Banco Galicia Investor Presentation May 2017 Agenda The - - PowerPoint PPT Presentation

Investor Presentation

May 2017

Banco Galicia

Agenda

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Annex

2

As of April 30, 2017.

Economic Activity

3

10,000 12,000 14,000 16,000 18,000 20,000 22,000 400 500 600 700 800 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2017E

Billions of Ps.

GDP - 2004 Constant Prices Income per cápita Income per Cápita (in constant Ps.)

GDP and Income per Cápita

• 15%
• 10%
• 5%

0% 5% 10% 15% 20% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2017E

GDP % Change

Real GDP Grow

• wth

th

100 200 300 400 2001 2003 2005 2006 2008 2009 2011 2013 2014 2016

International Environment

Agricultural Commodity Prices

Dec’01=100. As of April 30, 2017.

4 Interest Rates

5 10 15 20 25 2005 2007 2009 2010 2012 2014 2016

UST10y + EMBI+ Latam UST10y + EMBI+ Arg

% Jun-2005 Jul- 10 20 30 40 50 60 70 80 2001 2002 2004 %

96.93 103.08

50 100 150 200 250 2001 2004 2007 2010 2013 2016

Bilateral (Ps./US$) Multilateral

Real Exchange Rate (Dec’15=100)

Annual Avg Adjusted by INDEC CPI until 2006, and by private estimates since 2007. As of April 30, 2017.

• 4.2
• 5.6
• 8
• 4

4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E

As a % of GDP Primary Fiscal Balance as a % of GDP Overall Fiscal Balance as a % of GDP

Fiscal Performance (Federal Government only)

Fiscal Performance

1 2 3 4 5 6 5,000 10,000 15,000 20,000 25,000 30,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E

As a % of GDP Millions of US$

Monetary Financing

Argentine Central Bank advances Argentine Central Bank profits Use of international reserves Total Argentine Central Bank financing (as % of GDP) - r.h.s.

5

7 14 21 28 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Projected annual debt payments(*)

Foreign currency Pesos Billions of US$

Sovereign Debt

(*) Net of Central Bank advances, treasury bills and non-transferable bills held by Central Bank.

Source: MECON

6

Pesos 19% Pesos indexed to CER 7% Pesos Dólar Linked 3% USD 61% Euros 9% Other 1%

Debt by Currency

246

1998 2000 2002 2004 2006 2008 2010 2012 2014 Jun-16

75 150 225 300

Debt stock

Total sovereign debt

Billions of US$

56.9 20.2 13.1

50 100 150 200 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

As a % of GDP

Sovereign Debt

Gross public sector debt Public debt net of intra public sector holdings (estimated) Public debt net of intra public sector holdings and IFIs (estimated)

• 2.7%
• 6.0%
• 3.0%

0.0% 3.0% 6.0% 2004 2006 2008 2010 2012 2014 2016

As a % of GDP

External Sector Performance

Source: INDEC

Current Account (accrued basis) 7

61 62

25 50 75 100 2004 2006 2008 2010 2012 2014 2016

Billions of US$ Exports Imports

Foreign Trade

• 45
• 30
• 15

15 30 2004 2006 2008 2010 2012 2014 2016 2017E

Billions of US$ TOTAL AL Pri Primary ary pr prod

• ducts

ts Manuf anufac actu ture res of

• f agric

agricultu ultural ral ori

• rigin

gin Ind ndustr trial al manuf anufac actu ture res Fu Fuel and and ene nerg rgy

Trade Balance

3.2%

• 6.0%
• 3.0%

0.0% 3.0% 6.0% 2004 2006 2008 2010 2012 2014 2016

As a % of GDP

Capital Account (accrued basis)

Monetary Performance

(In billions of Dollars)

International Reserves

(*) As of April 30, 2017.

8 Stock of Lebac

(In billions of Pesos)

0% 10% 20% 30% 40% 50% 60%

• 250

500 750 1,000 1,250 1,500 2004 2006 2008 2010 2012 2014 2016

YOY % chg Monthly average in billions of Ps.

M2 (*)

15 30 45 60 2004 2006 2008 2010 2012 2014 2016 100 100 200 200 300 300 400 400 500 500 600 600 700 700 800 800 2004 2006 2008 2010 2012 2014 2016 10 20 30 40 50 2012 2013 2014 2015 2016 2017

CB Repo (7 days) Lebacs 35 Call (20d moving avg.)

Central Bank interest rate policy

%

Inflation

9

Source: City of Buenos Aires. As of March 31, 2017.

