Form 6-K GRUPO FINANCIERO GALICIA For: Aug 10

 

 

FORM 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of August, 2016

Commission File Number: 0-30852

 

 

GRUPO FINANCIERO GALICIA S.A.

(the “Registrant”)

 

 

Galicia Financial Group S.A.

(translation of Registrant’s name into English)

Tte. Gral. Juan D. Perón 430, 25^th Floor

(CP1038AAJ) Buenos Aires, Argentina

(address of principal executive offices)

 

 

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark whether by furnishing the information contained in this form, the Registrant is also thereby furnishing the information to the Securities and Exchange Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨             No  x

If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-             

 

 

 

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FORM 6-K

Commission File No. 0-30852

 

Month Filed		Event and Summary		Exhibit No.
August, 2016		Financial results of the Registrant for the second quarter ended June 30, 2016.			99.1

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		GRUPO FINANCIERO GALICIA S.A. (Registrant)
Date: August 10, 2016		By:		/s/ Pedro Alberto Richards
		Name:		Pedro Alberto Richards
		Title:		Chief Executive Officer

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

For more information contact:

Pedro A. Richards

Chief Executive Officer

Telefax: (5411) 4343-7528

[email protected]

www.gfgsa.com

GRUPO FINANCIERO GALICIA S.A. REPORTS FINANCIAL RESULTS FOR THE

QUARTER THAT ENDED ON JUNE 30, 2016

Buenos Aires, Argentina, August 9, 2016 – Grupo Financiero Galicia S.A. (“Grupo Financiero Galicia”; Buenos Aires Stock Exchange: GGAL / NASDAQ: GGAL) today announced its financial results for the quarter that ended on June 30, 2016 (“the quarter”).

HIGHLIGHTS

 

•

Net income for the quarter that ended on June 30, 2016, amounted to Ps.1,375 million, 44.9% higher than the Ps.949 million profit recorded in the second quarter of the 2015 fiscal year. The profit per share for the quarter amounted to Ps.1.06, compared to Ps.0.73 per share for the same quarter of the 2015 fiscal year.

 

•

The result of the quarter were mainly attributable to the income derived from Grupo Financiero Galicia’s interest in Banco de Galicia y Buenos Aires S.A. (“Banco Galicia” or the “Bank”), for Ps.1,153 million, in Sudamericana Holding S.A., for Ps.193 million, and in Galicia Administradora de Fondos S.A., for Ps.34 million, partially offset by administrative and financial expenses of Ps.50 million.

 

•

As of June 30, 2016, Grupo Financiero Galicia and its subsidiaries had a staff of 12,150 employees, a distribution network of 654 branches and other points of contact with clients and managed 3.9 million deposit accounts and 14.3 million credit cards.

CONFERENCE CALL

 

On Thursday, August 11, 2016 at 11:00 A.M. Eastern Standard Time (12:00 pm Buenos Aires Time), Grupo Financiero Galicia will host a conference call to review these results. The call-in number is: 719-457-2637 - Conference ID: 2563324.

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GRUPO FINANCIERO GALICIA S.A.

RESULTS FOR THE SECOND QUARTER

 

		In millions of pesos, except percentages
Table I:						FY2016				FY2015				Variation (%)*
Net Income by Business		2nd Q				1st Q				2nd Q				2Q16 vs 1Q16				2Q16 vs 2Q15
Income from Equity Investments in:
Banco de Galicia y Buenos Aires S.A.			1,153				1,146				878				0.6				31.3
Sudamericana Holding S.A.			193				166				67				16.3				188.1
Galicia Administradora de Fondos S.A.			34				30				23				13.3				47.8
Other companies (1)			8				6				6				33.3				33.3
Deferred tax adjustment (2)			41				24				8				70.8				412.5
Administrative Expenses			(17	)			(14	)			(7	)			21.4				142.9
Financial Results			(33	)			(11	)			(23	)			200.0				43.5
Other income and expenses			(4	)			1				(3	)			(500.0	)			33.3
Net Income			1,375				1,348				949				2.0				44.9

 

*	Calculated using values in millions with decimals.

(1)	Includes results from our interests in Compañía Financiera Argentina S.A. (3%), Galicia Warrants S.A. (87.5%) and Net Investment S.A. (87.5%).

(2)	Income tax charge determined by Banco Galicia´s subsidiaries in accordance with the deferred tax method.

 

		In pesos, except stated otherwise and percentages
Table II:		FY2016				FY2015				Six Months Ended
Principal Indicators		2nd Q				2nd Q				06/30/16				06/30/15
Earnings per Share
Average Shares Outstanding (in thousands)			1,300,265				1,300,265				1,300,265				1,300,265
Earnings per Share (1)			1.06				0.73				2.09				1.47
Book Value per Share(1)			13.12				9.27				13.12				9.27
Closing Price
Shares - Buenos Aires Stock Exchange			46.15				24.60
ADS - Nasdaq (in dollars)			30.54				18.79
Price/Book Value			3.52				2.65
Average Daily Volume (amounts in thousands)
Buenos Aires Stock Exchange			486				689				540				795
Nasdaq (2)			3,653				4,142				3,420				4,570
Profitability (%)
Return on Average Assets (3)			3.33				3.46				3.38				3.66
Return on Average Shareholders´ Equity (3)			33.68				32.52				34.60				34.06

 

(1)	10 ordinary shares = 1 ADS.

(2)	Expressed in equivalent shares.

(3)	Annualized.

In the second quarter of the 2016 fiscal year Grupo Financiero Galicia recorded a Ps.1,375 million profit, which represented a 3.33% annualized return on average assets and a 33.68% return on average shareholder’s equity.

This result was mainly due to profits from its interest in Banco Galicia, for Ps.1,153 million, which accounts for 83.85% of Grupo Financiero Galicia’s net income.

 

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Grupo Financiero Galicia S.A. – Selected Financial Information – Consolidated Data		In millions of pesos
						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Consolidated Balance Sheet
Cash and due from Banks			28,439				19,912				30,835				17,472				10,876
Government and Corporate Securities			29,804				30,116				15,525				17,064				19,661
Net Loans			109,334				103,245				98,345				82,838				79,663
Other Receivables Resulting from Financial Brokerage			21,752				16,334				8,061				10,834				13,987
Equity Investments in other Companies			51				51				52				52				51
Bank Premises and Equipment. Miscellaneous and Intangible Assets			5,623				5,137				4,925				4,727				4,069
Other Assets			4,847				5,644				4,005				3,555				3,676
Total Assets			199,850				180,439				161,748				136,542				131,983
Deposits			118,114				107,857				100,039				82,421				77,242
Other Liabilities Resulting from Financial Brokerage			53,954				46,112				37,329				32,672				35,153
Subordinated Notes			3,881				3,653				3,301				2,302				2,250
Other Liabilities			5,619				5,773				5,487				4,915				4,394
Minority Interest			1,224				1,211				1,107				992				891
Total Liabilities			182,792				164,606				147,263				123,302				119,930
Shareholders´ Equity			17,058				15,833				14,485				13,240				12,053
Consolidated Income Statement
Financial Income			9,097				8,793				8,009				6,446				5,820
Financial Expenses			(5,408	)			(5,130	)			(4,092	)			(3,343	)			(3,171	)
Gross Brokerage Margin			3,689				3,663				3,917				3,103				2,649
Provisions for Loan Losses			(723	)			(618	)			(691	)			(448	)			(484	)
Income from Services. Net			2,465				2,185				2,170				2,036				1,851
Income from Insurance Activities			645				581				533				447				429
Administrative Expenses			(4,238	)			(3,774	)			(3,741	)			(3,317	)			(3,079	)
Minority Interest			(61	)			(104	)			(116	)			(101	)			(66	)
Income from Equity Investments			74				2				1				47				26
Net Other Income			271				187				27				156				166
Income Tax			(747	)			(774	)			(856	)			(736	)			(543	)
Net Income			1,375				1,348				1,244				1,187				949

