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

May 2008

2

• The Argentine

ntine Economy

• The Argentine

ntine Financial al System em

• Banco Galicia

ia

Agenda

3

The he Arge gent ntine ine Econ

• nom
• my

4

5.8%

• 2.8%

5.5% 8.1% 3.9%

• 3.4%
• 0.8%
• 4.4%

8.8% 8.7% 7.5% 9.0% 9.1%

• 10.9%

8.5%

• 12%
• 9%
• 6%
• 3%

0% 3% 6% 9% 12%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E

GDP % C hange

200,000 225,000 250,000 275,000 300,000 325,000 350,000 375,000 400,000

In millions of Pesos

R eal GDP growth GDP , 1993 constant prices

E: Last available median of market forecasts published by the Argentine Central Bank.

Eco conomic ic Act ctivity vity

5 100 150 200 250 300 350 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 2.5 3.1 4 5.3 4.8 5.4 5.2 2 3 4 5 6 2001 2002 2003 2004 2005 2006 2007 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 2001 2002 2003 2004 2005 2006 2007 Bilateral (US$) Multilateral

World GDP Growth Agricultural Commodity Prices Real Exchange Rate

Dec’01=100.

With Strong Tail Winds

6

3.6% 3.2%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E

As a % of GDP

4,000 8,000 12,000 16,000 20,000 24,000 28,000 32,000 36,000 40,000

In millions of Ps.

Primary S urplus as a % of GDP Primary S urplus (in millions of Pesos)

Transfer of savings from the private pension funds to the state pension system

Fiscal Performance (Fed. Gvt. only)

Fisc scal l and Ext xternal l Sect ctor Performa mance nce

2.1% 2.8%

• 20%
• 15%
• 10%
• 5%

0% 5% 10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E

As a % of GDP

10,000 20,000 30,000 40,000 50,000 60,000 70,000

Current Accout (accrued basis) Exports Imports

External Sector

E: Last available median of market forecasts published by the Argentine Central Bank.

7

Central Bank’s FX Market Average Daily Intervention Stock

• ck of Leba

bac (**)

(*) As of April 25, 2008.

M2 M2

Moneta tary y Performanc ance

(In millions of Dollars)(*) (In billions of Dollars)(*)

Inte tern rnatio tional al Reserv erves es

(In billions of Pesos)(*) (Monthly average in billions of Pesos)(*)

• 40
• 20

20 40 60 80 100 120 J an-04 J an-05 J an-06 J an-07 J an-08 15 30 45 60

Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

60 85 110 135 160 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 5 10 15 20 25 30 35 40 45 50 55 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

8

50 75 100 125 150 175 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08

IR/ BMB IR/ M2

International Reserves: Coverage of Monetary Aggregates

%

Inte ternati nationa

• nal

l Rese serve ves

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.

9

• 1

41 6 12 10 9 10 4 1

• 2
• 2
• 5

5 15 25 35 45

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08E

CPI (average) CPI (end of period)

CPI (annual variation)

%

CCI: Cost of Construction Index PBPI: Producers Basic Prices Index CPI: Consumer Prices Index IWPI: Internal Wholesale Prices Index 18.6 20.7 15.5

8.8

5 10 15 20 25

Dec-05 Jun-06 Dec-06 Jun-07 Dec-07

Other Measures

(12 months trailing variation) C C I C P I P B P I I W P I %

Infl flati tion

• n

E: Last available median of market forecasts published by the Argentine Central Bank.

10

550 1,045 1,562 4,372 773 461 707 533 499 216 410 546 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Basis points over U.S . Treasury

Risk Premium (end of period)

(2) 150 200 250 300 350 400 450 500 550 600 650 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08

From J anuary 1, 2007

(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.

Country y Risk sk Premium

(1)

11

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

12

20% 25% 18% 33% 29% 22% (*)

25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Mar-08 From the P ublic S ector (C AGR : 45.8%) From the P rivate S ector (C AGR : 21.2%) From the Financial S ector and R

• es. Abroad (C

AGR : 41.0%)

Total Deposits

(in millions of Pesos)

42% (*) 43% 40% 38% 25%

15,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Mar-08

Loans to the Private Sector

(in millions of Pesos) (*) Mar-08 vs. Mar-07 variation. CAGR: Dec-02 / Mar-08. As of March 31, 2008.

