Banco Galicia Investor Presentation February 218
Agenda»The Argentine Financial System»Banco Galicia»Annex 2
But Still Low Financial Depth 3 As a % of GDP 25 2 15 18 16 1 5 2 22 24 26 28 21 212 214 216 218 Deposits from the Private Sector Loans to the Private Sector Financial Depth (as a % of GDP) 1 8 6 4 2 78 52 56 67 24 44 34 34 29 23 18 13 Chile Brazil Colombia Peru Mexico Argentina Deposits to GDP Loans to GDP Source: Central Bank of each country. 3
Private-Sector Loans and Deposit Growth 6 Y-O-Y Monthly % Change Dec'6=1 1.364 51 1,25 48 1, 36 29 75 24 5 12 25 47 26 28 21 212 214 216 26 28 21 212 214 216 Deposits Loans Deposits in Pesos Deposits in Dollars (In US$) As of December 31, 217. 4
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 7 6 65 4 4 3 35 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 December 31, 217 5
% % Increase in Interest Rates 32 Nominal Interest Rates (monthly averages) 18 Real Interest Rates (annual averages) (2) 28 24 23.27 12 2 6 3.6 16 12 8 4-6 -12 24 26 28 21 212 214 216-18 24 26 28 21 212 214 216 218 (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 December 31, 217. BADLAR Private Banks (1) 6
Change in the Composition of the Banking System December 21 Market Share Number Private-Sector Deposits (%) September 217 Market Share Number Private-Sector Deposits (%) Banking Institutions 86 1 63 1 Government-Owned Banks 13 3 13 35 Private-Sector Banks 73 7 5 65 - Domestic Banks 34 15 33 32 - Foreign Banks 39 55 17 33 7
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% 5 74 3 5% 18 15 8.8 25% 26 5 2 22 24 26 28 21 212 214 216 Nov-17 % 2 September'17 (*) Not including Central Bank Paper. INDIVIDUALS COMPANIES 2 15 1 5 Loan Portfolio Quality 139.5 1.8 18 15 12 9 6 Loan Loss Reserves / NPLs NPLs / Total Credit Loan Loss Reserves / NPLs 8
Efficiency Ratio % Improvement in Profitability 1. 5. - (5.) (.1) (.3) (8.9) (.5) (2.9) (4.2) (22.7) R.O.A. and R.O.E 32.7 25.7 29.5 32.4 29.6 25.7 19.2 24.4 25.3 14.3 11. 13.4 7..9 1.9 1.5 1.6 2.3 2.8 2.7 2.9 3.4 4.1 4.1 3.6 3. 4 2-2 -4 (1.) (59.2) 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 Nov-17-6 ROA ROE 16 Efficiency 8 12 8 51.8 59.3 6 4 Coverage % 4 2 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 Sep-17 Efficiency Ratio Coverage of Administrative Expenses with Income from Services 9
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.» Adequate capitalization levels. Opportunities» Low level of financial depth.» Increase in concentration.» Potential demand for mortgage loans. Challenges» Lack of long-term funding.» Reach a greater customer base - Bancarization.» Increased competition from new fintech players.» Sustain profitability. Threats» Lead time to correct fiscal, monetary and external imbalances.» Brazilian economy as a limitation to growth. 1
Agenda»The Argentine Financial System»Banco Galicia»Annex 11
Simplified Organizational Structure EBA HOLDING 55.1% Votes 19.7% Shares 87.5% 1% 95% 12.5% 5% Insurance 77% 97% Mutual Funds 3% 95% 1% 1% 95% 5% 5% Collection Processing 12
New Simplified Organizational Structure EBA HOLDING 55.1% Votes 19.7% Shares 87.5% 1% 95% 83% 12.5% 5% Insurance Mutual Funds 1% Collection Processing 13
Banco Galicia in Numbers Number of Branches Employees Clients (*) Bank 36 6.214 3.876 Reg. Credit-Card Cos. 25 3.896 5.46 CFA 94 1.117 48 Total 65 11.227 9.42 (*) In thousands. (**) 63 branches and 31 offices. December 217 (Consolidated figures) (**) US$ bn. Ps. bn. (18.77 Ps./US$) Assets 336,4 17,9 Net Loans 197,3 1,5 Deposits 23,5 1,8 Equity 35,8 1,9 14