 

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Grupo Financiero Galicia S.A. – Additional Information
						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Physical Data (Number of)
Employees			12,150				12,231				12,131				12,153				12,048
Banco Galicia			5,679				5,686				5,573				5,522				5,479
Regional Credit-Card Companies			4,893				5,014				5,040				5,072				5,098
Compañía Financiera Argentina			1,185				1,152				1,161				1,205				1,147
Sudamericana Holding			340				326				307				303				273
Galicia Administradora de Fondos			18				18				17				17				17
Other companies			35				35				33				34				34
Branches			528				525				525				525				525
Bank Branches			263				261				260				260				260
Regional Credit-Card Companies			209				208				207				207				207
Compañía Financiera Argentina			56				56				58				58				58
Other Points of Sale			126				127				126				126				126
Regional Credit-Card Companies			89				90				90				90				90
Compañía Financiera Argentina			37				37				36				36				36
Deposit Accounts (in thousands)			3,904				3,701				3,593				3,394				3,193
Credit Cards (in thousands)			14,253				13,852				13,563				13,097				12,569
Banco Galicia			3,681				3,575				3,430				3,232				3,089
Regional Credit-Card Companies			10,402				10,107				9,974				9,717				9,348
Compañía Financiera Argentina			170				170				159				148				132
Inflation and Exchange Rates
Retail Price Index (%) (1)			15.51				11.86				7.75				3.73				3.17
Wholesale Price Index (I.P.I.M.) (%) (1)			8.20				17.20				N/A				4.28				3.58
C.E.R. Coefficient (%) (1)			9.54				10.49				4.14				3.49				3.51
Exchange Rate (Pesos per US$) (2)			14.9200				14.5817				13.0050				9.4192				9.0865
Rates
Badlar (3) (quarterly averages)			30.22				27.48				24.09				20.97				20.52
Credit Line for Investment Projects (established by regulations)			22.00				22.00				18.00				18.00				19.00

 

(1)	Variation within the quarter. Variation of IPC made using the IPC of the Autonomous City of Buenos Aires since November 2015, alternatively supplied by the INDEC. IPIM: no data was published from October 2015 to December 2015; figures were published again beginning in January 2016.

(2)	Reference foreign currency exchange rate in accordance to Communiqué “A” 3500 from the Argentine Central Bank, as of the last working day of the quarter.

(3)	Private banks’ 30-day time deposits rate for amounts over Ps.1 million.

 

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BANCO DE GALICIA Y BUENOS AIRES S.A.

HIGHLIGHTS

 

•

Net income for the second quarter amounted to Ps.1,153 million, Ps.275 million (31.3%) higher than in the same quarter of the 2015 fiscal year, reaching Ps.2,299 million during the first six months of the 2016 fiscal year.

 

•

The growth of results when compared to the second quarter of the 2015 fiscal year was mainly due to the 34.5% growth in operating income(1) partially offset by a 37.6% increase in administrative expenses and a 49.4% increase in provisions for loan losses.

 

•

The credit exposure to the private sector reached Ps.127,128 million, up 37.7% during the last twelve months, and deposits reached Ps.118,310 million, up 52,9% during the same period. As of June 30, 2016, the Bank’s estimated market share of loans to the private sector was 9.52% while its estimated market share of deposits from the private sector was 9.61%.

 

•

In the framework of the Credit Line for Production Financing and Financial Inclusion, as of June 30, 2016, the Bank granted the mandatory amount established by certain regulations in force. As of the end of the quarter, the outstanding amount of loans of this credit line reached Ps.9,478 million.

 

•

On July 19, 2016, the Bank issued subordinated notes maturing in 2026 for a nominal value of US$250 million, and a fixed annual interest rate of 8.250% for the first five years. This is the first Argentine issuance under Basel III regulations and it is considered Tier II capital according to Argentine Central Bank regulations. The proceeds will be used to repay the outstanding subordinated notes due in January 2019, which accrue a 16% nominal annual interest rate. The early redemption will take place on August 22, 2016, for 100% of its nominal value plus accrued and unpaid interest.

INFORMATION DISCLOSURE

The data shown in the tables below and the consolidated financial statements correspond to Banco Galicia, consolidated with the subsidiaries under its direct or indirect control, except where otherwise noted.

The Bank’s consolidated financial statements and the figures included in the different tables of this report correspond to Banco Galicia, Banco Galicia Uruguay S.A. (in liquidation), (until April 30, 2016)^*, Tarjetas Regionales S.A. and its subsidiaries, Tarjetas del Mar S.A., Galicia Valores S.A., Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A.

 

 

(1)	Net financial income plus net income from services.

*	At the Extraordinary Shareholder’s Meeting of Banco Galicia Uruguay S.A. (in liquidation) held on April 30, 2016, the Shareholders decided to approve the Final Special Balance Sheet and to start the registration process in order to cancel the company legal status before the Uruguayan authorities.

 

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RESULTS FOR THE SECOND QUARTER

 

		In millions of pesos, except percentages
Table III Evolution of Consolidated Results						FY2016				FY2015				Variation (%)
		2nd Q				1st Q				2nd Q				2Q16 vs 1Q16				2Q16 vs 2Q15
Net Financial Income			3,626				3,589				2,628				1.0				38.0
Net Income from Services			2,671				2,388				2,055				11.9				30.0
Provisions for Loan Losses			(723	)			(618	)			(484	)			17.0				49.4
Administrative Expenses			(4,082	)			(3,647	)			(2,967	)			11.9				37.6
Operating Income			1,492				1,712				1,232				(12.9	)			21.1
Net Other Income / (Loss)*			326				115				135				183.5				141.5
Income Tax			(665	)			(681	)			(489	)			(2.3	)			36.0
Net Income			1,153				1,146				878				0.6				31.3

 

*	Includes income from equity investments and minority interest results.

 

		Percentages
Table IV		FY2016				FY2015				Six Months Ended
Profitability and Efficiency		2nd Q				2nd Q				06/30/16				06/30/15
Return on Average Assets *			2.81				3.27				2.89				3.42
Return on Average Shareholders’ Equity *			29.71				31.29				30.74				32.63
Financial Margin * (1)			11.52				11.44				11.22				12.39
Net Income from Services as a % of Operating Income (2)			42.42				43.88				41.22				42.78
Net Income from Services as a % of Administrative Expenses			65.43				69.26				65.45				71.40
Administrative Expenses as a % of Operating Income (2)			64.82				63.36				62.97				59.93

 

*	Annualized.