Post-cr cris isis is Stro rong ng Growt

• wth in Financial

al Interm ermedia diation tion

CAGR: 24.8%

13

50 25 19 18 17 16 51 15 30 45 60 C hile Uruguay Brasil Argentina Perú C

• lombia

México

Deposits from the Private Sector (as a % of GDP)

36 31 28 22 22 13 68 20 40 60 80 C hile C

• lombia

Brasil Perú México Uruguay Argentina

Loans to the Private Sector (as a % of GDP

)

(*) Adjusted by IWPI. In millions of Pesos of Apr-08. As of April 25, 2008.

22 21 19 18 19 19 18 19 10 8 9 10 11 19 26 14 13 24 5 10 15 20 25 30 2000 2001 2002 2003 2004 2005 2006 2007 2008E

Deposits from the P rivate S ector Loans to the P rivate S ector

As a % of GDP

E: Last available median of market forecasts published by the Argentine Central Bank. 30 55 80 105 130 155 180 205 230 255 280 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Deposits from the Private S ector Loans to the Private S ector

In billions of constant Pesos (* )

But Still l Low Financi cial al Depth

14

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.

By Currency

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

85% 1% 14%

20 40 60 80 100

J un-01 J un-02 J un-03 J un-04 J un-05 J un-06 J un-07

Pesos CER Adjusted F

• reign Currency

By Type of Deposit

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

51% 49%

20 40 60 80 100 J un-01 J un-02 J un-03 J un-04 J un-05 J un-06 J un-07 J un-08

Current Accounts + S aving Accounts Time Deposits (includes CER-adjusted)

As of April 25, 2008.

De De-dollar dollariz izat atio ion n but with h More Transact ctio iona nal l Deposit its

15

• 20
• 10

10 20 30 40 50

Dec-03 Dec-04 Dec-05 Dec-06 Dec-07

%

Deposits Loans

Y-O-Y M onthly % Change

Privat vate-Sec ecto tor r Loans s and De Deposi sits ts Growth

100 110 120 130 140 150 160

Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08

Loans in Pesos Deposits in Pesos Deposits in Dollars

Dec'06=100

As of April 25, 2008.

16 (1) Private Banks’ 30-day time deposits rate, for deposits over Ps. 1 million.

BADLAR Private Banks (1) 30-Day Time Deposits Private Bank’s 30-Day Time Deposits

3 6 9 12 15 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

%

Nominal Interest Rates

(monthly averages)

• 25
• 20
• 15
• 10
• 5

5 10 15 20 25 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 %

Real Interest Rates

(monthly averages, adjusted by IWPI)

Incr crease ase in Interes est t Rates

As of April 25, 2008.

17

December 2001 December 2007

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

Change in the Composi siti tion n of the Banki king Sys ystem

18

23 48 50 43 37 30 27 18 15 30 45 60 2000 2001 2002 2003 2004 2005 2006 2007 As a % of Total Assets

Exposure to the Public Sector

% 61 26 39 74

0% 25% 50% 75% 100% 2000 2007

COMP ANIE S INDIVIDUALS

Composition of Loans to the Private Sector

2.7 114.3

5 10 15 20 2000 2001 2002 2003 2004 2005 2006 2007 60 75 90 105 120 NALs / Total Credit Loan Loss Reserves / NALs

Loan Portfolio Quality

NALs / Total Credit Loan Loss Reserves / NALs

As of December 31, 2007.

0.6 0.0 1.5 3.0 4.5 6.0 2000 2001 2002 2003 2004 2005 2006 2007

Provisions for Loan Losses

(as a % of Total Assets)

Improve rovement ment in A Asset et Composi

• siti

tion n and in Loan Portfol folio

• Quality

ty

19

• 0.3
• 10.1

0.8 1.8

• 0.3
• 3.0
• 0.1

1.4

• 1.9

0.6 2.4 2.7 1.9

• 12
• 10
• 8
• 6
• 4
• 2

2 4 2000 2001 2002 2003 2004 2005 2006 2007

ROA

• Adj. ROA

Return on Assets

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

• mmuniqué “A” 3911.

S ep-07: anualizado.

