May 28
Agenda The Argentine Economy The Argentine Financial System Banco Galicia 2
The Argentine Economy 3
GDP % Change In millions of Pesos Economic Activity 12% 4, 9% 8.1% 8.8% 9.% 9.1% 8.5% 8.7% 7.5% 375, 6% 5.8% 5.5% 35, 3.9% 3% 325, % 3, -.8% -3% -6% -2.8% -3.4% -4.4% 275, 25, -9% 225, -12% -1.9% 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28E 2, Real GDP growth E: Last available median of market forecasts published by the Argentine Central Bank. GDP, 1993 constant prices 4
With Strong Tail Winds 35 Agricultural Commodity Prices 2.75 Real Exchange Rate 3 2.5 2.25 25 2. 2 1.75 15 1 Dec-1 Dec-2 Dec-3 Dec-4 Dec-5 Dec-6 Dec-7 1.5 Bilateral (US$) 1.25 Multilateral 1. 21 22 23 24 25 26 27 Dec 1=1. 6 5 World GDP Growth 5.3 5.4 4.8 5.2 4 4 3 2.5 3.1 2 21 22 23 24 25 26 27 5
As a % of GDP As a % of GDP In millions of Ps. Fiscal and External Sector Performance 5.% 4.5% 4.% 3.5% 3.% Fiscal Performance (Fed. Gvt. only) Transfer of savings from the private pension funds to the state pension system 3.2% 3.6% 4, 36, 32, 28, 24, Primary Surplus as a % of GDP 2.5% 2.% 1.5% 2, 16, 12, Primary Surplus (in millions of Pesos) 1.% 8,.5% 4,.% 1997 1998 1999 2 21 22 23 24 25 26 27 28E 1% 5% % -5% External Sector 2.8% 2.1% 7, 6, 5, 4, 3, Current Accout (accrued basis) Exports Imports -1% 2, -15% 1, -2% 1997 1998 1999 2 21 22 23 24 25 26 27 28E E: Last available median of market forecasts published by the Argentine Central Bank. 6
Monetary Performance Central Bank s FX Market Average Daily Intervention (In millions of Dollars)(*) 12 1 8 6 4 2-2 -4 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 International Reserves (In billions of Dollars)(*) 55 5 45 4 35 3 25 2 15 1 5 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 6 Stock of Lebac (**) (In billions of Pesos)(*) 16 M2 (Monthly average in billions of Pesos)(*) 45 135 3 11 15 85 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 6 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 (*) As of April 25, 28. 7
% International Reserves 175 International Reserves: Coverage of M onetary Aggregates 15 125 IR/ BMB IR/ M2 1 75 5 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 IR: international reserves of the Argentine Central Bank. BMB: monetary base + "quasi-monies" + net position of the Argentine Central Bank in securities sold/bought under repurchase/resell agreements. M2: currency held by the public + transactional deposits in pesos. As of April 25, 28. 8
% % Inflation 45 CPI (annual variat ion) 25 Other M easures (12 mont hs t railing variat ion) 41 C C I 2.7 35 2 18.6 25 15 P B P I 15.5 C P I 15 12 1 9 1 1 8.8 5 4 6 5 I W P I 1-5 -2-1 -2 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8E Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 CPI (average) CPI (end of period) CCI: Cost of Construction Index PBPI: Producers Basic Prices Index CPI: Consumer Prices Index IWPI: Internal Wholesale Prices Index E: Last available median of market forecasts published by the Argentine Central Bank. 9
Basis points over U.S. Treasury Country Risk Premium 4,5 4,372 4, 3,5 3, 2,5 2, From January 1, 27 65 6 55 5 45 4 35 3 25 2 15 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 1,5 1,562 1, 5 461 77 533 773 1,45 55 499 216 41 546 1997 1998 1999 2 21 22 23 24 25 26 27 28 Risk Premium (end of period) (1) As measured by the EMBI+ for Argentina except for the period between 22 and 24 when it corresponds to the spread over Treasury of the Boden 212. (2) As of May 6, 28. (1) (2) 1
