Banco Galicia Investor Presentation February 217
Agenda» The Argentine Economy»The Argentine Financial System»Banco Galicia»Annex 2
GDP % Change Billions of Ps. Economic Activity 8 7 6 5 4 GDP and Income per Cápita 1998 2 22 24 26 28 21 212 214 216 217E 22, 2, 18, 16, 14, 12, 1, Income per Cápita (in constant Ps.) GDP - 24 Constant Prices Income per cápita 2% Real GDP Growth 15% 1% 5% % -5% -1% -15% 1998 2 22 24 26 28 21 212 214 216 217E As of January 31, 217. 3
% % International Environment 4 Agricultural Commodity Prices 25 Real Exchange Rate (Dec 15=1) 2 3 2 15 1 5 13,9 98.51 1 21 23 25 26 28 29 211 213 214 216 Dec 1=1. As of January 31, 217. 21 24 27 21 213 216 Bilateral (Ps./US$) Multilateral Annual Avg Adjusted by INDEC CPI until 26, and by private estimates since 27. As of January 31, 217. 8 7 6 5 4 3 2 1 21 22 24 UST1y + EMBI+ Latam Interest Rates 25 2 15 1 5 Jun-25 Jul-25 27 29 21 212 214 216 UST1y + EMBI+ Arg 4
Millions of US$ As a % of GDP Fiscal Performance 4 Fiscal Performance (Federal Government only) -4-4.2-4.1-8 27 28 29 21 211 212 213 214 215 216 217E Primary Fiscal Balance as a % of GDP Overall Fiscal Balance as a % of GDP 3, 25, Monetary Financing 6 5 2, 15, 1, 5, 4 3 2 1 As a % of GDP 27 28 29 21 211 212 213 214 215 216 217E Argentine Central Bank advances Use of international reserves Argentine Central Bank profits Total Argentine Central Bank financing (as % of GDP) - r.h.s. 5
Billions of US$ As a % of GDP Billions of US$ Sovereign Debt 2 Sovereign Debt 28 Projected annual debt payments (*) Foreign currency Pesos 15 21 1 14 56.9 5 1997 1999 21 23 25 27 29 211 213 215 2.2 13.1 7 216 217 218 219 22 221 222 223 224 225 226 Gross public sector debt Public debt net of intra public sector holdings (estimated) Public debt net of intra public sector holdings and IFIs (estimated) (*) Net of Central Bank advances, treasury bills and non-transferable bills held by Central Bank. 3 225 15 75 Source: MECON Debt stock 246 1998 2 22 24 26 28 21 212 214 Jun-16 Total sovereign debt Debt by Currency Other 1% Euros 9% Pesos 19% Pesos indexed to CER 7% Pesos Dólar Linked 3% USD 61% 6
As a % of GDP Billions of US$ As a % of GDP Billions of US$ External Sector Performance 6.% Current Account (accrued basis) 1 Foreign Trade 3.%.% 75 5 61 6-3.% -2.7% 25 Exports Imports -6.% 24 26 28 21 212 214 216 24 26 28 21 212 214 216 6.% Capital Account (accrued basis) 3 Trade Balance 3.% 3.2% 15.% -3.% -15-3 -6.% Source: INDEC 24 26 28 21 212 214 216-45 24 26 28 21 212 214 216217E TOTAL Primary products Manufactures of agricultural origin Industrial manufactures Fuel and energy 7
Monthly average in billions of Ps. Monetary Performance 6 International Reserves (In billions of Dollars) 5 Central Bank interest rate policy 45 4 3 15 24 26 28 21 212 214 216 % 3 2 1 212 213 214 215 216 217 CB Repo (7 days) Lebacs 35 Call (2d moving avg.) 8 7 6 5 4 Stock of Lebac (In billions of Pesos) 1,25 1, 75 M2 (*) 5% 4% 3% YOY % chg 3 5 2% 2 1 25 1% 24 26 28 21 212 214 216-24 26 28 21 212 214 216 % (*) As of January 31, 217. 8
% % Inflation 6 45 3 15 CPI - 12 Months Trailing Variation 5. 4.5 4. 3.5 3. 2.5 2. 1.5 1..5 Monthly % Change 213 214 215 216 - Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Headline Source: City of Buenos Aires. As of January 31, 217. Core CPI CABA (core) REM* Jul (core) REM* Aug (core) * REM: Survey of market expectations 9
Agenda» The Argentine Economy»The Argentine Financial System»Banco Galicia»Annex 1
Private-Sector Loans and Deposit Growth Y-O-Y Monthly % Change Dec'6=1 6 1, 5 9 4 8 3 7 2 6 1 5 4-1 3-2 2-3 26 28 21 212 214 216 1 26 27 28 29 21 211 212 213 214 215 216 Deposits Loans Deposits in Pesos Deposits in Dollars (In US$) As of January 31, 217. 11