62.5 70.5 52.5 46.2 56.4 40 80 120 160

2000 2001 2002 2003 2004 2005 2006 2007

15 30 45 60

Efficiency Ratio Efficiency Ratio Excluding Com. A 3911 Coverage of Administrative Expenses with Income from S ervices

Efficiency

% %

Improve

• vement

ment in Profit itabi bili lity

As of December 31, 2007.

20

Ban anco

• Gal

alicia ia

21

GBA and

• Bs. As.:

135 Branches

Banco Galicia in Numbers

March 2008  Assets Ps.23,420 M  Loans Ps.12,096 M  Deposits Ps.13,895 M  Equity

• Ps. 1,798 M

Number of:

 Bank Branches 232  Reg. Credit-Card Cos. Offices 141  Employees 9,327  Clients 4.29 M

22

% % 1 Nación 13.59 1 Nación 10.12 2 S antander Río 9.69 2 S antander Río 10.07 3 BBVA Bco F rancés 9.51 3 Macro 8.31 4 Galicia 8.10 4 Galicia 8.14 5 Provincia de Buenos Aires 7.85 5 BBVA Bco F rancés 7.56 6 Macro 7.41 6 Provincia de Buenos Aires 6.52 7 HS BC 5.66 7 HS BC 5.70 8 Citibank 5.22 8 Citibank 3.97 9 Ciudad 4.66 9 Credicoop 3.64 10 Credicoop 4.48 10 S tandard Bank 3.62

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

(1) Includes securitized loans. Source: Argentine Central Bank - Superintendency of Financial and Exchange Institutions - monthly information. As of December 31, 2007.

One of the Largest st Banks ks

23 (1) Includes securitized loans. Source: Argentine Central Bank - Superintendency of Financial and Exchange Institutions - monthly information (except for the regional credit-card companies). As of December 31, 2007.

2 4 6 8 10 12 S antander R ío BBVA Francés Galicia Macro HS BC

Market S hare of Private-S ector Deposits (%)

1,000 2,000 3,000 4,000 5,000 6,000 S antander R ío Macro Galicia + T.R eg. BBVA Francés HS BC

Credit Card Managed (in thousands)

2 4 6 8 10 12 S antander R ío Galicia + T.R eg. Macro BBVA Frances HS BC

Market S hare of Loans to the Private S ector (%) (1)

100 200 300 400 500 Macro BBVA Francés Galicia + T.R eg. S antander R ío HS BC

Branches (number)

Peer Comparison

24

0.5 2.0 3.5 5.0 6.5 8.0 9.5 11.0 Dec-02 J un-03 Dec-03 J un-04 Dec-04 J un-05 Dec-05 J un-06 Dec-06 J un-07 Dec-07 S antander Río BBVA Francés Galicia Macro HS BC Citi S tandard Bank

Market Share of Private-Sector Deposits

Source: Argentine Central Bank - Superintendency of Financial and Exchange Institutions - monthly information. As of December 31, 2007

Faste test st Organic Growth

25

(2.4)% 35.2% 28.4%

CAGR %:

22.9% 31.4% 30.1%

CAGR %: As of March 31, 2008.

By Type of Borrower (Consolidated)

(In millions of Pesos)

800 1,300 1,800 2,300 2,800 3,300 3,800 4,300 4,800 5,300

Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Corporate Middle-Mkt Individuals

Comparison with the System

(Dec 02=100)

80 120 160 200 240 280 320 360 400 440

Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07

F inancial S ystem Banco Galicia in Argentina + RCC Cos. Banco Galicia in Argentina

Incr crease ased d Lending to the Priva vate Sect ctor

26

M iddle-M arket Companies 26% Agribusiness 13% Individuals (Bank) 25% Individuals (Regional Credit- Card Companies) 18% Financial Sector 1% Large Corporations 17%

Consoli solidat dated ed Gross s Loans ns to the Privat vate e Sector

• r:

: Ps.11 11,2 ,203 3 million ion

As of March 31, 2008.

Breakdown n of Loans to the Private Sector

27 Banco Galicia consolidated.

3.62% 113.8%

0% 5% 10% 15% 20% 25% 30% 35% Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07

NALs / Total loans to the private sector

0% 20% 40% 60% 80% 100% 120% 140%

Loan loss reserves / NALs

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

As of March 31, 2008.

