Grupo Financiero Galicia Investor Presentation June 2018 Agenda - - PowerPoint PPT Presentation

Investor Presentation

June 2018

Grupo Financiero Galicia

Agenda

2

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos

Economic Activity

3

• 5.9%

10.1% 6.0%

• 1.0%

2.4%

• 2.5%

2.7%

• 1.8%

2.9% 1.0% 2009 2011 2013 2015 2017 (*)Survey of Market Expectations (REM August, BCRA) Source: INDEC and BCRA

Real Gross Domestic Product

YoY % Var.

GDP quarterly evolution

Industrial Production quarterly evolution

0.8% 2.6%

• 0.5%
• 1.8%
• 1.1%
• 3.6%
• 0.1%

2.1%

• 0.2%

1.4% 1.7%

• 0.8%

1.9%

• 4.2%

3.1%

• 6.8%
• 3.5%

2.7% 5.0% 1.2%

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

Source: INDEC Source: FIEL 1.8% 1.9% 0.0%

• 1.2%
• 0.2%
• 2.1%

0.3% 0.8% 1.6% 0.6% 0.8%1.0%1.0% 0.3% 4.0% 2.5% 1.0%

• 3.3%
• 1.1%

3.0% 3.8% 3.9% 3.3%

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 q/q % chg. (sa) y/y % chg. (r.h.s.)

196.64 100 200 300 400 2001 2003 2005 2006 2008 2009 2011 2013 2014 2016 2017

International Environment

Agricultural Commodity Prices

Dec’01=100. As of June, 2018.

4

Real Exchange Rate

Index May-18 = 23,7 AR$/USD

16.0 44.9 38.6 34.7 25.4 22.5 21.3 May-18 18 23.7

12 17 22 27 32 37 42

Nov-01 Apr-04 Sep-06 Feb-09 Jul-11 Dec-13 May-16

Bilateral RER (ARS/USD) Multilateral RER

Source: BCRA

• 2.7
• 5.1
• 8
• 4

4

2007 2009 2011 2013 2015 2017

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 2017 2018E

Monetary Financing

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

5

Primary Fiscal Deficit – Annual Target

as % of GDP

5.5 4.6 3.8 2.7 1.3

2015 2016 2017 2018 2019 2020

• 0.9%
• 0.8%
• 1.1%
• 1.4%

Source: BCRA and own estimates

Source: Ministerio de Hacienda

Source: Ministerio de Hacienda Millions of USD As a % of GDP

• 1.3%

Sovereign Debt

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

6

USD 60% Pesos 23% Euros 8% Pesos CER indexed 8% Pesos Dollar Linked 1% Other 1%

17% 14% 14% 11% 10% 10% 10% 16% 21% 24% 6% 6% 5% 5% 4% 4% 5% 6% 6% 6% 23% 21% 19% 16% 15% 14% 15% 23% 27% 29% 54% 55% 43% 39% 40% 43% 44% 54% 51% 53% 0% 10% 20% 30% 40% 50% 60% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Private holders IFIs and others Gross Debt

Argen entin ina: : Publi lic Sector Net et Debt

As % of GDP

Public debt sensitivity to GDP growth

As % of GDP

27% 41% 37% 34% 2016 2017 2018 2019 2020 2021 1,5% 2% 2,5% 3% 3,5% 4% 4,5% 5% 5,5%

Average GDP growth

5 10 15 20 25 2022 2018 2020 2019 2021 2024 2026 2025 2023 Pesos Foreign currency Billions of US$

Projected annual debt payments(*)

As of December, 2017.

