Grupo Financiero Galicia Investor Presentation June 2018
Agenda » The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos 2
Economic Activity GDP quarterly evolution Real Gross Domestic Product 1.9% 4.0% 3.8% 3.9% 3.0% 1.8% YoY % Var. 1.6% 2.5% 3.3% 0.8%1.0%1.0% 10.1% 0.8% 0.6% 1.0% 0.3% 0.3% 0.0% -0.2% 6.0% -1.1% -1.2% q/q % chg. (sa) -3.3% 2.9% 2.7% y/y % chg. (r.h.s.) 2.4% -2.1% 1.0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Source: INDEC Industrial Production quarterly evolution -1.0% -1.8% 5.0% 2.6% -2.5% 1.9% 2.1% 3.1% 2.7% 0.8% -5.9% -0.2% 1.4% 1.7% 1.2% -0.1% -0.5% 2009 2011 2013 2015 2017 -0.8% -1.1% -3.5% -4.2% -1.8% (*)Survey of Market Expectations (REM August, BCRA) -6.8% -3.6% Source: INDEC and BCRA 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Source: FIEL 3
International Environment Agricultural Commodity Prices 400 Real Exchange Rate 300 Index May-18 = 23,7 AR$/USD Bilateral RER (ARS/USD) Multilateral RER 200 196.64 44.9 42 38.6 100 37 34.7 2001 2003 2005 2006 2008 2009 2011 2013 2014 2016 2017 Dec’01=100. 32 As of June, 2018. 25.4 May-18 18 27 23.7 22.5 22 21.3 17 16.0 12 Nov-01 Apr-04 Sep-06 Feb-09 Jul-11 Dec-13 May-16 Source: BCRA 4
Fiscal Performance Fiscal Performance (Federal Government only) 4 0 Primary Fiscal Deficit – Annual Target As a % of GDP -2.7 as % of GDP -4 -5.1 -0.9% -8 -0.8% 2007 2009 2011 2013 2015 2017 -1.1% Primary Fiscal Balance as a % of GDP Overall Fiscal Balance as a % of GDP -1.4% Source: Ministerio de Hacienda Monetary Financing 5.5 30,000 6 -1.3% 4.6 25,000 5 3.8 Millions of USD As a % of GDP 20,000 4 2.7 15,000 3 1.3 0 10,000 2 2015 2016 2017 2018 2019 2020 5,000 1 Source: Ministerio de Hacienda 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E Use of international reserves Argentine Central Bank profits Argentine Central Bank advances Total Argentine Central Bank financing (as % of GDP) - r.h.s. Source: BCRA and own estimates 5
Sovereign Debt Projected annual debt payments (*) Argen entin ina: : Publi lic Sector Net et Debt 25 As % of GDP 60% 54% 55% 54% 51% 53% Pesos 20 50% 39% 40% 43% 44% 43% Foreign currency Billions of US$ 15 40% 27% 29% 10 30% 23% 21% 19% 23% 6% 6% 5 16% 15% 14% 15% 20% 6% 6% 6% 5% 5% 4% 5% 17% 14% 14% 11% 10% 10% 10% 16% 21% 24% 4% 0 10% 2018 2019 2020 2021 2022 2023 2024 2025 2026 0% (*) Net of Central Bank advances, treasury bills and non-transferable 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 bills held by Central Bank. Private holders IFIs and others Gross Debt Debt by Currency Public debt sensitivity to GDP growth U$S 320,935 million As % of GDP Pesos Dollar 41% Other Average GDP Pesos CER Linked 1% indexed growth 1% 37% 8% Euros 1,5% 8% 2% 34% 2,5% 3% 3,5% USD 4% 60% 4,5% 27% 5% Pesos 5,5% 2016 2017 2018 2019 2020 2021 23% As of December, 2017. 6
External Sector Performance Foreign Trade 100 75 Billions of US$ 70 62 Current and Capital Accounts 50 Accrual Basis, as % of GDP 6% 25 Exports Imports 4% As % of GDP 0 2004 2006 2008 2010 2012 2014 2016 2018 2% Trade Balance 0% 30 -2% 15 Billions of US$ -4.1% 0 -4% Current Account -7.6 -4.9% Capital Account -15 -6% 2004 2006 2008 2010 2012 2014 2016 2018E -30 Source: INDEC and own estimates -45 2004 2006 2008 2010 2012 2014 2016 2018E 7
Monetary Performance International Reserves Central Bank Interest Rate Policy 70 USD billion ANR (%) 65 56 60 55 Call 1d 55 52 Lebac 35d - Secondary Mkt 50 50 48 Jun-18 Lebac 35d 45 44 45 40 40.0 38 35 40 30 36 36.5 25 32 20 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 28 Monetary aggregates 24 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Nov-17 Dec-18 Jan-18 Feb-18 Mar -18 Apr-18 May-18 Real YoY change 30% ARS Private Deposits Repo corridor 1d 20% ARS Credit to the Private Sector 20% Repo corridor 7d 54 M2 (private) Repo corridor center 7d 48 47.00 10% 2% 42 40.00 0% 36 -1% 33.00 30 26.75 -10% 25.50 24 24.75 22.75 -20% 18 Jan-15 Sep-15 May-16 Jan-17 Sep-17 May-18 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 8
