(*)
the characteristics of contractual cash flows of the financial asset. Business Model The Business Model refers to the way in which the Group manages a set of financial assets to reach a specific business objective. It represents the way the Group manages its financial instruments to generate cash flows. Business models that the Group can follow are listed below: Hold the instruments to collect its contractual cash flows; Hold the instruments in the portfolio to collect contractual cash flows and, in turn, sell them when deemed convenient; or; Hold the instruments for trading. The Group’s Business Model does not depend on the intentions that it may have for an individual instrument. Therefore, this condition is not an instrument-by-instrument classification approach, but it is determined from a higher level of aggregation. The Group only reclassifies an instrument when, and only when, the business model for managing financial assets is modified. The reclassification is performed from the commencement of the period where the change takes place. Such change is not expected to be frequent, and changes have not been recorded during this fiscal year. Characteristics of Contractual Cash Flows The Group assesses whether the cash flow of grouped instruments is not significantly different from the flow that would receive solely for interest; otherwise, they shall be measured at fair value through profit or loss. Based on the foregoing, there are three categories of Financial Assets: | The references are related to the explanations included in Note 3.5.
| (i) | Financial assets measured at amortized cost: |
Financial assets are measured at amortized cost when: | (a) | the financial asset is held within a business model whose objective is to hold financial assets to collect contractual cash flows; and |
| (b) | the contractual conditions of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest on the outstanding principal amount. |
(**)
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS These financial instruments are initially recognized at fair value plus the incremental and directly attributable transaction costs and are subsequently measured at amortized cost. The amortized cost of a financial asset is equal to its acquisition cost less its accumulated amortization plus accrued interest (calculated according to the effective interest method), net of any impairment loss. | The adjustments are related to the deconsolidation of Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A. (See Note 23).
| (ii) | Financial assets at fair value through other comprehensive income: |
Financial assets are measured at fair value through other comprehensive income when: |
| (a) | F-27the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
|
| (b) | the contractual conditions of the financial asset give rise, on specified dates, to cash flows which are solely payments of principal and interest on the outstanding principal amount. |
These instruments are initially recognized at their fair value plus the incremental and directly attributable transaction costs and are subsequently measured at fair value through other comprehensive income. Profits and losses arising from the changes in fair value are included in other comprehensive income within a separate equity component. Impairment losses or reversals, income for interest and exchange profits and losses are recognized through profit or loss. Upon its sale or disposal, the accumulated profit or loss previously recognized through other comprehensive income is reclassified to the statement of income. | (iii) | Financial assets at fair value through profit or loss: |
Financial assets at fair value through profit or loss are the following: Instruments held for trading; Instruments specifically designated at fair value through profit or loss; and Instruments whose contractual terms do not represent cash flows that are solely payments of principal and interest on the outstanding principal amount. These financial instruments are initially recognized at fair value and any fair value measurement is recognized in the statement of income. The Group classifies a financial instrument as held for trading if it is acquired or incurred for the main purpose of selling or repurchasing it in the short term, or if it is part of a portfolio of financial instruments that are jointly managed and for which there is evidence of short-term earnings, or is a derivative financial instrument not designated as a hedging instrument. Derivative instruments and held-for-trading securities are classified as held for trading and measured at fair value. Additionally, financial assets can be valued at fair value through profit or loss when, by doing so, the Group eliminates or significantly reduces a measurement or recognition mismatch. Equity instruments are so considered by its issuer; this means that they are instruments which do not contemplate a contractual obligation to pay cash, and which evidence a residual interest on the issuer’s asset after deducting its entire liabilities. Such instruments are measured at fair value through profit or loss, except when, at the time of the initial recognition, the irrevocable option had been exercised to measure them at fair value through Other Comprehensive Income. This method is only applicable when the instruments are not held for trading and income shall be accounted in other comprehensive income with no reclassification to profit or loss, even when they are realized. Dividends receivable arising from such instruments shall be recognized through profit or loss solely when the Group is entitled to collect the payment. Financial Liabilities Classification The Group classifies their financial liabilities at amortized cost, using the effective interest rate method, except for: Financial liabilities measured at fair value through profit or loss, including derivative financial instruments. Liabilities arising from the transfer of financial assets not complying with the derecognition criteria. Financial guarantee contracts. Loan commitments at a lower than market rate. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Financial liabilities measured at fair value through profit or loss: the Group may choose to use, at the beginning, the irrevocable option to designate a liability at fair value through profit or loss, if, and only if, in doing so, it reflects a better measurement of financial information because: the Group eliminates or significantly reduces measurement or recognition inconsistency which would otherwise be exposed in the valuation; if financial assets and liabilities or a group of financial assets or liabilities, are managed and their performance is assessed on a fair value basis, according to a documented investment or risk management strategy; or a host contract contains one or more embedded derivative instruments, and the Group has opted for designating the entire contract at fair value through profit or loss. Financial guarantee contracts: Financial guarantee contracts are those contracts requiring the issuer to make specific payments to reimburse the holder for the loss incurred when a specific debtor does not comply with its payment obligation on maturity, in accordance with