But Still Low Financial Depth In billions of constant Pesos (*) 1, 9 8 7 6 5 4 3 2 1 2 22 24 26 28 21 212 214 216 Deposits from the Private Sector (*) Adjusted by INDEC CPI until 26, and by private estimates since 27. In millions of Ps. 1 Loans to the Private Sector 3 27 24 21 18 15 12 9 6 3 Financial Depth (as a % of GDP) 2 22 24 26 28 21 212 214 216 Deposits from the Private Sector As a % of GDP Loans to the Private Sector 19 14 8 6 4 2 4 66 5 56 19 32 28 24 25 18 19 14 Chile Brazil Colombia Peru Mexico Argentina Deposits to GDP Loans to GDP As of June 3, 216. Source: Central Bank of each country. 12
Breakdown of Deposits by Currency and Type 1 By Currency (as a % of CA+SA+Time Deposits) 1 By Type of Deposit (as a % of CA+SA+Time Deposits) 8 8 6 72 6 61 4 4 28 39 2 2 21 24 27 21 213 216-21 24 27 21 213 216 Pesos Foreign Currency Current Accounts + Savings Accounts Time Deposits 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 January 31, 217. 13
% % Increase in Interest Rates 32 Nominal Interest Rates (monthly averages) 18 Real Interest Rates (annual averages) (2) 28 12 24 2 6 16 12 8 4-6 -12 24 26 28 21 212 214 216-18 24 26 28 21 212 214 216 (1) Private Banks 3-day time deposits rate, for deposits over Ps. 1 million. (2) Adjusted by INDEC CPI until 26, and by private estimates since 27. As of January 31, 217. BADLAR Private Banks (1) 14
Change in the Composition of the Banking System December 21 Market Share Number Private-Sector Deposits (%) November 216 Market Share Number Private-Sector Deposits (%) Banking Institutions 86 1 63 1 Government-Owned Banks 13 3 13 37 Private-Sector Banks 73 7 5 63 - Domestic Banks 34 15 33 32 - Foreign Banks 39 55 17 32 15
NPLs / Total Credit % Improvement in Asset Composition and in Loan Portfolio Quality 6 Exposure to the Public Sector (*) (As a % of Total Assets) 1% Composition of Loans 5 45 75% 52 74 3 5% 18 15 25% 48 26 2 22 24 26 28 21 212 214 Nov'16 (*) Not including Central Bank Paper. % 2 Nov'16 INDIVIDUALS COMPANIES 2 15 1 5 Loan Portfolio Quality 142. 1.7 18 15 12 9 6 Loan Loss Reserves / NPLs As of November 3, 216. NPLs / Total Credit Loan Loss Reserves / NPLs 16
Efficiency Ratio % Improvement in Profitability 1. 5. - (5.) (.1) (.3) (8.9) (.5) (2.9) (4.2) (22.7) 7..9 R.O.A. and R.O.E 32.7 25.7 29.5 32.4 29.7 19.2 24.4 25.3 14.3 11. 13.4 1.9 1.5 1.6 2.3 2.8 2.7 2.9 3.4 4.1 4.1 3.7 4 2-2 -4 (1.) (59.2) 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 Nov-16-6 16 ROA Efficiency ROE 8 12 8 4 46.2 48.5 7.5 5.1 6 4 2 Coverage % 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 Nov-16 As of November 3, 216. Efficiency Ratio Coverage of Administrative Expenses with Income from Services 17
Current Situation of the Financial System Strengths» High liquidity (with increased allocation to Central Bank paper).» Peso-based intermediation with high proportion of transactional deposits. Opportunities» Low level of financial depth.» Increase in concentration. Challenges» Lack of long-term funding.» Reach a greater customer base - Bancarization.» Increase cross-selling of financial products.» Sustain profitability. Threats» Lead time to correct fiscal, monetary and external imbalances.» Brazilian economy as a limitation to growth. 18
Agenda» The Argentine Economy»The Argentine Financial System»Banco Galicia»Annex 19
Simplified Organizational Structure EBA HOLDING 58.% Votes 21.6% Shares 87.5% 1% 95% 12.5% 5% Insurance 77% 97% Mutual Funds 3% 95% 1% 1% 95% 5% 5% Collection Processing 2