15 30 45 60 2013 2014 2014 2015 2015 2016 2016 2017

Headline Core

CPI - 12 12 Months hs Trailin ling Varia iatio ion

%

• 0.5

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

Monthly hly % % Chang nge

CPI CABA (core) REM* Jul (core) REM* Aug (core)

%

* REM: Survey of market expectations

Agenda

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Annex

10

Private-Sector Loans and Deposit Growth

200 400 600 800 1,000 1,200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Deposits in Pesos Deposits in Dollars (In US$)

Dec'06=100

As of March 31, 2017.

11

• 30
• 20
• 10

10 20 30 40 50 60 2006 2008 2010 2012 2014 2016

Y-O-Y Monthly % Change

Deposits Loans

But Still Low Financial Depth

18 14

5 10 15 20 25 30 2000 2002 2004 2006 2008 2010 2012 2014 2016

Deposits from the Private Sector Loans to the Private Sector

As a % of GDP 12

As of June 30, 2016. Source: Central Bank of each country. 20 40 60 80 100 Chile Brazil Colombia Peru Mexico Argentina

72 32 43 40 22 22 88 52 45 42 20 15

Deposits to GDP Loans to GDP

Financial Depth (as a % of GDP)

Breakdown of Deposits by Currency and Type

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 30, 2017.

13

72 28

20 40 60 80 100 2001 2004 2007 2010 2013 2016

By Currency

(as a % of CA+SA+Time Deposits)

Pesos Foreign Currency

61 39

20 40 60 80 100 2001 2004 2007 2010 2013 2016

By Type of Deposit

(as a % of CA+SA+Time Deposits)

Current Accounts + Savings Accounts Time Deposits

Increase in Interest Rates

(1) Private Banks’ 30-day time deposits rate, for deposits over Ps. 1 million. (2) Adjusted by INDEC CPI until 2006, and by private estimates since 2007. 4 8 12 16 20 24 28 32 2004 2006 2008 2010 2012 2014 2016

%

Nominal Interest Rates

(monthly averages)

As of April 30, 2017.

• 18
• 12
• 6

6 12 18 2004 2006 2008 2010 2012 2014 2016

%

Real Interest Rates

(annual averages) (2) BADLAR Private Banks (1)

14

Change in the Composition of the Banking System

December 2001

Number Market Share Private-Sector Deposits (%) Number Market Share Private-Sector Deposits (%)

Banking Institutions 86 86 100 100 63 63 100 100 Government-Owned Banks 13 30 13 34 Private-Sector Banks 73 70 50 66

• Domestic Banks

34 15 33 33

• Foreign Banks

39 55 17 33 February 2017

15

Improvement in Asset Composition and in Loan Portfolio Quality

18 18 50 50 8.2 8.2

15 30 45 60

2000 2002 2004 2006 2008 2010 2012 2014 2016Feb-17

Exposure to the Public Sector (*)

(As a % of Total Assets)

%

As of February 28, 2017. (*) Not including Central Bank Paper.

1.8 1.8 136.4 .4

60 90 120 150 180 5 10 15 20

NPLs / Total Credit Loan Loss Reserves / NPLs

Loan Portfolio Quality

NPLs / Total Credit Loan Loss Reserves / NPLs

0% 25% 50% 75% 100% 2000 Feb'17

26 51 74 49

INDIVIDUALS COMPANIES

Composition of Loans 16

Improvement in Profitability

(0.1) (0.3) (8.9) (2.9) (0.5) 0.9 1.9 1.5 1.6 2.3 2.8 2.7 2.9 3.4 4.1 4.1 3.6 3.4 (59.2) (22.7) (4.2) 7.0 14.3 11.0 13.4 19.2 24.4 25.3 25.7 29.5 32.7 32.4 29.6 27.7

• 60
• 40
• 20

20 40 (10.0) (5.0)

• 5.0

10.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Feb-17

ROA ROE

R.O.A. and R.O.E

As of February 28, 2017.

17

59.9 45.1

20 40 60 80 40 80 120 160 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Feb-17

Efficiency Ratio Coverage of Administrative Expenses with Income from Services

Efficiency

Efficiency Ratio % Coverage %

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.

18

Agenda

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Annex

19

Simplified Organizational Structure

Processing

EBA HOLDING

58.0% Votes 100% 87.5% 12.5% 21.6% Shares 97% 77%

Insurance

3% 95% 100% 100% 95% 5% 5%

Collection

20

Mutual Funds

95% 5%

Number of

Branches Employees Clients (*)

Bank 279 5,939 3,655

• Reg. Credit-Card Cos.

