EX-99.1 2 d713665dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

 

LOGO

GRUPO FINANCIERO GALICIA S.A. REPORTS FINANCIAL RESULTS FOR

THE FOURTH QUARTER THAT ENDED ON DECEMBER 31, 2018

Buenos Aires, Argentina, March 7, 2019 – Grupo Financiero Galicia S.A. (BYMA / NASDAQ: GGAL) announced its financial results for the fourth quarter that ended on December 31, 2018 (the “Quarter”).

HIGHLIGHTS

 

Ø  

For the 2018 fiscal year, the results of Grupo Financiero Galicia S.A. (“Grupo Financiero Galicia” or “GFG”) and its subsidiaries are reported in accordance with the International Financial Reporting Standards (“IFRS”) as established by the Argentine Central Bank. For a comparative purposes, figures for 2017 are also presented in accordance with IFRS. In addition, balances of certain items from previous quarters have been reclassified.

 

Ø  

Net income attributable to GFG for the 2018 fiscal year amounted to Ps.14,427 million, 67% higher than the Ps.8,631 million recorded in the prior fiscal year. The profit per share amounted to Ps.10.11, as compared to Ps.6.05 per share recorded for the 2017 fiscal year.

 

Ø  

The results of the 2018 fiscal year were mainly attributable to the income derived from GFG’s interests held in Banco de Galicia y Buenos Aires S.A.U. (“Banco Galicia” or “the Bank”), for Ps.11,536 million, Tarjetas Regionales S.A., for Ps.1,768 million, Sudamericana Holding S.A., for Ps.571 million, and Galicia Administradora de Fondos S.A. (“GAF”), for Ps.402 million, which were also increased by a net operating income of Ps.286 million, and partially offset by administrative expenses of Ps.117 million.

 

Ø  

Net income attributable to Grupo Financiero Galicia for the Quarter amounted to Ps.4,428 million, 55% higher than the Ps.2,851 million recorded in the same quarter of the prior fiscal year. The profit per share for the Quarter amounted to Ps.3.10, compared to Ps.2.00 per share for the same quarter of the 2017 fiscal year.

 

Ø  

The results of the Quarter were mainly attributable to the income derived from GFG’s interest in Banco Galicia, for Ps.4,208 million, in Sudamericana Holding S.A., for Ps.140 million, and in GAF, for Ps.44 million, which were partially offset by a Ps.22 million loss relating to Tarjetas Regionales S.A.

 

Ø  

The Bank’s market share of loans to the private sector was 10.52% and its market share for deposits from the private sector was 11.08%, increasing 87 bp and 88 bp, respectively, as compared to December 31, 2017.

Conference Call:

March 8, 2019, 11:00 am Eastern Time (1:00 pm Buenos Aires Time)

Call-in number: +1 323-994-2082

Conference ID: 8637758

For more information contact:

José Luis Ronsini - CFO

Pablo Firvida - IRO

Tel.: (5411) 6329-4881

inversores@gfgsa.com

www.gfgsa.com

 

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CONSOLIDATED INFORMATION

 

Consolidated Financial Statement            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18     vs 4Q17  

Financial Information

                                           

Assets

             565,234                517,801                327,295                        9                       73  

Net loans and other financing

     286,953        293,940        192,802        (2     49  

Deposits

     360,097        320,052        200,729        13       79  
Shareholders’ equity attributable to GFG      54,878        50,439        41,221        9       33  
Shares outstanding (in thousands of shares) (1)      1,426,765        1,426,765        1,426,765        -       -  
Book value per share (in pesos)      38.46        35.35        28.89        311 bp       957 bp  
Net income attributable to GFG      4,428        4,212        2,851        5       55  

Net income per share (in pesos)

     3.10        2.95        2.00        15 bp       110 bp  

(1) 10 ordinary shares = 1 ADS.

 

Selected Ratios            2018      2017      Variation (bp)            Fiscal Year  
Percentages, except otherwise noted    4Q      3Q      4Q      vs 3Q18     vs 4Q17     2018      2017  

Return (1) on average assets (2)

     3.24        3.55        3.91        (31     (67     3.37        3.49  

Return (1) on average shareholders’ equity (2)

     33.43        34.63        29.03        (120     440       30.53        30.19  

Financial Margin (2) (3)

             14.66                14.54                12.41                12               225               13.68                12.05  

Efficiency ratio (4)

     51.75        47.85        53.56        390       (181     52.07        57.25  

Total capital ratio (5)

     15.11        14.30        10.69        81       442       -        -  

Non-performing loans / Private-sector loans

     3.51        3.07        2.86        44       65       -        -  

Allowance for loan losses / Private-sector loans

     3.88        3.13        3.06        75       82       -        -  

Allowance for loan losses / Non-accrual loans

     110.59        101.80        107.08        879       351       -        -  

Cost of risk (2)

     4.74        4.15        2.74        59       200       3.89        2.74  

(1) Net income attributable to GFG.

(2) Annualized.

(3) Net interest income plus net fee income plus net result from financial instruments plus foreign currency quotation differences plus insurance premiums earned plus certain items included in other operating income and expenses, divided by the average balance of interest-earning assets.

(4) Personnel expenses plus administrative expenses plus depreciation and devaluations of assets, divided by net interest income plus net fee income plus net result from financial instruments plus foreign currency quotation differences plus insurance premiums earned plus certain items included in other operating income.

(5) Banco Galicia consolidated with Tarjetas Regionales S.A..

 

Market Indicators              2018        2017                Variation  
In pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18      vs 4Q17  

Market price

                                               (bp

Shares – BYMA

     103.30          105.65          123.70          (235      (2,040

ADS – NASDAQ (in US$)

     27.57          25.43          65.85          214        (3,828

Price BYMA / book value

     2.69          2.99          4.28          (30      (159
Average daily volume (in thousands of shares)                                          (%)  

BYMA

     1,238          1,587          644          (22      92  

NASDAQ (1)

     9,164          14,035          4,927          (35      86  
Market share (%)                                          (bp)  

Banco Galicia

                                                  

Loans to the private sector

     10.52          10.58          9.65          (6      87  

Deposits from the private sector

     11.08          11.04          10.20          4        88  

Galicia Administradora de Fondos S.A.

     10.08          10.17          12.50          (9      (242

(1) Expressed in equivalent shares: 10 ordinary shares = 1 ADS.

 

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GRUPO FINANCIERO GALICIA

RESULTS FOR THE FISCAL YEAR

 

Income Statement    2018        2017        Variation (%)  
In millions of pesos, except otherwise noted                            

Results from Equity Investments

     14,316          8,039          78  

Banco de Galicia y Buenos Aires S.A.U.