Banco Galicia in Numbers December 216 (Consolidated figures) Assets 24.1 15.1 Net Loans 137.5 8.7 Deposits 151.7 9.6 Equity 18.9 1.2 Number of Branches Employees Clients (*) Bank 279 5,799 3,648 Reg. Credit-Card Cos. 26 4,571 5,249 CFA 94 1,164 517 Total 579 11,534 9,414 (*) In thousands. (**) 57 branches and 37 offices. (**) 21
One of the Largest Banks Market share of Market share of private-sector deposits loans to the private-sector (1) Nación (P) 17.% Nación (P) 1.9% Santander 11.% Santander 1.4% Galicia Galicia 9,9% Galicia Galicia (2) 9.8% Provincia (P) 8.9% Provincia (P) 8.8% BBVA 7.5% Macro 7.7% Macro 6.7% BBVA 7.1% Credicoop 5.% HSBC 4.1% HSBC 4.3% Ciudad (P) 3.8% ICBC 3.3% Patagonia 3.8% Ciudad (P) 3.1% ICBC 3.8% % 2% 4% 6% 8% 1% 12% 14% 16% 18% 2% (1) Includes securitized loans and leasing. (2) Considering CFA, the Bank s market share of loans to the private-sector would be 9.9%. Source: Argentine Central Bank. (P) Goverment owned banks As of November 3, 216. % 2% 4% 6% 8% 1% 12% TOP 1 = 77% TOP 1 = 7 % 22
Peer Comparison 15 Market Share of Private-Sector Deposits (%) 15 Market Share of Loans to the Private Sector (%) (1) 1 1 5 5 Santander Galicia BBVA Macro HSBC Santander Galicia Macro BBVA HSBC +T.Reg.+CFA 16, Credit Cards Managed (in thousands) 8 Branches (number) 12, 6 8, 4 4, 2 - Santander Galicia BBVA Macro HSBC +T.Reg.+CFA (1) Includes securitized loans and leasing. Source: Argentine Central Bank (except for the regional credit-card companies). As of November 3, 216. Macro Santander Galicia BBVA HSBC +T.Reg.+CFA 23
Competitive Environment Market Share of Private-Sector Deposits 1.5 9.5 Santander Galicia 8.5 7.5 6.5 BBVA Macro 5.5 4.5 HSBC 3.5 2.5 27 28 29 21 211 212 213 214 215 216 Source: Argentine Central Bank. As of November 3, 216. Patagonia ICBC Citi 24
Broad and Growing Customer Base Total: 9.4 million, 49% (1) of Argentina s economically active population 11.6% CAGR since December 2 2% Consumer Banking Total: 3,552,218 18% 21% Corporate Banking Total: 96,11 1% 13% Low Income Medium Income Prof. and Self-employed High Income In Process of Classification 11% 56% Agribusiness Corporations Small and Middle-Market Business 78% Regional Credit-Card Companies Total: 4,993,912 11% CFA Total: 517,78 5% 29% 32% Low Income Middle Income Middle/High Income 6% Low Income Middle Income Middle/High Income 63% (1) Estimated. As of December 31, 216. 25
Breakdown of Loans to the Private Sector Agribusiness 12% Individuals 44% Middle- Market Companies 15% Agribusiness 9% Individuals (Bank) 33% Middle- Market Companies 2% Large Corporations 21% Financial Sector 3% Large Corporations 16% Financial Sector 2% Individuals (CFA) 4% Individuals (Regional Credit-Card Companies) 21% Bank: Ps. 16.6 billion Consolidated: Ps. 142.2 billion As of December 31, 216. 26
Billions of Ps. Loan Portfolio by Maturity 6 38% 34% 45 3 16% 15 1% <1 month 1-6 months 6-12 months 1-3 years 3-5 years >5 years 2%,2% Maturing within 1 year: 87.7%. US$-denominated loans: 12.6%. Consolidated figures, as of December 31, 216. 27
Billions of Ps. Funding Sources (non consolidated) Subordinated Bonds 3% Bonds 3% Bank: Ps. 151.5 billions Other(*) 17% Financial Entities 43% Credit Cards: Ps.36.3 billions Merchants 37% Financial Entities 32% CFA (*) : Ps.3.8 billions Deposits 36% Deposits 77% (*) Includes among other: repos, financial institutions, collections on account of third parties, debt with merchants. Bonds 2% Bonds 32% Total Deposits Growth (consolidated) Bank Deposits Breakdown by Type 175 15 125 1 CAGR: 34% Savings accounts 33% Time Deposits 45% 75 5 25 28 29 21 211 212 213 214 215 216 As of December 31, 216. (*) Includes information of TDM US$ -denominated deposits: 33.8%. Checking accounts 2% 28