U$S 320,935 million

Debt by Currency

External Sector Performance

7

62 70 25 50 75 100 2004 2006 2008 2010 2012 2014 2016 2018

Billions of US$ Exports Imports

Foreign Trade

• 7.6
• 45
• 30
• 15

15 30 2004 2006 2008 2010 2012 2014 2016 2018E

Billions of US$

Trade Balance

• 4.9%
• 4.1%
• 6%
• 4%
• 2%

0% 2% 4% 6% 2004 2006 2008 2010 2012 2014 2016 2018E

As % of GDP Current Account Capital Account

Current and Capital Accounts

Accrual Basis, as % of GDP

Source: INDEC and own estimates

Monetary Performance

8

Monetary aggregates

Real YoY change

20% 2%

• 1%
• 20%
• 10%

0% 10% 20% 30% Jan-15 Sep-15 May-16 Jan-17 Sep-17 May-18

ARS Private Deposits ARS Credit to the Private Sector M2 (private)

International Reserves

USD billion 45 38 55 50

20 25 30 35 40 45 50 55 60 65 70

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17

Central Bank Interest Rate Policy

ANR (%)

36.5

40.0

24 28 32 36 40 44 48 52 56 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Call 1d Lebac 35d - Secondary Mkt Lebac 35d 22.75 26.75 33.00 25.50 47.00 24.75 40.00 18 24 30 36 42 48 54

Jun-16 Dec-16 Jun-17 Dec-17 Jun-18

Repo corridor 1d Repo corridor 7d Repo corridor center 7d

Nov-17 Dec-18 Jan-18 Feb-18 Mar -18 Apr-18 May-18 Jun-18

Inflation

9

CPI Infl flatio ation

Greater Buenos Aires

Inflatio lation

y/y % chg.

Source: FIEL and own estimates Source: INDEC 1.4% 2.7% 2.5% 27% 24% 22% 21% 23% 24% 23%22% 25% 25% 25% 25% 25% Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 m/m % chg. y/y % chg. (r.h.s.)

CB´s inflation targets 2018-2020

YoY % chg.

Source: BCRA, INDEC & Own estimates

17 13

27.1 19.0 14.0

3 8 13 18 23 28 33

2017 2018 2019 2020

Central Bank Targets Galicia Survey of Market Expectations (REM May-18)

21% 24% 26% 41% 27% 39% 24.8% 28.0% 0% 10% 20% 30% 40% 50% Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 2018E

Agenda

10

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos

But Still Low Financial Depth

19 16 5 10 15 20 25 2010 2012 2014 2016 2018

Deposits from the Private Sector Loans to the Private Sector

As a % of GDP

11

Source: Central Bank of each country. 20 40 60 80 100

52 56 24 34 29 18 78 67 44 34 23 15

Deposits to GDP Loans to GDP

Financial Depth (as a % of GDP)

Peru Chile Brazil Colombia Mexico Argentina

Private-Sector Loans and Deposit Growth

12

40.2% 37.7% 25.9% 26.4% 93.2% 12.6% Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Total (ARS + USD) ARS USD (in USD)

Deposit Growth

Y-O-Y Monthly % Change

Private-Sector Loans

Y-O-Y Monthly % Change

39.7% 58.8% 29.5% 49.5% 103.8% 32.8% Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Total (ARS + USD) ARS USD (in USD)

May-17 Aug-17 Nov-17 Feb-18 May-18 May-17 Aug-17 Nov-17 Feb-18 May-18

51% 49% 42% 46% 50% 54% 58% Current Accounts + Savings Accounts

Time Deposits

Breakdown of Deposits by Currency and Type

13 Privat ate Depos

• sit

its Mix

% Total deposits

Depos

• sit

its in ARS Mix

% Deposits in ARS May-13 May-14 May-15 May-16 May-17 May-18 70% 30% 0% 20% 40% 60% 80% 100%

Jun-13 Apr-14 Jan-15 Nov-15 Sep-16 Jul-17 May-18

Deposits in ARS

Deposits in USD

Mar-13 Mar-14 Jan -15 Nov-15 Sep-16 Jul-17 Apr-18

Increase in Interest Rates

14

Cost of Liabil ilit ities ies

Private Badlar and Private Poll

Inter terest st Rates tes Spread ad

Yield on Assets vs Cost of Liabilities (weighted by operated amounts) 11 28 17 8 16 24 32 40 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Spread Weighted Yield on Assets Weighted Cost of Liabilities Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 29.4 27.2 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Private Badlar Private poll (30 d.) of time deposits Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 41.5 43.2 20 24 28 32 36 40 44 48 52 56 60 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Companies: overdraft in checking accounts Individuals: Personal loans Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18

Yield ld on

• n Assets

ts

Composition of the Banking System

Number Market Share 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 December 2017

15

Profitability and Asset Quality

16

2016 30% 2015 2014 26% 33% 2013 30% 2012 25% 32% 2011 mar-18 23% 2017 23%

R.O.E.