     11,536          7,178          61  

Tarjetas Regionales S.A. (1)

     1,768          -          N/A  

Galicia Administradora de Fondos S.A.

     402          428          (6)  

Sudamericana Holding S.A.

     571          409          40  

Other subsidiaries (2)

     39          24          63  

Net operating income

     286          699          (59)  

Administrative expenses

     (117)          (94)          24  

Other operating income and expenses

     (4)          3          (233)  

Income tax

     (54)          (16)          238  

Net income attributable to GFG

     14,427          8,631          67  

Other comprehensive income

     (75)          (267)          (72)  

Comprehensive income attributable to GFG

     14,352          8,364          72  

(1) 83% since January 1, 2018 (77% from the split-merger agreement with Banco Galicia and 6% from the acquisition of a minority interest).

(2) Includes the result from the interest in Galicia Warrants S.A. (87.5%) and Galicia Valores S.A. (1%).

Net income attributable to GFG for the 2018 fiscal year amounted to Ps.14,427 million, which represented a 3.37% annualized return on average assets and a 30.53% return on average shareholder’s equity.

The results described above are mainly attributable to profits from GFG’s interests in Banco Galicia, for Ps.11,536 million, Tarjetas Regionales S.A., for Ps.1,768 million, Sudamericana Holding S.A., for Ps.571 million, and GAF, for Ps.402 million. In the 2017 fiscal year, results from equity investments in Banco Galicia also included the interest in Tarjetas Regionales S.A.

RESULTS FOR THE QUARTER

 

Income Statement              2018        2017                  Variation (%)  
In millions of pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18        vs 4Q17  

Results from Equity Investments

     4,368          4,190          2,169          4          101  

Banco de Galicia y Buenos Aires S.A.U.

     4,208          3,404          1,913          24          120  

Tarjetas Regionales S.A. (1)

     (22)          524          -          (104)          N/A  

Galicia Administradora de Fondos S.A.

     44          78          132          (44)          (67)  

Sudamericana Holding S.A.

     140          166          125          (16)          12  

Other subsidiaries (2)

     (2)          18          (1)          (111)          100  

Net operating income

     105          57          712          84          (85)  

Administrative expenses

     (15)          (24)          (17)          (38)          (12)  

Other operating income and expenses

     (5)          (1)          3          400          (267)  

Income tax

     (25)          (10)          (16)          150          56  

Net income attributable to GFG

     4,428          4,212          2,851          5          55  

Other comprehensive income

     4          (81)          9          (105)          (56)  

Comprehensive income attributable to GFG

     4,432          4,131          2,860          7          55  

(1) 83% since January 1, 2018 (77% from the split-merger agreement with Banco Galicia and 6% from the acquisition of a minority interest).

(2) Includes the result from the interest in Galicia Warrants S.A. (87.5%) and Galicia Valores S.A. (1%).

Net income attributable to GFG for the Quarter amounted to Ps.4,428 million, which represented a 3.24% annualized return on average assets and a 33.43% return on average shareholders’ equity.

 

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This result was mainly due to profits from GFG’s interests in Banco Galicia, for Ps.4,208 million, Sudamericana Holding S.A., for Ps.140 million, and GAF, for Ps.44 million, which were partially offset by a Ps.22 million loss recorded relating to Tarjetas Regionales S.A. In the fourth quarter of the 2017 fiscal year, results from equity investments in Banco Galicia included its interest in Tarjetas Regionales S.A.

SELECTED FINANCIAL INFORMATION - CONSOLIDATED

 

Balance Sheet              2018        2017        Variation (%)  
In millions of pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18        vs 4Q17  

Assets

                                                    

Cash and due from banks

     143,309          116,815          58,955          23          143  

Debt securities

     75,989          22,563          28,953          237          162  

Net loans and other financing

     286,953          293,940          192,802          (2)          49  
Other financial assets      38,312          65,817          26,338          (42)          45  
Property, bank premises, equipment      10,885          10,522          9,790          3          11  
Intangible assets      3,744          1,112          906          237          313  
Other assets      5,638          6,788          3,666          (17)          54  

Assets available for sale (1)

     404          244          5,885          66          (93)  

Total assets

     565,234          517,801          327,295          9          73  

Liabilities

                                                    

Deposits

     360,097          320,052          200,729          13          79  

Financing from financial entities

     19,446          26,457          7,869          (26)          147  

Other financial liabilities

     69,165          64,966          39,193          6          76  

Notes

     29,984          26,794          13,735          12          118  

Subordinated notes

     9,768          10,357          4,828          (6)          102  

Other liabilities

     20,175          17,011          17,785          19          13  

Total liabilities

     508,635          465,637          284,139          9          79  
Shareholders’ equity attributable to third parties      1,721          1,725          1,935          -          (11)  
Shareholders’ equity attributable to GFG      54,878          50,439          41,221          9          33  

Shareholders’ equity

     56,599          52,164          43,156          9          31  

(1) Includes the interest in Compañía Financiera Argentina and in Cobranzas y Servicios until the fourth quarter of 2017, and the interest in Prisma Medios de Pago since the third quarter of 2017.

 

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Income Statement              2018        2017        Variation (%)  
In millions of pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18        vs 4Q17  
Net interest income      6,667          7,745          5,681          (14)          17  

Interest income

     22,760          18,591          9,995          22          128  

Interest related expenses

     (16,093)          (10,846)          (4,314)          48          273  

Net fee income

     5,246          4,775          4,938          10          6  

Fee income

     6,038          5,590          5,521          8          9  

Fee related expenses

     (792)          (815)          (583)          (3)          36  
Net results from financial instruments      6,239          5,192          1,484          20          320  
Gold and foreign currency quotation differences      1,619          (54)          648          3,098          150  
Other operating income      2,181          1,926          337          13          547  
Underwriting income from insurance business      507          626          405          (19)          25  
Loan loss provisions      (3,489)          (2,827)          (1,287)          23          171  
Net operating income      18,970          17,383          12,206          9          55  
Personnel expenses      (4,291)          (3,390)          (2,993)          27          43  
Administrative expenses      (4,345)          (3,783)          (2,761)          15          57  
Depreciations and devaluations of assets      (353)          (297)          (8)          19          4,313  
Other operating expenses      (3,619)          (3,610)          (2,449)          -          48  
Operating income      6,362          6,303          3,995          1          59  
Results from associates and joint businesses      -          -          16          -          (100)  
Income tax      (1,939)          (1,983)          (990)          (2)          96  
Net income      4,423          4,320          3,021          2          46  
Net income attributable to third parties      (5)          108          170          (105)          (103)  
Net income attributable to GFG      4,428          4,212          2,851          5          55  
Other comprehensive income (1)      4          (81)          9          105          (56)  
Total comprehensive income      4,427          4,239          3,030          4          46  
Comprehensive income attributable to third parties      (5)          108          170          (105)          (103)  
Comprehensive income attributable to GFG      4,432          4,131          2,860          7          55  

(1) Net of income tax.

