 2019 and 2018, our shareholders’ equity was Ps.112,381.1 million, Ps.112,670.4 million and Ps.95,315.0 million, respectively. At such dates, our ratio of average shareholders’ equity/average total assets was 17.16%, 15.12% and 13.90%, respectively. See “Item 4. Information on the Company—E. Selected Statistical Information—Return on Equity and Assets”.

In our opinion, our capital resources are sufficient for the Bank’s present requirements on an individual and a consolidated basis.

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We are not aware of any legal or economic restrictions on the ability of our subsidiaries to transfer funds to us in the form of dividends, loans or advances — subject to the regulations of each industry — or corporate law requirements. However, there can be no assurance that in the future such restrictions will not be adopted and that, if adopted, they will not negatively affect our liquidity.

The following table sets forth, for the dates indicated, the calculation of our excess capital under the Central Bank’s rules and certain capital and liquidity ratios.

|  | At December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands of pesos, except ratios and percentages) |
Calculation of excess capital (1) |  |  |  |  |  |  |  |  |  |  |  |
Allocated to assets at risk |  |  | 29,522,630 |  |  |  | 17,999,427 |  |  |  | 18,103,885 |
Allocated to Bank premises and equipment, intangible assets and equity investment assets |  |  | — |  |  |  | — |  |  |  | — |
Interest rate risk |  |  | — |  |  |  | — |  |  |  | — |
Public sector and securities in investment account |  |  | — |  |  |  | — |  |  |  | — |
A- Minimal exigency by adds up risks |  |  | 29,522,630 |  |  |  | 17,999,427 |  |  |  | 18,103,885 |
B- Basic exigency for custody of titles of the AFJP and / or agent of record of mortgage notes |  |  | — |  |  |  | — |  |  |  | — |
Credit risk (maximum between A and B) |  |  | 29,522,630 |  |  |  | 24,504,510 |  |  |  | 18,103,885 |
Market risk |  |  | 246,474 |  |  |  | 413,483 |  |  |  | 92,786 |
Operational risk |  |  | 9,025,959 |  |  |  | 8,712,818 |  |  |  | 3,594,744 |
Required minimum capital under Central Bank rules |  |  | 38,795,063 |  |  |  | 33,630,811 |  |  |  | 21,791,415 |
Basic net worth |  |  | 88,192,714 |  |  |  | 64,809,353 |  |  |  | 33,742,881 |
Complementary net worth |  |  | 2,967,150 |  |  |  | 2,666,395 |  |  |  | 1,940,905 |
Deductions |  |  | — |  |  |  | — |  |  |  | — |
Minority interest |  |  | 602,801 |  |  |  | 580,465 |  |  |  | 795,022 |
Total capital under Central Bank rules |  |  | 91,762,665 |  |  |  | 68,056,213 |  |  |  | 36,478,808 |
Excess capital |  |  | 52,967,602 |  |  |  | 34,425,402 |  |  |  | 14,687,393 |
Selected capital and liquidity ratios |  |  |  |  |  |  |  |  |  |  |  |
Average shareholders’ equity as a percentage of average total assets (2) |  |  | 16.40 | % |  |  | 15.12 | % |  |  | 13.90 | %
Total liabilities as a multiple of total shareholders’ equity |  |  | 5.58x |  |  |  | 4.47x |  |  |  | 8.20x |
Cash and due from banks as a percentage of total deposits |  |  | 31.81 | % |  |  | 46.47 | % |  |  | 38.19 | %
Liquid assets as a percentage of total deposits (3) |  |  | 56.36 | % |  |  | 49.55 | % |  |  | 36.43 | %
Loans as a percentage of total assets |  |  | 39.70 | % |  |  | 42.96 | % |  |  | 51.16 | %

(1) | See “Item 4. Information on the Company—F. The Argentine Banking System and Its Regulatory Framework—Capital Adequacy Requirements” for a discussion of the Central Bank’s capital requirements.

(2) | Average shareholders’ equity and average total assets computed as the average of period-beginning and period-ending balances.

(3) | At December 31, 2020, 2019 and 2018, “Liquid Assets” includes cash and cash equivalents and financial assets at fair value through profit or loss.

Market discipline

The BCRA imposed by Communication “A” 5394 the mandatory publication on the website of financial institutions of certain information in order to allow market participants to assess the information related to capital, risk exposures, assessment processes risk and capital adequacy of each of them. Financial institutions must provide appropriate information to ensure transparency in the management and measurement of risks and the adequacy of their capital.

This standard applies to the highest level of consolidation of each entity. Information concerning BBVA Argentina is available at: https://ir.bbva.com.ar/informacion-financiera/disciplina-del-mercado/. Such information is not incorporated by reference in this document.

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Credit Ratings

The cost and availability of debt financing are influenced by our credit ratings. A reduction in these ratings could increase the cost of and reduce our market access to debt financing. See “Item 3. Key Information—D. Risk Factors-Risks Relating to the Argentine Financial System and to BBVA Argentina—Our credit ratings depend on Argentine sovereign credit ratings, and such dependence limits our access to international financial markets.”

S&P Global Ratings

In December 2019, S&P Global Ratings affirmed both BBVA Argentina’s long term institutional rating and the negotiable obligation program rating, at “raBBB+”, both on CreditWatch negative. This was due to the potential impact on the banking industry of sovereign debt restructuring and foreign exchange market controls, along with the evolution of foreign and local currency deposits and regulations imposed by the Fernández administration.

In April 2020, S&P Global Ratings affirmed BBVA Argentina’s local long term institutional rating at “raBBB+”, the short term institutional rating at “raA-2”, and the negotiable obligation program rating at “raBBB+”. S&P Global Ratings also reviewed the CreditWatch negative to Outlook negative, primarily due to the mitigation of factors that could have adversely affected banks and linked to the sovereign debt restructuring, deposit behavior, and potential changes in economic policy under the Fernandez administration. Nonetheless, uncertainties remained given the weak financial and economic conditions exacerbated by the Covid-19 pandemic.

In May 2020, S&P Global Ratings affirmed BBVA Argentina’s local long and short term institutional ratings and the negotiable obligation program rating at “raBBB+”, “raA-2” and “raBBB+”, respectively, but reverted to CreditWatch negative from Outlook negative, primarily due to downgrade of Argentina’s transfer and convertibility rating from “B” to “CCC+” following certain measures affecting the foreign exchange market applied by the Central Bank.

In June 2020, S&P Global Ratings downgraded BBVA Argentina’s local long term institutional rating from “raBBB+” to “raBBB-”, its short term institutional rating from “raA-2” to “raA-3” and its negotiable obligation program rating from “raBBB+” to “raBBB-”, primarily due to the downgrade of Argentina’s transfer and convertibility rating which resulted in an adjustment to the Bank’s ratings as well as to the rating of most of its peers. CreditWatch negative was changed to Outlook negative.

In September 2020, S&P Global Ratings affirmed BBVA Argentina’s local long and short term institutional ratings and the negotiable obligation program rating as established in June 2020, maintaining the Outlook negative.

Fix SCR

In December 2019, Fix SCR affirmed BBVA Argentina’s national long-term and short-term credit ratings at “AAA(arg)” and “A1+(arg)”, respectively, maintaining a negative outlook. Also, Fix SCR rated the newly issued negotiable obligation Serie 28 at “A1+(arg)”. The corporate bonds program maintained its rating at “AAA(arg)”.

Throughout 2020, most recently in December 2020, Fix SCR affirmed BBVA Argentina’s national long-term and short-term credit ratings at “AAA(arg)” and “A1+(arg)”, respectively, maintaining a negative outlook. The corporate bonds program maintained its rating at “AAA(arg)”.

Fitch Ratings

The Bank’s Local Currency Long-term Default Rating (“IDR”) and Support Rating (“SR”) are sensitive to a change in Fitch’s view on BBVA’s ability and propensity to provide support to the Bank. The Bank´s IDR and Viability Rating (“VR”) would also likely move in line with a change in Argentina´s sovereign rating.

On January 22, 2020, Fitch Ratings affirmed the Bank’s foreign currency long-term IDR at “CCC” and local currency long-term IDR at “CCC+”. The Bank’s Foreign Currency IDRs were rated at country ceiling, while the Local Currency IDR were rated one notch higher. This rating reflected Fitch’s view that capital controls implemented by Argentina on September 2, 2019, following the sovereign default event were unlikely to prevent BBVA Argentina from servicing its obligations.

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On May 5, 2020, Fitch Ratings downgraded the Bank’s foreign currency long-term IDR from “CCC” to “CC”, its local currency long-term IDR from “CCC+” to “CC”, and its VR from “ccc” to “cc”, following the downgrade of Argentina’s long-term IDR to “C” from “CC”. In regards to this action (which also affected other banks), Fitch Ratings said in its report: “Despite the sovereign’s imminent default on its foreign currency debt, Fitch believes that these banks will likely retain the capacity to service their obligations in foreign currency as their intrinsic financial profiles should be sufficient to continue servicing their obligations, even after a sovereign default.”

On August 28, 2020, Fitch Ratings affirmed BBVA Argentina’s foreign and local currency long-term IDRs at “CC”, primarily due to the overall challenging operating environment: “The operating environment remains highly challenging as asset quality continues to be pressured by the strong recession exacerbated by a long lockdown due to the coronavirus pandemic, profitability affected by the very low loan growth, and rising costs due to continued high inflation and increasing credit costs.”

On September 16, 2020, Fitch Ratings upgraded BBVA Argentina’s foreign and local currency long-term IDRs from “CC” to “CCC” and its VR from “cc” to “ccc”, following Fitch’s upgrade of Argentina’s sovereign rating on September 10, 2020, from “RD” (Restricted Default) to “CCC” after the completion of distressed debt exchanges on its foreign currency sovereign debt securities in both local and external markets.

On January 14, 2021, Fitch Ratings affirmed BBVA Argentina’s foreign and local currency long-term IDRs at “CCC” and its VR at “ccc”.

C. | Research and Development, Patents and Licenses

We incur research and development expenses in connection with technology information systems. The amount spent during each of the last three years was not material and we hold no material patents and do not license to others any of our intellectual property.

We plan the update and development of technological infrastructure (data processing, management, deployment of communication schemes, support for electronic channel platforms, information security management and asset protection) based on current and prospective demand of such services.

We acquire the necessary technology, and equipment from third parties.

D. | Trend Information

We believe that the macroeconomic environment and the following trends in the Argentine financial system and in our business have affected and will, for the foreseeable future, continue to affect our results of operations and profitability. Our continued success and ability to increase our value to our shareholders will depend upon, among other factors, economic growth in Argentina and the corresponding growth of the market for long-term private sector lending and access to financial products and services by a larger segment of the population. This analysis should be read in conjunction with the discussion in “Item 3. Key Information—D. Risk Factors” of this annual report on Form 20-F.

Trends related to the Covid-19 pandemic

The Covid-19 pandemic, which originated in China and has subsequently spread to many other countries in the world, including Argentina and other countries where our clients operate, has adversely affected, and continues to affect, the global economy as well as the Argentine economy and our business. See “Item 5. Operating and Financial Review and Prospects—Recent Developments—Covid-19 Pandemic” and “Item 3. Key Information—D. Risk Factors—The Covid-19 pandemic is affecting the Bank”.

Trends related to the international and local scenario

During 2019 the global economy decelerated. The China-USA trade conflict had a negative effect on the global economy. On the other hand, the loosening by central banks of monetary policies helped to mitigate the weakness in activity by propelling consumption.

In Argentina, the most relevant event of 2020 was the outbreak of the Covid-19 pandemic, which worsened an already damaged economy. The Fernandez administration had to significantly increase its expenditures while public income decreased as a result of lockdown measures and decreased activity levels, which required the Central Bank to inject capital into the economy by issuing pesos due to the difficulty in accessing the debt market as a result of the ongoing debt restructuring.

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The economy shrank 9.9% in 2020, measured by GDP, mainly due to the lockdown measures imposed as a result of the Covid-19 pandemic and the slow recovery of the economy following the economic contraction that took place in the second quarter of the year.

Inflation increased by 36.1% in 2020, reflecting a deceleration in inflation compared to 53.8% in 2019, mainly driven by the decline in economic activity levels and the intervention in the prices of utility services.

The domestic public sector recorded a primary deficit of Ps.1,750 billion, accounting for approximately 6.5% of GDP.

Trends related to the Argentine financial system

Argentina has a small and under-penetrated system compared to its peers in Latin America. For this reason, we believe that the financial sector has potential room to grow if adequate policies are implemented and inflation and interest rates are normalized.

In terms of the distribution network, the financial sector has a good penetration, with points of sales covering all the provinces, advanced technology, strong regulations and good practices.

According to BBVA Research estimates, the Argentine financial system is expected to stagnate in the coming years, with private loans and total deposits to GDP ratios of approximately 11.7% and 17.7%, respectively, for 2021.

The Argentine banking system remains largely unconsolidated, with significantly more financial institutions compared to other countries of the region, and with the top five banks concentrating only approximately 54% of the loan market share, compared to an average of 77% in other Latin American peers. As a result, we believe there is significant room for industry consolidation.

Trends related to BBVA Argentina

2020 was a challenging year for Argentina and BBVA Argentina. The Covid-19 pandemic worsened an already difficult economic and social situation, and the financial system, although robust in solvency and liquidity, was not immune to its consequences.

The Covid-19 pandemic has impacted the Bank’s operations, while also affecting the calculation of expected credit losses and the valuation of debt instruments issued by the public sector, by decreasing the financial margin and restricting the Bank’s ability to charge fees and commissions on certain activities.

On the fiscal side, the impact on tax collection and the government’s need to increase public spending to mitigate the impact of the economic downturn made the Treasury more dependent on the Central Bank’s capacity to inject money in the economy by issuing pesos. Thus, the expansion of the monetary base established the conditions for local currency deposit growth in real terms, which had been weak for the previous couple of years. The undesirable consequence of this policy was a constant downward pressure on the peso, as currency controls established in 2019 were stricter, and the Central Bank suffered a decrease in its level of foreign currency reserves that set the tone for additional regulation on foreign exchange transfers, including banks’ dividends, which disbursement was postponed until January 2021, and subsequently until June 2021.

The increase in the monetary base did not result in higher inflation primarily due to the economic stress caused by the Covid-19 pandemic, price controls fixed by the government and regulations on utilities prices which contributed to 2020 having a lower level of inflation than 2019. Consequently, during the first half of the year the Central Bank continued to decrease the level of interest rates started in the fourth quarter of 2019. In the second half of the year, the increase in inflation resulted in the termination or partial reversion of these measures.

Bank loans, as well as deposits, increased in 2020, fostered by the decrease in interest rates and by Central Bank regulations establishing an amount of subsidized credit lines for companies and individuals affected by the Covid-19 pandemic. In order to maintain the banks’ profitability, the Central Bank determined that a portion of these credit lines were to be financed by a decrease in the level of banks non-remunerated reserve requirements. As minimum time deposits were also regulated, the Central Bank offset the impact on banks’ results by allowing them to hold an additional part of the corresponding reserve requirements in Central Bank short term bills (Leliqs).

In 2020 a substantial portion of the assets and liabilities of banks became subject to increased regulation with respect to volume and prices, and we expect this trend to continue in 2021. For example, current regulations require banks to pay minimum interest rates for term deposits and keep maximum rates determined by the Central Bank for certain types of loans, mainly credit cards and SMEs loans.

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Asset quality has been deeply affected by the Central Bank’s regulations. Waivers have been applied to different loan products, and flexibility has been granted in debtor classification by extending grace periods by 60 days before a loan is classified as non-performing. As a consequence, according to information from the Central Bank, delinquency ratios have declined during 2020. In 2021 the trend will depend on the evolution of the measures taken by the Central Bank.

Foreign currency deposits continued to decrease through 2020, but at a lower pace than during the last months of 2019. On the other hand, the lack of demand of US$ loans has allowed us to keep and even increase the high levels of liquidity in this currency. For 2021, we do not forecast a relevant change in this trend and we expect this activity to keep decreasing its importance in the Bank’s balance sheet structure.

During 2020, Argentina conducted a process to restructure its foreign currency debt. Local currency bonds were primarily not affected, even though some of them had had their payments postponed during the last months of 2019. These local currency bonds were finally redeemed in 2020. A process of yield curve normalization in local currency bonds started in the second quarter of 2020, and the Treasury was able to issue new bonds on a regular basis every month.

BBVA Argentina kept in its portfolio certain instruments, called Lelink, which are denominated in US$ but payable in local currency, and with an initial contractual maturity in December 2019. A postponement and a new schedule of payments for these instruments was announced in August 2019 under which 15% of the principal was to be paid at the original maturity, 25% in March 2020 and the remaining 60% in June 2020. Payments on this new schedule were suspended again in April 2020 with 60% of the principal still unpaid. In July 2020, the Treasury offered an exchange of the remaining balance of these instruments for inflation-adjusted instruments with maturities in 2023 and 2024 that the Bank accepted. The swap was executed at face value and without any haircut for the Bank.

During the last quarter of 2020, the Bank increased its inflation adjusted treasury bonds portfolio by approximately Ps.10,000 million, as a way of hedging against a higher inflation scenario. For the same reason, new purchases of these instruments could be made in 2021.

Notwithstanding the above, BBVA treasury holdings represent a low proportion of its balance sheet and exposure to public sector debt is lower (compared to assets or equity) than the average of banks in Argentina. We expect this trend to continue through 2021.

BBVA Argentina seeks to keep the strong pace it has shown during the last years in terms of customer growth (both commercial and retail) and its digitalization strategy, as the transformation process in which the Bank embarked a few years ago is a key component of our strategy. In line with this, the Bank will keep focus on tools like NPS (Net Promoter Score), which allows us to know the degree of satisfaction of our customers with our service and address the necessary steps to continue improving it. Regarding our digitalization strategy, the Covid-19 pandemic accelerated the adoption of digital tools by our customers, with a significant increase in the purchase of products through digital channels, as well as significant growth in app and desktop logins and wire transfers, which accelerated the transformation process the Bank had been developing since 2015, and which we expect to continue in the future.

In this context, BBVA Argentina’s management has emphasized the need of not only taking care of the business and managing volatility, but also on keeping both robust liquidity and solvency ratios.

The Bank intends to maintain its growth strategy in the coming years while maintaining strong levels of liquidity and solvency.

E. | Off-Balance Sheet Arrangements

We enter into various transactions involving off-balance sheet financial instruments. We use these instruments to meet the risk management, trading and financing needs of clients or for our proprietary trading and asset and liability management purposes. These instruments are subject to varying degrees of credit and market risk. We monitor credit risk and market risk associated with on- and off-balance sheet financial instruments on an aggregate basis.

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We use the same credit policies in determining whether to enter or extend call and put option contracts, commitments, conditional obligations and guarantees as we do for granting loans. Our management believes that the outstanding off-balance sheet items do not represent an unusual credit risk.

Derivatives

The market risk of derivatives arises from the potential for changes in value due to fluctuations in market prices. We reduce our exposure to market risk, if necessary, by entering into offsetting transactions in accordance with the hedging global policy defined by the Bank for its subsidiaries. The credit risk of derivatives arises from the potential of a counterparty to default on its contractual obligations. The effect of such a default varies as the market value of derivative contracts changes. Credit exposure exists at a particular point in time when a derivative has a positive market value. We attempt to limit our credit risk by dealing with creditworthy counterparties and obtaining collateral where appropriate.

Credit Commitments

Commitments to extend credit are agreements to lend to a customer at a future date, subject to compliance with contractual terms. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent actual future cash requirements for the Bank. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. Foreign trade acceptances represent Bank customer’s liabilities on outstanding drafts or bills of exchange that have been accepted by the Bank and the Bank’s liability to remit payment upon the presentation of the accepted drafts or bills of exchange. The credit risk involved in foreign trade acceptances and guarantees granted is essentially the same as that involved in extending loan facilities to customers.

Trust Activities

We act as trustee in several financial trusts established for various purposes. We are in no case personally liable for the liabilities assumed in the performance of the trust obligations. Any liabilities resulting from the trust are satisfied with and up to the full amount of the trust assets or their proceeds.

In addition, we act as trustee in 12 non-financial trusts. We are in no case personally liable for the liabilities assumed in the performance of the contract obligations. Any liabilities are satisfied with and up to the full amount of the trust assets and their proceeds. The non-financial trusts at issue were set up to secure the receivables of several creditors (beneficiaries) and the trustee was entrusted with the management, care, preservation and custody of the trust assets. The trust assets represented Ps.356.8 million as of December 31, 2020 and mainly consisted of cash, creditors’ rights, real estate and shares.

F. | Tabular Disclosure of Contractual Obligations

The following table represents our contractual obligations and commercial commitments as of December 31, 2020:

|  | Payments due by period (in thousands of pesos) |
|  | Total |  |  | Less than 1 year |  |  | 1-3 years |  |  | 4-5 years |  |  | After 5 years |
Contractual obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  |  | 50,210,225 |  |  |  | 48,835,852 |  |  |  | 1,374,373 |  |  |  | — |  |  |  | — |
Operating leases |  |  | 2,989,674 |  |  |  | 204,288 |  |  |  | 707,992 |  |  |  | 1,260,611 |  |  |  | 816,783 |
Total |  |  | 53,199,899 |  |  |  | 49,040,140 |  |  |  | 2,082,365 |  |  |  | 1,260,611 |  |  |  | 816,783 |
Commercial commitments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Lines of credit |  |  | 52,858,621 |  |  |  | 52,858,621 |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign trade acceptances |  |  | 5,238,515 |  |  |  | 5,238,515 |  |  |  | — |  |  |  | — |  |  |  | — |
Guarantees |  |  | 841,908 |  |  |  | 735,642 |  |  |  | 41,048 |  |  |  | 64,500 |  |  |  | 718 |
Total |  |  | 58,939,044 |  |  |  | 58,832,778 |  |  |  | 41,048 |  |  |  | 64,500 |  |  |  | 718 |

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. | Directors and Senior Management

Directors

The corporate by-laws of BBVA Argentina state that the Bank’s management is led by a board of directors consisting of a minimum of three and a maximum of nine directors, who are elected by the shareholders to hold such office for a period of three years and who may be re-elected (the “Board” or the “Board of Directors”). The by-laws also provide for the appointment of alternate directors. According to the Bank’s by-laws, the Board shall meet at least once per month.

The table below indicates the names of the current members of our Board, their present position in the Board, their business background and the date of expiration of the period for which they were elected. According to regulation, the members of the Board whose appointment expired in December 2020, will remain as members of Board at least until the next shareholders’ meeting.

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Name |  | Current Term Ends |  | Current Position |  | Date of Birth |  | Present principal occupations and business experience
María Isabel Goiri Lartitegui |  | December 2020 |  | Chairwoman |  | 03/31/1958 |  | Present principal occupation: regular director at BBVA Argentina. Business experience: regular director at Gescobro S.A. and Divarian S.A., regular director and Vice Chairman at BBVA Uruguay S.A., Risk Director at Garanti Bank, Turkey. Corporate Risk Management Director at BBVA Madrid, Financial Management Director at BBVA Compass, Birmingham, USA, Investor Relations Director at BBVA Madrid and Investment Director at BBVA Asset Management at BBVA Madrid.
Jorge Delfín Luna |  | December 2022 |  | Vice Chairman 1º |  | 11/17/1958 |  | Present principal occupation: regular director at BBVA Argentina; PSA Finance Argentina Compañía Financiera S.A. and Rombo Compañía Financiera S.A.; council vice chairman at Fundación Banco Francés. Business experience: commercial director of BBVA; committee director member at BBVA Argentina; regional interior manager at Banco de Crédito Argentino; director business banking and foreign trade; general manager and vice president of BBVA Uruguay; general manager of Easy Bank (BBVA Argentina); and regional manager at Citibank. Mr. Luna was elected Director in March 2017.
Alfredo Castillo Triguero (*) |  | December 2022 |  | Vice Chairman 2º |  | 06/19/1957 |  | Present principal occupation: regular director at BBVA Argentina. Business experience: risks general director and audits general director at BBVA Bancomer; vice chairman of the financing area at BBVA Banco Provincial of Venezuela; member of the management boards of several subsidiaries of BBVA Bancomer and BBVA Colombia Financial Group; and executive vice chairman of the financial area of BBVA Banco Ganadero of Colombia. Mr. Castillo Triguero was elected Director in April 2016.
Juan Manuel Ballesteros Castellano (*) |  | December 2022 |  | Regular Director |  | 02/07/1963 |  | Present principal occupation: regular director at BBVA Argentina. Business experience: organization director at BBVA; and human resources director at BBVA. Mr. Juan Manuel Ballesteros Castellano was elected Director in April 2016.
Gabriel Eugenio Milstein |  | December 2020 |  | Regular Director |  | 08/14/1958 |  | Present principal occupation: regular director at BBVA Argentina; PSA Finance Argentina Compañía Financiera S.A. and Rombo Compañía Financiera S.A.; council member at Fundación Banco Francés; alternate director at Volkswagen Financial Services Compañía Financiera S.A. Business experience: media director at BBVA Argentina; human resources and services director at BBVA Argentina. Mr. Milstein was elected Director in April 2016.

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Name |  | Current Term Ends |  | Current Position |  | Date of Birth |  | Present principal occupations and business experience
Oscar Miguel Castro |  | December 2020 |  | Regular Director |  | 12/04/1945 |  | Present principal occupation: regular director at BBVA Argentina; regular director at Molino Agro; independent director at Zurich Argentina Cia. de Seguros S.A. and Zurich Argentina Cia. de Reaseguros S.A.; regular director at Volkswagen Financial Services Compañía Financiera S.A. Business experience: international partner at Arthur Andersen, Pistrelli Díaz y Asoc. for twenty years; partner in charge of financial services division for Latin America and Argentina, and executive member of the committee of financial services at Arthur Andersen. Mr. Castro was elected Director in March 2003.
Adriana M. Fernández de Melero (*) |  | December 2022 |  | Regular Director |  | 04/02/1961 |  | Present principal occupation: regular director at BBVA Argentina. Business experience: in charge of profitability analyses and financial planning at Banco Español; development and planning human resources manager at Banco de Crédito Argentino; human resources administration manager at BBVA Argentina; organization manger and productivity at BBVA Argentina; development business manager at BBVA Argentina; director of corporate development and transformation BBVA Argentina; presidential advisor at Banco Provincia. Mr. Melero was elected Director in March 2017.
Javier Pérez Cardete (*) |  | December 2021 |  | Alternate Director |  | 02/19/1961 |  | Present principal occupation: alternate director at BBVA Argentina. Business experience: south and east territorial director at BBVA; area director at BBVA; and risk responsible of Valencia at BBVA. Mr. Javier Pérez Cardete was elected Director in April 2016.
Gustavo A. Mazzolini Casas |  | December 2021 |  | Alternate Director |  | 03/27/1967 |  | Present principal occupation: alternate director at BBVA Argentina. Business experience: CFO at BBVA; financial staff country monitoring at BBVA; strategies and financial director lobs and ads at BBVA; financial director at Banco Provincial grupo BBVA; department responsible of coordination financial directions Latam grupo at BBVA; planning financial director at Credilogros Compañía Financiera at BBVA; and financial director at Corp Banca Argentina. Mr. Mazzolini was elected Director in March 2017.

(*) | Qualify as independent directors according to the independence criteria set forth by General Resolution No. 622 of the CNV.

At the ordinary and extraordinary shareholders’ meeting held on April 10, 2018, Oscar Miguel Castro and Gabriel Eugenio Milstein were reelected as Regular Directors.

At the ordinary and extraordinary shareholders’ meeting held on April 24, 2019, María Isabel Goiri Lartitegui was elected chairwoman to succeed Jorge Carlos Bledel. In addition, Adriana María Fernández de Melero was elected as Regular Director and Gabriel Alberto Chaufán was elected as Alternate Director. Moreover, Javier Pérez Cardete and Gustavo Alberto Mazzolini Casas were reelected as Alternate Directors.

At the ordinary and extraordinary shareholders’ meeting held on May 15, 2020, Jorge Delfín Luna, Alfredo Castillo Triguero, Juan Manuel Ballesteros Castellano y Adriana María Fernández de Melero were reelected as Regular Directors.

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Senior Management

Our senior management consists of the Chief Executive Officer and those executive officers who have decision-making powers and who report directly to the Chief Executive Officer. As described below, the main members of our senior management are members of the Management Committee. The table below shows the names of our senior managers and the year of their appointment to such position, as well as their business background. The senior managers are appointed for an indefinite period.

Name |  | First Appointed |  | Current Position |  | Date of Birth |  | Background and Business Experience
Martín Ezequiel Zarich |  | 2015 |  | Chief Executive Officer |  | 04/09/1964 |  | Work Experience: alternate director at BBVA Argentina; regular director at BBVA Consolidar Seguros S.A.; regular director at BBVA Francés Valores S.A.; council chairman at Fundación Banco Francés; director of innovation and development at BBVA Argentina; merger director at BBVA Argentina; planning director at BBVA Argentina; financial director at BBVA Argentina; retail banking director at BBVA Argentina; director at Credilogros; director at BBVA Banco Francés Uruguay; deputy general director, business development at BBVA Group; sub deputy director general development of the business of the BBVA Group; economist at Banco de Crédito Argentino; management control and budget manager at Banco de Crédito Argentino; director of planning, control of management and economics at Banco de Crédito Argentino. Mr. Zarich joined the Bank in 1987.
Ernesto Ramón Gallardo Jimenez |  | 2017 |  | Director, Finance |  | 10/05/1963 |  | Work Experience: Financial management Director at BBVA Bancomer; Director COAP América; Global Director of Fixed Income for Asset Management Companies at Banco Santander; fixed income and arbitration at Société Générale; derivatives director at Capital Markets Sociedad de Valores y Bolsa. Mr. Gallardo Jimenez joined the Bank in 2017.
Juan Christian Kindt |  | 2019 |  | Director, Business Development |  | 11/14/1969 |  | Work Experience: Business Execution Manager at BBVA; Segment and Business Manager at BBVA; TMKT Commercial Channels and Customer Service Manager at BBVA; Manager of Financing and Consumption in Commercial Banking at BBVA; Zonal Manager of the Metro Sur zone and Territorial Zonal Manager Buenos Aires at BBVA; Comodoro Rivadavia Branch Manager at BBVA. Mr. Kindt joined the Bank in 1994.
Leandro Alvarez |  | 2020 |  | Director, Engineering & Data |  | 03/26/1970 |  | Work Experience: Head of Solutions Development at Business Development Officer, Assistant Manager of Channels & Application Architecture; Regional manager for Latin America for the technological replacement of the bank branch systems where BBVA has been present (BBVA Aplica SA) and Assistant Manager of Channels and Markets. Mr. Alvarez joined the Bank in 1994.

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Name |  | First Appointed |  | Current Position |  | Date of Birth |  | Background and Business Experience
Gustavo Alonso |  | 2015 |  | Director, Commercial |  | 07/02/1964 |  | Work Experience: retail product manager at BBVA Argentina; BBVA Argentina means of payment and consumption manager; general manager of strategic alliances and products at BBVA Argentina; marketing manager at BBVA Argentina; advisor manager for commercial banking at BBVA Argentina; area manager at BBVA Argentina; and Pilar, San Nicolás and Rosario branch manager at BBVA Argentina. Mr. Alonso joined the Bank in 1988.
Gustavo Osvaldo Fernández |  | 2010 |  | Director, Talent & Culture |  | 01/22/1964 |  | Work Experience: director of technology and operations at BBVA; systems and organizations coordinator at Banca Nazionale del Lavoro; systems coordinator at Banco de Galicia; organization and systems development manager at Banco de Crédito Argentino; design and development manager at BBVA Argentina; media director at BBVA Argentina; design and development at América director at BBVA; and business partner America at BBVA. Mr. Fernández joined the Bank in 1995.
Carlos Elizalde |  | 2014 |  | Director, Corporate & Investment Banking |  | 06/12/1961 |  | Work Experience: regional director for global transaction banking Latam at BBVA; general manager at AL-Rajhi Bank; free-lance consultant at Riyadh KSA Buenos Aires; general director at Citigroup Miami; regional chief for Latin America at Citigroup Miami; and head of regional sales at Citigroup Buenos Aires. Mr. Elizalde joined the Bank in 2011.
Gerardo Fiandrino |  | 2015 |  | Director, Risks |  | 11/11/1965 |  | Work Experience: retail banking director for South América at BBVA; wholesale banking director for South América at BBVA; retail risks manager at BBVA Argentina; wholesales and corporate manager at BBVA Argentina; admission and control manager at BBVA Argentina; control and operational risks manager at BBVA Argentina; director at Rombo Compañía Financiera S.A.; director at PSA Finance Argentina Compañía Financiera S.A; portfolio control manager at Banco de Crédito Argentino; and senior investment banking officer at Banco de Crédito Argentino. Mr. Fiandrino joined the Bank in 1992.
Eduardo González Correas |  | 2017 |  | Director, Legal Services |  | 03/07/1982 |  | Work Experience: Legal manager Banking Business, Corporate & Investment Banking at BBVA Argentina; Legal Assistant Manager Corporate & Investment Banking at BBVA Argentina; lawyer Legal Assistant Management Corporate & Investment Banking at BBVA Argentina; lawyer at Estudio Jurídico Allende & Brea; lawyer at Estudio Jurídico Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (h). Mr. González Correas joined the Bank in 2008.

The service agreements of the directors and the executive officers of the Bank do not provide for benefits upon termination of employment except as described in “—B. Compensation” below.

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B. | Compensation

The Bank has a Nomination and Remunerations Committee which was created on March 30, 2009. Its members must be directors with no executive functions, and the majority of its members must be “independent”. Its main functions are to provide assistance to the Board in all issues regarding compensation policies and other benefits. Moreover, it is also in charge of stating the terms and conditions for the selection and hiring of the key principal executives of the company. As of the date hereof it consists of (i) Oscar Miguel Castro; (ii) Alfredo Castillo Triguero; (iii) Gabriel Eugenio Milstein; (iv) Gustavo Fernández and (v) Eduardo González Correas.

The aggregate amount of compensation paid by the Bank and its subsidiaries during the fiscal year ended December 31, 2020 to all directors and officers for services in all capacities, including salaries and bonuses, was Ps.747,735 million. This amount also included compensation accrued during 2019 and paid in 2020. Compensation in the amount of Ps.39,323 million accrued during 2020 and will be paid between 2021 and 2024. We hereby confirm that disclosure of the directors individual compensation is not required under the Argentine law. Moreover, Argentine legislation requires approval of an aggregate amount of Director’s compensation in the annual ordinary shareholders’ meeting.

During the fiscal year ended December 31, 2020 and 2019, the Bank did not pay, set aside or accrue any amount as contribution to pension plans.

C. | Board practices

Our corporate governance system is based on the distribution of functions between the Board and the several committees described below.

Supervisory Committee

The primary responsibilities of the Supervisory Committee are to monitor the management’s compliance with Argentine corporate law, the by-laws, the Bank’s internal regulations, if any, and the shareholders’ resolutions. It also, performs other functions, including, but not limited to: (i) attending meetings of the Board, the Management Committee and shareholders’ meetings, (ii) calling extraordinary shareholders’ meetings when deemed necessary and ordinary and special shareholders’ meetings when not called by the Board, and (iii) investigating written complaints of shareholders. In performing these functions, the Supervisory Committee does not control our operations or assess the merits of the decisions made by the directors.

The Supervisory Committee has unlimited access to our books and records and a right to request as much information as necessary for the performance of its duties.

At the ordinary and extraordinary shareholders’ meeting of BBVA Argentina held on May 15, 2020, the following members were appointed to the Supervisory Committee:

|  |  |  | Expiration of term
Regular |  | Mario Rafael Biscardi |  | December 31, 2020
|  | Gonzalo José Vidal Devoto |  | December 31, 2020
|  | Alejandro Mosquera |  | December 31, 2020
Alternate |  | Julieta Paula Pariso |  | December 31, 2020
|  | Lorena Claudia Yansenson |  | December 31, 2020
|  | Daniel Oscar Celentano |  | December 31, 2020

Both the regular and alternate members of the Supervisory Committee as of December 31, 2020 had represented, in their capacity as lawyers, to the Bank that: (a) they performed or were prepared to perform the function of legal advisors with the professional independence required by technical resolution No. 15 of the Argentine federation of professional councils in economic sciences; (b) they were members of Biscardi & Asociados S.R.L. and qualify as “independent” according to General Resolution No. 622 (New Text 2013), and (c) they had disclosed all the information required by the CNV regarding their professional relations with the Bank.

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Below is some background information of the current members of the Supervisory Committee.

• |  | Mario Rafael Biscardi: Lawyer, member of Biscardi & Asociados S.R.L.; member of the Supervisory Committee of: Banco BBVA Argentina S.A.; BBVA Broker S.A; Consultatio Asset Management Gerente De Fondos Comunes De Inversión S.A.;

• |  | PSA Finance Compañía Financiera S.A.; Rombo Compañía Financiera S.A.; BBVA Consolidar Seguros S.A.; Centro Automotores S.A.; Centro del Norte S.A.; Consolidar AFJP S.A. (undergoing liquidation proceedings); Cormasa S.A.; Courtage S.A.; Orazul Energy Cerros Colorados S.A.; Orazul Generating S.A.; Orazul Energy Southern Cone S.R.L.; BBVA Francés Valores S.A.; Industrial Valores S.A.; Metalúrgica Tandil S.A.; Plan Rombo S.A. De Ahorro Para Fines Determinados; Renault Argentina S.A.; Rombo Ahorro S.A. De Ahorro Para Fines Determinados (undergoing liquidation proceedings); MSD Argentina SRL (formerly known as Schering Plough S.A.); Santista Argentina S.A.; V.T.V. Norte S.A.; Banco de Servicios Financieros S.A.; Valentín Bianchi S.A.C.I.F.; Industrial Asset Management Sociedad Gerente de Fondos Comunes de Inversión S.A; Consultatio Investments S.A.; VTV Metropolitana S.A., INC S.A. and Volkswagen Financial Services Compañía Financiera S.A. He serves as an alternate member of the Supervisory Committee in: Bridgestone Argentina S.A.I.C.; Compañía de Alimentos Fargo S.A.; Procter & Gamble Argentina S.R.L.; Fresh Food S.A.; Panificación Argentina S.A.I. y C.; Capital Foods S.A., Establecimiento Elaborador de Alimentos SACAAN de Argentina S.A; TWW Argentina S.A and Colle di Boasi S.A.U. He serves as regular Director in: GMS Management Solutions S.A., Tecnoespumas S.A. and Molding Tex S.A. and as regular liquidator of Plas Alco Argentina S.A. (undergoing liquidation proceedings).

• |  | Gonzalo José Vidal Devoto: Lawyer, member of Biscardi & Asociados S.R.L.; regular member of the Supervisory Committee of Bimbo de Argentina S.A.; Rombo Compañía Financiera S.A.; BBVA Francés Valores S.A.; Banco BBVA Argentina S.A.; BBVA Broker S.A; BBVA Consolidar Seguros S.A; Consolidar AFJP (undergoing liquidation proceedings). Centro Automotores S.A.; Centro del Norte S.A.; Cormasa S.A.; Courtage S.A.; Orazul Generating S.A.; Orazul Energy Southern Cone S.R.L.; INC S.A.; Plan Rombo S.A. de Ahorro para Fines Determinados; Santista Argentina S.A.; VTV Norte S.A.; Banco de Servicios Financieros S.A.; Alimentos Valente Argentina AVA S.A.; Rombo Compañía Financiera S.A; Renault Argentina S.A; VTV Metropolitana S.A.; Bimbo Frozen Argentina S.A. and Metalurgica Tandil S.A. He serves as an alternate member of the supervisory committee in: Consultatio Asset Management Gerente de Fondos Comunes de Inversión S.A; Volkswagen Financial Services Compañía Financiera S.A.; Orazul Energy Cerros Colorados S.A. and Industrial Asset Management Sociedad Gerente de Fondos Comunes de Inversion S.A.

• |  | Alejandro Mosquera: Lawyer, member of Biscardi & Asociados S.R.L.; member of the Supervisory Committee of: Banco BBVA Argentina S.A.; BBVA Broker S.A; Consultatio Asset Management Gerente De Fondos Comunes De Inversión S.A.; Rombo Compañía Financiera S.A.; BBVA Consolidar Seguros S.A.; Centro Automotores S.A.; Centro del Norte S.A.; Consolidar AFJP S.A. (undergoing liquidation proceedings); Cormasa S.A.; Compañía de Alimentos Fargo S.A.; Courtage S.A.; Orazul Energy Cerros Colorados S.A.; Orazul Generating S.A.; Orazul Energy Southern Cone S.R.L.; BBVA Francés Valores S.A.; Fresh Food S.A.; Industrial Valores S.A.; Metalúrgica Tandil S.A.; Plan Rombo S.A. De Ahorro Para Fines Determinados; Procter & Gamble Argentina S.R.L.; Renault Argentina S.A.; Rombo Ahorro S.A. De Ahorro Para Fines Determinados (undergoing liquidation proceedings); Santista Argentina S.A.; Panificación Argentina S.A.I. y C.; Capital Foods S.A.; Banco de Servicios Financieros S.A.; Establecimiento Elaborador de Alimentos SACAAN de Argentina S.A.; INC S.A. and Industrial Asset Management Sociedad Gerente de Fondos Comunes de Inversión S.A.; Daikin Air Conditioning Argentina S.A. and Volkswagen Financial Services Compañía Financiera S.A. He serves as an alternate member of the supervisory committee in: PSA Finance Argentina Compañía Financiera S.A.; MSD Argentina S.A. (formerly known as Schering Plough S.A.) and Consultatio Investments S.A. He serves as regular Director in: VTV Norte S.A. and VTV Metropolitana S.A. He serves as alternate Director in: GDC Argentina S.A. and GMS Management Solutions S.A.; He serves as alternate liquidator of Plas Alco Argentina S.A. (undergoing liquidation proceedings).

• |  | Julieta Paula Pariso: Lawyer, member of Biscardi & Asociados S.R.L.; alternate member of the Supervisory Committee of: Banco BBVA Argentina S.A.; BBVA Broker S.A Consultatio Asset Management Gerente De Fondos Comunes De Inversión S.A.; Daikin Air Conditioning Argentina S.A; Rombo Compañía Financiera S.A.; BBVA Consolidar Seguros S.A.; Centro Automotores S.A.; Centro del Norte S.A.; Consolidar AFJP S.A. (undergoing liquidation proceedings); Cormasa S.A.; Courtage S.A.; Orazul Energy Cerros Colorados S.A.; Orazul Generating S.A.; Orazul Energy Southern Cone S.R.L.; BBVA Francés Valores S.A.; Industrial Valores S.A.; Metalúrgica Tandil S.A.; Plan Rombo S.A. De Ahorro Para Fines Determinados; Renault Argentina S.A.; Rombo Ahorro S.A. De Ahorro Para Fines Determinados; Santista Argentina S.A.; V.T.V. Norte S.A.; Banco de Servicios Financieros S.A.; VTV Metropolitana S.A.; INC S.A. Industrial Asset Management Sociedad Gerente de Fondos Comunes de Inversión S.A. and Volkswagen Financial Services Compañía Financiera S.A.

• |  | Lorena Claudia Yansenson: Lawyer, member of Biscardi & Asociados S.R.L.; alternate member of the Supervisory Committee of Bimbo de Argentina S.A.; Rombo Compañía Financiera S.A.; BBVA Francés Valores S.A.; Banco BBVA Argentina S.A.; BBVA Broker S.A; Consolidar Seguros S.A; Consolidar AFJP(undergoing liquidation proceedings).;Centro Automotores S.A.; Centro del Norte S.A.; Cormasa S.A.; Courtage S.A.; Orazul Generating S.A; Orazul Energy Southern Cone S.R.L; INC S.A; Plan Rombo S.A. de Ahorro para Fines Determinados; Renault Argentina S.A.; Santista Argentina S.A.; VTV Norte S.A.; Banco de Servicios Financieros S.A.; Alimentos Valente Argentina AVA S.A.; VTV Metropolitana S.A.; Bimbo Frozen Argentina S.A. and Metalurgica Tandil S.A.

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• |  | Daniel Oscar Celentano: Lawyer, member of Biscardi & Asociados S.R.L.; alternate member of the Supervisory Committee of: Banco BBVA Argentina S.A.; BBVA Broker S.A; Rombo Compañía Financiera S.A; BBVA Francés Valores S.A.; Consolidar AFJP S.A. (undergoing liquidation proceedings); BBVA Consolidar Seguros S.A.; Metalúrgica Tandil S.A.; Courtage S.A.; Centro del Norte S.A.; Centro Automotores S.A.; Orazul Generating S.A.; Orazul Energy Southern Cone S.R.L.; Renault Argentina S.A.; Cormasa S.A.; Plan Rombo S.A. de Ahorro para Fines Determinados; Santista Argentina S.A.; Banco de Servicios Financieros S.A.; VTV Norte S.A.; VTV Metropolitana S.A.; Rombo Ahorro S.A. de Ahorro para Fines Determinados and INC S.A.

There are no agreements between the Bank and its directors, members of the Supervisory Committee or main executives, as a consequence of which the directors, members of the Supervisory Committee or main executives might have interests in opposition to those of the Bank, according to the provisions of Article 272 of the Argentine Business Companies Law.

Audit Committee (I)

According to Board’s resolution dated February 18, 2020, BBVA Argentina has an Audit Committee (I) to comply with the provisions set out by the Central Bank in its Communication “A” 6552 , whose current composition is as follows:

Members: |  | Adriana Fernández de Melero
|  | Oscar Miguel Castro
|  | Adolfo Rivera Guzmán

The Audit Committee (I) meets once a month. In each of these meetings, the internal audit director presents the projects undertaken by the internal audit department. The minutes of the meeting are then drafted detailing the issues discussed as well as those items requiring further discussion. The minutes are transcribed into an internal control book which is sent to the Board of Directors for their information.

The Audit Committee (I)’s duties are to:

| • |  | supervise the appropriate implementation of the internal control systems defined in the Bank through a regular evaluation;

| • |  | provide assistance to improve the effectiveness of the internal controls;

| • |  | inquire about external audit planning and comment as necessary on the nature, scope and time for the performance of the audit proceedings;

| • |  | revise and approve the annual work program of the Bank’s internal audit area (“internal audit planning memorandum” or “annual planning”) to be carried out under said annual planning, as well as the level of compliance with such program;

| • |  | revise the reports issued by the internal auditors pursuant to the provisions set forth in these rules;

| • |  | consider the observations made by the external and the internal auditors regarding the internal control weaknesses found during the performance of their duties, as well as the corrective measures implemented by the general management to minimize or cure such weaknesses;

| • |  | review the results obtained by the Supervisory Committee of the Bank during the performance of its duties, as informed in the applicable reports;

| • |  | maintain a permanent communication with the officers of the Superintendence in charge of the control of the Bank, so as to learn about their concerns, and the problems identified during the inspections conducted in the Bank, and monitor the actions adopted to solve such problems;

| • |  | be informed about the annual financial statements and the financial statements for the interim periods as well as the external auditors’ reports issued with respect to the former, and any other applicable accounting information; and

| • |  | regularly control compliance with the independence rules applicable to external auditors.

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Audit Committee (II) (as per Law No.26,831, which complies with NYSE Listing Standards)

According to Board’s resolution dated April 28, 2020, BBVA Argentina has an Audit Committee (II), whose current composition is as follows:

Members: |  | Juan Manuel Ballesteros Castellano
|  | Alfredo Castillo Triguero
|  | Adriana María Fernández de Melero

According to Section 303A.07(b) of the NYSE Listed Company Manual, all of the members of this Audit Committee must be “independent”. Moreover, according to Decree Law No. 26,831 the Audit Committee (II) must consist of at least three members of the Board, the majority of whom should be independent directors. All the members of the Audit Committee (II) qualify as an independent director according to the independence criteria set forth by General Resolution No. 622 of the CNV. The powers and duties of the Audit Committee (II) are as follows:

| • |  | to opine on the Board’s proposal to appoint the external auditors of the company, and to ensure their independence;

| • |  | to supervise the operation of internal control and administrative accounting systems, as well as to ensure the reliability of the latter and of all financial information or other significant facts submitted to the CNV and the self-regulated bodies in compliance with the applicable information regulations;

| • |  | to supervise the application of policies regarding the information about the Bank’s risk management;

| • |  | to furnish the market with comprehensive information in respect of transactions which may involve conflicts of interest with members of the corporate bodies or controlling shareholders;

| • |  | to opine on the reasonableness of proposals of management concerning fees and share option plans for the Bank’s directors and managers;

| • |  | to opine on the compliance with legal requirements and the reasonableness of the conditions for the issuance of shares or securities convertible into shares in the event of a capital increase, with exclusion or limitation of preference rights;

| • |  | to verify the observance of the applicable standards of behavior;

| • |  | to issue a duly grounded opinion with regard to operations with related parties in those cases contemplated by Law No. 26,831;

| • |  | to issue a duly grounded opinion and forward it to the self-regulated entities as determined by the CNV whenever there is a conflict of interests or the possibility of such a conflict in the Bank;

| • |  | to annually prepare an action plan to be submitted to the Board and the Supervisory Committee; and

| • |  | to examine the plans prepared by the external and internal auditors, evaluate their performance and issue an opinion on the matter on occasions of the presentation and publication of the annual financial statements.

All directors, members of the Supervisory Committee, managers and external auditors must, at the request of the Audit Committee (II), attend its sessions and cooperate with it, facilitating its access to such information as may be available to them. In order to ensure a more appropriate exercise of the powers and duties contemplated herein, the committee may request the advice of lawyers and other independent professionals and retain their services for the account of the Bank within the budget allocated for such purposes by the shareholders’ meeting. The Audit Committee (II) shall have access to such information and documentation as it may deem necessary in order to comply with its obligations.

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Nomination and Remunerations Committee

According to Board’s resolution dated October 29, 2019, BBVA Argentina has a Nomination and Remunerations Committee, whose current composition is as follows:

Members: |  | Oscar Miguel Castro
|  | Alfredo Castillo Triguero
|  | Gabriel Eugenio Milstein
Guest members:
|  | Gustavo Fernández
|  | Eduardo González Correas

Its main purpose is to provide information and advice regarding the nomination and compensations of directors and executive officers. Its main functions are to:

| • |  | establish the requirements for the appointments of directors and executive officers;

| • |  | approve training programs for directors and executive officers;

| • |  | approve policies and criteria for the evaluation of performances of directors and executive officers;

| • |  | annually inform the Board of Directors of the criteria enforced to determine the compensation of directors and executive officers; and

| • |  | state the policies for the promotion, layoff, suspension and retirement of directors and executive officers.

Special Committees of the Bank´s Management

The Bank has the following special committees:

| • |  | Management Committee

As of the date hereof the Management Committee consists of: (i) Martín Ezequiel Zarich; (ii) Gustavo Alonso; (iii) Juan Christian Kindt; (iv) Gustavo Fernández; (v) Ernesto Ramón Gallardo; (vi) Gerardo Fiandrino; (vii) Leandro Alvarez; (viii) Carlos Elizalde and (ix) Eduardo González Correas.

The obligations of the Management Committee are to: (i) establish the business and investment strategies, the general risks policies, the human resources policies and cooperate with the General Manager; (ii) delegate powers to other officers; (iii) analyze and approve the general annual budget; (iv) monitor its evolution and determine corrective measures according to internal and market variables and (v) create business synergies with other companies of the group.

The Management Committee meets monthly.

| • |  | Information Technology Committee

The Information Technology Committee is responsible for the institutional treatment of the policies, goals and planning of the information systems area, and as of the date of this annual report consists of: (i) Leandro Alvarez; (ii) Rubén Stempellato; (iii) Gabriel Eugenio Milstein; (iv) Analia Gonzalez; (v) Miryam Quercia; (vi) Daniel Neme; (vii) Lucrecia Eiriz,(viii) Verónica Redlich, (ix) Rubén Lauriente and (x) Alberto Ocampo.

The Information Technology Committee meets quarterly.

| • |  | Disclosure Committee

As of the date of this annual report, the Disclosure Committee consists of: (i) the financial director Ernesto Ramón Gallardo; (ii) the legal services director, Eduardo González Correas; (iii) the accounting manager, Carlos Reinaudo; (iv) the investor relations manager, Inés Lanusse; (v) the responsible of investors and rating agents Patricio Javier Kelly ; (vi) the risks director, Gerardo Fiandrino and (vii) the manager of banking and institutional business Rocío Carreras.

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The general functions of the Disclosure Committee are to ensure, with respect to all information to be disclosed by the Bank to its shareholders, to the markets where its shares are listed and to the regulatory entities of said markets, (i) that the information required to be disclosed to the public (whether directly or through regulatory bodies) is recorded, processed, summarized and reported accurately and in a timely manner and (ii) that such information is collected and communicated to managers and directors in due time and form in order to take appropriate decisions on the required information.

The Disclosure Committee meets quarterly or as otherwise necessary.

| • |  | Asset Laundering and Terrorism Financing Prevention Committee

The Asset Laundering and Terrorism Financing Prevention Committee as of the date of this annual report consists of: (i) two directors, Oscar Miguel Castro, who is the compliance officer on money laundering prevention before the anti-money laundering organism (Unidad de Información Financiera) and Gabriel Eugenio Milstein, (ii) the director in charge of the regulatory compliance area, Mónica Etcheverry, manager in regulatory compliance; (iii) the official in charge of the compliance area processes, Adriana Scorza and (iv) the responsible for the money laundering prevention area Federico Maliandi.