2017 2014 2011 2012 2013 2015 2016 61,1 % 57,6 % 58,7 % 54,0 % 52,6 % 54,8 % 55,6 %

Efficiency

3,4 % 2017 3,6 % 4,1 % 2014 2,9 % 2016 2,7 % 2015 4,1 % mar-18 2013 2012 2,9 % 2011 2,7 %

R.O.A.

1.9 % 1.7 % 1.7 % 1.5 % 1.8 % 1.5 % 1.5 % 1.2 % mar-18 2017 2016 2011 2015 2014 2013 2012

Loan Portfolio Quality

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

18

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos

Simplified Organizational Structure

EBA HOLDING

55.1% Votes 100% 87.5% 12.5% 19.7% Shares 83%

Insurance

100%

19

Mutual Funds

95% 5%

Collection Processing

Business Summary - Banco Galicia

22.8 .8% Ps

• Ps. 34.4

.4 bn bn. 1.7 US$ bn. 6,393 empl mployes ess CLIENTS NTS 3.9 milli lion clients ents ROE EMPL MPLOYE YESS SS EQUITY ROE EMPL MPLOYE YESS SS EQUITY

• Ps. 283.9

.9 bn bn. 14.1 US$ bn. 170.8 .8 Ps Ps. . bn bn. 8.5 US$ bn.

• Ps. 198.5

.5 bn bn. 9.9 US$ bn. 308 branches ASS SSETS TS NET LOAN ANS DEPOS OSITS BRANCHES HES

20

As of March 31, 2018. Exchange rate (Ps. per US$) = 20.14.

One of the Largest Banks

13.5% 10.1% 9.5% 5% 9.5% 7.8% 7.2% 4.0% 3.7% 3.7% 3.1%

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

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. Source: Argentine Central Bank.

(P) Goverment owned Banks.

As of December 31, 2017.

16.7% 11.7% 10.1% .1% 9.4% 7.7% 6.6% 4.4% 4.3% 3.2% 3.2%

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

Nación Santander Galicia Provincia BBVA Macro Credicoop HSBC Ciudad Patagonia

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

TOP 10 = 77% TOP 10 = 72%

Galicia Galicia 21

(P) (P)

200 400 600 800 Santander Macro Galicia BBVA HSBC

Branches (number)

(1) Includes securitized loans and leasing. Source: Argentine Central Bank (except for Naranja). As of December 31, 2017. 5 10 15 Santander Galicia Macro BBVA HSBC

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

Peer Comparison

+ Naranja 5 10 15 Santander Galicia BBVA Macro HSBC

Market Share of Private-Sector Deposits (%) 22

+ Naranja

• 4,000

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

Credit Cards Managed (in thousands)

+ Naranja .

26% 50% 11% 13%

Low Income Medium Income

• Prof. and Self-employed

High Income

Broad and Growing Customer Base

80% 1% 19%

Agribusiness Corporations SMEs As of March 31, 2018.

23

Corporate Banking Total: 106,342 Consumer Banking Total: 3,825,817

As of March 31, 2018.

Breakdown of Loans to the Private Sector

Large Corporations 23% Middle- Market Companies 17% Agribusiness 13% Individuals 43% Financial Sector 4%

Gross Loans: Ps. 175 billion

24

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.

Loan Portfolio by Maturity

Loans in foreign currency: 26.3%. 30% 33% 11% 16% 6% 4%

Funding Sources

Deposits 76% Bonds 2% Subordinated Bonds 2% Other(*) 20%

Total Funding: Ps. 263.9 billions

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

US$ -denominated deposits: 37.1%.