 

Additional Information                            2018      2017  
(Number of, except otherwise noted)    4Q      3Q      2Q      1Q      4Q  

Employees

     10,209        10,455        10,574        10,581        10,532  

Banco Galicia

     6,294        6,457        6,478        6,393        6,214  

Tarjetas Regionales

     3,488        3,564        3,657        3,760        3,896  

Galicia Administradora de Fondos

     22        21        19        19        19  

Sudamericana Holding

     381        386        391        381        375  

Other companies

     24        27        29        28        28  

Branches and other points of sales

     560        556        558        564        563  

Banco Galicia

     325        319        309        308        306  

Tarjetas Regionales

     238        237        249        256        257  

Deposit Accounts at Banco Galicia (in thousands)

     4,760        4,637        4,505        4,348        4,249  

Credit Cards (in thousands)

         13,916            14,286            14,205            13,391            13,234  

Banco Galicia

     5,098        5,029        4,953        4,222        4,086  

Tarjetas Regionales

     8,818        9,257        9,252        9,169        9,148  

GAF assets under management (millions of pesos)

     64,404        58,115        72,922        91,609        67,771  

Inflation, exchange rate and interest rates

                                            

Consumer price index (IPC) (%)

     11.50        14.10        8.80        6.70        6.14  

Wholesale price index (IPIM) (%)

     4.50        27.50        16.60        11.80        4.67  

Acquisition value unit (UVA)

     31.06        26.73        24.31        22.61        21.15  

Exchange rate (Ps./US$) (1)

     37.81        40.90        28.86        20.14        18.77  

Badlar (quarterly averages) (2)

     50.21        37.08        27.31        22.86        22.48  

(1) 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.

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

 

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BANCO GALICIA

HIGHLIGHTS

 

Ø  

Net income attributable to Banco Galicia for the 2018 fiscal year amounted to Ps.11,536 million, Ps.4,358 million (61%) higher than the figure accounted for in the 2017 fiscal year, mainly due to an increase in net operating income (69%).

 

Ø  

Net income for the Quarter amounted to Ps.4,208 million, Ps.2,295 million (120%) higher than the figure accounted for in the same quarter of the 2017 fiscal year, mainly due to an increase in net operating income (103%). Excluding the results from the split-up of Tarjetas Regionales S.A. (effective as of January 1, 2018), net income increased 224%.

 

Ø  

The credit exposure to the private sector reached Ps.287,891 million, up 58% from the Ps. 182,655 million recorded in the fourth quarter of the 2017 fiscal year, and deposits reached Ps.361,302 million, up 80% from Ps.200,835 million. As of December 31, 2018, the Bank’s estimated market share of loans to the private sector was 10.52%, while its estimated market share of deposits from the private sector was 11.08%.

 

Ø  

The non-accrual loan portfolio represented 2.88% of total loans to the private sector, recording an increase of 88 basis points (“bp”) from the 2.00% recorded at the end of the same quarter of the 2017 fiscal year.

 

Ø  

As of the end of the Quarter, the minimum capital requirement amounted to Ps.27,163 million (up Ps.8,968 million or 49%), and the computable capital was Ps.49,329 million (up Ps.26,525 million or 116%). The excess over the capital requirement amounted to Ps.22,166 million, and the total capital ratio was 15.14%.

INFORMATION DISCLOSURE

The data shown in this report and the consolidated financial statements correspond to Banco de Galicia y Buenos Aires S.A.U., as consolidated, except where otherwise noted.

For comparison purposes, figures for the 2017 fiscal year corresponding to the Bank’s interest in Tarjetas Regionales S.A.(1) (“Tarjetas Regionales”), Compañía Financiera Argentina S.A. (“CFA”)(2) and Cobranzas y Servicios S.A. (“CyS”)(2) are presented in the line of results from associates and joint businesses. In addition, balances of certain items were adjusted or reclassified.

 

 

(1) Beginning in January 1, 2018, the financial statements of Tarjetas Regionales were consolidated line by line with Grupo Financiero Galicia.

(2) On February 2, 2018, the sale of each of Companñĺa Financiera Argentina and Cobranzas y Servicios was completed.

 

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RESULTS FOR THE FISCAL YEAR

 

Income Statement    2018      2017      Variation (%)  
In millions of pesos, except otherwise noted                        

Net interest income

     19,247        12,806        50  

Net fee income

     10,248        7,588        35  

Net results from financial instruments

     14,018        4,193        234  

Gold and foreign currency quotation differences

     3,100        2,087        49  

Other operating income

     5,896        3,190        85  

Loan loss provisions

     (6,511)        (2,587)        152  

Net operating income

             45,998                27,277        69  

Personnel expenses

     (9,498)        (7,103)        34  

Administrative expenses

     (8,618)        (5,824)        48  

Depreciations and devaluations of assets

     (837)        (552)        52  

Other operating expenses

     (10,646)        (6,611)        61  

Operating income

     16,399        7,187        128  

Results from associates and joint businesses

     110        2,374        (95)  

Income tax

     (5,023)        (2,198)        129  

Results from discontinued activities (1) (2)

     51        (185)        (128)  

Net income

     11,537        7,178        61  

Net income attributable to third parties

     1        -        N/A  

Net income attributable to Banco Galicia

     11,536        7,178        61  

Other comprehensive income (1)

     (65)        (281)        (77)  

Total comprehensive income

     11,472        6,897        66  

(1) Net of income tax.

        

    

                          
Profitability and Efficiency    2018      2017      Variation (bp)  
Percentages, except otherwise noted                        

Return (1) on average assets

     3.17        3.06        11  

Return (1) on average shareholders´ equity

     30.86        26.07        479  

Financial margin (1) (2)

     12.93        10.43        250  

Efficiency ratio (3)

     40.35        52.98        (1,263)  

(1) Annualized.

(2) Net interest income plus net fee income plus net result from financial instruments plus foreign currency quotation differences plus certain items included in other operating income, divided by average interest-earning assets.

(3) Personnel expenses plus administrative expenses plus depreciation and devaluations of assets, divided by net interest income plus net fee income plus net result from financial instruments plus foreign currency quotation differences plus insurance premiums earned plus certain items included in other operating income.