In order to comply with its control and prevention purposes, the Terrorism Assets and Money Laundering Prevention Committee assumes the following responsibilities:

| • |  | to deal with all matters related to the prevention of terrorism assets laundering and financing;

| • |  | to define operational policies and continuously monitor their degree of advancement; and

| • |  | to assign duties to the different areas involved.

Each member assumes the following functions:

| • |  | to render his or her area of activity more sensitive as to the importance of preventing terrorism assets laundering and financing;

| • |  | to detect any relevant situation which may occur in his or her area in this connection;

| • |  | to analyze any new product or service and evaluate potential asset laundering risks; and

| • |  | to assume the necessary commitments in his or her area in order to implement prevention systems in coordination with the officer responsible for Asset Laundering Prevention.

The Terrorism Asset Laundering and Financing Committee meets every three months, or extraordinarily whenever the coordinator should deem it convenient due to the existence of relevant matters to be discussed.

Not later than five business days prior to the meeting the regulatory compliance director shall discuss with the secretary the agenda to be treated at the quarterly meeting, and the secretary will submit such agenda to the members of the committee.

| • |  | Compliance Committee

The Compliance Committee consists of: (i) the executive director, Martín Ezequiel Zarich; (ii) the compliance director, Mónica Etcheverry; (iii) the retail banking director, Gustavo Alonso; (iv) the financial area director, Ernesto Gallardo; (v) the legal services director, Eduardo González Correas; (vi) the risks director Gerardo Fiandrino and (vii) the internal audit director, Adolfo Rivera Guzmán, who attends as an observer with voice but without vote.

The main functions of the Compliance Committee are to:

| • |  | set action plans and continuously review their progress;

| • |  | contribute to preserve the corporate integrity of BBVA Argentina, ensuring the effective application of the Code of Conduct and the Regulations of Conduct in the Capital Markets;

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| • |  | encourage and promote a culture of ethics and integrity, promote the adoption of necessary measures to resolve queries, concerns, suggestions in relation to compliance and application of the Code of Conduct as well as ethically questionable actions that may arise in the context of the Bank’s operations;

| • |  | promote and monitor the operation and effectiveness of the Whistleblower Channel and the review of its most significant cases;

| • |  | ensure compliance with the provisions of the Protection of Users of Financial Services, considering the claims submitted by users and adopting actions that mitigate their occurrence;

| • |  | assume the necessary commitments and agree on actions to carry out prevention systems, in coordination with the Responsible for the Prevention of Money Laundering and Terrorism Financing; and

| • |  | promote training and raise awareness about the importance of compliance with the Code of Conduct and the Compliance Committee’s actions.

The Compliance Committee meets on a monthly basis.

| • |  | Risk Management Committee

This committee consists of the risks director, the retail risk and process transformation manager, the wholesale risks manager, the internal risk control manager, a member of Internal Risk Control as Technical Secretariat, the manager of financial risks and reporting, all of them as permanent participants; the Executive Director; the Head of the subject area; the C&IB Director and/or the Manager of Global Transactional Banking and/or the Manager of Global Markets Argentina; the Commercial Director and/or the Retail Coordination Manager and/or the Business Coordination Manager; all of them as Guests and the Business Development Director and/or the Business Implementation Manager as Lecturer.

The main purpose of the Risks Management Committee is to:

| • |  | approve any transactions and financial programs of clients which exceed the powers granted to the credit risk, financial institutions and issuer risk committee, and any other matter solved outside the regional scope. Any and all transactions which may result special or exceptional may be dealt with by such committee;

| • |  | approve refinancing, cancellations and penalties for individual or corporate clients;

| • |  | approve the operations of non-delegated risks (risks concerning means of communications, public importance, political parties, trade unions or associated companies of the Bank or its members);

| • |  | treat the proposal for delegation of powers that will then be submitted to the Board for approval;

| • |  | approve the Specific Risk Management Framework annually and periodically monitor the evolution of the metrics defined therein;

| • |  | define and approve the necessary strategies, manuals, policies, practices and procedures to identify, evaluate, measure and handle the risks to which the entity is exposed to (credit, market, structure, liquidity, operational risks, among others);

| • |  | approve credit policies, rating tools and models and campaigns of pre-approved items or massive campaigns);

| • |  | approve the limits of asset allocation and stress tests;

| • |  | call the Crisis Committee if necessary;

| • |  | submit to the Board those issues required by the local regulator;

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| • |  | presentation and analysis of periodic management reports, which must subsequently be submitted to Senior Management and the Board. These reports should include the main aspects of the management of all the risks of the entity;

| • |  | approve quarterly the prioritization of SDA projects (Intradominium refinement); and

| • |  | monthly review of IFRS9 sanitation according to IFRS9 methodology.

| • |  | Corporate Assurance Committee

As of the date hereof, the Corporate Assurance Committee consists of the executive director as Chairman, the members of the Management Committee as permanent participants and the Secretary of the Committee, which is the non-Financial Risk Manager.

The main functions of this committee are:

| • |  | to promote and ensure the effectiveness of the control model and the necessary culture of transparency and self-criticism;

| • |  | to ensure the implementation and maintenance of the corporate assurance model within the BBVA Group entities;

| • |  | to prioritize control weaknesses identified by the expert areas and the internal audit bureau regarding adequacy, appropriateness and timeliness of the proposed remedial actions;

| • |  | to ensure that experts activities are carried out with self-criticism and transparently;

| • |  | to understand, evaluate, and assign responsibilities for managing risks that are submitted for consideration;

| • |  | to give timely follow up on agreed action plans to mitigate risks;

| • |  | to communicate to specialists and business units all decisions;

| • |  | to promote awareness of the operational risk model , as well as the dissemination of corporate policies governing the matter;

| • |  | to solve and take decisions regarding the operational risk, required by its materiality or importance;

| • |  | to ensure the implementation of the operational risk model and facilitate proper management for operational risks related to BBVA Argentina business;

| • |  | to supervise the proper implementation of tools and model methodology; and

| • |  | to deal with any matter that enhances the quality and reliability of BBVA Argentina internal controls and its affiliated companies.

Meetings of the Corporate Assurance Committee may be ordinary and extraordinary. The former, are held on a quarterly basis, summoned in advance by the secretary. The latter are held when summoned by the secretary or upon the request of one or more members of the committee when special circumstances so require it.

| • |  | Assets and Liabilities Committee

The Assets and Liabilities Committee consists of: (i) the executive director; (ii) the business development director; (iii) the financial director; (iv) the risks director; (v) the commercial director; (vi) the corporate & investment banking director; (vii) the Financial Management Manager, all of them as permanent participants; (viii) the BBVA Research director; and (ix) the financial risks manager and reporting, all of them as guests.

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The main functions of this committee are:

| • |  | to monitor macroeconomic variables;

| • |  | to analyze and discuss domestic and foreign market conditions and forecast any potential impact on the Bank’s structural risks;

| • |  | to monitor and control limits and liquidity alerts, rates, change position and market risks, both internal and regulatory, and to define corrective actions if necessary;

| • |  | to analyze the historical evolution and projection of the balance sheet, deviations from budget, and comparison against the market and competition;

| • |  | to monitor the Bank’s excess liquidity, comparison of market and analysis of stress scenarios;

| • |  | to determine the resource allocation strategy;

| • |  | to determine price and products policy for assets and liabilities;

| • |  | to monitor the Bank’s financial margin and its main deviations;

| • |  | to determine the strategy to be applied for investments and surplus;

| • |  | to analyze risks associated with investments in the public sector;

| • |  | to analyze the historical and projected evolution of the capital position and projected dividends of the Bank; and

| • |  | to order financial or other analyzes deemed necessary to optimize management of the items mentioned above.

This committee meets on a monthly basis.

Also in compliance with resolutions of the Central Bank or other controlling bodies, the Bank has appointed different offices responsible for specific subjects, as detailed below:

| • |  | Responsible for Foreign Exchange Positions (Communication “A” 4246 BCRA)

Main Responsible Officer: Germán Adolfo Salse

Alternate Responsible Officer: María Susana Dopazo Tomey

| • |  | Responsible for Foreign Exchange Control (Communication “A” 4246 BCRA)

Main Responsible Officer: Rubén José Lauriente

Alternate Responsible Officer: María Susana Dopazo Tomey

| • |  | Responsible for costumer services in compliance with Communication “A” 5388 of BCRA.

Responsible Manager Jorge Delfín Luna

Main Responsible Officer: Rubén Lemme

Alternate Responsible Officer: Mónica Gabriela Etcheverry / Carolina Noelia Guevara

| • |  | Responsible for the Liquidity Policy (Communication “A” 2879 BCRA):

Main Responsible Officer: Diego Cesarini

| • |  | Responsible for Information Systems (Communication “A” 2593 BCRA)

Main Responsible Officer: Ernesto Gallardo

Alternate Responsible Officer: Juan Christian Kindt

| • |  | Responsible for Market Relations (Law No. 26.831)

Main Responsible Officer: Ernesto Gallardo

Alternate Responsible Officers: Martín Ezequiel Zarich and Eduardo González Correas

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| • |  | Compliance Officer on Money Laundering Prevention (Communication “A” 5004 BCRA):

Main Responsible Officer: Oscar Miguel Castro

Alternate Responsible Officer: Gabriel Eugenio Milstein

| • |  | Security Responsible for Financial Entities (Communications “A” 5120 and 5132)

Main Responsible Officer: Juan Antonio Calderón

Alterante Responsible Officer: Victor Fabian Garibotto

Advisors

All internal legal advice is provided to the Bank by its own legal services department.

D. | Employees

The following table shows the breakdown of our full-time payroll employees as of December 31, 2020, 2019 and 2018:

|  | As of December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Main office |  |  | 3,118 |  |  |  | 3,826 |  |  |  | 3,568 |
Branches |  |  | 2,901 |  |  |  | 2,495 |  |  |  | 2,521 |
Total |  |  | 6,019 |  |  |  | 6,321 |  |  |  | 6,089 |

Our employees are represented by a national bank union with optional membership. As of December 31, 2020, 2,457 employees were unionized. The union negotiates a collective bargaining agreement to establish minimum salaries for all of its members. We have not experienced any conflicts with the union for over 20 years and we consider relations with our employees to be satisfactory.

We have a personnel Training and Development Department, which is in charge of the training of all of the Bank’s employees. This includes in-house training courses and seminars in all the areas: Operations, Technology and Business (Branches, Corporate Banking). We provide bonuses to individual employees throughout the bank on a discretionary basis, taking into consideration individual merit and overall profit levels. We do not have a formal profit-sharing plan.

The Bank does not employ a significant number of temporary employees.

E. | Share Ownership

As of February 28, 2021, Gabriel Eugenio Milstein (Regular Director), Gustavo Alonso (Commercial Director) and Gustavo Osvaldo Fernández (Talent & Culture Director) own shares in BBVA Argentina. The ownership of each of them represented less than 1% of the capital stock of the Bank. The shares owned by these persons do not have different voting rights.

None of our directors or our remaining senior executives own shares or options on shares of BBVA Argentina.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. | Major Shareholders

The following table sets forth certain information regarding the beneficial ownership of our ordinary shares as of February 28, 2021, by each person who, to our knowledge, beneficially owns more than 5% of our ordinary shares. These persons do not have different voting rights.

|  | Ordinary Shares Beneficially Owned at February 28, 2021 |
Beneficial Owner |  | Number of Shares |  |  | Percentage of Shares Outstanding |
Banco Bilbao Vizcaya Argentaria S.A. |  |  | 244,870,968 |  |  |  | 39.97 | %
BBV América SL (1) |  |  | 160,060,144 |  |  |  | 26.13 | %
The Bank of New York Mellon (2) |  |  | 99,307,764 |  |  |  | 16.21 | %
Administración Nacional de Seguridad Social |  |  | 42,439,494 |  |  |  | 6.93 | %

(1) | BBV América S.L. is under the control of BBVA.

(2) | As holder agent of ADSs.

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Our capital stock at December 31, 2020 was 612,659,638 shares. As of such date, BBVA had an equity interest in the Bank of 66.55%.

On October 9, 2019, the CNV issued Resolution No. 20,484/2019 approving the merger of BBVA Francés Valores S.A. into the Bank. As a result, the Bank was authorized to issue 50,441 ordinary shares, with a nominal value of Ps.1 and entitling to one vote each to be delivered to BBVA Francés Valores S.A.’s minority shareholders. As of the date of this annual report on Form 20-F, the merger and the capital increase are still in the process of being registered with the IGJ.

We are a corporation registered under Argentine law whose shareholders restrict their liability to the shares they have subscribed and paid-in under the Business Companies Law. Therefore, and in terms of Law No. 25,738, no shareholder of the Bank, whether foreign or local, is liable beyond such paid-in shares for obligations deriving from transactions made by the Bank.

We are unaware of any arrangements the operation of which may, at a subsequent date, result in a change of control of BBVA Argentina.

As of December 31, 2020, according to our records 14 holders of ordinary shares and 26 registered holders of ADSs (in accordance with the records of the Bank of New York Mellon (“BoNY”), as depositary for the ADSs) have an address in the United States, representing 20.79% of our issued and outstanding ordinary shares.

B. | Related Parties Transactions

The following table presents the aggregate amounts of total financial exposure of BBVA Argentina to related parties for the two-month period ended February 28, 2021 and for the fiscal year ended December 31, 2020. Related parties include controlled companies, controlling shareholders and entities under common control, key management and directors and associated entities.

The financings described below (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (c) did not involve more than the normal risk of collectability or present other unfavorable features.

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|  | February 28, 2021 |  |  | December 31, 2020 |
Related Party |  | Largest Outstanding Amount (1)(2) |  |  | Interest Rates |  |  | Amount Outstanding (2) |  |  | Interest Rates |  |  | Nature |  |  | Largest Outstanding Amount (1)(2) |  |  | Interest Rates |  |  | Amount Outstanding (2) |  |  | Interest Rates |  |  | Nature |
Controlled, Controlling and Under Common Control Entities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BBVA and subsidiaries |  |  | 2,444,493 |  |  |  | — |  |  |  | 2,208,233 |  |  |  | — |  |  |  | Guarantees given and correspond- dents |  |  |  | 2,593,202 |  |  |  | — |  |  |  | 1,231,048 |  |  |  | — |  |  |  | Guarantees given and correspond- dents |
BBVA Asset Management S.A. |  |  | 1,628,032 |  |  |  | 32.73 | % |  |  | 1,628,032 |  |  |  | 32.73 | % |  |  | Other loans, credit card loans and equity investment |  |  |  | 1,448,248 |  |  |  | 32.73 | % |  |  | 1,448,248 |  |  |  | 32.73 | % |  |  | Other loans, credit card loans and equity investment |
Consolidar AFJP S.A. (undergoing liquidation proceedings) |  |  | 28,031 |  |  |  | — |  |  |  | 28,031 |  |  |  | — |  |  |  | Other loans, guarantees given and equity investment |  |  |  | 33,615 |  |  |  | — |  |  |  | 27,547 |  |  |  | — |  |  |  | Other loans, guarantees given and equity investment |
PSA Finance S.A. |  |  | 2,410,206 |  |  |  | 48.84 | % |  |  | 2,410,206 |  |  |  | 48.84 | % |  |  | Advances, call money, other loans and equity investment |  |  |  | 2,021,461 |  |  |  | 47.72 | % |  |  | 2,021,461 |  |  |  | 47.72 | % |  |  | Advances, call money, other loans and equity investment |
BBVA Consolidar Seguros S.A. |  |  | 550,113 |  |  |  | 32.73 | % |  |  | 550,113 |  |  |  | 32.73 | % |  |  | Credit card loans, other loans and equity investment |  |  |  | 518,383 |  |  |  | 32.73 | % |  |  | 499,437 |  |  |  | 32.73 | % |  |  | Advances, credit card loans, other loans and equity investment |
Play Digital S.A. |  |  | 76,830 |  |  |  | 25.43 | % |  |  | 73,944 |  |  |  | 27.13 | % |  |  | Credit card loans and equity investment |  |  |  | 163,741 |  |  |  | 26.04 | % |  |  | 76,808 |  |  |  | 26.04 | % |  |  | Credit card loans and equity investment |
Volkswagen Financial Services S.A |  |  | 4,517,225 |  |  |  | 35.68 | % |  |  | 4,341,502 |  |  |  | 37.68 | % |  |  | Credit card loans, other loans, call money and equity investment |  |  |  | 4,574,830 |  |  |  | 24.22 | % |  |  | 4,534,644 |  |  |  | 34.59 | % |  |  | Credit card loans, other loans, call money, advances and equity investment |
Associated Entities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rombo Cia Financiera S.A. |  |  | 1,714,438 |  |  |  | 93.56 | % |  |  | 1,714,438 |  |  |  | 93.56 | % |  |  | Advances, loans, other loans and equity investment |  |  |  | 2,435,324 |  |  |  | 31.00 | % |  |  | 1,665,895 |  |  |  | 84.68 | % |  |  | Advances, call money, other loans, guarantees given |
Key Management Personnel (3) |  |  | 51,418 |  |  |  | 55.00 | % |  |  | 51,418 |  |  |  | 55.00 | % |  |  | Credit card loans, personal loans, other loans, advances and real estate mortgage |  |  |  | 48,960 |  |  |  | 55.00 | % |  |  | 41,508 |  |  |  | 55.00 | % |  |  | Credit card loans, personal loans, other loans, advances and real estate mortgage |

(1) | Largest amount during the period indicated.

(2) | In thousands of pesos.

(3) | Key management personnel includes those having the authority and responsibility for planning, managing and controlling the Bank’s activities, whether directly or indirectly. Based on this definition, the Bank considers the members of the Board of Directors as key personnel.

| The transactions included in this section (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (c) did not involve more than the normal risk of collectability or present other unfavorable features.

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As of December 31, 2020, the Bank did not have outstanding any financial assistance from BBVA.

C. | Interest of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. | Financial Statements and Other Financial Information

See “Item 3. Key information—A. Selected Financial Data” and “Item 18. Financial Statements” and other financial information filed with this annual report.

Legal Proceedings

The Bank and its subsidiaries are involved in a number of legal and regulatory actions and proceedings, including legal claims and proceedings, civil and criminal regulatory proceedings, including class actions, governmental investigations and proceedings, tax proceedings and other proceedings. Legal and regulatory actions and proceedings are subject to many uncertainties, and their outcomes, including the timing thereof, the amount of fines or settlements or the form of any settlements, or changes in business practices we may need to introduce as a result thereof, any of which may be material, are often difficult to predict, particularly in the early stages of a particular legal or regulatory matter.

As of the date hereof, the Bank is involved in a number of legal and regulatory actions and proceedings, the adverse resolution of which may also adversely impact the Bank.

The Bank can provide no assurance that the legal and regulatory actions and proceedings to which it is subject, or to which it may become subject in the future or otherwise affected by, will not, if resolved adversely, result in a material adverse effect on the Bank’s financial position, results of operations or liquidity.

The Financial Information Unit (UIF) notified the Bank in May and June 2019 of the filling of two actions through summary proceedings against the Bank and the members of its Board of Directors and its compliance officer regarding alleged violations of the regulations for the prevention of money laundering. The Bank intends to defend the interests of these parties and has presented a deposition in their defense, but given their early stages is unable to predict the outcome of these actions.

In February 2020, we were notified of a class action for the alleged damage suffered by investors in certain investment funds managed by the Bank, following the unilateral modification of the price of certain future dollar contracts in which the affected funds investmented. These modifications were carried out by the organized market in which these future dollar contracts were negotiated, and the class action plaintiffs allege a failure by the Bank to contest the unilateral modifications carried out by the organized market in order to defend the fund investors’ financial interests.

Dividends

In Argentina, financial institutions may distribute dividends provided that (i) they are not covered by the terms of sections 34 “Regularization and recovery” and 35 bis “Institution restructuring to safeguard lending and bank deposits” of the Law on Financial Institutions (Law No. 21,526); (ii) they are not receiving financial assistance from the BCRA; (iii) they are not in arrears or non-compliance with the information regime established by the BCRA; (iv) they meet minimum capital requirements and cash requirements; and (v) they have complied with the additional capital margins applicable to it as provided for in Section 4 (Additional Capital Margins) of the BCRA’s Structured Income Distribution text.

Financial institutions not included in the above paragraph may distribute earnings up to an amount equal to retained earnings of legal reserves less the following items:

| 1. | 100% of the debit balance of each of the items recorded under other comprehensive income (loss);

| 2. | income (loss) arising from the revaluation of property, plant and equipment, intangible assets and investment properties;

| 3. | net positive amount arising from the difference between the measurement at amortized cost and the fair market value recorded by the financial institution with respect to public debt instruments and/or monetary regulation instruments of the BCRA valued at amortized cost, adjustments to asset valuations: (i) notified by the Superintendence of Financial and Exchange Entities (SEFyC)—whether or not accepted by the institution—and/or (ii) required by external auditing and, in both cases, pending accounting registration; and

| 4. | preferential asset valuation exemptions granted by the SEFyC on a case-by-case basis, including adjustments for failure to implement agreed adequacy plans.

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Amounts available for dividend distributions are determined pursuant to Argentine law and IFRS-BCRA. As a result, dividends may be paid when the Bank has no income as determined under IFRS-IASB and, conversely, dividends may not be payable even if the Bank has income as determined under IFRS-IASB.

With respect to fiscal year 2017, the Board of Directors decided at the meeting held on April 26, 2018 that the payment of such dividends would occur on May 9, 2018 for a total amount Ps.970 million nominal value.

For the fiscal year 2018, the Board of Directors decided at the meeting held on April 24, 2019 to distribute a total amount Ps.2,407 million nominal value based on the Bank’s results as determined under IFRS-BCRA.

The Bank’s Board of Directors resolved to propose for shareholder approval the payment of a cash dividend of Ps.2,500 million for the year ended December 31, 2019. The ordinary and extraordinary shareholders’ meeting was initially called for April 7, 2020 and was rescheduled to May 15, 2020 as a virtual meeting due to the Covid-19 pandemic. The Board of Directors of the Bank decided to propose for the approval of the extraordinary general meeting of shareholders held on November 20, 2020, the partial withdrawal of the optional reserve to be applied to the payment of a supplementary dividend in the amount of Ps.12,000 million.

Communication “A” 6886 provides that financial institutions must have the formal authorization of the BCRA before making dividend distributions. In such authorization process, the Superintendence of Financial and Exchange Entities will take into account, among other elements, the potential effects of the application of International Accounting Standards according to Communication “A” 6430 (point 5.5. of IFRS 9) and the restatement of financial statements provided by Communication “A” 6651.

As a result of the Covid-19 pandemic, the Central Bank issued Communication “A” 6939 whereby the distribution of dividends by financial institutions was suspended until June 30, 2020. Communication “A” 7035 extended such restriction until December 31, 2020, which was subsequently extended to June 30, 2021 by Communication”A” 7181.

B. | Significant Changes

None.

ITEM 9. THE OFFER AND LISTING

We were one of the first companies listed on the BCBA (now the BYMA), quoting since 1888. Currently our shares are listed on the BYMA under the ticker BBAR. Since 1993 our shares have also been listed on the NYSE in the form of ADSs under the ticker BBAR and, since December 1999, our shares have also been listed on the Madrid Stock Exchange under the ticker XBBAR. We cannot give assurance that a public market in the United States for the ADSs will continue to exist.

The table below shows the quarterly high and low closing prices of the ordinary shares in pesos on BYMA for the periods indicated. The following prices have not been adjusted for any stock dividends.

|  | Pesos Per Ordinary Share (1) |
|  | High |  |  | Low |
April 2021 (through April 12, 2021) |  |  | 135.95 |  |  |  | 130.00 |
March 2021 |  |  | 150.40 |  |  |  | 129.90 |
February 2021 |  |  | 153.20 |  |  |  | 136.25 |
January 2021 |  |  | 155.65 |  |  |  | 135.50 |
Year ended December 31, 2020 |  |  | 188.85 |  |  |  | 69.40 |
Fourth quarter |  |  | 175.10 |  |  |  | 122.30 |
December 2020 |  |  | 170.35 |  |  |  | 143.35 |
November 2020 |  |  | 175.10 |  |  |  | 136.25 |
October 2020 |  |  | 157.00 |  |  |  | 122.30 |
September 2020 |  |  | 148.60 |  |  |  | 117.65 |
Third quarter |  |  | 188.85 |  |  |  | 117.65 |
Second quarter |  |  | 174.40 |  |  |  | 73.70 |
First quarter |  |  | 156.50 |  |  |  | 69.40 |
Year ended December 31, 2019 |  |  | 183.45 |  |  |  | 80.55 |
Fourth quarter |  |  | 148.50 |  |  |  | 81.15 |
Third quarter |  |  | 183.45 |  |  |  | 80.55 |
Second quarter |  |  | 163.00 |  |  |  | 114.40 |
First quarter |  |  | 174.30 |  |  |  | 134.15 |
Year ended December 31, 2018 |  |  | 170.50 |  |  |  | 89.00 |
Year ended December 31, 2017 |  |  | 157.00 |  |  |  | 87.00 |
Year ended December 31, 2016 |  |  | 119.00 |  |  |  | 78.50 |

(1) | Pesos per ordinary share data reflect nominal prices at trading date.

Source: BYMA.

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The ordinary shares trade on the NYSE in the form of ADSs issued by The Bank of New York Mellon, as depositary. Each ADS represents three ordinary shares. The table below shows the quarterly high and low closing prices of the ADSs in dollars on the NYSE for the periods indicated.

|  | Pesos Per ADS (1) |
|  | High |  |  | Low |
April 2021 (through April 12, 2021) |  |  | 2.79 |  |  |  | 2.64 |
March 2021 |  |  | 3.07 |  |  |  | 2.54 |
February 2021 |  |  | 3.15 |  |  |  | 2.71 |
January 2021 |  |  | 3.21 |  |  |  | 2.69 |
Year ended December 31, 2020 |  |  | 5.77 |  |  |  | 2.27 |
Fourth quarter |  |  | 3.57 |  |  |  | 2.32 |
December 2020 |  |  | 3.57 |  |  |  | 3.10 |
November 2020 |  |  | 3.51 |  |  |  | 2.63 |
October 2020 |  |  | 2.69 |  |  |  | 2.32 |
September 2020 |  |  | 3.44 |  |  |  | 2.41 |
Third quarter |  |  | 4.62 |  |  |  | 2.41 |
Second quarter |  |  | 4.53 |  |  |  | 2.30 |
First quarter |  |  | 5.77 |  |  |  | 2.27 |
Year ended December 31, 2019 |  |  | 13.97 |  |  |  | 3.06 |
Fourth quarter |  |  | 6.11 |  |  |  | 3.06 |
Third quarter |  |  | 12.44 |  |  |  | 3.90 |
Second quarter |  |  | 11.34 |  |  |  | 7.67 |
First quarter |  |  | 13.97 |  |  |  | 9.14 |
Year ended December 31, 2018 |  |  | 26.60 |  |  |  | 7.18 |
Year ended December 31, 2017 |  |  | 25.54 |  |  |  | 15.30 |
Year ended December 31, 2016 |  |  | 23.10 |  |  |  | 16.50 |

(1) | Source: BoNY Mellon Depositary.

Trading on the BYMA

In Argentina all publicly offered securities must be traded on markets authorized by the CNV. At the end of 2020, the four principal authorized markets in Argentina were the Bolsas y Mercados Argentinos-BYMA (for equity and fix income), the Mercado Abierto Electrónico-MAE (for fix income and derivatives), the Mercado a Término de Buenos Aires-MATBA (for commodities and derivatives) and the ROFEX (for commodities and derivatives).

The BYMA, founded as the BCBA in 1854, is the oldest and largest equity market in Argentina. Usually, the overwhelming majority of all Argentine equity trades take place on the BCBA.

We were one of the first companies listed on the BCBA (now the BYMA), quoting since 1888. Currently our shares are listed on the BYMA under the ticker BBAR. Since 1993 our shares have also been listed on the NYSE in the form of ADS under the ticker BBAR and, since December 1999, our shares have also been listed on the Madrid Stock Exchange under the ticker XBBAR. We cannot give assurance that a public market in the United States for the ADSs will continue to exist.

As of December 31, 2020, the shares of 91 Argentine companies were listed on the BYMA, excluding investment funds. In 2020, 6.2 million shares were traded on BYMA, more than double of the 2.96 million traded in the previous year. However, the effective volume in US$ was only US$3,694 million, 18.3% less than in 2019, due to the depreciation of the peso. See “Instituto Argentino de Mercado de Capitales.”

All the agents authorized by the CNV can conduct transactions in the authorized markets. These agents must be affiliated with BYMA (stock market continued by BYMA) if they want to trade on this market. Trading on the BYMA is conducted through three different trading systems:

| • |  | the “Millennium”;

| • |  | the “Senebi”; and

| • |  | the “Sistaco”.

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The operations at the electronic auction system called the “Millennium” start from 11:00 A.M. and end at 5:00 P.M. each business day. Each broker inserts both its buying and selling orders while the system matches the transactions. Millennium has been considered a single market. The system allows for the trade of securities, public bonds, private bonds, futures and derivatives.

The Buenos Aires Stock Market’s trades are made through an electronic Senebi Market System (the “Senebi”) that operates from 11:00 A.M. to 5:00 P.M. each business day. Member Agents operate on their own, arranging transactions through direct negotiations. Any transactions must be informed by the BYMA agents for their disclosure, registration and publication. The transactions arranged and registered in Senebi are considered unsecured and, consequently, do not enjoy the backing of the Mandatory Guarantee Fund Constituted by BYMA. Additionally, such transactions are made through an electronic Sistaco Market System (the “Sistaco”) that operates from 11:00 A.M. to 5:00 P.M. each business day. That allows Brokers of Negotiable Securities (ACVN) to inform BYMA, the occurrence of business on negotiable securities, in the systems that the ACVN manages, in which it links authorized intermediaries that are later confirmed for subsequent registration in the segment Senebi or agree in the PPT. In all markets, the operations can be executed in pesos or dollars from local accounts or foreign accounts.

As of December 31, 2020, the market capitalization of the 91 domestic companies listed on the BYMA was approximately US$112.1 billion. At the same time, the market capitalization of the domestic companies totalled US$28.8 billion.

The following table summarizes certain historical information about the BYMA.

|  | December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Market capitalization (US$ billion) |  |  | 112.1 |  |  |  | 176.3 |  |  |  | 285.4 |
Number of companies listed |  |  | 91 |  |  |  | 90 |  |  |  | 95 |
Rate of return in US$ (1) |  |  | (12.50 | )% |  |  | (13.17 | )% |  |  | (50.20 | )%
Market/book ratio (2) |  |  | 0.94 |  |  |  | 1.11 |  |  |  | 1.87 |

(1) | Based on the Merval Index

(2) | Estimated

Source: BYMA and Instituto Argentino de Mercados de Capitales (IAMC).

Market Regulation

In November 2012, the Argentine Congress passed Law No. 26,831 (the “Capital Markets Law”), which abrogated Law No. 17,811 enacted in 1968. In July 2013, the Argentine executive branch issued implementing Decree 1023/2013, and in September 2013, the CNV issued a new set of rules further implementing and administering the requirements of the Securities Law (General Resolution 622/2013 and, together with Decree No. 1023/2013, the “CNV Rules”).

The objectives of the Securities Law are, among others, the promotion of the participation in the securities market of small investors, including retail investors, trade unions, chambers of commerce, professional organizations, and small and medium-sized companies; the strengthening of the mechanisms to protect and prevent abuses against such investors and the simplification of the mechanisms by which persons trade on the market.

The Securities Law introduced other important amendments, the most important of which are: (i) the end of the Argentine securities market’s self-regulation; (ii) new categories of licenses for participants in the public offering regime; (iii) the new powers conferred on the CNV; and (iv) the mandatory tender offer rules. These amendments are briefly described below.

| • |  | End of Self-Regulation of the Securities Market

The Securities Law brought to an end the self-regulation of the Argentine securities market. Prior to the Securities Law, in order to trade on a market, broker dealers had to be shareholders of the self-regulated organization (“SRO”) that operated such market. Accordingly, in the city of Buenos Aires, the only persons authorized to trade securities listed on the BYMA were the shareholders of the Buenos Aires Stock Market, the entity overseeing brokerage activities and transactions on the Buenos Aires Stock Market. Likewise, for persons to trade securities on the Mercado Abierto Electrónico (“MAE”; basically an electronic system to which broker dealers are linked), they had to be shareholders of such entity. While these entities supervised their participants, the CNV, in turn, supervised the entities.

The Securities Law expressly provided that stock exchanges and other securities markets may no longer impose as a requirement for membership to be a shareholder of the relevant exchange or market. It also established that markets must be organized as public companies (i.e. with listed shares), excluding other types of companies or civil associations.

Moreover, the CNV now directly authorizes, revokes the authorization of, regulates and supervises the securities markets, as well as any individuals and companies that in any manner participate in the public offering of securities. Accordingly, the indirect regulation through SROs was abandoned.

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| • |  | New Licenses for Participants in the Public Offering Regime

The Securities Law set several types of licenses for persons and companies already engaged, or wishing to engage, in the public offering of securities. Regarding the former, such as stock brokers or MAE broker dealers that already held a license, the CNV Rules allowed them to choose until March 2014 among the new set of licenses and comply with the requirements of each of them, with longer periods of time available to comply with certain specific requirements such as mandatory minimum capital requirements.

The new types of licenses included the following: Negotiating Agents (Agentes de Negociación–AN), for companies that wish to engage in the primary and secondary offer of securities; Liquidation and Compensation Agents (Agentes de Liquidación y Compensación–ALyC), for companies that, in addition to the primary and secondary offer of securities, wish to participate in the settlement of transactions; Soliciting Agents (Agentes Productores–AP), which allows individuals and companies to solicit clients for referral to either an AN or ALyC; Capital Market Advisors (Agentes Asesores de Mercados de Capitales–AA), for individuals or companies giving advice to the public relating to the capital markets; and Selling Agents (Agentes de Corretaje de Valores Negociables–ACVN), for ANs, ALyCs and other authorized participants to act as intermediaries among sellers and buyers through electronic platforms.

There are also specific licenses to act as central securities depositories or Collective Deposit Agents (Agente de Depósito Colectivo–ADC); or perform certain of their related activities as Custody and Payment Agents (Agente de Custodia, Registro y Pago–ACRyP).

Regarding rating agencies, the Securities Law introduced the possibility for public universities to act as such, and therefore there are two categories in this area: rating agents (Agentes de Calificación de Riesgo–ACR) and public university rating agents (Agentes de Calificación de Riesgo–Universidades Públicas).

Regarding collective investments, including investment funds and trusts, the Securities Law maintained a similar scheme of licenses, extending the requirement imposed on other non-banking entities to register with the CNV to banks, to act as financial trustees.

Finally, the Securities Law required that all employees of registered entities who deal with the public, whether due to the provision of advisory services or any services, must be registered in a special registry to be kept by the CNV (Registry of Competent Agents or Registro de Idóneos), and, among others, complete the training programs mandated by the CNV.

| • |  | New Powers Conferred on the CNV

The CNV directly regulates, supervises and disciplines individuals and companies that participate in any manner in the public offering of securities. The indirect regulations through SROs were abandoned.

The CNV authorizes the public offering of securities and keeps record of companies authorized to publicly offer their securities. Also, the CNV keeps a registry of, and grants, suspends or revokes the authorization to operate the markets (which governing rules will also approve), licensed agents, and of any other persons or companies that because of their activities are under the CNV supervision. It also approves the governing rules of the securities markets.

The CNV, in addition to the power it already had of controlling the companies authorized to publicly offer their securities, assumes the power of controlling companies which hold the licenses described in “New Licenses for participants in the Public Offering Regime” section above. The CNV must carry on the permanent supervision of such companies, approving any amendments to their by-laws, variations of their capital, and their dissolution and liquidation.

The CNV enforces the Securities Law, with the power to impose sanctions. The CNV may declare acts which are under its supervision null and void, without the need of prior administrative proceedings, when such acts were contrary to the Securities Law. The courts reviewing the decisions of the CNV are the commercial courts instead of the administrative law courts.

In carrying out its duties, the CNV may, inter alia, request information, conduct inspections and investigations, request the assistance of law enforcement authorities, and file judicial complaints.

| • |  | Mandatory Tender Offers Rules

A mandatory tender offer for taking of control of a company is now applicable to all companies admitted to the public offering regime, with no possibility to opt out of the regime.

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ITEM 10. ADDITIONAL INFORMATION

A. | Share Capital

Not applicable

B. | Memorandum and Articles of Association

The following summarizes certain material provisions of our by-laws and Argentine law, the main regulatory bodies governing BBVA Argentina. This summary is qualified in its entirety by reference to the Business Companies Law, the Financial Institutions Law and our by-laws, and corresponds to the last five years.

At the ordinary and extraordinary shareholders’ meeting held on April 10, 2014, our shareholders approved an amendment to section 1 and 3 of the corporate by-laws in order to comply with the Capital Markets Law. This amendment was registered before the Public Registry of Commerce on September 18, 2014 under No. 17,995, Book 70 of Corporations. A copy of our by-laws was filed as an exhibit to our annual report on Form 20-F for the year ended December 31, 2014.

At the ordinary and extraordinary shareholders’ meeting held on April 24, 2019, our shareholders approved an amendment to section 1 and 3 of the corporate by-laws in order to change the company name, allow the Board to issue corporate bonds without the prior delegation of the shareholders’ meeting, the exercise of preemptive rights in accordance with the prospectus in case of a capital increase and the elimination of the accretion right. This amendment was registered before the Public Registry of Commerce on October 17, 2019 under No. 21332, Book 97 of Corporations. A copy of our by-laws as currently in effect was filed as an exhibit to our annual report on Form 20-F for the year ended December 31, 2019.

Registry and Company’s Objects and Purposes

BBVA Argentina is registered with the Public Registry of Commerce of the Argentina (Registro Público de Comercio) under company number 1,065, Page 359, Book 5, Volume “A” of Local Corporate By-laws. Section 3 of our by-laws provides that the object of BBVA Argentina is to engage in the commercial banking business, including financial brokerage, whether in Argentina or abroad. Under our by-laws, BBVA Argentina is authorized to perform the following activities:

| • |  | accept term and demand deposits;

| • |  | grant short-term bullet and other amortizable loans;

| • |  | discount, purchase and sell bills of exchange, promissory notes, pledges, checks, drafts and other negotiable instruments;

| • |  | grant guarantees, bonds or other forms of collateral; accept bills of exchange, drafts and other orders of payment, transfer funds and issue and accept letters of credit;

| • |  | grant advances on credits from property sales, acquire the same and undertake the risks resulting therefrom, take steps to collect them and offer technical and administrative assistance;

| • |  | invest in government securities;

| • |  | make temporary investments in liquid assets;

| • |  | invest in new stock or securities issues, in pursuance of such regulations as may be set forth to that purpose;

| • |  | accept securities in custody and provide other services related to the banking business;

| • |  | manage, on account of third parties, the purchase and sale of securities, and act as paying agents in relation to dividends, redemption and interest;

| • |  | engage in brokerage activities in the over-the-counter securities market;

| • |  | perform foreign exchange transactions;

| • |  | comply with agencies related to its operations;

| • |  | receive deposits of participation in mortgage loans and in special accounts;

| • |  | issue mortgage obligations;

| • |  | grant loans for the acquisition, construction, enlargement, repair, improvement and maintenance of urban or rural real estate, and for the substitution of mortgages taken out for that same purpose;

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| • |  | receive loans from abroad and act as intermediary in local or foreign currency-denominated loans;

| • |  | issue private bonds;

| • |  | carry out such lending, borrowing and service-related operations as are not forbidden under the Financial Institutions Law; and

| • |  | serve and register before the CNV as management agent for collective investment products, custodian for collective investment products, trading agent, settlement and clearing agent, broker, capital market advisor agent, securities broker and/or custody, registration and paying agent, taking into account the compatibilities established by the Argentine Securities Commission and upon compliance with the requirements established by that entity.

Directors

Under Section 18 of our by-laws, the Board of Directors receives an annual fee established by the shareholders. This fee is subject to the restrictions of Section 261 of the Business Companies Law, which provides that the aggregate compensation of the directors may not exceed 25% of the income of the Bank, or 5% of the income if no dividends were distributed to the shareholders.

The compensation of the members of the Board is previously approved by the Nominations and Compensation Committee and the Audit Committee (II) of the Bank, taking into consideration the reasonability and legality of the amount proposed. The decision of these two committees regarding the compensation amount will then be submitted to the approval of the Board of Directors and the annual shareholders’ meeting.

Under Section 272 of the Business Companies Law, a director may not vote in respect of any proposal in which he, or any person connected to him, has an interest contrary to the interests of BBVA Argentina. Moreover, Directors are not entitled to carry out personal transactions with the company or its affiliates, other than the banking common operations, unless they are approved by a special procedure that guarantees the transparency of proposed transaction.

Directors need not hold shares in BBVA Argentina or any of our subsidiaries to qualify and be appointed as directors of BBVA Argentina.

The bank has no policies regarding age limits or retirement age.

Rights Attaching to Shares

As of the date of the filing of this annual report, our capital is formed by a single class of shares, all of which are ordinary shares and have the same voting and economic rights. Shareholders participate in the distribution of dividends pro rata of the paid-in capital. Furthermore, shareholders are entitled to participate in the distribution resulting from the liquidation of BBVA Argentina in proportion to the paid-in capital.

Shareholders are entitled to vote cumulatively one-third of the vacancies of the Board of Directors. The board may not be partially reelected if it impairs or prevents the exercise by shareholders of their cumulative voting rights.

Shareholders may no longer claim the payment of dividends from BBVA Argentina once three years have elapsed from the date on which the relevant dividend was made available to such shareholder.

Our by-laws do not contain any provisions related to sinking funds or potential liability of shareholders of BBVA Argentina to make additional contributions.

Shareholders’ meetings

All general meetings apart from annual regular meetings are called regular or special meetings. Ordinary and extraordinary shareholders’ meetings are to be convened by the Board of Directors of the Bank or by the Supervisory Committee in such instances as set forth by law, or whenever they may deem it necessary, or upon requisition of shareholders representing at least 5% of our stock capital, as provided by Section 236 of the Business Companies Law.

Shareholders’ meetings are called by publication for five days, at least 20 and not more than 45 days before the date of the meeting, in the Official Gazette and in one of the most widely circulated newspapers in Argentina. The notice must include the nature, the date, time and place of the meeting, the agenda, and any special requirements in our by-laws for the shareholders to attend.

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In case of adjournment of a regular shareholders’ meeting, the meeting on second call may be held on the same date, at least one hour after the time set for the meeting on first call, in compliance with Section 237 of the Business Companies Law. In case of adjournment of a special shareholders’ meeting, the meeting on second call must be held within the following thirty days, and the publication must appear for three days at least eight days before the date set for that meeting.

In order to attend and vote at any shareholders’ meeting, shareholders must deposit with us their shares or a share certificate or a statement of account representing book-entry shares, as the case may be, issued by us, a securities depository or any other authorized institution, to be recorded in the record book of attendance, at least three business days before the date of the meeting.

Holders of registered or book-entry shares, the record of which we keep, are only required to notify us to register their names in the record book of attendance, at least three business days before the date of the meeting. We must provide such shareholders with certificates authorizing them to attend the meeting.

Shareholders may be present at meetings by power-of-attorney or proxy. In the latter case, the principal’s signature shall be certified by a court, notary public or bank. Directors, statutory auditors, managers or any other of our employees may not act as agents for these purposes.

A quorum must be present at any regular shareholders’ meetings on first call upon the attendance of shareholders representing the majority of voting stock. On second call, there is a quorum with the attendance of any number of shares present. A quorum is present at any special shareholders’ meeting on first call upon the attendance of shareholders representing 60% of the voting stock. Shareholders representing 30% of our voting stock shall constitute a quorum at a special shareholders’ meeting on second call. In any case, resolutions require the absolute majority of the voting stock present.

Restrictions on Voting and Shareholding

There are no restrictions imposed by Argentine law or our by-laws or other organizational documents regarding the rights of non-residents or foreign persons to hold or vote our ordinary shares or ADSs of the Bank.

Change of Control

There are no provisions in our articles of incorporation or by-laws that would have the effect of delaying, deferring or preventing a change of control of BBVA Argentina and that would operate only with respect to a merger, acquisition, corporate restructuring involving BBVA Argentina or any of its subsidiaries.

Ownership Disclosure

There are no provisions in our by-laws governing the ownership threshold above which shareholder ownership must be disclosed.

Change in the Capital

Our by-laws do not establish conditions for the changes in the capital of BBVA Argentina more stringent than those conditions imposed by the Business Companies Law.

C. | Material Contracts

No material contracts outside the ordinary course of business have been entered into during the last two years.

D. | Exchange Controls

On January 7, 2002, Congress approved the Public Emergency Law that introduced dramatic changes to the Republic’s economic model and amended the currency board that pegged the peso at parity with the dollar which had been in effect since April 1, 1991 pursuant to the Convertibility Law. The law empowered the executive branch to implement, among other things, additional monetary, financial and exchange measures to overcome the economic crisis in the medium term. The Central Bank, among other restrictive measures, restricted the transfer of U.S. dollars abroad without its prior approval. In 2003 and 2004, the government substantially eased these restrictions. On June 10, 2005 the government issued Decree No. 616/05 establishing further restrictions on capital flows into Argentina, with the following provisions:

| (i) | all incoming and outgoing funds from the Argentine Exchange market, and any debt operation with non-residents which could demand future payments in foreign currency to non-residents, are subject to registration with the Central Bank for informative purposes;

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| (ii) | any debt entered into between non-governmental persons or entities and non-residents must be agreed for a term of at least 365 days, except for the financing of import and export operations and the primary placements of public debt listed in an authorized stock exchange; and

| (iii) | all incoming funds relating to foreign private debt, and all incoming funds of non-residents, excluding foreign direct investments and certain types of portfolio investments (purchases in the primary market of debt instruments and equity, listed in authorized stock exchanges, etc.) regardless of the agreed payment procedure, must be agreed for at least 365 days, and 30% of incoming funds must be deposited with a bank in Argentina in a non-interest bearing account, known as “encaje” (legal reserve).

On December 16, 2015, the Ministry of Economy and Public Finances issued Resolution No. 3/2015 (published in the Official Gazette on December 18, 2015) amending Decree No. 616/2005. Pursuant to such resolution, the mandatory waiting period was reduced from 365 to 120 calendar days and the mandatory deposit was reduced to zero percent.

Accompanying this resolution, the Central Bank issued new foreign exchange regulations on December 17, 2015: Communications “A” 5850 and continuing with Communications “A” 5861, 5899, 6037, 6137 and supplementary, under which structural changes were made to the current foreign exchange regime, easing the access to the foreign exchange market.

On February 2017, the Ministry of Economy and Public Finances issued Resolution No. 1/2017 reducing the mandatory waiting period to zero days and, at the same time, the Central Bank issued new foreign exchange regulations in Communications “A” 6037, 6118, 6137, 6150, 6163 and 6174 that ease the access to the foreign exchange market in Argentina.

On May 19, 2017, the Central Bank issued Communication “A” 6244 effective as of July 1, 2017, whereby all the rules that regulated trading in the foreign exchange market were significantly modified and rendered more flexible.

After some years of flexibility in foreign exchange matters, on September 1, 2019, the Central Bank issued Communication “A” 6770 that established new regulations, restricting access to the exchange market. Accompanying this main resolution, new regulations, amendments and supplements, were issued in Communications “A” 6776, 6780, 6788, 6815, 6818 and 6844 (latest summary of the exchange rate regulations in force).

Therefore, a description of the restrictions and regulations in force until August 30, 2019 and those in force as of September 1, 2019 are detailed below.

Cross Border Transfers of Funds, Foreign Debts

Until the last regulatory amendment of September 2019, the repayment of the principal and interest on foreign indebtedness did not require the entry and settlement of the disbursement through the foreign exchange market.

Currently, due to the changes introduced by the Central Bank, new debts disbursed as of September 1, 2019 are subject to the entry and compulsory settlement through the foreign exchange market, to the extent that the repayment of the principal and interest are made with access to the exchange market.

Today, regardless of whether the financial indebtedness was incurred before or after September 1, 2019, repayments, both principal and interest, may be made with a maximum anticipation of three business days to maturity. If the anticipation period is longer, the prior confirmation of the Central Bank will be required.

Regulations Regarding Exports, Imports, and Services

Regarding exports, in 2016 the Central Bank relaxed certain rules related to the entry and exit of foreign currency collected abroad as a result of the collection of exports of goods, advances and pre-export financing, establishing that the deadline for repatriation to Argentina of foreign currency is 10 years.

Since January 9, 2019 it is regulated that the funds originated by the collection of Argentine exports corresponding to official shipping permits from September 2, 2019 must be entered and settled in the exchange market within the maximum terms established in Communication “A” 6770 and its amendments.

In addition, it is established that the official exports prior to September 2, 2019 that are pending collection to date, as well as the new advances and pre-financing, must be entered and settled in the local exchange market within five business days of the date of collection or disbursement abroad or in the country.

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In relation to the export of services, Communication “A” 6137 of the Central Bank eliminated the obligation to repatriate to Argentina the foreign currency obtained.

Currently, with respect to the collection of services exports, it was established that they must be entered and settled in the local exchange market within a period not exceeding 5 (five) business days from the date of receipt abroad or in the country, or its accreditation in foreign accounts.

With respect to imports, access to the foreign exchange market for the payment of imports, according to the new regulations, may only be made from the expiration of the obligation, without limitation as to amount, except for the payment of imports between related companies, that may be made for up to US$2 million (or its equivalent in other currencies), per calendar month, per debtor, when it corresponds to payments for invoices whose maturities have operated before August 31, 2019. Advance payments between related companies will require the previous authorization of the Central Bank, as well as any operation that does not fit in the described provisions.

Importers have to repatriate the goods within a specific period: 270 days for capital goods and 90 days for the rest of the goods (previously there was no obligation).

With respect to the payment of services, access to the foreign exchange market for payments of services, which until the new provisions could be carried out without limits and without the prior authorization of the Central Bank, can currently be canceled as of their maturity. In the case of services provided between related counterparties, the prior authorization of the BCRA will be required for access to the exchange market.

Purchase of Foreign Currency

| A. | Domestic individuals and companies

The regime applicable before September 1, 2019, provided by Communications “A” 5850, 6037 and 6163 and Resolution No. 3,821 in relation to the purchase of external assets by Argentine residents - individuals and national companies - for investment purposes (a practice commonly known as hoarding) and for travel, tourism and family assistance, was characterized by the following:

| • |  | External assets could only be acquired by Argentine individuals, private sector legal entities incorporated in Argentina that were not authorized to trade in the foreign exchange market, assets (patrimonies) and other entities incorporated in Argentina and local government agencies.

| • |  | Access to the local foreign exchange market was allowed without requiring the prior approval of the Central Bank for an unlimited amount, for all of the following: real estate investments abroad, loans granted to non-Argentine residents, contributions from Argentine residents of direct investments in the foreign, investment portfolio of Argentine people abroad, certain other investments abroad of Argentine residents, portfolio investments of Argentine legal entities abroad, purchase of banknotes in foreign currency to be made in Argentina, donations that meet certain conditions, as well as the purchase of traveler’s checks.

| • |  | In the case of sales in foreign currency to Argentine residents for portfolio investments abroad, the transfer had to be made directly to the bank account of said Argentine resident, which must be located in foreign banks or financial institutions that regularly carry out banking activities, which were not incorporated in countries or territories that are considered non-cooperative for the purposes of fiscal transparency in terms of the provisions of Section 1 of Decree No. 589/13 and its complementary provisions, or in countries or territories that do not apply the FATF recommendations. For these purposes, the countries or territories considered non-cooperative are the countries or territories identified by the FATF (www.fatf-gafi.org).

| • |  | The proceeds from the sale of foreign currency by Argentine residents in the foreign exchange market for all items could be credited to a checking account or savings account at a local financial institution in the name of the client or withdrawn in cash.

| • |  | With respect to the collection for services rendered to non-Argentine residents and / or resulting from the sale of non-produced non-financial assets exempt from the mandatory sale in the foreign exchange market.

Argentine residents who received funds in foreign currency for the payment of services rendered to non-Argentine residents or for the sale of non-produced non-financial assets could receive those funds in a local foreign currency account without exchanging it for Argentine pesos in the foreign exchange market.

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After Communications “A” 6011, 6037 and 6163, the foreign assets of the Central Bank could be acquired for investment purposes by Argentine residents without limitations. In addition, foreign currency could be purchased through a debit account or through an unlimited cash withdrawal without limits.

Currently, the new exchange regulatory framework establishes:

For the formation of external assets, resident individuals may access the exchange market for up to the sum of US$200, or its equivalent in other currencies, per calendar month in all entities authorized to operate in exchange. For larger amounts, the prior approval of the Central Bank will be required. Legal entities, for any amount, will require the prior consent of the Central Bank. Regarding non-residents, both physical and legal, their access to the exchange market will require the prior authorization of the Central Bank.

Transfers in foreign currency for the formation of external assets must be destined for a bank account in the name of the originator of the operation.

The income from investments of residents and non-residents continues without restrictions as to amount and can be credited to accounts in foreign currency in the country.

| B. | Non-residents

Prior to September 1, 2019, per Communication “A” 6174, entities authorized to trade in the foreign exchange could sell currencies to non-residents without limitation if funds were properly credited to a local account in their name.