Ass sset t Quality ty Improvem vement nt

28

Sep-01 Dec-02 Number of: Sep-01 Dec-02 Mar-08 Dec-02 Mar-08 Employees 8,625 6,054 9,327 (30) 54

• Banco Galicia

5,680 4,113 5,451 (28) 33

• Regional Credit-Card Cos. and Other S

ubsidiaries 2,945 1,941 3,876 (34) 100 Bank Branches in Argentina 389 229 232 (41) 1 Regional Credit-Card Cos. Branches 106 87 141 (18) 62 Deposit Accounts (1) 1,239 1,063 1,399 (14) 32 Credit Cards (1) 1,891 1,596 5,605 (16) 251

• Banco Galicia (1)

678 498 1,127 (27) 126

• Regional Credit-Card Cos. (Visa and Local Brands) (1)

1,213 1,098 4,478 (9) 308 Debit Cards

(1)

958 801 1,114 (16) 39 Client Base (1) 2,840 2,013 4,290 (29) 113

(1) In thousands.

Variation (%)

Post st-Cri Crisi sis s Growth

29

Total: 4.29 million : 23.4%(1) of Argentina’s economically active population

Regional Credit- Card Companies

Total: 2,547,539 Low Income

(1) Estimated. (2) Consumer Banking and Corporate Banking do not include 407,429 and 1,969 credit card coholders, respectively. As of March 31, 2008.

Consumer Banking(2)

Total: 1,294,071

353,838 47,808 317,073 575,352

Low Income Medium Income Other High Income

Corporate Banking(2)

Total: 39,1740

753 9,862 29,139

Small and Middle- Market Business Corporations Agribusiness

15.5% CAGR since December’02

Broad and G Growing Customer er Base

30

Streamlining of operations and restructuring of liabilities Growth based on existing client base Growth based on client acquisition Profitability increase

2002 2003 2004 2005 2006 2007 2008...

Stages s of Reco cove very

Post-crisis balance sheet clean up and capital increase

31

Restructured Debt

Galicia Uruguay / Head Office and Galicia Cayman Ltd. Cayman Branch Jul-02 Dec-02 / Jul-03 M ay-04

Original Debt Amount

328 1,136 1,476 2,940

Original Average Life New Debt (years)

4.1 4.4 8.1 6.2

Debt Reduction after Restructuring

328 1,053 730 2,111

Debt Amount (1)

83 746 829

Capital Generation Associated to the Debt Restructuring

In millions of Dollars

Total

Tier 1 135 Tier 2 230 Total 365 In millions of Dollars

Total NY Branch

(2) (3)

(1) Only principal, as of March 31, 2008. (2) US$ 503 million correspond to the exchange of restructured liabilities for Boden 2012. (3) Includes US$ 43 million from Grupo Galicia´s debt forgiveness.

Fore reign gn De Debt Re Restru ructu turi ring g and Ca Capital Genera ration ion

32

59%

50 100 150 200 J un-96 J un-99 Dec-01 J un-04 Mar-05 Dec-05 S ep-06 J un-07 Mar-08 E xcess of Regulatory Capital as a % of Minimum Requirement

Minimum Requirement Ps. 1,512 million Regulatory Capital

• Ps. 2,409 million

Excess Capital Ps. 897 million Banco Galicia consolidated. Capital adequacy requirements were suspended between January 2002 and December 2003. As of March 31, 2008.

Exc xcess ss Regulatory

• ry Capital

33

Dec-05 Mar-08 Absolute Variation Liquidity 1.758 3.604 1.846 Exposure to the Private Sector (1) 5.406 11.845 6.439 Other 2.075 2.040 (35) TOTAL 9.239 17.489 8.250 Deposits 7.960 13.607 5.647 Other 2.025 5.137 3.112 TOTAL 9.985 18.744 8.759 Exposure to the Public Sector (1) 15.869 5.647 (10.222)

• BODEN

5.143 2.710 (2.433)

• PGN

5.188 1.247 (3.941)

• BOGAR

3.823

• (3.823)
• Discount

733 692 (41)

• Other

982 998 16

Difference from Amparo Claims 348 284 (64) TOTAL 16.217 5.931 (10.286) Argentine Central Bank 8.612

• (8.612)

Restructured Foreign Debt 4.582 2.540 (2.042) Other 888 338 (550) TOTAL 14.082 2.878 (11.204) 36,3% 74,7%

(1) Does not include Securitized Loans. As of December 2005: Bank: Ps.296 million, Regional Credit Card Companies: Ps. 179 million.