207 4,316 4,957 CFA 94 1,156 533

Total

580 580 11,411 9,145

(*) In thousands. (**) 63 branches and 31 offices.

Banco Galicia in Numbers

March 2017

(Consolidated figures)

(**)

• Ps. bn.

US$ bn.

(15.38 Ps./US$)

Assets 253.3 16.5 Net Loans 146.4 9.5 Deposits 158.7 10.3 Equity 20.4 1.3

21

One of the Largest Banks

11.3% 10.2% 9.7% 7% 8.6% 8.0% 6.9% 4.1% 3.8% 3.7% 3.6%

0% 2% 4% 6% 8% 10% 12%

Nación Santander Galicia Provincia Macro BBVA HSBC Ciudad ICBC Patagonia

Market share of loans to the private-sector (1) Market share of private-sector deposits

(1) Includes securitized loans and leasing. (2) Considering CFA, the Bank’s market share of loans to the private-sector would be 9.7%. Source: Argentine Central Bank.

(P) Goverment owned Banks.

As of February 28, 2017.

16.7% 11.1% 10,2 10,2% 9.0% 7.5% 6.5% 4.9% 4.1% 3.2% 3.2%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Nación Santander Galicia Provincia BBVA Macro Credicoop HSBC ICBC Ciudad

(P) (P) (P) (P)

TOP 10 = 77% TOP 10 = 70 %

Galicia Galicia (2) 22

(P) (P)

(1) Includes securitized loans and leasing. Source: Argentine Central Bank (except for the regional credit-card companies). As of February 28, 2017. 5 10 15 Santander Galicia Macro BBVA HSBC

Market Share of Loans to the Private Sector (%) (1)

Peer Comparison

+T.Reg.+CFA 5 10 15 Santander Galicia BBVA Macro HSBC

Market Share of Private-Sector Deposits (%) 23

• 4,000

8,000 12,000 16,000 Santander Galicia BBVA Macro HSBC

Credit Cards Managed (in thousands)

+T.Reg.+CFA 200 400 600 800 Macro Santander Galicia BBVA HSBC

Branches (number)

+T.Reg.+CFA

Source: Argentine Central Bank. As of February 28, 2017.

Competitive Environment

Santander BBVA

Galicia

Macro HSBC Citi ICBC Patagonia

2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Market Share of Private-Sector Deposits

24

Total: 9.1 million, 47%(1) of Argentina’s economically active population

26% 49% 11% 13% 1%

Consumer Banking Total: 3,557,567

Low Income Medium Income

• Prof. and Self-employed

High Income In Process of Classification

11.2% CAGR since December’02

Broad and Growing Customer Base

20% 1% 79%

Corporate Banking Total: 97,566

Agribusiness Corporations Small and Middle-Market Business

60% 29% 11%

Regional Credit-Card Companies Total: 4,956,614

Low Income Middle Income Middle/High Income

63% 32% 5%

CFA Total: 533,178

Low Income Middle Income Middle/High Income

(1) Estimated. As of March 31, 2017.

25

Large Corporations 16% Middle- Market Companies 15% Agribusiness 9% Individuals (Bank) 33% Individuals (Regional Credit-Card Companies) 20% Individuals (CFA) 4% Financial Sector 3% As of March 31, 2017.

Breakdown of Loans to the Private Sector

Consolidated: Ps. 151.6 billion

Large Corporations 21% Middle- Market Companies 20% Agribusiness 12% Individuals 43% Financial Sector 4%

Bank: Ps. 116.1 billion

26

10 20 30 40 50 60 70 <1 month 1-6 months 6-12 months 1-3 years 3-5 years >5 years

Billions of Ps.

35%

Loan Portfolio by Maturity

Maturing within 1 year: 85.7%. US$-denominated loans: 15.7%. Consolidated figures, as of March 31, 2017.

27

40% 11% 11% 3% 0.4%

Funding Sources (non consolidated)

Deposits 77% Bonds 3% Subordinated Bonds 3% Other(*) 17%

Bank: Ps. 203.9 billions

Deposits 44% Bonds 25% Financial Entities 31%

CFA(*): Ps.4.3 billions

Merchants 35% Bonds 17% Financial Entities 48%

Credit Cards: Ps.35.3 billions

Time Deposits 39% Checking accounts 19% Savings accounts 42%

Bank Deposits Breakdown by Type

(*) Includes among other: repos, financial institutions, collections on account of third parties, debt with merchants.

US$ -denominated deposits: 33.8%.

As of March 31, 2017.