Currently, the operations of non-residents require the prior approval of the BCRA.

Transfer of Dividends

The transfer abroad of profits and dividends to non-resident shareholders will require the prior consent of the Central Bank from the effective date of Communication “A” 6770 of September 1, 2020.

As an exception to this general requirement, in accordance with the new provisions of Communication “A” 6869, the exchange market may be accessed without the prior authorization of the Central Bank for the payment of profits and dividends for non-resident shareholders, when all the conditions set forth in such Communication are fulfilled. These conditions include, among others: (i) dividends must be settled and distributed based on closed audited balances; (ii) compliance with the “Survey of External Assets and Liabilities” for the operations involved; and (iii) the total amount of transfers abroad as payment of dividends through the exchange market may not exceed 30% of the value of new contributions of foreign direct investment in the resident company, which must be entered and settled through the foreign exchange market.

Direct Investments

The entrance of direct investments to the country does not have restrictions. Such investments can be credited in accounts in foreign currency and currently there is no minimum term.

The repatriation of direct investments in the country by non-residents requires the prior authorization of the BCRA, according to the provisions of Communication “A” 6855 from the Central Bank.

Survey of External Assets and Liabilities

The obligation of residents to complete the “Survey of the issuance of debt and external liabilities” (Communication “A” 3602 and complementary) and the “Survey of direct investments” (Communication “A” 4237 and complementary) even when they have not accessed the exchange market and / or it is not foreseen to access it in the future due to the transactions that correspond to be declared, were replaced by Communication “A” 6401 of December 26, 2017. Statements made on or before September 30, 2017 shall be governed by the rules of the replaced communication.

Future and Forward Operations

The Central Bank has significantly modified the exchange regulations on derivatives by incorporating the restriction on the execution of cross-border derivative transactions.

The exchange regulations now oblige Argentine residents to obtain the prior authorization of the Central Bank to access the foreign exchange market for transfers abroad in derivatives with foreign counterparties, according to Communication “A” 6780 of the Central Bank. The entry of foreign currency for this concept has no restrictions.

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Banking institutions must follow specific rules, depending on whether the derivative transaction is made with a central clearing counterparty or a foreign bank.

E. | Taxation

The following is a summary of certain Argentine and United States federal income tax consequences of the ownership and disposition of our ADSs or ordinary shares by a U.S. Holder (as defined below). This summary is not a complete analysis or listing of all possible tax considerations that may be relevant to a holder of our ADSs or ordinary shares. Holders of our ADSs or ordinary shares should consult their own tax advisers as to Argentine, United States and other tax consequences of the ownership and disposition of ADSs or ordinary shares.

1. | Argentine Taxes

General

The following is a summary of certain Argentine tax matters that may be relevant with respect to the ownership and disposition of ADSs or ordinary shares by U.S. Holders. Such summary is based upon the tax laws of Argentina, and regulations thereunder, in effect as of the date of this annual report and is subject to any subsequent change in Argentine laws and regulations which may come into effect after such date. Investors in ADSs or ordinary shares should consult their own tax advisers as to the Argentine, United States and other tax consequences of the ownership and disposition of ADSs or ordinary shares.

Taxation of Dividends

Pursuant to Law No. 25,063, as enacted into law on December 30, 1998, dividend payments on the ordinary shares (and ADSs), whether in the form of cash, stock, or other types of consideration, are subject to Argentine withholding taxes at a rate of 35% to the extent the aggregate amount distributed exceeds the sum, for the previous year, of: (i) our accumulated taxable earnings and (ii) certain tax-exempt income (such as dividend payments from other corporations) (known as the “equalization tax”).

On September 23, 2013, Law No. 26,893 was published, which imposes an additional 10% withholding tax on dividends, in cash or in kind, that Argentine companies distribute to Argentine individuals as well as foreign individuals and entities. The law describes the 10% withholding tax as a “sole and definitive” payment.

Law No. 26,893 became effective as of September 23, 2013 and applies to taxable events on or after that date.

However, such 10% withholding was abrogated by art. 75 of Law No. 27,260. Consequently, payments of dividends or profits distributions that are verified as from July 23, 2016 are exempted from the 10% income tax withholding.

With respect to the equalization tax, article 83 of fiscal reform Law No. 27,430 states that it shall not be applicable for dividends or profits attributable to accrued earnings in the fiscal years beginning as from 1 January 2018.

On the other hand, for the fiscal years beginning as of January 1, 2018 the issuer will be subject to a 30% tax rate and a withholding tax of 7% will be applicable to the dividends. For the fiscal year beginning in 2022, the issuer will be subject to a 25% tax rate and a withholding tax of 13% will be applicable to the dividends.

On December 23, 2019, the Congress passed the Law No. 27,541 “Solidarity and Productive Reactivation Law as a part of Public Emergency” which was proposed by the National Government. The scheduled decrease in enterprise income tax from 30% to 25% was revoked (keeping the income tax rate at 30% as of 2020 and 2021). Consequently, the additional rate charged for dividend payments to parent companies decreased from 13% to 7%.

The tax must be withheld by the paying entities from the above-mentioned dividends and profits received by individuals and undivided succession residing in the Republic of Argentina and non-resident beneficiaries. An undivided succession is a legal figure created by the Argentine Civil Code which covers the time elapsed between the date of death of a person and the declaration of heirs. Such withholding shall have the character of a unique and definitive payment, except for those individuals and undivided successions residing in the Republic of Argentina and registered as payers of the tax.

In the case of distributed profits generated in fiscal periods in respect of which the paying entity was subject to the 35% tax rate, the payment of the tax or withholding shall not apply to such dividends or profits, as the case may be. Nonetheless, if applicable, the equalization tax still applies.

To these effects it shall be considered, without admission of proof to the contrary, that the dividends or profits made available correspond, first and foremost, to the earliest accumulated profits or benefits.

The dividends or profits distributed by subjects under article 73 (capital companies and permanent establishments) and the interest or accruals from securities, bonds, investment fund participations and other financial instruments will be applied to the fiscal year in which they may have been: (i) made available or paid, whichever occurs first; or (ii) capitalized, provided the securities foresee interest or accrual payments within terms of up to one year.

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So far these rules have not been subject to regulations or interpreted by the executive power or authority of application.

Taxation of Capital Gains

The tax reform Law No. 27,430 enacted in December 2017 brought about changes regarding the taxation of capital gains deriving from the trading of shares, representative values and share deposit certificates and other securities, quotas and corporate participations (including quotas in mutual investment funds, certificates of participation in financial trusts and any other rights on trusts and similar agreements) digital coins, securities, bonds and other financial instruments, whoever the subject acquiring them.

The capital gains deriving from the holding and trading of shares will be considered to be of Argentine source whenever the issuer is domiciled, established or residing in the Argentine Republic. The representative securities or share deposit or other certificates, such as our ADSs, will be of Argentine source when the issuer of the shares and other securities is domiciled, established or resident in the Argentine Republic, regardless of the entity issuing the certificates, the place of issue of the latter or the place of deposit of such shares and other securities.

According to the changes made by the amendment to article 26 paragraph u) in 2019 Decree No. 824/2019 of the Income Tax Law, the following will be exempted from tax:

| • |  | The capital gains from purchase and sale, exchange, swap or disposal transactions of shares, securities representing shares and share deposit certificates, held by natural resident persons and undivided estate established in the Argentine Republic, provided those transactions are not attributable to subjects comprised in paragraphs d) and e) and in the last paragraph of article 53 of the law.

The benefit established in the preceding paragraph may only be applicable to the extent that (a) it is a placement by public offer authorized by the National Securities Commission; (b) the transactions were carried out in markets authorized by such body under segments ensuring price-time priority and interference of offers; and/or (c) they were effected through a public offer of purchase and/or exchange as authorized by the National Securities Commission.

| • |  | The capital gains from purchase and sale, exchange, swap or disposal transactions of shares, securities representing shares and share deposit certificates, held by non-resident beneficiaries insofar as such beneficiaries do not reside in non-cooperating jurisdictions. Likewise, the tax exemption shall also be applicable to the interest or yield or results from the purchase and sale, exchange, swap or disposal by the above-mentioned non-resident beneficiaries of representative securities or share deposit certificates issued abroad, such as our ADSs, provided such shares were issued by entities domiciled, established or residing in the Argentine Republic and have an authorization for public offer issued by the National Securities Commission.

If the requirements of article 26 paragraph u of the law described above are not met, the applicable tax will be fifteen percent (15%).

So far these rules have not been subject to regulations by the executive power or authority of application.

Value Added Tax (“VAT”)

Neither the sale, exchange or other disposition of ADSs or ordinary shares nor the payment of dividends thereunder is subject to VAT.

Transfer Taxes

The sale or transfer of ADSs or ordinary shares is not subject to transfer tax.

Personal Property Tax

According to Law No. 23,966, as amended, and Decrees No. 127/96 and 812/96, all individuals and undivided estates are subject in Argentina to a personal property tax on all assets held at December 31 of each fiscal year (the “Personal Property Tax”). This tax applies to our ADSs and ordinary shares held by U.S. Holders. In the case of individuals and undivided estates domiciled or located in Argentina, an exemption is available to taxpayers whose assets included in the tax base for purposes of the Personal Property Tax do not exceed Ps.2,000,000. Corporations and other legal entities domiciled or located in Argentina are not subject to the Personal Property Tax. Individuals and undivided estates domiciled or located in a foreign country are subject to the Personal Property Tax only with respect to assets located in Argentina.

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Pursuant to Law No. 25,585, it is presumed — without the right to rebut such presumption — that shares of stock corporations, such as ADSs (held in book-entry form or evidenced by ADRs), shares of common stock and equity interests in entities governed by the Business Companies Law No. 19,550, as amended, whose holders are corporations or any other entities, companies, permanent establishments or trusts, domiciled, settled or located in a foreign country, belong indirectly to individuals or undivided estates domiciled in a foreign country.

Pursuant to Law No. 25,585, published in the Official Gazette on May 15, 2002, BBVA Argentina is responsible for paying the Personal Property Tax on our ADSs or ordinary shares held by individuals or undivided estates domiciled in Argentina or a foreign country, or corporations or any other entities located in a foreign country. The tax rate to be applied is 0.50% and the taxable base is the value of the shareholders’ equity arising from the last balance sheet of the company at December 31. The minimum exempted amount of Ps.2,000,000 is not applicable. The tax so paid is considered a definitive payment.

Companies responsible for the tax payment, such as BBVA Argentina, are entitled to obtain refunds of the amounts paid from holders of ADSs or ordinary shares and may retain or foreclose on the property included in the tax base for purposes of the Personal Property Tax that originated the payment.

The Tax Amnesty Regime instituted by Law No. 27,260 established benefits for observant taxpayers and set forth certain conditions for having access to such benefits.

In the case of business entities, the benefit is an exemption from the Personal Property Tax applicable to fiscal years 2016, 2017 and 2018. In this case, even if the entity is the one obligated to pay the tax in its capacity as “substitute responsible”, the tax is applicable to the shareholder.

The Treasury, by means of a circular letter (Circular AFIP 2-E 2017), specified that the “substitute responsible” enjoys the above benefit exclusively in its capacity as “substitute” and with respect to the property for which it is obliged in such capacity. This implies that, even if it may have a record of defaults in its own obligations or may have applied for the Tax Amnesty Regime, such circumstances will not make it forfeit its benefit as a compliant taxpayer in its capacity as substitute responsible (for the benefit of its shareholders).

Also, in the case of corporate stocks or shareholdings, the percentage value was reduced from 0.50% to 0.25% by the law indicated above. However, on December 23, 2019, the Congress passed the Law No. 27,541 “Solidarity and Productive Reactivation Law as a part of Public Emergency, modifying again the tax rate to 0.50%.

In 2021, the Bank expects to make payments on account of its shareholders in connection with Personal Property Tax due with respect to assets held as of December 31, 2020.

Other Taxes

There are no Argentine inheritance, succession or gift taxes applicable to the ownership, transfer or disposition of ADSs or ordinary shares. There are no Argentine stamp, issue, registration or similar taxes or duties payable by holders of ADSs or ordinary shares.

Deposit and Withdrawal of Ordinary Shares in Exchange for ADSs

No Argentine tax is imposed on the deposit or withdrawal of ordinary shares in exchange for ADSs.

Income Tax Treaty

There is currently no income tax treaty or convention in effect between Argentina and the United States.

2. | U.S. Federal Income Tax Considerations

The following summary describes material U.S. federal income tax consequences to U.S. Holders of owning and disposing of ADSs or ordinary shares, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular person’s decision to hold such securities. The discussion applies only to the U.S. Holders (described below) that hold ADSs or ordinary shares as capital assets for U.S. federal income tax purposes, and it does not describe all of the tax consequences that may be relevant in light of the U.S. Holder’s particular circumstances, including alternative minimum tax consequences, the potential application of the provisions of the Code known as the Medicare contribution tax and tax consequences applicable to U.S. Holders subject to special rules, such as:

| • |  | certain financial institutions;

| • |  | dealers and traders in securities who use a mark-to-market method of tax accounting;

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| • |  | persons holding ADSs or ordinary shares as part of a hedging transaction, straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to ADSs or the ordinary shares;

| • |  | persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

| • |  | entities classified as partnerships for U.S. federal income tax purposes;

| • |  | tax-exempt entities, “individual retirement accounts” or “Roth IRAs”;

| • |  | persons that own or are deemed to own ten percent or more of our stock, by vote or value;

| • |  | persons who acquired ADSs or ordinary shares pursuant to the exercise of an employee stock option or otherwise as compensation; or

| • |  | persons holding shares in connection with a trade or business conducted outside of the United States.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds ADSs or ordinary shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. Partnerships holding ADSs or ordinary shares and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of the ADSs or ordinary shares.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis, which may affect the tax consequences described herein. It is also based in part on representations by the depositary and assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms. Holders of the ADSs or ordinary shares are urged to consult their own tax advisers as to the United States, Argentine and other tax consequences of the ownership and disposition of ADSs or ordinary shares in their particular circumstances, including the effect of any U.S. state or local tax laws.

As used herein, a “U.S. Holder” is a beneficial owner of ADSs or ordinary shares that is, for U.S. federal income tax purposes:

| • |  | a citizen or individual resident of the United States;

| • |  | a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or

| • |  | an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

In general, a U.S. Holder who owns ADSs will be treated as the owner of the underlying shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying shares represented by those ADSs.

U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of ADSs or ordinary shares in their own particular circumstances.

This discussion assumes that the Company is not, and will not become, a passive foreign investment company (“PFIC”), as described below.

Taxation of Distributions

Distributions paid on ADSs or ordinary shares, other than certain pro rata distributions of ordinary shares, will generally be treated as dividends to the extent paid out of current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because the Company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends paid by qualified foreign corporations to certain non-corporate U.S. Holders are taxable at rates applicable to long-term capital gains. A foreign corporation is treated as a qualified foreign corporation with respect to dividends paid on stock that is readily tradable on a securities market in the United States, such as the New York Stock Exchange where our ADSs are traded. U.S. Holders should consult their tax advisers to determine whether the favorable rate will apply to dividends they receive and whether they are subject to any special rules that limit their ability to be taxed at this favorable rate. The amount of a dividend will include any amounts withheld in respect of Argentine taxes. The amount of the dividend generally will be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally allowed to U.S. corporations under the Code. Dividends generally will be included in a U.S. Holder’s income on the date of such U.S. Holder’s (or in the case of ADSs, the depositary’s) receipt of the dividend. The amount of any dividend income paid in Argentine pesos will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of such receipt regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, U.S. Holders should not be required to recognize foreign currency gain or loss in respect of the dividend income. U.S. Holders may have foreign currency gain or loss if such dividend is not converted into U.S. dollars on the date of its receipt.

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Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s circumstances, Argentine income taxes, if any, withheld from payments of dividends on ADSs or ordinary shares generally will be creditable against a U.S. Holder’s U.S. federal income tax liability. Amounts paid on account of the Argentine Personal Property Tax, if any, will not be eligible for credit against the U.S. Holder’s U.S. federal income tax liability. U.S. Holders should consult their tax advisers to determine the tax consequences applicable to them as result of amounts paid on account of the Argentine Personal Property Tax, including whether such amounts are includible in income or deductible for U.S. federal income tax purposes. The rules governing foreign tax credits are complex and, therefore, U.S. Holders should consult their tax advisers regarding the availability of foreign tax credits in their particular circumstances. Instead of claiming a foreign tax credit, a U.S. Holder may, at its election, deduct such otherwise creditable Argentine taxes in computing its taxable income, subject to generally applicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits must apply to all foreign taxes paid or accrued in the taxable year.

Sale or Other Disposition of ADSs or Ordinary Shares

For U.S. federal income tax purposes, gain or loss a U.S. Holder realizes on the sale or other disposition of ADSs or ordinary shares will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the ADSs or ordinary shares for more than one year. The amount of a U.S. Holder’s gain or loss will equal the difference between its tax basis in the ADSs or ordinary shares disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. If an Argentine tax is withheld on the sale or disposition of ADSs or ordinary shares, a U.S. Holder’s amount realized will include the gross amount of the proceeds of the sale or disposition before deduction of the Argentine tax. See “—Argentine Taxes—Taxation of Capital Gains” for a description of when a disposition may be subject to taxation by Argentina. Such gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. U.S. Holders should consult their tax advisers as to whether the Argentine tax on gains may be creditable against the U.S. Holder’s U.S. federal income tax on foreign source income from other sources. The deductibility of capital losses is subject to limitations.

Passive Foreign Investment Company Rules

We believe that we were not a PFIC for U.S. federal income tax purposes for the taxable year 2020. However, because our PFIC status depends upon the composition of our income and assets and the market value of our assets (including, among others, less than 25-percent-owned equity investments) from time to time, and because our analysis of our PFIC status is based upon certain proposed Treasury regulations, including those which are not yet in effect but are generally proposed to become effective for taxable years after December 31, 1994, which may not be finalized in their current form, there can be no assurance that we will not be considered a PFIC for any taxable year. If we are treated as a PFIC for any taxable year during which a U.S. Holder owned ADSs or ordinary shares, gain recognized by such U.S. Holder on a sale or other disposition (including certain pledges) of ADSs or ordinary shares would be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for such taxable year and an interest charge would be imposed on the resulting tax liability for each such taxable year. Further, any distribution in respect of ADSs or ordinary shares in excess of 125 percent of the average of the annual distributions on ADSs or ordinary shares received by the U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation in the same manner. Certain elections (including a mark-to-market election) may be available to U.S. Holders that may result in alternative treatments if we were a PFIC for any taxable year. U.S. Holders should consult their tax advisers to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances.

In addition, if we were a PFIC or, with respect to a particular U.S. Holder, were treated as a PFIC for a taxable year in which we pay a dividend or the prior taxable year, the favorable tax rates discussed above with respect to dividends paid to certain non-corporate holders would not apply.

If we are a PFIC for any taxable year during which a U.S. Holder owned our ADSs or ordinary shares, such U.S. Holder will generally be required to file IRS Form 8621 with the U.S. Holder’s annual U.S. federal income tax return, subject to certain exceptions.

Information Reporting and Backup Withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is an exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.

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The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the Internal Revenue Service.

Certain U.S. Holders who are individuals or specified entities may be required to report information relating to securities of non-U.S. companies, or accounts through which they are held, subject to certain exceptions (including an exception for securities held in accounts maintained by U.S. financial institutions). U.S. Holders should consult their tax advisors regarding the effect, if any, of these rules on their ownership or disposition of ordinary shares or ADSs.

F. | Dividends and paying agents

Not applicable.

G. | Statement by experts

Not applicable.

H. | Documents on Display

This annual report and the exhibits thereto and any periodic reports or other information filed pursuant to the Exchange Act may be inspected without charge and copied at prescribed rates at the SEC’s public reference room located at 100F Street, N.E., Washington, D.C. 25049. In addition, the SEC maintains a website that contains information filed electronically with the SEC, which can be accessed over the internet at www.sec.gov. The documents concerning BBVA Argentina which are referred to in this annual report may also be inspected at our office at Av. Córdoba 111, C1054AAA Buenos Aires, Republic of Argentina.

I. | Subsidiary information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction

The General Risks Policy expresses the levels and types of risk that the Bank is willing to take to carry out its strategic plan, with no relevant deviations, even under stress conditions.

To achieve its goals, the Group uses a management model with two principles for the decision-making process:

| • |  | Prudence: materialized in relation to the management of the various risks acknowledged by the Bank.

| • |  | Anticipation: refers to the adaptation capacity of risk management.

This process aims to be adequate, sufficiently proven, duly documented and periodically reviewed based on the changes of the Bank’s risk profile and the market.

We have divided this section into three parts:

| • |  | Risk management, where we explain the policies and procedures that the Bank has in place to monitor and assess the different risks it is exposed to in the ordinary course of its business, and, in particular, qualitative information about market risk.

| • |  | Trading portfolio activities, where we provide quantitative information about market risk as of the end of the latest fiscal year for instruments entered into for trading purposes.

| • |  | Non-trading portfolio activities, where we provide quantitative information about market risk as of the end of the latest fiscal year for instruments entered into for purposes other than trading.

Risk Management

The risks department of BBVA Argentina continues to adjust its comprehensive management model by reconditioning its structures and improving its policies aimed at providing the solution that is best suited to the clients’ requirements, the changes of environment, and the requirements of the local regulatory body. It is also oriented to permanently improving the tools and processes, focused on the detection, monitoring and mitigation of each of the risks incurred by the Bank.

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This model makes it possible to satisfactorily comply with the guidelines set forth by the BCRA in its communications.

“Risks” comprises five groups:

| • |  | Credit Risk: The possibility that a counterpart fails to comply with its contractual obligations in relation to a certain transaction. It is the most important risk for the Bank and includes counterparty risk, issuer risk, settlement risk and country risk management.

| • |  | Financial Risk: The possibility of losses generated by changes in the market rates or the risk quality which determine the value of the Bank’s assets and liabilities. It is subdivided into: Market Risk, Liquidity Risk, Interest Rate Risk and Marketplace Credit Risk.

| • |  | Non-Financial Risk: It primarily refers to Operational Risk, defined as losses caused as a result of: human errors, inadequate or defective internal processes, inappropriate behavior in front of clients, in the markets or against the Bank, failures, interruptions or deficiencies in systems or communications, inadequate data management, legal risks, or as a consequence of external events, including cyber-attacks, fraud committed by third parties, natural disasters and deficient service provided by suppliers.

| • |  | Internal Control and Reporting: The control and monitoring areas are in charge of giving cohesion to credit risk management and ensuring that the management of the other critical risk groups is carried out in accordance with standards established by the Bank’s.

| • |  | Strategy & Solution Development: Area that participates in project evaluation, which supports its development. It contains Risk Center of Expertise (COE) that develops models and performs parameter estimation.

The risks department’s objective is to ensure portfolio quality by controlling the origination of businesses and optimizing credit recoveries under best-practice standards. This is undertaken without disregarding the main focus, which is centered on the client, with particular emphasis on not inducing client over-indebtedness.

Risk Appetite

The Bank’s risk appetite is approved by the Board of Directors, which determines the risks and the level of risks that it is willing to assume to achieve the business objectives. These are expressed in terms of solvency, profitability, liquidity and financing, or other metrics.

The risk appetite statement of BBVA Argentina is as follows:

“BBVA Argentina’s risk policy is focused on promoting a universal, multi-channel and responsible banking business model, based on values, committed to sustainable development and operational excellence, and focused on the needs of our clients. To achieve these objectives, the risk model is aimed at maintaining a moderate risk profile, a robust financial position and a solid risk-adjusted return throughout the cycle, as the best way to face adverse situations without compromising our strategic goals. Risk management is based on prudent management, a comprehensive view of all risks, a diversification of portfolios by geographies, asset classes and customer segments and the maintenance of a long-term relationship with the client, contributing, in this way, to profitable and sustainable growth and the generation of recurring value.”

Credit Risk Ratios and Performance

At December 31, 2020 the non-performing loan ratio was 1.50%, while the coverage ratio was 245%, compared to 3.58% and 148%, respectively, at December 31, 2019. The evolution of these ratios reflect (i) that the Bank started 2020 with a portfolio with high levels of allowances, mainly due to certain management adjustments applied in 2019; (ii) the improvement of arrears; (iii) the good performance of the Bank’s credit quality during 2020; (iv) the write-off of our main defaulting wholesale customer (Molinos Cañuelas) and the collection of the debt from another important defaulting customer (BGH). A reduction of stage 3 loans was observed during 2020 due to the deferral measures adopted by the Central Bank in response to the Covid-19 pandemic.

BBVA is one of the banks with the lowest non-performing loan ratio in the Argentine financial system (source: BCRA).

Management Units

The different risk units provide support to the management of commercial banking entities, regarding admission, monitoring and recovery of credits. The model has been configured on the basis of the Bank’s business structure.

Retail Risks

Retail Risks is responsible for the management of retail customers, including admission through predictive / statistical tools, both reactive and behavioral, the admission of special cases, the administration of tools and policies, portfolio monitoring, and the recovery process. The Bank assumes retail credit risk as it maintains contractual obligations with private customers.

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The development of methods and tools that facilitate risk management in an automated manner continued, improving the availability within web channels, assuming a qualitative change in the proactive offer, achieving greater decentralization in the making of credit decisions and allowing admission teams to improve their value contribution. New automatic salary advance actions were carried out with online updates.

Currently, a methodology is used by risk groups, which allows a more personalized offer on admission and a better capacity for managing problematic recovery. This methodology has also incorporated regional differentiation, both in minimum income and credit assistance by product, as well as differentiated purchasing power.

Proactive strategy through the Hermes Tool is maintained with respect to clients, and non-clients generating more offers on the most attractive profiles.

With respect to monitoring, detailed study of the portfolio, risk strategy and control over risk monitoring and actions on market changes are maintained. Additionally, we seek to maintain a transversal vision that encourages the identification and dissemination of best practices in retail risk management, as well as the identification of business opportunities and improvement paths.

The recovery activity is part of an integral management circuit that covers both actions aimed at preventing non-payment, as well as those carried out after non-payment occurs until the partial or total recovery of the principal amount. Within this continuous process there are different teams, tools and strategies according to the type and / or situation of the client or asset. To ensure the continuity of this process, mechanisms for feedback of information, connectivity of tools and joint committees, among others, must be established.

In order for the recovery team to achieve its objectives, it must carry out strategies, including a segmentation and allocation process. Segmentation consists of selecting groups of clients with the objective of managing each group in a homogeneous way. The indicators used to assign segments should be dynamic and adapted to the desired recovery management. Assignment consists of assigning to each of the client groups the most efficient recovery strategy to a team responsible for such management. Recovery strategies must be considered together looking for actions and solutions so that the Bank partially or totally recovers the unpaid balance in the optimal manner.

Middle Market and Corporate Risk

We have developed a dynamic structure, with an integral end-to-end process formed by the Admission, Monitoring and Recovery areas, which focus on the fulfillment of market requirements, prioritizing the values of prudence, anticipation and diversification, which we believe are necessary to maintain excellence in risk quality.

We encourage the coordination between commercial and risks areas, and seek to improve our response times and satisfy business requirements while maintaining risk quality.

As a result of the challenging environment arising from the Covid-19 pandemic, the prudence and risk containment frameworks have been intensified in all areas and management levels.

In 2019 we moved forward on the consolidation of the decentralized model, developing an automatic bid tool for small and medium-sized businesses, providing feedback on both, including on the quality of offers and reasons for rejection.

With respect to large companies, we continued using the risk analyst tool, which provided analysis on different activity areas, and in the case of the medium and small companies business line, we continued using the rating model. The application of statistical tools gave us the opportunity to complete an efficient analysis to better satisfy our client needs.

In the Risk Monitoring area, and due to the challenging environment caused by the Covid-19 pandemic, all preventive management and monitoring measures were intensified adding new measures to those used traditionally. We continue to carry out a proactive control process, by using an alert system and maintaining fluent communication with the commercial areas, which allowed us to anticipate the detection of payment issues. To reinforce this concept, we have developed an ambitious plan that consists of visiting all of our clients throughout the country. Also as part of the end-to-end process that we have already mentioned, the Monitoring area is integrated with the Recovery Management area to improve the recovery process.

The recovery activity is part of the integral management circuit, which includes both the actions aimed to prevent the lack of payment and those carried out after non-payment until we are able to obtain partial or total recovery of principal. The methodology in this area is based on efficient management, seeking automation in every chain of the circuit, and improving processes with existing resources, with a goal of shorter response times, reducing recovery times, obtaining higher levels of specialization and increasing our profits. Within this continuous process there are different equipment, tools and strategies according to the type and / or situation of the client or asset.

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The area’s working methodology is to aim for automation and improvements in processes with existing resources, generating shorter response times, reducing recovery times, increasing levels of specialization and increasing profitability measured in collections by resource, as well as improvements in efficiency, taking into consideration the absorption of higher levels of work.

To achieve the optimization of the task based on data, the Bank utilizes a self-management tool that collects the entire recovery process, from the potential delay to full cancellation or subsequent sale.

Financial Risks

BBVA Argentina has developed a comprehensive risk management framework in order to identify, measure, monitor and mitigate financial risks, which is in line with the basic principles of the Basel’s Banking Supervision Committee and includes:

| • |  | market risk (counterparty and valuation risk);

| • |  | structural risks (interest rate risk, liquidity and financing risk); and

| • |  | economic capital and stress tests.

This framework consists of a set of policies and strategies, organizational structures, measurement tools, limits and alerts, and information and control systems. In addition, the financial risks management framework is in accordance with the risk appetite approved by the Board of Directors.

Market Risks

Market risk is defined as the possibility of suffering losses in the value of a portfolio as a result of adverse changes in market prices. For a description of how BBVA Argentina manages market risk and a quantitative analysis of the market risk of the trading portfolio, see “—Trading Portfolio Activities” below.

Counterparty Risk

Counterparty Risk is defined as the probability that the counterparty defaults on its obligations to us, causing BBVA Argentina a financial loss. Global Markets & Asset and Liabilities Management respectively operate different products which are susceptible to the risk of client defaults on their obligations. Therefore, joint management is employed.

The products where such risk exists are:

| • |  | derivatives;

| • |  | loans to financial institutions; and

| • |  | liquidity-management transactions guaranteed by securities (repos).

Daily risk reports are produced to monitor the exposure of each counterparty to ensure it complies with the predefined scope. Limits are monitored on a daily basis.

At the end of 2020, the gross counterparty risk amounted to Ps.23,656 million. Net counterparty risk reached Ps.19,057 million. The calculation of the net counterparty risk includes the reverse repurchase agreement operations.

Liquidity and Financing Risk

Liquidity risk is defined as the possibility that the entity will not be able to comply with its payment obligations without incurring in significant losses that could affect its daily operations or its financial condition.

BBVA Argentina has implemented a management process for the identification, evaluation, measurement, monitoring, control and mitigation of liquidity risk. Within it, the risk appetite framework is configured as a fundamental element, providing BBVA Argentina with an integral framework that determines the risks and the level of risks that it is willing to assume to achieve its business objectives.

Among the fundamental metrics used for the measurement, monitoring and control of liquidity risk are:

| • |  | LtSCD (Loan to Stable Customers Deposits): measures the relationship between net credit investment and stable customer funds. The objective is to preserve a stable financing structure in the medium and long term.

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| • |  | LCR (Liquidity Coverage Ratio): measures the ratio between high-quality liquid assets and total net cash outflows over a 30-day period. The objective is to preserve a cushion of assets or buffer management that absorbs liquidity shocks in the short term.

During 2020, both indicators were within the limits approved by the Board of Directors.

On the other hand, the liquidity risk management process at BBVA Argentina also includes the management of intraday liquidity risk, for which the Bank has a procedure based on a monitoring and control scheme of its liquidity position.

Interest Rate Risk

Interest rate risk is defined as the possibility of changes in the interest margin and / or in the value of the Bank’s equity due to the variation of market interest rates.

Among the main metrics used for the measurement, monitoring and control of this risk are:

| • |  | Margin at Risk (MeR): quantifies the maximum loss that could be recorded in the projected financial margin for the next 12 month period under a defined scenario of market interest rate curves for a given level of confidence.

| • |  | Economic Capital (EC): quantifies the maximum loss that could be generated in the economic value of the Bank under a defined scenario of market interest rate curves for a given level of confidence.

In addition, the Bank has adopted the principles, standards and controls with respect to capital and financial margin established in Communication “A” 6397 from BCRA to manage this risk, and continues improving its application.

Economic Capital

In accordance with the “Guidelines for Risk management in Financial Institutions” established by the BCRA, BBVA Argentina has developed an internal, integrated and global process to assess the adequacy of its economic capital based on its risk profile and elaborates, on an annual basis, the capital self-assessment report (IAC).

Economic capital is the amount of capital considered necessary to cover unexpected losses that the Bank could face due to the risks to which it is exposed.

The methodologies for capital calculation of the following risks are defined following the guidelines established by the Basel Committee:

| • |  | credit risk;

| • |  | concentration risk;

| • |  | market risk;

| • |  | interest rate risk;

| • |  | operational risk;

| • |  | reputational and strategic risk;

The distribution of economic capital for October 2020 consumption by type of risk is as follows:

| • |  | credit risk and concentration risk: represent 60% of the total economic capital;

| • |  | operational risk:15%;

| • |  | interest rate risk:11%;

| • |  | market risk: 11%; and

| • |  | other risks: 6%.

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Stress Tests

In compliance with the “Guidelines for Risk Management in Financial Institutions” established by BCRA, BBVA Argentina has developed a stress test program which is framed within the comprehensive risk management process of the Bank.

Stress tests are defined as the evaluation of the Bank’s economic and financial situation under a severely adverse but possible scenario, requiring the simulation of scenarios that allow estimating the potential impact on the value of the portfolios, profitability, solvency and liquidity, with the purpose of identifying latent risks and detecting vulnerabilities. The main function of stress tests is to serve as a tool for risk management and capital allocation among the Bank’s businesses.

With a minimum annual frequency, BBVA Argentina carries out an integral stress test exercise through which the impact of adverse macroeconomic scenarios on the entity’s solvency, profitability and liquidity position is quantified, taking into account all the relevant risks to which it is exposed and considering the existing interactions between them.

The results of the stress tests carried out in March 2019 corresponding to the 2019/2020 projection period show the solvency and liquidity position of the Bank even under the adverse scenarios such as those analyzed therein.

Non-Financial Risks

BBVA Argentina’s control model aims to anticipate the relevant risks during the operational risk life cycle (admission, monitoring and mitigation), with a model of three lines of defense, which allows its management in the different areas.

The first line of defense is the Business and Support Areas, which is in charge of managing the operational risks related to products, activities, processes and systems. These Areas also have a Risk Control Assurer (RCA) that is responsible for ensuring the adequate management of operational risk, extending the methodology for identifying risks, promoting and establishing mitigation measures and necessary controls in the processes and operations performed and outsourced by the Areas and monitoring their adequate implementation.

The second line of defense is comprised of: (i) the Non-Financial Risks Area, which is responsible for the design and maintenance of the operational risk management model, and for assessing the degree of application in the different Areas; (ii) the Risk Control Specialists (RCS), who define the framework for the mitigation, control and monitoring in their field of specialty and across all areas where operational risks under their control may materialize; and (iii) the Responsible Business Area, which is responsible for controlling and monitoring reputational risk resulting from operational events.

The third line of defense is Internal Audit, which conducts an independent review of the control model, verifying compliance and effectiveness of the established policies and provides independent information to the Corporate Control Committee.

The methodology for the management of non-financial risks is based on the identification of the Bank’s operational processes and the operational risks to which they are exposed, evaluating their criticality and managing their mitigation, where appropriate. This management process was developed through the use of various tools for the admission of new businesses, products and services, for their qualitative management (mapping of processes, risks and controls) and quantitative (base of operating losses) and the application for management of subcontracting.

It is a comprehensive operational risk management model, designed in accordance with international standards, which allows it to adapt to the environment and internal requirements.

Internal Risk Control

Internal Risk Control has as its main functions: to ensure that there is a sufficient internal regulatory framework; to provide adequate governance, and a defined process and measures for each type of risk; to control its application and operation; and to ensure that an assessment is made of the existence of a control environment and its proper implementation and operation.

The area contains a Validation team who submit the relevant risk models to an effective and independent verification, in order to provide for their robustness and stability, ensuring that they are suitable for use.

Trading Portfolio Activities

Market risk is defined as the possibility of suffering losses in the value of a portfolio as a result of adverse changes in market prices. The main market risks can be classified as follows:

| • |  | Interest rate risk: This arises as a result of exposure to movements in the different yield curves.

| • |  | Foreign exchange risk: This is caused by the movements in the different currencies exchange rates in which a position is held. This risk is generated primarily in spot currency positions and in any derivative product whose underlying asset is an exchange rate.

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The structure of measurement and control of the market risk includes a scheme of limits and alerts in terms of economic capital, VaR (value at risk), stress VaR, monthly and annual stop loss and internal sub-limits. In order to measure and manage market risk, BBVA Argentina uses a historical Value at Risk (“VaR”) model, which estimates the maximum loss that may occur in the trading portfolio at a given confidence interval of 99% and a time horizon of one day.

Monitoring and control of market risk is conducted under a scheme of limits that is presented and proposed by the Market Risk Unit and approved every year by the Risk Management Committee and the Board.

Market risk management focuses on the Bank’s Global Market (“GM”) trading portfolio. This portfolio includes:

| • |  | fixed income securities (Argentine sovereign bonds and bills, Central Bank bills and corporate bonds);

| • |  | spot currency positions; and

| • |  | derivative products (foreign exchange futures and forwards, interest rate swaps).

Within the model of market risk management there are specific circuits established for communication and operation in case approved risks levels are exceeded.

The following charts show the Bank’s VaR and Risk Factor evolution during 2020.

The following tables show the evolution of VaR during the last three years.

Daily Trading VaR at BBVA Argentina (in millions of pesos)

|  | 2020 |  |  | 2019 |  |  | 2018 |
Average |  |  | 226.41 |  |  |  | 81.60 |  |  |  | 22.86 |
Minimum |  |  | 27.42 |  |  |  | 11.55 |  |  |  | 4.97 |
Maximum |  |  | 431.58 |  |  |  | 273.42 |  |  |  | 97.37 |
At December 31 |  |  | 225.50 |  |  |  | 43.57 |  |  |  | 49.36 |

Daily Trading VaR – Categories (in millions of pesos)

Interest Risk VaR |  | 2020 |  |  | 2019 |  |  | 2018 |
Average |  |  | 108.68 |  |  |  | 71.97 |  |  |  | 19.00 |
Minimum |  |  | 6.97 |  |  |  | 8.26 |  |  |  | 3.13 |
Maximum |  |  | 406.57 |  |  |  | 234.32 |  |  |  | 93.76 |
At December 31 |  |  | 237.23 |  |  |  | 43.99 |  |  |  | 49.90 |

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Exchange-rate Risk |  | 2020 |  |  | 2019 |  |  | 2018 |
Average |  |  | 187.62 |  |  |  | 25.85 |  |  |  | 9.64 |
Minimum |  |  | 2.93 |  |  |  | 0.85 |  |  |  | 0.28 |
Maximum |  |  | 377.09 |  |  |  | 155.02 |  |  |  | 37.98 |
At December 31 |  |  | 137.98 |  |  |  | 3.92 |  |  |  | 2.65 |

Back testing

In line with Basel recommendations, the market risk model is periodically validated through back testing analysis. The aim of these tests is to determine the quality and precision of the model used to calculate the daily maximum loss of a portfolio, with a 99% of confidence interval and temporal horizon of 250 days, by comparing the trading portfolio results and the risk measurements calculated by the model.

Stress test analysis

As described in “—Risk Management” above, a number of stress tests are carried out at the bank, and this is also performed on the Bank’s trading portfolios. The aim is to expose BBVA Argentina’s trading portfolios to abnormal market variations, based on stress situations occurred in the past (historical scenarios) or in stress situations that may occur in the future with some probability (simulated scenarios), but outside the predetermined confidence interval of the daily VaR measurement.

| • |  | Historical scenarios: The historical scenario used as reference for this stress test is the year 2019. The uncertainty due to the change of government in August 2019 generated a high impact on the behavior of financial markets, which implied high volatility of prices and interest rates.

| • |  | Simulated scenarios: The scenario used for these exercises of economic stress is based on resampling methodology. This methodology is based on the use of dynamic scenarios that are recalculated periodically depending on the main risks in the trading portfolios. On a data window wide enough to collect different periods of stress (data are taken from January 1, 2008 until today), a simulation is performed by a resampling of historical observations. This generates a distribution of losses and gains that provides an analysis of the most extreme events that occurred within the selected historical window. The advantage of this methodology is that the stress period is not pre-established, but rather a function of the portfolio held at any time.

Valuation

The Market Risk Unit is responsible for establishing the fair value of fixed income instruments and derivatives. Automatic systems are used for daily capture and dissemination of prices and market variables that have an impact on the Bank´s portfolio and clients’ holdings in custody.

For price determination, the use of market information is prioritized. If not possible, pricing through internal models is established, considering the availability of data with which to develop inputs that represent the assumptions that markets participants would use when pricing the asset. For instance, fixed income securities are priced with the discounted cash flow model using market yield curves, technical value or last market price with the addition of accrued interest.

Derivatives Credit Risk

The Market Risk Unit is responsible for monitoring and control of derivatives credit risk. The derivatives credit risk exposure is measured by the probability that the counterparty defaults on its obligations as a consequence of insolvency or incapacity of payment, causing BBVA Argentina to suffer a financial loss.

Risk exposure is determined using the following formula:

Derivatives credit risk = Market Value (MtM) + Potential Risk; where:

| • |  | The market value of the operation is defined as the difference between agreed price and current market price (mark to market). This market value can be positive or negative depending on the risk exposure. The potential risk is an estimation of the maximum expected increase of market value for a given level of confidence due to future price fluctuations until the operation due date.

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Interest Rate Risk

Interest rate sensitivity is the relationship between market interest rates and net portfolio value on one hand, and net interest income on the other, due to the repricing of assets and liabilities. Our interest rate sensitivity analysis measures the sensitivity of the net portfolio value and net interest income to parallel changes in interest rates and to changes in the yield curve.

For the purpose of calculating the net present value, when the interest rate is fixed, the future cash flows of the financial assets and liabilities are calculated on a contractual basis. When the interest rate is variable, cash flows that have a maturity during the repricing interval are included. These amounts are added to the remaining balance of the asset or liability at the end of the interval.

Net interest income is calculated as the difference between interest income earned on interest-earning assets and interest expense from interest-bearing liabilities for each month of the fiscal year.

In general, this calculation is limited to its assumption of a permanent increase or decrease in interest rates and that all of such rates change at the same rate. Accordingly, actual results could differ materially from those projected.

For any given period, the pricing structure is matched when an equal amount of assets and liabilities reprice. Any mismatch of interest-earning assets and interest-bearing liabilities is known as a gap. A positive gap denotes asset sensitivity and normally means that an increase in interest rates would have a negative effect on net portfolio value and a positive effect on interest income, while a decline in interest rates would have a positive effect on net portfolio value and a negative effect on net interest income.

Changes in interest rates could impact our profitability as a result of timing differences on the repricing of the assets and liabilities. One measure of interest rate risk is the change in net portfolio value (defined as the net present value of interest-earning assets and interest-bearing liabilities) and the change in net interest income caused by a change in market interest rates.

The table below sets forth the results of the equity value and net interest income under various interest rate scenarios and the percentage changes from amounts generated under a stable interest rate environment.

December 31, 2020 |
Change in base interest rates and adjust rates (basis points) |  |  | Net portfolio value |  |  | Percentage change |  |  | Net interest and adjust income |  |  | Percentage change |  |  | Net income of adjustable portfolio |  |  | Percentage change |
(in millions of pesos, except percentages) |
| 500 |  |  |  | 31,693.1 |  |  |  | (0.52 | )% |  |  | 97,984.4 |  |  |  | 4.37 | % |  |  | 2,037.1 |  |  |  | (12.37 | )%
| 0 |  |  |  | 31,858.4 |  |  |  | 0.00 | % |  |  | 93,883.5 |  |  |  | 0.00 | % |  |  | 2,324.6 |  |  |  | 0.00 | %
| (500 | ) |  |  | 32,031.2 |  |  |  | 0.54 | % |  |  | 89,825.4 |  |  |  | (4.32 | )% |  |  | 2,617.4 |  |  |  | 12.59 | %

Based on our position at December 31, 2020, and assuming a hypothetical, immediate 500 basis points increase in interest rates affecting all interest rate sensitive assets and liabilities, we estimate our net portfolio value would be reduced by Ps.165.3 million and our net interest income would be increased by approximately Ps.4,100.9 million.

Foreign Exchange Risk

As of December 31, 2020, as part of our asset and liability management, we aimed to minimize the impact on results of foreign exchange rate fluctuations by maintaining excess balances of assets over liabilities denominated in dollars. The following table shows the estimated effect on net income of a 10% variation in the value of the peso against all other currencies:

Peso against all other currencies |  | Effect on net income based on our position as of December 31, 2020 |  |  | Effect on net income based on our position as of December 31, 2019 |
|  | (in millions of pesos, except percentages) |  |  |  |
10% |  |  | 139 |  |  |  | (236 | )
(10)% |  |  | (139 | ) |  |  | 236 |

For a description of the changes in exchange rates, see “Item 3. Key Information—Exchange Rates”.

Equity and Commodity Price Risk

Equity and commodity risk are the risks associated with adverse movements in the value of equity securities and commodities or related indexes. We do not have any material exposure to either of them.

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Non-trading Portfolio Activities

Non-trading instruments consist primarily of loans and deposits. The Bank’s primary market risk exposure in its non-trading instruments is interest rate risk, which arises from the possibility of changes in market interest rates. Such changes in market interest rates affect the Bank’s net interest income due to timing differences on the repricing of their assets and liabilities. The Bank is also affected by gaps in maturity dates and interest rates in the different asset and liability accounts.

The interest rate risks arising from these activities is included in the analysis of the interest rate risk previously showed and managed in aggregated manner.

ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. | Debt securities

Not applicable.

B. | Warrants and rights

Not applicable.

C. | Other securities

Not applicable.

D. | American Depositary Shares

Fees and charges for holders of American Depositary Receipts

The depositary for our ADRs is the Bank of New York Mellon (BNY).

Holders of our ADRs are generally expected to pay fees to BNY according to the following schedule:

Persons depositing or withdrawing shares must pay: |  | For:
US$5.00 (or less) per 100 ADRs (or portion of 100 ADRs) |  | •   Issuance of ADRs, including issuances resulting from a distribution, sale or exercise of shares or rights or other property •   Cancellation of ADRs for the purpose of withdrawal including if the deposit agreement terminates
US$5.00 (or less) per 100 ADRs (or portion thereof) |  | •   Any cash distribution made pursuant to the deposit agreement
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADRs |  | •   Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADR registered holders
US$0.05 (or less) per ADRs per calendar year |  | •   Depositary services
Registration or transfer fees |  | •   Transfer and registration of shares on the Company’s share register to or from the name of the depositary or its agent when you deposit or withdraw shares
Expenses of the depositary |  | •   Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) •   Converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian have to pay on any ADR or share underlying an ADR, for example, stock transfer taxes, stamp duty or withholding taxes |  | •   As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities |  | •   As necessary

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BNY Mellon collects its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs for the purpose of withdrawal or from intermediaries acting for them. It also collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. BNY Mellon may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. BNY Mellon may generally refuse to provide fee-attracting services until its fees for those services are paid.

Fees Paid by Depositary to the Company

BNY Mellon paid US$40,037.80 to BBVA Argentina in 2020.

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- PART II -

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

Effectiveness of Disclosure Controls and Procedures

As of December 31, 2020, the management of the Bank, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).

Based on such evaluation, the Bank’s Chief Executive Officer and Chief Financial Officer concluded that the Bank’s disclosure controls and procedures were effective for gathering, analyzing and disclosing the information the Bank is required to disclose in the reports it files under the Exchange Act, within the time periods specified in the SEC’s rules and forms.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of the Bank is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The Bank’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS-IASB and includes those policies and procedures that:

| • |  | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Bank;

| • |  | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS-IASB, and that our receipts and expenditures are being made only in accordance with authorizations of the Bank’s management and directors; and

| • |  | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of the Bank’s management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in “Internal Control—Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, our management concluded that, as of December 31, 2020, our internal control over financial reporting was effective based on those criteria.

Our internal control over financial reporting as of December 31, 2020 has been audited by KPMG an independent registered public accounting firm, as stated in their report which is included further below in this annual report on Form 20-F.

Limitations on Effectiveness of Controls and Procedures

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Bank have been detected.

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Changes in Internal Control Over Financial Reporting

There has been no change in the Bank’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Bank’s internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Banco BBVA Argentina S.A.:

Opinion on Internal Control Over Financial Reporting

We have audited Banco BBVA Argentina S.A. and its subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2020 and 2019 and the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated April 15, 2021, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG

Buenos Aires, Argentina

April 15, 2021

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ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

The Bank’s Board of directors has appointed Mr. Alfredo Castillo Triguero to serve on its Audit Committee II. The Bank’s Board of directors has concluded that Mr. Castillo Triguero is an audit committee financial expert as defined by the SEC based on his extensive audit experience.

ITEM 16B. CODE OF ETHICS

The BBVA Argentina Code of Conduct applies to all our management and employees, including the Executive Chairman, the Financial Director and other senior financial officers of the Bank. The Code of Conduct sets out the standards of behavior that should be adhered to so that the Bank’s conduct towards its customers, colleagues and the society are consistent with the Bank’s values. The BBVA Argentina Code of Conduct can be found on BBVA Argentina’s website at www.bbva.com.ar and can be accessed without charge.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees

Following is a summary of the fees to our independent external auditors for the years ended December 31, 2020 and 2019:

|  | 2020 |  |  | 2019 |
|  | (in millions of pesos) |
Audit fees |  |  | 149.28 |  |  |  | 86.46 |
Audit-related fees |  |  | 6.24 |  |  |  | — |
Tax fees |  |  | — |  |  |  | — |
All other fees |  |  | 0.14 |  |  |  | — |
Total fees |  |  | 155.66 |  |  |  | 86.46 |

Audit fees are fees for professional services performed by KPMG for 2020 and 2019, respectively, for the audit and limited review of the Bank’s annual and quarterly financial statements and services that are normally provided in connection with statutory and regulatory filings. Audit-related fees consist of fees for assurance and related services performed by KPMG that are reasonably related to the performance of the audit or review of the Bank’s financial statements and are not reported as Audit fees. The Bank has approved policies and procedures for pre-approving all non-audit work that would be performed by the Bank’s external auditor. Specifically, the policies and procedures prohibit an accounting firm, including the Bank’s external auditor from performing any services for the Bank or its subsidiaries without the prior approval of Audit Committee (I) and Audit Committee (II).

Services

Since March 2017, KPMG has acted as the Bank’s external auditor. Its last appointment was approved by the ordinary and extraordinary shareholders’ meetings held on May 15, 2020.

The ordinary and extraordinary shareholders’ meetings held on May 15, 2020 designated KPMG as the Bank’s external auditor for the fiscal year 2020, with Mauricio G. Eidelstein (Registered in Professional Council of Economic Sciences of the City of Buenos Aires,) as the Bank’s auditor and Carlos Fernando Bruno and Marcelo Adrián Castillo as alternate auditors for the same period.

The firm KPMG has its domicile at Bouchard 710, 1st floor (C1106ABL), City of Buenos Aires, Argentina and is registered with the Professional Council of Economic Sciences of the City of Buenos Aires, under Volume 2, Page 6.

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ITEM 16D. EXEMPTIONS FROM LISTING REQUIREMENTS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY ONE ISSUER AND AFFILIATED PERSONS

None.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

BBVA Argentina corporate governance practices are governed by the applicable Argentine law (particularly Law No. 26,831 as modified by Law No. 27,440 and the standards of the CNV), as well as by its by-laws. BBVA Argentina has securities that are registered with the SEC and are listed on the NYSE, and is therefore subject to corporate governance requirements applicable to NYSE-listed non-U.S. companies.

NYSE-listed non-U.S. companies may, in general, follow their home country corporate governance practices in lieu of most of the new NYSE corporate governance requirements codified in Section 303A of the NYSE’s Listed Company Manual. However, NYSE-listed non-U.S. companies must comply with NYSE Sections 303A.06, 303A.11 and 303A.12(b) and (c).

The CNV passed in May 2012 and in September 2013, General Resolution No. 606/12 (“GR 606/12”) and General Resolution No. 622/13 (“GR 622/13”), respectively, which set forth the corporate governance requirements which companies that publicly offer shares representing their capital stock in Argentina must adopt. Moreover, since December 2012, the Bank has a new corporate governance code (Código de Gobierno Societario, hereinafter the “CGS”) in accordance with Communication “A” 5201 and Communication “A” 6639, as amended, Communication “A” 7100 of the Central Bank, GR 622/13 and General Resolution No. 797/19 from the CNV.

NYSE Section 303A.11 requires that non-U.S. companies disclose any significant ways in which their corporate governance practices differ from U.S. companies under NYSE listing standards. In accordance with NYSE Section 303A.11, we describe below the relevant differences between BBVA Argentina’s corporate governance practices and NYSE standards for listed companies.