In fiscal year 2018 net income attributable to Banco Galicia amounted to Ps.11,536 million, Ps.4,358 million (61%) higher than the Ps.7,178 million profit for the same quarter of the previous fiscal year, which represented a 3.17% annualized return on average assets and a 30.86% return on average shareholders’ equity.

 

       LOGO    7


RESULTS FOR THE QUARTER

 

Income Statement            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Net interest income

     4,623        5,770        3,577        (20)        29  

Net fee income

     2,978        2,691        1,976        11        51  

Net results from financial instruments

     6,026        4,843        989        24        509  

Gold and foreign currency quotation differences

     1,678        (83)        645        2,122        160  

Other operating income

     1,707        1,602        944        7        81  

Loan loss provisions

     (2,055)        (2,032)        (795)        1        158  

Net operating income

             14,957                12,791                7,336                17                104  

Personnel expenses

     (2,916)        (2,324)        (2,007)        25        45  

Administrative expenses

     (2,522)        (2,248)        (1,669)        12        51  

Other operating expenses

     (3,489)        (3,259)        (2,033)        7        72  

Operating income

     6,030        4,960        1,627        22        271  

Results from associates and joint businesses

     24        30        606        (20)        (96)  

Income tax

     (1,846)        (1,585)        (320)        16        477  

Net income

     4,208        3,405        1,913        24        120  

Net income attributable to third parties

     -        1        -        (100)        -  

Net income attributable to Banco Galicia

     4,208        3,404        1,913        24        120  

Other comprehensive income (1)

     3        (82)        4        104        (25)  

Total comprehensive income

     4,211        3,323        1,917        27        120  

(1) Net of income tax.

              

    

                                            
Profitability and Efficiency            2018      2017      Variation (bp)  
Percentages, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Return (1) on average assets

     3.68        3.36        2.84        32        84  

Return (1) on average shareholders´ equity

     39.99        35.60        21.94        439        1,805  

Financial margin (1) (2)

     14.71        14.00        9.96        71        475  

Efficiency ratio (3)

     42.97        41.21        52.24        176        (927)  

(1) Annualized.

(2) Net interest income plus net fee income plus net result from financial instruments plus foreign currency quotation differences plus certain items included in other operating income, divided by average interest-earning assets.

(3) Personnel expenses plus administrative expenses plus depreciation and devaluations of assets, divided by net interest income plus net fee income plus net result from financial instruments plus foreign currency quotation differences plus insurance premiums earned plus certain items included in other operating income.

In the fourth quarter of the 2018 fiscal year a Ps.4,208 million net income attributable to Banco Galicia was recorded, Ps.2,295 million (120%) higher than the Ps.1,913 million for the same quarter of the previous fiscal year, which resulted from a higher net operating income (104%) due to the growth in the net income from financial instruments (509%).

 

       LOGO    8


Net Interest Income            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted                  4Q                    3Q                    4Q            vs 3Q18            vs 4Q17  

Interest income

     18,840        15,265        7,282        23        159  

Private sector securities

     34        41        (1)        (17)        3,500  

Public sector securities (1)

     576        469        (58)        23        1,093  

Loans and other financing

     18,183        14,384        7,092        26        156  

Financial sector

     621        624        220        -        182  

Non-financial private sector

     17,562        13,760        6,872        28        156  

Overdrafts

     3,052        2,985        809        2        277  

Promissory notes

     3,193        2,845        1,664        12        92  

Mortgage loans

     2,568        1,350        239        90        974  

Pledge loans

     71        109        43        (35)        65  

Personal loans

     2,119        1,973        1,452        7        46  

Credit-card loans

     5,269        3,562        2,285        48        131  

Financial leases

     171        127        91        35        88  

Other

     1,119        809        289        38        287  

Other interest-earning assets

     47        371        180        (87)        (74)  

Interest expenses

     (14,217)        (9,495)        (3,705)        50        284  

Deposits from the non-financial private sector

     (12,309)        (7,821)        (3,058)        57        303  

Saving accounts

     (1)        (1)        (1)        -        -  

Time deposits and term investments

     (10,626)        (6,652)        (2,889)        60        268  

Other

     (1,682)        (1,168)        (168)        44        901  

Financing from financial institutions

     (356)        (270)        (137)        32        160  

Repurchase agreement transactions

     (22)        (40)        (94)        (45)        77  

Other interest-bearing liabilities

     (195)        (242)        (47)        (19)        315  

Notes

     (1,335)        (1,122)        (369)        19        262  

Net interest income

     4,623        5,770        3,577        (20)        29  

(1) Corresponds to interest on Bote 2020.

Net interest income for the Quarter amounted to Ps.4,623 million, representing a Ps.1,046 million (29%) increase as compared to the Ps.3,577 million profit from the same quarter of the 2017 fiscal year. This increase was primarily a consequence of a Ps.11,091 million (156%) increase in interest on loans and other financing.

 

                                                                        
Yields and Rates (1)                        2018            2017                   Variation (% / bp)  
Average balances: in millions of pesos          4Q            3Q            4Q     vs 3Q18            vs 4Q17  
Yields and rates: annualized nominal %   Av. B.     Int.     Av. B.     Int.     Av. B.     Int.     Av. B.     Int.     Av. B.     Int.  

Interest-earning assets

    287,490       35.47       263,420       27.85       180,915       18.72       9       762       59       1,675  

In pesos

    194,081       49.70       180,451       37.94       137,287       23.54       8       1,176       41       2,616  

Government securities

    49,073       57.71       28,941       42.78       17,245       23.33       70       1,493       185       3,438  

Loans

    141,109       46.74       144,153       36.54       114,293       23.34       (1)       1,020       23       2,340  

Other interest-earning assets

    3,899       56.21       7,357       46.21       5,749       27.97       (47)       1,000       (32)       2,824  

In foreign currency

    93,409       5.90       82,969       5.93       43,628       3.55       13       (3)       114       235  

Government securities

    2,627       (1.07)       3,522       13.86       5,302       3.85       (25)       (1,493)       (50)       (492)  

Loans

    88,812       6.07       78,101       5.49       37,802       3.22       14       58       135       285  

Other interest-earning assets

    1,970       7.51       1,346       10.40       524       24.43       46       (289)       276       (1,692)  

Interest-bearing liabilities

    296,389       19.22       262,623       14.43       156,551       9.46       13       479       89       976  

In pesos

    144,635       38.03       129,511       27.47       96,364       14.72       12       1,056       50       2,331  

Saving accounts

    27,358       1.46       27,515       0.81       28,499       0.21       (1)       65       (4)       125  