NPLs / Total loans to the private sector Asset Quality 12% Acquisition of CFA 16% 1% 14% 8% 6% 8.1% 1.7% 12% 1% Loan loss reserves / NPLs 4% 8% 3.4% 2% 1.9% 6% % 28 29 21 211 212 213 214 215 216 4% As of December 31, 216. NPLs / Total loans to the private sector Consumer (T. Reg. + CFA) NPL ratio Bank NPL ratio Loan loss reserves / NPLs 29
Total Capital Ratio (%) Excess Regulatory Capital and Total Capital Ratio 17.5% Minimum Requirement Ps.15.3 bn Regulatory Capital Ps. 22. bn Excess Capital Ps. 6.8 bn / 44.3 % 15.% 15.% 12.5% 11.8% 1.% Regulatory Ratio Total Capital Ratio 7.5% 29 21 211 212 213 214 215 216 Banco Galicia consolidated. As of December 31, 216. 3
% Millions of Ps. Billions of Ps. % Strong Profitability 28 Total Assets, Public Sector Exposure and ROA 5 15 Net Interest Margin - NIM 24 2 16 12 8 4 3.6 24.1 3.4 3.5 2.9 3. 2.6 16.6 1.9 16..9.8 82.2 62.8 19 23.4 33.7 5.7 5.4 3.8 1.5 1.7 1.7 2.8 3.4 4.7 5.9 4 3 2 1 12.5 1 7.5 5 2.5 5.8 8.3 1.1 11.7 12.1 12.8 13.4 12.9 12. Total Assets Exposure to the Non-Financial Public Sector ROA 75 Efficency Ratio 6, Net Income and ROE 5 5 4, 36.6 3.9 32.1 37.9 33.3 31.4 4 3 25 72.6 65.1 66.1 63.4 64.2 61.6 56.3 59.7 61.5 2, 1.5 8.4 2.4 195 172 469 5,94 3,158 3,913 1,837 1,17 1,31 2 1 % Net Income ROE 31
Agenda» The Argentine Economy»The Argentine Financial System»Banco Galicia»Annex 32
Consolidated Income Statement Twelve months ended 11,543 27,69 42% 3,533 13% 16,974 12M 216 16,66 1% 62% 58% 1,113 3,121 4% 11% 5,94 18% Net Financial Income Net Income from Services Operating Income Net Charge for Loan Losses Administrative Expenses Net Other Income/Losses Income Tax Net Income Variation 12M 215 3,842 2,91 6,752 1,319 4,524 863 591 1,181 % Change 31 34 32 6 36 345 23 3 33
Consolidated Income Statement - 4Q of 216 4Q16 4,897 6% 59% 3,413 8,31 1,311 16% 41% 1% 4,86 58% 375 962 4% 12% 1,552 18% Net Financial Income Net Income from Services Operating Income Net Charge for Loan Losses Administrative Expenses Net Other Income/Losses Income Tax Net Income Variation 3Q16 943 342 1,285 43 475 78 149 39 % Change 24 11 18 49 11 26 18 25 Variation 4Q15 1,132 1,33 2,165 62 1,253 431 218 55 % Change 3 43 35 9 35 77 29 48 34
Volume Growth & Productivity Improvement Variation Dec-2 Dec-16 Abs. % Employees 6,58 11,956 5,898 97 - Banco Galicia 4,57 5,799 1,742 43 - Regional Credit-Card Cos. 1,94 4,571 2,667 14 - CFA 1,164 - Other Subsidiaries 97 4 (93) (96) Distribution Platform Branches - Banco Galicia 229 279 5 22 - Regional Credit-Card Cos. 87 21 123 141 - CFA 94 Electronic Banking Transactions (1) (in thousands, per month) 4,996 79,63 74,67 1,483 Products Deposit Accounts (*) 1,63 4,18 2,955 278 Credit Cards (*) 1,596 14,31 12,714 797 - Banco Galicia (*) 498 3,675 3,177 638 - Regional Credit-Card Cos. (*) (Proprietary brands and others) 1,98 1,459 9,361 853 - CFA (*) 176 Debit Cards (*) 81 1,459 658 82 Client Base (* ) 2,13 9,318 7,35 363 (*) In thousands. 35
Tarjetas Regionales» Consumer finance to medium and low income segments.» Merchant acquirer and payment processing services provider to proprietary credit cards.» Largest credit card issuer in Argentina with over:» 3.5 million active accounts and 1. million cards issued.» 26 branches and 54 offices across the country.» 12.7% market share in purchase volume (billed + installments) nationwide. (1)» Second largest merchant acquirer with over 25, affiliated merchants.» Largest independent payment processor with more than 163 million annual transactions. In millions of Ps. 12M 215 12M 216 Assets 22,764 31,52 Loans 2,92 28,98 Net Worth 4,355 5,632 Net Income 1,541 1,649 ROE 43.2% 33.9% (1) As of November 3, 216 36