Director Independence

Under NYSE Section 303A.01, a NYSE-listed company must have a majority of independent directors on its board of directors.

Under Argentine law, the board is not required to consist of a majority of independent directors. However, when directors are appointed, each shareholder that nominates a director is required to report at the meeting whether or not such director is independent. Since May 28, 2004, Argentine companies are required to have at least two independent directors appointed to the Audit Committee (I and II). Currently, the Board is composed of two independent directors.

Standards for Evaluating Director Independence

NYSE Section 303A.02 establishes general standards to evaluate directors’ independence (and no director qualifies as “independent” unless the board of directors affirmatively determines that such director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company), and emphasizes that the concern is independence from management. The board of directors is also required, on a case by case basis, to express an opinion with regard to the independence or lack of independence, of each individual director.

To qualify as an “independent” or “non-independent” director, CNV standards are generally similar to NYSE standards.

Pursuant to CNV Rules, a director will be considered as “independent” if its main relationship with the listed company is his position as director of the board. He will be appointed taking into account his professional career, suitability, qualified knowledge, and criteria, economic and interest independence, considering also that he can perform his functions objectively and impartially.

For the purposes of this definition, it shall be understood under CNV Rules that a director does not qualify as “independent”, when one or more of the following circumstances are met:

| (a) | he is a member of the board of directors of the parent company or another company belonging to the same economic group of the company through a pre-existing relationship at the time of his election, or during the immediately prior three years;

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| (b) | he is or has been associated with the company or any of the company’s shareholders that have a direct or indirect “significant participation” on the company, or with corporations with which such shareholders also have a direct or indirect “signification participation”; or if he or she was associated with any of them through an employment relationship during the last three years;

| (c) | he has any professional relationship or is a member of a corporation that maintains frequent professional relationships of significant nature and volume, or receives remuneration or fees (other than the one received in consideration of his role as a director) from the company or the company’s shareholders that have a direct or indirect “significant participation” on the company, or with corporations in which such shareholders also have a direct or indirect “significant participation.” This prohibition includes professional relationships and affiliations during the immediately prior three years prior to his or her appointment as director;

| (d) | he directly or indirectly owns 5% or more of the voting shares and/or capital stock of the company or any company with a “significant participation” in the company;

| (e) | he directly or indirectly sells and/or provides goods and/or services (different from those accounted for in section c) above) on a regular basis and of a significant nature and volume to the company or to the company’s shareholders that have a direct or indirect “significant participation”, that result in proceeds that are higher than his remuneration as a director. This prohibition includes business relationships that have been carried out during the immediately prior three years to his appointment as director;

| (f) | he has been a director, manager, administrator or principal executive of not-for-profit organizations that have received funds, for amounts greater than those described in section I) of article 12 of Resolution No. 30/2011 of the UIF and its amendments, from the company, its parent company and other companies of the same group of which the company is a party, as well as of its respective principal executives;

| (g) | he receives any consideration, including through his participation in plans or stock option schemes, from the company or companies of the same economic group, other than the compensation paid to him for his role as a director, except dividends paid as a shareholder of the company in compliance with section d) above or the consideration received in compliance with section e);

| (h) | he has served as member of the board of directors of the company, its parent company or another company belonging to the same economic group for more than ten years, except if such relationship ceased to exist during the three years immediately preceding the appointment; and

| (i) | he is the spouse or legally recognized partner, relative up to the third level of consanguinity or up to the second level of affinity of persons who, if they were members of the board of directors, would not be independent, according to the above listed criteria.

In connection with the independence criteria above, references to “significant participation” refer to those individuals who hold shares representing at least 5% of the capital stock and or the voting shares, or a smaller amount if they have the right to elect one or more directors by share class or have other shareholders’ agreements relating to the government and administration of the company or its parent company.

Non-management Directors Meetings

Under NYSE Section 303A.03, non-management directors must meet at regularly scheduled executive meetings not attended by management. Neither Argentine law nor BBVA Argentina by-laws require that any such meetings be held.

Nominations Corporate Governance Committee

Under NYSE Section 303A.04, listed companies shall have a “nominations/corporate governance committee” comprised entirely of independent directors. GR 622/13, requires public companies to have a Nomination Committee. Moreover, pursuant to CNV standards, the person who nominates a director shall report at the shareholders’ meeting whether or not the nominee is an “independent person”, based on the criteria established by the CNV (which are substantially similar to NYSE standards).

Compensation Committee

Under NYSE Section 303A.05(a), listed companies have to have a compensations committee comprised entirely of independent directors. Under NYSE Section 303A.05(b), the compensations committee shall have a written charter establishing certain minimum responsibilities as set forth in NYSE Section 303A.05(b)(i). In addition, amendments approved by the NYSE in January 2013 require the charter to specify the rights and responsibilities of the compensation committee regarding the authority to retain advisers and to provide funding for such advisers. Certain specified factors must be considered regarding such advisers’ independence from management. GR 622/13, also requires for companies which publicly offer their securities to have a compensation committee.

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The CGS sets forth the creation of a nominations and compensations committee, composed of three non-executive directors, whose duties, among others, are to fix the rules and procedures for the selection of key executives and senior staff, to determine the level of remuneration for directors and key executives, to fix policies and practices regarding remunerations and benefits and to approve any relevant changes.

Audit Committee (II)

Under NYSE Section 303A.06, listed companies must have an “audit committee” that complies with SEC requirements. The Audit Committee (II) of BBVA Argentina currently complies with SEC requirements and the standards of Law No. 26,831 as modified by Law No. 27,440.

Under NYSE Section 303A.07(a), the audit committee shall consist of at least three members. All of its members shall be financially literate or must acquire such financial knowledge within a reasonable period of time and at least one of its members shall have experience in accounting or financial administration. Argentine law also requires the audit committee to be comprised of at least three members. Pursuant to CNV’s standards, audit committee members are required to be conversant in business, financial, or accounting issues. CNV’s rules provide for the training of its members to carry out their duties and BBVA Argentina engages in this training.

Under NYSE Section 303A.07(a), if a member of the audit committee is simultaneously a member of the audit committee of more than three public companies, and the listed company does not limit the number of audit committees on which its members may serve, then, in each case the board of directors shall determine whether the simultaneous service would prevent such member from effectively serving on the listed company’s audit committee, and shall report its decision in the annual proxy statement of the company or in the company’s annual report filed with the SEC. No such provision regarding an audit committee member’s simultaneous membership on public companies exists under Argentine law or BBVA Argentina’s by-laws.

Under NYSE Section 303A.07(a), all members of the audit committee are required to be “independent”. In accordance with Law No. 26,831, a majority of the members of Audit Committee (II) must be “independent”.

Under NYSE Section 303A.07(b), the audit committee shall have a charter establishing the duties and responsibilities of its members, including, at a minimum, some of the duties and responsibilities required by Rule 10A-3 of the Exchange Act and as set forth in NYSE Section 303A.7(b) of the NYSE Manual. The functions and responsibilities of the audit committee in Argentina, established by Law No. 26,831 as modified by the Law No. 27,440 and CNV’s standards, are essentially the same as provided for under Rule 10A-3 of the Exchange Act.

NYSE Sections 303A.07(b)(iii) A), (B) and (C) establish the duties and responsibilities of the audit committee, among others: (i) to discuss the annual audited financial statements and the quarterly financial statements of the company with management and the independent auditor, including the information disclosed under the heading “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and (ii) to discuss the company’s press releases relating to its earnings, as well as the financial information and guidelines relating to its earnings that are supplied to equity researchers and rating agencies. No such provision is contained in the Argentine law or BBVA Argentina’s by-laws. However, CNV standards establish similar functions for the audit committee, namely, “to verify the reliability of the administrative-accounting system, and of all financial data, or of any significant data submitted to CNV and to self-regulated exchanges, in compliance with the applicable reporting regime”.

NYSE Section 303A.07(b)(iii)(G) provides that the audit committee shall establish clear policies for hiring external auditors’ employees. No such provision regarding hiring external auditors’ employees is contained in Argentine law or BBVA Argentina’s by-laws.

NYSE Section 303A.07(c) provides that each company must have an internal audit function in order to provide to the management and to the audit committee permanent assessments on the company’s risk management processes and internal control system. BBVA Argentina has an Audit Committee according to Central Bank’s rules, which provides to the management permanent assessments about management and operating processes, and risks of the company.

Disclosure of Corporate Governance Guidelines

NYSE Section 303A.09 provides that companies must adopt and disclose corporate governance guidelines, including several issues for which such reporting is mandatory, and include such information on the company’s website, which should also include the charters of the audit committee, the nominations committee and the compensation committee.

Law No. 26.831 as modified by the Law 27,440 required additional information that companies must include in their annual reports, including information relating to the decision-making organization (corporate governance), the company’s internal controls system, rules for director and manager compensation, stock-options, and any other compensation system applicable to Board members and managers. Law No. 26,831 does not address the remaining issues included in NYSE Section 303A.09. However, all relevant information sent by the Bank to the CNV is forwarded to the CNV through the CNV’s Financial Reporting Highway and may be viewed on the CNV’s website.

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The Bank publishes on its website, in the Shareholders and Investors Section, among others, any notices of relevant events; the Corporate Governance Code; the Bank’s bylaws or the composition of the Board of Directors and Senior Management.

Evaluation of Board Performance

Under NYSE Section 303A.09, the Board of Directors must make a self-assessment of its performance at least once a year to determine if it or its committees function effectively and report thereon. Under Argentine law, the board’s performance is evaluated at the annual shareholders’ meeting.

According to the provisions of the Corporate Governance Code, Regular Directors perform an annual self-assessment of Board performance as the governing body and their individual roles as members thereof, must submit them to the head of the Legal Services of the Bank, in his capacity as Secretary of the Board.

Code of Ethics

NYSE Section 303A.10 provides for the adoption of a Code of Business Conduct and Ethics and sets out the topics that such code must contain. BBVA Argentina’s Board approved in December 18, 2003, as amended on August 25, 2015, the “Code of Conduct of BBVA Argentina and its group of companies in Argentina”, which applies to all management and employees, with no exceptions, the English translation of which is available to the public on BBVA Argentina’s website. See “Item 16B. Code of Ethics” above. BBVA Argentina believes that its Code of Conduct complies with NYSE requirements.

Certifications by the CEO

NYSE Section 303A.12(a) provides that the CEO shall on a yearly basis certify to NYSE that he/she knows of no violation by the company of NYSE Sections relating to corporate governance. No such certification is required by Argentine law or by BBVA Argentina’s by-laws.

Notification of Non-fulfillment

Under NYSE Section 303A.12(b), the CEO shall notify the NYSE in writing whenever any executive officer of the company becomes aware of any substantial non-fulfilment of any applicable provision under NYSE Section 303A.

No such provision regarding notification of non-fulfilment of NYSE Section 303A is contained in Argentine law or BBVA Argentina’s by-laws, but BBVA Argentina CEO will comply with the notice provisions as set forth under NYSE Section 303A.12(b).

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- PART III -

ITEM 17. FINANCIAL STATEMENTS

We have responded to Item 18 in lieu of this item.

ITEM 18. FINANCIAL STATEMENTS

Reference is made to Item 19 for a list of the financial statements filed as a part of this annual report.

ITEM 19. EXHIBITS

| • |  | Index to Consolidated Financial Statements:

|  | Page |
Report of Independent Registered Public Accounting Firm |  |  | F-1 |
Consolidated Statements of Financial Position |  |  | F-4 |
Consolidated Statements of Profit or Loss |  |  | F-6 |
Consolidated Statements of Comprehensive Income |  |  | F-7 |
Consolidated Statements of Changes in Equity |  |  | F-8 |
Consolidated Statements of Cash Flows |  |  | F-11 |
Notes to the Consolidated Financial Statements |  |  | F-13 |

| • |  | Index to Exhibits:

Exhibit Number |  | Description
1.1 |  | Amended and Restated By-Laws (Estatutos) of Banco BBVA Argentina S.A. (*)
1.2 |  | English translation of the Amended and Restated By-Laws (Estatutos) of Banco BBVA Argentina S.A. (*)
2.1 |  | Description of Registrant’s Securities Registered under Section 12 of the Exchange Act
8.1 |  | Subsidiaries of the Company
12.1 |  | Section 302 Certification of Chief Executive Officer
12.2 |  | Section 302 Certification of Chief Financial Officer
13.1 |  | Certification by CEO and CFO pursuant to Section 1350, as adapted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002
101.INS |  | XBRL Instance Document.
101.SCH |  | XBRL Taxonomy Extension Schema Document.
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document.
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document.

(*) | Incorporated by reference to BBVA Argentina’s annual report on Form 20-F for the year ended December 31, 2019, filed with the SEC on April 27, 2020.

We will furnish to the SEC, upon request, copies of any unfiled instruments that define the rights of holders of long-term debt of BBVA Argentina.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

BANCO BBVA ARGENTINA S.A.
By: |  | /s/ Ernesto R. Gallardo Jiménez
|  | Name: |  | Ernesto R. Gallardo Jiménez
|  | Title: |  | Chief Financial Officer

Date: April 15, 2021

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|  | BANCO BBVA ARGENTINA S.A. CONSOLIDATED FINANCIAL STATEMENTS, DECEMBER 31, 2020

##### Table of Contents

Banco BBVA Argentina S.A.

TABLE OF CONTENTS |  | PAGE
Report of Independent Registered Public Accounting Firm |  | F-1
Consolidated Financial Statements, December 31, 2020 |  |
Consolidated Statements of Financial Position |  | F-4
Consolidated Statements of Profit or Loss |  | F-6
Consolidated Statements of Comprehensive Income |  | F-7
Consolidated Statements of Changes in Equity |  | F-8
Consolidated Statements of Cash Flows |  | F-11
Notes to the consolidated financial statements |  | F-13

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Banco BBVA Argentina S.A.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Banco BBVA Argentina S.A. and its subsidiaries (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2020 and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 15, 2021, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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Provision for expected credit losses on financial assets at amortized cost and at fair value through comprehensive income, loan commitments and financial guarantees

As discussed in Notes 5.4 g) and 12 to the consolidated financial statements, the Company’s provision for expected credit losses (ECL) related to financial assets at amortized cost and at fair value through comprehensive income, loan commitments and financial guarantees was 21,038.8 million Argentine Pesos (Ps.) as of December 31, 2020. The Company measures the ECL of certain instruments on an individual basis using estimates of future cash flows. The Company measures the ECL for all other instruments on a collective basis using the variables Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) as well as estimates of certain future macroeconomic variables. The Company uses models and historical data in the determination of the PDs, EADs and LGDs.

We identified the assessment of the ECL related to financial assets at amortized cost and at fair value through comprehensive income, loan commitments and financial guarantees as a critical audit matter. It involved subjective and complex auditor judgement, as well as specialized skills and knowledge, due to the significant measurement uncertainty associated with the significant assumptions used in its estimation. In addition, the COVID-19 pandemic has negatively affected the economy and business activities in the country where the Company operates, which increased this measurement uncertainty as of December 31, 2020.

The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the measurement of ECL, with the assistance of our credit risk specialists in the case of the collective ECL. This included controls related to (i) the development and approval of the overall ECL methodology, (ii) the validation of the PD, EAD, and LGD models, including the determination of the methodologies and assumptions used, (iii) the determination of the future macroeconomic variables used in the model, (iv) the assessment of the need for and measurement of qualitative adjustments to the collective ECL, (v) the calculation of the ECL estimates, and (vi) the estimation of future cash flows for financial instruments assessed on an individual basis.

We involved credit risk professionals with specialized skills and knowledge who assisted in (i) evaluating the Company’s ECL methodology for compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board, (ii) assessing whether certain models used in calculating the PD, EAD and LGD are suitable for their intended use by inspecting model documentation, assessing the conceptual soundness and ongoing performance as well as the methodologies used and certain assumptions, (iii) evaluating the future macroeconomic variables used in the models, and (iv) assessing the need for and measurement of qualitative adjustments to the ECL, including those used to account for the impacts of COVID-19, and (v) assessing the mathematical accuracy of the ECL calculation for a sample of loans. For a sample of loans evaluated on an individual basis, we assessed the ECL, including the estimate of future cash flows.

Measurement of fair value of difficult-to-value financial instruments

As discussed in Notes 4.3 and 40 to the consolidated financial statements, the Company has recorded Ps. 7,215.8 million of financial assets measured at fair value that were classified as Level 3 (‘difficult-to-value financial instruments’) as of December 31, 2020. A financial instrument is classified as Level 3 in the fair value hierarchy when its fair value is estimated using significant unobservable inputs. The Company’s difficult-to-value financial instruments consist of an equity investment, which is measured using a discounted cash flow model, and a related derivative, which is measured using a binomial option pricing model, both of which require a number of unobservable inputs.

We identified the measurement of the fair value of these difficult-to-value financial instruments as a critical audit matter. There was a high degree of auditor subjectivity and judgment involved in evaluating the models and methodologies used to estimate their fair value. Subjective auditor judgment was also required to evaluate the significant unobservable inputs to the models, such as projected Earnings Before Interest, Tax, Depreciation and Amortization and free cash flow, minority discount rate, weighted average cost of capital, terminal growth factor and volatility.

The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the fair value measurement of the difficult-to-value financial instruments. This included controls related to (i) the development and approval and/or reassessment of the Company´s valuation models and methodologies, and (ii) the appropriateness, relevance and reliability of the significant inputs used to estimate fair values. In addition, we involved valuation professionals with specialized skills and knowledge who assisted in (i) assessing the compliance of

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certain valuation models and methodologies with International Financial Reporting Standards as issued by the International Accounting Standards Board, (ii) testing the Company’s process to develop the fair value of the difficult-to-value financial instruments, including evaluating whether the inputs are appropriate, relevant and reliable, and (iii) developing an independent fair value estimate of the difficult-to-value financial instruments and comparing it to the Company’s fair value estimate.

/s/ KPMG

We have served as the Company’s auditor since 2017.

Buenos Aires, Argentina

April 15, 2021

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Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2020 AND 2019

(in thousands of Argentine pesos)

|  | Notes |  |  | December 31, 2020 |  |  | December 31, 2019 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
CASH AND CASH EQUIVALENTS |  |  | 8 |  |  |  | 152,040,070 |  |  |  | 212,733,025 |
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS |  |  |  |  |  |  | 12,616,460 |  |  |  | 15,424,483 |
Debt securities |  |  | 9.1. |  |  |  | 942,761 |  |  |  | 5,622,562 |
Derivatives |  |  | 9.2. |  |  |  | 3,877,749 |  |  |  | 4,148,248 |
Equity instruments |  |  | 9.3. |  |  |  | 7,795,950 |  |  |  | 5,653,673 |
FINANCIAL ASSETS AT AMORTIZED COST |  |  |  |  |  |  | 349,113,843 |  |  |  | 280,486,554 |
Loans and advances to government sector |  |  |  |  |  |  | 511 |  |  |  | 581 |
Loans and advances to central bank |  |  |  |  |  |  | 6,005 |  |  |  | 23,695 |
Loans and advances to financial institutions |  |  | 10.1. |  |  |  | 1,755,198 |  |  |  | 6,902,232 |
Loans and advances to customers |  |  | 10.2. |  |  |  | 277,823,797 |  |  |  | 258,724,084 |
Reverse repurchase agreements |  |  | 10.3. |  |  |  | 48,686,967 |  |  |  | — |
Other financial assets |  |  | 10.4. |  |  |  | 20,841,365 |  |  |  | 14,835,962 |
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME |  |  |  |  |  |  | 127,572,351 |  |  |  | 61,543,514 |
Debt securities |  |  | 14.1. |  |  |  | 127,543,852 |  |  |  | 61,506,254 |
Equity instruments |  |  | 14.2. |  |  |  | 28,499 |  |  |  | 37,260 |
INVESTMENT IN JOINT VENTURES AND ASSOCIATES |  |  | 16 |  |  |  | 1,442,345 |  |  |  | 1,410,346 |
TANGIBLE ASSETS |  |  |  |  |  |  | 35,658,422 |  |  |  | 37,423,357 |
Property and equipment |  |  | 17.1. |  |  |  | 33,768,154 |  |  |  | 35,494,157 |
Investment properties |  |  | 17.2. |  |  |  | 1,890,268 |  |  |  | 1,929,200 |
GOODWILL AND INTANGIBLE ASSETS |  |  | 18 |  |  |  | 1,553,897 |  |  |  | 1,061,983 |
INCOME TAX ASSETS |  |  |  |  |  |  | 5,920,397 |  |  |  | 4,152,062 |
Current |  |  |  |  |  |  | 487 |  |  |  | 35,639 |
Deferred |  |  | 15.1. |  |  |  | 5,919,910 |  |  |  | 4,116,423 |
OTHER ASSETS |  |  | 19 |  |  |  | 6,880,802 |  |  |  | 3,791,770 |
NON-CURRENT ASSETS HELD FOR SALE |  |  | 20 |  |  |  | 225,938 |  |  |  | 283,605 |
TOTAL ASSETS |  |  |  |  |  |  | 693,024,525 |  |  |  | 618,310,699 |

The accompanying explanatory notes are an integral part of these consolidated financial statements.

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Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2020 AND 2019

(in thousands of Argentine pesos) (cont.)

|  | Notes |  |  | December 31, 2020 |  |  | December 31, 2019 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS |  |  |  |  |  |  | 188,694 |  |  |  | 4,974,233 |
Derivatives |  |  | 21.1. |  |  |  | 188,694 |  |  |  | 4,183,526 |
Trading liabilities |  |  | 21.2. |  |  |  | — |  |  |  | 790,707 |
FINANCIAL LIABILITIES AT AMORTIZED COST |  |  |  |  |  |  | 528,244,795 |  |  |  | 457,814,875 |
Bank loans |  |  | 22.1. |  |  |  | 9,626,028 |  |  |  | 8,371,111 |
Deposits from government sector |  |  |  |  |  |  | 5,628,415 |  |  |  | 3,999,990 |
Deposits from financial institutions |  |  |  |  |  |  | 861,653 |  |  |  | 242,903 |
Deposits from customers |  |  | 22.2. |  |  |  | 471,733,196 |  |  |  | 395,993,904 |
Other financial liabilities |  |  | 22.3. |  |  |  | 39,226,721 |  |  |  | 39,242,734 |
Debt securities issued |  |  | 23 |  |  |  | 1,168,782 |  |  |  | 9,964,233 |
PROVISIONS |  |  | 24 |  |  |  | 6,027,601 |  |  |  | 7,234,088 |
INCOME TAX LIABILITIES |  |  |  |  |  |  | 3,196,825 |  |  |  | 10,218,097 |
Current |  |  |  |  |  |  | 3,157,486 |  |  |  | 10,218,097 |
Deferred |  |  | 15.1. |  |  |  | 39,339 |  |  |  | — |
OTHER LIABILITIES |  |  | 25 |  |  |  | 40,823,216 |  |  |  | 23,252,497 |
TOTAL LIABILITIES |  |  |  |  |  |  | 578,481,131 |  |  |  | 503,493,790 |
EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Share capital |  |  | 26 |  |  |  | 612,710 |  |  |  | 612,710 |
Share premium |  |  |  |  |  |  | 26,386,953 |  |  |  | 26,386,953 |
Inflation adjustment to share capital |  |  |  |  |  |  | 18,640,670 |  |  |  | 18,640,670 |
Reserves |  |  |  |  |  |  | 119,196,249 |  |  |  | 92,525,638 |
Accumulated loss |  |  |  |  |  |  | (58,285,838 | ) |  |  | (26,122,154 | )
Accumulated other comprehensive income |  |  |  |  |  |  | 5,830,351 |  |  |  | 626,581 |
Equity attributable to owners of the Bank |  |  |  |  |  |  | 112,381,095 |  |  |  | 112,670,398 |
Non-controlling interests |  |  |  |  |  |  | 2,162,299 |  |  |  | 2,146,511 |
TOTAL EQUITY |  |  |  |  |  |  | 114,543,394 |  |  |  | 114,816,909 |
TOTAL LIABILITIES AND EQUITY |  |  |  |  |  |  | 693,024,525 |  |  |  | 618,310,699 |

The accompanying explanatory notes are an integral part of these consolidated financial statements.

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Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

(in thousands of Argentine pesos, except earnings per share)

|  | Notes |  |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Interest income |  |  | 28.1. |  |  |  | 118,522,759 |  |  |  | 156,367,921 |  |  |  | 118,269,467 |
Interest expenses |  |  | 28.2. |  |  |  | (41,471,892 | ) |  |  | (66,123,069 | ) |  |  | (51,808,825 | )
NET INTEREST INCOME |  |  |  |  |  |  | 77,050,867 |  |  |  | 90,244,852 |  |  |  | 66,460,642 |
Fee and commission income |  |  | 29 |  |  |  | 23,663,181 |  |  |  | 23,976,155 |  |  |  | 26,334,964 |
Fee and commission expense |  |  | 30 |  |  |  | (11,423,234 | ) |  |  | (12,841,847 | ) |  |  | (11,521,703 | )
Gains on financial assets and liabilities at fair value through profit or loss, net |  |  | 31 |  |  |  | 11,239,112 |  |  |  | 15,604,469 |  |  |  | 242,608 |
Losses on derecognition of financial assets not measured at fair value through profit or loss, net |  |  | 32 |  |  |  | (2,309,858 | ) |  |  | (80,874 | ) |  |  | (286,372 | )
Exchange differences, net |  |  | 33 |  |  |  | 6,227,725 |  |  |  | 14,026,409 |  |  |  | 13,589,850 |
Other operating income |  |  | 34 |  |  |  | 6,322,980 |  |  |  | 11,982,201 |  |  |  | 4,412,604 |
Other operating expenses |  |  | 35 |  |  |  | (15,590,218 | ) |  |  | (22,028,412 | ) |  |  | (16,720,831 | )
GROSS INCOME |  |  |  |  |  |  | 95,180,555 |  |  |  | 120,882,953 |  |  |  | 82,511,762 |
Administration costs |  |  |  |  |  |  | (39,138,572 | ) |  |  | (41,728,066 | ) |  |  | (40,920,004 | )
Personnel benefits |  |  | 36 |  |  |  | (20,379,135 | ) |  |  | (22,698,425 | ) |  |  | (22,801,895 | )
Other administrative expenses |  |  | 37 |  |  |  | (18,759,437 | ) |  |  | (19,029,641 | ) |  |  | (18,118,109 | )
Depreciation and amortization |  |  | 38 |  |  |  | (4,065,981 | ) |  |  | (5,728,534 | ) |  |  | (4,025,755 | )
Impairment of financial assets |  |  |  |  |  |  | (11,864,861 | ) |  |  | (21,445,415 | ) |  |  | (8,029,553 | )
Loss on net monetary position |  |  | 5.22. |  |  |  | (22,274,824 | ) |  |  | (27,518,847 | ) |  |  | (24,407,251 | )
NET OPERATING INCOME |  |  |  |  |  |  | 17,836,317 |  |  |  | 24,462,091 |  |  |  | 5,129,199 |
Share of profit of equity accounted investees |  |  |  |  |  |  | 266,572 |  |  |  | 174,422 |  |  |  | 664,982 |
PROFIT BEFORE TAX |  |  |  |  |  |  | 18,102,889 |  |  |  | 24,636,513 |  |  |  | 5,794,181 |
Income tax expense |  |  | 15.3. |  |  |  | (8,034,094 | ) |  |  | (2,821,059 | ) |  |  | (9,081,582 | )
PROFIT (LOSS) FOR THE YEAR |  |  |  |  |  |  | 10,068,795 |  |  |  | 21,815,454 |  |  |  | (3,287,401 | )
Attributable to owners of the Bank |  |  |  |  |  |  | 10,051,035 |  |  |  | 21,819,964 |  |  |  | (3,119,918 | )
Attributable to non-controlling interest |  |  |  |  |  |  | 17,760 |  |  |  | (4,510 | ) |  |  | (167,483 | )
EARNINGS PER SHARE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings per share (in pesos) |  |  | 7 |  |  |  | 16.4042 |  |  |  | 35.6145 |  |  |  | (5.0924 | )
Diluted earnings per share (in pesos) |  |  | 7 |  |  |  | 16.4042 |  |  |  | 35.6145 |  |  |  | (5.0924 | )

The accompanying explanatory notes are an integral part of these consolidated financial statements.

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Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

(in thousands of Argentine pesos)

|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Profit (loss) for the year |  |  | 10,068,795 |  |  |  | 21,815,454 |  |  |  | (3,287,401 | )
Items that are or may be subsequently reclassified to profit or loss |  |  |  |  |  |  |  |  |  |  |  |
Fair value changes for financial instruments at fair value through other comprehensive income (FVOCI) |  |  |  |  |  |  |  |  |  |  |  |
Profit (loss) for the year for financial instruments at fair value through other comprehensive income (FVOCI) |  |  | 5,067,254 |  |  |  | (1,267,956 | ) |  |  | (775,905 | )
Adjustment for reclassifications in the year |  |  | 2,309,858 |  |  |  | 80,874 |  |  |  | 306,752 |
Related income tax |  |  | (2,070,299 | ) |  |  | 1,960,826 |  |  |  | 140,089 |
|  |  | 5,306,813 |  |  |  | 773,744 |  |  |  | (329,064 | )
Share in other comprehensive income (OCI) from investees at equity method |  |  |  |  |  |  |  |  |  |  |  |
Share in OCI from investees at equity-method |  |  | (95,694 | ) |  |  | (201,868 | ) |  |  | 270,954 |
|  |  | (95,694 | ) |  |  | (201,868 | ) |  |  | 270,954 |
Fair value changes for hedging instruments - Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |
Profit or loss for the year for hedging instruments |  |  | — |  |  |  | (33,481 | ) |  |  | — |
Related income tax |  |  | — |  |  |  | 8,472 |  |  |  | — |
|  |  | — |  |  |  | (25,009 | ) |  |  | — |
Items that will not be reclassified to profit or loss |  |  |  |  |  |  |  |  |  |  |  |
Fair value changes for equity instruments at fair value through other comprehensive income (FVOCI) |  |  |  |  |  |  |  |  |  |  |  |
(Loss) Profit for the year for equity instruments at fair value through other comprehensive income (FVOCI) |  |  | (9,142 | ) |  |  | 5,124 |  |  |  | — |
Related income tax |  |  | 1,793 |  |  |  | (1,537 | ) |  |  | — |
|  |  | (7,349 | ) |  |  | 3,587 |  |  |  | — |
Other comprehensive income (loss), net of tax |  |  | 5,203,770 |  |  |  | 550,454 |  |  |  | (58,110 | )
Total comprehensive income (loss) for the year |  |  | 15,272,565 |  |  |  | 22,365,908 |  |  |  | (3,345,511 | )
Total comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Attributable to owners of the Bank |  |  | 15,254,806 |  |  |  | 22,382,926 |  |  |  | (3,178,028 | )
Attributable to non-controlling interests |  |  | 17,759 |  |  |  | (17,018 | ) |  |  | (167,483 | )

The accompanying explanatory notes are an integral part of these consolidated financial statements.

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Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2020

(in thousands of Argentine pesos, except dividends per share)

|  |  |  |  |  |  |  |  |  |  | Other comprehensive income |  |  | Reserves |  |  |  |  |  |  |  |  |  |  |  |  |
Transactions |  | Share capital |  |  | Share premium |  |  | Inflation adjustment to share capital |  |  | Fair value reserve |  |  | Share of OCI from associates and joint ventures |  |  | Legal reserve |  |  | Other reserves |  |  | Accumulated loss |  |  | Total equity attributable to owners of the Bank |  |  | Non- controlling interest |  |  | Total equity |
Balance at December 31, 2019 |  |  | 612,710 |  |  |  | 26,386,953 |  |  |  | 18,640,670 |  |  |  | 559,408 |  |  |  | 67,173 |  |  |  | 21,593,067 |  |  |  | 70,932,571 |  |  |  | (26,122,154 | ) |  |  | 112,670,398 |  |  |  | 2,146,511 |  |  |  | 114,816,909 |
Total comprehensive income for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Profit (Loss) for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,051,035 |  |  |  | 10,051,035 |  |  |  | 17,760 |  |  |  | 10,068,795 |
- Other comprehensive income for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,306,813 |  |  |  | (103,043 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,203,770 |  |  |  | (1 | ) |  |  | 5,203,769 |
Distribution of retained earnings as per the Shareholders’ Meeting held on May 15, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Legal reserve |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,442,944 |  |  |  | — |  |  |  | (8,442,944 | ) |  |  | — |  |  |  |  |  |  |  | — |
Cash dividends (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,063,448 | ) |  |  | — |  |  |  | (3,063,448 | ) |  |  |  |  |  |  | (3,063,448 | )
Other reserves (Note 26) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 33,771,775 |  |  |  | (33,771,775 | ) |  |  | — |  |  |  |  |  |  |  | — |
Distribution of retained earnings as per the Shareholders’ Meeting held on November 20, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash dividends (2) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (12,480,660 | ) |  |  | — |  |  |  | (12,480,660 | ) |  |  |  |  |  |  | (12,480,660 | )
Other net losses |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,971 | ) |  |  | (1,971 | )
Balances at December 31, 2020 |  |  | 612,710 |  |  |  | 26,386,953 |  |  |  | 18,640,670 |  |  |  | 5,866,221 |  |  |  | (35,870 | ) |  |  | 30,036,011 |  |  |  | 89,160,238 |  |  |  | (58,285,838 | ) |  |  | 112,381,095 |  |  |  | 2,162,299 |  |  |  | 114,543,394 |

(1) | Dividends per share amounts to pesos 5.000245

(2) | Dividends per share amounts to pesos 20.371278

The accompanying explanatory notes are an integral part of these consolidated financial statements.

F-8

##### Table of Contents

Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2019

(in thousands of Argentine pesos, except dividends per share)

|  |  |  |  |  |  |  |  |  |  | Other comprehensive income |  |  | Reserves |  |  |  |  |  |  |  |  |  |  |  |  |
Transactions |  | Share capital |  |  | Share premium |  |  | Inflation adjustment to share capital |  |  | Fair value reserve |  |  | Share of OCI from associates and joint ventures |  |  | Legal reserve |  |  | Other reserves |  |  | Accumulated loss |  |  | Total equity attributable to owners of the Bank |  |  | Non- controlling interest |  |  | Total equity |
Balance at December 31, 2018 |  |  | 612,660 |  |  |  | 26,373,705 |  |  |  | 18,640,578 |  |  |  | (212,799 | ) |  |  | 276,418 |  |  |  | 17,566,314 |  |  |  | 46,046,725 |  |  |  | (13,988,581 | ) |  |  | 95,315,020 |  |  |  | 63,063 |  |  |  | 95,378,083 |
Total comprehensive income for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Profit (Loss) for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21,819,964 |  |  |  | 21,819,964 |  |  |  | (4,510 | ) |  |  | 21,815,454 |
- Other comprehensive income for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 772,207 |  |  |  | (209,245 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 562,962 |  |  |  | (12,508 | ) |  |  | 550,454 |
- Distribution of retained earnings as per the Shareholders’ Meeting held on April 24, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Legal reserve |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,026,753 |  |  |  | — |  |  |  | (4,026,753 | ) |  |  | — |  |  |  |  |  |  |  |  |
Cash dividends (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,040,938 | ) |  |  | (5,040,938 | ) |  |  |  |  |  |  | (5,040,938 | )
Other reserves |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24,885,846 |  |  |  | (24,885,846 | ) |  |  | — |  |  |  |  |  |  |  |  |
- Other net increases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Pending registration (Note 26) |  |  | 50 |  |  |  | 13,248 |  |  |  | 92 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 13,390 |  |  |  | (12,069 | ) |  |  | 1,321 |
- Gain of control over subsidiaries (Note 42) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,112,535 |  |  |  | 2,112,535 |
Balances at December 31, 2019 |  |  | 612,710 |  |  |  | 26,386,953 |  |  |  | 18,640,670 |  |  |  | 559,408 |  |  |  | 67,173 |  |  |  | 21,593,067 |  |  |  | 70,932,571 |  |  |  | (26,122,154 | ) |  |  | 112,670,398 |  |  |  | 2,146,511 |  |  |  | 114,816,909 |

(1) | Dividends per share amounts to pesos 8.227958

The accompanying explanatory notes are an integral part of these consolidated financial statements.

F-9

##### Table of Contents

Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2018

(in thousands of Argentine pesos, except dividends per share)

|  |  |  |  |  |  |  |  |  |  | Other comprehensive income |  |  | Reserves |  |  |  |  |  |  |  |  |  |  |  |  |
Transactions |  | Share capital |  |  | Share premium |  |  | Inflation adjustment to share capital |  |  | Fair value reserve |  |  | Share of OCI from associates and joint ventures |  |  | Legal reserve |  |  | Other reserves |  |  | Accumulated loss |  |  | Total equity attributable to owners of the Bank |  |  | Non- controlling interest |  |  | Total equity |
Balance at December 31, 2017 |  |  | 612,660 |  |  |  | 26,373,705 |  |  |  | 18,640,578 |  |  |  | 116,265 |  |  |  | 5,464 |  |  |  | 15,377,588 |  |  |  | 40,028,954 |  |  |  | 1,594,175 |  |  |  | 102,749,389 |  |  |  | 952,448 |  |  |  | 103,701,837 |
Adjustment on initial application of IFRS 9, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,519,210 | ) |  |  | (1,519,210 | ) |  |  | — |  |  |  | (1,519,210 | )
Restated balance at the beginning of the year |  |  | 612,660 |  |  |  | 26,373,705 |  |  |  | 18,640,578 |  |  |  | 116,265 |  |  |  | 5,464 |  |  |  | 15,377,588 |  |  |  | 40,028,954 |  |  |  | 74,965 |  |  |  | 101,230,179 |  |  |  | 952,448 |  |  |  | 102,182,627 |
Total comprehensive loss for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Loss for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,119,918 | ) |  |  | (3,119,918 | ) |  |  | (167,483 | ) |  |  | (3,287,401 | )
- Other comprehensive loss for the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (329,064 | ) |  |  | 270,954 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (58,110 | ) |  |  | — |  |  |  | (58,110 | )
- Distribution of retained earnings as per the Shareholders’ Meeting held on April 10, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Legal reserve |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,188,726 |  |  |  | — |  |  |  | (2,188,726 | ) |  |  | — |  |  |  | — |  |  |  | — |
Cash dividends (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,737,131 | ) |  |  | (2,737,131 | ) |  |  | — |  |  |  | (2,737,131 | )
Other reserves |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,017,771 |  |  |  | (6,017,771 | ) |  |  | — |  |  |  | — |  |  |  | — |
- Other net increases |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 51,207 |  |  |  | 51,207 |
- Loss of control of subsidiary |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (773,109 | ) |  |  | (773,109 | )
Balances at December 31, 2018 |  |  | 612,660 |  |  |  | 26,373,705 |  |  |  | 18,640,578 |  |  |  | (212,799 | ) |  |  | 276,418 |  |  |  | 17,566,314 |  |  |  | 46,046,725 |  |  |  | (13,988,581 | ) |  |  | 95,315,020 |  |  |  | 63,063 |  |  |  | 95,378,083 |

(1) | Dividends per share amounts to pesos 4.467623

The accompanying explanatory notes are an integral part of these consolidated financial statements.

F-10

##### Table of Contents

Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

(in thousands of Argentine pesos)

|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Accounts
Cash flow from operating activities |  |  |  |  |  |  |  |  |  |  |  |
Profit before tax |  |  | 18,102,889 |  |  |  | 24,636,513 |  |  |  | 5,794,181 |
Adjustments to obtain cash flows from operating activities: |  |  | (28,528,319 | ) |  |  | (35,549,527 | ) |  |  | (48,058,804 | )
Depreciation and amortization |  |  | 4,065,981 |  |  |  | 5,728,534 |  |  |  | 4,025,755 |
Net impairment loss of financial assets |  |  | 11,864,861 |  |  |  | 21,445,415 |  |  |  | 8,029,553 |
Accrued interest |  |  | (79,878,102 | ) |  |  | (94,312,427 | ) |  |  | (68,285,419 | )
Exchange rate |  |  | (10,467,407 | ) |  |  | (35,013,137 | ) |  |  | (37,359,594 | )
Inflation effect on cash and cash equivalents balances |  |  | 48,182,313 |  |  |  | 76,713,902 |  |  |  | 45,807,111 |
Gain on sale of Prisma Medios de Pagos S.A. (see Note 9.3.) |  |  | — |  |  |  | (5,202,018 | ) |  |  | — |
Put option - Prisma Medios de Pagos S.A. (see Note 40.b.3)) |  |  | (497,000 | ) |  |  | (932,562 | ) |  |  | — |
Revaluation result - Prisma Medios de Pagos S.A. |  |  | (3,368,893 | ) |  |  | (5,180,616 | ) |  |  | — |
Other adjustments |  |  | 1,569,928 |  |  |  | 1,203,382 |  |  |  | (276,210 | )
Net (increases) decreases due to changes in operating assets: |  |  | (138,325,293 | ) |  |  | 153,489,601 |  |  |  | (8,532,455 | )
Financial assets at fair value through profit or loss (FVTPL) |  |  | 6,221,639 |  |  |  | 8,785,344 |  |  |  | 1,815,751 |
Financial assets at amortized cost |  |  | (6,109,521 | ) |  |  | 11,901,145 |  |  |  | (4,795,147 | )
Other financial assets |  |  | 3,457,216 |  |  |  | 10,730,843 |  |  |  | (8,675,952 | )
Loans and advances to financial institutions |  |  | (31,659,768 | ) |  |  | 106,187,787 |  |  |  | 17,776,894 |
Loans and advances to customers |  |  | 70 |  |  |  | (150 | ) |  |  | 35 |
Loans and advances to government sector |  |  | (48,550,732 | ) |  |  | 26,562,031 |  |  |  | (7,337,698 | )
Financial assets at fair value through other comprehensive income |  |  | (58,660,867 | ) |  |  | (11,281,608 | ) |  |  | 591,993 |
Other assets |  |  | (3,023,330 | ) |  |  | 604,209 |  |  |  | (7,908,331 | )
Net increases (decreases) due to changes in operating liabilities: |  |  | 75,007,094 |  |  |  | (174,082,019 | ) |  |  | 91,973,119 |
Financial liabilities at amortized cost |  |  |  |  |  |  |  |  |  |  |  |
Deposits from financial institutions |  |  | 618,750 |  |  |  | (373,071 | ) |  |  | 112,762 |
Deposits from customers |  |  | 76,805,004 |  |  |  | (140,903,179 | ) |  |  | 62,242,659 |
Deposits from government sector |  |  | 1,631,595 |  |  |  | 789,231 |  |  |  | 19,095 |
Repurchase agreements |  |  | 331,035 |  |  |  | (314,170 | ) |  |  | (852,528 | )
Financial liabilities at FVTPL |  |  | (4,785,539 | ) |  |  | 692,951 |  |  |  | 3,623,686 |
Other financial liabilities |  |  | 406,249 |  |  |  | (33,973,781 | ) |  |  | 26,827,445 |
Income tax paid |  |  | (16,263,579 | ) |  |  | (2,176,539 | ) |  |  | (2,845,567 | )
Interest received |  |  | 121,249,917 |  |  |  | 148,915,406 |  |  |  | 109,187,613 |
Interest paid |  |  | (41,382,661 | ) |  |  | (62,814,309 | ) |  |  | (44,678,126 | )
Total cash flows generated by/(used in) operating activities |  |  | (10,139,952 | ) |  |  | 52,419,126 |  |  |  | 102,839,961 |

The accompanying explanatory notes are an integral part of these consolidated financial statements.

F-11

##### Table of Contents

Banco BBVA Argentina S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

(in thousands of Argentine pesos) (cont.)

Accounts |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Cash flows from investing activities |  |  |  |  |  |  |  |  |  |  |  |
Payments: |  |  | (3,326,215 | ) |  |  | (4,081,758 | ) |  |  | (4,155,026 | )
Purchase of property and equipment, intangible assets and other assets |  |  | (3,147,268 | ) |  |  | (4,081,758 | ) |  |  | (3,983,253 | )
Loss of control of the subsidiary (see Note 42) |  |  | — |  |  |  | — |  |  |  | (171,773 | )
Other payments related to investment activities |  |  | (178,947 | ) |  |  | — |  |  |  | — |
Collections: |  |  | 622,862 |  |  |  | 5,224,748 |  |  |  | 2,425,877 |
Sale of equity instruments |  |  | — |  |  |  | 3,392,851 |  |  |  | — |
Sale of property and equipment, intangible assets and other assets |  |  | — |  |  |  | — |  |  |  | 1,372,337 |
Cash and cash equivalents – Gain of control over subsidiaries (see Note 42) |  |  | — |  |  |  | 350,925 |  |  |  | — |
Dividends received |  |  | 622,862 |  |  |  | 1,480,972 |  |  |  | 1,053,540 |
Total cash flows (used in) / generated by investing activities |  |  | (2,703,353 | ) |  |  | 1,142,990 |  |  |  | (1,729,149 | )
Cash flows from financing activities |  |  |  |  |  |  |  |  |  |  |  |
Payments: |  |  | (12,170,644 | ) |  |  | (13,880,505 | ) |  |  | (5,542,919 | )
Dividends |  |  | — |  |  |  | (5,040,938 | ) |  |  | (2,737,131 | )
Debt security payments - Capital |  |  | (7,226,018 | ) |  |  | (4,383,423 | ) |  |  | (1,139,836 | )
Debt security payments - Interest |  |  | (3,910,199 | ) |  |  | (3,362,337 | ) |  |  | (1,660,684 | )
BCRA |  |  | — |  |  |  | — |  |  |  | (5,268 | )
Payment of lease liabilities |  |  | (1,034,427 | ) |  |  | (1,093,807 | ) |  |  | — |
Collections: |  |  | 2,035,900 |  |  |  | 7,197,400 |  |  |  | 2,204,470 |
Non controling interest capital contribution |  |  | — |  |  |  | — |  |  |  | 595,589 |
Debt securities issued - Capital |  |  | 2,035,900 |  |  |  | 7,195,559 |  |  |  | 1,608,881 |
BCRA |  |  | — |  |  |  | 1,841 |  |  |  | — |
Total cash flows (used in) / generated by financing activities |  |  | (10,134,744 | ) |  |  | (6,683,105 | ) |  |  | (3,338,449 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | 10,467,407 |  |  |  | 35,013,137 |  |  |  | 37,359,594 |
Inflation effect on cash and cash equivalents |  |  | (48,182,313 | ) |  |  | (76,713,902 | ) |  |  | (45,807,111 | )
Total changes in cash and cash equivalents |  |  | (60,692,955 | ) |  |  | 5,178,246 |  |  |  | 89,324,846 |
Cash and cash equivalents at the beginning of the year (Note 8) |  |  | 212,733,025 |  |  |  | 207,554,779 |  |  |  | 118,229,933 |
Cash and cash equivalents at the end of the year (Note 8) |  |  | 152,040,070 |  |  |  | 212,733,025 |  |  |  | 207,554,779 |

The accompanying explanatory notes are an integral part of these consolidated financial statements.

F-12

##### Table of Contents

Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

1. General information

Banco BBVA Argentina S.A. (hereinafter “BBVA Argentina”, the “Bank” or the “Entity”) is a corporation (“sociedad anónima”) incorporated under the laws of Argentina, operating as a universal bank with a network of 247 national branches.

Since December 1996, BBVA Argentina is controlled by Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”, “BBVA Group” or the “controlling entity”), which directly and indirectly owns 66.55% of the share capital of the Bank as of December 31, 2020.

These Consolidated Financial Statements relate to the Bank and its subsidiaries (collectively, the “Group”). The Bank’s subsidiaries are detailed in Note 42.

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

1.1. Economic context

The Bank continues to operate in a complex economic context, signaled by the persistence of high levels of inflation along with a sharp drop in the level of activity, amidst the ongoing health emergency. This scenario is accompanied by volatile financial variables, including, among others, a country risk indicator which has increased even after the successful renegotiation of sovereign debt, as well as the imputed exchange rates impacting the outstanding public debt denominated in foreign currency.

Against this backdrop, on December 23, 2019, the Public Emergency, Social Solidarity and Productive Revival Law (the “Economic Emergency Law”) was published in the Official Gazette, declaring Argentina in economic, financial, administrative, social security, energy, public health and social emergency.

The Economic Emergency Law postponed until December 31, 2021 the reduction in the income tax rate (see Note 15) and the application of 2017 Fiscal Covenant, which established a gradual decrease in turnover tax until December 31, 2020.

In particular, and concerning financial assets, the Argentine Government issued Decrees No. 49/2019 and 596/2019, postponing the repayment of US-dollar denominated Treasury Bills as well as short-term securities (Letes, Lecap, Lecer, and Lelink).

Following the compulsory rescheduling of soverign debt established by Decrees No. 141/20 and 193/20, on July 2020, the Bank exchanged US dollar-denominated Lelinks (Treasury Bills adjusted by the benchmark exchange rate) with a nominal value of USD 224,675,000, for the following securities:

| • |  | Argentine Treasury bonds in pesos adjusted by CER + 1.4% due March 25, 2023 (BONCER 2023) with a nominal value of 2,675,346,340, with interest payable semi-annually and principal repayable in full upon maturity; and

| • |  | Argentine Treasury bonds in pesos adjusted by CER + 1.5% due March 25, 2024 (BONCER 2024) with a nominal value of 6,240,472,351, with interest payable semi-annually and principal payable in full upon maturity.

The bonds received in exchange are measured at fair value through OCI. This operation did not generate gains or losses for the Bank.

As regards the foreign exchange market, on September 1, 2019, the Argentine Government published Executive Decree No. 609/2019 setting forth extraordinary and interim guidelines concerning 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 is required to access the foreign exchange market for the remittance of profits and dividends, payment of services to foreign related companies, and early payment of financial debts (principal or interest) over three business days before their due date. Then, on December 30, 2019, the BCRA issued Communication “A” 6856, establishing that the preceding provisions would remain in force on and after December 31, 2019. As of the date of these financial statements, the BCRA issued further regulations imposing new restrictions to access the exchange market.

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1.2. COVID-19

On March 11, 2020, the World Health Organization designated the Coronavirus (COVID-19) outbreak as a pandemic, due to its fast pace of proliferation across more than 150 countries. Most governments took restrictive measures to contain the spread, including, without limitation, social distancing, confinement, lockdowns, and restrictions to the free movement of people, closure of governmental and private facilities, other than those deemed essential (i.e., health, food, fuel and communication facilities), border closures, and drastic reductions in transportation by air, sea, railroad and land.

As for Argentina, where the Entity operates, on March 12, 2020, Executive Decree No. 260/2020, as amended, was issued, declaring the country in health emergency in order to cope with the crisis brought about by the COVID-19. On March 19, 2020, Executive Decree No. 297/2020 was issued, mandating social and preventive lockdown measures, effective from March 20, 2020 through November 8, 2020, pursuant to successive extensions established by subsequent Decrees published in the Official Gazette. By means of Decree No. 875/2020 dated November 7, 2020, the Executive Branch established mandatory social preventive distancing measures, subsequently extended until April 9, 2021 for people residing in or moving around urban agglomerations and the districts or provinces, to the extent they comply with the epidemiological and health parameters therein set forth.

The measures adopted by the Executive Branch originally led to the slowdown or suspension of most non-essential activities carried out by individuals and, as such, have had significant impact on the economy at the national, regional and global levels, due to the disruption or slowdown of supply chains, coupled with rising economic uncertainty, as evidenced by the increased volatility in asset prices and exchange rates, and a decline in long-term interest rates. Then, due to the epidemiological evolution in different regions of the country, the restrictive measures progressively became more flexible, allowing to gradually resume economic and personal activities.

In an effort to address the challenges brought about by the pandemic, the BCRA took several measures primarily aimed at facilitating credit access by economic players, including, without limitation:

| a) | eased calculation of days in arrears and suspension of certain mandatory reclassification provisions for purposes of the financial system’s debtors classification and allowance assessment, according to the BCRA’s rules and regulations;

| b) | introduced a maximum amount of Bills issued by the BCRA (LELIQs) that an entity can held, which is monthly determined based on the capital for regulatory purposes and the amount of deposits;

| c) | financial entities have to grant credit facilities to Micro, Small and Medium Enterprises (MSMEs) at an annual nominal interest rate up to 24% to cover working capital requirements or to pay for wages;

| d) | financial institutions are required to grant an automatic extension of the payment term of credit card outstanding balances until September 30, 2020, payable in 9 instalments with interest rate of up to 40% a year, with a three-month grace period;

| e) | for mortgage and pledge loans adjustable by UVA (linked to CPI) Decrees Nos. 319/2020 and 767/2020 established the suspension of any increases in the amounts of installments until January 2021. In addition, from February 2021 there is a period of 18 months of convergence so that amounts of installments will reach the normal level without the effect of the suspended increases. The difference between the payments in accordance to contractual terms and those derived from the suspension, are payable in new installments that do not exceed the original ones at the end of the original contractual term.

| f) | suspended hikes in fees and commissions (related to saving accounts, credit cards, current accounts and safe deposit boxes) from November 5, 2020 with maximum percentages allowed by the BCRA. Such percentages shall be communicated to the BCRA at least 30 days prior to date scheduled to inform the user, and they shall only be applied 60 days after the users have been informed. This implies that the nearest effective date for these increases will be early February 2021;

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| g) | ceiling rates on revolving credit card financing arrangements and floor rates on time deposits;

| h) | financial entities have to grant credit facilities to customers and non-customers at a regulatory interest rate of 24%, for the acquisition of Argentine-sourced capital goods, health service providers and companies which had no access to bank loans;

| i) | financial entities are required to grant corporate loans at regulatory interest rates under the Employment and Production Emergency Assistance Program (“Program”), at a regulatory rate of 15%;

| j) | under the abovementioned Program financial entities have to grant a zero-rate (15% of the rate is covered by the Fondo Nacional de Desarrollo Productivo “FONDEP”) on credit facilities in pesos for taxpayers under the simplified tax regime and self-employed workers engaged in cultural activities; and

| k) | from October 16, 2020 to September 30, 2021 the largest financials institutions are required to keep an outstanding balance of loans under the “Financing line for productive investments of MSMEs” for financing of investment projects, working capital and discount of financial instruments of at least 7.5% of the financial institution deposits.