(1)	Financial Margin: Financial Income minus Financial Expenses, divided by Average Interest-earning Assets.

(2)	Operating Income: Net Financial Income plus Net Income from Services.

In the second quarter of the 2016 fiscal year, the Bank recorded a Ps.1,153 million profit, which was Ps.275 million (or 31.3%) higher than the Ps.878 million profit recorded for the same quarter of the previous year.

The variation in net income was a consequence of the Ps.1,614 million increase in operating income, which was offset mainly by the Ps.1,115 million increase in administrative expenses and of Ps.239 million in provisions for loan losses.

The operating income for the second quarter of the 2016 fiscal year totaled Ps.6,297 million, up 34.5% from the Ps.4,683 million recorded in the same quarter of the prior year. This positive development was due to both a higher net financial income (up Ps.998 million or 38.0%) and a higher net income from services (up Ps.616 million or 30.0%).

The net financial income for the quarter included an Ps.89 million loss from foreign-currency quotation differences (including the results from foreign-currency forward transactions), compared to a Ps.17 million profit in the second quarter of the previous fiscal year. The quarter’s loss was composed of a Ps.268 million gain from FX brokerage and of a Ps.357 million loss from the valuation of the foreign-currency net position and the results of foreign-currency forward transactions, compared to a Ps.65 million profit and a Ps.48 million loss, respectively, in the second quarter of the 2015 fiscal year.

The quarter’s net financial income before foreign-currency quotation differences amounted to Ps.3,715 million, which represented a Ps.1,104 million (42.3%) increase as compared to the Ps.2,611 million income recorded in the same quarter of the 2015 fiscal year, and was mainly due to the increase in the portfolio of loans to the private sector and a higher spread.

 

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		Average balances in millions of pesos. Yields and rates in annualized nominal %
Table V										FY2016																								FY2015
Average Balances,		2nd Q								1st Q								4th Q								3rd Q								2nd Q
Yield and Rates*		Av. B.				Int.				Av. B.				Int.				Av. B.				Int.				Av. B.				Int.				Av. B.				Int.
Interest-Earning Assets			125,855				28.06				131,340				24.30				107,097				26.01				98,417				25.15				91,904				24.42
Government Securities			16,876				30.22				30,172				15.01				14,870				25.78				16,375				25.68				15,870				19.23
Loans			105,723				27.46				98,553				26.94				89,480				25.91				79,835				24.99				73,546				25.80
Financial Trusts Securities			635				51.89				665				35.03				679				51.32				721				29.39				786				5.98
Other Interest-Earning Assets			2,621				32.92				1,950				31.10				2,068				23.85				1,486				26.00				1,702				21.95
Interest-Bearing Liabilities			95,705				19.58				95,037				18.14				74,202				17.42				67,840				16.52				63,548				16.45
Saving Accounts			24,249				0.25				22,011				0.19				17,276				0.22				14,960				0.20				12,786				0.19
Time Deposits			54,115				27.27				55,998				24.97				43,475				23.92				39,849				22.20				37,506				21.66
Debt Securities			13,845				20.60				13,238				18.22				10,601				18.02				10,343				17.75				9,704				17.12
Other Interest-Bearing Liabilities			3,496				30.77				3,790				21.24				2,850				20.32				2,688				18.44				3,552				18.14

 

*	Does not include foreign-currency quotation differences. Annual nominal interest rates were calculated using a 360-day denominator.

The average interest-earning assets grew Ps.33,951 million (36.9%) as compared to the second quarter of the previous fiscal year, as a consequence of the Ps.32,177 million increase in the average portfolio of loans to the private sector. Interest-bearing liabilities increased Ps.32,157 million (50.6%) during the same period, mainly due to the increase of the average balances of interest bearing deposits for both saving accounts (89.7%) and time deposits (44.3%).

The average yield on interest-earning assets for the second quarter of the 2016 fiscal year was 28.06%, with a 364 basis point (“bp”) increase compared to the same quarter of the prior year, mainly due to a 1,099 bp increase in interest rates on the net position of government securities and a 166 bp higher accrued interest rate on the loan portfolio. Likewise, the average cost of interest-bearing liabilities was 19.58%, with a 313 bp increase compared to the second quarter of the prior year, mainly due to the increase in the average interest rate on time deposits, for 561 bp.

 

		In millions of pesos
Table VI Income from Services, Net						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
National Cards			1,093				932				965				831				731
Regional Credit Cards			1,426				1,313				1,299				1,198				1,093
CFA			88				80				102				78				70
Deposit Accounts			599				594				537				511				465
Insurance			147				125				116				120				110
Financial Fees			35				38				34				35				33
Credit-Related Fees			86				57				83				75				76
Foreign Trade			85				78				63				55				50
Collections			91				61				71				69				72
Utility-Bills Collection Services			56				49				49				44				40
Mutual Funds			11				9				10				9				8
Other			177				164				159				154				132
Total Income			3,894				3,500				3,488				3,179				2,880
Total Expenditures			(1,223	)			(1,112	)			(1,108	)			(952	)			(825	)
Income from Services, Net			2,671				2,388				2,380				2,227				2,055

 

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Net income from services amounted to Ps.2,671 million, up 30.0% from the Ps.2,055 million recorded in the second quarter of the previous fiscal year. The increases of fees which stood out were those related to national and regional credit cards (38.1%), deposit accounts (28.8%) and foreign trade (70.0%).

Provisions for loan losses for the second quarter of the 2016 fiscal year amounted to Ps.723 million, Ps.239 million higher than those recorded in the same quarter of the prior year, mainly in connection with the individuals’ loan portfolio.

Administrative expenses for the quarter totaled Ps.4,082 million, up 37.6% from the same quarter of the previous year. Personnel expenses amounted to Ps.2,270 million, growing 37.2%, mainly as a consequence of salary increase agreements with the unions. The remaining administrative expenses amounted to Ps.1,812 million, with a Ps.499 million (38.0%) increase as compared to the Ps.1,313 million from the second quarter of the 2015 fiscal year, which was mainly due to increases in taxes, advertising and publicity, cash transportation, maintenance, electricity and communications, rentals and security services that resulted from an increase in the level of activity and of expenses related to services provided to the Bank.

Income from equity investments for the quarter amounted to Ps.103 million, Ps.66 million higher than in the second quarter of the 2015 fiscal year, mainly as a consequence of the collection of dividends from the Bank’s interest in Prisma Medios de Pago SA and Interbanking SA, and to higher profits from Sudamericana Holding S.A.

Net other income for the quarter amounted to Ps.275 million, with an increase of Ps.103 million as compared to the same quarter of the prior year, mainly due to higher profits on security margin transactions and punitive interests, credits recovered and lower net other provisions.