As of March 31, 2018.

25

Time Deposits 37% Checking accounts 22% Saving accounts 41%

Deposits Breakdown by Type:

• Ps. 198.5 billions

Asset Quality

3.21% 2.41% 6.81% 103.53% 40% 60% 80% 100% 120% 140% 160% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2015 2016 2017 2018

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

NPLs / Total loans to the private sector Bank NPL ratio Naranja NPL ratio (until Sep'17 with CFA) Loan loss reserves / NPLs As of March 31, 2018.

26

Excess Regulatory Capital and Total Capital Ratio

9.5% 12.5% 10.7% 14.6% 8.0% 10.0% 12.0% 14.0% 16.0% Mar-15 Mar-16 Mar-17 Mar-18 Banco Galicia consolidated. As of March 31, 2018.

Total Capital Ratio (%)

Minimum Requirement Ps.25.7 bn Regulatory Capital

• Ps. 45.5 bn

Excess Capital

• Ps. 19.9 bn / 77%

27

52.5% 58.0% 55.1% 58.0% 58.7% 64.8% 61.0%

Strong Profitability

28

12.4% 13.1% 13.4% 13.5% 11.9% 13.2% 11.9% 11.5% 10.9% 14.1% 2Q 17 2Q 16 3Q 16 4Q 15 4Q 16 1Q 16 1Q 17 3Q 17 4Q 17 1Q 18

Net Interest Margin - NIM Efficiency R.O.E. R.O.A.

3Q 17 4Q 17 1Q 18 2Q 17 1Q 17 4Q 16 3Q 16 1Q 16 2Q 16 4Q 15 31.4% 26.0% 22.8% 27.3% 28.4% 36.0% 30.2% 2Q 17 4Q 16 1Q 16 4Q 17 1Q 17 4Q 15 2Q 16 3Q 17 3Q 16 1Q 18

GGAL Bank

2.8% 3.5% 2.8% 3.3% 2Q 16 4Q 16 4Q 15 3Q 16 1Q 16 1Q 17 1Q 18 2Q 17 4Q 17 3Q 17 Until Dec’17 consolidated with Naranja and CFA As of March 31, 2018.

5,450 2,519 7,969 871 4,215 81 849 1,953 Net Income Net Financial Income Income Tax Net Income from Services Operating Income Net Charge for Loan Losses Administrative Expenses Net Other Income/Losses 68% 32% 100% 11% 54%

• 1%

11% 25%

Variation 1Q 2017

Consolidated Income Statement – 1Q of 2018

1Q 2018

29

103% 90% 33% 87% 9% 98% 58%

Physical Data

Mar-18

·Employees 10,581

• Banco Galicia

6,393

• Naranja

3,760

• Other

428 ·Distribution Platform Branches

• Banco Galicia

308

• Naranja

256 ·Electronic Banking Transactions (in millions, per month) 25.1 ·Products Deposit Accounts (*) 4,348 Credit Cards (*) 13,391

• Banco Galicia (*)

4,222

• Naranja (*) (Proprietary brands and others)

9,169 Debit Cards(*) 1,701

(*) In thousands

30

Agenda

31

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos

Business Summary – Tarjetas Regionales

Ps

• Ps. 40.2

.2 bn bn.

+30% y/y

• Ps. 842 mill

llio ions

+22% y/y

• Ps. 38.3

.3 bn bn.