Operational Bank Assets / Total Assets

As of March 2008: Bank: Ps.572 million; Regional Credit Card Companies: Ps.359 million.

Assets Liabilities O P E R A T I O N A L B A N K R E S I D U A L B A N K Assets Liabilities

Balance Sheet Selecte ted Data

34 (In millions of P esos)

FY 2006 FY 2007 Absolute Variation Net Financial Income (1) 473.2 774.5 301.3 Provisions for Loan Losses (110.9) (255.5) (144.6) Net Income from S ervices 668.8 933.2 264.4 Administrative Expenses (946.0) (1,246.7) (300.7) Net Operating Income 85.1 205.5 120.4 Net Other Income / (Losses) (38.8) (38.5) 0.3 Bad Debts Recovered 49.7 61.5 11.8 Provisions Reversed 32.5 21.6 (10.9) Income Tax (56.3) (72.8) (16.5) Adjusted Net Income 72.2 177.3 105.1 Loss from Valuation of Public-S ector Assets (Comm. "A" 3911) (198.4) (38.2) 160.2 Amortization of Amparo Claims

• (108.7)

(108.7) Net Income / (Loss) (126.2) 30.4 156.6

(1) E xcludes losses from valuation of public-sector assets in accordance with Comm. "A" 3911 and includes income on margin requirements of repo transactions.

Consolidate ated d Income State teme ment: nt: FY 2006 - 2007 2007

35 (In millions of P esos)

1Q'07 4Q'07 1Q'08 1Q'07/ 1Q'08 4Q'07/ 1Q'08 Net Financial Income (1) 166 232 254 88 22 Provisions for Loan Losses (49) (97) (85) (36) 11 Net Income from S ervices 202 260 274 72 14 Administrative Expenses (268) (356) (370) (101) (14) Net Operating Income 50 39 73 23 34 Net Other Income / (Losses) (15) 8 (25) (10) (32) Bad Debts Recovered 25 12 7 (18) (5) Provisions Reversed 3 18 (3) (18) Income Tax (18) (14) (20) (2) (6) Adjusted Net Income 45 63 35 (10) (28) Loss from Valuation of Public-S ector Assets (Comm. "A" 3911) (51) (12) 6 57 18 Amortization of Amparo Claims (31)

• (3)

28 (3) Net Income / (Loss) (36) 51 39 75 (13)

(1) E xcludes losses from valuation of public-sector assets in accordance with Comm. "A" 3911 and includes income on margin requirements of repo transactions.

Absolute Var.

Consolidate ated d Income State teme ment: nt: 1st. Q FY 2008

36 (1) Net Financial Income (adjusted) + Net Income from Services, in millions of Pesos. (2) Semiannualized. Banco Galicia consolidated. 25.3% 68.7%

25 30 35 40 45 50 55 60 65 70 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07

%

Residual Bank Assets as a % of Total Assets

As of March 31, 2008.

300 400 500 600 700 800 900 1000 1100

2S 2004 1S 2005 2S 2005 1S 2006 2S 2006 1S 2007 2S 2007 1Q 2008(2)

Net Operating Revenues

(1)

Summary ry of Post-Cri risis sis Performa mance nce

37

Objectives

 Consolidate leadership position in Argentina.  Achieve profitability in line with industry expectations.

Strategy

 Grow in loan origination to the private sector and reduce exposure to the public sector.  Funded through deposit growth and securitization.  Consolidate leadership in agribusiness and medium-sized companies and consumer finance.  Improve penetration in large corporate segment.  Continue growing in transactional banking and e-banking.  Maintain operating efficiency.

Objectiv ctives es and Strateg egy

38

 Strong brand name.  One of the most valuable financial services franchises in Argentina.  Broad customer base.  Wide product offering.  Largest consumer finance operation.  Leading provider of credit cards and electronic banking services.  Leader in agribusiness and medium-sized enterprises sectors.  Large distribution platform and best electronic services platform.  Strong IT capabilities.

Competi titive ve Advantage ges