The income tax charge was Ps.665 million, Ps.176 million higher than in the second quarter of the 2015 fiscal year.

LEVEL OF ACTIVITY

 

		In millions of pesos
Table VII Exposure to the Private Sector						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Loans			113,362				107,087				101,902				86,238				83,051
Financial Leases			848				904				980				1,011				1,034
Corporate Securities			1,258				1,497				1,471				855				718
Other Financing *			11,660				10,681				10,629				7,923				7,454
Subtotal			127,128				120,169				114,982				96,027				92,257
Securitized Assets **			—				—				—				—				40
Total Credit			127,128				120,169				114,982				96,027				92,297

 

*	Includes certain accounts under the balance sheet heading Other Receivables from Financial Brokerage, Guarantees Granted and Unused Balances of Loans Granted.

**	Financial trust CFA Trust I.

As of June 30, 2016, the Bank’s total exposure to the private sector reached Ps.127,128 million, with an increase of 37.7% from a year before and of 5.8% during the quarter.

Total loans include Ps.25,484 million corresponding to the regional credit card companies, which registered a 41.1% increase during the last twelve months and a 7.1% increase during the quarter. They also include Ps.3,890 million from CFA, which were up 19.8% during the year and 5.9% during the quarter.

 

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		Percentages
Table VIII Market Share *						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Total Loans			8.89				9.07				8.89				8.44				8.67
Loans to the Private Sector			9.52				9.74				9.60				9.10				9.15

 

*	Banco de Galicia and CFA, within the Argentine financial system, according to the daily information on loans published by the Argentine Central Bank. Loans include only principal. The regional credit-card companies’ data is not included.

The Bank’s market share of loans to the private sector as of June 30, 2016, without considering those granted by the regional credit card companies, was 9.52%, compared to a 9.74% from March 31, 2016, and to a 9.15% from June 30, 2015.

 

		In millions of pesos
Table IX						FY2016												FY2015
Loans by Type of Borrower		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Large Corporations			16,483				15,745				13,619				11,278				11,885
SMEs			28,682				28,027				29,022				24,518				22,854
Individuals			66,195				61,438				58,267				49,874				45,605
Financial Sector			2,002				1,877				994				568				2,707
Total Loans			113,362				107,087				101,902				86,238				83,051
Allowances			4,021				3,847				3,560				3,401				3,288
Total Loans, Net			109,341				103,240				98,342				82,837				79,763

 

		In millions of pesos
Table X						FY2016												FY2015
Loans by Sector of Activity		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Financial Sector			2,002				1,877				994				568				2,707
Services			6,021				5,971				5,797				5,398				4,761
Agriculture and Livestock			9,642				10,635				11,342				8,850				8,676
Consumer			66,860				62,149				59,012				50,160				45,864
Retail and Wholesale Trade			10,133				9,512				8,737				7,817				6,775
Construction			1,046				1,033				1,035				936				884
Manufacturing			16,833				14,405				13,029				10,610				11,297
Other			825				1,505				1,956				1,899				2,087
Total Loans			113,362				107,087				101,902				86,238				83,051
Allowances			4,021				3,847				3,560				3,401				3,288
Total Loans, Net			109,341				103,240				98,342				82,837				79,763

During the year, loans to the private sector registered growth mainly in those granted to individuals (45.2%), large corporations (38.7%) and SMEs (25.5%). By sector of activity, the higher growth was recorded in the consumer sector (45.8%), the retail and wholesale trade sector (49.6%) and the manufacturing sector (49.0%).

 

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		In millions of pesos
Table XI Exposure to the Argentine Public Sector *						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Government Securities’ Net Position			15,825				28,997				16,401				14,758				18,200
Lebac / Nobac			11,752				25,104				12,619				10,770				13,972
Other			4,073				3,893				3,782				3,988				4,228
Other Receivables Resulting from Financial Brokerage			873				943				960				782				747
Trust Certificates of Participation and Securities			671				684				709				689				718
Other			202				259				251				93				29
Total Exposure			16,698				29,940				17,361				15,540				18,947

 

*	Excludes deposits with the Argentine Central Bank, which constitute one of the items by which the Bank complies with the Argentine Central Bank’s minimum cash requirement.

As of June 30, 2016, the Bank’s exposure to the public sector amounted to Ps.16,698 million. Excluding debt securities issued by the Argentine Central Bank, said exposure reached Ps.4,946 million (2.5% of total assets), while as of June 30, 2015, it amounted to Ps.4,975 million (3.8% of total assets).

 

		In millions of pesos
Table XII Deposits *						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
In Pesos			97,117				88,990				85,866				75,955				72,304
Current Accounts			24,252				20,685				19,522				19,728				19,016
Saving Accounts			20,434				16,880				18,835				16,657				15,767
Time Deposits			50,444				49,515				46,071				38,389				36,446
Other			1,987				1,910				1,438				1,181				1,075
In Foreign Currency			21,193				19,201				14,403				6,629				5,052
Total Deposits			118,310				108,191				100,269				82,584				77,356

 

*	Includes CFA.

At the end of the quarter the Bank’s deposits amounted to Ps.118,310 million, representing a 52.9% increase during the last twelve months, as a consequence of the 34.3% increase of peso-denominated deposits and of 319.5% increase of dollar-denominated deposits. During the quarter, the increase was of 9.4%, with growths of 9.1% and 10.4% for peso-denominated deposits and dollar-denominated deposits, respectively.

Dollar-denominated deposits amounted to US$1,420 million, increasing 155.4% as compared to the same quarter of 2015 and 7.8% as compared to the first quarter of 2016, together with a 64.2% increase in the quotation of the dollar during the last twelve months.

 

		Percentages
Table XIII Market Share *						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Total Deposits			7.87				7.73				7.42				7.12				6.97
Private Sector Deposits			9.61				9.37				9.41				8.92				8.73

 

*	Banco Galicia and CFA, within the Argentine financial system, according to the daily information on deposits published by the Argentine Central Bank. Deposits and Loans include only principal.

As of June 30, 2016, the Bank’s estimated market share of private sector deposits in the Argentine financial system was 9.61%, compared to 9.37% of the prior quarter and to 8.73% of a year before.

 

				10

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		In millions of pesos
Table XIV						FY2016												FY2015
Other Financial Liabilities		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Domestic Financial Institutions and Credit Entities			2,362				2,176				1,389				1,136				1,423
Foreign Financial Institutions and Credit Entities			1,885				1,423				1,406				1,284				1,843
Notes*			15,304				13,737				12,748				10,362				10,468
Obligations in Connection with Spot Transactions Pending Settlement and Repurchase Agreement Transactions			16,489				9,303				1,059				5,184				8,443
Obligations in Connection with Debts with Merchants due to Credit-Card Activities			15,392				15,223				15,316				11,986				10,917
Other			6,763				8,470				9,075				4,664				4,017
Total			58,195				50,332				40,993				34,616				37,111

 

*	Includes subordinated notes.