28

25 50 75 100 125 150 175 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Billions of Ps.

Total Deposits Growth (consolidated)

CAGR: 34%

Asset Quality

3.40% 1.98% 8.52% 100.12%

40% 60% 80% 100% 120% 140% 160% 0% 2% 4% 6% 8% 10% 12% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Loan loss reserves / NPLs NPLs / Total loans to the private sector

NPLs / Total loans to the private sector Bank NPL ratio Consumer (T. Reg. + CFA) NPL ratio Loan loss reserves / NPLs As of March 31, 2017. Acquisition of CFA

29

Excess Regulatory Capital and Total Capital Ratio

11.7%

8.0% 10.0% 12.0% 14.0% 16.0% Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16

Ex CFA 13.2% With IFRS 13.0%

Banco Galicia consolidated. As of March 31, 2017.

Total Capital Ratio (%)

Minimum Requirement Ps.16.4 bn Regulatory Capital

• Ps. 23.4 bn

Excess Capital

• Ps. 7.0 bn / 42.7 %

30

Strong Profitability

5.8 8.3 10.1 11.7 12.1 12.8 13.4 12.9 12.0 11.9 2.5 5 7.5 10 12.5 15

%

Net Interest Margin - NIM

72.6 65.1 66.1 63.4 64.2 61.6 56.3 59.7 61.5 58.7 25 50 75

%

Efficency Ratio

177 229 409 1,107 1,336 1,824 3,338 4,338 6,018 1,601 10.1 11.7 18.6 37.4 32.1 39.1 35.0 30.2 15 30 45 2,500 5,000 7,500

Millions of Ps.

Net Income and ROE

Net Income BGBA Net Income GFG ROE GFG ROE BGBA

%

5.4 3.8 1.5 1.7 1.7 2.8 3.4 4.7 5.9 7.0

19 23.4 33.7 50.7 62.8 82.2 106.0 160.6 240.1 253.3 0.9 0.8 1.9 2.9 2.6 3.4 3.6 3.5 2.5 2.8 1 2 3 4 5 40 80 120 160 200 240 280

Billions of Ps.

Total Assets, Public Sector Exposure and ROA

Total Assets Exposure to the Non-Financial Public Sector ROA

31

Agenda

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Annex

32

4,800 3,608 8,408 1,157 4,932 48 887 1,480 Net Income Net Financial Income Income Tax Net Income from Services Operating Income Net Charge for Loan Losses Administrative Expenses Net Other Income/Losses 58% 42% 100% 13% 62% 4% 11% 18% 1,211 1,220 2,431 507 1,285 206 334

% Change 34 51 41 90 35

• 168

30 29 Variation 3M 2016

Consolidated Income Statement – Three months ended

3M 2017

33

Net Income Net Financial Income Income Tax Net Income from Services Operating Income Net Charge for Loan Losses Administrative Expenses Net Other Income/Losses

• 97

195 98

• 99

72

• 272
• 75
• 72

Consolidated Income Statement - 1Q of 2017

% Change 2 6 1 8 1 117 8 5 Variation 4Q16 Variation 1Q16 1Q17

1,211 1,220 2,431 507 1,285

• 99

206 334

34

60% 4,800 3,608 8,408 1,069 4,932 40 887 1,480 16% 100% 41% 58% 4% 12% 18% 59%

% Change 34 51 41 90 35 168 30 29

Volume Growth & Productivity Improvement

dic-02 mar-17 Abs. %

·Employees 6.058 11.831 5.773 95

• Banco Galicia

4.057 5.939 1.882 46

• Regional Credit-Card Cos.

1.904 4.571 2.667 140

• CFA

1.156

• Other Subsidiaries

97 4 (93) (96) ·Distribution Platform Branches

• Banco Galicia

229 279 50 22

• Regional Credit-Card Cos.

87 207 120 138

• CFA

94 ·Electronic Banking Transactions (1)(in thousands, per month) 4.996 82.027 77.031 1.542 ·Products Deposit Accounts (*) 1.063 4.149 3.086 290 Credit Cards (*) 1.596 13.703 12.107 759

• Banco Galicia (*)

498 3.797 3.299 662

• Regional Credit-Card Cos. (*) (Proprietary brands and others)

1.098 9.729 8.631 786

• CFA (*)

177 Debit Cards(*) 801 1.475 674 84 ·Client Base (*) 2.013 9.047 7.034 349

(*) In thousands.