The Argentine Financial System 11
Post-crisis Strong Growth in Financial Intermediation 225, Total Deposits 22% (* ) Loans to the Private Sector (in millions of Pesos) (in millions of Pesos) 42% (* ) 2% 12, 43% 2, 25% 15, 175, 15, 29% 18% 9, 75, 4% 125, 1, 75, 33% 6, 45, 25% 38% 5, 3, 25, 15, Dec-2 Dec-3 Dec-4 Dec-5 Dec-6 Dec-7 Mar-8 Dec-2 Dec-3 Dec-4 Dec-5 Dec-6 Dec-7 Mar-8 From the Public Sector (CAGR: 45.8%) From the Private Sector (CAGR: 21.2%) From the Financial Sector and Res. Abroad (CAGR: 41.%) CAGR: 24.8% (*) Mar-8 vs. Mar-7 variation. CAGR: Dec-2 / Mar-8. As of March 31, 28. 12
But Still Low Financial Depth 28 255 23 25 18 155 13 15 In billions of constant Pesos (* ) Deposits from the Private Sector Loans to the Private Sector 3 25 2 15 1 26 24 22 19 21 1 As a % of GDP 19 Deposits from the Private Sector Loans to the Private Sector 18 19 19 19 18 8 9 1 11 13 14 8 55 5 3 Jan-97 Jan-99 Jan-1 Jan-3 Jan-5 Jan-7 (*) Adjusted by IWPI. In millions of Pesos of Apr-8. As of April 25, 28. 2 21 22 23 24 25 26 27 28E E: Last available median of market forecasts published by the Argentine Central Bank. 6 Deposits from the Private Sector (as a % of GDP) Loans to the Private Sector (as a % of GDP) 8 51 5 68 45 6 3 15 25 19 18 17 16 4 2 36 31 28 22 22 13 Chile Uruguay Brasil Argentina Perú Colombia México Chile Colombia Brasil Perú México Uruguay Argentina 13
De-dollarization but with More Transactional Deposits By Currency (as a % of CA+SA+Time Deposits) By Type of Deposit (as a % of CA+SA+Time Deposit s) 1 1 85% 8 8 6 Pesos CER Adjusted Foreign Currency 6 51% 49% 4 4 2 Jun-1 Jun-2 Jun-3 Jun-4 Jun-5 Jun-6 Jun-7 14% 1% 2 Current Accounts + Saving Accounts Time Deposits (includes CER-adjusted) Jun-1 Jun-2 Jun-3 Jun-4 Jun-5 Jun-6 Jun-7 Jun-8 Deposit data is not shown for the period January-March 22, because as a result of the devaluation and the pesification measures, figures are not homogeneous for that period. As of April 25, 28. 14
% Private-Sector Loans and Deposits Growth Y-O-Y M onthly % Change Dec'6=1 5 16 4 3 2 1-1 15 14 13 12 11-2 Dec-3 Dec-4 Dec-5 Dec-6 Dec-7 1 Dec-6 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Deposit s Loans Loans in Pesos Deposits in Pesos Deposit s in Dollars As of April 25, 28. 15
% % Increase in Interest Rates 15 Nominal Interest Rates (monthly averages) 25 Real Interest Rates (monthly averages, adjusted by IWPI) 2 12 15 1 9 5 6-5 -1 3-15 -2 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8-25 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 BADLAR Private Banks (1) 3-Day Time Deposits Private Bank s 3-Day Time Deposits (1) Private Banks 3-day time deposits rate, for deposits over Ps. 1 million. As of April 25, 28. 16
Change in the Composition of the Banking System Number December 21 December 27 Market Share Private-Sector Deposits (%) Number Market Share Private-Sector Deposits (%) Banking Institutions 86 1 67 1 Government-Ow ned Banks 13 3 12 3 Private-Sector Banks 73 7 55 7 - Domestic Banks 34 15 34 32 - Foreign Banks 39 55 21 38 17
NALs / Total Credit % Loan Loss Reserves / NALs Improvement in Asset Composition and in Loan Portfolio Quality 6 Exposure to the Public Sector 1% Composition of Loans to the Private Sector 48 5 As a % of Total Assets 45 43 37 75% 74 61 COMPANIES 3 23 3 27 5% 15 18 25% 26 39 INDIVIDUALS 2 21 22 23 24 25 26 27 % 2 27 2 Loan Portfolio Quality 12 6. Provisions for Loan Losses (as a % of Total Assets) 15 114.3 15 4.5 1 9 3. 5 2.7 75 1.5.6 2 21 22 23 24 25 26 27 6. 2 21 22 23 24 25 26 27 NALs / Total Credit Loan Loss Reserves / NALs As of December 31, 27. 18