CFA Efectivo Sí» Consumer finance to medium and low income segments.» Leader in Personal Loans within consumer finance institutions.» More than 2 years in the market with strong brand:» 517, current clients (segment C1, C2, C3, D1) more than 1 million historical clients.» 361, loans granted in 215 and 534, during 216.» 149,statements as of December 31, 216 (vs 14, as of December 31, 215).» Loans in pesos, no guarantee, fixed interest rate.» 94 branches (57 Branches and 37 minibranches). In millions of Ps. 12M 215 12M 216 Assets 3,837 5,91 Loans 3,481 5,372 Net Worth 1,315 1,252 Net Income 15 351 ROE 12.2% 28.8% 37
Lines of Business December 216 (In millions of Ps. except percentages). It does not include accrued interest. Cash loans. Granted in branches. Payroll loans. Government employees, pensioners, military and members of mutuals. Loans for the acquisition of goods. Granted through retail merchants associated with CFA. Microfinance. Entrepreneurs and Self-employeed. Issuer of Visa and MasterCard credit cards. Cross-selling to current clients and to open market clients. 2,67 39% 522 1% 361 7%. - 2,346 47% Total 5,296 1% Issuer of debit cards associated with saving accounts and time deposits, for retired people and pensioners. Insurance (casualty, life, burial, purchase). 38
Sudamericana Holding - Corporate Structure 12.5% 87.5% Sudamericana Holding Insurance company founded in 1996 and originally aimed at individuals' insurance that is currently broadening its strategy to cover corporate insurance. Turnover: $3,4MM AUM: $963MM Equity: $661MM Retirement insurance company. It manages voluntary retirement and pension plans. Turnover: $.1MM AUM: $137MM Equity: $15.7MM Insurance broker of the corporate segment, which offers coverage in those lines not marketed by Galicia Seguros. Turnover: $39MM AUM: $4.5MM Equity: $11.2MM 39
Sudamericana Holding - General Data General Data Annual Turnover: AR$ 3 billion (FY216) Policies in force: 3.2 million (credit-related insurance) and 5.4 million (voluntary insurance). Positioning 3Q-FY216 Homeowners Insurance Ranked 1 st 1.% Market Share Theft Ranked 1 st 18.% Market Share Personal Accidents Ranked 2 nd 1.% Market Share Group Life Ranked 4 th 6.3% Market Share Miscellaneous Risks Ranked 8 th 3.1% Market Share Risk Rating FixScr (Affiliate of Fitch Ratings): domestic rating of financial strength AA (arg) Category. Certifications Bureau Veritas Certification: ISO 91:28 Property and life insurance integrated management: Evaluation of policy applications, policy issuance, billing and premium collection, post-sale, inquiry and customer request service, reception and resolution of claims. 4
Sudamericana Holding - Distribution Channels Business Partners' Branches Telemarketing Over 5 branches of our affiliated companies (Banco Galicia, Tarjeta Naranja, Tarjeta Nevada and Compañía Financiera Argentina). Near 2 branches of retail chains. +2 telemarketers at our own call center. 18 telemarketers at an external call center. Specialized Insurance Stands ATMs Near 6 stands at our business partners' branches. Insurance sale through Banco Galicia's ATM network. Specialized Salesforce Account officers for corporate businesses. Specialized Insurance Officers in banking branches. Internet Open market sale through different web pages. Main Business Partners 41
Sudamericana Holding - Turnover and Profit Evolution Per Fiscal Year (in millions of Ps.) 3.5 3. Turnover Prof its/turnover Combined Ratio Galicia Seguros (%) 46% 2.5 39% 2. 1.5 49% 34% 1. 5 12,% 13,6% 14,1% 12,8% 21,5% - 754 84,4 1.121 82,7 1.53 86,5 2.83 84,9 3.43 75,4 212 213 214 215 216 Fiscal Year: July 1st to June 3th 42