As of June 30, 2016, other financial liabilities amounted to Ps.58,195 million, Ps.21,084 million or 56.8% higher than the Ps.37,111 million recorded a year before. This growth was mainly due to the increase of: (i) spot transactions pending settlement and repurchase agreement transactions of government securities, for Ps.8,046 million; (ii) financing from merchants in connection with credit card activities, for Ps.4,475 million; (iii) notes, for Ps.4,836 million, related to transactions of Tarjeta Naranja S.A., Tarjetas Cuyanas S.A., Tarjetas del Mar S.A. and CFA S.A., offset by the amortizations made during the last twelve months and by the evolution of the exchange rate during the period; and (iv) the item “Other”, for Ps.2,746 million, where it is worth to noting the higher volume of exports from clients pending settlement together with the evolution of the exchange rate and the increase of the amount to be paid to clients of Banco Galicia in connection with outstanding contracts of sales of foreign currency forward transactions.

As of June 30, 2016, the Bank had 3.9 million deposit accounts, which represent an increase of approximately 711 thousand accounts as compared with the same date of the previous year. Likewise, the number of credit cards reached 14.3 million, 1.7 million more than those managed a year before.

ASSET QUALITY

 

		In millions of pesos, except percentages
Table XV						FY2016												FY2015
Loan Portfolio Quality		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Non-Accrual Loans *			3,894				3,552				3,167				3,126				3,076
With Preferred Guarantees			116				99				106				54				44
With Other Guarantees			84				116				103				118				92
Without Guarantees			3,694				3,337				2,958				2,954				2,940
Allowance for Loan Losses			4,021				3,847				3,560				3,401				3,288
Non-Accrual Loans to Private-Sector Loans (%)			3.44				3.32				3.11				3.62				3.70
Allowance for Loan Losses to Private-Sector Loans (%)			3.55				3.59				3.49				3.94				3.96
Allowance for Loan Losses to Non-Accrual Loans (%)			103.26				108.31				112.41				108.80				106.89
Non-Accrual Loans with Guarantees to Non-Accrual Loans (%)			5.14				6.05				6.60				5.50				4.42

 

*	The non-accrual portfolio includes loans classified under the following categories of the Argentine Central Bank classification: With Problems and Medium Risk, High Risk of Insolvency and High Risk, Uncollectible and Uncollectible due to Technical Reasons.

The Bank’s non-accrual loan portfolio amounted to Ps.3,894 million as of June 30, 2016, representing 3.44% of total loans to the private-sector, recording a 26 bp improvement as compared to the 3.70% ratio of a year before.

 

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The coverage of the non-accrual loan portfolio with allowances for loan losses reached 103.26% as of June 30, 2016, compared to 106.89% of a year before.

In terms of total Credit—defined as loans, certain accounts included in “Other Receivables Resulting from Financial Brokerage” representing credit transactions, assets under financial leases, guarantees granted and unused balances of loans granted—the Bank’s non-accrual portfolio represented 3.10% of total credit to the private-sector, and its coverage with allowances for loan losses reached 104.34%, compared to 3.38% and 107.61% of a year before, respectively.

On an individual basis Banco Galicia’s non-accrual loan portfolio amounted to Ps.1,627 million as of June 30, 2016, increasing 45.7% during the last twelve months, representing 1.93% of total loans to the private-sector, compared to the 1.80% ratio recorded a year before. The coverage with allowances for loan losses reached 120.10%, compared to 145.75% as of June 30, 2015.

 

		In millions of pesos
Table XVI Consolidated Analysis of Loan Loss Experience						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Allowance for Loan Losses at the Beginning of the Quarter			3,847				3,560				3,401				3,288				2,996
Changes in the Allowance for Loan Losses
Provisions Charged to Income			702				593				657				437				481
Provisions Reversed			(18	)			—				—				—				—
Charge Offs			(510	)			(306	)			(498	)			(324	)			(189	)
Allowance for Loan Losses at Quarter End			4,021				3,847				3,560				3,401				3,288
Charge to the Income Statement
Provisions Charged to Income			(702	)			(593	)			(657	)			(428	)			(470	)
Direct Charge Offs			(24	)			(18	)			(21	)			(19	)			(14	)
Bad Debts Recovered			85				56				86				74				65
Provisions Reversed *			18				—				—				—				—
Net Charge to the Income Statement			(623	)			(555	)			(592	)			(373	)			(419	)

 

*	Recorded under “Net Other Income/(Loss)”.

During the quarter, Ps.510 million were charged off against the allowance for loan losses and direct charges to the income statement for Ps.24 million were made.

 

				12

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CAPITALIZATION AND LIQUIDITY

 

		In millions of pesos, except ratios
Table XVII Consolidated Regulatory Capital *						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Minimum Capital Required (A)			12,053				12,457				11,063				8,807				7,993
Allocated to Credit Risk			9,036				9,397				8,369				6,377				5,776
Allocated to Market Risk			259				477				296				250				174
Allocated to Operational Risk			2,758				2,583				2,398				2,180				2,043
Computable Capital (B)			16,144				14,500				14,071				12,674				11,536
Tier I			14,092				12,510				11,732				10,599				9,692
Tier II			2,052				1,990				2,339				1,857				1,741
Additional Capital – Market Variation			—				—				—				218				103
Excess over Required Capital (B) - (A) (1)			4,091				2,043				3,008				3,867				3,543
Total Capital Ratio (%) (2)			14.35				11.75				13.38				15.77				16.03
Regulatory Ratio (%) (3)			10.98				9.52				10.18				11.51				11.55

 

*

Through its Communiqué “A” 5831, the Argentine Central Bank established that, beginning in December 2015, the capital requirement on credit risk has to be calculated considering the balances as of the last day of each month (previously the balances to be considered were the average balances corresponding to the second month before the determination of the requirement). Regarding computable capital, the one to be considered is that of the same month of the requirement (previously it was that of a month before).

(1)	The excess capital covers the 0.25% increase of the additional requirement related to the function of custodian of titles representative of investments of the Fondo de Garantía y Sustentabilidad del Sistema Integrado Previsional Argentino.

(2)	Total computable capital / risk weighted assets (credit and market risks).

(3)	In accordance with Argentine Central Bank regulations, operational risk is to be considered in order to determine risk weighted assets. The requirement on operational risk is related the evolution of the average of financial income and fee income.

As of June 30, 2016, the Bank’s consolidated computable capital was Ps.4,091 million (33.9%) higher than the Ps.12,053 million capital requirement. As of June 30, 2015, this excess amounted to Ps.3,543 million or 44.3%.

The minimum capital requirement increased Ps.4,060 million as compared to June 30, 2015, mainly as a result of higher requirements of: (i) Ps.3,260 million due to the growth of the private-sector loan portfolio; and (ii) Ps.715 million on operational risk.

Computable capital increased Ps.4,608 million as compared to June 30, 2015, mainly as a consequence of a higher Tier I capital, for Ps.4,400 million, due to the higher net income, partially offset by higher deductions, resulting from organization and development expenses. Tier II capital recorded a Ps.311 million increase, mainly as a consequence of the higher balance of the provision for loan losses on the credit portfolio in normal situation, offset by the 24% limit (42% until December 31, 2015) on the balance of subordinated notes admitted for the 2016 fiscal year due to the relevant regulations in force.