Time deposits

    103,448       47.02       88,122       34.86       56,362       21.41       17       1,216       84       2,561  

Debt securities

    10,503       42.31       10,380       33.14       4,350       25.38       1       917       141       1,693  

Other interest-bearing liabilities

    3,326       45.82       3,494       34.23       7,153       13.25       (5)       1,159       (54)       3,257  

In foreign currency

    151,754       1.29       133,112       1.73       60,187       1.06       14       (44)       152       23  

Saving accounts

    90,227       -       78,830       -       41,468       -       14       -       118       -  

Time deposits

    33,926       0.61       26,008       1.28       9,595       1.04       30       (67)       254       (43)  

Debt securities

    12,910       7.56       11,137       8.40       4,391       8.56       16       (84)       194       (100)  

Other interest-bearing liabilities

    14,691       5.25       17,137       6.07       4,733       3.38       (14)       (82)       210       187  

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

 

       LOGO    9


The average interest-earning assets for the Quarter amounted to Ps.287,490 million, growing Ps.106,575 million (59%) as compared to the figure recorded for the fourth quarter of the previous fiscal year, primarily as a consequence of the Ps.31,828 million (185%) increase in the average portfolio of peso-denominated government securities and of the Ps.51,010 million (135%) increase in the average balance of loans to the private sector.

Interest-bearing liabilities reached Ps.296,389 million, increasing Ps.139,838 million (89%) during the same period, primarily due to a Ps.48,759 million (118%) increase in the average balances of dollar-denominated saving accounts as a consequence of the evolution of the exchange rate and a Ps.47,086 million (84%) increase in peso-denominated time deposits.

The average yield on interest-earning assets for the fourth quarter of the 2018 fiscal year was 35.47%, with an 1,675 bp increase compared to the same quarter of the prior fiscal year, mainly due to an increase of 3,438 bp in the yield on peso-denominated government securities and of an increase of 2,824 bp in the interest rate on other interest earning assets. Likewise, the average cost of interest-bearing liabilities was 19.22%, with a 976 bp increase as compared to the fourth quarter of the prior fiscal year, mainly due to the 3,257 bp increase in the average interest rate on other interest-bearing liabilities and of 2,561 bp on peso-denominated time deposits.

 

Net Fee Income            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted                4Q                  3Q                  4Q      vs 3Q18      vs 4Q17  

Credit cards

     1,576        1,289        1,103        22        43  

Deposit accounts

     847        815        500        4        69  

Insurance

     163        153        127        7        28  

Financial fees

     58        64        52        (9)        12  

Credit-related fees

     27        34        66        (21)        (59)  

Foreign trade

     248        230        174        8        43  

Collections

     176        161        137        9        28  

Utility-bills collection services

     228        199        136        15        68  

Mutual funds

     125        127        38        (2)        229  

Other

     233        214        182        9        28  

Total fee income

     3,681        3,286        2,515        12        (46)  

Total expenditures

     (703)        (595)        (539)        18        30  

Net fee income

     2,978        2,691        1,976        11        51  

Net fee income for the Quarter amounted to Ps.2,978 million, up 51% from the Ps.1,976 million recorded in the fourth quarter of the previous fiscal year. The increases in fees which stood out were those related to credit-cards (Ps.473 million or 43%) and to deposit accounts (Ps.347 million or 69%).

 

Net Income from Financial Instruments            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted                4Q                  3Q                  4Q      vs 3Q18      vs 4Q17  

Government securities

     6,482        2,684        1,061        142        511  

Private sector securities

     174        201        107        (13)        63  

Derivative financial instruments

     (630)        1,958        (179)        (132)        252  

Forward transactions

     (546)        1,974        (179)        (128)        205  

Interest-rate swaps

     (84)        (16)        -        425        -  

Net income from financial instruments

     6,026        4,843        989        24        509  

 

       LOGO    10


Net income from financial instruments for the Quarter amounted to Ps.6,026 million, up Ps.5,037 million (509%) from the Ps.989 million recorded in the same quarter of the 2017 fiscal year, as a consequence of the increase in gains from government securities (511%).

Profits from gold and foreign currency quotation differences for the Quarter amounted to Ps.1,678 million, 160% higher than the Ps.645 million profit recorded in the same quarter of the 2017 fiscal year. This result includes a Ps. 1,623 million profit from foreign-currency trading.

 

Other Operating Income              2018        2017        Variation (%)  
In millions of pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18        vs 4Q17  

Other financial income / (losses) (1) (2)

     73          89          44          (18)          66  

Fees from bundles of products (1)

     642          584          497          10          29  

Rental of safe deposit boxes (1)

     120          108          89          11          35  

Other fee income (1)

     130          124          94          5          38  

Other adjustments and interest on miscellaneous receivables

     412          507          109          (19)          278  

Other

     330          190          111          74          197  

Total other operating income

     1.707          1.602          944          7          81  

(1) Item included for calculating the efficiency ratio.

(2) Item included for calculating the financial margin.

Other operating income for the Quarter reached Ps.1,707 million, increasing Ps.763 million (81%) from the Ps.944 million net profit recorded in the fourth quarter of 2017.

Provisions for loan losses for the fourth quarter of the 2018 fiscal year amounted to Ps.2,055 million, Ps.1,260 million (158%) higher than those recorded in the same quarter of the prior year. This was due to the evolution of credits in arrears of the consumer portfolio and to higher regulatory provisions on the portfolio in normal situation as a consequence of the increase in the volume of credit.

Personnel expenses amounted to Ps.2,916 million for the Quarter, increasing 45% from the same quarter of the 2017 fiscal year, mainly due to salary increase agreements with the union.

 

Administrative Expenses              2018        2017        Variation (%)  
In millions of pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18        vs 4Q17  

Fees and compensations for services

     168          200          73          (16)          130  

Fees to directors and syndics

     9          7          5          29          80  

Publicity, promotion and research expenses

     167          128          134          30          25  

Taxes

     492          395          330          25          49  

Maintenance

     342          275          145          24          136  

Electricity and communications

     185          168          128          10          45  

Stationery and office supplies

     30          23          19          30          58  

Rentals

     144          129          74          12          95  

Hired administrative services

     303          284          232          7          31  

Security

     123          117          106          5          16  

Insurance

     18          13          11          38          64  

Other

     541          509          412          6          31  

Total administrative expenses

     2,522          2,248          1,669          12          51  

Administrative expenses for the Quarter totaled Ps.2,522 million, up 51% in the same period, as a consequence of a Ps.197 million (136%) increase in maintenance expenses and of the Ps.162 million (49%) increase in taxes.