Variation

35

Tarjetas Regionales

36

» 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: » 3.4 million active accounts and 9.7 million cards issued. » 207 branches and 54 offices across the country. » 13.3% market share in purchase volume (billed + installments) nationwide. » Second largest merchant acquirer with over 250,000 affiliated merchants. » Largest independent payment processor with more than 167 million annual transactions.

In millions of Ps.

3M 2016 3M 2017 Assets 23,535 30,197 Loans 22,619 29,443 Net Worth 4,825 6,011 Net Income 437 437 693 693 ROE 37.9% 46.8%

CFA | Efectivo Sí

37

» Consumer finance to medium and low income segments. » Leader in Personal Loans within consumer finance institutions. » More than 20 years in the market with strong brand: » 533,000 current clients (segment C1, C2, C3, D1) – more than 1 million historical clients. » 534,000 loans granted in 2016 and 147,000 during 2017. » 141,000 statements as of March 31, 2017 (vs 150,000 as of March 31, 2016). » Loans in pesos, no guarantee, fixed interest rate. » 94 branches (57 Branches and 37 minibranches).

In millions of Ps.

3M 2016 3M 2017 Assets 4,133 6,413 Loans 3,822 6,177 Net Worth 1,354 1,228 Net Income 62 81 ROE 18.7% 24.2%

Lines of Business

March 2017

(In millions of Ps. except percentages). It does not include accrued interest.

Cash loans. s. Granted in branches. 2,446 40% Pay ayroll ll loans. s. Government employees, pensioners, military and members of mutuals. 591 10% Loans s for the e acquisit isitio ion of goods. Granted through retail merchants associated with CFA. 327 5% Microfin inanc ance. Entrepreneurs and Self-employeed. 0.0

• Issu

suer of Visa and d Mast sterCar erCard d credit edit cards. ds. Cross-selling to current clients and to open market clients. 2,813 45% Total al 6,177 100% Insu surance (casu sualty lty, , life, , buria ial, , purchase hase). ). Issu suer of debit it cards ds associa iated ed with saving ving accoun unts ts and d time e depo eposits sits, , for ret etir ired people ple and d pen ensione sioners.

38

Sudamericana Holding - Corporate Structure

39

12.5% 87.5%

Sudamericana Holding

Turnover: $3,004MM | AUM: $963MM Equity: $661MM Turnover: $0.1MM | AUM: $137MM Equity: $15.7MM Turnover: $39MM | AUM: $4.5MM Equity: $11.2MM

Insurance company founded in 1996 and

• riginally aimed at individuals' insurance

that is currently broadening its strategy to cover corporate insurance. Retirement insurance company. It manages voluntary retirement and pension plans. Insurance broker of the corporate segment, which offers coverage in those lines not marketed by Galicia Seguros.

Positioning 2Q-FY2017 Certifications Risk Rating General Data

Sudamericana Holding - General Data

40

Homeowners Insurance Ranked 1st 9.9% Market Share Theft Ranked 1st 18.1% Market Share Personal Accidents Ranked 2nd 10.5% Market Share Group Life Ranked 5th 5.3% Market Share Miscellaneous Risks Ranked 8th 3.1% Market Share FixScr (Affiliate of Fitch Ratings): domestic rating of financial strength AA (arg) Category. Bureau Veritas Certification: ISO 9001:2008 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. Annual Turnover: AR$ 3.4 billion (CY2016) Policies in force: 3.2 million (credit-related insurance) and 5.4 million (voluntary insurance).

Main Business Partners

Business Partners' Branches Telemarketing Specialized Insurance Stands ATMs Specialized Salesforce Internet

Sudamericana Holding - Distribution Channels

41

• Over 500 branches of our affiliated companies (Banco Galicia, Tarjeta Naranja, Tarjeta

Nevada and Compañía Financiera Argentina).

• Near 200 branches of retail chains.
• +200 telemarketers at our own call center.
• 180 telemarketers at an external call center.
• Near 60 stands at our business partners' branches.
• Insurance sale through Banco Galicia's ATM network.
• Account officers for corporate businesses.
• Specialized Insurance Officers in banking branches.
• Open market sale through different web pages.

Per Fiscal Year (in millions of Ps.)

Sudamericana Holding - Turnover and Profit Evolution

42

930 1.308 1.759 2.497 3.415 12,4% 13,6% 13,3% 16,4% 20,8%

• 500

1.000 1.500 2.000 2.500 3.000 3.500 2012 2013 2014 2015 2016 Turnover Profits/Turnover 83, 9 84, 8 85, 9 82, 76, 2

41% 35% 42% 37%

Combined Ratio Galicia Seguros (%)