May 2008 Agenda The Argentine ntine Economy The Argentine - PowerPoint PPT Presentation

May 2008

Agenda • The Argentine ntine Economy • The Argentine ntine Financial al System em • Banco Galicia ia 2

The he Arge gent ntine ine Econ onom omy 3

Eco conomic ic Act ctivity vity 12% 400,000 9.1% 8.5% 9.0% 8.8% 8.7% 9% 375,000 8.1% 7.5% 5.8% 5.5% 6% 350,000 3.9% In millions of Pesos 3% 325,000 hange GDP % C 0% 300,000 -0.8% -3% 275,000 -2.8% -3.4% -4.4% -6% 250,000 -9% 225,000 -10.9% -12% 200,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E R eal GDP growth GDP , 1993 constant prices E: Last available median of market forecasts published by the Argentine Central Bank. 4

With Strong Tail Winds Agricultural Commodity Prices Real Exchange Rate 2.75 350 2.50 300 2.25 250 2.00 1.75 200 1.50 150 Bilateral (US$) 1.25 Multilateral 100 1.00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 2001 2002 2003 2004 2005 2006 2007 Dec’01=100. World GDP Growth 6 5.4 5.3 5.2 4.8 5 4 4 3.1 3 2.5 2 2001 2002 2003 2004 2005 2006 2007 5

Fisc scal l and Ext xternal l Sect ctor Performa mance nce Fiscal Performance (Fed. Gvt. only) 5.0% 40,000 Transfer of savings from the private pension 4.5% 36,000 funds to the state pension system 4.0% 32,000 3.2% 3.6% 3.5% 28,000 Primary S urplus as In millions of Ps. a % of GDP As a % of GDP 3.0% 24,000 2.5% 20,000 Primary S urplus (in 2.0% 16,000 millions of Pesos) 1.5% 12,000 1.0% 8,000 0.5% 4,000 0.0% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E External Sector 10% 70,000 2.8% 60,000 5% Current Accout (accrued basis) 50,000 0% As a % of GDP Exports 40,000 -5% 2.1% Imports 30,000 -10% 20,000 -15% 10,000 -20% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E E: Last available median of market forecasts published by the Argentine Central Bank. 6

Moneta tary y Performanc ance Central Bank’s FX Market Average Daily Intervention Inte tern rnatio tional al Reserv erves es (In millions of Dollars)(*) (In billions of Dollars)(*) 120 55 50 100 45 80 40 35 60 30 40 25 20 20 15 0 10 -20 5 -40 0 J an-04 J an-05 J an-06 J an-07 J an-08 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Stock ock of Leba bac (**) M2 M2 (In billions of Pesos)(*) (Monthly average in billions of Pesos)(*) 160 60 135 45 110 30 15 85 0 60 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 (*) As of April 25, 2008. 7

Inte ternati nationa onal l Rese serve ves International Reserves: Coverage of Monetary Aggregates 175 150 IR/ BMB % 125 IR/ M2 100 75 50 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 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, 2008. 8

Infl flati tion on CPI (annual variation) Other Measures (12 months trailing variation) 25 45 41 C C I 20.7 20 35 18.6 15 25 15.5 P B P I % % C P I 10 15 12 10 10 9 8.8 6 I W P I 4 5 5 1 0 -1 -2 -2 -5 0 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08E Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 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

Country y Risk sk Premium 4,500 4,372 From J anuary 1, 2007 650 4,000 600 550 3,500 500 450 . Treasury 400 3,000 350 300 Basis points over U.S 2,500 250 200 150 2,000 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 1,562 1,500 1,045 1,000 773 707 533 550 546 461 499 410 500 216 0 (2) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 (1) Risk Premium (end of period) (1) As measured by the EMBI+ for Argentina except for the period between 2002 and 2004 when it corresponds to the spread over Treasury of the Boden 2012. (2) As of May 6, 2008. 10

The he Arge gent ntine ine Fina nanc ncial al Syste tem 11

Post-cr cris isis is Stro rong ng Growt owth in Financial al Interm ermedia diation tion Loans to the Private Sector Total Deposits 22% (*) (in millions of Pesos) (in millions of Pesos) 42% (*) 20% 225,000 120,000 43% 200,000 105,000 25% 175,000 90,000 40% 18% 150,000 75,000 29% 125,000 38% 60,000 33% 100,000 25% 45,000 75,000 30,000 50,000 15,000 25,000 0 0 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Mar-08 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Mar-08 From the P ublic S ector (C AGR : 45.8%) CAGR: 24.8% From the P rivate S ector (C AGR : 21.2%) From the Financial S ector and R es. Abroad (C AGR : 41.0%) (*) Mar-08 vs. Mar-07 variation. CAGR: Dec-02 / Mar-08. As of March 31, 2008. 12