Inflation Inflatio lation 50% y/y % chg. 41% 39% 40% CB ´ s inflation targets 2018-2020 28.0% 30% 27% 26% 24.8% YoY % chg. 24% 21% 20% Central Bank 33 Targets 10% Galicia 28 0% Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 2018E Survey of Market 27.1 Expectations Source: FIEL and own estimates 23 (REM May-18) 19.0 CPI Infl flatio ation 18 Greater Buenos Aires 27% 14.0 17 25% 25% 25% 13 25% 25% 13 24% 24% 2.7% 2.5% 8 23% 23%22% 1.4% 22% 3 21% 2017 2018 2019 2020 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Source: BCRA, INDEC & Own estimates m/m % chg. y/y % chg. (r.h.s.) Source: INDEC 9
Agenda » The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos 10
But Still Low Financial Depth As a % of GDP 25 20 19 16 15 10 5 0 2010 2012 2014 2016 2018 Deposits from the Private Sector Loans to the Private Sector Financial Depth (as a % of GDP) 100 Deposits to GDP 78 Loans to GDP 80 67 56 60 52 44 34 40 34 29 23 24 18 15 20 0 Chile Brazil Colombia Peru Mexico Argentina Source: Central Bank of each country. 11
Private-Sector Loans and Deposit Growth Deposit Growth Private-Sector Loans Y-O-Y Monthly % Change Y-O-Y Monthly % Change 93.2% 103.8% USD (in USD) USD (in USD) Total (ARS + USD) 58.8% 40.2% 37.7% 49.5% Total (ARS + USD) 39.7% ARS 26.4% 29.5% 32.8% ARS 25.9% 12.6% Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 May-17 Aug-17 Nov-17 Feb-18 May-18 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 May-17 Aug-17 Nov-17 Feb-18 May-18 12
Breakdown of Deposits by Currency and Type Privat ate Depos osit its Mix Depos osit its in ARS Mix % Total deposits % Deposits in ARS 100% 58% Current Accounts + Savings Accounts 80% Deposits in ARS 54% 70% 60% 51% 50% 40% 49% 30% Deposits in USD 46% 20% Time Deposits 0% 42% Jun-13 Apr-14 Jan-15 Nov-15 Sep-16 Jul-17 May-18 Mar-13 Mar-14 Jan -15 Nov-15 Sep-16 Jul-17 Apr-18 May-13 May-14 May-15 May-16 May-17 May-18 13
Increase in Interest Rates Cost of Liabil ilit ities ies Private Badlar and Private Poll 32 Private Badlar 31 Private poll (30 d.) of time deposits 30 29.4 Inter terest st Rates tes Spread ad 29 Yield on Assets vs Cost of Liabilities 28 (weighted by operated amounts) 27.2 27 26 Spread 25 40 Weighted Yield on Assets 24 Weighted Cost of Liabilities 23 32 22 28 21 20 24 19 17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 16 11 Yield ld on on Assets ts 60 8 56 52 0 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 48 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 43.2 44 40 41.5 36 32 28 Companies: overdraft in checking accounts 24 Individuals: Personal loans 20 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 14
Composition of the Banking System December 2017 Market Share Number Private-Sector Deposits (%) Banking Institutions 62 62 100 100 Government-Owned Banks 13 34 Private-Sector Banks 49 66 - Domestic Banks 33 32 - Foreign Banks 16 34 15
Profitability and Asset Quality R.O.E. Efficiency 33% 32% 30% 30% 26% 61,1 % 58,7 % 25% 23% 57,6 % 54,8 % 54,0 % 52,6 % 23% 55,6 % 2011 2012 2013 2014 2015 2016 2017 mar-18 2011 2012 2013 2014 2015 2016 2017 R.O.A. Loan Portfolio Quality 4,1 % 4,1 % 3,4 % 3,6 % 1.9 % 1.8 % 1.7 % 2,9 % 1.7 % 2,7 % 2,9 % 1.5 % 1.5 % 2,7 % 1.5 % 1.2 % 2011 2012 2013 2014 2015 2016 2017 mar-18 2011 2012 2013 2014 2015 2016 2017 mar-18 16
Current Situation of the Financial System Strengt gths » High liquidity (with increased allocation to Central Bank paper). » Peso-based intermediation with high proportion of transactional deposits. » Adequate capitalization levels. Opport rtunit ities ies » Low level of financial depth. » Increase in concentration. » Potential demand for mortgage loans. Challen lenges » 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. 17
Agenda » The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos 18
Simplified Organizational Structure EBA HOLDING 55.1% Votes 19.7% Shares 95% 83% 87.5% 100% 12.5% 5% Insurance Mutual Funds 100% Collection Processing 19
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