In addition, the distribution of profits by financial institutions was suspended until June 30, 2021.

1.3. Main impacts on the Bank operations

The events described in the preceding Notes 1.1. and 1.2. impact the Entity’s operations, while also affecting the calculation of expected credit losses (see Note 11) and the valuation of debt instruments issued by the public sector (given their new conditions as lower rates, longer term and different currency), by decreasing the financial margin and restricting the Entity’s ability to charge fees and commissions on certain activities (withdrawal of money at ATMs, operations carried out in the branch by MSMEs).

As of December 31, 2020, minimum capital and minimum cash surpass the minimum thresholds required by the BCRA, with no deficiencies in these ratios being expected for the following twelve months.

The Entity’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 of preparation.

2.1 Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) (“IFRS-IASB”).

These consolidated financial statements have been approved by the Board of Directors of Banco BBVA Argentina S.A. on April 13, 2021.

2.2 Comparative information

Leases

As of January 1, 2019, IFRS 16 “Leases” replaced IAS 17 “Leases” and includes changes in the lessee accounting model (see Note 6.1). This amendment was applied using the modified retrospective method and the previous year has not been restated for comparison purposes.

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3. Functional and presentation currency and hyperinflationary accounting

The Argentine Peso is the functional and presentation currency of the Bank and its subsidiaries. All amounts are stated in thousands of Argentine pesos, unless otherwise stated.

See note 5.22 for Hyperinflationary accounting.

4. Accounting estimates and judgments

In preparing these consolidated financial statements, the Board of Directors has made judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses.

The related estimates and assumptions are based on expectations and other factors deemed reasonable, the result of which are the basis for the judgments on the value of assets and liabilities, which are not easily obtained from other sources. Actual results may differ from these estimates.

The underlying estimates and assumptions are continuously under review. The effect of the review of accounting estimates is recognized prospectively.

4.1. Judgments

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is described in Note 5 “Significant accounting policies” in the following titles:

| • |  | Note 5.1. – “Basis of consolidation”

| • |  | Note 5.4.b) – “Financial assets and liabilities - Classification of financial assets”

| • |  | Note 5.4.g) – “Financial assets and liabilities - Impairment of financial assets”

| • |  | Note 5.18. – “Leases”

4.2. Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in these consolidated financial statements within the next financial year is included in the following notes:

| • |  | Note 11 – “Measurement of Expected Credit Losses (ECL)” regarding impairment of financial assets: establishing the criteria for determining whether credit risk on a financial asset has increased significantly since initial recognition, determining the methodology for incorporating forward-looking information into the measurement of ECL and selection and approval of models used to measure ECL.

| • |  | Note 15 – “Income tax”, regarding availability of future taxable profit against which deferred tax assets may be realized and the effect of the final resolution of uncertain tax positions.

| • |  | Note 24 – “Provisions”, regarding the likelihood, timing and amount of outflow of resources.

| • |  | Note 40 b.3) – “Valuation techniques for Levels 2 and 3”, regarding measurement of the fair value of financial instruments with observable and unobservable inputs, respectively”

On March 11, 2020, COVID-19 was declared as a global pandemic by the World Health Organization (see Note 1.2). The great uncertainty associated to the unprecedented nature of this pandemic entails a greater complexity of developing reliable estimations and applying judgment.

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Therefore, these estimates have been made on the basis of the best available information on the matters analyzed, as of December 31, 2020. However, it is possible that events may take place in the future which could make it necessary to amend these estimations (upward or downward), which would be carried out prospectively, recognizing the effects of the change in the consolidated statement of profit or loss on the date of that change.

4.3. Fair value measurement

Fair value is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date. The fair value of a liability reflects its non-performance risk.

When available, the Group measures the fair value of a financial instrument using the quoted price in an active market. A market is considered active if transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques maximizing the use of relevant market inputs and minimizes the use of unobservable inputs. The selection of a valuation technique considers all factors market participants would take into consideration for the purposes of setting the price of the transaction.

Fair values are categorized into different levels in the fair value hierarchy based on the input data used in the measurement techniques, as follows:

| • |  | Level 1: quoted prices in active markets (unadjusted) for identical assets or liabilities.

| • |  | Level 2: fair value estimated with observable market inputs.

| • |  | Level 3: inputs that are unobservable.

The Group recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

5. Significant accounting policies

The Group has consistently applied the following accounting policies in all periods presented in these consolidated financial statements.

5.1. Basis of consolidation

| a) | Subsidiaries

Subsidiaries are all entities (including structured entities, if any) controlled by the Group. The Group controls an entity if it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. At each period-end, the Group reassesses whether it has control if there are changes to one or more of the elements of control.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

The financial statements of subsidiaries were prepared as of the same dates and for the same fiscal years as those of Banco BBVA Argentina S.A., consistently applying accounting policies in line with those the Bank relies on.

| b) | Non-controlling interests

Non-controlling interests are the proportionate share of income and shareholders’ equity of the subsidiaries, which do not belong to the Bank and are disclosed separately in the Consolidated Statements of profit or loss, of Comprehensive Income, of Financial Position and of changes in equity.

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| c) | Trusts

The Bank acts as trustee for a number of trusts. The Bank considers the purpose and design of the trust so as to identify its relevant activities, how decisions about such activities are made, who has the current ability to direct those activities, and who receives returns therefrom. In case the Bank has decision-making power over the trust, determines whether it acts as a principal or as an agent of a third party.

The Bank has concluded that it does not have control over any of these trusts.

| d) | Investment funds

A subsidiary of the Bank acts as fund manager to a number of investment funds. Determining whether the Bank controls such an investment fund usually focuses on the assessment of the aggregate economic interests of the Bank in the fund (comprising any carried interests and expected management fees) and considers that investors have no right to remove the fund manager without cause. In cases where the economic interest share is less than 37%, the Bank concludes its subsidiary acts as an agent for the investors and therefore does not consolidate those funds.

| e) | Loss of control

When the Bank loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, any related non-controlling interest and other components of equity.

Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

| f) | Transactions eliminated on consolidation

Intra-Group balances and transactions, and any unrealized income and expenses arising from intra-Group transactions, are eliminated in preparing the consolidated financial statements.

| g) | Business combinations

The Group accounts for business combinations using the acquisition method, when control is transferred to the Group. Generally, the consideration transferred for the acquisition is measured at fair value, similarly to the net identifiable assets acquired. The Group also relies on the acquisition method to account for business combinations with no consideration transferred. Goodwill is tested for impairment on an annual basis. Any income from the acquisition under too favorable conditions is recognized the income statement. Transaction costs are accounted for as expenses when incurred, other than to the extent related to the issuance of debt or equity instruments.

5.2. Foreign currency

Transactions in foreign currencies are translated into the respective functional currency of Bank at the spot exchange rates published by the BCRA at the date of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the spot exchange rate at the reporting date.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the spot exchange rate at the date on which the fair value is determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction.

Foreign currency differences arising from translation are recognized in profit or loss.

5.3. Cash and cash equivalents

Cash and cash equivalents includes cash, bank deposits, balances with central banks, balances with no restrictions kept with the BCRA and on-demand accounts held at financial institutions that are subject to an insignificant risk of changes in their fair value which are used by the Bank in the management of its short-term commitments.

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Cash and cash equivalents are carried at amortised cost in the Consolidated Statement of Financial Position.

5.4. Financial assets and liabilities

| a) | Initial recognition and measurement

The Group initially recognizes loans, deposits, debt securities issued and liabilities on the date on which they are originated. All other financial instruments (including ordinary course purchases and sales of financial assets) are recognized on the trade date, which is the date when the Group becomes party to the contractual provisions of the instrument.

The Group recognizes purchases of financial instruments with the commitment to resell at a certain price as a loan granted in the line “Reverse repurchase agreements” in the Consolidated statement of financial position. The difference between the purchase and sale prices of those instruments is recorded as interest accrued during the term of the transactions using the effective interest method.

Financial assets and financial liabilities are initially recognized at fair value. Instruments not measured at fair value through profit or loss (FVTPL) are recognized at fair value plus (in the case of assets) or minus (in the case of liabilities) the transaction costs directly attributable to the acquisition of the asset or the issuance of the liability.

The transaction price is usually the best evidence of fair value for initial recognition.

However, if the Group determines that the fair value at initial recognition is different than the consideration received or paid, when the fair value is classified as Level 1 or 2, the financial instrument is initially recognized at fair value and the difference is recognized in profit or loss. If the fair value at initial recognition is classified as Level 3, the difference between the fair value and the consideration is deferred in the term of the instrument.

| b) | Classification of financial assets

On initial recognition, financial assets are classified as measured at amortized cost, fair value through Other Comprehensive Income (FVOCI) or fair value through profit or loss (FVTPL).

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

| • |  | The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

| • |  | The contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.

A financial asset is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:

| • |  | The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

| • |  | The contractual terms of the financial asset give rise to cash flows that are SPPI on the principal amount outstanding.

For a financial asset measured at FVOCI, gains and losses are recognised in OCI, except for the following, which are recognised in profit or loss in the same manner as for financial assets measured at amortised cost:

| • |  | Interest revenue using the effective interest method;

| • |  | Expected credit losses (“ECL”) and reversals; and

| • |  | Foreign exchange gains and losses.

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When a financial asset measured at FVOCI is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss.

On initial recognition of an equity investment that is not held for trading, the Bank may irrevocably elect to, for each individual instrument, present subsequent changes in fair value in OCI. Gains and losses on such equity instruments are never reclassified to profit or loss and no impairment is recognised in profit or loss. Dividends are recognised in profit or loss unless they clearly represent a recovery of part of the cost of the investment, in which case they are recognised in OCI. Cumulative gains and losses recognised in OCI are transferred to retained earnings on disposal of an investment.

On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

All other financial assets are classified as measured at FVTPL. This category includes derivative financial instruments.

Business model assessment

The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

| • |  | The stated policies and objectives for the portfolio and the operation of those policies in practice,

| • |  | How the performance of the portfolio is evaluated and reported to the Group’s management,

| • |  | The risks that affect the performance of the business model and how those risks are managed,

| • |  | How managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

| • |  | The frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group’s stated objective for managing the financial assets is achieved and how cash flows are realized.

Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets.

Assessment of whether contractual cash flows are SPPI

For the purpose of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs as well as profit margin. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

In making the assessment, the Group considers:

| • |  | Contingent events that would change the amount and timing of cash flows;

| • |  | Leverage features;

| • |  | Prepayment and extension terms;

| • |  | Terms that limit the Bank’s claim to cash flows from specified assets; and

| • |  | Features that modify consideration of the time value of money (e.g. periodical reset of interest rate).

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Reclassification

Financial assets are not reclassified after their initial recognition, except for a change in the Group’s business models. Financial liabilities are not be reclassified.

| c) | Classification of financial liabilities

The Group classifies its financial liabilities, other than derivatives, financial guarantees and liabilities at fair value through profit or loss as measured at amortized cost.

Financial liabilities held for trading and derivative financial instruments are measured at FVTPL.

Financial liabilities held for trading have been acquired or incurred principally for the purpose of selling or repurchasing in the near term, or held as part of a portfolio that is managed together for short-term profit or position taking. Trading liabilities are initially recognised and subsequently measured at fair value in the Consolidated Statement of Financial Position, with transaction costs recognised in profit or loss. All changes in fair value are recognised as part of net trading income in profit or loss.

‘Financial guarantees’ are contracts that require the Group to make specified payments to reimburse the holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance with the terms of a financial asset.

Financial guarantees issued are initially recognized at fair value, and subsequently are measured at the higher of this amortized amount and the present value of any expected payment to settle the liability when a payment under the contract has become probable.

| d) | Measurement at amortized cost

The amortized cost of a financial asset or liability is the amount of its initial recognition less the capital reimbursements, plus or less the amortization, using the effective interest method, of any difference between the initial amount and the amount at maturity. In the case of financial assets, it also includes any impairment.

| e) | Modifications of financial assets and financial liabilities

i) Financial assets

If the terms of a financial asset are modified, then the Group evaluates whether the cash flows of the modified asset are substantially different.

If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value plus any eligible transaction costs. Any fees received as part of the modification are accounted for as follows:

| • |  | Fees that are considered in determining the fair value of the new asset and fees that represent reimbursement of eligible transaction costs are included in the initial measurement of the asset; and

| • |  | Other fees are included in profit or loss as part of the gain or loss on derecognition.

If cash flows are modified when the borrower is in financial difficulties, then the objective of the modification is usually to maximise recovery of the original contractual terms rather than to originate a new asset with substantially different terms. If the Group plans to modify a financial asset in a way that would result in forgiveness of cash flows, then it first considers whether a portion of the asset should be written off before the modification takes place. This approach impacts the result of the quantitative evaluation and the derecognition criteria are not usually met in such cases.

If the modification of a financial asset measured at amortised cost or FVOCI does not result in derecognition of the financial asset, then the Group first recalculates the gross carrying amount of the financial asset using the original effective interest rate of the asset and recognises the resulting adjustment as a modification gain or loss in profit or loss. For floating-rate financial assets, the original effective interest rate used to calculate the modification gain or loss is adjusted to reflect current market terms at the time of the modification. Any costs or fees incurred and fees received as part of the modification adjust the gross carrying amount of the modified financial asset and are amortised over the remaining term of the modified financial asset.

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If such a modification is carried out because of financial difficulties of the borrower, then the gain or loss is presented together with impairment losses. In other cases, it is presented as interest income calculated using the effective interest rate method.

| ii) | Financial liabilities

The Group derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability derecognised and consideration paid is recognised in profit or loss. Consideration paid includes non-financial assets transferred, if any, and the assumption of liabilities, including the new modified financial liability.

If the modification of a financial liability is not accounted for as derecognition, then the amortised cost of the liability is recalculated by discounting the modified cash flows at the original effective interest rate and the resulting gain or loss is recognised in profit or loss. For floating-rate financial liabilities, the original effective interest rate used to calculate the modification gain or loss is adjusted to reflect current market terms at the time of the modification. Any costs and fees incurred are recognised as an adjustment to the carrying amount of the liability and amortised over the remaining term of the modified financial liability by re-computing the effective interest rate on the instrument.

| f) | Derecognition of financial assets and liabilities

| i) | Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in OCI is recognised in profit or loss.

Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as at FVOCI is not recognised in profit or loss on derecognition of such securities. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the Group is recognised as a separate asset or liability.

The Group enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognised. Examples of such transactions are securities lending and sale-and-repurchase transactions.

When assets are sold to a third party with a concurrent total rate of return swap on the transferred assets, the transaction is accounted for as a secured financing transaction similar to sale-and-repurchase transactions, because the Group retains all or substantially all of the risks and rewards of ownership of such assets.

In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.

In certain transactions, the Group retains the obligation to service the transferred financial asset for a fee. The transferred asset is derecognised if it meets the derecognition criteria. An asset or liability is recognised for the servicing contract if the servicing fee is more than adequate (asset) or is less than adequate (liability) for performing the servicing.

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| ii) | Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.

| g) | Impairment of financial assets

The IFRS 9 impairment model is applied to financial assets valued at amortized cost and to financial assets valued at fair value with changes in other comprehensive income, except for investments in equity instruments. Likewise, all the financial instruments valued at fair value through profit and loss are excluded from the impairment model.

The standard classifies financial instruments into three categories, which depend on the evolution of their credit risk from the moment of initial recognition. The first category includes the transactions with no significant increase in credit risk since their initial recognition and not impaired for which a 12-month ECL is recognised (Stage 1); the second comprises the financial assets for which a significant increase in credit risk has been identified since its initial recognition but which are not credit-impaired (Stage 2) for which a lifetime ECL is recognised; and the third category which is for impaired financial assets where one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred (Stage 3).

The calculation of the allowances for credit risk in each of these three categories are done differently following concepts of expected loss:

| • |  | Expected loss at 12 months: expected credit loss that arises from possible default events within 12 months following the presentation date of the financial statements, applicable for financial assets classified as Stage 1; and

| • |  | Lifetime Expected Credit Losses of the transaction: this is the expected credit loss that arises from all possible default events over the remaining life of the financial instrument, applicable for financial assets classified as Stage 2 and 3.

All this requires considerable judgment, both in the modeling for the estimation of the expected losses and in the forecasts, on how the economic factors affect such losses, which must be carried out on a weighted probability basis.

The Group has applied the following definitions in accordance with IFRS 9:

Default

BBVA Argentina has applied a definition of default for financial instruments that is consistent with that used in internal credit risk management, as well as the indicators under applicable regulation at the date of implementation of IFRS 9. Both qualitative and quantitative indicators have been considered.

The 90-day past-due stipulation may be waived in cases where the Group considers it appropriate, based on reasonable and documented information that it is appropriate to use a longer term. As of December 31, 2020, the Group did not waive the past-due stipulation for any of the portfolios.

Restructured asset

If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due to financial difficulties of the borrower, then an assessment is made of whether the financial asset should be derecognised and ECL are measured as follows.

| • |  | If the restructuring will not result in derecognition of the existing asset, then the expected cash flows arising from the modified financial asset are included in calculating the cash shortfalls from the existing asset.

| • |  | If the restructuring will result in derecognition of the existing asset, then the expected fair value of the new asset is treated as the final cash flow from the existing financial asset at the time of its derecognition. This amount is included in calculating the cash shortfalls from the existing financial asset that are discounted from the expected date of derecognition to the reporting date using the original effective interest rate of the existing financial asset.

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Credit-impaired financial assets

At each reporting date the Group assesses whether the financial assets carried at amortized cost and debt financial assets carried at FVOCI and finance lease receivables are credit-impaired (Stage 3).

An asset is credit-impaired if one or more events have occurred and they have a detrimental impact on the estimated future cash flows of the asset. Evidence that a financial asset is credit-impaired includes observable data about the following events:

| • |  | Significant financial difficulty of the issuer or the borrower.

| • |  | A breach of contract (e.g. a default or past due event).

| • |  | A lender having granted a concession to the borrower – for economic or contractual reasons relating to the borrower’s financial difficulty – that the lender would not otherwise consider.

| • |  | It becomes probable that the borrower will enter bankruptcy or other financial reorganization.

| • |  | The disappearance of an active market for a security because of financial difficulties.

It may not be possible to identify a single discrete event. Instead, the combined effect of several events may cause financial assets to become credit-impaired.

The definition of impaired financial assets in the Group is aligned with the definition of default explained previously.

Significant increase in credit risk

The objective of the impairment requirements is to recognize lifetime expected credit losses for financial instruments for which there have been significant increases in credit risk since initial recognition considering all reasonable and supportable information, including that which is forward-looking.

The model developed by the Group for assessing the significant increase in credit risk has a two-prong approach:

| • |  | Quantitative criterion: the Group uses a quantitative analysis based on comparing the current expected probability of default over the life of the transaction with the original adjusted expected probability of default, so that both values are comparable in terms of expected default probability for their residual life. The thresholds used for considering a significant increase in risk take into account special cases according to geographic areas and portfolios. Depending on how old current operations are, at the time implementation of the standard, some simplification has been made to compare the probabilities of default between the current and the original moment, based on the best information available at that moment.

| • |  | Qualitative criterion: most indicators for detecting significant risk increase are included in the Group’s systems through rating/scoring systems or macroeconomic scenarios, so quantitative analysis covers the majority of circumstances. The Group will use additional qualitative criteria when it considers it necessary to include circumstances that are not reflected in the rating/score systems or macroeconomic scenarios used.

Additionally, instruments under one of the following main circumstances are classified as Stage 2 (Qualitative criterion):

| • |  | More than 30 days past due. However this presumption can be rebutted in those cases in which the Group considers, based on reasonable and documented information, that such non-payment does not represent a significant increase in risk. The Group has not considered periods superior to 30 days for any of the significant portfolios.

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| • |  | Watch list: They are subject to special watch by the Risks units because they show negative signs in their credit quality, even though there may be no objective evidence of impairment.

| • |  | Refinance or restructuring that does not show evidence of impairment.

Method for calculating ECL

The measurement of ECL must reflect:

| • |  | A considered and unbiased amount, determined by evaluating a range of possible results.

| • |  | The time value of money.

| • |  | Reasonable and supportable information that is available without undue cost or effort and that reflects current conditions and forecasts of future economic conditions.

The Group measures the ECL both individually and collectively.

For significant impaired instruments the amount of credit losses is calculated as the difference between expected discounted cash flows at the effective interest rate of the transaction and the carrying amount of the instrument.

To establish which and how many clients need to be analyzed individually, the Group adopts the criteria defined by the BBVA Group, which is a relative weight in terms of total risk over the defaulted total risk of wholesale exposure and in term of total risk over the Watch List total risk of wholesale exposure.

The scope for individual analysis is defined with the following criteria to analyze all clients with at least an asset in default and with total risk above the local threshold (12,000) or with at least an asset on the Watch List (WL) with total risk above the local threshold (14,000), meaning:

a) Stage 3 and Total Risk > 12,000;

b) Stage 2, WL and Total Risk > 14,000.

Threshold for Defaulted exposure: The threshold is established in such a way that the clients with total risk above this threshold are assessed individually for at least 40% of the total risk of the defaulted wholesale portfolio.

Threshold for Watch List exposure: The threshold is established in such a way that the clients with total risk above this threshold are assessed individually for at least 20% of the total risk of the Watch List wholesale portfolio.

For the collective measurement of expected losses instruments are grouped into groups of assets based on their risk characteristics. Exposure within each group is segmented according to the common credit risk characteristics, which are indicative of the payment capacity of the borrower in accordance with their contractual conditions. These risk characteristics have to be relevant in estimating the future flows of each group. The characteristics of credit risk may consider, among others, the following factors:

| • |  | Type of instrument.

| • |  | Rating or scoring tools.

| • |  | Type of collateral.

| • |  | Period of time at default for stage 3.

| • |  | Segment.

| • |  | Qualitative criteria which can have a significant increase in risk.

ECL are derived from the following parameters:

| • |  | PD: estimate of the probability of default in a given timeframe.

| • |  | EAD: estimate of the exposure in case of default at each future period, taking into account the changes in exposure after the presentation date of the financial statements.

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| • |  | LGD: estimate of the loss given default, calculated as the difference between the contractual cash flows and receivables, including guarantees.

In the case of debt securities, the LDP (Low Default Portfolio) methodology that is used has parameters based on external ratings.

Use of present, past and future information

ECL requires incorporation of present, past and future information to detect any significant increase in risk and measure the expected loss.

ECL does not require identification of all possible scenarios for measuring expected loss. However, the probability of a loss event occurring and the probability it will not occur will also have to be considered, even though the possibility of a loss may be very small. Also, when there is no linear relation between the different future economic scenarios and their associated expected losses, more than one future economic scenario must be used for the measurement.

The approach used by the Group consists of using first the most probable scenario (baseline scenario) consistent with that used in the Group’s internal management processes, and then applying an additional adjustment, calculated by considering the weighted average of expected losses in other economic scenarios (one more positive and the other more negative). The main macroeconomic variable in each of the scenarios is Gross Domestic Product (“GDP”).

Presentation of allowance for ECL in the statement of financial position

Loss allowances for ECL are presented in the statement of financial position as follows:

| • |  | Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;

| • |  | Loan commitments and financial guarantee contracts: generally, as a provision;

| • |  | Where a financial instrument includes both a drawn and an undrawn component, and the Group cannot identify the ECL on the loan commitment component separately from those on the drawn component: the Group presents a combined loss allowance for both components. The combined amount is presented as a deduction from the gross carrying amount of the drawn component. Any excess of the loss allowance over the gross amount of the drawn component is presented as a provision; and

| • |  | Financial assets measured at FVOCI: no loss allowance is recognised in the statement of financial position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognised in the fair value reserve.

| h) | Write-off

Loans and debt securities are written off (either partially or in full) when there is no reasonable expectation of recovering the financial asset in its entirety or a portion thereof. This is generally the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is carried out at the individual asset level.

Recoveries of amounts previously written off are included in ‘impairment losses on financial instruments’ in the statement of profit or loss.

Financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

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5.5. Investments in joint ventures and associates

An associate is an entity over which the Group has a significant influence but no control over its financial and operating policies. Significant influence is presumed to exist when the Bank holds between 20 and 50 percent of the voting power of another entity.

A joint venture is an arrangement in which the Group has joint control whereby the Group has rights to the net assets of the arrangement rather than rights to its assets and obligations for its liabilities.

Investments in associates and joint ventures are initially recognized at cost, which includes transaction costs, and subsequently accounted for using the equity method.

The consolidated financial statements include the Group’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

5.6. Property and equipment

Property and equipment items are measured at cost, net of accumulated depreciation and accumulated impairment losses, if any.

At the transition date to IFRS on January 1, 2017 the Bank considered as deemed cost the fair value determined through technical appraisals.

If significant parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Any gains or losses on disposal of an item of property and equipment are recognized net within other income in profit or loss. Subsequent expenses are only capitalized if they are likely to provide future economic benefits for the Group. Ongoing repairs and maintenance are expensed as incurred.

Depreciation is calculated using the straight line method over the estimated useful lives of the assets, and is recognized in profit or loss in the heading “Depreciation and amortization” on the statement of profit or loss.

The estimated useful lives of significant items of property and equipment are as follows:

| • |  | Buildings: as informed in the technical appraisal as of January 1, 2017

| • |  | Furniture and facilities: 10 years

| • |  | Equipment: 3-5 years

| • |  | Automobiles: 5 years

Depreciation methods and useful lives are reviewed at each reporting date and adjusted prospectively, if necessary.

5.7. Investment properties

Investment properties are measured at cost, net of accumulated depreciation and accumulated impairment losses, if any.

At the transition date to IFRS on January 1, 2017 the Bank considered as deemed cost the fair value determined through technical appraisals.

Any gains or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss.

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When the use of a property changes such that it is reclassified as property and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

The estimated useful lives of investment properties are as informed in the technical appraisal.

Depreciation methods and useful lives are reviewed at each reporting date and adjusted prospectively, if necessary.

5.8. Intangible assets

Intangible assets include the information systems costs of acquisition and implementation, which are measured at cost less accumulated amortization and impairments, if any.

Subsequent expenses related to information systems are only capitalized if the economic benefits of the related asset increase. All other expenses are recognized as incurred.

Information systems are amortized using the straight line method over their estimated useful life of 5 years and is recognized in profit or loss in the heading “Depreciation and amortization” on the consolidated statement of profit or loss.

Amortization methods and the estimated useful life are reviewed at each reporting date and adjusted prospectively, if necessary.

5.9. Goodwill

Goodwill arising from the acquisition of subsidiaries is measured at cost less any accumulated impairment losses.

Goodwill is not amortized but subject to an annual test for impairment. The cash generating unit to which goodwill has been allocated, is tested for impairment (including goodwill) at least annually or more frequently if there is an indication of impairment.

5.10. Other assets

Foreclosed assets are measured at the lower of the fair value of the date on which the Group receives the ownership of the asset, and the fair value less cost of disposal at the reporting date.

5.11. Non- current assets held-for-sale

Assets are classified as held-for-sale if it is highly likely that they will be recovered, mainly through their sale, which is estimated to occur within the twelve months following the date of their classification as such.

These assets are measured at the lower of their carrying amount and their fair value less the cost of disposal.

Once classified as held-for-sale, property and equipment are no longer depreciated and any equity-accounted investee is no longer equity accounted.

5.12. Impairment of non-financial assets

At each reporting date, the Group assesses whether there are indications that a non-financial asset may be impaired (except deferred tax assets). If there is such an indication, the asset’s recoverable value is estimated.

For the impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows for their continued use that is largely independent of the cash inflows from other assets or other cash generating units (CGU). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The “recoverable value” of an asset or CGU is the greater of its value in use and its fair value less the cost of sale. “Value in use” is based on estimated future cash flows, discounted at their present value using the pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or CGU.

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An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

An impairment loss for goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent the carrying amount of the assets does not exceed the amount they would have been determined if the impairment loss had not been recognized.

5.13. Provisions

The Group recognizes a provision if and only if the Group has a present legal or constructive obligation resulting from past events; it is probable (i.e. more likely than not) that an outflow of resources will be required to settle the obligation; and the amount payable can be estimated reliably.

To assess provisions, the existing risks and uncertainties were considered, taking into consideration the opinion of the Group’s external and internal legal advisors. Based on the analysis carried out, the Group recognizes a provision for the amount considered as the best estimate of the potential expense necessary to settle the present obligation at each reporting date.

The provisions recognized by the Group are reviewed at each reporting date and are adjusted to reflect the best estimate available.

5.14. Employee benefits

| a) | Short term personnel benefits

Short-term personnel benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the personnel and the obligation can be estimated reliably.

| b) | Other long term personnel benefits

The Group’s obligation in relation to long term personnel benefits is the amount of the future benefit the employees have earned in exchange for services provided during the current and prior periods. The benefit is discounted at present value. Remeasurement is recognized in profit or loss.

| c) | Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring. If benefits are not expected to be wholly settled within 12 months of the reporting date, then they are discounted.

5.15. Share capital

Transaction costs directly attributable to the issuance of ordinary shares are recognized as a reduction of the contributions received, net of the related income tax.

5.16. Interest income and expenses

Interest income and expenses are recognized in profit or loss using the effective interest rate method. The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments and collections during the expected lifetime of the financial instrument to the gross carrying amount of the financial assets; or the amortized cost of the financial liability.

The calculation of the effective interest rate includes transaction costs, commissions and other items paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition of a financial asset or the issuance of a financial liability.

The ‘amortized cost’ of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance.

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The ‘gross carrying amount of a financial asset’ is the amortized cost of a financial asset before adjusting for any expected credit loss allowance.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability.

However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income and expenses presented in the consolidated statement of profit or loss mainly include interest on:

| • |  | Financial assets and liabilities measured at amortized cost; and

| • |  | Financial assets measured at fair value through OCI

5.17. Fee and commission income / expenses

This item contains income from commissions resulting from transactions with customers, mainly related to maintenance and administration fees on current, saving accounts, credit cards, securities custody and foreign exchange transactions.

Commissions, fees and similar items that are part of a financial asset or liability’s effective interest rate are included in the effective interest rate.

Other commission income is recognized when the related services are performed:

| • |  | at a point in time (in relation to fees for services, fees for investment funds management, sales commissions, syndication fees), or

| • |  | over the performance obligation period (in relation to annual fee for credit cards, issuance of financial guarantees).

The Bank has a customer loyalty program in place consisting in the accumulation of Latam Airlines miles through credit and/or debit card consumptions that can be exchanged for air tickets, catalog products or hotel accommodation. This program is a separable performance obligation in the contract with the customer. The Bank has concluded that it is acting as an agent in relation to the airline miles and consequently, the allocated transaction price consists only of the commission net of the amounts paid to the principal (Latam Airlines).

Commission expenses are recognized in profit or loss when the related service is received.

5.18. Leases

| • |  | Policy applicable from January 1, 2019

As of January 1, 2019, the Group adopted IFRS 16 “Leases”.

IFRS 16 introduced a single lessee accounting model, requiring that lessees 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 Group 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 accounting, IFRS 16 substantially kept the requirements of IAS 17. Therefore, lessors continue classifying leases as operating or finance, and each of them is recognized differently.

At the adoption of IFRS 16, the Group opted to apply the modified retrospective method whereby the Right of use and the Lease liability determined as of January 1, 2019 (“the transition date”) were recognized. The Lease liability was determined as the current amount of future payments agreed, discounted at the Group’s incremental borrowing rate as of such date, while the Right of use was measured for an amount equivalent to the Lease liability. Accordingly, the transition to IFRS 16 did not result in an adjustment to Accumulated Loss as of the transition date.

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Below is a detail of the accounting policies:

| • |  | 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.

| • |  | Leases where the Group is the 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 for an amount equivalent to the net investment in the lease under “Loans and other financing.”

Lease payments included in the measurement of the Net investment are:

| • |  | Fixed payments, including payments that are substantially fixed;

| • |  | Variable payments, which depend on a rate or index, initially measured applying the rate or index as of the lease commencement date;

| • |  | Any amounts expected to be collected as guaranteed residual value;

| • |  | The exercise price of call options, if it is reasonably certain that they will be exercised; and

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

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.

In an operating lease, the leased asset (generally investment property) is not derecognized, and the collection received are recognized as an income applying the straight-line method.

| • |  | Leases where the Group is the 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:

| a) | Fixed payments, including payments that are substantially fixed;

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| b) | Variable payments, which depend on a rate or index, initially measured applying the rate or index as of the lease commencement date;

| c) | Any amounts expected to be paid as guaranteed residual value;

| d) | The exercise price of call options, if it is reasonably certain that they will be exercised;

| e) | Any amounts expected to be paid for renewal periods if it is reasonably certain that the renewal options will be exercised; and

| f) | 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. When the Lease liability is remeasured; in which case, the relevant adjustment is recognized in the Right of use of the leased asset.

Lease liabilities denominated in US dollars are translated into the functional currency at the spot exchange rate at the reporting date. Foreign currency differences arising from translation are recognized in profit or loss.

The Group has elected not to recognize right of use assets and liabilities for lease of low-value and short-term leases, including IT equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

| • |  | COVID-19 related rent concessions

The Group has not applied the amendment to IFRS 16 “Leases in relation to rental concessions related to Covid-19”. The Group did not apply the practical expedient that allows it not to assess whether eligible rental concessions that are a direct consequence of the Covid-19 pandemic are lease modifications. Consequently, the Group assesses whether there is a modification of the lease.

| • |  | Policy applicable before January 1, 2019

| a) | Arrangements containing a lease

At the inception of the arrangement, the Group determined if the arrangement contained a lease, in which case lease payments were separated into those related with the lease and those for other elements, based on relative fair values.

| b) | Classification of a lease

When the lease substantially transfers the risks and rewards of the ownership of the leased asset, it was classified as a financial lease. Otherwise, the lease is classified as an operating lease.

| c) | Leases where the Group is the lessee

Payments under an operating lease were recognized in profit or loss by applying the straight line method over the term of the lease. Leased assets were not recognized in the Consolidated statement of financial position.

| d) | Leases where the Group is the lessor

Except for real estate, the leased asset in an operating lease was classified as “Other assets” and depreciated over its estimated useful life. Real estate for lease was classified as “Investment Properties” (see Note 5.7). Collections received under an operating lease were recognized in profit or loss by applying the straight line method in the term of the lease.

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The leased asset in a financial lease was derecognized and a receivable is recognized for the amount of the net investment in the lease and presented within “Loans and advances to customers”.

Collections received under a financial lease were separated into interest and the reduction of the lease’s net investment. Interest income was recognized over the lease term applying the interest rate implicit in the lease. Contingent lease payments were not included in the net investment of the lease.

5.19. Current and deferred income tax

Income tax expense includes the current income tax and the deferred income tax and is recognized in profit or loss, except to the extent it relates to an item recognized in OCI or directly in equity.

| a) | Current taxes

Current income tax includes the income tax payable, and any adjustment to the tax payable related to previous years. The current amount of tax payable is the best estimate of the amount that is expected to be paid measured at the applicable tax rate enacted or substantially enacted at the reporting date.

| b) | Deferred tax

Deferred income tax recognizes the tax effect of temporary differences between the carrying amounts of the assets and liabilities and the related tax bases used for tax purposes.

Deferred tax is not recognized for:

| • |  | Temporary differences on the initial recognition of assets or liabilities in transaction that is not a business combination and that affects neither accounting nor taxable profit or loss.

| • |  | Temporary differences related to investment in subsidiaries to the extent that is probable that they will not reverse in the foreseeable future; and

| • |  | Taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax liabilities are recognized for the tax effect of all taxable temporary differences.

Deferred tax assets are recognized for unused tax losses and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on business plans for the Bank and each of its subsidiaries. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profit will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if certain criteria are met.

5.20. Segment reporting

An operating segment is a component of the Bank that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses relating to transactions with any of the Bank’s other components, whose operating results are regularly reviewed by the Bank’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Bank’s CEO (being the CODM) include items that are directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Bank’s headquarters), head office expenses and tax assets and liabilities.

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5.21. Offsetting

Financial assets and financial liabilities are offset and net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis of to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under IFRS-IASB, or for gains and losses arising from a group or similar transactions such as in the Group´s trading activity.

5.22. Hyperinflationary Accounting

IAS 29 Financial Reporting in Hyperinflationary Economies requires an entity whose functional currency is the currency of a hyperinflationary economy, to state the assets, liabilities, income and expenses in terms of the measuring unit current at the end of reporting period.

An economy is considered to be a hyperinflationary economy when, among other criteria, it has cumulative inflation of approximately 100% or more over a 3-year period.

The Argentine economy is considered to be as hyperinflationary as from July 1, 2018.

The Bank’s followed the guidance issued by Argentine accounting standards setters by which the “general price index” for IAS 29 purposes is determined considering the Wholesale price index (WPI) through December 31, 2016 and the Consumer price index (CPI) beginning on January 1, 2017 and onwards. These indexes are published by the National Institute of Statistics and Census (INDEC).

The CPI increased 36.14%, 53.83% and 47.65% during 2020, 2019 and 2018, respectively.

Under IAS 29 assets and liabilities not already expressed in terms of the measuring unit current at the end of the reporting period are adjusted by applying a general price index. The adjusted amount of a non-monetary item is reduced, in accordance with IFRS-IASB, when it exceeds its recoverable amount. The impact of implementation of IAS 29 at the beginning of the first period of application is recognized in equity. All items in the statement of comprehensive income are expressed in terms of the measuring unit current at the end of the reporting period. The gain or loss on the net monetary position is included in the Consolidated Statement of profit or loss.

Since the Group prepares its financial information based on a historical cost approach, it has applied IAS 29 to the comparative periods as follows:

| • |  | Restated the Consolidated statement of profit or loss, the Consolidated statement of comprehensive income, the Consolidated statement of changes in shareholders’ equity and Consolidated statements of cash flow for the year ended December 31, 2019 and 2018 in terms of the measuring unit current at December 31, 2020, including the calculation and separate disclosure of the gain or loss on the net monetary position.

| • |  | Restated the Consolidated statement of financial position as of December 31, 2019 in terms of the measuring unit current at December 31, 2020.

In order to apply IAS 29 to the Consolidated statement of financial position, the Group has applied the following methodology and criteria:

| • |  | Non-monetary items have been restated by applying the general price index. The restated amounts have been reduced to their recoverable value by applying the pertinent IFRS, if necessary.

| • |  | Monetary items have not been restated.

| • |  | Assets and liabilities linked by agreement to changes in prices, such as index linked bonds and loans, have been measured in accordance with the pertinent agreement.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

| • |  | The measurement of Investments accounted for under the equity method, have been determined based on financial information of the associates and joint ventures prepared in accordance with IAS 29.

| • |  | Deferred income tax assets and liabilities have been recalculated based on the restated amounts.

In order to apply IAS 29 to the Consolidated statement of profit or loss, the Consolidated statement of comprehensive income and the Consolidated statement of cash flows, the Group has applied the following methodology and criteria:

| • |  | All items in the Consolidated statement of profit or loss, Consolidated statement of comprehensive income and Consolidated statement of cash flows have been expressed in terms of the measuring unit current at December 31, 2020.

| • |  | The gain or loss on the net monetary position is included in the Consolidated statement of profit or loss.

| • |  | The gain or loss generated by cash and cash equivalents is presented in the Consolidated statement of cash flows separately from cash flows from operating, investing and financing activities as a specific item in the reconciliation between cash and cash equivalents at the beginning and at the end of the period.

6. IFRS standards update

6.1. | IFRS effective after January 1, 2020

The IASB issued an amendment to IFRS 16 “Leases – COVID-19- Related Rent Concessions” effective for fiscal years beginning on or after June 1, 2020. The amendment allows a lessee to recognize COVID-19-related changes in lease agreements as variable lease payments, rather than considering them as lease amendments pursuant to IFRS 16. The Group has not applied such amendment to lease agreements to which it is a party as lessee.

6.2. | IFRS effective after January 1, 2021

The following new or amendments to the current IFRS are effective as from the fiscal year beginning on January 1, 2021. Early adoption is permitted. These amendments were not early adopted by the Group in these consolidated financial statements.

New standard or amendment |  | Effective as from
Interest Rate Benchmark Reform. Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) |  | January 1, 2021
Loss-making Contracts. Cost of Fulfilling a Contract (Amendment to IAS 37) |  | January 1, 2022
Annual Improvements to IFRS 2018-2020 |  | January 1, 2022
Property, Plant and Equipment — Proceeds before Intended Use (Amendment to IAS 16) |  | January 1, 2022
Reference to the Conceptual Framework (Amendments to IFRS 3) |  | January 1, 2022
IFRS 17 Insurance Contracts and Amendments to IFRS 17 |  | January 1, 2023
Classification of Liabilities as Current or Non-current (Amendment to IAS 1) |  | January 1, 2023
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |  | To be determined

The Group estimates that none of these new standards or amendments would have a significant impact on its consolidated financial statements

7. | Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss that is attributable to ordinary shareholders of the Bank by the weighted-average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss that is attributable to ordinary shareholders and the weighted-average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The calculation of the earnings per share is detailed below:

Accounts |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Numerator: |  |  |  |  |  |  |  |  |  |  |  |
Profit (Loss) attributable to owners of the Bank |  |  | 10,051,035 |  |  |  | 21,819,964 |  |  |  | (3,119,918 | )
Profit (Loss) attributable to owners of the Bank adjusted to reflect the effect of dilution |  |  | 10,051,035 |  |  |  | 21,819,964 |  |  |  | (3,119,918 | )
Denominator: |  |  |  |  |  |  |  |  |  |  |  |
Weighted average of outstanding ordinary shares for the year |  |  | 612,710,079 |  |  |  | 612,671,108 |  |  |  | 612,659,638 |
Weighted average of outstanding ordinary shares for the year adjusted to reflect the effect of dilution |  |  | 612,710,079 |  |  |  | 612,671,108 |  |  |  | 612,659,638 |
Basic earnings per share (1) |  |  | 16.4042 |  |  |  | 35.6145 |  |  |  | (5.0924 | )
Diluted earnings per share (1) |  |  | 16.4042 |  |  |  | 35.6145 |  |  |  | (5.0924 | )

(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.

8. Cash and cash equivalents

|  | December 31, 2020 |  |  | December 31, 2019 |
BCRA - Unrestricted current account |  |  | 86,115,929 |  |  |  | 146,352,604 |
Cash |  |  | 62,232,907 |  |  |  | 63,610,250 |
Balances with other local and foreign institutions |  |  | 3,691,234 |  |  |  | 2,770,171 |
TOTAL |  |  | 152,040,070 |  |  |  | 212,733,025 |

9. Financial assets at fair value through profit or loss

9.1. Debt securities

|  | December 31, 2020 |  |  | December 31, 2019 |
Government securities |  |  | 915,323 |  |  |  | 70,617 |
Private securities - Corporate bonds |  |  | 27,438 |  |  |  | 127,432 |
BCRA Liquidity Bills |  |  | — |  |  |  | 5,424,513 |
TOTAL |  |  | 942,761 |  |  |  | 5,622,562 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

9.2. | Derivatives

The Group uses derivatives, not designated in a qualifying hedge relationship, to manage its exposure of foreign currency and interest rate risks. The instruments used include interest rate swaps and forward contracts (net settled in pesos).

The Group recognizes the put option in respect of the Bank’s right to sell its equity interest in Prisma Medios de Pago S.A. to the buyer (Al Zenith (Netherlands) B.V) on December 30, 2021. Such option was measured at fair value, determined by management using a report prepared by third party appraisers (see Note 40).

|  | December 31, 2020 |  |  | December 31, 2019 |
Foreign Currency Forwards |  |  | 2,695,749 |  |  |  | 3,209,511 |
Put Option - Prisma Medios de Pago S.A. |  |  | 1,182,000 |  |  |  | 932,562 |
Interest Rate Swaps |  |  | — |  |  |  | 6,175 |
TOTAL |  |  | 3,877,749 |  |  |  | 4,148,248 |

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

|  | December 31, 2020 |  |  | December 31, 2019 |
Foreign Currency Forwards |  |  |  |  |  |  |  |
Foreign currency forward purchases - US$ |  |  | 1,011,403 |  |  |  | 618,497 |
Foreign currency forward sales - US$ |  |  | 978,794 |  |  |  | 620,956 |
Foreign currency forward sales - Euros |  |  | 6,834 |  |  |  | 1,804 |
Foreign currency forward purchases - Euros |  |  | — |  |  |  | 35 |
Interest rate swaps |  |  |  |  |  |  |  |
Fixed rate for floating rate |  |  | — |  |  |  | 1,500,050 |
Floating rate for fixed rate |  |  | — |  |  |  | 92,463 |

Definitions:

Floating rate: BADLAR RATE (Buenos Aires Deposits of Large Amount Rate), is the interest rate for time deposits over 1 (one) million pesos, for 30 to 35 days.

9.3. | Equity instruments

|  | December 31, 2020 |  |  | December 31, 2019 |
Prisma Medios de Pago S.A. (1) |  |  | 6,033,808 |  |  |  | 4,129,157 |
Mercado de Valores de Buenos Aires S.A. |  |  | 154,000 |  |  |  | 109,423 |
BYMA-Bolsas y Mercados Argentinos S.A. |  |  | 136,274 |  |  |  | 85,576 |
Investment Funds |  |  | 1,471,868 |  |  |  | 1,329,517 |
TOTAL |  |  | 7,795,950 |  |  |  | 5,653,673 |

(1) | This balance corresponds to the amount of 10,805,542 shares held in Prisma Medios de Pago S.A., representing 5.44% of such company’s capital stock. Such equity interest was measured at fair value, which management estimated using a report prepared by independent appraisers.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

On February 1, 2019, the transfer of 2,344,064 registered, common shares with a nominal value of $ 1 each and one vote per share, was made for the benefit AI Zenith (Netherlands) B.V. (company related to Advent International Global Private Equity).

In accordance with the provisions of the Offer for the purchase of those shares by AI Zenith (Netherlands) B.V., and accepted by the Bank, the total estimated price was US$ 78,265,273, out of which, on February 1, 2019, the Bank received US$ 46,457,210, and the unpaid balance shall be deferred over the following 5 (five) years and settled as follows: (i) 30% of that amount shall be paid in pesos, adjusted by Reference Stabilization Coefficient -an index based on CPI- (CER) at an annual nominal rate of 15% and (ii) 70% in US Dollars at an annual nominal rate of 10 %.

On July 22, 2019, the Entity completed the assessment of the selling price of the shares. Such price amounts to US$ 76,947,895.33. The difference between the final price and the estimated price was discounted from the outstanding balance; therefore, the Bank did not have to return the funds it had received. The selling terms include a put option, by which the Bank can sell the remaining interests in Prima Medios de Pago S.A. to the buyer on December 30, 2021.

The other payment conditions have remained unaltered.

As a consequence of this transaction, a profit of 5,202,018 was recognized in “Other operating income” in the year ended December 31, 2019 (Note 34).

10. Financial assets at amortized cost

10.1. Loans and advances to financial institutions

|  | December 31, 2020 |  |  | December 31, 2019 |
Loans and advances to financial institutions |  |  | 2,337,748 |  |  |  | 7,076,612 |
Allowances for loan losses |  |  | (582,550 | ) |  |  | (174,380 | )
TOTAL |  |  | 1,755,198 |  |  |  | 6,902,232 |

10.2. Loans and advances to customers

|  | December 31, 2020 |  |  | December 31, 2019 |
Credit Cards |  |  | 114,535,142 |  |  |  | 98,110,800 |
Consumer loans |  |  | 28,120,635 |  |  |  | 32,122,283 |
Commercial papers |  |  | 19,117,168 |  |  |  | 16,794,614 |
Overdrafts |  |  | 17,411,178 |  |  |  | 19,600,558 |
Real estate mortgage |  |  | 16,745,745 |  |  |  | 19,265,842 |
Loans for the prefinancing and financing of exports |  |  | 15,979,854 |  |  |  | 24,908,414 |
Notes |  |  | 14,702,105 |  |  |  | 15,466,297 |
Pledge loans |  |  | 11,412,208 |  |  |  | 11,785,802 |
Loans to employees |  |  | 2,131,958 |  |  |  | 2,333,951 |
Receivables from financial leases |  |  | 1,867,439 |  |  |  | 2,572,772 |
Other financing |  |  | 48,301,667 |  |  |  | 31,299,660 |
Allowances for loan losses |  |  | (12,501,302 | ) |  |  | (15,536,909 | )
TOTAL |  |  | 277,823,797 |  |  |  | 258,724,084 |

The Group holds loans and other financing in a business model for the purpose of collecting contractual cash flows.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Receivables from financial leases

The Group as lessor entered into finance lease agreements related to vehicles and machinery and equipment.

The following table shows the total gross investment of the finance leases (leasing) and the present value of the minimum payments to be received thereunder:

|  | December 31, 2020 |  |  | December 31, 2019 |
|  | Total investment |  |  | Present value of minimum lease payments |  |  | Total investment |  |  | Present value of minimum lease payments |
Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Up to 1 year |  |  | 1,102,020 |  |  |  | 744,854 |  |  |  | 1,300,410 |  |  |  | 1,296,284 |
From 1 to 5 years |  |  | 1,571,289 |  |  |  | 1,122,585 |  |  |  | 1,280,469 |  |  |  | 1,276,488 |
TOTAL |  |  | 2,673,309 |  |  |  | 1,867,439 |  |  |  | 2,580,879 |  |  |  | 2,572,772 |
Principal |  |  |  |  |  |  | 1,810,335 |  |  |  |  |  |  |  | 2,539,791 |
Interest accrued |  |  |  |  |  |  | 57,104 |  |  |  |  |  |  |  | 32,981 |
TOTAL |  |  |  |  |  |  | 1,867,439 |  |  |  |  |  |  |  | 2,572,772 |

10.3. Reverse repurchase agreements

|  | December 31, 2020 |  |  | December 31, 2019 |
BCRA repos |  |  | 49,187,908 |  |  |  | — |
Allowances for loan losses |  |  | (500,941 | ) |  |  | — |
TOTAL |  |  | 48,686,967 |  |  |  | — |

The fair value of financial assets accepted as collateral that the Group is permitted to sell or repledge in the absence of default was 55,340,223 as of December 31, 2020.

10.4. Other financial assets

|  | December 31, 2020 |  |  | December 31, 2019 |
Financial assets pledged as collateral |  |  | 10,972,890 |  |  |  | 8,057,680 |
Other receivables |  |  | 8,776,296 |  |  |  | 6,483,728 |
Receivable from financial institution for spot transactions pending settlement |  |  | 1,114,396 |  |  |  | 345,148 |
Receivable from non-financial institution for spot transactions pending settlement |  |  | 104,249 |  |  |  | 37,818 |
Others |  |  | 137,905 |  |  |  | 219,741 |
Allowances for loan losses |  |  | (264,371 | ) |  |  | (308,153 | )
TOTAL |  |  | 20,841,365 |  |  |  | 14,835,962 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

11. Measurement of Expected Credit Loss

The expected credit loss of a financial instrument must reflect an unbiased estimate, the time value of money and a forward looking perspective (including the economic forecast).

Therefore the recognition and measurement of ECL is highly complex and involves the use of significant analysis and estimation including formulation and incorporation of forward-looking economic conditions into ECL.

Risk Parameters Adjusted by Macroeconomic Scenarios

ECL must include forward-looking macroeconomic information. The Group uses the credit risk parameters PD, LGD and EAD in order to calculate the ECL for the credit portfolios.

The Group´s methodological approach in order to incorporate the forward looking information aims to determine the relation between macroeconomic variables and risk parameters following three main steps:

| • |  | Step 1: Analysis and transformation of time series data.

| • |  | Step 2: For each dependent variable find conditional forecasting models that are economically consistent.

| • |  | Step 3: Select the best conditional forecasting model from the set of candidates defined in Step 2, based on their out of sample forecasting performance.

How economic scenarios are reflected in calculation of ECL

Based on economic theory and analysis, the macroeconomic variables most directly relevant for explaining and forecasting the selected risk parameters are:

| • |  | The net income of families, corporates or public administrations.

| • |  | The payment amounts on the principal and interest on the outstanding loans.

The Group approximates these variables by using a proxy indicator from the set included of the macroeconomic scenarios provided by the economic research department.

The Group BBVA selected the Real GDP Growth as the principal indicator, among other indicators such as unemployment rate, BADLAR rate, private consumption or country risk, because it captures the influence of all potentially relevant macro-financial scenario on internal PD, even though other variables could be used.

Multiple scenario approach under IFRS 9

IFRS 9 requires calculating an unbiased probability weighted measurement of ECL by evaluating a range of possible outcomes, including forecasts of future economic conditions.