 

       LOGO    11


Other Operating Expenses              2018        2017        Variation (%)  
In millions of pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18        vs 4Q17  

Contribution to the Deposit Insurance Fund (1) (2)

     143          108          72          32          99  

Other financial expenses (1) (2)

     368          122          73          202          404  

Turnover tax (1)

     1,779          1,581          866          13          105  

On operating income (2)

     1,228          1,094          601          12          104  

On fees

     487          430          234          13          108  

On other items

     64          57          31          12          106  

Other fee-related expenditures (2)

     808          778          560          4          44  

Other

     391          670          462          (42)          (15)  

Total other operating expenses

     3,489          3,259          2,033          7          72  

(1) Item included for calculating the efficiency ratio.

(2) Item included for calculating the financial margin.

Other operating expenses reached Ps.3,489 million, increasing Ps.1,456 million (72%) from the Ps.2,033 million recorded in the fourth quarter of the 2017 fiscal year.

The income tax charge was Ps.1,846 million, Ps.1,526 million (477%) higher than in the fourth quarter of the 2017 fiscal year.

SELECTED FINANCIAL INFORMATION

 

Balance Sheet              2018        2017        Variation (%)  
In millions of pesos, except otherwise noted    4Q        3Q        4Q        vs 3Q18        vs 4Q17  

Assets

                                                    

Cash and due from banks

     142,049          116,288          58,461          22          143  

Debt securities

     75,974          22,019          26,602          245          186  

Net loans and other financing

     243,276          253,978          160,904          (4)          51  

Other financial assets

     33,135          62,321          22,841          (47)          45  

Equity investments in subsidiaries, associates and joint businesses

     203          180          6,650          13          (97)  

Property, bank premises, equipment

     9,869          9,567          8,973          3          10  

Intangible assets

     3,260          685          600          376          443  

Other assets

     3,068          4,307          1,820          (29)          69  

Assets available for sale (1)

     404          244          5,716          66          (93)  

Total assets

     511,238          469,588          292,567          9          75  

Liabilities

                                                    

Deposits

     361,302          320,367          200,835          13          80  

Financing from financial entities

     17,491          23,637          7,728          (26)          126  

Other financial liabilities

     47,483          47,481          22,948          -          107  

Notes

     15,528          15,273          4,489          2          246  

Subordinated notes

     9,768          10,357          4,828          (6)          102  

Other liabilities

     15,695          12,712          12,762          23          23  

Total liabilities

     467,267          429,827          253,590          9          84  

Shareholders’ equity

     43,971          39,761          38,978          11          13  

Foreign currency assets and liabilities

                                                    

Assets

     200,001          193,734          85,788          3          133  

Liabilities

     200,421          195,557          83,745          2          139  

Net forward purchases/(sales) of foreign currency (2)

     102          2,728          (2,807)          (96)          (104)  

Net global position in foreign currency

     (318)          905          (764)          (135)          (58)  

(1) Includes the interests in Compañía Financiera Argentina S.A. and in Cobranzas y Servicios S.A. until 2017, and the interest in Prisma Medios de Pago S.A. since the fourth quarter of 2017.

(2) Recorded off-balance sheet.

 

       LOGO    12


LEVEL OF ACTIVITY

 

Financing to the Private Sector(1)            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

In pesos

     170,640        174,882        137,236        (2)        24  

Loans

     131,792        140,542        116,882        (6)        13  

UVA-adjusted loans

     17,438        13,332        4,060        31        330  

Financial leases

     1,361        1,495        1,562        (9)        (13)  

Debt securities

     411        492        696        (16)        (41)  

Other financing (2)

     19,638        19,021        14,036        3        40  

In foreign currency

     117,251        124,518        45,419        (6)        158  

Loans

     93,773        98,580        39,342        (5)        138  

Financial leases

     1,013        1,037        311        (2)        226  

Debt securities

     4,293        5,359        1,544        (20)        178  

Other financing (2)

     18,172        19,542        4,222        (7)        330  

Total financing to the private sector

     287,891        299,400        182,655        (4)        58  

(1) Includes IFRS adjustment.

(2) Includes certain off-balance sheet accounts related to guarantees granted.

As of December 31, 2018, total financing to the private sector reached Ps.287,891 million, representing a 58% increase from a year before, mainly as a consequence of the growth of the loan portfolio, both in pesos (23%) and in foreign currency (138%). Dollar-denominated loans increased 18% from the same quarter of the 2017 fiscal year.

 

Market Share (1)            2018      2017      Variation (bp)  
Percentages, except otherwise noted        4Q          3Q          4Q          vs 3Q18          vs 4Q17  

Total loans

     10.63        10.67        9.53        (4)        110  

Loans to the private sector

     10.52        10.58        9.65        (6)        87  

(1) According to the daily information on loans published by the Argentine Central Bank. Only principal as of the last day of each quarter.

The Bank’s market share of loans to the private sector as of December 31, 2018, was 10.52%, increasing 87 bp from December 31, 2017.

 

       LOGO    13


Break down of loans and other financing            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Financial entities

     7,943        8,866        4,703        (10)        69  

Loans

     7,942        8,860        4,700        (10)        69  

Other financing

     1        6        3        (83)        (67)  

Non-financial private sector and residents abroad

         242,691            251,352            159,868            (3)            52  

Loans

     235,061        243,594        155,584        (4)        51  

Overdrafts

     14,430        24,697        11,298        (42)        28  

Promissory notes

     36,101        43,849        35,533        (18)        2  

Mortgage loans

     11,793        11,826        5,713        -        106  

Pledge loans

     998        1,112        1,078        (10)        (7)  

Personal loans

     25,312        24,792        18,333        2        38  

Credit-card loans

     67,709        62,892        53,853        8        26  

Other

     74,735        71,509        30,433        5        146  

Accrued interest, adjustments and foreign currency quotation differences receivable

     5,395        4,031        267        34        1,921  

Documented interest

     (1,412)        (1,114)        (924)        27        53  

Financial leases

     2,374        2,532        1,873        (6)        27  

Other financing

     5,256        5,226        2,411        1        118  

Non-financial public sector

     12        1        -        1,100        N/A  

Total loans and other financing

     250,646        260,219        164,571        (4)        52  

Allowances

     (7,370)        (6,241)        (3,667)        18        99  

Loans

     (7,263)        (6,157)        (3,594)        18        102  

Financial leases

     (29)        (31)        (22)        (6)        32  

Other financing

     (78)        (53)        (51)        47        (7)  

Net loans and other financing

     243,276        253,978        160,904        (4)        51  

As of December 31, 2018, net loans and other financing provisions amounted to Ps.243,276 million, growing 51% from December 31, 2017, mainly due to a Ps.13,856 (26%) million increase in credit-card loans and of Ps.6,979 million (38%) in personal loans.