+30% y/y

Ps

• Ps. 9.3 billio

lions ns +37% y/y 38.1 .1%

• 5 bp y/y

3,760 empl mployes ess 205 branc nche hes s 51 offices es 5.0 mill llio ion clien ents ts 9.2 milli lions s 3.6 milli lions s activ ive accounts +172 millio ion anual al transa ansactions 3rd d larges est independ dependent ent pay ayme ment proces esso sor 280,0 ,000 affiliat ated ed merchant ants Second largest merchant acquirer

ASS SSETS LOANS R.O.E. NETINCOME ME EMPLOYESS CLIENTS EQUITY ITY BRANCH CHES ES ACCOUNTS CARDS DSISS SSUED MERCHAN ANT TRANSA SACTION IONS 32

Tarjetas Regionales

33

» 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 9.2 million cards issued. » 205 branches and 51 offices across the country. » 15.2%1 market share in purchase volume (billed + installments) nationwide. » Second largest merchant acquirer with over 280,000 affiliated merchants. » Third largest independent payment processor with more than 172 million annual transactions.

In millions of Ps.

3M 2017 3M 2018 Assets 30,975 40,242 Loans 29,443 38,333 Net Worth 6,774 9,256 Net Income 691 691 842 842 ROE 43.1% 38.1%

1 Estimated.

As of March 31, 2018.

Agenda

34

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos

Sudamericana Holding - Corporate Structure

35

12.5% 87.5%

Sudamericana Holding

Turnover: $3.255 MM | AUM: $1.077 MM Equity: $735 MM Turnover: $0.1 MM | AUM: $193 MM Equity: $41 MM Turnover: $53 MM | AUM: $26MM Equity: $12 MM

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 1Q-FY2018 General Data

Sudamericana Holding - General Data

36

Homeowners Insurance Ranked 1st 9.4% Market Share Theft Ranked 1st 19.6% Market Share Personal Accidents Ranked 3nd 10.0% Market Share Group Life Ranked 13th 2.2% Market Share Miscellaneous Risks Ranked 6th 3.1% Market Share Annual Turnover: AR$ 3.3 billion (2017) Policies in force: 3 million (credit-related insurance) and 4.7 million (voluntary insurance).

As of March 31, 2018.

Main Business Partners

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

Sudamericana Holding - Distribution Channels

37

• Over 490 branches of our affiliated companies (Banco Galicia and Tarjeta Naranja).
• Near 120 branches of retail chains.
• +160 telemarketers at our own call center.
• 290 telemarketers at an external call center.
• Near 65 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.
• Homebanking

1.262 1.685 2.401 3.414 3.308

14,1% 13,9% 17,0% 20,8% 14,2%

• 10,0%

10,0% 30,0% 50,0% 70,0% 90,0% 110,0% 130,0% 150,0%

• 500

1.000 1.500 2.000 2.500 3.000 3.500 4.000

2013 2014 2015 2016 2017

Turnover Profit / Turnover

Per Calendar Year (in millions of Ps.)

Sudamericana Holding - Turnover and Profit Evolution

38

84% 85% 81% 76% 86%

CR

+34% +43% +42%

• 3%

Combined Ratio Galicia Seguros (%)

Agenda

39

» The Argentine Economy »The Argentine Financial System »Banco Galicia »Tarjetas Regionales »Sudamericana Holding »Galicia Administradora de Fondos

Galicia Administradora de Fondos, established in 1958, is a pioneer in the mutual fund business. The company manages FIMA mutual funds, designed to meet the needs of various client segments (institutional investors, companies and individuals). As for March 2018, had a market share of 13.2%.

41 47.5% 82.865 ROAE CLIENTS

• Ps. 168 millions
• Ps. 91.8 billions

19 employess NET INCOME AUM EMPLOYESS

Net Income Assets Under Management

89 89 139 139 168 168 1Q 2017 4Q 2017 1Q 2018 54,846 846 74,667 667 91,756 756 1T 2017 4T 2017 1T 2018 +88% +21% (*) In millions pesos 42

Our Family of Funds

Fima Premium Fima Acciones Fima PB Acciones Fima Capital Plus Fima Ahorro Pesos Fima Ahorro Plus Fima Renta Plus

Secure Balan anced ed Dynami mic

Inv nves estor

• r

Profile ile

Inve vestm stment nt hori rizon

• n/

/ Risk

Fima Renta Dólares I Fima Renta Dólares II Fima Mix I Fima Renta Pesos

44