The BBVA Research team produces forecasts of the macroeconomic variables under the baseline scenario, which are used in the rest of the related processes of the Group, such as budgeting, the internal capital adequacy assessment process (ICAAP) and risk appetite framework, stress testing, etc.

Additionally, the BBVA Research team produces alternative scenarios to the baseline scenario so as to meet the requirements under the IFRS 9 standard.

Alternative macroeconomic scenarios

For each of the macro-financial variables (GDP or interest rate or exchange rate), BBVA Research produces three scenarios.

Each of these scenarios corresponds to the expected value of a different area of the probabilistic distribution of the possible projections of the economic variables.

The approach of the Group consists of using the scenario that is the most likely scenario, which is the baseline scenario, consistent with the rest of internal processes (ICAAP, Budgeting) and then applying upside and downside scenarios by taking into account the weighted average of the ECL determined by each of the scenarios.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

It is important to note that in general, it is expected that the effect of the overlay is to increase the ECL. It is possible to obtain an overlay that does not have that effect, whenever the relationship between macro scenarios and losses is linear. However, the overlay is not expected to reduce the ECL.

COVID-19 Impact

During the pandemic-related lockdown, the BCRA and the government issued several communications and decrees, pursuant to which customers within the portfolio of non-card financings benefitted from the deferral, without interest, of installments not paid in April 2020 until the final loan maturity.

The table below summarizes the loan portfolio affected by the aforementioned measures and the related impact on contractual cash flows:

|  | Affected portfolio |  |  | Loss from changes in contractual cash flows (a) |
UVA-indexed mortgage loans |  |  | 16,568,485 |  |  |  | (451,177 | )
UVA-indexed pledge loans |  |  | 338,749 |  |  |  | (7,118 | )

(a) | Recognized in Net Interest Income.

Concerning credit cards, outstanding balances as of April 2020 and September 2020 were required to be automatically rescheduled with interest in nine equal and consecutive installments, with a three-month grace period. The due date deferral did not result in stage improvements in any case.

The ECL measurement model parameters were not affected. The update of macroeconomic scenarios and non-linearity adjustment did not represent relevant impacts on the level of ECL. Credit quality ratios did not show deterioration as a result of the aid measures promoted by the national authorities. Given the pandemic and quarantine situation, no relevant impacts were recorded on ECL directly related to COVID 19.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

12. Credit risk exposure and allowances

Below is a detail of the changes occurred during fiscal 2020 and 2019 in the credit risk exposure and the impairment allowances booked under IFRS 9 in the accompanying consolidated statement of financial position or reversal of estimated impairment of financial assets at amortized cost, financial assets at fair value through other comprehensive income, loan commitments and financial guarantees:

December 31, 2020

FINANCIAL ASSETS AT AMORTIZED COST AND AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - CREDIT RISK EXPOSURE |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Credit risk exposure |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure |
Opening balance as of December 31, 2019 |  |  | 285,039,178 |  |  |  | 46,865,496 |  |  |  | 2,365,338 |  |  |  | 5,426,432 |  |  |  | 5,167,769 |  |  |  | 344,864,213 |
Transfers of financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (96,538,747 | ) |  |  | 98,480,465 |  |  |  | 130,244 |  |  |  | — |  |  |  | — |  |  |  | 2,071,962 |
Transfers from Stage 2 to Stage 1 |  |  | 68,909,373 |  |  |  | (65,842,848 | ) |  |  | (40,271 | ) |  |  | — |  |  |  | — |  |  |  | 3,026,254 |
Transfers from Stage 1 or 2 to Stage 3 |  |  | (12,251,971 | ) |  |  | (6,025,456 | ) |  |  | (1,991,808 | ) |  |  | 21,573,730 |  |  |  | 2,043,568 |  |  |  | 3,348,063 |
Transfers from Stage 3 to Stage 1 or 2 |  |  | 908,863 |  |  |  | 789,372 |  |  |  | (1,415 | ) |  |  | (1,961,496 | ) |  |  | (37,570 | ) |  |  | (302,246 | )
Changes without transfers between Stages |  |  | 95,796,815 |  |  |  | 13,919,010 |  |  |  | 3,746,774 |  |  |  | (22,131,388 | ) |  |  | (3,333,447 | ) |  |  | 87,997,764 |
New financial assets originated |  |  | 1,543,750,422 |  |  |  | 21,179,874 |  |  |  | 1,335,605 |  |  |  | 26,004,670 |  |  |  | 6,300,218 |  |  |  | 1,598,570,789 |
Repayments |  |  | (1,312,238,958 | ) |  |  | (30,447,870 | ) |  |  | (647,298 | ) |  |  | (14,423,361 | ) |  |  | (3,738,346 | ) |  |  | (1,361,495,833 | )
Write-offs |  |  | — |  |  |  | 8 |  |  |  | — |  |  |  | (4,308,513 | ) |  |  | (3,781,493 | ) |  |  | (8,089,998 | )
Foreign exchange |  |  | 8,930,081 |  |  |  | 5,693,673 |  |  |  | 555,724 |  |  |  | 38,810 |  |  |  | 730,732 |  |  |  | 15,949,020 |
Inflation adjustment |  |  | (106,057,773 | ) |  |  | (12,221,786 | ) |  |  | (1,201,302 | ) |  |  | (7,280,112 | ) |  |  | (853,731 | ) |  |  | (127,614,704 | )
Closing balance as of December 31, 2020 |  |  | 476,247,283 |  |  |  | 72,389,938 |  |  |  | 4,251,591 |  |  |  | 2,938,772 |  |  |  | 2,497,700 |  |  |  | 558,325,284 |
December 31, 2019 |  |  |  |  |  |  |  |
FINANCIAL ASSETS AT AMORTIZED COST AND AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - CREDIT RISK EXPOSURE |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Credit risk exposure |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure |
Opening balance as of December 31, 2018 |  |  | 446,438,916 |  |  |  | 9,202,674 |  |  |  | 2,186,378 |  |  |  | 4,075,713 |  |  |  | 3,785,128 |  |  |  | 465,688,809 |
Transfers of financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (151,356,778 | ) |  |  | 147,677,742 |  |  |  | 774,015 |  |  |  | — |  |  |  | — |  |  |  | (2,905,021 | )
Transfers from Stage 2 to Stage 1 |  |  | 66,247,687 |  |  |  | (66,718,975 | ) |  |  | (164,390 | ) |  |  | — |  |  |  | — |  |  |  | (635,678 | )
Transfers from Stage 1 or 2 to Stage 3 |  |  | (1,371,651 | ) |  |  | (9,378,970 | ) |  |  | (2,743,261 | ) |  |  | 10,941,163 |  |  |  | 2,762,779 |  |  |  | 210,060 |
Transfers from Stage 3 to Stage 1 or 2 |  |  | 470,593 |  |  |  | 491,787 |  |  |  | 263,488 |  |  |  | (1,104,383 | ) |  |  | (1,086,420 | ) |  |  | (964,935 | )
Changes without transfers between Stages |  |  | (39,183,816 | ) |  |  | 4,122,339 |  |  |  | 809,358 |  |  |  | 530,495 |  |  |  | (1,052,812 | ) |  |  | (34,774,436 | )
New financial assets originated |  |  | 1,042,227,825 |  |  |  | 54,656,727 |  |  |  | 2,309,324 |  |  |  | 1,187,132 |  |  |  | 1,975,838 |  |  |  | 1,102,356,846 |
Repayments |  |  | (987,079,841 | ) |  |  | (84,504,080 | ) |  |  | (485,021 | ) |  |  | (3,267,584 | ) |  |  | (856,155 | ) |  |  | (1,076,192,681 | )
Write-offs |  |  | — |  |  |  | (16 | ) |  |  | — |  |  |  | (5,112,765 | ) |  |  | (2,559 | ) |  |  | (5,115,340 | )
Foreign exchange |  |  | 58,562,068 |  |  |  | 7,555,201 |  |  |  | 437,098 |  |  |  | 18,718 |  |  |  | 1,631,075 |  |  |  | 68,204,160 |
Gain of control over subsidiaries |  |  | 25,789,262 |  |  |  | 298,762 |  |  |  | — |  |  |  | 204,591 |  |  |  | — |  |  |  | 26,292,615 |
Inflation adjustment |  |  | (172,605,937 | ) |  |  | (16,320,425 | ) |  |  | (1,021,651 | ) |  |  | (2,050,801 | ) |  |  | (1,989,105 | ) |  |  | (193,987,919 | )
Other adjustments |  |  | (3,099,150 | ) |  |  | (217,270 | ) |  |  | — |  |  |  | 4,153 |  |  |  | — |  |  |  | (3,312,267 | )
Closing balance as of December 31, 2019 |  |  | 285,039,178 |  |  |  | 46,865,496 |  |  |  | 2,365,338 |  |  |  | 5,426,432 |  |  |  | 5,167,769 |  |  |  | 344,864,213 |

F-42

##### Table of Contents

Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

December 31, 2020

LOAN COMMITMENTS AND FINANCIAL GUARANTEES - CREDIT RISK EXPOSURE |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Credit risk exposure |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure |
Opening balance as of December 31, 2019 |  |  | 61,008,073 |  |  |  | 6,429,186 |  |  |  | 190,568 |  |  |  | 44,527 |  |  |  | 7 |  |  |  | 67,672,361 |
Transfers of loan commitments and financial guarantees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (14,213,063 | ) |  |  | 13,217,852 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (995,211 | )
Transfers from Stage 2 to Stage 1 |  |  | 9,897,551 |  |  |  | (8,851,105 | ) |  |  | (125 | ) |  |  | — |  |  |  | — |  |  |  | 1,046,321 |
Transfers from Stage 1 or 2 to Stage 3 |  |  | (35,683 | ) |  |  | (46,932 | ) |  |  | (631 | ) |  |  | 46,915 |  |  |  | 1,491 |  |  |  | (34,840 | )
Transfers from Stage 3 to Stage 1 or 2 |  |  | 61,570 |  |  |  | 17,036 |  |  |  | 8 |  |  |  | (60,330 | ) |  |  | (398 | ) |  |  | 17,886 |
Changes without transfers between Stages |  |  | 4,711,634 |  |  |  | (799,987 | ) |  |  | (119,029 | ) |  |  | (6,085 | ) |  |  | (512 | ) |  |  | 3,786,021 |
New loan commitments and financial guarantees originated |  |  | 33,940,652 |  |  |  | 3,159,203 |  |  |  | 99,143 |  |  |  | 2,323 |  |  |  | — |  |  |  | 37,201,321 |
Expirations and repayments |  |  | (20,744,486 | ) |  |  | (6,746,419 | ) |  |  | (24,810 | ) |  |  | (13,662 | ) |  |  | (35 | ) |  |  | (27,529,412 | )
Write-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (55 | ) |  |  | (6 | ) |  |  | (61 | )
Foreign exchange |  |  | 851,390 |  |  |  | 235,129 |  |  |  | 10,931 |  |  |  | — |  |  |  | — |  |  |  | 1,097,450 |
Inflation adjustment |  |  | (17,855,245 | ) |  |  | (1,820,204 | ) |  |  | (53,984 | ) |  |  | (5,175 | ) |  |  | (53 | ) |  |  | (19,734,661 | )
Closing balance as of December 31, 2020 |  |  | 57,622,393 |  |  |  | 4,793,759 |  |  |  | 102,071 |  |  |  | 8,458 |  |  |  | 494 |  |  |  | 62,527,175 |
December 31, 2019 |  |  |  |  |  |  |  |
LOAN COMMITMENTS AND FINANCIAL GUARANTEES - CREDIT RISK EXPOSURE |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Credit risk exposure |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure (collectively assessed) |  |  | Credit risk exposure (individually assessed) |  |  | Credit risk exposure |
Opening balance as of December 31, 2018 |  |  | 53,380,614 |  |  |  | 2,506,872 |  |  |  | 17,284 |  |  |  | 34,114 |  |  |  | 144 |  |  |  | 55,939,028 |
Transfers of loan commitments and financial guarantees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (10,335,734 | ) |  |  | 10,620,271 |  |  |  | 90 |  |  |  | — |  |  |  | — |  |  |  | 284,627 |
Transfers from Stage 2 to Stage 1 |  |  | 6,638,883 |  |  |  | (5,058,323 | ) |  |  | (99 | ) |  |  | — |  |  |  | — |  |  |  | 1,580,461 |
Transfers from Stage 1 or 2 to Stage 3 |  |  | (278,456 | ) |  |  | (62,905 | ) |  |  | (233 | ) |  |  | 263,141 |  |  |  | 1,099 |  |  |  | (77,354 | )
Transfers from Stage 3 to Stage 1 or 2 |  |  | 209,277 |  |  |  | 12,087 |  |  |  | 53 |  |  |  | (208,703 | ) |  |  | (65 | ) |  |  | 12,649 |
Changes without transfers between Stages |  |  | 18,406,080 |  |  |  | (453,067 | ) |  |  | 138,773 |  |  |  | (4,997 | ) |  |  | (923 | ) |  |  | 18,085,866 |
New loan commitments and financial guarantees originated |  |  | 36,045,328 |  |  |  | 3,212,040 |  |  |  | 41,942 |  |  |  | 13,300 |  |  |  | — |  |  |  | 39,312,610 |
Expirations and repayments |  |  | (22,145,669 | ) |  |  | (3,027,375 | ) |  |  | (1,493 | ) |  |  | (35,108 | ) |  |  | — |  |  |  | (25,209,645 | )
Write-offs |  |  | — |  |  |  | (16 | ) |  |  | — |  |  |  | (64 | ) |  |  | — |  |  |  | (80 | )
Foreign exchange |  |  | 1,833,472 |  |  |  | 244,850 |  |  |  | 4,497 |  |  |  | — |  |  |  | — |  |  |  | 2,082,819 |
Inflation adjustment |  |  | (22,745,722 | ) |  |  | (1,565,248 | ) |  |  | (10,246 | ) |  |  | (17,156 | ) |  |  | (248 | ) |  |  | (24,338,620 | )
Closing balance as of December 31, 2019 |  |  | 61,008,073 |  |  |  | 6,429,186 |  |  |  | 190,568 |  |  |  | 44,527 |  |  |  | 7 |  |  |  | 67,672,361 |

F-43

##### Table of Contents

Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

December 31, 2020

FINANCIAL ASSETS AT AMORTIZED COST AND AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - ALLOWANCES |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Loss allowances |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances |
Opening balance as of December 31, 2019 |  |  | 5,518,838 |  |  |  | 9,049,602 |  |  |  | 243,784 |  |  |  | 3,831,165 |  |  |  | 4,051,588 |  |  |  | 22,694,977 |
Transfers of financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (2,819,678 | ) |  |  | 12,528,181 |  |  |  | 26,802 |  |  |  | — |  |  |  | — |  |  |  | 9,735,305 |
Transfers from Stage 2 to Stage 1 |  |  | 3,223,138 |  |  |  | (5,807,043 | ) |  |  | (4,639 | ) |  |  | — |  |  |  | — |  |  |  | (2,588,544 | )
Transfers from Stage 1 or 2 to Stage 3 |  |  | (5,425,887 | ) |  |  | (1,828,401 | ) |  |  | (631,921 | ) |  |  | 10,844,691 |  |  |  | 1,048,133 |  |  |  | 4,006,615 |
Transfers from Stage 3 to Stage 1 or 2 |  |  | 20,402 |  |  |  | 74,303 |  |  |  | (1,395 | ) |  |  | (1,119,654 | ) |  |  | (38,196 | ) |  |  | (1,064,540 | )
Changes without transfers between Stages |  |  | 5,759,823 |  |  |  | (746,277 | ) |  |  | 816,969 |  |  |  | (9,633,680 | ) |  |  | (2,635,527 | ) |  |  | (6,438,692 | )
New financial assets originated |  |  | 15,901,370 |  |  |  | 2,549,016 |  |  |  | 144,135 |  |  |  | 12,147,304 |  |  |  | 6,331,742 |  |  |  | 37,073,567 |
Repayments |  |  | (13,655,264 | ) |  |  | (5,784,954 | ) |  |  | (78,243 | ) |  |  | (8,781,898 | ) |  |  | (3,348,194 | ) |  |  | (31,648,553 | )
Write-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,415,408 | ) |  |  | (3,882,490 | ) |  |  | (7,297,898 | )
Foreign exchange |  |  | 452,351 |  |  |  | 571,299 |  |  |  | 81,381 |  |  |  | 33,184 |  |  |  | 711,973 |  |  |  | 1,850,188 |
Inflation adjustment |  |  | (1,831,796 | ) |  |  | (2,494,082 | ) |  |  | (196,226 | ) |  |  | (1,445,336 | ) |  |  | (680,822 | ) |  |  | (6,648,262 | )
Closing balance as of December 31, 2020 (*) |  |  | 7,143,297 |  |  |  | 8,111,644 |  |  |  | 400,647 |  |  |  | 2,460,368 |  |  |  | 1,558,207 |  |  |  | 19,674,163 |
(*)   Impairment of financial assets detailed in the table above includes allowances on financial assets at FVOCI for 5,756,454. December 31, 2019 |
FINANCIAL ASSETS AT AMORTIZED COST AND AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - ALLOWANCES |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Loss allowances |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances |
Opening balance as of December 31, 2018 |  |  | 3,566,598 |  |  |  | 1,604,291 |  |  |  | 194,203 |  |  |  | 2,834,364 |  |  |  | 1,248,087 |  |  |  | 9,447,543 |
Transfers of financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (2,620,159 | ) |  |  | 9,063,675 |  |  |  | 86,007 |  |  |  | — |  |  |  | — |  |  |  | 6,529,523 |
Transfers from Stage 2 to Stage 1 |  |  | 1,089,664 |  |  |  | (2,739,576 | ) |  |  | (3,564 | ) |  |  | — |  |  |  | — |  |  |  | (1,653,476 | )
Transfers from Stage 1 or 2 to Stage 3 |  |  | (54,346 | ) |  |  | (2,455,000 | ) |  |  | (337,767 | ) |  |  | 6,416,480 |  |  |  | 566,057 |  |  |  | 4,135,424 |
Transfers from Stage 3 to Stage 1 or 2 |  |  | 21,601 |  |  |  | 60,192 |  |  |  | 72,288 |  |  |  | (683,334 | ) |  |  | (254,697 | ) |  |  | (783,950 | )
Changes without transfers between Stages |  |  | (301,453 | ) |  |  | 171,322 |  |  |  | 163,344 |  |  |  | 869,794 |  |  |  | 2,430,368 |  |  |  | 3,333,375 |
New financial assets originated |  |  | 7,588,880 |  |  |  | 217,694 |  |  |  | 189,306 |  |  |  | 608,390 |  |  |  | 421,812 |  |  |  | 9,026,082 |
Repayments |  |  | (5,796,016 | ) |  |  | (1,516,057 | ) |  |  | (61,021 | ) |  |  | (1,513,532 | ) |  |  | (178,192 | ) |  |  | (9,064,818 | )
Write-offs |  |  | — |  |  |  | (3 | ) |  |  | — |  |  |  | (3,795,182 | ) |  |  | (2,559 | ) |  |  | (3,797,744 | )
Foreign exchange |  |  | 486,995 |  |  |  | 174,223 |  |  |  | 30,191 |  |  |  | 12,095 |  |  |  | 720,092 |  |  |  | 1,423,596 |
Gain of control over subsidiaries |  |  | 161,071 |  |  |  | 1,860 |  |  |  | — |  |  |  | 155,888 |  |  |  | — |  |  |  | 318,819 |
Inflation adjustment |  |  | (1,867,269 | ) |  |  | (1,056,847 | ) |  |  | (89,203 | ) |  |  | (1,377,593 | ) |  |  | (899,380 | ) |  |  | (5,290,292 | )
Other adjustments |  |  | 3,243,272 |  |  |  | 5,523,828 |  |  |  | — |  |  |  | 303,795 |  |  |  | — |  |  |  | 9,070,895 |
Closing balance as of December 31, 2019 (*) |  |  | 5,518,838 |  |  |  | 9,049,602 |  |  |  | 243,784 |  |  |  | 3,831,165 |  |  |  | 4,051,588 |  |  |  | 22,694,977 |

(*) | Impairment of financial assets detailed in the table above includes allowances on financial assets at FVOCI for 6,675,535.

F-44

##### Table of Contents

Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

December 31, 2020

LOAN COMMITMENTS AND FINANCIAL GUARANTEES - ALLOWANCES |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Loss allowances |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances |
Opening balance as of December 31, 2019 |  |  | 729,461 |  |  |  | 455,615 |  |  |  | 15,286 |  |  |  | 32,691 |  |  |  | 207 |  |  |  | 1,233,260 |
Transfers of loan commitments and financial guarantees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (334,616 | ) |  |  | 1,245,196 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 910,580 |
Transfers from Stage 2 to Stage 1 |  |  | 271,538 |  |  |  | (782,637 | ) |  |  | (255 | ) |  |  | — |  |  |  | — |  |  |  | (511,354 | )
Transfers from Stage 1 or 2 to Stage 3 |  |  | (1,839 | ) |  |  | (7,260 | ) |  |  | (1,014 | ) |  |  | 30,038 |  |  |  | 2,539 |  |  |  | 22,464 |
Transfers from Stage 3 to Stage 1 or 2 |  |  | 1,938 |  |  |  | 1,455 |  |  |  | 54 |  |  |  | (42,104 | ) |  |  | (774 | ) |  |  | (39,431 | )
Changes without transfers between Stages |  |  | 151,333 |  |  |  | (77,704 | ) |  |  | (523 | ) |  |  | (2,846 | ) |  |  | (68 | ) |  |  | 70,192 |
New loan commitments and financial guarantees originated |  |  | 827,366 |  |  |  | 220,711 |  |  |  | 12,212 |  |  |  | 2,055 |  |  |  | — |  |  |  | 1,062,344 |
Repayments |  |  | (461,805 | ) |  |  | (578,507 | ) |  |  | (3,542 | ) |  |  | (8,879 | ) |  |  | (160 | ) |  |  | (1,052,893 | )
Write-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (45 | ) |  |  | (128 | ) |  |  | (173 | )
Foreign exchange |  |  | 30,490 |  |  |  | 10,558 |  |  |  | 1,285 |  |  |  | — |  |  |  | — |  |  |  | 42,333 |
Inflation adjustment |  |  | (233,665 | ) |  |  | (127,794 | ) |  |  | (7,393 | ) |  |  | (3,559 | ) |  |  | (317 | ) |  |  | (372,728 | )
Closing balance as of December 31, 2020 |  |  | 980,201 |  |  |  | 359,633 |  |  |  | 16,110 |  |  |  | 7,351 |  |  |  | 1,299 |  |  |  | 1,364,594 |
December 31, 2019 |  |  |  |  |  |  |  |
LOAN COMMITMENTS AND FINANCIAL GUARANTEES - ALLOWANCES |  | Not credit impaired |  |  | Credit impaired |  |  | Total |
| Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
| Loss allowances |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances (collectively assessed) |  |  | Loss allowances (individually assessed) |  |  | Loss allowances |
Opening balance as of December 31, 2018 |  |  | 588,409 |  |  |  | 136,345 |  |  |  | 327 |  |  |  | 23,447 |  |  |  | 1,914 |  |  |  | 750,442 |
Transfers of loan commitments and financial guarantees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfers from Stage 1 to Stage 2 |  |  | (206,816 | ) |  |  | 602,213 |  |  |  | 526 |  |  |  | — |  |  |  | — |  |  |  | 395,923 |
Transfers from Stage 2 to Stage 1 |  |  | 128,864 |  |  |  | (282,949 | ) |  |  | (25 | ) |  |  | — |  |  |  | — |  |  |  | (154,110 | )
Transfers from Stage 1 or 2 to Stage 3 |  |  | (3,936 | ) |  |  | (11,123 | ) |  |  | (219 | ) |  |  | 172,283 |  |  |  | 1,125 |  |  |  | 158,130 |
Transfers from Stage 3 to Stage 1 or 2 |  |  | 1,896 |  |  |  | 655 |  |  |  | 801 |  |  |  | (140,369 | ) |  |  | (1,067 | ) |  |  | (138,084 | )
Changes without transfers between Stages |  |  | 196,731 |  |  |  | (65,311 | ) |  |  | 13,984 |  |  |  | 2,485 |  |  |  | (1,095 | ) |  |  | 146,794 |
New loan commitments and financial guarantees originated |  |  | 534,809 |  |  |  | 233,085 |  |  |  | 1,744 |  |  |  | 8,800 |  |  |  | — |  |  |  | 778,438 |
Repayments |  |  | (258,652 | ) |  |  | (86,324 | ) |  |  | (275 | ) |  |  | (22,053 | ) |  |  | — |  |  |  | (367,304 | )
Write-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (48 | ) |  |  | — |  |  |  | (48 | )
Foreign exchange |  |  | 5,216 |  |  |  | 2,579 |  |  |  | 306 |  |  |  | — |  |  |  | — |  |  |  | 8,101 |
Inflation adjustment |  |  | (257,060 | ) |  |  | (73,555 | ) |  |  | (1,883 | ) |  |  | (11,854 | ) |  |  | (670 | ) |  |  | (345,022 | )
Closing balance as of December 31, 2019 |  |  | 729,461 |  |  |  | 455,615 |  |  |  | 15,286 |  |  |  | 32,691 |  |  |  | 207 |  |  |  | 1,233,260 |

F-45

##### Table of Contents

Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

13. Refinancing and restructuring operations

Policies and principles with respect to refinancing and restructuring operations

Refinancing and restructuring transactions are carried out with customers who have requested such an operation in order to meet their current loan payments if they are expected, or may be expected, to experience financial difficulty in making the payments in the future.

The basic aim of a refinancing and restructuring operation is to provide the customer with a situation of financial viability over time by adapting repayment of the loan incurred with the Group to the customer’s new situation of fund generation. The use of refinancing and restructuring for other purposes, such as to delay loss recognition, is contrary to the Group´s policies.

The Group’s refinancing and restructuring policies are based on the following general principles:

| • |  | Refinancing and restructuring is authorized according to the capacity of customers to pay the new installments. This is done by first identifying the origin of the payment difficulties and then carrying out an analysis of the customers’ viability, including an updated analysis of their economic and financial situation and capacity to pay and generate funds. If the customer is a company, the analysis also covers the situation of the industry in which it operates.

With the aim of increasing the solvency of the operation, new guarantees and/or guarantors of demonstrable solvency are obtained where possible. An essential part of this process is an analysis of the effectiveness of both the new and original guarantees.

This analysis is carried out from the overall customer or group perspective.

Refinancing and restructuring operations do not in general increase the amount of the customer’s loan, except for the expenses inherent to the operation itself.

| • |  | The capacity to refinance and restructure loans is not delegated to the branches, but decided on by the risk units.

The decisions made are reviewed from time to time with the aim of evaluating full compliance with refinancing and restructuring policies.

In the case of retail customers (private individuals), the main aim of the Group’s policy on refinancing and restructuring loans is to avoid default arising from a customer’s temporary liquidity problems by implementing structural solutions that do not increase the balance of customer’s loan. The solution required is adapted to each case and the loan repayment is made easier, in accordance with the following principles:

| • |  | Analysis of the viability of operations based on the customer’s willingness and ability to pay, which may be reduced, but should nevertheless be present. The customer must therefore repay at least the interest on the operation in all cases. No arrangements may be concluded that involve a grace period for both principal and interest.

| • |  | Refinancing and restructuring of operations is only allowed on those loans in which the Group originally entered into.

| • |  | Customers subject to refinancing and restructuring operations are excluded from marketing campaigns of any kind.

Under restructuring or refinancing, the cure period is defined as 1 year from the latter of:

| • |  | The moment of extending the restructuring measures.

| • |  | The moment when the exposure has been classified as defaulted.

| • |  | The end of grace period included in the restructuring arrangements.

Additionally, this period should not be shorter than the period during which material payment has been made by the customer.

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During the cure period, facilities will have a PD of 100% assigned and classified in Stage 3.

Once the cure period for Stage 3 is finished, the contract refinancing and restructuring will be transferred to Stage 2 for two additional years.

14. Financial assets at fair value through other comprehensive income

The Group designated certain investments shown in the following table as equity securities as at FVOCI. The FVOCI designation was made because the investments are expected to be held for the long term for strategic purposes.

None of these strategic investments was disposed of during the year ended December 31, 2020, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

14.1. Debt securities

|  | December 31, 2020 |  |  | December 31, 2019 |
BCRA Liquidity Bills |  |  | 89,890,131 |  |  |  | 39,585,142 |
Government securities |  |  | 30,452,845 |  |  |  | 21,825,609 |
Financial assets pledged as collateral |  |  | 6,939,966 |  |  |  | — |
Private securities - Corporate bonds |  |  | 260,910 |  |  |  | 95,503 |
TOTAL |  |  | 127,543,852 |  |  |  | 61,506,254 |

14.2. Equity instruments

|  | December 31, 2020 |  |  | December 31, 2019 |
Banco Latinoaméricano de Exportaciones S.A. |  |  | 27,216 |  |  |  | 35,921 |
Others |  |  | 1,283 |  |  |  | 1,339 |
TOTAL |  |  | 28,499 |  |  |  | 37,260 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

15. Income Tax

15.1. Deferred income tax assets and liabilities

Account |  |  |  |  | Changes recognized in |  |  | As of December 31, 2020 |
| As of December 31, 2019 |  |  | Consolidated statement of profit or loss |  |  | Other comprehensive income |  |  | Consolidation with subsidiaries |  |  | Deferred tax asset |  |  | Deferred tax liabilities |
Allowance for loan losses |  |  | 6,077,813 |  |  |  | (1,498,157 | ) |  |  | — |  |  |  | 2,109 |  |  |  | 4,581,765 |  |  |  | — |
Provisions |  |  | 2,762,677 |  |  |  | (251,920 | ) |  |  | — |  |  |  | — |  |  |  | 2,510,757 |  |  |  | — |
Loan Commissions |  |  | 174,283 |  |  |  | 100,877 |  |  |  | — |  |  |  | — |  |  |  | 275,160 |  |  |  | — |
Expenses capitalized for tax purpose |  |  | (279,890 | ) |  |  | (564,566 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (844,456 | )
Property and equipment |  |  | (7,826,316 | ) |  |  | 1,129,736 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (6,696,580 | )
Investments in debt securities and equity instruments |  |  | (2,787,312 | ) |  |  | 2,168,490 |  |  |  | (2,068,506 | ) |  |  | 23,546 |  |  |  | — |  |  |  | (2,663,782 | )
Derivatives |  |  | 15,249 |  |  |  | (4,048 | ) |  |  | — |  |  |  | — |  |  |  | 11,201 |  |  |  | — |
Inflation adjustment (see Note 15.5) |  |  | 5,980,408 |  |  |  | 2,725,485 |  |  |  | — |  |  |  | — |  |  |  | 8,705,893 |  |  |  | — |
Others |  |  | (489 | ) |  |  | (1,869 | ) |  |  | — |  |  |  | 2,971 |  |  |  | 613 |  |  |  | — |
Balance |  |  | 4,116,423 |  |  |  | 3,804,028 |  |  |  | (2,068,506 | ) |  |  | 28,626 |  |  |  | 16,085,389 |  |  |  | (10,204,818 | )
Offsetting |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (10,165,479 | ) |  |  | 10,165,479 |
Net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,919,910 |  |  |  | (39,339 | )
Account |  |  |  |  | Changes recognized in |  |  | As of December 31, 2019 |
| As of December 31, 2018 |  |  | Consolidated statement of profit or loss |  |  | Other comprehensive income |  |  | Gain of control over subsidiaries |  |  | Deferred tax asset |  |  | Deferred tax liabilities |
Allowance for loan losses |  |  | 2,524,230 |  |  |  | 3,553,583 |  |  |  | — |  |  |  | — |  |  |  | 6,077,813 |  |  |  | — |
Provisions |  |  | 1,034,295 |  |  |  | 1,728,383 |  |  |  | — |  |  |  | — |  |  |  | 2,762,678 |  |  |  | — |
Loan Commissions |  |  | 392,873 |  |  |  | (218,590 | ) |  |  | — |  |  |  | — |  |  |  | 174,283 |  |  |  | — |
Expenses capitalized for tax purpose |  |  | (835,040 | ) |  |  | 555,150 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (279,890 | )
Property and equipment |  |  | (7,291,169 | ) |  |  | (535,147 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,826,316 | )
Investments in debt securities and equity instruments |  |  | 220,681 |  |  |  | (4,975,754 | ) |  |  | 1,967,761 |  |  |  | — |  |  |  | — |  |  |  | (2,787,312 | )
Derivatives |  |  | 23,458 |  |  |  | (8,209 | ) |  |  | — |  |  |  | — |  |  |  | 15,249 |  |  |  | — |
Inflation adjustment (see Note 15.5) |  |  | — |  |  |  | 5,980,408 |  |  |  | — |  |  |  | — |  |  |  | 5,980,408 |  |  |  | — |
Others |  |  | 1,634 |  |  |  | 87,307 |  |  |  | — |  |  |  | (89,431 | ) |  |  | — |  |  |  | (490 | )
Balance |  |  | (3,929,038 | ) |  |  | 6,167,131 |  |  |  | 1,967,761 |  |  |  | (89,431 | ) |  |  | 15,010,431 |  |  |  | (10,894,008 | )
Offsetting |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (10,894,008 | ) |  |  | 10,894,008 |
Net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,116,423 |  |  |  | — |

In order to fully realize the deferred income tax asset, the Bank will need to generate taxable income. Based upon the level of historical taxable income and projections for future over the years in which the deferred income tax are deductible, Management of the Bank believes that as of December 31, 2020 it is probable that the Bank will realize all of the deferred income tax assets. Taxable profit projections for 2021 take into account that the methodology of the tax inflation adjustment differs significantly from the accounting for hyperinflation under IAS 29, and the tax deductible expense generated by the tax inflation adjustment will be lower than the loss as calculated for accounting purposes.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

15.2. Unrecognised deferred tax liabilities

At December 31, 2020 and 2019 there were deferred tax liabilities of 315,340 and 346,587, respectively, related to investments in subsidiaries and in joint ventures. However this liability was not recognized because the Group controls the dividend policy of its subsidiaries and is able to veto the payment of dividends of its joint ventures. No dividend distribution from subsidiaries and joint ventures is expected in the foreseeable future.

15.3. Income tax expense

|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Current Tax |  |  | 12,165,929 |  |  |  | 14,681,916 |  |  |  | 11,300,604 |
Deferred Tax |  |  | (3,804,028 | ) |  |  | (6,167,131 | ) |  |  | 742,435 |
Inflation adjustment for prior period (see Note 15.5) |  |  | — |  |  |  | (5,693,726 | ) |  |  | (2,961,457 | )
Over/under income tax from prior year |  |  | (327,807 | ) |  |  | — |  |  |  | — |
Income tax expense |  |  | 8,034,094 |  |  |  | 2,821,059 |  |  |  | 9,081,582 |

The reconciliation of the effective tax rate is set forth below:

|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Profit before income tax |  |  | 18,102,889 |  |  |  | 24,636,513 |  |  |  | 5,794,181 |
Income tax rate |  |  | 30 | % |  |  | 30 | % |  |  | 30 | %
Income tax using the Bank´s income tax rate |  |  | 5,430,867 |  |  |  | 7,390,954 |  |  |  | 1,738,254 |
Tax -exempt income |  |  | (328,390 | ) |  |  | (655,330 | ) |  |  | (411,218 | )
Non-deductible expenses |  |  | 120,650 |  |  |  | 87,334 |  |  |  | 146,568 |
Change in tax rate (see Note 15.4) |  |  | (444,727 | ) |  |  | (1,281,548 | ) |  |  | (604,046 | )
Other |  |  | 194,985 |  |  |  | (21,293 | ) |  |  | (36,906 | )
Net monetary inflation adjustment |  |  | 8,755,629 |  |  |  | 10,490,151 |  |  |  | 11,210,387 |
Subtotal |  |  | 13,729,014 |  |  |  | 16,010,268 |  |  |  | 12,043,039 |
Inflation adjustment for tax purposes (see Note 15.5) |  |  | (5,367,113 | ) |  |  | (13,189,209 | ) |  |  | (2,961,457 | )
Over/under income tax from prior year |  |  | (327,807 | ) |  |  | — |  |  |  | — |
Income tax expense |  |  | 8,034,094 |  |  |  | 2,821,059 |  |  |  | 9,081,582 |
Effective tax rate |  |  | 44 | % |  |  | 11 | % |  |  | 157 | %

15.4. Change in tax rate

The tax reform enacted by Law 27,430 established a gradual decrease in the income tax rate from 35% to 30% for fiscal years beginning January 1, 2018, while for fiscal years beginning January 1, 2020, the rate would be reduced to 25%.

In December 2019, the Social Solidarity Law 27,541 suspended the decrease of income tax rate to 25% until the fiscal years beginning on January 1, 2022, consequently the income tax rate remained 30%.

15.5. Income tax exposure – inflation adjustment

The tax inflation adjustment prescribed by Law 20,628 allows the tax payers to deduct certain inflation effects from taxable profit. At December 31, 2016 the Bank recognized and measured its income tax provision without applying a tax inflation adjustment in the calculation of its taxable income in 2017, since it was suspended by Law 24,073.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

On May 10, 2018, after analyzing the effect of the non-application of the tax inflation adjustment and on the basis of related legal precedents, the Bank approved the filing of a petition for the courts to declare such suspension to be unconstitutional based on the non-confiscatory principle set in article 17 of the Argentina National Constitution, in the light of the confiscatory effect that these provisions entail in this specific case.

The Bank therefore filed its Income tax return for the year ended December 31, 2017 having applied the tax inflation adjustment in its preparation. with a net impact of 1,021,518 in nominal values (corresponding to 2,961,457 in terms of currency as of December 31, 2020) in “Income tax expense” in the year ended December 31, 2018.

The Bank, based on the result of the evaluation carried out, and taking into account the opinion issued by its legal and fiscal advisors, concluded that it is probable that it will be able to obtain a favorable result in the final judicial instance, in case this treatment be challenged by the tax authorities.

Law 27,430 (amended by Law 27,468) was published in December 29, 2017 and reintroduced the tax inflation adjustment, when certain criteria are met.

As of December 31, 2018, considering that the criteria to apply the tax inflation adjustment had not been met, the Bank recorded an income tax provision without applying the tax inflation adjustment.

Despite this, on May 13, 2019, the Bank’s Board of Directors resolved to file a declaratory action in court requesting the unconstitutionality of the rules that restricted the full application of the tax inflation adjustment in 2018, given the confiscatory effect that this entails in the specific case. As a consequence, the Bank filed its Income tax return for the year ended December 31, 2018 applying the tax inflation adjustment, although it was not considered probable that this position would be accepted by the tax authorities.

Subsequently, during 2019 the Bank and its legal counsel became aware of jurisprudence which led them to reassess the likelihood of the benefit of the tax inflation adjustment being accepted for 2018 to being probable. As a result, the Bank recognized a reduction of 3,239,760 in nominal values (corresponding to 5,693,726 in terms of currency as of December 31, 2020) in its “Income tax expense” for the year ended December 31, 2019.

On December 23, 2019, the Congress passed the Law 27,541 “Solidarity and Productive Reactivation Law as a part of Public Emergency” by which, the benefit (or charge) of the tax inflation adjustment for 2019 and 2020 fiscal years, are deductible 1/6 in that fiscal period and the remaining 5/6, in equal parts in the 5 following immediate fiscal periods.

In 2019 the criteria to apply the tax inflation adjustment were met and the Bank filed its income tax return with this benefit. Therefore, for the total tax inflation adjustment for 2019 fiscal year, amounting to 13,189,209, 7,208,801 was considered as a deduction in 2019 income tax provision and 5,980,408 has been recognized as a deferred tax asset.

In 2020 the Bank expects to file its income tax return with the same benefit. Therefore, the adjustment for total tax inflation for fiscal year 2020, was considered 1/6 as a deduction in the provision for income tax 2020 and 5/6 as a deferred tax asset, amounting to 8,705,893 as of December 31, 2020 (including 1/6 from 2019).

On June 8, 2020, the Bank obtained a favorable result in the Court in relation to the declaratory action filed on May 12, 2017. The Court concluded that the prohibition on applying the inflation adjustment mechanism for income tax return in fiscal year 2016 is inapplicable to the case.

On December 9, 2020 the Appeal Court dismissed the appeals filed by the tax authorities against the Court judgement on August 6, 2020, thereby confirming the decision taken by the Court. Although the tax authorities filed an extraordinary appeal, it was withdrawn on February 1, 2021, being the Court judgement the final decision.

As a consequence, this judgement has no impact on these financial statements since the Bank had not established any provision as it was considered probable that it would be able to obtain a favorable result in the final judicial instance.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Income tax – motions for refund of amounts paid for fiscal years 2013, 2014 and 2015

In connection with the years 2013, 2014 and 2015, the Bank determined its taxable income without applying the tax inflation adjustment. If it had been applied, the bank would have paid for 264,257, 647,945 and 555,002 less, in nominal values in those periods.

On the basis of the Bank’s position presented in the preceding paragraphs, on November 19, 2015 a prior administrative claim for the recovery of these amounts was filed with the administrative authorities in connection with the periods 2013 and 2014. On September 23, 2016 a complaint was filed with the courts for both periods in view of the administrative authorities’ failure to answer.

In addition, on April 4, 2017, a petition was filed for the recovery of the tax paid in excess for year 2015. Likewise, on December 29, 2017, the related complaint was filed with the court for that year.

On October 21, 2020, we were informed that the Court rendered a judgment confirming the Bank’s request for fiscal year 2014. The Tax authorities appealed that judgment to the Appeal Court.

On November 10, 2020, the Court also confirmed the Bank’s request for fiscal year 2013. The Tax authorities appealed that judgment to the Appeal Court.

As of the date of these financial statements, the Court had not yet released a judgement in relation to the fiscal year 2015.

The Bank has not recognized any asset in relation to these claims.

Income tax – motion for refund of amounts paid for fiscal year 2019

As mentioned in the previous paragraphs, in relation to the fiscal year 2019, the Bank determined the income tax return by applying the tax inflation adjustment in accordance with the law which maintained the application of the inflation adjustment mechanism but considered a sixth in that fiscal period and the remaining five sixths in equal parts in the next 5 fiscal periods. Such deferral has been recognized as a deferred tax asset.

Considering that there are reasonable grounds to sustain the unconstitutionality and / or inapplicability to the specific case of the reform introduced by Law 27,541, on August 21, 2020 a prior administrative claim was filed in order to obtain the refund of the sum of $ 4,528 .453, in nominal value in that period. The effect of non-inclusion in full of the tax inflation adjustment shows a clearly confiscatory taxation and such confiscation is not reversed by the right to deduct on future tax years the deferred tax asset.

However, over time the bank will deduct 1/6 in the following periods until it is consumed, although the claim for interest will continue.

As of the date of these financial statements the tax authorities had not yet released a response to the motion lodged.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

16. Investment in joint ventures and associates

|  | December 31, 2020 |  |  | December 31, 2019 |
Rombo Cía. Financiera S.A. |  |  | 757,149 |  |  |  | 895,378 |
BBVA Consolidar Seguros S.A. |  |  | 445,378 |  |  |  | 360,236 |
Interbanking S.A. |  |  | 165,422 |  |  |  | 154,732 |
Play Digital S.A. (1) |  |  | 74,396 |  |  |  | — |
TOTAL |  |  | 1,442,345 |  |  |  | 1,410,346 |

(1) | The Bank is one of the sponsors and shareholders of Play Digital S.A. (the “company”), an Argentine fintech incorporated on May 26, 2020.

The company’s initial capital stock is 7,500,000 common shares of $1 par value each, entitling to one vote per share, was distributed as follows:

| (i) | Banco BBVA Argentina S.A., holder of 2,500,000 common shares, of $1 par value each, entitling to one vote per share, representing 33.33% of the stock capital;

| (ii) | Banco de Galicia y Buenos Aires S.A.U., holder of 2,500,000 common shares, of $1 par value each, entitling to one vote per share, representing 33.33% of the stock capital; and

| (iii) | Banco Santander Río S.A., holder of 2,500,000 common shares, of $1 par value each, entitling to one vote per share, representing 33.33% of the stock capital.

The agreement provides for the participation of other financial institutions as holders of equity interests in the company’s capital; when this occurs, the equity interests of the founder financial institutions will be diluted.

The company’s purpose is to engage, directly and/or through third parties, or in association with third parties, in the following activities in Argentina or abroad:

| a) | Provision of electronic payment services;

| b) | Management and operation of transfers by using mobile communication devices and/or any other electronic means, as well as electronic payment and/or collection services on behalf and for the account of third parties, to which effect it shall enter into agency agreements to make and receive collections and/or payments for the account and to the order of third parties, in all cases through electronic-supported transfer systems;

| c) | Operation of electronic currency transfer systems through the Internet and/or any other digital or virtual payment means. It may also provide supplementary technological or IT support services related to financial activities. The activities falling under the scope of Financial Institutions Law No. 21526, as amended and regulated, are excluded from its purpose.

On July 15, 2020, the Bank made a capital contribution for future subscription of shares for 13,750, which was accepted and transferred on July 20, 2020.

Likewise, on July 23, 2020, the first Extraordinary General Shareholders’ Meeting took place in which it was decided to incorporate Banco Macro S.A. as a new investor, joining the existing Banco BBVA Argentina S.A., Banco de Galicia and Buenos Aires S.A.U. and Banco Santander Río S.A. Consequently, the Bank’s participation in Play Digital S.A. was reduced from 33% to 25%.

On August 26, 2020, Banco BBVA Argentina S.A. made an additional capital contribution of 27,250, maintaining its participation.

On October 15, 2020, a new Extraordinary General Shareholders’ Meeting was held in which it was determined to incorporate new banks as sponsors, adding to the existing ones. Consequently, the Bank’s participation in Play Digital S.A. was reduced from 25% to 18.1585%.

In the Ordinary and Extraordinary General Shareholders’ Meeting of December 15, 2020, a new share issue was decided in which the Bank did not exercise its right of first refusal, reducing its participation to 13.001%.

As of December 31, 2020, the participation of Play Digital S.A. within the caption Investments in associates amounts to of 74,396. The Bank concluded that it has significant influence over Play Digital S.A. since it has the right to appoint one member of the Board of Directors. It should be noted that on January 8, 2021, a sale of shares of Play Digital S.A. was made (see note 49).

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The following table summarises the information related to the most significant investments in joint venture:

|  | Rombo Compañía Financiera S.A. |
|  | December 31, 2020 |  |  | December 31, 2019 |
Total Assets |  |  | 9,354,472 |  |  |  | 10,801,444 |
Total Liabilities |  |  | 7,461,599 |  |  |  | 8,562,999 |
Profit |  |  | 345,574 |  |  |  | 395,620 |
Equity |  |  | 1,892,873 |  |  |  | 2,238,445 |
Ownership interest |  |  | 40 | % |  |  | 40 | %

17. Tangible assets

17.1. Property and equipment

|  | December 31, 2020 |  |  | December 31, 2019 |
Real estate |  |  | 23,344,942 |  |  |  | 23,970,454 |
Furniture and facilities |  |  | 4,922,945 |  |  |  | 5,255,866 |
Right of use |  |  | 2,655,151 |  |  |  | 3,184,937 |
Machinery and equipment |  |  | 2,140,829 |  |  |  | 2,592,481 |
Constructions in progress |  |  | 646,906 |  |  |  | 437,722 |
Automobiles |  |  | 57,381 |  |  |  | 52,697 |
TOTAL |  |  | 33,768,154 |  |  |  | 35,494,157 |

Changes in the item for years 2020 and 2019 are included below:

|  |  |  |  |  |  |  |  |  |  |  |  |  | Depreciation |  |  |  |
|  | Cost as of December 31, 2019 |  |  | Transfer from investment properties |  |  | Additions |  |  | Disposals (*) |  |  | Accumulated as of December 31, 2019 |  |  | Transfer from investment properties |  |  | Disposals (*) |  |  | For the period |  |  | Accumulated as of December 31, 2020 |  |  | Carrying amount as of December 31, 2020 |
Real estate |  |  | 27,406,248 |  |  |  | 3,396 |  |  |  | 115,643 |  |  |  | (1,955,258 | ) |  |  | 3,435,794 |  |  |  | 356 |  |  |  | (1,818,692 | ) |  |  | 607,629 |  |  |  | 2,225,087 |  |  |  | 23,344,942 |
Furniture and facilities |  |  | 9,031,914 |  |  |  | — |  |  |  | 360,821 |  |  |  | (1,346,385 | ) |  |  | 3,776,048 |  |  |  | — |  |  |  | (1,477,379 | ) |  |  | 824,736 |  |  |  | 3,123,405 |  |  |  | 4,922,945 |
Rights of use – Real estate |  |  | 3,962,642 |  |  |  | — |  |  |  | 429,188 |  |  |  | (290,628 | ) |  |  | 777,705 |  |  |  | — |  |  |  | (26,764 | ) |  |  | 695,110 |  |  |  | 1,446,051 |  |  |  | 2,655,151 |
Machinery and equipmente |  |  | 6,300,135 |  |  |  | — |  |  |  | 1,122,938 |  |  |  | (3,012,796 | ) |  |  | 3,707,654 |  |  |  | — |  |  |  | (3,011,959 | ) |  |  | 1,573,753 |  |  |  | 2,269,448 |  |  |  | 2,140,829 |
Construction in progress |  |  | 437,722 |  |  |  | — |  |  |  | 295,844 |  |  |  | (86,660 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 646,906 |
Automobiles |  |  | 230,895 |  |  |  | — |  |  |  | 20,278 |  |  |  | (98,654 | ) |  |  | 178,198 |  |  |  | — |  |  |  | (103,145 | ) |  |  | 20,085 |  |  |  | 95,138 |  |  |  | 57,381 |
Total |  |  | 47,369,556 |  |  |  | 3,396 |  |  |  | 2,344,712 |  |  |  | (6,790,381 | ) |  |  | 11,875,399 |  |  |  | 356 |  |  |  | (6,437,939 | ) |  |  | 3,721,313 |  |  |  | 9,159,129 |  |  |  | 33,768,154 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Depreciation |  |  |  |
|  | Cost as of December 31, 2018 |  |  | Gain of control over subsidiaries |  |  | Transfer to investment properties |  |  | Additions |  |  | Disposals (*) |  |  | Accumulated as of December 31, 2018 |  |  | Transfer to investment properties |  |  | Disposals (*) |  |  | For the period |  |  | Gain of control over subsidiaries |  |  | Accumulated as of December 31, 2019 |  |  | Carrying amount as of December 31, 2019 |
Real estate |  |  | 29,091,573 |  |  |  | — |  |  |  | (1,751,822 | ) |  |  | 294,422 |  |  |  | (227,925 | ) |  |  | 3,203,525 |  |  |  | (49,040 | ) |  |  | (227,925 | ) |  |  | 509,234 |  |  |  | — |  |  |  | 3,435,794 |  |  |  | 23,970,454 |
Furniture and facilities |  |  | 9,430,753 |  |  |  | 34,399 |  |  |  | — |  |  |  | 1,226,582 |  |  |  | (1,659,820 | ) |  |  | 3,568,449 |  |  |  | — |  |  |  | (1,657,811 | ) |  |  | 1,858,249 |  |  |  | 7,161 |  |  |  | 3,776,048 |  |  |  | 5,255,866 |
Rights of use – Real estate (**) |  |  | — |  |  |  | 24,835 |  |  |  | — |  |  |  | 3,937,807 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 766,294 |  |  |  | 11,411 |  |  |  | 777,705 |  |  |  | 3,184,937 |
Machinery and equipment |  |  | 5,776,948 |  |  |  | 13,483 |  |  |  | — |  |  |  | 1,745,397 |  |  |  | (1,235,693 | ) |  |  | 3,079,268 |  |  |  | — |  |  |  | (1,234,549 | ) |  |  | 1,855,364 |  |  |  | 7,571 |  |  |  | 3,707,654 |  |  |  | 2,592,481 |
Construction in progress |  |  | 983,305 |  |  |  | — |  |  |  | — |  |  |  | 376,146 |  |  |  | (921,729 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 437,722 |
Automobiles |  |  | 200,776 |  |  |  | 9,838 |  |  |  | — |  |  |  | 20,917 |  |  |  | (636 | ) |  |  | 156,834 |  |  |  | — |  |  |  | — |  |  |  | 19,824 |  |  |  | 1,540 |  |  |  | 178,198 |  |  |  | 52,697 |
Total |  |  | 45,483,355 |  |  |  | 82,555 |  |  |  | (1,751,822 | ) |  |  | 7,601,271 |  |  |  | (4,045,803 | ) |  |  | 10,008,076 |  |  |  | (49,040 | ) |  |  | (3,120,285 | ) |  |  | 5,008,965 |  |  |  | 27,683 |  |  |  | 11,875,399 |  |  |  | 35,494,157 |

(*) | Includes write-off of fully depreciated items and finalized constructions.

(**) | The Group included in additions the amount net of initial recognition (see note 5.18).