% % Improvement in Profitability 4 2-2 -4-6 -.1 -.3 Return on Assets -3. -1.9 -.3.6.8 1.9 1.8 2.7 1.4 2.4 ROA Adj. ROA -8-1 -12-1.1 2 21 22 23 24 25 26 27 ROA: return on average assets; Adj. ROA: adjusted by losses from amortization of amparo claims and adjustments to the valuation of public-sector assets pursuant to Communiqué A 3911. Sep-7: anualizado. 16 Efficiency 56.4 6 46.2 12 45 8 4 7.5 Efficiency Rat io Efficiency Ratio Excluding Com. A 3911 Coverage of Administ rat ive Expenses wit h Income from Services 2 21 22 23 24 25 26 27 62.5 52.5 3 15 As of December 31, 27. 19
Banco Galicia 2
Banco Galicia in Numbers March 28 Assets Ps.23,42 M Loans Ps.12,96 M Deposits Ps.13,895 M Equity Ps. 1,798 M GBA and Bs. As.: 135 Branches Number of: Bank Branches 232 Reg. Credit-Card Cos. Offices 141 Employees 9,327 Clients 4.29 M 21
One of the Largest Banks M arket share of privat e-sect or deposit s M arket share of loans to the private-sector (1) % % 1 Nación 13.59 1 Nación 1.12 2 Sant ander Río 9.69 2 Sant ander Río 1.7 3 BBVA Bco Francés 9.51 3 Macro 8.31 4 Galicia 8.1 4 Galicia 8.14 5 Provincia de Buenos Aires 7.85 5 BBVA Bco Francés 7.56 6 Macro 7.41 6 Provincia de Buenos Aires 6.52 7 HSBC 5.66 7 HSBC 5.7 8 Cit ibank 5.22 8 Cit ibank 3.97 9 Ciudad 4.66 9 Credicoop 3.64 1 Credicoop 4.48 1 St andard Bank 3.62 (1) Includes securitized loans. Source: Argentine Central Bank - Superintendency of Financial and Exchange Institutions - monthly information. As of December 31, 27. 22
Peer Comparison 12 Market Share of Private-Sector Deposits (%) 12 Market Share of Loans to the Private Sector (%) (1) 1 1 8 8 6 6 4 4 2 2 Santander Río BBVA Francés Galicia Macro HSBC Santander Río Galicia + T.Reg. Macro BBVA Frances HSBC Credit Card M anaged (in thousands) Branches (number) 6, 5 5, 4 4, 3 3, 2, 2 1, 1 Santander Río Macro Galicia + T.Reg. BBVA Francés HSBC (1) Includes securitized loans. Source: Argentine Central Bank - Superintendency of Financial and Exchange Institutions - monthly information (except for the regional credit-card companies). As of December 31, 27. Macro BBVA Francés Galicia + T.Reg. Santander Río HSBC 23
Fastest Organic Growth 11. M arket Share of Private-Sector Deposits 9.5 Santander Río BBVA Francés 8. Galicia 6.5 Macro HSBC 5. 3.5 Citi Standard Bank 2..5 Dec-2 Jun-3 Dec-3 Jun-4 Dec-4 Jun-5 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Source: Argentine Central Bank - Superintendency of Financial and Exchange Institutions - monthly information. As of December 31, 27 24
Increased Lending to the Private Sector 5,3 By Type of Borrower (Consolidat ed) (In millions of Pesos) 44 Comparison with the System (Dec 2=1) 4,8 4,3 Corporate Middle-Mkt Individuals 4 36 Financial Syst em Banco Galicia in Argent ina + RCC Cos. Banco Galicia in Argent ina 3,8 32 3,3 28 2,8 24 2,3 2 1,8 16 1,3 12 8 Dec-2 Dec-3 Dec-4 Dec-5 Dec-6 Dec-7 8 Dec-2 Dec-3 Dec-4 Dec-5 Dec-6 Dec-7 CAGR %: (2.4)% 35.2% 28.4% CAGR %: 22.9% 31.4% 3.1% As of March 31, 28. 25
Breakdown of Loans to the Private Sector Individuals (Regional Credit - Card Companies) 18% Financial Sect or 1% Large Corporat ions 17% Individuals (Bank) 25% M iddle-m arket Companies 26% Agribusiness 13% Consolidated Gross Loans to the Private Sector: Ps.11,23 million As of March 31, 28. 26