One of the Largest Banks Market share of private-sector deposits Market share of loans to the private-sector (1) Nación (P) 17.2% Nación (P) 12.2% Santander 12.1% Santander 11.% Provincia (P) 9.4% Galicia (2) Galicia 9.5% Galicia 9.3% Provincia (P) 9.5% BBVA 7.4% Macro 8.1% Macro 6.8% BBVA 7.2% Credicoop 4.7% HSBC 4.1% HSBC 4.1% Ciudad (P) 3.6% Ciudad (P) 3.3% ICBC 3.6% ICBC 3.% Patagonia 3.1% % 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 1.%. Source: Argentine Central Bank. (P) Goverment owned Banks. As of September 3, 217. % 2% 4% 6% 8% 1% 12% 14% TOP 1 = 78% TOP 1 = 72% 15
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 September 3, 217. Santander Macro Galicia BBVA HSBC +T.Reg.+CFA 16
Competitive Environment Market Share of Private-Sector Deposits 12. Santander 1. 8. 6. Galicia BBVA Macro 4. 2. HSBC ICBC Patagonia Superville Citi. 212 213 214 215 216 Source: Argentine Central Bank. As of September 3, 217. 17
Broad and Growing Customer Base Total: 9.3 million, 48% (1) of Argentina s economically active population 1.8% CAGR since December 2 Consumer Banking Total: 3,771,939 26% Corporate Banking Total: 14,126 1% 19% 1% 48% 8% Low Income 14% Medium Income Prof. and Self-employed High Income In Process of Classification 11% Regional Credit-Card Companies Total: 5,45,881 11% Agribusiness Corporations Small and Middle-Market Business CFA Total: 48,494 5% 32% Low Income Middle Income 29% Middle/High Income 6% Low Income Middle Income Middle/High Income 63% (1) Estimated. As of December 31, 217. 18
Breakdown of Loans to the Private Sector Middle- Market Companies 19% Agribusiness 12% Individuals 42% Middle- Market Companies 15% Agribusiness 1% Individuals (Bank) 33% Large Corporations 24% Financial Sector 3% Large Corporations 19% Financial Sector 2% Individuals (CFA) 4% Individuals (Regional Credit-Card Companies) 17% Bank: Ps. 161.7 billion Consolidated: Ps. 24. billion As of December 31, 217. 19
Billions of Ps. Loan Portfolio by Maturity 7 6 5 4 32% 3 31% 2 1 15% 14% 6% 1.9% <1 month 1-6 months 6-12 months 1-3 years 3-5 years >5 years Maturing within 1 year: 78.6%. US$-denominated loans: 19.4%. Consolidated figures, as of December 31, 217. 2
Billions of Ps. Funding Sources (non consolidated) Bank: Ps. 263.9 billions Subordinated Bonds 2% Bonds 2% Other(*) 17% Deposits 79% Credit Cards: Ps.42.1 billions Bonds 22% Financial Entities 4% CFA (*) : Ps.6.4 billions Financial Entities 21% Deposits 41% (*) Includes among other: repos, financial institutions, collections on account of third parties, debt with merchants. 225 2 175 15 125 1 75 5 25 As of December 31, 217. Total Deposits Growth (consolidated) CAGR: 34% Merchants 38% 28 29 21 211 212 213 214 215 216 217 Bank Deposits Breakdown by Type Time Deposits 33% Checking accounts 17% Bonds 38% US$ -denominated deposits: 34.8%. Savings accounts 5% 21
NPLs / Total loans to the private sector Asset Quality 12% 16% 1% 14% 8% 6% 8.29% 97.34% 12% 1% Loan loss reserves / NPLs 4% 3.36% 8% 2% 2.9% 6% % 28 29 21 211 212 213 214 215 216 217 4% As of December 31, 217. NPLs / Total loans to the private sector Consumer (T. Reg. + CFA) NPL ratio Bank NPL ratio Loan loss reserves / NPLs 22
Total Capital Ratio (%) Excess Regulatory Capital and Total Capital Ratio 16.% Minimum Requirement Ps.22.6 bn Regulatory Capital Ps. 29.5 bn 14.% Excess Capital Ps. 6.9 bn / 3.6 % With Capítalization 14.3% 12.% 1.7% 1.% 8.% Sep-9 Sep-1 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Banco Galicia consolidated. As of December 31, 217. 23
% Millions of Ps. Billions of Ps. % Strong Profitability 4 36 32 28 24 2 16 12 8 4 Total Assets, Public Sector Exposure and ROA 336.4 3.6 3.4 3.5 24.1 2.9 3. 2.6 2.5 16.6 1.9 16..9 82.2.8 62.8 5.7 33.7 19 23.4 5.4 3.8 1.5 1.7 1.7 2.8 3.4 4.7 5.9 9.7 5 4 3 2 1 15 12.5 1 7.5 5 2.5 5.8 Net Interest Margin - NIM 8.3 1.1 11.7 12.1 12.8 13.4 12.9 12. 13. Total Assets Exposure to the Non-Financial Public Sector ROA 75 5 Efficency Ratio 72.6 65.1 66.1 63.4 64.2 61.6 56.3 59.7 61.5 57.4 Net Income and ROE 8,329 39.1 37.4 32.1 35. 6,18 3.9 4,338 18.6 3,338 45 3 % 25 1.1 11.7 177 229 49 1,824 1,336 1,17 15 24 Net Income BGBA ROE GFG Net Income GFG ROE BGBA