But Still l Low Financi cial al Depth In billions of constant Pesos (* ) As a % of GDP 280 30 Deposits from the P rivate S ector 26 255 Loans to the P rivate S ector Deposits from the Private S ector 25 24 Loans to the Private S ector 230 22 21 205 19 19 20 19 19 18 18 19 180 14 155 15 13 11 130 10 10 9 10 8 105 80 5 55 30 0 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 2000 2001 2002 2003 2004 2005 2006 2007 2008E (*) Adjusted by IWPI. In millions of Pesos of Apr-08. E: Last available median of market forecasts published by the As of April 25, 2008. Argentine Central Bank. Deposits from the Private Sector (as a % of GDP) Loans to the Private Sector (as a % of GDP ) 60 80 68 51 50 45 60 40 30 36 25 31 28 19 18 17 22 22 16 20 15 13 0 0 C hile C olombia Brasil Perú México Uruguay Argentina C hile Uruguay Brasil Argentina Perú C olombia México 13

De De-dollar dollariz izat atio ion n but with h More Transact ctio iona nal l Deposit its By Currency By Type of Deposit (as a % of CA+SA+Time Deposits) (as a % of CA+SA+Time Deposits) 100 100 85% 80 80 60 60 51% Pesos CER Adjusted F oreign Currency 49% 40 40 20 20 14% Current Accounts + S aving Accounts Time Deposits (includes CER-adjusted) 1% 0 0 J un-01 J un-02 J un-03 J un-04 J un-05 J un-06 J un-07 J un-01 J un-02 J un-03 J un-04 J un-05 J un-06 J un-07 J un-08 Deposit data is not shown for the period January-March 2002, because as a result of the devaluation and the pesification measures, figures are not homogeneous for that period. As of April 25, 2008. 14

Privat vate-Sec ecto tor r Loans s and De Deposi sits ts Growth Y-O-Y M onthly % Change Dec'06=100 50 160 40 150 30 140 20 % 130 10 120 0 110 -10 -20 100 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Loans in Pesos Deposits Loans Deposits in Pesos Deposits in Dollars As of April 25, 2008. 15

Incr crease ase in Interes est t Rates Nominal Interest Rates Real Interest Rates (monthly averages, adjusted by IWPI) (monthly averages) 15 25 20 12 15 10 9 5 % % 0 6 -5 -10 3 -15 -20 0 -25 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 BADLAR Private Banks (1) 30-Day Time Deposits Private Bank’s 30 -Day Time Deposits (1) Private Banks’ 30-day time deposits rate, for deposits over Ps. 1 million. As of April 25, 2008. 16

Change in the Composi siti tion n of the Banki king Sys ystem December 2001 December 2007 Market Share Market Share Number Private-Sector Number Private-Sector Deposits (%) Deposits (%) Banking Institutions 86 100 67 100 Government-Ow ned Banks 13 30 12 30 Private-Sector Banks 73 70 55 70 - Domestic Banks 34 15 34 32 - Foreign Banks 39 55 21 38 17

Improve rovement ment in A Asset et Composi ositi tion n and in Loan Portfol folio o Quality ty Exposure to the Public Sector Composition of Loans to the Private Sector 60 100% As a % of Total Assets 50 48 45 43 75% 61 COMP ANIE S 37 74 % 30 30 50% 27 23 18 INDIVIDUALS 15 25% 39 26 0 0% 2000 2007 2000 2001 2002 2003 2004 2005 2006 2007 Provisions for Loan Losses Loan Portfolio Quality (as a % of Total Assets) 20 120 6.0 Loan Loss Reserves / NALs 114.3 15 105 4.5 NALs / Total Credit 10 90 3.0 5 75 1.5 2.7 0.6 0 60 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007 NALs / Total Credit Loan Loss Reserves / NALs As of December 31, 2007. 18

Improve ovement ment in Profit itabi bili lity Return on Assets 4 2.7 2.4 1.9 1.8 1.4 2 0.8 0.6 0 -0.1 -0.3 -0.3 -2 ROA -1.9 -4 -3.0 Adj. ROA -6 -8 -10 -10.1 -12 2000 2001 2002 2003 2004 2005 2006 2007 R OA: return on average assets; Adj. R OA: adjusted by losses from amortization of amparo claims and adjustments to the valuation of public-sector assets pursuant to C ommuniqué “A” 3911. S ep-07: anualizado. Efficiency 160 60 56.4 46.2 120 45 % % 80 30 62.5 70.5 52.5 40 15 Efficiency Ratio Efficiency Ratio Excluding Com. A 3911 Coverage of Administrative Expenses with Income from S ervices 0 0 2000 2001 2002 2003 2004 2005 2006 2007 As of December 31, 2007. 19