 

Loans by Type of Borrower            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18          vs 4Q17  

Large corporations

     91,754        103,416        39,232        (11)        134  

SMEs

     48,462        51,066        49,421        (5)        (2)  

Individuals

     93,253        88,066        68,009        6        37  

Financial sector

     7,942        8,860        4,700        (10)        69  

Residents abroad

     5,248        3,830        274        37        1,815  

Other

     554        698        800        (21)        (31)  

IFRS adjustment

     (4,198)        (3,481)        (359)        21        1,069  

Total loans

     243,015        252,455        162,077        (4)        50  

Allowances

     (7,263)        (6,157)        (3,595)        18        102  

Net total loans

     235,752            246,298            158,482            (4)        49  

 

       LOGO    14


Loans by Sector of Activity            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18          vs 4Q17  

Financial sector

     7,942        8,860        4,700        (10)        69  

Residents abroad

     5,248        3,830        274        37        1,815  

Services

     13,771        16,311        14,259        (16)        (3)  

Agriculture and livestock

     31,852        30,573        18,606        4        71  

Consumer

     93,282        88,105        68,076        6        37  

Retail and wholesale trade

     20,589        23,029        19,939        (11)        3  

Construction

     3,224        3,662        2,435        (12)        32  

Manufacturing industry

     50,537        58,199        30,261        (13)        67  

Other

     20,768        23,367        3,886        (11)        434  

IFRS adjustment

     (4,198)        (3,481)        (359)        21        1,069  

Total loans

     243,015            252,455            162,077            (4)        50  

Allowances

     (7,263)        (6,157)        (3,595)        18        102  

Net total loans

     235,752        246,298        158,482        (4)        49  

When compared to the previous fiscal year, loans to the private sector registered growth, mainly in those granted to large corporations (Ps.52,522 million or 134%) and to individuals (Ps.25,244 million or 37%). By sector of activity, the higher growth was recorded in the consumer sector (Ps.25,206 million or 37%) and in the manufacturing industry (Ps.20,276 million or 67%).

 

Net Exposure to the Argentine Public Sector (1)            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Government securities’ net position

     84,205        29,614        26,367        184        219  

Lebac

     -        1,260        15,843        (100)        (100)  

Leliq

     70,157        12,923        -        443        N/A  

Bote

     8,976        9,355        -        (4)        N/A  

Other

     5,072        6,076        10,524        (17)        (52)  

Other receivables resulting from financial brokerage

     57        63        39        (10)        46  

Loans and other financing

     13        7        2        86        550  

Trust certificates of participation and securities

     44        56        37        (21)        19  

Total exposure to the public sector

     84,262        29,677        26,406        184        219  

(1) Excludes deposits with the Argentine Central Bank, which constitute one of the items by which the Bank complies with minimum cash requirements.

As of December 31, 2018, the Bank’s exposure to the public sector amounted to Ps.84,262 million, recording a 219% increase during the last twelve months, due to an increase in the portfolio of government securities, mainly of debt securities issued by the Argentine Central Bank, partially offset by the sale of Lebacs. Excluding Argentine Central Bank paper, net exposure to the public sector reached Ps.14,105 million (3% of total assets), while, as of December 31, 2017, it amounted to Ps.10,563 million (4% of total assets).

 

       LOGO    15


Deposits            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

In pesos

     198,601        167,113        130,421        19        52  

Current accounts

     40,069        34,347        33,210        17        21  

Saving accounts

     61,129        45,870        41,362        33        48  

Time deposits

     90,143        80,204        52,933        12        70  

UVA-adjusted time deposits

     1,984        2,278        603        (13)        229  

Other

     1,273        1,196        886        6        44  

Interests and adjustments

     4,003        3,218        1,427        24        181  

In foreign currency

     162,701        153,254        70,414        6        131  

Saving accounts

     137,796        125,680        59,054        10        133  

Time deposits

     24,064        26,545        10,946        (9)        120  

Other

     793        952        398        (17)        99  

Interests and adjustments

     48        77        16        (38)        200  

Total deposits

     361,302        320,367        200,835        13        80  

As of December 31, 2018, the Bank’s deposits amounted to Ps.361,302 million, representing an 80% increase during the last twelve months. Peso-denominated deposits increased 52% in the same period, mainly due to a Ps.37,210 million (70%) increase in time deposits and Ps.19,767 million (48%) increase in deposits in saving accounts. Dollar-denominated deposits increased 131% in the last twelve months, as a consequence of the evolution of the exchange rate. Deposits in dollar-denominated saving accounts reached Ps.137,796, increasing 13% measured in dollars (133% measured in pesos) from December 31, 2017.

At the end of the Quarter there were 4.8 million deposit accounts, 12% more than the 4.2 million recorded from a year before.

 

Market Share (1)            2018      2017      Variation (bp)  
Percentages, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Total deposits

     8.85        8.39        8.23        46        62  

Private sector deposits

     11.08        11.04        10.20        4        88  

(1) According to the daily information on loans published by the Argentine Central Bank. Balances as of the last day of each quarter.

As of December 31, 2018, the Bank’s estimated market share of private sector deposits in the Argentine financial system was 11.08%, recording a 88 bp increase from a year before.

 

Financial Liabilities            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Financial entities

     17,491        23,637        7,728        (26)        126  

Financing from credit-card purchases

     15,274        11,120        10,514        37        45  

Notes

     15,528        15,273        4,489        2        246  

Subordinated notes

     9,768        10,357        4,828        (6)        102  

Creditors for purchases of foreign currency

     14,410        15,658        5,049        (8)        185  

Collections on account of third parties

     7,647        6,009        3,148        27        143  

Other financial liabilities

     10,152        14,694        4,237        (31)        140  

Total financial liabilities

     90,270        96,748        39,993        (7)        116  

Financial liabilities at the end of the fourth quarter of the 2018 fiscal year amounted to Ps.90,270 million, Ps.48,483 million (116%) higher than the Ps.39,993 million recorded a year before. This growth was mainly due to the increase in notes (Ps.11,039 million or 246%) and in financing from financial entities (Ps.9,763 million or 126%).