17.2. Investment properties

Below are the changes in investment properties:

|  |  |  |  |  |  |  |  |  |  |  |  |  | Depreciation |  |  |  |
|  | Cost as of December 31, 2019 |  |  | Transfer to Property and equipment |  |  | Additions |  |  | Disposals |  |  | Accumulated as of December 31, 2019 |  |  | Transfer to Property and equipment |  |  | Disposals |  |  | For the period |  |  | Accumulated as of December 31, 2020 |  |  | Carrying amount as of December 31, 2020 |
Real estate |  |  | 2,023,910 |  |  |  | (3,396 | ) |  |  | — |  |  |  | (131 | ) |  |  | 94,710 |  |  |  | (356 | ) |  |  | (131 | ) |  |  | 35,892 |  |  |  | 130,115 |  |  |  | 1,890,268 |
Total |  |  | 2,023,910 |  |  |  | (3,396 | ) |  |  | — |  |  |  | (131 | ) |  |  | 94,710 |  |  |  | (356 | ) |  |  | (131 | ) |  |  | 35,892 |  |  |  | 130,115 |  |  |  | 1,890,268 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Depreciation |  |  |  |
|  | Cost as of December 31, 2018 |  |  | Transfer from Property and equipment |  |  | Additions |  |  | Disposals |  |  | Accumulated as of December 31, 2018 |  |  | Transfer from Property and equipment |  |  | Disposals |  |  | For the period |  |  | Accumulated as of December 31, 2019 |  |  | Carrying amount as of December 31, 2019 |
Real estate |  |  | 272,088 |  |  |  | 1,751,822 |  |  |  | — |  |  |  | — |  |  |  | 16,393 |  |  |  | 49,040 |  |  |  | — |  |  |  | 29,277 |  |  |  | 94,710 |  |  |  | 1,929,200 |
Total |  |  | 272,088 |  |  |  | 1,751,822 |  |  |  | — |  |  |  | — |  |  |  | 16,393 |  |  |  | 49,040 |  |  |  | — |  |  |  | 29,277 |  |  |  | 94,710 |  |  |  | 1,929,200 |

18. Intangible assets

Below are the changes in the items:

|  |  |  |  |  |  |  |  |  |  | Amortization |  |  |  |
|  | Cost as of December 31, 2019 |  |  | Additions |  |  | Disposals (*) |  |  | Accumulated as of December 31, 2019 |  |  | Disposals (*) |  |  | For the period |  |  | Accumulated as of December 31, 2020 |  |  | Carrying amount as of December 31, 2020 |
Software licenses |  |  | 2,363,029 |  |  |  | 802,556 |  |  |  | (1,048,297 | ) |  |  | 1,301,046 |  |  |  | (1,046,199 | ) |  |  | 308,544 |  |  |  | 563,391 |  |  |  | 1,553,897 |
Total |  |  | 2,363,029 |  |  |  | 802,556 |  |  |  | (1,048,297 | ) |  |  | 1,301,046 |  |  |  | (1,046,199 | ) |  |  | 308,544 |  |  |  | 563,391 |  |  |  | 1,553,897 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

|  |  |  |  | Amortization |  |  |  |
|  | Cost as of December 31, 2018 |  |  | Gain of control over subsidiaries |  |  | Additions |  |  | Disposals (*) |  |  | Accumulated as of December 31, 2018 |  |  | Gain of control over subsidiaries |  |  | Disposals (*) |  |  | For the period |  |  | Accumulated as of December 31, 2019 |  |  | Carrying amount as of December 31, 2019 |
Software licenses |  |  | 2,403,559 |  |  |  | 4,177 |  |  |  | 418,293 |  |  |  | (463,000 | ) |  |  | 1,075,904 |  |  |  | 1,514 |  |  |  | (463,000 | ) |  |  | 686,628 |  |  |  | 1,298,018 |  |  |  | 1,061,983 |
Total |  |  | 2,403,559 |  |  |  | 4,177 |  |  |  | 418,293 |  |  |  | (463,000 | ) |  |  | 1,075,904 |  |  |  | 1,514 |  |  |  | (463,000 | ) |  |  | 686,628 |  |  |  | 1,298,018 |  |  |  | 1,061,983 |

(*) | Includes write-off of fully amortized items.

19. Other assets

|  | December 31, 2020 |  |  | December 31, 2019 |
Prepayments |  |  | 4,425,001 |  |  |  | 1,961,177 |
Tax advances |  |  | 1,566,805 |  |  |  | 789,208 |
Advances to personnel |  |  | 378,052 |  |  |  | 443,081 |
Other miscellaneous assets |  |  | 276,631 |  |  |  | 308,047 |
Advances to suppliers of goods |  |  | 160,100 |  |  |  | 231,673 |
Foreclosed assets |  |  | 15,918 |  |  |  | 19,501 |
Others |  |  | 58,295 |  |  |  | 40,033 |
Allowance |  |  | — |  |  |  | (950 | )
TOTAL |  |  | 6,880,802 |  |  |  | 3,791,770 |

20. Non-current assets held for sale

It includes certain real property assets located in Argentina which the Board of Directors are committed to sale in the short-term.

21. Financial liabilities at fair value through profit or loss

21.1. Derivatives

|  | December 31, 2020 (*) |  |  | December 31, 2019 (*) |
Foreign Currency Forwards |  |  | 188,694 |  |  |  | 3,984,235 |
Interest Rate Swaps |  |  | — |  |  |  | 199,291 |
TOTAL |  |  | 188,694 |  |  |  | 4,183,526 |

(*) | The notional amounts are disclosed in note 9.2

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

21.2. Trading liabilities

|  | December 31, 2020 |  |  | December 31, 2019 |
Short sold positions |  |  | — |  |  |  | 790,707 |
TOTAL |  |  | — |  |  |  | 790,707 |

22. Financial liabilities at amortized cost

22.1. Banks loans

|  | December 31, 2020 |  |  | December 31, 2019 |
Local financial institutions |  |  | 7,906,629 |  |  |  | 4,891,450 |
Foreign financial institutions |  |  | 1,690,912 |  |  |  | 3,456,861 |
Central Bank |  |  | 28,487 |  |  |  | 22,800 |
|  |  | 9,626,028 |  |  |  | 8,371,111 |

22.2. Deposits from customers

|  | December 31, 2020 |  |  | December 31, 2019 |
Savings Accounts |  |  | 205,927,223 |  |  |  | 201,250,239 |
Term deposits |  |  | 120,068,027 |  |  |  | 114,595,457 |
Checking accounts |  |  | 112,583,740 |  |  |  | 73,516,392 |
Investment accounts |  |  | 27,904,734 |  |  |  | 105 |
Others |  |  | 5,249,472 |  |  |  | 6,631,711 |
TOTAL |  |  | 471,733,196 |  |  |  | 395,993,904 |

22.3. Other financial liabilities

|  | December 31, 2020 |  |  | December 31, 2019 |
Obligations for financing of purchases (*) |  |  | 25,067,212 |  |  |  | 23,103,205 |
Collections and other transactions on behalf of third parties |  |  | 4,050,321 |  |  |  | 4,358,101 |
Lease liabilities (See Notes 5.18 and 44) |  |  | 2,950,729 |  |  |  | 3,426,282 |
Creditors for spot transactions pending settlement |  |  | 986,457 |  |  |  | 163,939 |
Accrued commissions payable |  |  | 41,542 |  |  |  | 19,841 |
Interest accrued payable |  |  | — |  |  |  | 495,127 |
Others |  |  | 6,130,460 |  |  |  | 7,676,239 |
TOTAL |  |  | 39,226,721 |  |  |  | 39,242,734 |

(*) | Includes payables to merchants acquirers as a result of purchases made by the holders of the Bank’s credit cards.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

23. Debt securities issued

|  |  |  |  |  |  |  |  |  |  |  |  | Carrying amount as of |
Detail |  | Issuance date |  |  | Nominal Value |  |  | Maturity date |  |  | Annual Nominal Rate (*) |  | December 31, 2020 |  |  | December 31, 2019 |
Class 24 |  |  | 27/12/2017 |  |  |  | 546,500 |  |  |  | 12/27/2020 |  |  | Badlar Private + 4.25% |  |  | — |  |  |  | 716,780 |
Class 25 |  |  | 08/11/2018 |  |  |  | 784,334 |  |  |  | 11/08/2020 |  |  | UVA + 9.50% |  |  | — |  |  |  | 1,761,712 |
Class 27 |  |  | 28/02/2019 |  |  |  | 1,090,000 |  |  |  | 08/28/2020 |  |  | Badlar Private + 6.25% |  |  | — |  |  |  | 1,213,012 |
Class 28 |  |  | 12/12/2019 |  |  |  | 1,967,150 |  |  |  | 06/12/2020 |  |  | Badlar Private + 4% |  |  | — |  |  |  | 2,678,087 |
Class 26 - 28 - PSA Finance Argentina |  |  | 01/02/2018 |  |  |  | 808,333 |  |  |  | 06/17/2020 |  |  | Badlar Private + 2.75% (class 26) / Badlar Private + 7% (class 28) |  |  | — |  |  |  | 848,785 |
Class 5 - 8 - 9 - Volkswagen Financial Services |  |  | 27/02/2019 |  |  |  | 1,086,556 |  |  |  | 03/30/2023 |  |  | UVA + 9.24 % (class 5) / UVA (class 8) / fixed rate (class 9) |  |  | 1,125,656 |  |  |  | 2,278,084 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Total Principal |  |  | 1,125,656 |  |  |  | 9,496,460 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Interest accrued |  |  | 43,126 |  |  |  | 467,773 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Total principal and interest accrued |  |  | 1,168,782 |  |  |  | 9,964,233 |

(*) Definitions:

BADLAR: Interest rate for time deposits of an amount superior than 1 (one) million pesos, from 30 to 35 days.

UVA: It is a unit of measure that is updated daily according to CER, based on the consumer price index.

24. Provisions

The Group, as a result of the ordinary course of its business, may be a party to legal lawsuits of labor, commercial and tax nature. A provision is recognized whenever the loss is classified as probable.

| • |  | Financial guarantees and loan commitments: reflects the expected credit loss arising from financial guarantees issued, unused balances of checking account overdrafts, credit cards and other loan commitments.

| • |  | Provisions for reorganization: Consistent with the goal of further aligning the organizational structure with the corporate strategy during the current year, achieving efficiency gains and streamlining the decision-making process across all work teams.

| • |  | Other provisions: reflects the estimated amounts to pay class actions, labour, tax and commercial claims as well as other miscellaneous complaints.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

|  | December 31, 2020 |  |  | December 31, 2019 |
Other provisions |  |  | 2,633,845 |  |  |  | 3,310,543 |
Provisions commercial claims |  |  | 1,957,932 |  |  |  | 2,605,366 |
Provisions labor-related |  |  | 250,904 |  |  |  | 278,001 |
Provisions tax claims |  |  | 182,951 |  |  |  | 143,757 |
Others |  |  | 242,058 |  |  |  | 283,419 |
Provisions for reorganization |  |  | 2,029,162 |  |  |  | 2,690,285 |
Financial guarantees and loan commitments |  |  | 1,364,594 |  |  |  | 1,233,260 |
TOTAL |  |  | 6,027,601 |  |  |  | 7,234,088 |

Changes in fiscal year 2020 and 2019 are included below:

Accounts |  | Balances as of December 31, 2019 |  |  | Increases |  |  | Provisions reversals |  |  | Provisions used |  |  | Inflation adjustment |  |  | Balances as of December 31, 2020 |
- Other provisions |  |  | 3,310,543 |  |  |  | 1,124,419 |  |  |  | (28,587 | ) |  |  | (742,649 | ) |  |  | (1,029,881 | ) |  |  | 2,633,845 |
Provisions commercial claims |  |  | 2,605,366 |  |  |  | 750,096 |  |  |  | — |  |  |  | (630,636 | ) |  |  | (766,894 | ) |  |  | 1,957,932 |
Provisions labor-related |  |  | 278,001 |  |  |  | 139,933 |  |  |  | — |  |  |  | (72,920 | ) |  |  | (94,110 | ) |  |  | 250,904 |
Provisions tax claims |  |  | 143,757 |  |  |  | 119,771 |  |  |  | — |  |  |  | (26,773 | ) |  |  | (53,804 | ) |  |  | 182,951 |
Others |  |  | 283,419 |  |  |  | 114,619 |  |  |  | (28,587 | ) |  |  | (12,320 | ) |  |  | (115,073 | ) |  |  | 242,058 |
- Provisions for reorganization |  |  | 2,690,285 |  |  |  | 2,858,723 |  |  |  | (646,586 | ) |  |  | (2,328,094 | ) |  |  | (545,166 | ) |  |  | 2,029,162 |
- Financial guarantees and loan commitments |  |  | 1,233,260 |  |  |  | 537,694 |  |  |  | — |  |  |  | — |  |  |  | (406,360 | ) |  |  | 1,364,594 |
TOTAL PROVISIONS |  |  | 7,234,088 |  |  |  | 4,520,836 |  |  |  | (675,173 | ) |  |  | (3,070,743 | ) |  |  | (1,981,407 | ) |  |  | 6,027,601 |

Accounts |  | Balances as of December 31, 2018 |  |  | Increases |  |  | Provisions used |  |  | Balances as of December 31, 2019 |
- Other provisions |  |  | 2,826,834 |  |  |  | 3,200,103 |  |  |  | (2,716,394 | ) |  |  | 3,310,543 |
Provisions commercial claims |  |  | 2,251,611 |  |  |  | 2,648,272 |  |  |  | (2,294,517 | ) |  |  | 2,605,366 |
Provisions labor-related |  |  | 354,470 |  |  |  | 175,162 |  |  |  | (251,631 | ) |  |  | 278,001 |
Provisions tax claims |  |  | 146,001 |  |  |  | 92,895 |  |  |  | (95,139 | ) |  |  | 143,757 |
Others |  |  | 74,752 |  |  |  | 283,774 |  |  |  | (75,107 | ) |  |  | 283,419 |
- Provisions for reorganization |  |  | — |  |  |  | 3,188,547 |  |  |  | (498,262 | ) |  |  | 2,690,285 |
- Financial guarantees and loan commitments |  |  | 750,442 |  |  |  | 482,866 |  |  |  | (48 | ) |  |  | 1,233,260 |
TOTAL PROVISIONS |  |  | 3,577,276 |  |  |  | 6,871,516 |  |  |  | (3,214,704 | ) |  |  | 7,234,088 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The expected terms to settle these obligations are as follows:

December 31, 2020 |  |  |  |  |  |
Provisions |  | Within 12 months |  |  | After 12 months |
Other provisions |  |  | 1,129,070 |  |  |  | 1,504,775 |
Provisions commercial claims |  |  | 826,610 |  |  |  | 1,131,322 |
Provisions labor-related |  |  | 78,737 |  |  |  | 172,167 |
Provisions tax claims |  |  | 69,429 |  |  |  | 113,522 |
Others |  |  | 154,294 |  |  |  | 87,764 |
Provisions for reorganization |  |  | 2,029,162 |  |  |  | — |
Financial guarantees and loan commitments |  |  | 1,364,594 |  |  |  | — |
December 31, 2019 |  |  |  |  |  |
Provisions |  | Within 12 months |  |  | After 12 months |
Other provisions |  |  | 1,215,982 |  |  |  | 2,094,561 |
Provisions commercial claims |  |  | 873,356 |  |  |  | 1,732,010 |
Provisions labor-related |  |  | 59,532 |  |  |  | 218,469 |
Provisions tax claims |  |  | 44,703 |  |  |  | 99,054 |
Others |  |  | 238,391 |  |  |  | 45,028 |
Provisions for reorganization |  |  | 2,690,285 |  |  |  | — |
Financial guarantees and loan commitments |  |  | 1,233,260 |  |  |  | — |

Possible contingencies

Contingent liabilities have not been recognized in these financial statements and corresponds to 105 claims received (both before the courts and the administrative authorities), arisen in the ordinary course of business. The estimated amount of said claims amounts to 18,623 of which an outflow of funds is estimated for approximately 2,566 in the next 12 months. These claims are primarily related to leasing claims, petitions to secure evidence, and labor claims. The Group’s management and legal advisors consider that the probability that these cases would derive in an outflow of resources is possible, but not probable, and that the potential cash disbursements should not be material.

25. Other liabilities

|  | December 31, 2020 |  |  | December 31, 2019 |
Cash dividends payable (see note 26) |  |  | 14,500,000 |  |  |  | — |
Miscellaneous creditors |  |  | 8,824,128 |  |  |  | 7,018,393 |
Other collections and withholdings |  |  | 5,163,932 |  |  |  | 4,186,674 |
Short term personnel benefits |  |  | 5,044,814 |  |  |  | 5,708,980 |
Advance collections |  |  | 4,958,065 |  |  |  | 3,548,845 |
Other taxes payable |  |  | 1,348,935 |  |  |  | 1,659,555 |
Contract liabilities |  |  | 400,421 |  |  |  | 522,449 |
Long term personnel benefits |  |  | 393,701 |  |  |  | 417,251 |
Social security payable |  |  | 99,339 |  |  |  | 83,638 |
Others |  |  | 89,881 |  |  |  | 106,712 |
TOTAL |  |  | 40,823,216 |  |  |  | 23,252,497 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

26. Capital and Reserves

| • |  | Share capital

Quantity of shares at December 31 2020 |  |  | Share capital December 31 2020 |
Class |  | Quantity |  |  | Nominal value per share |  |  | Votes per share |  |  | Shares outstanding |  |  | Pending issuance or distribution |  |  | Paid-in |
Ordinary |  |  | 612,710,079 |  |  |  | 1 |  |  |  | 1 |  |  |  | 612,615 |  |  |  | 95 |  |  |  | 612,710 |

On April 24, 2019 the shareholders meeting of BBVA Argentina and the shareholders meetings of its subsidiary BBVA Francés Valores S.A. approved the merger of the two companies, effective as from October 1, 2019. Prior to the merger, BBVA Argentina had a 95% holding of shares and votes of BBVA Francés Valores S.A.

On October 9, 2019, the Argentine Securities Commision (CNV) handed down Resolution No. 20484/2019 concerning the merger, by which Banco BBVA Argentina S.A. was authorized to proceed with the issuance of 50,441 common book-entry shares, with a nominal value of $ 1 and entitled to one (1) vote each, that will be given to the minority shareholders of BBVA Francés Valores S.A.

As of the date of these consolidated financial statements, the merger and the ensuing capital stock increase are in the process of being registered with the Argentine Superintendence of Corporations (IGJ).

The following table shows the reconciliation of the number of shares at opening date to closing date:

Quantity of shares at December 31, 2018 |  |  | 612,659,638 |
Insuance of shares 2019 (*) |  |  | 50,441 |
Quantity of shares at December 31, 2019 |  |  | 612,710,079 |
Quantity of shares at December 31, 2020 |  |  | 612,710,079 |

(*) | Pending registration by IGJ.

| • |  | Share premium

The share premium account represents the difference between the par value of the shares issued and the subscription price.

| • |  | Inflation adjustment to share capital

It comprises the cumulative monetary inflation adjustment on the share capital.

| • |  | Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of financial assets measured at FVOCI, net of the related income tax.

| • |  | Legal reserve

BCRA regulations establish that 20% of net income as determined in accordance with BCRA Generally Accepted Accounting Principles (BCRA GAAP), should be allocated to the legal reserve.

| • |  | Other reserve

Set up to fulfil the requirement of CNV where the entire balance of retained earnings determined in accordance with BCRA GAAP needs to be allocated by the Shareholders’ meeting to cash dividends, dividends in shares, set up reserves other than the legal reserve, or a combination of all of them.

| • |  | Restrictions to the payment of dividends

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For statutory purposes, the Bank prepares financial statements in accordance with BCRA GAAP. Dividend distributions are determined by the Shareholders based on these statutory financial statements.

Pursuant to the provisions in the regulation in force issued by the BCRA, financial institutions shall apply an annual 20% of the year’s profits determined in accordance with BCRA GAAP to increase legal reserves.

Furthermore, pursuant to the requirements in General Resolution No. 622 issued by the CNV, the Shareholders’ Meeting considering the financial statements with positive accumulated results determined in accordance with BCRA GAAP shall specifically provide for the allocation of those results.

Specifically, the mechanism to be followed by financial institutions to assess distributable amounts is defined by the BCRA through the regulations in force on the “Distribution of earnings”, provided certain conditions are not met, such as the registration for financial assistance for lack of liquidity granted by that entity, deficiencies in capital or minimum cash contributions and the existence of a certain type of penalty set forth by various regulators and weighted as significant and/or failure to implement corrective measures, among other conditions.

On September 20, 2017, BCRA issued Communication “A” 6327, which establishes that financial entities will not be able to make profit distributions with the profit that is originated by the first application of the IFRS, and must constitute a special reserve that can only be used for capitalization or to absorb eventual negative balances of the item “Retained earnings”.

In addition, the Bank shall maintain a minimum capital after the proposed distribution of profits.

On May 15, 2020 the Shareholders’ Meeting approved the distribution of dividends for an amount of 2,500,000 in nominal value (corresponding to 3,063,448 in terms of currency as of December 31, 2020).

On November 20, 2020 the Shareholders’ Meeting approved the distribution of dividends for an amount of 12,000,000 in nominal value (corresponding to 12,480,660 in terms of currency as of December 31, 2020). BCRA through Communication “A” 6768 issued on August 30, 2019 and Communication “A” 6886 issued on January 31, 2020, provides that financial institutions must have the formal authorization of the BCRA before cancellation of dividends. Subsequently, BCRA issued Communication “A” 7181 that suspended those payments until June 30, 2021.

The cash dividend payment declared by the shareholders will be made effective after suspension is terminated and BCRA formally approve the payment.

27. Analysis of changes in financing activities during the year

The following chart provides a reconciliation between the opening and closing balances for liabilities arising from financing activities:

|  | 2020 |  |  | 2019 |
Debt securities issued |  |  |  |  |  |  |  |
Opening balance |  |  | 13,390,515 |  |  |  | 5,180,604 |
Gain of control over subsidiaries |  |  | — |  |  |  | 5,054,024 |
New borrowings |  |  | 4,691,050 |  |  |  | 11,710,741 |
Debt payments |  |  | (8,260,445 | ) |  |  | (6,054,607 | )
Interests and adjustments accrued |  |  | 3,540,061 |  |  |  | 5,716,480 |
Interests paid |  |  | (3,910,199 | ) |  |  | (3,362,337 | )
Inflation effect on debt securities issued |  |  | (5,331,472 | ) |  |  | (4,854,390 | )
Closing balance |  |  | 4,119,510 |  |  |  | 13,390,515 |

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28. Net interest income

28.1. Interest income

Interest revenue calculated using the effective interest method.

|  | 2020 |  |  | 2019 |  |  | 2018 |
Interest from government securities |  |  | 33,664,109 |  |  |  | 49,098,038 |  |  |  | 20,684,183 |
Interest from credit card loans |  |  | 18,707,357 |  |  |  | 28,656,180 |  |  |  | 19,619,248 |
Interest from other loans |  |  | 11,269,542 |  |  |  | 7,377,124 |  |  |  | 7,690,032 |
Interest from overdrafts |  |  | 10,814,487 |  |  |  | 13,839,785 |  |  |  | 15,053,918 |
Interest from commercial papers |  |  | 10,182,777 |  |  |  | 15,051,005 |  |  |  | 13,629,461 |
Interest from consumer loans |  |  | 9,562,611 |  |  |  | 12,301,110 |  |  |  | 15,941,930 |
UVA clause adjustment (1) |  |  | 9,232,639 |  |  |  | 14,787,161 |  |  |  | 9,071,650 |
Premium for reverse repurchase agreements |  |  | 4,956,430 |  |  |  | 2,462,919 |  |  |  | 1,410,373 |
Interest from car loans |  |  | 2,995,000 |  |  |  | 1,972,697 |  |  |  | 3,113,187 |
Stabilization Coefficient (CER) clause adjustment (1) |  |  | 2,546,829 |  |  |  | 108,472 |  |  |  | 234,610 |
Interest from loans for the prefinancing and financing of exports |  |  | 1,429,432 |  |  |  | 4,295,451 |  |  |  | 3,663,772 |
Interest on loans to financial institutions |  |  | 1,207,423 |  |  |  | 3,700,450 |  |  |  | 4,775,119 |
Interest from mortgage loans |  |  | 931,823 |  |  |  | 1,890,592 |  |  |  | 1,942,756 |
Interest from financial leases |  |  | 541,336 |  |  |  | 801,446 |  |  |  | 1,351,442 |
Interest from private securities |  |  | 23,115 |  |  |  | 14,594 |  |  |  | 87,700 |
Other financial income |  |  | 457,849 |  |  |  | 10,897 |  |  |  | 86 |
TOTAL |  |  | 118,522,759 |  |  |  | 156,367,921 |  |  |  | 118,269,467 |

(1) | Adjustment clauses based on the variation of the consumer price index.

28.2. Interest expenses

|  | 2020 |  |  | 2019 |  |  | 2018 |
Time deposits |  |  | 33,236,039 |  |  |  | 52,834,019 |  |  |  | 35,573,477 |
Savings accounts deposits |  |  | 2,700,162 |  |  |  | 3,749,806 |  |  |  | 9,186,451 |
Other liabilities |  |  | 2,662,424 |  |  |  | 5,728,338 |  |  |  | 3,722,117 |
Bank loans |  |  | 1,394,983 |  |  |  | 1,230,240 |  |  |  | 383,690 |
UVA clause adjustment (1) |  |  | 1,011,135 |  |  |  | 2,096,368 |  |  |  | 2,688,015 |
Interest on the lease liability |  |  | 373,512 |  |  |  | 432,547 |  |  |  | — |
Premium for reverse repurchase agreements |  |  | — |  |  |  | 3,598 |  |  |  | 230,784 |
Others |  |  | 93,637 |  |  |  | 48,153 |  |  |  | 24,291 |
TOTAL |  |  | 41,471,892 |  |  |  | 66,123,069 |  |  |  | 51,808,825 |

(1) | Adjustment clause based on the variation of the consumer price index.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

29. Fee and commission income

|  | 2020 |  |  | 2019 |  |  | 2018 |
Linked to deposits |  |  | 12,013,206 |  |  |  | 15,625,680 |  |  |  | 15,320,959 |
Linked to credit cards |  |  | 8,574,713 |  |  |  | 5,161,923 |  |  |  | 7,641,939 |
Insurance agent fee |  |  | 1,437,672 |  |  |  | 1,545,159 |  |  |  | 1,817,747 |
From foreign currency transactions |  |  | 1,312,183 |  |  |  | 1,474,105 |  |  |  | 1,221,029 |
Linked to securities |  |  | 321,586 |  |  |  | 166,561 |  |  |  | 326,800 |
From guarantees granted |  |  | 3,821 |  |  |  | 2,727 |  |  |  | 6,490 |
TOTAL |  |  | 23,663,181 |  |  |  | 23,976,155 |  |  |  | 26,334,964 |

30. Fee and commission expense

|  | 2020 |  |  | 2019 |  |  | 2018 |
For credit and debit cards |  |  | 8,524,712 |  |  |  | 8,266,906 |  |  |  | 7,191,092 |
For promotions |  |  | 1,746,686 |  |  |  | 2,623,670 |  |  |  | 2,724,585 |
For foreign trade transactions |  |  | 278,455 |  |  |  | 485,530 |  |  |  | 328,438 |
Linked to transactions with securities |  |  | 4,534 |  |  |  | 4,000 |  |  |  | 3,902 |
Other commission expenses |  |  | 868,847 |  |  |  | 1,461,741 |  |  |  | 1,273,686 |
TOTAL |  |  | 11,423,234 |  |  |  | 12,841,847 |  |  |  | 11,521,703 |

31. Gains on financial assets and liabilities at fair value through profit or loss, net

|  | 2020 |  |  | 2019 |  |  | 2018 |
Income from debt and equity instruments |  |  | 7,607,079 |  |  |  | 13,198,302 |  |  |  | 2,993,171 |
Gain / (Loss) from foreign currency forward transactions |  |  | 3,061,714 |  |  |  | 2,169,298 |  |  |  | (620,289 | )
Gains from put options |  |  | 497,000 |  |  |  | 932,562 |  |  |  | — |
Interest rate swaps |  |  | 73,319 |  |  |  | (695,693 | ) |  |  | (2,130,274 | )
TOTAL |  |  | 11,239,112 |  |  |  | 15,604,469 |  |  |  | 242,608 |

32. Losses on derecognition of financial assets not measured at fair value through profit or loss, net

|  | 2020 |  |  | 2019 |  |  | 2018 |
Loss from sale of government securities |  |  | (2,308,809 | ) |  |  | (79,314 | ) |  |  | (284,476 | )
Loss from sale of private securities |  |  | (1,049 | ) |  |  | (1,560 | ) |  |  | (1,896 | )
TOTAL |  |  | (2,309,858 | ) |  |  | (80,874 | ) |  |  | (286,372 | )

33. Exchange differences, net

|  | 2020 |  |  | 2019 |  |  | 2018 |
Income from trading in foreign currency |  |  | 6,066,379 |  |  |  | 14,325,764 |  |  |  | 10,643,679 |
Conversion of foreign currency assets and liabilities into pesos |  |  | 161,346 |  |  |  | (299,355 | ) |  |  | 2,946,171 |
TOTAL |  |  | 6,227,725 |  |  |  | 14,026,409 |  |  |  | 13,589,850 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

34. Other operating income

|  | 2020 |  |  | 2019 |  |  | 2018 |
Adjustments and interest on miscellaneous receivables |  |  | 1,882,344 |  |  |  | 1,729,851 |  |  |  | 1,039,065 |
Rental of safe deposit boxes |  |  | 1,122,188 |  |  |  | 961,725 |  |  |  | 1,124,781 |
Services rendered |  |  | 270,110 |  |  |  | 300,983 |  |  |  | 323,403 |
Proceeds from electronic transactions |  |  | 186,922 |  |  |  | 199,891 |  |  |  | 255,558 |
Income related to foreign trade |  |  | 167,080 |  |  |  | 433,560 |  |  |  | 462,620 |
Gain from the sale of non-current assets held for sale |  |  | — |  |  |  | 5,202,018 |  |  |  | — |
Other operating income |  |  | 2,694,336 |  |  |  | 3,154,173 |  |  |  | 1,207,177 |
TOTAL |  |  | 6,322,980 |  |  |  | 11,982,201 |  |  |  | 4,412,604 |

35. Other operating expenses

|  | 2020 |  |  | 2019 |  |  | 2018 |
Sales taxes |  |  | 8,116,846 |  |  |  | 10,866,557 |  |  |  | 10,430,538 |
Provisions for reorganization |  |  | 2,858,723 |  |  |  | 3,188,547 |  |  |  | — |
Provisions for legal and administrative proceedings |  |  | 1,004,990 |  |  |  | 2,903,150 |  |  |  | 1,301,014 |
Contributions to the Deposits Guarantee Fund (Note 46) |  |  | 696,691 |  |  |  | 824,817 |  |  |  | 826,050 |
Loss on initial recognition of loans bearing below market interest rate |  |  | 627,182 |  |  |  | 2,069,574 |  |  |  | 1,342,077 |
Expected credit losses on financial guarantee and loan commitments |  |  | 537,694 |  |  |  | 482,866 |  |  |  | 78,062 |
Damage claims |  |  | 85,793 |  |  |  | 229,208 |  |  |  | 405,915 |
Loss on sale of non-current assets held for sale |  |  | — |  |  |  | — |  |  |  | 536,147 |
Other operating expenses |  |  | 1,662,299 |  |  |  | 1,463,693 |  |  |  | 1,801,028 |
TOTAL |  |  | 15,590,218 |  |  |  | 22,028,412 |  |  |  | 16,720,831 |

36. Personnel benefits

|  | 2020 |  |  | 2019 |  |  | 2018 |
Salaries |  |  | 12,951,727 |  |  |  | 13,364,230 |  |  |  | 13,036,484 |
Social security charges |  |  | 3,535,606 |  |  |  | 3,901,108 |  |  |  | 3,851,123 |
Other short term personnel benefits |  |  | 2,778,210 |  |  |  | 4,028,583 |  |  |  | 3,424,584 |
Personnel compensations and rewards |  |  | 436,790 |  |  |  | 719,905 |  |  |  | 1,836,160 |
Personnel services |  |  | 433,919 |  |  |  | 496,513 |  |  |  | 478,813 |
Fees to Bank Directors and Supervisory Committee |  |  | 60,188 |  |  |  | 22,247 |  |  |  | 41,895 |
Termination benefits |  |  | 82,785 |  |  |  | 4,106 |  |  |  | 33,314 |
Other long term benefits |  |  | 99,910 |  |  |  | 161,733 |  |  |  | 99,522 |
TOTAL |  |  | 20,379,135 |  |  |  | 22,698,425 |  |  |  | 22,801,895 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

37. Other administrative expenses

|  | 2020 |  |  | 2019 |  |  | 2018 |
Taxes |  |  | 4,490,270 |  |  |  | 4,433,658 |  |  |  | 4,226,702 |
Maintenance costs |  |  | 2,226,065 |  |  |  | 2,034,666 |  |  |  | 1,931,138 |
Armored transportation services |  |  | 2,205,072 |  |  |  | 3,447,768 |  |  |  | 2,701,123 |
Rent |  |  | 1,876,131 |  |  |  | 1,334,943 |  |  |  | 1,967,802 |
Administrative expenses |  |  | 1,622,077 |  |  |  | 1,725,522 |  |  |  | 1,349,599 |
Electricity and communications |  |  | 1,024,242 |  |  |  | 966,919 |  |  |  | 824,218 |
Other fees |  |  | 966,453 |  |  |  | 944,428 |  |  |  | 737,943 |
Security services |  |  | 768,112 |  |  |  | 658,966 |  |  |  | 759,803 |
Advertising |  |  | 718,833 |  |  |  | 861,349 |  |  |  | 1,037,373 |
Insurance |  |  | 222,001 |  |  |  | 194,810 |  |  |  | 181,218 |
Travel expenses |  |  | 118,790 |  |  |  | 226,699 |  |  |  | 226,880 |
Stationery and supplies |  |  | 68,797 |  |  |  | 98,409 |  |  |  | 94,482 |
Other administrative expenses |  |  | 2,452,594 |  |  |  | 2,101,504 |  |  |  | 2,079,828 |
TOTAL |  |  | 18,759,437 |  |  |  | 19,029,641 |  |  |  | 18,118,109 |

38. Depreciation and amortization

|  | 2020 |  |  | 2019 |  |  | 2018 |
Depreciation of property and equipment |  |  | 3,026,203 |  |  |  | 4,242,671 |  |  |  | 3,698,337 |
Amortization of right of use |  |  | 695,110 |  |  |  | 766,294 |  |  |  | — |
Amortization of intangible assets |  |  | 308,544 |  |  |  | 686,628 |  |  |  | 317,458 |
Depreciation of investment properties |  |  | 35,892 |  |  |  | 29,277 |  |  |  | 9,256 |
Depreciation of other assets |  |  | 232 |  |  |  | 3,664 |  |  |  | 704 |
TOTAL |  |  | 4,065,981 |  |  |  | 5,728,534 |  |  |  | 4,025,755 |

39. Financial instruments risks

Presentation of Risk Management and Risk-Weighted Assets (RWA)

Strategies and processes

The General Risks Policy expresses the levels and types of risk the Group is willing to take to carry out its strategic plan, with no relevant deviations, even under stress conditions.

To achieve its goals, the Group uses a management model with two principles for the decision-making process:

| • |  | Prudence: Materialized in relation to the management of the various risks acknowledged by the Group.

| • |  | Anticipation: refers to the adaptation capacity of risk management.

This process aims to be adequate, sufficiently proven, duly documented and periodically reviewed based on the changes of the Group’s risk profile and the market.

Structure and organization

The Group has a formal organizational structure, with a set of roles and responsibilities, organized in a pyramidal structure that generates control instances from lower to higher levels, up to the highest decision-making bodies. The following are the areas that conform the structure and a list of their functions:

| • |  | Risks Management Unit,

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| • |  | Committees

| • |  | Control and Reporting Units

| • |  | Cross-Control Areas

Risks Management Unit:

This is an area that is independent from business units, in charge of implementing the criteria, policies and procedures defined by the organization within the scope of credit (retail and wholesale), operational and market risk management, with a follow-up and control of proper application and proposing the actions necessary to the keep quality of risks within the defined goals. One of its main functions is to ensure proper information for the decision-making process at all levels, including relevant risk factors, such as:

| • |  | Active management throughout the life of the risk.

| • |  | Clear processes and procedures.

| • |  | Integrated management of all risks through identification and quantification.

| • |  | Generation, implementation and dissemination of advanced decision-making support tools.

Committees

Committees are the instances through which risks are treated. BBVA Argentina has an agile and proper structure of committees for the management of the various risks.

Internal Risk Control Unit

The main responsibilities of Internal Risks Control Area are: ensuring there is a proper internal regulatory framework (a process and measures defined for each type of risks), controlling its application and operation, and ensuring an assessment of the existence of a control environment and its proper implementation and operation.

The area has a Models Validation team that ensures the adequate use of BBVA Argentina’s internal risk statistical models and is responsible for issuing an informed and updated opinion on the proper use of such models.

Reporting Units

The Reporting Units are in charge of control procedures for risk, determining the risk quota for each segment of economic activity and type of financing, preparing fundamental metrics setting forth the principles and general risk profile in the statement of Appetite for Risk. In addition, it is in charge of generating reports for the Risks Management for decision-making process in accordance with internal credit policies and control organizations’ policies, reviewing processes and proposing alternatives.

Cross-Control Areas

The Group also has cross-control areas, such as: Internal Audit, Regulatory Compliance and Internal Control.

Risk Appetite Framework

Risk appetite is a key element providing the Group with a comprehensive framework to determine the risks and level of risks, expressed in terms of capital, liquidity, profitability, income recurrence, risks costs or other metrics.

Risk appetite is expressed through a statement containing the general principles for the Group’s strategy and quantitative metrics.

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Stress Testing

The evaluation of the Group’s financial position under a severe but plausible scenario requires the simulation of scenarios to estimate the potential impact on the value of portfolios, profitability, solvency and liquidity.

Credit risk

It is the most important risk for the Group and includes counterparty risk, issuer risk, settlement risk and country risk management.

Strategy and processes

BBVA Argentina develops its credit risk strategy defining the goals that will guide its granting activities, the policies to be adopted and the necessary practices and procedures to carry out those activities.

Additionally, the Risks Management Department, together with the rest of the Bank’s Management Departments, annually develops a budget process, which includes the main variables of credit risk:

| • |  | Expected growth per portfolio and product.

| • |  | Evolution of default ratio.

| • |  | Evolution of write-off portfolios.

This way, the expected standard credit risk values are set for a term of one year. Afterwards, the real values obtained are compared with that budget, to assess the growth of the portfolio and its quality.

Also, maximum limits or exposures per economic activity are formalized, pursuant to the Group’s placement strategy, which are used to follow up credit portfolios. In case of deviations from the set limits, these are analyzed by the Risks Follow-Up Committees to take the necessary measures.

Origination

BBVA Argentina has credit risk origination policies, to define the criteria to obtain quality assets, establish risk tolerance levels and alignment of the credit activities with the strategy of BBVA Argentina and in accordance with the Group. The policy of accepting risks is therefore organized into three different levels in the Group:

| • |  | Analysis of the financial risk of the transaction, based on the debtor’s capacity for repayment or funds generation.

| • |  | The constitution of guarantees that are adequate, or at any rate generally accepted, for the risk assumed, in any of the generally accepted forms: monetary, secured, personal or hedge guarantees; and finally.

| • |  | Assessment of the repayment risk (asset liquidity) of the guarantees received.

Monitoring

The main monitoring procedures carried out for the various Banking areas are:

| • |  | Monitoring of the limit granted: Since customer profiles vary over time, the limits of products contracted are periodically reviewed for the purpose of broadening, reducing or suspending the limit assigned, based on the risk situation.

| • |  | Maintenance of pre-approved limits: Customers’ characteristics, vary over time. Therefore, there is periodical maintenance of the pre-approved limits, taking into consideration changes in a customer’s situation (position of asset and liability and relationship). Likewise, there is a periodic follow-up of the evolution of the pre-approved limits amount for the purpose of controlling and ensuring the risk assigned in accordance with the desired risk levels.

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| • |  | Monitoring of rating tools: Rating tools are a reflection of the internal inputs and show the characteristics and biases of such inputs. Therefore, they need a long period of use to reduce or eliminate those biases through the inclusion of new information, correction of existing information and periodic reviews optimizing the results of back-tests.

| • |  | Portfolio analysis: The portfolio analysis consists of a monitoring process and study of the complete cycle of portfolios risk for the purpose of analyzing the status of the portfolio, identifying potential paths towards improvements in management and forecasting future behavior.

Additionally, the following functions are carried out:

| • |  | Monitoring of specific customers.

| • |  | Monitoring of products.

| • |  | Monitoring of units (branches, areas).

| • |  | Other monitoring actions (samples, control of admission process and risk management, campaigns).

The priority in credit risk monitoring processes is focused mainly on problematic or potentially problematic customers for preventive purposes. The remaining aspects, the monitoring of products, units and other monitoring actions, are supplementary to the specific monitoring of customers.

Recovery

BBVA Argentina has also a Recoveries Area within Risks Management, to mitigate the severity of credit portfolios as well as to provide the results directly through collections of Write-Off portfolios and indirectly through collections of active portfolios, which imply a reduction of allowances.

Scope and nature of information and/or risk measurement systems

BBVA Argentina has several tools to be used in credit risk management for effective risk control and facilitating the entire process. The periodic reports are:

| • |  | Progress of Risks.

| • |  | Payment Schedules.

| • |  | Ratings.

| • |  | Dashboard.

| • |  | Early Alerts System.

| • |  | Quarterly tools follow-up sheet.

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Exposure to credit risk

The Group’s credit risk exposure of loans and advances under IFRS 9 with stage allocation by asset classification as of December 31, 2020 and 2019 is provided below:

Credit risk exposure |  | December 31, 2020 |  |  | Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
Cash and cash equivalents |  |  | 86,184,474 |  |  |  | 86,184,474 |  |  |  | — |  |  |  | — |
- BCRA unrestricted current account |  |  | 86,184,474 |  |  |  | 86,184,474 |  |  |  | — |  |  |  | — |
Financial assets at amortized cost |  |  | 344,596,958 |  |  |  | 299,911,768 |  |  |  | 39,248,718 |  |  |  | 5,436,472 |
Wholesale |  |  | 127,382,078 |  |  |  | 112,935,399 |  |  |  | 11,532,469 |  |  |  | 2,914,210 |
- Business |  |  | 63,350,121 |  |  |  | 57,314,517 |  |  |  | 4,658,319 |  |  |  | 1,377,285 |
- Corporate & Investment Banking (CIB) |  |  | 51,430,316 |  |  |  | 43,387,621 |  |  |  | 6,615,922 |  |  |  | 1,426,773 |
- Institutional and international |  |  | 3,539 |  |  |  | 3,186 |  |  |  | 9 |  |  |  | 344 |
- MSMEs |  |  | 9,853,004 |  |  |  | 9,515,836 |  |  |  | 227,360 |  |  |  | 109,808 |
- Others |  |  | 2,745,098 |  |  |  | 2,714,239 |  |  |  | 30,859 |  |  |  | — |
Retail |  |  | 168,026,972 |  |  |  | 137,788,461 |  |  |  | 27,716,249 |  |  |  | 2,522,262 |
- Advances |  |  | 397,966 |  |  |  | 224,119 |  |  |  | 58,893 |  |  |  | 114,954 |
- Credit cards |  |  | 108,390,974 |  |  |  | 87,348,378 |  |  |  | 20,065,917 |  |  |  | 976,679 |
- Personal loans |  |  | 27,678,973 |  |  |  | 21,409,918 |  |  |  | 5,126,960 |  |  |  | 1,142,095 |
- Pledge loans |  |  | 12,762,900 |  |  |  | 12,446,707 |  |  |  | 78,369 |  |  |  | 237,824 |
- Mortgages |  |  | 18,561,052 |  |  |  | 16,125,462 |  |  |  | 2,385,293 |  |  |  | 50,297 |
- Receivables from financial leases |  |  | 234,513 |  |  |  | 233,326 |  |  |  | 805 |  |  |  | 382 |
- Others |  |  | 594 |  |  |  | 551 |  |  |  | 12 |  |  |  | 31 |
Reverse repurchase agreements |  |  | 49,187,908 |  |  |  | 49,187,908 |  |  |  | — |  |  |  | — |
- BCRA repos |  |  | 49,187,908 |  |  |  | 49,187,908 |  |  |  | — |  |  |  | — |
Financial assets at fair value through other comprehensive income |  |  | 127,543,852 |  |  |  | 90,151,041 |  |  |  | 37,392,811 |  |  |  | — |
- Debt securities |  |  | 127,543,852 |  |  |  | 90,151,041 |  |  |  | 37,392,811 |  |  |  | — |
Total financial assets risk |  |  | 558,325,284 |  |  |  | 476,247,283 |  |  |  | 76,641,529 |  |  |  | 5,436,472 |
Loan commitments and financial guarantees |  |  | 62,527,175 |  |  |  | 57,622,393 |  |  |  | 4,895,830 |  |  |  | 8,952 |
Wholesale |  |  | 15,103,722 |  |  |  | 14,192,903 |  |  |  | 903,181 |  |  |  | 7,638 |
- Business |  |  | 4,696,427 |  |  |  | 4,509,965 |  |  |  | 180,282 |  |  |  | 6,180 |
- CIB |  |  | 5,681,763 |  |  |  | 5,464,505 |  |  |  | 216,776 |  |  |  | 482 |
- Institutional and international |  |  | 4,215,983 |  |  |  | 3,730,436 |  |  |  | 485,547 |  |  |  | — |
- MSMEs |  |  | 509,549 |  |  |  | 487,997 |  |  |  | 20,576 |  |  |  | 976 |
Retail |  |  | 47,423,453 |  |  |  | 43,429,490 |  |  |  | 3,992,649 |  |  |  | 1,314 |
- Advances |  |  | 4,971,492 |  |  |  | 4,874,422 |  |  |  | 97,011 |  |  |  | 59 |
- Credit cards |  |  | 42,130,673 |  |  |  | 38,287,465 |  |  |  | 3,841,953 |  |  |  | 1,255 |
- Mortgages |  |  | 289,695 |  |  |  | 258,729 |  |  |  | 30,966 |  |  |  | — |
- Others |  |  | 31,593 |  |  |  | 8,874 |  |  |  | 22,719 |  |  |  | — |
Total loan commitments and financial guarantees |  |  | 62,527,175 |  |  |  | 57,622,393 |  |  |  | 4,895,830 |  |  |  | 8,952 |
Total credit risk exposure |  |  | 620,852,459 |  |  |  | 533,869,676 |  |  |  | 81,537,359 |  |  |  | 5,445,424 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Credit risk exposure |  | December 31, 2019 |  |  | Stage 1 |  |  | Stage 2 |  |  | Stage 3 |
Financial assets at amortized cost |  |  | 283,357,959 |  |  |  | 245,405,093 |  |  |  | 27,358,665 |  |  |  | 10,594,201 |
Wholesale |  |  | 121,743,503 |  |  |  | 106,101,285 |  |  |  | 9,436,834 |  |  |  | 6,205,384 |
- Business |  |  | 63,570,532 |  |  |  | 51,955,351 |  |  |  | 6,324,901 |  |  |  | 5,290,280 |
- CIB |  |  | 54,764,063 |  |  |  | 52,123,004 |  |  |  | 1,825,624 |  |  |  | 815,435 |
- Institutional and international |  |  | 781,390 |  |  |  | 427,890 |  |  |  | 353,022 |  |  |  | 478 |
- MSMEs |  |  | 2,627,518 |  |  |  | 1,595,040 |  |  |  | 933,287 |  |  |  | 99,191 |
Retail |  |  | 161,614,456 |  |  |  | 139,303,808 |  |  |  | 17,921,831 |  |  |  | 4,388,817 |
- Advances |  |  | 634,087 |  |  |  | 394,705 |  |  |  | 149,426 |  |  |  | 89,956 |
- Credit cards |  |  | 93,547,285 |  |  |  | 81,534,909 |  |  |  | 9,805,989 |  |  |  | 2,206,387 |
- Personal loans |  |  | 33,189,072 |  |  |  | 24,553,711 |  |  |  | 6,783,052 |  |  |  | 1,852,309 |
- Pledge loans |  |  | 13,086,909 |  |  |  | 12,625,716 |  |  |  | 261,480 |  |  |  | 199,713 |
- Mortgages |  |  | 20,931,137 |  |  |  | 19,974,970 |  |  |  | 918,980 |  |  |  | 37,187 |
- Receivables from financial leases |  |  | 224,639 |  |  |  | 218,816 |  |  |  | 2,809 |  |  |  | 3,014 |
- Others |  |  | 1,327 |  |  |  | 981 |  |  |  | 95 |  |  |  | 251 |
Financial assets at fair value through other comprehensive income |  |  | 61,506,254 |  |  |  | 39,634,085 |  |  |  | 21,872,169 |  |  |  | — |
- Debt securities |  |  | 61,506,254 |  |  |  | 39,634,085 |  |  |  | 21,872,169 |  |  |  | — |
Total financial assets risk |  |  | 344,864,213 |  |  |  | 285,039,178 |  |  |  | 49,230,834 |  |  |  | 10,594,201 |
Loan commitments and financial guarantees |  |  | 67,672,394 |  |  |  | 61,008,074 |  |  |  | 6,619,755 |  |  |  | 44,565 |
Wholesale |  |  | 16,874,379 |  |  |  | 13,133,774 |  |  |  | 3,734,472 |  |  |  | 6,133 |
- Business |  |  | 12,256,853 |  |  |  | 10,592,414 |  |  |  | 1,660,653 |  |  |  | 3,786 |
- CIB |  |  | 2,346,931 |  |  |  | 1,030,897 |  |  |  | 1,315,730 |  |  |  | 304 |
- Institutional and international |  |  | 1,660,476 |  |  |  | 1,068,597 |  |  |  | 591,879 |  |  |  | — |
- MSMEs |  |  | 610,119 |  |  |  | 441,866 |  |  |  | 166,210 |  |  |  | 2,043 |
Retail |  |  | 50,798,015 |  |  |  | 47,874,300 |  |  |  | 2,885,283 |  |  |  | 38,432 |
- Advances |  |  | 5,400,667 |  |  |  | 5,219,511 |  |  |  | 179,008 |  |  |  | 2,148 |
- Credit cards |  |  | 45,016,896 |  |  |  | 42,311,309 |  |  |  | 2,669,303 |  |  |  | 36,284 |
- Mortgages |  |  | 336,459 |  |  |  | 313,579 |  |  |  | 22,880 |  |  |  | — |
- Others |  |  | 43,993 |  |  |  | 29,901 |  |  |  | 14,092 |  |  |  | — |
Total loan commitments and financial guarantees |  |  | 67,672,394 |  |  |  | 61,008,074 |  |  |  | 6,619,755 |  |  |  | 44,565 |
Total credit risk exposure |  |  | 412,536,607 |  |  |  | 346,047,252 |  |  |  | 55,850,589 |  |  |  | 10,638,766 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Information on the credit quality of assets

The Group’s credit quality analysis of financial assets under IFRS 9 with risk allocation as of December 31, 2020 and 2019 is provided below:

Credit quality analysis |  |  |  | December 31, 2020 |
Cash and cash equivalents |  |  |  |  |  |
- BCRA unrestricted current account (Low risk) |  |  |  |  | 86,184,474 |
Total cash and cash equivalents |  |  |  |  | 86,184,474 |
Wholesale |  |  |  |  |  |
- Low risk |  |  |  |  | 97,760,236 |
- Medium risk |  |  |  |  | 26,525,516 |
- High risk |  |  |  |  | 15,278,200 |
- Non performing |  |  |  |  | 2,921,848 |
Total wholesale |  |  |  |  | 142,485,800 |
Retail |  |  |  |  |  |
- Low risk |  |  |  |  | 140,435,130 |
- Medium risk |  |  |  |  | 68,578,972 |
- High risk |  |  |  |  | 3,912,747 |
- Non performing |  |  |  |  | 2,523,576 |
Total retail |  |  |  |  | 215,450,425 |
Reverse repurchase agreement |  |  |  |  |  |
- BCRA repos |  | CCC+ |  |  | 49,187,908 |
Total reverse repurchase agreement |  |  |  |  | 49,187,908 |
Debt securities |  |  |  |  |  |
- BCRA Liquidity Bills |  | CCC+ |  |  | 89,890,131 |
- Government securities |  | CC |  |  | 37,392,811 |
- Corporate bonds |  | CCC+ |  |  | 260,910 |
Total debt securities |  |  |  |  | 127,543,852 |
Total credit risk exposure |  |  |  |  | 620,852,459 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Credit quality analysis |  |  |  | December 31, 2019 |
Wholesale |  |  |  |  |  |
- Low risk |  |  |  |  | 82,589,414 |
- Medium risk |  |  |  |  | 35,034,923 |
- High risk |  |  |  |  | 14,782,028 |
- Non performing |  |  |  |  | 6,211,517 |
Total wholesale |  |  |  |  | 138,617,882 |
Retail |  |  |  |  |  |
- Low risk |  |  |  |  | 149,850,521 |
- Medium risk |  |  |  |  | 54,347,711 |
- High risk |  |  |  |  | 3,786,990 |
- Non performing |  |  |  |  | 4,427,249 |
Total retail |  |  |  |  | 212,412,471 |
Debt securities |  |  |  |  |  |
- BCRA Liquidity Bills |  | B+ |  |  | 39,585,142 |
- Government securities |  | CCC |  |  | 21,825,609 |
- Corporate bonds |  | B+ |  |  | 95,503 |
Total debt securities |  |  |  |  | 61,506,254 |
Total credit risk exposure |  |  |  |  | 412,536,607 |

Mitigation of credit risk, collateralized credit risk and other credit enhancements

In most cases, maximum credit risk exposure is reduced by collateral, credit enhancements and other actions which mitigate the Group’s exposure. The Group applies a credit risk hedging and mitigation policy deriving from a banking approach focused on relationship banking. The existence of guarantees could be a necessary but not sufficient instrument for accepting risks, as the assumption of risks by the Group requires prior evaluation of the debtor’s capacity for repayment, or that the debtor can generate sufficient resources to allow the amortization of the risk incurred under the agreed terms.