 

		Percentages
Table XVIII Liquidity (unconsolidated)						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Liquid Assets * as a percentage of Transactional Deposits			92.09				91.72				91.51				75.28				76.94
Liquid Assets * as a percentage of Total Deposits			46.48				42.32				42.93				37.05				37.41

 

*

Liquid assets include cash and due from banks (including deposits with the Argentine Central Bank and the special escrow accounts with the monetary authority), holdings of Lebac and Nobac (Argentine Central Bank’s bills and notes, respectively), net call money interbank loans, short-term placements with correspondent banks and reverse repurchase agreement transactions with the local market.

As of June 30, 2016, the Bank’s liquid assets represented 92.09% of the Bank’s transactional deposits and 46.48% of its total deposits, as compared to 76.94% and 37.41%, respectively, as of June 30, 2015.

 

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BANCO DE GALICIA Y BUENOS AIRES S.A.

SELECTED FINANCIAL INFORMATION - CONSOLIDATED DATA ^*

 

		In millions of pesos
						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
Cash and Due from Banks			28,427				19,891				30,828				17,466				10,871
Government and Corporate Securities			28,764				29,348				15,045				16,637				19,187
Net Loans			109,341				103,240				98,342				82,837				79,763
Other Receivables Resulting from Financial Brokerage			22,148				16,837				8,248				10,413				13,694
Equity Investments in Other Companies			177				150				129				104				109
Bank Premises and Equipment, Miscellaneous and Intangible Assets			5,510				5,051				4,838				4,648				3,996
Other Assets			3,744				4,641				3,120				2,689				2,849
Total Assets			198,111				179,158				160,550				134,794				130,469
Deposits			118,226				108,008				100,183				82,487				77,285
Other Liabilities Resulting from Financial Brokerage			54,314				46,679				37,692				32,314				34,861
Subordinated Notes			3,881				3,653				3,301				2,302				2,250
Other			4,427				4,702				4,503				3,980				3,571
Minority Interests			1,152				1,158				1,059				946				844
Total Liabilities			182,000				164,200				146,738				122,029				118,811
Shareholders’ Equity			16,111				14,958				13,812				12,765				11,658
Foreign-Currency Assets and Liabilities
Assets			33,607				28,853				27,237				16,884				16,729
Liabilities			34,789				32,775				28,051				16,535				16,678
Net Forward Purchases/(Sales) of Foreign Currency (1)			2,785				3,639				3,142				1,621				(690	)

 

*	Banco de Galicia y Buenos Aires S.A. consolidated with subsidiary companies (Section 33 - Law No. 19,550).

(1)	Recorded off-balance sheet.

 

				14

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BANCO DE GALICIA Y BUENOS AIRES S.A.:

SELECTED FINANCIAL INFORMATION - CONSOLIDATED DATA^*

 

		In millions of pesos
						FY2016												FY2015
		2nd Q				1st Q				4th Q				3rd Q				2nd Q
FINANCIAL INCOME			9,003				8,694				7,939				6,393				5,779
Interest on Loans to the Financial Sector			85				64				42				21				9
Interest on Overdrafts			776				701				573				531				398
Interest on Promissory Notes			1,619				1,657				1,525				1,242				1,129
Interest on Mortgage Loans			133				123				109				96				85
Interest on Pledge Loans			22				23				23				23				21
Interest on Credit-Card Loans			3,351				2,950				2,567				2,239				2,309
Interest on Financial Leases			75				75				71				53				51
Interest on Other Loans			1,216				1,081				946				831				780
Net Income from Government and Corporate Securities			1,582				1,343				1,166				1,225				888
Net Income from Options			—				—				88				4				(1	)
Interest on Other Receivables Resulting from Financial Brokerage			5				12				(6	)			23				15
Net Income from Secured Loans - Decree No. 1387/01			—				—				—				—				1
CER Adjustment			—				—				—				—				3
Other			(19	)			326				982				43				40
Quotation Differences on Gold and Foreign Currency			158				339				(147	)			62				51
FINANCIAL EXPENSES			(5,377	)			(5,105	)			(4,174	)			(3,318	)			(3,151	)
Interest on Saving Accounts Deposits			(1	)			(1	)			(1	)			(1	)			0
Interest on Time Deposits			(3,671	)			(3,468	)			(2,570	)			(2,194	)			(2,016	)
Interest on Subordinated Obligations			(148	)			(151	)			(108	)			(93	)			(88	)
Other Interest			(20	)			(12	)			(119	)			(22	)			(20	)
Interest on Interbank Loans Received (Call Money Loans)			(11	)			(15	)			(15	)			(8	)			(12	)
Interest on Other Financing from Financial Entities			(38	)			(29	)			(20	)			(18	)			(25	)
Net Income from Options			(3	)			(19	)			—				—				—
Interest on Other Liabilities Resulting from Financial Brokerage			(758	)			(601	)			(466	)			(463	)			(432	)
Contributions to the Deposit Insurance Fund			(50	)			(163	)			(138	)			(128	)			(119	)
Quotation Differences on Gold and Foreign Currency			—				—				(256	)			—				—
CER Adjustment			(1	)			—				—				—				—
Other			(676	)			(646	)			(481	)			(391	)			(439	)
GROSS FINANCIAL MARGIN			3,626				3,589				3,765				3,075				2,628
PROVISIONS FOR LOAN LOSSES			(723	)			(618	)			(691	)			(448	)			(484	)
INCOME FROM SERVICES, NET			2,671				2,388				2,380				2,227				2,055
ADMINISTRATIVE EXPENSES			(4,082	)			(3,647	)			(3,607	)			(3,204	)			(2,967	)
Personnel Expenses			(2,270	)			(2,014	)			(1,963	)			(1,747	)			(1,654	)
Directors’ and Syndics’ Fees			(14	)			(15	)			(25	)			(27	)			(27	)
Other Fees			(105	)			(83	)			(112	)			(105	)			(87	)
Advertising and Publicity			(200	)			(141	)			(158	)			(141	)			(135	)
Taxes			(391	)			(359	)			(325	)			(286	)			(263	)
Depreciation of Premises and Equipment			(66	)			(60	)			(60	)			(55	)			(50	)
Amortization of Organization Expenses			(187	)			(187	)			(194	)			(158	)			(147	)
Other Operating Expenses			(489	)			(458	)			(427	)			(394	)			(355	)
Other			(360	)			(330	)			(343	)			(291	)			(249	)
MINORITY INTEREST RESULTS			(52	)			(99	)			(113	)			(101	)			(74	)
INCOME FROM EQUITY INVESTMENTS			103				27				24				61				37
NET OTHER INCOME / (LOSS)			275				187				33				153				172
INCOME TAX			(665	)			(681	)			(744	)			(656	)			(489	)
NET INCOME / (LOSS)			1,153				1,146				1,047				1,107				878

 

*	Banco de Galicia y Buenos Aires S.A., consolidated with subsidiary companies (Section 33 – Law No. 19,550).