 

       LOGO    16


ASSET QUALITY

 

Loan Portfolio Quality            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Non-accrual loans (1)

     7,003        5,976        3,203        17        119  

With preferred guarantees

     492        446        194        10        154  

With other guarantees

     737        703        206        5        258  

Without guarantees

     5,774        4,827        2,803        20        106  

Allowance for loan losses

     7,263        6,157        3,594        18        102  

Relevant ratios (%)

                                Variation (bp)  

Non-accrual loans to private-sector loans

     2.88        2.37        2.00        51        88  

Allowance for loan losses to private-sector loans

     2.99        2.44        2.24        55        75  

Allowance for loan losses to non-accrual loans

     103.73        103.03        112.24        70        (851)  

Non-accrual loans with guarantees to non-accrual loans

     17.54        19.23        12.49        (169)        505  

Cost of risk (2)

     3.56        3.45        2.05        11        151  

(1) 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.

(2) Annualized.

The Bank’s non-accrual loan portfolio amounted to Ps.7,003 million as of December 31, 2018, accounting for 2.88% of total loans to the private-sector, increasing 88 bp from the 2.00% ratio of a year before.

The coverage of the non-accrual loan portfolio with allowances for loan losses reached 103.73% as of the end of the Quarter, compared to 112.24% from a year before.

In terms of total financing (defined as loans, certain other receivable financial asset accounts, guarantees granted and unused balances of loans granted) the Bank’s non-accrual portfolio represented 2.54% of total financing to the private-sector, and its coverage with allowances for loan losses reached 101.82%, compared to 2.08% and 117.46% from a year before, respectively.

 

Analysis of Loan Loss Experience            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Allowance for loan losses at the beginning of the Quarter

     6,157        4,918        3,077        25        100  

Changes in the allowance for loan losses

                                            

Provisions charged to income

     1,954        1,888        743        3        163  

Charge offs

     (848)        (649)        (226)        31        275  

Allowance for loan losses at the end of the Quarter

     7,263        6,157        3,594        18        102  

Charge to the income statement

                                            

Provisions charged to income (1)

     (1,954)        (1,888)        (743)        3        163  

Direct charge offs (1)

     (90)        (92)        (46)        (2)        96  

Bad debts recovered

     43        33        31        30        39  

Net charge to the income statement

     (2,001)        (1,947)        (758)        3        164  

(1) Item included for calculating the cost of risk.

During the Quarter, Ps.848 million were charged off against the allowance for loan losses and direct charges to the income statement for Ps.90 million were made. Net charge to the income statement amounted to Ps.2,001 million.

 

       LOGO    17


CAPITALIZATION AND LIQUIDITY

 

Regulatory Capital            2018      2017      Variation (%)  
In millions of pesos, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Minimum capital required (A)

     27,163        29,120        18,195        (7)        49  

Allocated to credit risk

     22,171        24,642        14,414        (10)        54  

Allocated to market risk

     969        943        1,126        3        (14)  

Allocated to operational risk

     4,023        3,535        2,655        14        52  

Computable capital (B)

     49,329        48,774        22,804        1        116  

Tier I

     36,584        35,322        16,221        4        126  

Tier II

     12,745        13,452        6,583        (5)        94  

Excess over required capital (B) - (A)

     22,166        19,654        4,609        13        381  

Risk weighted assets

     325,853        348,263        221,472        (6)        47  
                                  Variation (bp)  

Total capital ratio (%)

     15.14        14.01        10.90        113        424  

Tier I capital ratio (%)

     11.23        10.14        7.80        109        343  

As of December 31, 2018, the Bank’s computable capital amounted to Ps.49,329 million, Ps.22,166 million (82%) higher than the Ps.27,163 million capital requirement. As of December 31, 2017, this excess amounted to Ps.4,609 million (25%).

The minimum capital requirement increased Ps.8,968 million as compared to December 31, 2017, mainly due to the growth of the private-sector loan portfolio, and computable capital increased Ps.26,525 million in the same period, primarily as consequence of the Ps.10,000 million capitalization and of the application of IFRS. The total capital ratio was 15.14%, increasing 424 bp during the last twelve months.

 

Liquidity            2018      2017      Variation (%)  
Percentages, except otherwise noted    4Q      3Q      4Q      vs 3Q18      vs 4Q17  

Cash and due from banks

     142,049        116,288        58,461        22        143  

Government securities

     62,388        15,897        19,771        292        216  

Call-money

     938        1,074        935        (13)        -  

Overnight placements in correspondent banks

     6,256        4,895        491        28        1,174  

Repurchase agreement transactions

     (419)        14,652        8,415        (103)        (105)  

Escrow accounts

     5,188        4,459        3,610        16        44  

Total liquid assets

     216,400        157,265        91,683        38        136  

Liquidity ratios

                                Variation (bp)  

Liquid assets (*) as a percentage of transactional deposits

     90.55        76.38        68.61        1,417        2,194  

Liquid assets (*) as a percentage of total deposits

     59.89        49.09        45.65        1,080        1,424  

(*) 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 (Argentine Central Bank’s bills), net call money interbank loans, short-term placements with correspondent banks and reverse repurchase agreement transactions with the local market.

As of December 31, 2018, the Bank’s liquid assets represented 90,55% of the Bank’s transactional deposits and 59.89% of its total deposits, as compared to 68.61% and 45.65%, respectively, as of December 31, 2017.

 

       LOGO    18


TARJETAS REGIONALES

INFORMATION DISCLOSURE

The data shown in the following tables correspond to Tarjetas Regionales, consolidated line by line with its subsidiaries.

RESULTS FOR THE FISCAL YEAR

 

Income Statement    2018      2017      Variation (%)  
In millions of pesos, except otherwise noted                        

Net interest income

     7,516        6,414        17  

Net fee income

     9,136        7,599        20  

Net results from financial instruments

     696        (1)        69,700  

Gold and foreign currency quotation differences

     (50)        9        (656)  

Other operating income

     956        759        26  

Loan loss provisions

     (3,816)        (2,018)        89  

Net operating income

     14,438        12,762        13  

Personnel expenses

     (3,940)        (3,142)        25  

Administrative expenses

     (5,304)        (3,593)        48  

Depreciations and devaluations of assets

     (286)        (203)        41  

Other operating expenses (1)

     (1,907)        (1,440)        32  

Operating income

     3,001        4,384        (32)  

Income tax

     (871)        (1,665)        (48)  

Net income

     2,130        2,719        (22)  

(1) In the third quarter of 2018 this includes sales tax for Ps.204 million. Item included for calculating the financial margin.

 

Profitability and Efficiency    2018      2017      Variation (bp)  
Percentages, except otherwise noted                        

Return (1) on average assets

     4.86        8.50        (364)  

Return (1) on average shareholders´ equity

     22.36        33.95        (1,159)  

Financial margin (1) (2)

     17.02        17.98