The procedures for the management and valuation of collateral following the Corporate Policies (retail and wholesale), which establish the basic principles for credit risk management, including the management of collaterals assigned in transactions with customers.

The methods used to value the collateral are in line with the best market practices and imply the use of appraisal of real-estate collateral, the market price in market securities, the trading price of shares in investment funds, etc. All the collaterals received must be correctly assigned and entered in the corresponding register.

The following are the principal types of collateral managed by BBVA Argentina

| • |  | Guarantees: It includes sureties or unsecured instruments.

| • |  | Joint and several guarantee: upon default on payment, the creditor may collect the unpaid amount from either the debtor or the surety.

| • |  | Joint guarantee: in this case the guarantors and debt-holders are liable in proportion to their interest in the company / transaction and restricted to such amount or percentage.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

| • |  | Security Interest: it includes guarantees based on tangible assets, which are classified as follows:

| • |  | Mortgages: a mortgage does not change the debtor’s unlimited liability, who is fully liable. They are documented pursuant to the Group’s internal regulations for such purposes and are duly registered. Also, there is an independent appraisal, at market value, which enables a prompt sale.

| • |  | Pledges: this includes chattel mortgages of motor vehicles or machinery, as well as liens on time deposits and investment funds. To be accepted, they shall be effective upon realization accordingly, they are properly documented and shall be approved by the Legal Services area.

Loan commitments

To meet the specific financial needs of customers, the Group’s credit policy also includes, among others, the granting of financial guarantess, letters of credit and lines of credit through checking accounts overdrafts and credit cards. Although these transactions are not recognized in the Consolidated Statement of Financial Position, because they imply a potential liability for the Group, they expose the Group to credit risks in addition to those recognized in the Consolidated Statement of Financial Position and are, therefore, an integral part of the Group’s total risk.

Main types of guarantors

The Group defines that the collateral shall be direct, explicit, irrevocable and unconditional in order to be accepted as risk mitigation. Furthermore, regarding admissible guarantors, BBVA Argentina accepts financial institutions (local or foreign), public entities, stock exchange companies, resident and non-resident companies, including insurance companies.

Credit quality of financial assets that are neither past due nor impaired

The Group has tools (“scoring” and “rating”) that enable it to rank the credit quality of its transactions and customers based on an assessment and its correspondence with the probability of default (“PD”) scales. To analyze the performance of PD, the Group has a series of tracking tools and historical databases that collect the pertinent internally generated information. These tools can be grouped together into scoring and rating models, being the main difference between ratings and scorings is that the latter are used to assess retail products, while ratings use a wholesale banking customer approach.

These different levels and their probability of default were calculated by using as a reference the rating scales and default rates. These calculations establish the levels of probability of default for the Bank’s Master Rating Scale. Although this scale is common to the entire Group, the calibrations (mapping scores to PD sections/Master Rating Scale levels) are carried out at the country level.

Market risk

BBVA Argentina considers market risk as the likelihood of losses of value of the trading portfolio as a consequence of adverse changes in market variables affecting the valuation of financial products and instruments.

The main market risk factors the Group is exposed to are as follows:

| • |  | Interest rate risk: From exposure to changes in the various interest rate curves.

| • |  | Foreign exchange risk: From changes in the various foreign exchange rates. All positions in a currency other than the currency of the consolidated statements of financial position create foreign exchange risk.

The Financial Risks Management of the Risks Management area applies the criteria, policies and procedures defined by the Board of Directors to manage, with a follow-up and control of its proper application, and proposing the necessary actions to maintain the quality of risk within the defined appetite for risk.

The financial risks management model of BBVA Argentina consists of the Market Risks and Structural Risks and Economic Capital Areas, which are coordinated for control and follow-up of risks.

The management of these risks is in line with the basic principles of the Basel Committee on Banking Supervision, with a comprehensive process to identify, measure, monitor and control risks.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The organization of financial risks is completed with a scheme of committees in which it participates, for the purpose of having an agile management process integrated into the treatment of the various risks.

Among others:

| • |  | Assets and liabilities Committee (ALCO).

| • |  | Risk Management Committee (RMC).

| • |  | Financial Risks Committee (FRC).

BBVA Argentina has many tools and systems to manage and follow-up market risk, to achieve effective risk control and treatment.

The main market risk metric is VaR (“Value at Risk”), a parameter to estimate the maximum loss expected for the trading portfolio positions with a 99% confidence level and a time horizon of 1 day.

Current management structure and procedures in force include follow-up of a limits and alerts scheme in terms of VaR, economic capital, stress and stop loss.

The market risk measurement model is periodically validated through Back-Testing to determine the quality and precision of the VaR estimate.

The Market Risk management model contemplates procedures for communication in the event the risks levels defined are exceeded, establishing specific communication and acting circuits based on the exceeded threshold.

The market risk measurement perimeter is the trading portfolio (trading book) managed by the Global Markets unit. This portfolio mainly consists of:

| • |  | Argentine Government Securities.

| • |  | BCRA Liquidity Bills

| • |  | Provincial debt securities.

| • |  | Corporate Bonds.

| • |  | Foreign exchange spot.

| • |  | Derivatives (Exchange rate Futures and Forwards and Interest rate swaps).

The following tables show the trading portfolio total VaR and VaR per risk factors based on daily VaR information:

VaR (in millions of pesos)

|  | Year-ended December 31, 2020 |  |  | Year-ended December 31, 2019 |
Average |  |  | 226.41 |  |  |  | 81.60 |
Minimum |  |  | 27.42 |  |  |  | 11.55 |
Maximum |  |  | 431.58 |  |  |  | 273.42 |
Closing |  |  | 225.50 |  |  |  | 43.57 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

VaR per risk factors – (in millions of pesos)

VaR interest rate |  | Year-ended December 31, 2020 |  |  | Year-ended December 31, 2019 |
Average |  |  | 108.68 |  |  |  | 71.97 |
Minimum |  |  | 6.97 |  |  |  | 8.26 |
Maximum |  |  | 406.57 |  |  |  | 234.32 |
Closing |  |  | 237.23 |  |  |  | 43.99 |
VaR foreign exchange rate |  | Year-ended December 31, 2020 |  |  | Year-ended December 31, 2019 |
Average |  |  | 187.62 |  |  |  | 25.85 |
Minimum |  |  | 2.93 |  |  |  | 0.85 |
Maximum |  |  | 377.09 |  |  |  | 155.02 |
Closing |  |  | 137.98 |  |  |  | 3.92 |

Currency risk

The position in foreign currency is shown below:

|  | Total as of December 31, 2020 |  |  | As of December 31, 2020 (per currency) |  |  | Total as of December 31, 2019 |
|  | US Dollar |  |  | Euro |  |  | Real |  |  | Other |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 114,954,079 |  |  |  | 110,150,270 |  |  |  | 4,568,050 |  |  |  | 33,778 |  |  |  | 201,982 |  |  |  | 119,371,805 |
Financial assets at fair value through profit or loss - Debt securities |  |  | 629 |  |  |  | 629 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 226 |
Other financial assets |  |  | 6,930,424 |  |  |  | 6,924,630 |  |  |  | 5,793 |  |  |  | — |  |  |  | — |  |  |  | 3,461,778 |
Loans and advances |  |  | 27,928,287 |  |  |  | 27,928,212 |  |  |  |  |  |  |  |  |  |  |  | 75 |  |  |  | 46,696,681 |
Financial assets at fair value through other comprehensive income - Debt securities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,093,293 |
Equity instruments |  |  | 28,273 |  |  |  | 28,273 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 36,946 |
TOTAL ASSETS |  |  | 149,841,692 |  |  |  | 145,032,014 |  |  |  | 4,573,843 |  |  |  | 33,778 |  |  |  | 202,057 |  |  |  | 179,660,729 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 137,441,745 |  |  |  | 134,734,046 |  |  |  | 2,707,699 |  |  |  | — |  |  |  | — |  |  |  | 159,598,906 |
Trading liabilities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 612,112 |
Other financial liabilities |  |  | 10,386,382 |  |  |  | 9,968,665 |  |  |  | 380,566 |  |  |  | — |  |  |  | 37,151 |  |  |  | 10,465,808 |
Bank loans |  |  | 2,260,739 |  |  |  | 2,260,739 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,153,052 |
Other liabilities |  |  | 1,142,679 |  |  |  | 1,104,580 |  |  |  | 21,282 |  |  |  | — |  |  |  | 16,817 |  |  |  | 1,691,325 |
TOTAL LIABILITIES |  |  | 151,231,545 |  |  |  | 148,068,030 |  |  |  | 3,109,547 |  |  |  | — |  |  |  | 53,968 |  |  |  | 176,521,203 |
Net |  |  | (1,389,583 | ) |  |  | (3,036,016 | ) |  |  | 1,464,296 |  |  |  | 33,778 |  |  |  | 148,089 |  |  |  | 3,139,526 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The notional amounts of the foreign currency term and forward transactions are presented below:

|  | December 31, 2020 |  |  | December 31, 2019 |
Foreign Currency Forwards |  |  |  |  |  |  |  |
Foreign currency forward purchases - US$ |  |  | 1,011,403 |  |  |  | 618,497 |
Foreign currency forward sales - US$ |  |  | 978,794 |  |  |  | 620,956 |
Foreign currency forward sales - Euros |  |  | 6,834 |  |  |  | 1,804 |
Foreign currency forward purchases - Euros |  |  | — |  |  |  | 35 |
Foreign currency forward - US$ |  |  | 32,609 |  |  |  | (2,459 | )
Foreign currency forward - Euros |  |  | 6,834 |  |  |  | 1,769 |

Interest rate risk

Structural interest risk (SIR) gathers the potential impact of market interest rate variations on the margin of interest and the equity value of BBVA Argentina.

The process to manage this risk has a limits and alerts structure to keep the exposure to this risk within levels that are consistent with the appetite for risk and the business strategy defined and approved by the Board of Directors.

Within the core metrics used for measurement, follow-up and control, the following stand out:

| • |  | Margin at Risk (MaR): quantifies the maximum loss which may be recorded in the financial margin projected for 12 months under the worst case scenario of rate curves for a certain level of confidence.

| • |  | Economic Capital (EC): quantifies the maximum loss which may be recorded in the economic value of the Group under the worst case scenario of rate curves for a certain level of confidence.

The Group additionally carries out an analysis of sensitivity of the economic value and the financial margin for parallel variations by +/- 100 basis points over interest rates.

The following table shows the sensitivity of the economic value (SEV), to +100 basis points variation presented as a proportion of Core Capital:

SEV +100 bps

|  | December 31, 2020 |  |  | December 31, 2019 |
Closing |  |  | 0.38 | % |  |  | 0.32 | %
Minimum |  |  | 0.17 | % |  |  | 0.04 | %
Maximum |  |  | 0.47 | % |  |  | 1.64 | %
Average |  |  | 0.34 | % |  |  | 0.77 | %

The following table shows the sensitivity of the financial margin (SFM), to -100 basis points variation presented as a percentage of 12-month forecast net interest income:

SFM -100 bps

|  | December 31, 2020 |  |  | December 31, 2019 |
Closing |  |  | 0.92 | % |  |  | 0.82 | %
Minimum |  |  | 0.56 | % |  |  | 0.58 | %
Maximum |  |  | 0.92 | % |  |  | 2.20 | %
Average |  |  | 0.81 | % |  |  | 1.48 | %

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Liquidity and financing risk

The liquidity risk is defined as the possibility of the Group not efficiently meeting its payment obligations without incurring significant losses which may affect its daily operations or its financial standing.

The short-term purpose of the liquidity and financing risk management process at BBVA Argentina is to timely and duly address payment commitments agreed, without resorting to additional funding deteriorating the Group’s reputation or significantly affecting its financial position, keeping the exposure to this risk within levels that are consistent with the appetite for risk and the business strategy defined and approved by the Board of Directors. In the medium and long term, to watch for the suitability of the financial structure of the Bank and its evolution, according to the economic situation, the markets and regulatory changes.

Within the core metrics used for measurement, follow-up and control of this risk, management considers the following to be most relevant:

LtSCD: (Loan to Stable Customers Deposits), measures the relationship between the net credit investment and the customers’ stable resources, and is set forth as the key metric of appetite for risk. The goal is to preserve a stable financing structure in the medium and long term.

LCR: (Liquidity Coverage Ratio), BBVA Argentina calculates the liquidity coverage coefficient daily by measuring the relation between high quality liquid assets and total net cash outflows during a 30-day period.

Below is the LCR ratios:

|  | December, 2020 |  |  | December, 2019 |
LCR Closing |  |  | 321 | % |  |  | 413 | %
Max |  |  | 354 | % |  |  | 525 | %
Min |  |  | 292 | % |  |  | 410 | %
Avg |  |  | 313 | % |  |  | 457 | %

The following charts show the concentration of deposits as of December 31, 2020 and 2019:

|  | December 31, 2020 |  |  | December 31, 2019 |
Number of customers |  | Debt balance |  |  | % over total portfolio |  |  | Debt balance |  |  | % over total portfolio |
10 largest customers |  |  | 47,049,746 |  |  |  | 9.84 | % |  |  | 14,805,699 |  |  |  | 3.70 | %
50 following largest customers |  |  | 40,204,538 |  |  |  | 8.41 | % |  |  | 23,185,601 |  |  |  | 5.79 | %
100 following largest customers |  |  | 25,447,726 |  |  |  | 5.32 | % |  |  | 18,262,499 |  |  |  | 4.56 | %
Rest of customers |  |  | 365,521,254 |  |  |  | 76.43 | % |  |  | 343,982,998 |  |  |  | 85.95 | %
TOTAL |  |  | 478,223,264 |  |  |  | 100.00 | % |  |  | 400,236,797 |  |  |  | 100.00 | %

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The following chart show the breakdown by contractual maturity of loans and advances, other financing and financial liabilities considering the total amounts to their due date, as of December 31, 2020 and 2019:

|  | Assets(*) |  |  | Liabilities (*) |
|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2020 |  |  | December 31, 2019 |
Up to 1 month (**) |  |  | 141,716,796 |  |  |  | 135,797,587 |  |  |  | 473,165,815 |  |  |  | 415,394,814 |
From more than 1 month to 3 month |  |  | 37,208,495 |  |  |  | 36,288,151 |  |  |  | 26,150,054 |  |  |  | 32,989,897 |
From more than 3 month to 6 month |  |  | 30,735,275 |  |  |  | 19,850,272 |  |  |  | 31,502,743 |  |  |  | 11,823,481 |
From more than 6 month to 12 month |  |  | 33,137,133 |  |  |  | 26,432,729 |  |  |  | 2,818,747 |  |  |  | 7,815,160 |
From more than 12 month to 24 month |  |  | 33,794,545 |  |  |  | 37,925,667 |  |  |  | 2,142,351 |  |  |  | 1,595,696 |
More than 24 months |  |  | 43,647,595 |  |  |  | 57,062,231 |  |  |  | 4,245,245 |  |  |  | 5,031,776 |
TOTAL |  |  | 320,239,839 |  |  |  | 313,356,637 |  |  |  | 540,024,955 |  |  |  | 474,650,824 |

(*) | These figures includes expected interest amounts. For floating rate instruments such interest amounts were calculated using interest rate prevailing at the end of each period.

(**) | The Bank has liquid assets such as cash and cash equivalents (Note 8), reverse repurchase agreements (Note 10.4) and BCRA liquidity bills (Note 14.1), among others, to settle its liabilities.

Additionally, the Bank has issued financial guarantees and loan commitments which may require outflows on demand.

Financial guarantees and loan commitments |  | December 31, 2020 |  |  | December 31, 2019 |
Up to 1 month |  |  | 207,111,405 |  |  |  | 232,513,084 |
From more than 1 month to 3 month |  |  | 700,808 |  |  |  | 2,756 |
From more than 3 month to 6 month |  |  | 916,901 |  |  |  | 335,854 |
From more than 6 month to 12 month |  |  | 2,816,669 |  |  |  | 164,735 |
From more than 12 month to 24 month |  |  | 184,331 |  |  |  | 528,973 |
More than 24 months |  |  | 635,499 |  |  |  | 375,240 |
TOTAL |  |  | 212,365,613 |  |  |  | 233,920,642 |

The amounts of the Bank’s financial assets and liabilities, which are expected to be collected or paid twelve months after the closing date are set forth below:

|  | December 31, 2020 |  |  | December 31, 2019 |
Financial assets |  |  |  |  |  |  |  |
Loans and advances |  |  | 77,442,142 |  |  |  | 94,987,898 |
Debt securities |  |  | 28,562,761 |  |  |  | 239,102 |
Total |  |  | 106,004,903 |  |  |  | 95,227,000 |
Financial liabilities |  |  |  |  |  |  |  |
Other financial liabilities |  |  | 4,326,274 |  |  |  | 5,642,383 |
Bank loans |  |  | 1,708,917 |  |  |  | 670,728 |
Debt securities issued |  |  | 331,775 |  |  |  | 185,568 |
Deposits |  |  | 20,630 |  |  |  | 128,793 |
Total |  |  | 6,387,596 |  |  |  | 6,627,472 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

40. Fair values of financial instruments

| a) | Assets and liabilities measured at fair value

The fair value hierarchy of assets and liabilities measured at fair value as of December 31, 2020 is detailed below:

|  | Book value |  |  | Total fair value |  |  | Level 1 Fair value |  |  | Level 2 Fair value |  |  | Level 3 Fair value |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Debt securities |  |  | 942,761 |  |  |  | 942,761 |  |  |  | 541,977 |  |  |  | 400,784 |  |  |  | — |
- Derivatives |  |  | 3,877,749 |  |  |  | 3,877,749 |  |  |  | — |  |  |  | 2,695,749 |  |  |  | 1,182,000 |
- Equity instruments |  |  | 7,795,950 |  |  |  | 7,795,950 |  |  |  | 1,762,142 |  |  |  | — |  |  |  | 6,033,808 |
Financial assets at fair value through other comprehensive income - Debt securities |  |  | 127,543,852 |  |  |  | 127,543,852 |  |  |  | 1,947,177 |  |  |  | 125,596,675 |  |  |  | — |
Financial assets at fair value through other comprehensive income - Equity instruments |  |  | 28,499 |  |  |  | 28,499 |  |  |  | — |  |  |  | 28,499 |  |  |  | — |
Total |  |  | 140,188,811 |  |  |  | 140,188,811 |  |  |  | 4,251,296 |  |  |  | 128,721,707 |  |  |  | 7,215,808 |
Financial liabilities at fair value through profit or loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  |  | 188,694 |  |  |  | 188,694 |  |  |  | — |  |  |  | 188,694 |  |  |  | — |
Total |  |  | 188,694 |  |  |  | 188,694 |  |  |  | — |  |  |  | 188,694 |  |  |  | — |

The fair value hierarchy of assets and liabilities measured at fair value as of December 31, 2019 is detailed below:

|  | Book value |  |  | Total fair value |  |  | Level 1 Fair value |  |  | Level 2 Fair value |  |  | Level 3 Fair value |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Debt securities |  |  | 5,622,562 |  |  |  | 5,622,562 |  |  |  | — |  |  |  | 5,622,562 |  |  |  | — |
– Derivatives |  |  | 4,148,248 |  |  |  | 4,148,248 |  |  |  | — |  |  |  | 3,215,686 |  |  |  | 932,562 |
- Equity instruments |  |  | 5,653,673 |  |  |  | 5,653,673 |  |  |  | 1,524,516 |  |  |  | — |  |  |  | 4,129,157 |
Financial assets at fair value through other comprehensive income - Debt securities |  |  | 61,506,254 |  |  |  | 61,506,254 |  |  |  | 1,667,766 |  |  |  | 59,838,488 |  |  |  | — |
Financial assets at fair value through other comprehensive income - Equity instruments |  |  | 37,260 |  |  |  | 37,260 |  |  |  | — |  |  |  | 37,260 |  |  |  | — |
Total |  |  | 76,967,997 |  |  |  | 76,967,997 |  |  |  | 3,192,284 |  |  |  | 68,713,996 |  |  |  | 5,061,719 |
Financial liabilities at fair value through profit or loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trading liabilities |  |  | 790,707 |  |  |  | 790,707 |  |  |  | 790,707 |  |  |  | — |  |  |  | — |
Derivatives |  |  | 4,183,526 |  |  |  | 4,183,526 |  |  |  | — |  |  |  | 4,183,526 |  |  |  | — |
Total |  |  | 4,974,233 |  |  |  | 4,974,233 |  |  |  | 790,707 |  |  |  | 4,183,526 |  |  |  | — |

The fair value of a financial asset or liability is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date.

The most objective reference for the fair value of a financial asset or liability is the price that would be paid in an orderly, transparent and active market, that is to say its quoted or market price.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

If it is not possible to obtain a market price, a fair value is determined using best market practice valuation techniques, such as discounted cash flows based on a yields curve for the same class and type of instrument, or if there is no market curve with the same characteristics of the financial instrument, the fair value is calculated considering the latest market price plus interest accrued until the valuation date.

In line with the accounting standard, a three-level classification of financial instruments is established. This classification is mainly made based on the observability of the necessary inputs to calculate that fair value, defining the following levels:

| • |  | Level 1: Financial instruments valued with quoted prices in an active market. Active market means a market that allows the observation of representative prices with sufficient frequency and daily volume.

| • |  | Level 2: Financial instruments that do not have an active market, but that may be valued through market observable data.

| • |  | Level 3: Valuation using models where variables not obtained from observable market information are used.

Financial assets at fair value primarily consist of BCRA Liquidity Bills and Government securities, together with a minor share in Corporate Bonds. Likewise, financial derivatives are classified at fair value, which include futures and foreign currency NDF (non-delivery forwards), put options, and interest rate swaps.

b) Transfers between hierarchy levels

b.1) Transfers from Level 1 to Level 2

The following instruments measured at fair value were transferred from Level 1 to Level 2 of the fair value hierarchy:

|  | December 31, 2020 |  |  | December 31, 2019 |
Treasury Bonds adjusted by CER in pesos maturing in 2021 |  |  | 62,700 |  |  |  | 142,429 |

The transfer is due to the fact that the bond was not listed on the market the number of days necessary to be considered Level 1. No transfers from Level 1 to Level 2 have occurred as of December 31, 2020.

b.2) Transfers from Level 2 to Level 1

No transfers have occurred from Level 2 to Level 1 as of December 31, 2020 and 2019.

b.3) Valuation techniques for Levels 2 and 3

The valuation techniques for Level 2 and 3 are described in the paragraphs below.

Fixed Income

The determination of fair value prices set forth by the Bank for fixed income consists of considering reference market prices from the Electronic Open Market, in spanish, “Mercado Abierto Electrónico” (MAE), the main market where bonds are traded.

For Argentine Treasury Bonds, prices are captured from MAE. If bonds have not traded for the last 10 business days, fair value is determined by discounting cash flows using the pertinent discount curve.

Argentine Treasury Bills which have not traded for the last 10 business days are measured by reference to their cash flows discounted using the respective yield curve, based on the currency in which the bills were issued. In particular, US-dollar linked Treasury Bills (Lelinks) are measured using the yield curve in pesos.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Liquidity bills issued by the BCRA without quoted prices in MAE on the last day of the month, the fair value is determined by discounting cash flows using the monetary policy rate. The monetary policy rate is the rate used by the Central Bank of Argentina to make monetary policy. The benchmark rate used for monetary policy is the interest rate on liquidity bills (LELIQs).

Finally, corporate bonds and sub-sovereign bonds were measured at their market prices prevailing on the last 10 business days in MAE, where available. In the absence of market prices, the fair value of these securities is determined based on the last market price available, plus accrued interest.

Swaps

For swaps, the fair valuation consists of discounting future cash flows using the interest rate, according to the rate curve resulting from the implicit yield of Rosario Futures Exchange (ROFEX) futures, the main derivatives market in Argentina where these types of securities are traded.

Non-Deliverable Forwards

The fair value of NDFs consists of discounting the future cash flows to be exchanged pursuant to the contract, using a discount curve that will depend on the currency of each cash flow. The result is then calculated by subtracting the present values in pesos, estimating the value in pesos based on the applicable spot exchange rate, depending on whether the contract is local or offshore.

For local peso-dollar swap contracts, cash flows in pesos are discounted using the yield curve in pesos resulting from the prices of ROFEX futures and the US dollar spot selling exchange rate published by BNA. Cash flows in US dollars are discounted using the Overnight Index Swap (OIS) international dollar yield curve. Then, the present value of cash flows in dollars is netted by converting such cash flows into pesos using the US dollar spot selling exchange rate published by BNA.

For local peso-euro swap contracts, cash flows in pesos are discounted using the yield curve in pesos resulting from the prices of ROFEX futures and the US dollar spot selling exchange rate published by BNA. Cash flows in euros are discounted using the yield curve in euros. Then, the present value of cash flows in euros is netted by converting such cash flows into pesos using the euro spot selling exchange rate published by BNA.

For offshore peso-dollar swap contracts, cash flows in pesos are discounted using the yield curve in pesos resulting from market quoted forward prices sourced from ICAP Broker. Cash flows in dollars are discounted using the OIS yield curve. Then, the present value of cash flows in dollars is netted by converting such cash flows into pesos using the Emerging Markets Traders Association (EMTA) US dollar spot exchange rate.

Investments in Equity Instruments

The fair value of the equity interest held in Prisma Medios de Pago S.A., classified as Level 3, was determined by management with input from independent appraisers using a discounted cash flow method by applying the income approach. (Note 9.3).

The most relevant unobservable input data include:

| • |  | Projected EBITDA and Free cash flow (mainly determined by the expected evolution of the level of transactions and fees)

| • |  | Minority discount rate (equivalent to 1 / (1 + Premium control) – 1)

| • |  | WACC (Weighted Average Cost of Capital) of Prisma.

| • |  | g = growth factor for terminal value.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Below we present the sensitivity analysis for the valuation of the remaining 49% equity of Prisma, still held by the selling shareholders. The sensitivity is related to the two following variables: the WACC (Weighted Average Cost of Capital) and the g level (the growth factor for future cash flows after 2023 that determines the terminal value):

|  | Prisma equity (49%) + minority discount (9.09%) – $ millions |
|  |  |  |  | g (terminal value growth – annual) |
|  |  |  |  | 2.00% |  |  | 3.00% |  |  | 4.00% |
|  | 97.5 | % |  |  | 52,020.5 |  |  |  | 54,950.5 |  |  |  | 58,413.1 |
|  | 100 | % |  |  | 51,368.3 |  |  |  | 54,252.6 |  |  |  | 57,664.8 |
|  | 102.5 | % |  |  | 50,727.0 |  |  |  | 53,569.7 |  |  |  | 56,929.2 |

The scenario for the valuation considers WACC at 100% and g at 3%.

As BBVA Argentina holds an interest in Prisma of 11.1217% the fair value accounts for 6,033,808.

Put Options

The Group has classified the put option in respect of its equity interest in Prisma Medios de Pago S.A. as Level 3, since its valuation uses significant unobservable inputs. The income (loss) from the asset measured at fair value on the basis of non-observable input data is booked under Net income / (loss) from financial instruments carried at fair value through profit or loss.

These instruments were measured using a valuation technique based on a binomial option pricing model. This model involves creating a comparable portfolio under the same conditions as the put, considering several scenarios. The pricing model factors in the company’s projected cash flows and financial indebtedness as of the exercise date (34 months subsequent to the contract closing date). Expected cash flows are discounted using the Weighted Average Cost of Capital (WACC) discount rate.

The most relevant unobservable input data used in the pricing model include:

| • |  | Monthly volatility (sensitivity to volatility ranging from 10%, 12%, 15% and 20%).

| • |  | The theoretical exercise price for the option. This price is 7 times the expected EBITDA for the 3rd year. This EBITDA is calculated considering the expected cash flows of the business as well as the financial indebtedness, considering Cash and Banks and Short-term investments, and financial indebtedness projected for the option exercise date.

Any potential substantial change in any of the aforementioned non-observable input data may increase or decrease the put option estimated fair value.

Below we present the sensitivity for the valuation of the put option per share, based on the level of implied volatility and the theoretical exercise price of the share price, the result of which is shown in the tables below:

|  | Sensibility - US$ |
|  | Volatility |
|  |  |  | 10.0% |  |  | 12.0% |  |  | 15.0% |  |  | 20.0% |
|  | 95 | % |  |  | 1.08 |  |  |  | 1.16 |  |  |  | 1.26 |  |  |  | 1.42 |
|  | 100 | % |  |  | 1.26 |  |  |  | 1.30 |  |  |  | 1.42 |  |  |  | 1.59 |
|  | 105 | % |  |  | 1.43 |  |  |  | 1.48 |  |  |  | 1.58 |  |  |  | 1.75 |

The scenario considered for the valuation considers EBITDA at 100% and volatility at 12%. BBVA Argentina, has a position of 10,805,542 shares of Prisma and the FX rate is 84.1450 pesos/US$. Therefore the fair value of the put is 10,805,542 x 84.1450 x 1,30= 1,182,000.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

b.4) Reconciliation of opening and ending balances of Level 3 assets and liabilities at fair value

The following table shows a reconciliation between opening balances and final balances of Level 3 fair values:

|  | December 31, 2020 |  |  | December 31, 2019 |
Balance at the beginning of the fiscal year |  |  | 5,061,719 |  |  |  | — |
Investments in equity instruments – Prisma Medios de Pago S.A. (*) |  |  | 3,368,893 |  |  |  | 4,129,157 |
Derivatives - Put options - Prisma Medios de Pago S.A. (*) |  |  | 497,000 |  |  |  | 932,562 |
Dividends received |  |  | (452,277 | ) |  |  | — |
Net monetary inflation adjustment |  |  | (1,259,527 | ) |  |  | — |
Balance at year-end |  |  | 7,215,808 |  |  |  | 5,061,719 |

(*) | Presented in Gains on financial assets and liabilities at fair value through profit or loss, net.

| c) | Fair value of Assets and Liabilities not measured at fair value

Below is a description of methodologies and assumptions used to assess the fair value of the main financial instruments not measured at fair value, when the instrument does not have a quoted price in a known market. Assets and liabilities with fair value similar to their accounting balance.

| • |  | Assets and liabilities with fair value similar to their accounting balance

For financial assets and financial liabilities maturing in less than one year, it is considered that the accounting balance is similar to fair value. This assumption also applies for deposits, because a significant portion thereof (more than 99% considering contractual terms and conditions) have a residual maturity of less than one year.

| • |  | Fixed rate financial instruments

The fair value of financial assets was assessed by discounting future cash flows from market rates at each measurement date for financial instruments with similar characteristics.

| • |  | Variable rate financial instruments

For financial assets and financial liabilities accruing a variable rate, it is considered that the accounting balance is similar to the fair value.

As of December 31, 2020, the level of significance of the unobservable inputs used to determine the hierarchy of the fair value of deposits, loans and other financing valued at amortized cost has been reviewed, resulting in a higher exposure classified as Level 3.

The fair value hierarchy of assets and liabilities not measured at fair value as of December 31, 2020 is detailed below:

|  | Book value |  |  | Total fair value |  |  | Level 2 Fair value |  |  | Level 3 Fair value |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 152,040,070 |  |  |  | (a | ) |  |  | — |  |  |  | — |
Other financial assets |  |  | 20,841,365 |  |  |  | (a | ) |  |  | — |  |  |  | — |
Loans and advances |  |  | 279,585,511 |  |  |  | 276,440,067 |  |  |  | — |  |  |  | 276,440,067 |
Reverse repurchase agreements |  |  | 48,686,967 |  |  |  | (a | ) |  |  | — |  |  |  | — |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

|  | Book value |  |  | Total fair value |  |  | Level 2 Fair value |  |  | Level 3 Fair value |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 478,223,264 |  |  |  | 473,797,890 |  |  |  | 1,677,826 |  |  |  | 472,120,064 |
Other financial liabilities |  |  | 39,226,721 |  |  |  | (a | ) |  |  | — |  |  |  | — |
Bank loans |  |  | 9,626,028 |  |  |  | 9,870,481 |  |  |  | 4,813,284 |  |  |  | 5,057,197 |
Debt securities issued |  |  | 1,168,782 |  |  |  | 1,137,658 |  |  |  | 1,137,658 |  |  |  | — |

The fair value hierarchy of assets and liabilities not measured at fair value as of December 31, 2019 is detailed below:

|  | Book value |  |  | Total fair value |  |  | Level 2 Fair value |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 212,733,025 |  |  |  | (a | ) |  |  | — |
Other financial assets |  |  | 14,835,962 |  |  |  | (a | ) |  |  | — |
Loans and advances |  |  | 265,650,592 |  |  |  | 262,969,717 |  |  |  | 262,969,717 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 400,236,797 |  |  |  | 397,728,689 |  |  |  | 397,728,689 |
Other financial liabilities |  |  | 39,242,734 |  |  |  | (a | ) |  |  | — |
Bank loans |  |  | 8,371,111 |  |  |  | 8,326,413 |  |  |  | 8,326,413 |
Debt securities issued |  |  | 9,964,233 |  |  |  | 9,889,946 |  |  |  | 9,889,946 |

a) | The Group does not report the fair value as the accounting values are a reasonable approximation of the fair values.

41. Segment reporting

Basis for segmentation

The Bank identified the operating segments based on the management information reviewed by the chief operating decision maker. As of December 31, 2020, and 2019, the Group has determined that it has only one reportable segment related to banking activities.

Most of the Group’s operations, property and customers are located in Argentina. No customer has generated 10% or more of the Group’s total income.

The following is relevant information on loans and deposits by business line as of December 31, 2020 and 2019:

|  | December 31, 2020 |  |  | December 31, 2019 |
Financial assets at amortized cost - Loans and advances |  |  | 279,585,511 |  |  |  | 265,650,592 |
Corporate banking |  |  | 33,152,112 |  |  |  | 52,578,472 |
Small and medium companies |  |  | 88,081,690 |  |  |  | 64,031,846 |
Retail |  |  | 158,351,709 |  |  |  | 149,040,274 |
Other assets |  |  | 413,439,014 |  |  |  | 352,660,107 |
TOTAL ASSETS |  |  | 693,024,525 |  |  |  | 618,310,699 |
Financial liabilities at amortized cost – Deposits |  |  | 478,223,264 |  |  |  | 400,236,797 |
Corporate banking |  |  | 91,105,915 |  |  |  | 33,391,167 |
Small and medium companies |  |  | 101,543,218 |  |  |  | 92,791,600 |
Retail |  |  | 285,574,131 |  |  |  | 274,054,030 |
Other liabilities |  |  | 100,257,867 |  |  |  | 103,256,993 |
TOTAL LIABILITIES |  |  | 578,481,131 |  |  |  | 503,493,790 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The information in relation to the operating segment (Group banking activity) is the same as that set out in the Consolidated statement of profit or loss, considering that it is the measure used by the Entity’s highest authority in making decisions about the allocation of resources and performance evaluation

42. Subsidiaries

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

Below is the information on the Bank’s subsidiaries:

Name |  | Registered Office (country) |  | Ownership interest as of |
| December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
BBVA Francés Valores S.A. |  | Argentina |  |  | — |  |  |  | — | (a) |  |  | 96.9953 | %
Consolidar A.F.J.P. S.A. (undergoing liquidation proceedings) |  | Argentina |  |  | 53.8892 | % |  |  | 53.8892 | % |  |  | 53.8892 | %
Volkswagen Financial Services Compañía Financiera S.A. |  | Argentina |  |  | 51.0000 | % |  |  | 51.0000 | % (b) |  |  | — |
PSA Finance Argentina Compañía Financiera S.A. |  | Argentina |  |  | 50.0000 | % |  |  | 50.0000 | % (b) |  |  | — |
BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión |  | Argentina |  |  | 100.0000 | % |  |  | 100.0000 | % |  |  | 95.0000 | %

(a) | As of October 1, 2019, the company BBVA Francés Valores S.A. merged into the Bank. (See Note 26)

(b) | On July 1, 2019, the Entity consolidates these companies as a result of the gain of control. (See Note 5.1)

| • |  | Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (“AFJP”): corporation incorporated under the laws of Argentina undergoing liquidation proceedings;

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

| • |  | PSA Finance Argentina Compañía Financiera S.A. (“PSA”): a financial company incorporated under the laws of Argentina engaged in pledge loans; and

| • |  | BBVA Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión: corporation incorporated under the laws of Argentina as an agent for the management of investment products.

The Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting from the supervisory framework within which VWFS and PSA operate. The supervisory frameworks require banking subsidiaries to keep certain levels of regulatory capital and liquid assets, limit their exposure to other parts of the Group and comply with other ratios.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

43. Related parties

a) Parent

The Bank’s direct controlling entity is Banco Bilbao Vizcaya Argentaria, S.A.

b) Key Management personnel

Key management personnel are those having the authority and responsibility for planning, managing and controlling the Bank’s activities, whether directly or indirectly.

Based on that definition, the Bank considers the members of the Board of Directors as key personnel.

b.1) Remuneration of key management personnel

The key personnel of the Board of Directors received the following compensations:

|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Fees |  |  | 50,741 |  |  |  | 20,339 |  |  |  | 38,510 |
Total |  |  | 50,741 |  |  |  | 20,339 |  |  |  | 38,510 |

b.2) Balances and results arising from transactions with key management personnel

|  | Balances as of |  |  | Results |
|  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 4,975 |  |  |  | 6,287 |  |  |  | 1,131 |  |  |  | 1,484 |  |  |  | 2,061 |
Overdrafts |  |  | 30 |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | 20 |
Mortgage loans |  |  | 1,190 |  |  |  | 1,713 |  |  |  | 255 |  |  |  | 378 |  |  |  | 606 |
Deposits |  |  | 32,673 |  |  |  | 25,133 |  |  |  | 1,075 |  |  |  | 1,628 |  |  |  | 338 |

Loans are granted on an arm’s length basis. All loans to related parties were classified in Stage 1.

b.3) Balances and results arising from transactions with related parties (except key management personnel)

|  | Balances as of |  |  | Results |
Parent |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Cash and other demand deposits |  |  | 1,168,271 |  |  |  | 621,390 |  |  |  | — |  |  |  | — |  |  |  | — |
Derivatives (Assets) |  |  | — |  |  |  | 886,425 |  |  |  | — |  |  |  | — |  |  |  | — |
Other financial assets |  |  | — |  |  |  | 735,992 |  |  |  | — |  |  |  | — |  |  |  | — |
Trading liabilities |  |  | 2,131 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other liabilities |  |  | 7,061,795 |  |  |  | 480,355 |  |  |  | 721,876 |  |  |  | 398,135 |  |  |  | 234,262 |
Derivatives (Liabilities) |  |  | 11,618 |  |  |  | 1,634,234 |  |  |  | 385,850 |  |  |  | 9,569 |  |  |  | 209,999 |

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

|  | Balances as of |  |  | Results |
Off-balance sheet transaction |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Securities in custody (b) |  |  | 63,028,083 |  |  |  | 77,454,929 |  |  |  | — |  |  |  | — |  |  |  | — |
Derivative instruments (Notional amount) |  |  | 925,000 |  |  |  | 15,269,110 |  |  |  | — |  |  |  | — |  |  |  | — |
Guarantees granted (c) |  |  | 2,656,720 |  |  |  | 962,230 |  |  |  | 5,956 |  |  |  | 3,254 |  |  |  | 4,570 |
Guarantees received |  |  | 3,725,274 |  |  |  | 38,612 |  |  |  | — |  |  |  | — |  |  |  | — |

|  | Balances as of |  |  | Results |
Associates/ Joint Ventures |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2020 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Cash and other demand deposits |  |  | 934 |  |  |  | 400 |  |  |  | — |  |  |  | — |  |  |  | — |
Loans and advances |  |  | 72,447 |  |  |  | 2,427,370 |  |  |  | 1,480,274 |  |  |  | 2,807,733 |  |  |  | 3,508,628 |
Debt securities at fair value through profit or loss |  |  | 5,189 |  |  |  | 22,847 |  |  |  | 76,902 |  |  |  | 71,709 |  |  |  | 85,265 |
Derivatives (Assets) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other financial assets |  |  | 73,320 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Deposits |  |  | 614,636 |  |  |  | 509,749 |  |  |  | 5,985 |  |  |  | 11,203 |  |  |  | 75,377 |
Trading liabilities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other financial liabilities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other liabilities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,322 |  |  |  | 9,048 |
Financing received |  |  | 887,068 |  |  |  | 272,877 |  |  |  | 2,741 |  |  |  | 14,932 |  |  |  | 13,632 |
Derivatives (Liabilities) |  |  | — |  |  |  | 188,207 |  |  |  | 57,445 |  |  |  | 632,839 |  |  |  | 1,589,137 |
Debt securities issued |  |  | — |  |  |  | 212,299 |  |  |  | 24,552 |  |  |  | 69,827 |  |  |  | 84,425 |
Other operating income (a) |  |  | — |  |  |  | — |  |  |  | 41,357 |  |  |  | 61,180 |  |  |  | 38,262 |
Off-balance sheet transaction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps (Notional amount) |  |  | — |  |  |  | 1,815,229 |  |  |  | — |  |  |  | — |  |  |  | — |
Securities in custody (b) |  |  | 1,516,130 |  |  |  | 1,715,124 |  |  |  | 1,801 |  |  |  | 2,519 |  |  |  | 1,007 |
Guarantees received |  |  | 14,204 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Guarantees granted (c) |  |  | 443 |  |  |  | 24,891 |  |  |  | 137 |  |  |  | 781 |  |  |  | 603 |

(a) | Operating leases.

(b) | These balances represent the shares in custody of Banco BBVA Argentina SA held by BBVA and BBV América.

(c) | These balances represent commercial guarantees granted.

Transactions have been agreed upon on an arm’s length basis. All loans to related parties were classified in Stage 1.

44. Leases

The Group as lessee

The Group leases branches under lease contracts. Leases are typically for a term of 5 years, with the option to renew after that date. Payments for leases are increased annually to reflect the market conditions.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

Below are the minimum future payments of leases under lease contracts not subject to cancellation as of December 31, 2020 and 2019:

|  | Leases in U.S. dollars |  |  | Leases in local currency |  |  | Total December 31, 2020 |  |  | Total December 31, 2019 |
Up to 1 year |  |  | 166,578 |  |  |  | 12,565 |  |  |  | 179,143 |  |  |  | 113,988 |
From 1 to 5 years |  |  | 1,798,702 |  |  |  | 156,101 |  |  |  | 1,954,803 |  |  |  | 1,670,331 |
More than 5 years |  |  | 814,011 |  |  |  | 2,772 |  |  |  | 816,783 |  |  |  | 1,641,963 |
TOTAL |  |  |  |  |  |  |  |  |  |  | 2,950,729 |  |  |  | 3,426,282 |

The amount of the depreciation of the right of use recognized in results was 695,110 and 766,294 for the years ended December 31, 2020 and 2019.

45. Restricted assets

As of December 31, 2020 and 2019, the Group has the following restricted assets:

| a) | The Entity used as security for loans agreed under the Global Credit Program for MSMEs granted by the Inter-American Development Bank (IDB):

|  | December 31, 2020 |  |  | December 31, 2019 |
Argentine Treasury Bonds adjusted by CER in pesos maturing in 2023 |  |  | 28,202 |  |  |  | — |
Treasury Bonds adjusted by CER in pesos maturing in 2024 |  |  | 64,500 |  |  |  | — |
Argentine Treasury Bonds adjusted by CER in pesos maturing in 2021 |  |  | — |  |  |  | 112,737 |
Treasury Bills in pesos maturing on July 31, 2020 |  |  | — |  |  |  | 147,032 |
|  |  | 92,702 |  |  |  | 259,769 |

| b) | Also, the Entity has accounts, deposits, repo transactions and trusts applied as guarantee for activities related to credit card transactions, with automated clearing houses, transactions settled at maturity, foreign currency futures, court proceedings and leases in the amount of 17,912,856 and 8,064,219 as of December 31, 2020 and 2019, respectively.

46. Deposits guarantee regime

The Bank is included in the Deposits Guarantee Fund Insurance System of Law No. 24,485, Regulatory Decrees No. 540/95, No. 1292/96, No. 1127/98 and No. 30/18 and Communication “A” 5943 issued by the BCRA.

That law provided for the incorporation of the company “Seguros de Depósitos Sociedad Anónima” (SEDESA) for the purpose of managing the Deposits Guarantee Fund (DGF), the shareholders of which, pursuant to the changes introduced by Decree No. 1292/96, will be the BCRA with at least one share and the trustees of the trust with financial institutions in the proportion determined by the BCRA for each, based on their contributions to the DGF.

In August 1995 that company was incorporated, and the Bank has a 10.038% share of the corporate stock.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The Deposits Guarantee Insurance System, which is limited, mandatory and for valuable consideration, has been created for the purpose of covering bank deposit risks as a supplement of the deposits privileges and protection system set forth by the Law on Financial Institutions.

The guarantee covers the refund of the principal paid plus interest accrued up to the date of revocation of the authorization to operate or until the date of suspension of the Bank by application of Section 49 of the Articles of Organization of the BCRA, if this measure had been adopted previously, without exceeding the amount of 450. For transactions in the name of two or more people, the guarantee shall be distributed on a pro-rata basis among them. In no case shall the total guarantee per person exceed the aforementioned amount, regardless of the number of accounts and/or deposits.

In addition, it is set forth that financial institutions shall make a monthly contribution to the DGF an amount equivalent to 0.015% of the monthly average of daily balances of the items listed in the related regulations.

For the years ended December 31, 2020 and 2019 the contributions to the Fund have been recorded in the item “Other operating expenses - Contributions to the deposits guarantee fund” in the amounts of 696,691 and 824,817, respectively.

On February 28, 2019, BCRA issued Communication “A” 6654 setting forth an increase in the guarantee from pesos 450 to 1,000, effective March 1, 2019. In addition, on April 16, 2020, the Argentine Central Bank issued Communication “A” 6973 increasing such amount to 1,500, effective May 1, 2020.

47. Minimum cash and minimum capital

a) Minimum cash

The BCRA establishes different regulations to be observed by financial institutions, mainly regarding solvency levels, liquidity and credit assistance levels.

Minimum cash regulations set forth an obligation to keep liquid assets in relation to deposits and other obligations recorded for each period. The items included for the purpose of meeting that requirement are detailed below:

Accounts |  | December 31, 2020 |  |  | December 31, 2019 |
Balances at the BCRA |  |  |  |  |  |  |  |
BCRA – current account - not restricted |  |  | 85,945,337 |  |  |  | 146,289,273 |
BCRA – special guarantee accounts – restricted |  |  | 4,553,788 |  |  |  | 3,849,897 |
|  |  | 90,499,125 |  |  |  | 150,139,170 |
Argentine Treasury Bonds in pesos at fixed rate due May 2022 |  |  | 14,479,133 |  |  |  | — |
Argentine Treasury Bonds in pesos at fixed rate due Novermber 2020 |  |  | — |  |  |  | 9,938,556 |
Liquidity Bills – BCRA |  |  | 89,885,499 |  |  |  | 45,009,654 |
TOTAL |  |  | 194,863,757 |  |  |  | 205,087,380 |

b) Minimum capital

Minimum capital requirements are determined on the basis of the implicit risks to which the Group is exposed (credit risk, market risk and operational risk). The minimum capital will be the higher of the minimum capital fixed by BCRA and the capital requirements for credit risk, market risk — requirement for daily positions in eligible instruments — and operational risk. These requirements must be complied with on both an individual and a consolidated basis.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

For the purposes of calculating capital requirements, there is recognition of certain risk mitigation techniques such as collateralization, personal guarantees and credit derivatives, provided that certain criteria are met financial institutions may opt for either the simple approach (or risk weighting substitution) or for the comprehensive approach, which allows reducing the exposure amount up to the value ascribed to the collateral. Off-balance sheet transactions (including loan commitments) must be converted into credit exposure equivalents through the use of credit conversion factors (CCF). The higher the chance of financing an off-balance sheet transaction, the higher the conversion factor will be. Then, the credit exposure equivalent is weighted based on counterparty risk.

Minimum capital must be, at least, the greater of:

| • |  | Minimum basic capital, and

| • |  | The sum of minimum capital required for credit risk, market risk and operational risk.

Differential requirements were established for banks and other financial institutions, mainly based on the area where their head offices are located, in order to benefit those areas with smaller banking coverage according to BCRA criteria, which now enjoy less stringent requirements with respect to minimum basic capital.

Minimum capital requirement for credit risk will be determined as the sum of:

a) 8% of the sum of credit-risk-weighted asset transactions without delivery against payment;

b) failed delivery-against-payment transactions; and

c) requirement for counterpart credit risk in transactions with over-the-counter derivatives.

The sum of (a), (b) and (c) is multiplied by a coefficient which varies from 1 to 1.19 based on the rating the Bank is granted by BCRA.

Minimum Capital Requirement for Market Risk: BCRA imposes additional minimum capital requirements in relation to market risk associated with positions held by financial institutions in “local assets”, “foreign assets”, “foreign currency” and “gold”, including derivatives bought or sold on such positions.

The positions under consideration must be separated according to the currency of issue of each instrument, regardless of the issuer’s residence. In the cases of assets expressed in foreign currency, the Group must consider the risk for two positions: that which corresponds to the assets and the position in foreign currency, the relevant capital requirement being determined on the basis of the latter. The value of all positions will be expressed in pesos by using the reference exchange rate published by the BCRA for the U.S. dollar, after application of the swap rate corresponding to the other currencies.

Minimum Capital Requirement for Operational Risk: Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The definition includes legal risk but excludes strategic and reputational risk. Financial institutions must establish a system for the management of operational risk that includes policies, processes, procedures and the structure for their adequate management.

Any defects of application derived from the requirement of additional capital will not make the financial institution fall into noncompliance with the Minimum Capital Regulations, even if they will not be allowed to distribute cash dividends and pay fees, ownership interest or bonuses originated in the bank’s distribution of results.

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Banco BBVA Argentina S.A. |  | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (in thousands of Argentine pesos) (cont.) |  |

The breakdown of minimum capital at consolidated level is detailed below:

Minimum capital requirements |  | December 31, 2020 |  |  | December 31, 2019 |
Credit risk |  |  | 29,522,630 |  |  |  | 24,504,510 |
Operational risk |  |  | 9,025,959 |  |  |  | 8,712,818 |
Market risk |  |  | 246,474 |  |  |  | 413,483 |
Total capital |  |  | 91,762,665 |  |  |  | 68,056,213 |
Excess capital |  |  | 52,967,602 |  |  |  | 34,425,402 |

48. Subsequent events

Play Digital S.A.

On January 8, 2021, the transfer of 26,803,289 common book-entry shares of Play Digital S.A., with a par value of $1 each and entitled to one vote per share, was completed for the benefit of Banco de la Nación Argentina for 30,398, resulting in a gain for the Bank of 3,595. Following the transaction, Banco de la Nación Argentina became a new sponsor in addition to the ones already existing as mentioned in Note 16.

As a result, the Bank’s equity interest in Play Digital S.A. went from 13.001% to 10.762%.

As a result of the General Ordinary and Extraordinary Shareholders’ Meeting held on December 15, 2020, the Bank made a new contribution on February 26, 2021 for the subscription of 17,410,778 common shares entitled to one vote per share, at their par value of $1 each. Therefore, the Bank maintains a 10.762% equity interest in the company.

Change in business model

Since January 1, 2021, there was a change in the Entity’s business model associated with the holdings of fixed income instruments with a remaining maturity of over 90 days at the time of acquisition and which, as provided for by the Central Bank, are allowed to be used to meet minimum cash or reserve requirements.

Previously, these securities were considered under the held to collect and sell business model and measured at fair value through other comprehensive income, based on the management’s object to hold these financial instruments to meet minimum cash requirements as well as to sell them considering that the BCRA requirement would be temporary given the economic situation.

During the year 2020 the BCRA extended the requirement to maintain these instruments in order to meet cash reserves, leading management to reassess the business model for those assets.

As mentioned in the first paragraph, fixed income instruments, regardless of their form of adjustment, issued by the federal, provincial or municipal government or by the BCRA (monetary regulation instruments) will be considered under the held to collect business model and measured consequently, at amortized cost.

BBVA Consolidar Seguros S.A.’s change of name

On January 5, 2021, the Argentine Supervisory Board of Companies (IGJ) approved the change of name of BBVA Consolidar Seguros S.A. to BBVA Seguros Argentina S.A.

Proposal for future distributions of earnings

On March 9, 2021, the Board of Directors proposed to submit to the consideration of the next Ordinary and Extraordinary Shareholders’ Meeting, to be held on April 20, 2021, a distribution of cash dividends in the amount of 7,000,000, subject to the prior authorization of the BCRA.

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