NALs / Total loans to the private sector Loan loss reserves / NALs Asset Quality Improvement 35% 14% 3% 113.8% 12% 25% 1% 2% 8% 15% 6% 1% 4% 5% 3.62% 2% % Dec-3 Jun-4 Dec-4 Jun-5 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 NALs / Total loans to the private sector Loan loss reserves / NALs Banco Galicia consolidated. % As of March 31, 28. 27
Post-Crisis Growth Variation (%) Sep-1 Dec-2 Number of: Sep-1 Dec-2 M ar-8 Dec-2 M ar-8 Employees 8,625 6,54 9,327 (3) 54 - Banco Galicia 5,68 4,113 5,451 (28) 33 - Regional Credit-Card Cos. and Other Subsidiaries 2,945 1,941 3,876 (34) 1 Bank Branches in Argentina 389 229 232 (41) 1 Regional Credit-Card Cos. Branches 16 87 141 (18) 62 Deposit Accounts (1) 1,239 1,63 1,399 (14) 32 Credit Cards (1) 1,891 1,596 5,65 (16) 251 - Banco Galicia (1) 678 498 1,127 (27) 126 - Regional Credit-Card Cos. (Visa and Local Brands) (1) 1,213 1,98 4,478 (9) 38 Debit Cards (1) 958 81 1,114 (16) 39 Client Base (1) 2,84 2,13 4,29 (29) 113 (1) In t housands. 28
Broad and Growing Customer Base Total: 4.29 million : 23.4% (1) of Argentina s economically active population 15.5% CAGR since December 2 Consumer Banking (2) Total: 1,294,71 47,88 Corporate Banking (2) Total: 39,174 9,862 353,838 753 317,73 Low Income M edium Income Other High Income Small and Middle- M arket Business Corporations Agribusiness 575,352 29,139 Regional Credit- Card Companies Total: 2,547,539 Low Income (1) Estimated. (2) Consumer Banking and Corporate Banking do not include 47,429 and 1,969 credit card coholders, respectively. As of March 31, 28. 29
Stages of Recovery 22 23 24 25 26 27 28... Streamlining of operations and restructuring of liabilities Post-crisis balance sheet clean up and capital increase Growth based on existing client base Growth based on client acquisition Profitability increase 3
Foreign Debt Restructuring and Capital Generation Restructured Debt In millions of Dollars Galicia Uruguay / Head Office and NY Branch Galicia Cayman Lt d. Cayman Branch Total Jul-2 Dec-2 / Jul-3 M ay-4 Original Debt Amount 328 1,136 1,476 2,94 Original Average Lif e New Debt (years) 4.1 4.4 8.1 6.2 Debt Reduct ion af t er Rest ruct uring 328 1,53 73 2,111 Debt Amount (1) 83 746 829 (2) Capital Generation Associated to the Debt Restructuring In millions of Dollars Total Tier 1 135 Tier 2 23 Tot al 365 (3) (1) Only principal, as of March 31, 28. (2) US$ 53 million correspond to the exchange of restructured liabilities for Boden 212. (3) Includes US$ 43 million from Grupo Galicia s debt forgiveness. 31
Excess of Regulatory Capital as a % of Minimum Requirement Excess Regulatory Capital 2 Minimum Requirement Ps. 1,512 million Regulatory Capital Ps. 2,49 million Excess Capital Ps. 897 million 15 1 5 59% Jun-96 Jun-99 Dec-1 Jun-4 Mar-5 Dec-5 Sep-6 Jun-7 Mar-8 Banco Galicia consolidated. Capital adequacy requirements were suspended between January 22 and December 23. As of March 31, 28. 32
Balance Sheet Selected Data O P E R A T I O N A L R E S I D U A L B A N K B A N K Assets Liabilities Assets Liabilities Dec-5 Mar-8 Absolute Variation Liquidity 1.758 3.64 1.846 Exposure to the Private Sector (1) 5.46 11.845 6.439 Other 2.75 2.4 (35) TOTAL 9.239 17.489 8.25 Deposits 7.96 13.67 5.647 Other 2.25 5.137 3.112 TOTAL 9.985 18.744 8.759 Exposure to the Public Sector (1) 15.869 5.647 (1.222) -BODEN 5.143 2.71 (2.433) -PGN 5.188 1.247 (3.941) -BOGAR 3.823 - (3.823) -Discount 733 692 (41) -Other 982 998 16 Difference from Amparo Claims 348 284 (64) TOTAL 16.217 5.931 (1.286) Argentine Central Bank 8.612 - (8.612) Restructured Foreign Debt 4.582 2.54 (2.42) Other 888 338 (55) TOTAL 14.82 2.878 (11.24) Operational Bank Assets / Total Assets 36,3% 74,7% (1) Does not include Securitized Loans. As of December 25: Bank: Ps.296 million, Regional Credit Card Companies: Ps. 179 million. As of March 28: Bank: Ps.572 million; Regional Credit Card Companies: Ps.359 million. 33
