Grupo Financiero Galicia S.A. ( GGAL)

Q4 2010 Earnings Call

February 17, 2011 11:00 AM ET

Executives

Pablo Firvida – VP, IR

Analysts

Saul Martinez – JP Morgan

Tito Labarta – Deutsche Bank

Boris Molina – Santander

Arthur Bryan (ph) – Deltec (ph)

Denis Parisien – Deutsche Bank

Federico Rey -Raymond James

Federico Rey – Raymond James

Presentation

Operator

Welcome to the Grupo Financiero Galicia’s Fourth Quarter 2010 Conference Call. This call is being recorded.

At this time I would like to turn the call over to Mr. Pablo Firvida. Please go ahead, sir.

Pablo Firvida

Thank you. Good morning ladies and gentlemen. Welcome to the Grupo Financiero Galicia fourth quarter fiscal year 2010 conference call. I am Pablo Firvida, Head of Investor Relations. With me today are some members of the management of the Bank and Grupo. We want to thank you for attending this call. I will make a short introduction in order to explain the operating conditions under which the reported results have occurred and summarize the advanced performance during the quarter. Then we will take your questions.

Some of the statements made during this conference call would be forward-looking statements within the meaning of the Safe Harbor Provisions of the U.S. Federal and Securities Laws. This forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.

During the fourth quarter of 2010, the Argentine economy performed under the influence of a positive international scenario. High liquidity levels and the weakness of the U.S. dollar, foster the flow of capitals, the emerging economies in search of higher returns. Thus allowing the maintenance of the good performance of Argentine financial assets recorded in the prior quarters.

In addition, changes in crop forecast due to climate factors, renewed momentum of grain prices which will also have a positive impact on the Argentine commercial balance, it’s fiscal revenues and in the supply of U.S. orders. Even though GDP official data for the fourth quarter is still not available, private estimates 0.1% growth above the 0.8% recorded in the previous quarter. We’re giving as a result, an annual growth of 8.2%, an estimate for 2011, 5.5% increase.

During the quarter, national fiscal revenues increased 29.8% year-over-year while primary expenditures grew 37.5% year-over-year. Thus the primary surplus for the quarter amounted to Ps.4.16 billion more than Ps.4 billion lower than a year before. For 2010, primary surplus amounted to Ps.24.9 billion or 1.7% of GDP more than Ps.7 billion higher than in 2009.

Consumer prices maintained its growing pace increasing 2.4% in the quarter, as measured by the official index and 5.2% according to private estimates with a trailing 12 months GPI inflation reaching 10.5%, which is also lower than the 22% estimated by private consultant for the same period.

On the monitory front, the portfolios registration process in the fourth quarter was slower than in the previous one. The estimated outsource were around $2 billion compared to $2.5 billion for the prior quarter and reaching $11 billion for the whole year.

The Argentine Center Bank expanded the monitory base by Ps.20.6 in the quarter and in this context, the exchange rate increased from 3.96 to Ps.3.98 per dollar during the quarter.

Other interest rates paid by private banks increased during the quarter, raised on time deposits in pesos for up to 59 days increased 10.3%, a 36 basis points increase.

Lending rates also recorded an increase as compared to previous quarter with over drop rates growing 78 basis points ending the fourth quarter at an average of 19.3%.

Private sector deposits at the end of the quarter amounted to Ps.256 billion with a 9.3% growth during the quarter, and a 29.7% inter annual increase. Transactional deposits increased 13.1% in the quarter.

Total loss to private sector at the end of the quarter amounted to Ps.197 billion, a 12.3% increase in the quarter and a 37.8% inter annual increase.

Turning now to the bank, net income for the fourth quarter amounted to Ps.197.8 million nearly four times the Ps.53.6 million profit recorded in the same quarter of the prior year. For the whole fiscal year, net income amounted to Ps.469.1 million and net income before the amortization of amparo reached Ps.750.1 million showing a significant increase as compared to Ps.281.1 million from the prior year. This progress was a consequence of a significant improvement in the vast financial condition due to a series of factors.

In first place, the significant increase in the volume of activity with the private sector. With credit to the private sector growing 49.5% year-over-year or 41.5% not considering CFA. On deposits from the private sector growing 30.5% year-over-year or 28.5% without CFA.

In second place, the Ps.2.4 billion increase of the bank’s exposure to the non-financial public sector. This exposure as a percentage of total assets decreased from 14.2% to 4.2% during 2010 and as of the end of 2010, there are no near big difference between the market value and the accounting value.

In third place, the bank reduced its dollar to nominate the debt by approximately $200 million through the repayment of the bonds during January 2010 and through the redemption of all the 2014 bonds.

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