Agenda»The Argentine Financial System»Banco Galicia»Annex 25
Consolidated Income Statement Twelve months ended 14,815 38,577 4,79 13% 22,149 12M 217 23,762 38% 1% 58% 62% 284 4,439-1% 12% 6,915 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 216 7,696 3,272 1,968 1,652 5,175 1,318 1,821 % Change 48 28 4 53 3-14 42 36 26
Consolidated Income Statement - 4Q of 217 3,942 1,679 6,197 4Q17 6,737 37% 13% 59% 6% 63% 1% 122 1,237-1% 12% 1,754 17% 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 3Q17 372 35 722 369 71 29-65 -263 % Change 6 1 7 37 13-19 -5-13 Variation 4Q16 1,84 529 2,369 21 1,337-354 275 22 % Change 38 15 29 17 28-153 29 13 27
Volume Growth & Productivity Improvement Variation dic-2 dic-17 Abs. % Employees 6.58 11.767 5.79 94 - Banco Galicia 4.57 6.214 2.157 53 - Regional Credit-Card Cos. 1.94 3.896 1.992 15 - CFA 1.117 - Other Subsidiaries 97 4 (93) (96) Distribution Platform Branches - Banco Galicia 229 36 77 34 - Regional Credit-Card Cos. 87 25 118 136 - CFA 94 Electronic Banking Transactions (1) (in thousands, per month) 4.996 39.995 34.999 71 Products Deposit Accounts (*) 1.63 4.56 3.497 329 Credit Cards (*) 1.596 13.455 11.859 743 - Banco Galicia (*) 498 4.86 3.588 72 - Regional Credit-Card Cos. (*) (Proprietary brands and others) 1.98 9.148 8.5 733 - CFA (*) 221 Debit Cards (*) 81 1.651 85 16 Client Base (* ) 2.13 9.298 7.285 362 (*) In thousands. 28
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:» 3.6 million active accounts and 9.1 million cards issued.» 25 branches and 52 offices across the country.» 15.1% 1 market share in purchase volume (billed + installments) nationwide.» Second largest merchant acquirer with over 25, affiliated merchants.» 3Largest independent payment processor with more than 174 million annual transactions. 1 Estimated. As of September 3, 217. In millions of Ps. 12M 216 12M 217 Assets 3,847 37,27 Loans 28,98 34,672 Net Worth 5,5 8,414 Net Income 1,694 2,721 ROE 32.3% 38.3% 29
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:» 48, current clients (segment C1, C2, C3, D1) more than 1 million historical clients.» 534, loans granted in 216 and 553, during 217.» 155,statements as of December 31, 217 (vs 15, as of December 31, 216).» Loans in pesos, no guarantee, fixed interest rate.» 94 branches (57 Branches and 37 minibranches). In millions of Ps. 12M 216 12M 217 Assets 5,924 8,548 Loans 5,33 7,686 Net Worth 1,221 1,251 Net Income 351 277 ROE 29.5% 23.5% 3
Lines of Business December 217 (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. 3,228 42% 769 1% 384 5%. - 3,35 43% Total 7,686 1% Issuer of debit cards associated with saving accounts and time deposits, for retired people and pensioners. Insurance (casualty, life, burial, purchase). 31
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: $11.2MM 32
Sudamericana Holding - General Data General Data Annual Turnover: AR$ 3.4 billion (CY216) Policies in force: 3.2 million (credit-related insurance) and 5.4 million (voluntary insurance). Positioning 2Q-FY217 Homeowners Insurance Ranked 1 st 9.9% Market Share Theft Ranked 1 st 18.1% Market Share Personal Accidents Ranked 2 nd 1.5% Market Share Group Life Ranked 5 th 5.3% 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. 33
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 34
Sudamericana Holding - Turnover and Profit Evolution Per Fiscal Year (in millions of Ps.) 3.5 3. 2.5 Turnover Profits/Turnover Combined Ratio Galicia Seguros (%) 42% 37% 2. 35% 1.5 41% 1. 5-2,8% 12,4% 13,6% 13,3% 16,4% 93 83, 1.38 84, 1.759 85, 2.497 82, 3.415 9 8 9 212 213 214 215 216 76, 2 35