Consolidated Income Statement: FY 26-27 (In millions of Pesos) FY 26 FY 27 Absolut e Variat ion Net Financial Income (1) 473.2 774.5 31.3 Provisions for Loan Losses (11.9) (255.5) (144.6) Net Income from Services 668.8 933.2 264.4 Administ rat ive Expenses (946.) (1,246.7) (3.7) Net Operat ing Income 85.1 25.5 12.4 Net Ot her Income / (Losses) (38.8) (38.5).3 Bad Debt s Recovered 49.7 61.5 11.8 Provisions Reversed 32.5 21.6 (1.9) Income Tax (56.3) (72.8) (16.5) Adjust ed Net Income 72.2 177.3 15.1 Loss from Valuat ion of Public-Sect or Asset s (Comm. "A" 3911) (198.4) (38.2) 16.2 Amort izat ion of Amparo Claims - (18.7) (18.7) Net Income / (Loss) (126.2) 3.4 156.6 (1) Excludes losses from valuation of public-sector assets in accordance with Comm. "A" 3911 and includes income on margin requirements of repo transactions. 34
Consolidated Income Statement: 1st. Q FY 28 (In millions of Pesos) 1Q'7 4Q'7 1Q'8 Absolut e Var. 1Q'7/ 4Q'7/ 1Q'8 1Q'8 Net Financial Income (1) 166 232 254 88 22 Provisions for Loan Losses (49) (97) (85) (36) 11 Net Income from Services 22 26 274 72 14 Administ rat ive Expenses (268) (356) (37) (11) (14) Net Operat ing Income 5 39 73 23 34 Net Ot her Income / (Losses) (15) 8 (25) (1) (32) Bad Debt s Recovered 25 12 7 (18) (5) Provisions Reversed 3 18 (3) (18) Income Tax (18) (14) (2) (2) (6) Adjust ed Net Income 45 63 35 (1) (28) Loss from Valuat ion of Public-Sect or Asset s (Comm. "A" 3911) (51) (12) 6 57 18 Amort izat ion of Amparo Claims (31) - (3) 28 (3) Net Income / (Loss) (36) 51 39 75 (13) (1) Excludes losses from valuation of public-sector assets in accordance with Comm. "A" 3911 and includes income on margin requirements of repo transactions. 35
% Summary of Post-Crisis Performance Residual Bank Assets as a % of Total Assets Net Operating Revenues (1) 7 68.7% 11 65 1 6 9 55 8 5 45 4 35 7 6 5 4 3 25.3% 25 Dec-4 Jun-5 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 3 2S 24 1S 25 2S 25 1S 26 2S 26 1S 27 2S 27 1Q 28(2) As of March 31, 28. (1) Net Financial Income (adjusted) + Net Income from Services, in millions of Pesos. (2) Semiannualized. Banco Galicia consolidated. 36
Objectives and Strategy Objectives Consolidate leadership position in Argentina. Achieve profitability in line with industry expectations. Strategy Grow in loan origination to the private sector and reduce exposure to the public sector. Funded through deposit growth and securitization. Consolidate leadership in agribusiness and medium-sized companies and consumer finance. Improve penetration in large corporate segment. Continue growing in transactional banking and e-banking. Maintain operating efficiency. 37
Competitive Advantages Strong brand name. One of the most valuable financial services franchises in Argentina. Broad customer base. Wide product offering. Largest consumer finance operation. Leading provider of credit cards and electronic banking services. Leader in agribusiness and medium-sized enterprises sectors. Large distribution platform and best electronic services platform. Strong IT capabilities. 38