 

				15

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CONSUMER FINANCE BUSINESS – ADITIONAL INFORMATION

TARJETAS REGIONALES S.A.

The data shown in the following tables correspond to Tarjetas Regionales S.A. consolidated with its subsidiaries (Tarjeta Naranja S.A., Tarjetas Cuyanas S.A., Procesadora Regional S.A. and Cobranzas Regionales S.A.). Figures are stated according to Argentine Central Bank accounting standards.

 

		In millions of pesos, except percentages
Table XIX Selected Information						FY2016				FY2015				Variation (%)
		2nd Q				1st Q				2nd Q				2Q16 vs 1Q16				2Q16 vs 2Q15
Total Assets			25,146				23,573				18,640				6.7				34.9
Cash and Due from Banks			363				326				289				11.3				25.6
Loans			22,716				21,316				16,008				6.6				41.9
Total Liabilities			20,432				18,861				15,281				8.3				33.7
Notes			5,442				4,526				4,691				20.2				16.0
Financial Entities			2,247				1,851				1,328				21.4				69.2
Merchants			10,705				10,523				7,677				1.7				39.4
Shareholders’ Equity			4,714				4,712				3,359				0.0				40.3
Net Income			211				429				296				(50.8	)			(28.7	)
Net Financial Income			824				863				543				(4.5	)			51.7
Net Income from Services			1,104				1,094				950				0.9				16.2
Provisions for Loan Losses			(325	)			(255	)			(141	)			27.5				130.5
Administrative Expenses			(1,358	)			(1,130	)			(989	)			20.2				37.3
Loan Portfolio Quality															Variation (b.p.)
Non-Accrual Loans to Total Loans (%)			6.39				6.11				7.36				28				(97	)
Allowance for Loan Losses to Total Loans (%)			6.03				5.76				6.75				27				(72	)
Allowance for Loan Losses to Non-Accrual Loans (%)			94.30				94.28				91.69				2				261

 

		Percentages
Table XX		FY2016				FY2015				Six Months Ended
Profitability and Efficiency		2nd Q				2nd Q				06/30/16				06/30/15
Return on Average Assets *			3.61				6.90				5.63				7.20
Return on Average Shareholders’ Equity *			18.03				35.26				27.79				37.15
Financial Margin * (1)			14.40				12.84				15.23				13.36
Net Income from Services as a % of Operating Income (2)			57.26				63.63				56.58				62.44
Net Income from Services as a % of Administrative Expenses			81.30				96.06				88.38				101.94
Administrative Expenses as a % of Operating Income (2)			70.44				66.24				64.02				61.25

 

*	Annualized.

(1)	Financial Margin: Financial Income minus Financial Expenses, divided by Average Interest-earning Assets.

(2)	Operating Income: Net Financial Income plus Net Income from Services.

 

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COMPAÑÍA FINANCIERA ARGENTINA S.A.

 

		In millions of pesos, except percentages
Table XXI						FY2016				FY2015				Variation (%)
Selected Information		2nd Q				1st Q				2nd Q				2Q16 vs 1Q16				2Q16 vs 2Q15
Total Assets			4,371				4,229				3,847				3.4				13.6
Cash and Due from Banks			220				180				333				22.2				(33.9	)
Loans			3,520				3,273				2,898				7.5				21.5
Total Liabilities			3,288				2,926				2,668				12.4				23.2
Deposits			770				922				938				(16.5	)			(17.9	)
Notes			1,352				1,032				802				31.0				68.6
Financial Entities			201				256				285				(21.5	)			(29.5	)
Shareholders’ Equity			1,083				1,303				1,179				(16.9	)			(8.1	)
Net Income			80				53				29				50.9				175.9
Net Financial Income			330				319				271				3.4				21.8
Net Income from Services			61				54				44				13.0				38.6
Provisions for Loan Losses			(70	)			(72	)			(89	)			(2.8	)			(21.3	)
Administrative Expenses			(277	)			(244	)			(215	)			13.5				28.8
Loan Portfolio Quality															Variation (b.p.)
Non-Accrual Loans to Total Loans (%)			14.43				14.54				18.21				(11	)			(378	)
Allowance for Loan Losses to Total Loans (%)			11.72				12.98				12.73				(126	)			(101	)
Allowance for Loan Losses to Non-Accrual Loans (%)			81.22				89.21				69.92				(799	)			1,130

 

		Percentages
Table XXII		FY2016				FY2015				Six Months Ended
Profitability and Efficiency		2nd Q				2nd Q				06/30/16				06/30/15
Return on Average Assets *			7.53				3.06				6.58				3.02
Return on Average Shareholders’ Equity *			28.37				9.67				22.06				9.44
Financial Margin * (1)			32.73				31.27				33.69				32.22
Net Income from Services as a % of Operating Income (2)			15.60				13.97				15.05				13.38
Net Income from Services as a % of Administrative Expenses			22.02				20.47				22.07				21.00
Administrative Expenses as a % of Operating Income (2)			70.84				68.25				68.19				63.69

 

*	Annualized.

(1)	Financial Margin: Financial Income minus Financial Expenses, divided by Average Interest-earning Assets.

(2)	Operating Income: Net Financial Income plus Net Income from Services.

 

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SUDAMERICANA HOLDING S.A.

INFORMATION DISCLOSURE

The data shown in the tables of this report and the consolidated financial statements correspond to Sudamericana Holding S.A. consolidated with the subsidiaries under its direct or indirect control (Galicia Seguros S.A., Galicia Retiro Compañía de Seguros S.A. and Galicia Broker Asesores de Seguros S.A.).

RESULTS FOR THE QUARTER THAT ENDED ON JUNE 30, 2016

 

		In millions of pesos, except percentages
Table XXIII		Quarters ended:												Variation (%)
Selected Information		06/30/16				03/31/16				06/30/15				Quarter				Annual
Assets			2,225				1,816				1,308				22.5				70.1
Premiums Receivable			486				446				346				9.0				40.5
Reinsurance Recoverables			4				2				3				100.0				33.3
Liabilities			1,169				982				769				19.0				52.0
Debt with Insureds			177				175				140				1.1				26.4
Debt with Reinsurers			6				4				7				50.0				(14.3	)
Debt with Agents and Brokers			97				105				68				(7.6	)			42.6
Insurance Contract Liabilities			274				245				218				11.8				25.7
Shareholders’ Equity			1,056				835				539				26.5				95.9
Net Income			208				189				77				10.1				170.1
Earned Premiums			840				781				570				7.6				47.4
Incurred Claims			(104	)			(103	)			(83	)			1.0				25.3
Net Investment Income			88				59				35				49.2				151.4
Commissions and Other			(184	)			(167	)			(217	)			10.2				(15.2	)
Operating Expenses			(240	)			(212	)			(140	)			13.2				71.4
Annualized Sales			249				216				170				15.3				46.5

 

		Percentages
Table XXIV:		Quarters ended:								Six months ended:
Profitability		06/30/16				06/30/15				06/30/16				06/30/15
Return on Average Assets *			41.22				25.14				42.48				26.14
Return on Average Shareholders’ Equity *			86.06				60.04				90.96				63.83

 

*	Annualized.

