Argentina's BBVA Banco Frances SA (BFR, FRAN.BA) said Monday it expects its loan portfolio to grow about 25% this year, after increasing almost 49% in 2011.

Argentina's economy is widely expected to grow at a significantly slower rate this year than the 8.9% logged in 2011. At the same time, most private sector forecasters see inflation staying above 20%.

The bank's investor relations director Cecilia Acuna said in a conference call Monday that loan loss provisions going forward will probably be slightly lower than the 58.9 million pesos ($13.2 million) reported in the first quarter.

Loans to the private sector, which represent the bulk of the bank's overall credit portfolio, increased almost 42% on the year, to ARS23.15 billion at the end of March. Automobile and personal loans accounted for much of that growth.

Asset quality as measured by non-performing loans as a percentage of total loans was unchanged on the year at 2.47% as of March 31.

Banco Frances reported first-quarter net profit of ARS240.5 million on Friday, up 23% from the first quarter of 2011 thanks to higher revenue from lending and fees.

The bank's bottom line also got a boost from the sale of its corporate headquarters and an insurance subsidiary.

The net financial margin--the difference between what the bank pays on its deposits and earns on its loans and securities holdings--jumped 55% on the year, to ARS777.9 million in the quarter.

Net fee income rose 37% to ARS417.2 million.

Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA) owns a controlling interest in Banco Frances, which operates 268 branches and 654 ATMs.

Banco Frances's stock was recently trading 1.2% higher at ARS8.50 in Buenos Aires.

-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740, ken.parks@dowjones.com

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