 

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GALICIA ADMINISTRADORA DE FONDOS S.A.

RESULTS FOR THE SECOND QUARTER

 

		In millions of pesos, except percentages
Table XXV:						FY2016				FY2015				Variation (%)
Selected Information		2nd Q				1st Q				2nd Q				2Q16 vs 1Q16				2Q16 vs 2Q15
Shareholders’ Equity			78				41				47				90.2				66.0
Net Income			36				32				24				12.5				50.0
Fees and Commissions			63				49				44				28.6				43.2
Administrative Expenses			(10	)			(9	)			(7	)			11.1				42.9
Commercial Expenses			(4	)			(3	)			(2	)			33.3				100.0

 

		In millions of pesos, except percentages
Table XXVI:		Assets Under Management as of:								Variation
Mutual Funds		06/30/16				06/30/15				Ps.				%
Fima Premium			4,040				4,075				(35	)			(0.9	)
Fima Ahorro Pesos			11,234				4,506				6,728				149.3
Fima Ahorro Plus			6,213				6,362				(149	)			(2.3	)
Fima Capital Plus			643				1,121				(478	)			(42.6	)
Fima Renta en Pesos			139				56				83				148.2
Fima Renta Plus			179				68				111				163.2
Fima Abierto Pymes			232				181				51				28.2
Fima Acciones			83				84				(1	)			(1.2	)
Fima PB Acciones			247				242				5				2.1
Fima Mix I			863				—				863				100.0
Total Assets Under Management			23,873				16,695				7,178				43.0

 

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RECENT DEVELOPMENTS

BANCO GALICIA

NOTES

On July 19, 2016, the Bank issued subordinated Notes for a nominal value of US$250 million, due on July 19, 2026. The notes will bear a fixed annual interest rate of 8.250% from July 19, 2016 to, but excluding, July 19, 2021. From and after this date to, but excluding, the date of maturity 715.6 basis points will be added to the US 5-year Treasury Bond rate as of said date. Interest will be paid semi-annually, on January 19 and July 19, commencing in 2017, and the principal amount will be amortized in full on July 19, 2026.

On July 19, 2021, the Bank has the right to redeem the notes, in whole but not in part, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest thereon.

The proceeds will be used to repay the outstanding subordinated notes due in 2019. The early redemption will take place on August 22, 2016, for 100% of its nominal value plus accrued and unpaid interest.

This issuance is the first Argentine transaction under Basel III regulations and it is considered Tier II capital according to Argentine Central Bank regulations. The success of the placement was shown by the demand of investors, who made offers for around US$1.3 billion, 5 times higher than the amount issued.

DISTRIBUTION NETWORK

During the quarter and in July, the Bank increased its distribution network with the opening of 3 branches: Cutral Có and Añelo, in the province of Neuquén, and Laguna del Sol, in the province of Buenos Aires.

DIVIDEND DISTRIBUTION

At CFA’s Ordinary and Extraordinary Shareholders’ Meetings held on April 21 and August 1, 2016, the shareholders approved the payment of cash dividends for Ps.300 million and Ps.77 million, respectively, in both cases subject to the approval of the Argentine Central Bank.

REGULATORY CHANGES

NET POSITION IN FOREIGN CURRENCY

On June 23, 2016, through its Communiqué “A” 5997, the Argentine Central Bank established a new limit on the long net position in foreign currency. Commencing on July 1, the limit was established at 15% (previously 10%) of the computable regulatory capital or of its own liquid resources, whichever is the lesser, and the limit on forward transactions was removed (previously 5%).

CREDIT LINE FOR PRODUCTION FINANCING AND FINANCIAL INCLUSION

Through its Communiqué “A”5975”, issued on May 17, the Argentine Central Bank established a new amount to be granted under “Credit Line for Production Financing and Financial Inclusion”. At the end

 

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of 2016 financial institutions must have a balance of financing equivalent to at least 15.5% (14% for the first half of 2016) of deposits of non-financial private sector in pesos, calculated based on the monthly average of daily balances of May 2016. For these purposes, the simple average of the daily balances of existing loans between July 1 and December 31, 2016, will be considered. The line has a 22% annual interest rate, and a minimum term of 3 years.

DIVIDEND DISTRIBUTION

On June 9, through its Communiqué “A” 5985 the Argentine Central Bank removed the regulation regarding dividend distribution which required financial institutions to have an excess of computable capital over the minimum requirement of at least 75%, after the payment of such dividend. In order to be able to distribute dividends, financial entities considered domestic systemically important, such as Banco Galicia, must have a capital conservation buffer of at least 3.5% of risk-weighted assets in addition to the minimum capital requirement. Said buffer must be fully comprised of capital qualified as Tier I. Dividend distribution will be limited when the level and composition of the entity’s computable capital is within the range of the capital conservation buffer and requires the prior authorization of the Argentine Central Bank.

TAX AMNESTY LAW

By Law No.27,260 a tax amnesty regime was established, which consists of a “voluntary and exceptional” system and enables a series of alternatives in order to declare holdings of national and foreign currency, and other property in Argentina or abroad that has not been declared to the tax authorities.

MINIMUM CASH REQUIREMENTS

Through its Communiqué “A” 5980, issued on May 26, the Argentine Central Bank increased the rates that financial entities must apply in order to determine the minimum cash requirements. Said increase was made in two tranches (the first one in June and the second one commencing on July 1) of 2.5 percentage points each for sight deposits and up to 1.5 percentage point each for time deposits.

FOREIGN EXCHANGE MARKET

On May 5, through its Communiqué “A” 5964, the Argentine Central Bank established that beginning on June 6 financial institutions that have opened accounts in foreign currency for clients should allow the accreditation in such accounts of transfers from abroad in foreign currency as well as to debit foreign currency deposited locally in such accounts to be transferred abroad. In addition, through Communiqué “A” 5963, the maximum monthly purchase limit of foreign currency was increased to US$5 million (previously US$2 million).

Finally, on August 8, through its Communiqué “A” 6037, the Argentine Central Bank removed certain regulations which were still in force related to controls and limits to access to the foreign exchange market, among which was the above mentioned US$5 million monthly limit to purchase foreign currency.

 

This report is a summary analysis of Grupo Financiero Galicia’s financial condition and results of operations as of and for the periods indicated. For a correct interpretation, this report must be read in conjunction with Grupo Financiero Galicia’s financial statements, as well as with all other material periodically filed with the National Securities Commission (www.cnv.gob.ar), the Buenos Aires Stock Exchange (www.bolsar.com), the Cordoba Stock Exchange (www.bolsacba.com.ar) and the Nasdaq (www.nasdaq.com). In addition, the Argentine Central Bank (www.bcra.gob.ar) may publish information related to Banco Galicia as of a date subsequent to the last date for which the Bank has published information.   Readers of this report must note that this is a translation made from an original version written and expressed in Spanish. Therefore, any matters of interpretation should be referred to the original version in Spanish.

 

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