the original or amended terms of a debt instrument. Financial guarantee contracts are initially measured at fair value, and subsequently measured at the higher of the amount of the loss allowance and the amount initially recognized less, when appropriate, the cumulative amount of income recognized. Derecognition of Financial Instruments Financial Assets A financial asset or, where applicable, a part of a financial asset or a part of a group of similar financial assets, is derecognized when: (i) the rights to receive cash flows from the asset have expired; or (ii) the Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation to pay all of the cash flows received immediately to a third party under a pass-through agreement; and all the risks and rewards of the asset have also been substantially transferred, or, in case all the risks and rewards of the asset had not been substantially transferred or retained, the control of the asset has been transferred. When the contractual rights of receiving the cash flows generated by the asset have been transferred, or a transfer agreement has been executed, the entity assesses if it has retained, and to what extent, the risks and awards inherent in asset ownership. When substantially all the risks and rewards inherent in asset ownership have not been transferred or retained, nor has control of the asset been transferred, the asset continues to be recognized to the extent of its continued involvement over it. In this case, the related liability is also recognized. The transferred asset and the related liability are measured in such a way so as to reflect the rights and obligations that the Group had retained. A continuing involvement that takes the form of a collateral on the transferred asset is measured as the smallest amount between (i) the original carrying amount of the asset, and (ii) the maximum amount of consideration received that would be required to be returned. Financial Liabilities: A financial liability is derecognized when the obligation, has been cancelled, or has expired. When an existing financial liability is exchanged by another of the same borrower under significantly different conditions, or the conditions are significantly modified, such exchange or modification is treated as a derecognition of the original liability and a new liability is recognized, the difference between the value in books of the initial financial liability and the consideration paid is recognized in the Consolidated Statement of Income. When the renegotiation conditions are not significantly different, or the conditions are not significantly modified, the flows of the modified financial liabilities are discounted at the rate of the original contract. | 1.9. | DERIVATIVE FINANCIAL INSTRUMENTS |
Derivative Financial instruments, including foreign currency contracts, futures, forward contracts, interest rate swaps, cross currency swaps, interest rate options and foreign currency options are recorder at their fair value. All derivative financial instruments are recorder as assets when the fair value is positive and as liabilities when the fair value is negative, against the agreed price. The changes in the fair value of derivative financial instruments are recognized in profit or loss. In these consolidated financial statements, the Group has not applied hedge accounting. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1.10. REPURCHASE TRANSACTIONS Reverse Repurchase Transactions According to the derecognition principles in IFRS 9, these transactions are considered as secured borrowings, since the risk has not been transferred to the counterpart. Financing granted through reverse repurchase transactions are recorded under “Repurchase Transactions” accounts, classified by counterparty and considering the asset received as collateral. At the closing of each month, accrued interest receivable is imputed to the “Repurchase Transactions” account with offsetting entry in “Interest Income”. The underlying assets received for the reverse repurchase transactions will be recorded in Off-Balance Sheet Items. The assets received that have been sold by the Group are not deducted, but derecognized only when the repo transaction finishes, recording a liability in kind for the obligation to deliver the security sold. Repurchase Transactions Financing received through repurchase transactions are recorded under “Repurchase Transactions” accounts, classified by counterparty and considering the asset pledged as collateral. In these transactions, when the receiver of the underlying asset obtains the right to sell it or pledge it as collateral, this is reclassified to the “Financial Assets Pledged as Collateral” accounts. At the closing of each month, accrued interest payable is imputed to the “Repurchase Transactions” account with offsetting entry in “Interest Expenses”. 1.11. ALLOWANCES FOR FINANCIAL INSTRUMENTS The Group assesses on a forward-looking basis the expected credit loss (“ECL”) associated with its debt instruments assets carried at amortized cost and FVOCI, together with the exposure arising from loan commitments and financial guarantee contracts. The Group recognizes a loss allowance for such losses at each reporting date. The measurement of ECL reflects: An unbiased and probability-weighted amount is determined by evaluating a range of possible outcomes, The time value of money, and Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. Note 45 provides more detail of how the expected credit loss allowance is measured. 1.12. LEASES 1.12.1. Lease activities of the Group The Group is the lessee of various properties to be used in its ordinary course of business. Lease contracts are generally made for fixed periods, from 1 to 20 years, but in some cases, there may be price agreements for shorter periods with extension options. Lease terms are individually negotiated and contain a wide range of different terms and conditions. From January 1, 2019, leases are recognized as a right-of-use asset and a corresponding liability, on the date at which the leased asset is available for use by the Group. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: fixed payments (including in-substance fixed payments), less any lease incentives receivable; variable lease payments based on an index or a rate, initially measured using the index or rate on the initial date; amounts expected to be payable by the lessee under residual value guarantees; the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The lease payments are discounted using the interest rate implicit in the lease, if it can be determined; or otherwise, the Group’s incremental borrowing rate will be applied, which is the rate that the lessee would have to pay to borrow the necessary funds to obtain an asset of similar value to the right-of- use asset, in a similar economic environment with similar terms, security and conditions. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period, to produce a constant, periodic interest rate on the remaining balance of the liability for each period. Right-of-use assets are measured at their cost, comprising the following: the amount of the initial measurement of the lease liability; any lease payment made on or before the initial date, less any lease incentives received; any initial direct cost; and restoration and dismantling costs. Right-of-use assets are depreciated over the shorter of the asset useful life and the lease term on a straight-line method. Payments related to short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less that do not contain a bargain purchase option. Low-value assets are defined as small physical spaces where equipment owned by the Group is kept. 1.12.2. Extension and Termination Options The extension and termination options that are included in several Property, Plant and Equipment leases were considered to determine the term of the lease. These options are used to maximize the operational flexibility in terms of managing the assets used in our operations. Most of the extension and termination options held are exercisable only by the Group and not by the respective lessor. 1.13. PROPERTY, PLANT AND EQUIPMENT Assets are measured at their acquisition or construction cost, net of accumulated depreciations and/or accumulated impairment losses, if any. The cost includes the expenses directly attributable to the acquisition or construction of the items. Property, Plant and Equipment acquired through business combinations were initially valued at the estimated fair value at the acquisition date. Subsequent costs are included in the value of the asset or are recognized as a separate asset, as appropriate, if and only if they are likely to generate future economic benefits for the Group, and its cost can be reasonably measured. When improvements are made to the asset, the carrying amount of the replaced asset is derecognized, the new asset being amortized for the remaining useful life. Repair and maintenance costs are recognized in the consolidated statement of income for the year in which they are incurred. The depreciation of these assets is calculated using the straight-line method to allocate their cost over, their estimated useful lives. If an asset includes significant components with different useful lives, they are recognized and depreciated as separate items. The residual values of Property, Plant and Equipment, the useful lives and the depreciation methods are reviewed and adjusted if necessary, at the closing date of each fiscal year, or when there is evidence of impairment. The book value of the Property, Plant and Equipment is immediately reduced to its recoverable amount when it is greater than the estimated recoverable value. Profits and losses from the sale of Property, Plant and Equipment items are determined by comparing the proceeds from the disposal to the carrying amount of the respective asset and are charged to income. 1.14. INTANGIBLE ASSETS 1.14.1. Licenses Licenses acquired individually are initially valued at cost, while those acquired through business combinations are recognized at their estimated fair value at the acquisition date. At the closing date of these consolidated financial statements, intangible assets with a finite useful life are presented net of accumulated depreciation and/or accumulated impairment losses, if any. These assets are subject to impairment tests annually, or when there is evidence of impairment. The licenses acquired by the Group have been classified as intangible assets with a finite useful life, being amortized on a straight-line basis over the period of the license. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Intangible assets with an indefinite useful life are the assets arising from contracts or other legal rights, that can be renewed without significant cost, and for which, based on an analysis of all relevant factors, there is no foreseeable limit of the period along which the asset is expected to generate net cash flows for the Group. These intangible assets are not amortized, but are subject to impairment tests, annually or when there is evidence of impairment, either individually or at the level of the cash generating unit. The determination of the indefinite useful life is annually reviewed to confirm if it continues being applicable. 1.14.2. Software The costs related to software maintenance are recognized as expense when incurred. The development, acquisition and implementation costs that are directly attributable to software design and testing, identifiable and monitored by the Group, are recognized as assets. The costs incurred in software development, acquisition or implementation, recognized as intangible assets, are amortized by applying the straight-line method over their estimated useful lives. 1.15. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS 1.15.1. Assets Held for Sale The assets, or group of assets, classified as available for sale in accordance with the provisions of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations,” will be disclosed separately from the rest of the assets. Non-current assets or disposal groups (including the loss of control over a subsidiary) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. In order for an asset to be classified as held for sale, it must meet the following conditions: it must be available for immediate sale in its current condition; Management must be committed to a plan to sell the asset and must have initiated an active program to locate a buyer and complete the plan; the asset must be actively marketed for sale at a reasonable price in relation to its current fair value; the sale is expected to be completed within 12 months from its reclassification date; and it is unlikely that the plan will be significantly changed or withdrawn. The assets, or groups of assets, classified as held for sale in accordance with the provisions of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, are measured at the lower of their carrying amount and fair value less costs to sell and are restated in accordance with Note 22. Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. 1.15.2. Discontinued Operations A discontinued operation is a component of the Group that has been disposed of, or that has been classified as held for sale, and complies with any of the following conditions: it represents line of business or a geographical area, which is significant and can be considered as separated from the rest; it is part of a single coordinated plan to have a business line, or geographical area of the operations which is significant and can be considered as separated from the rest; or it is an independent entity exclusively acquired to resell it. Any profit or loss arising from re-measuring an asset (or group of assets for its disposal) classified as Held for Sale, which does not meet the definition of discontinued operation, will be included in the Income from continuing operations. 1.16. IMPAIRMENT OF NON-FINANCIAL ASSETS Assets with indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or, at least, on an annual basis. Depreciation and impairment losses are recognized when the carrying amount exceeds their recoverable value. The recoverable value of assets is the greater of the net amount that it would obtain from its sale, or its value in use. For the impairment tests, the assets are grouped at the lowest level where they generate identifiable cash flows (cash generating units). The carrying amount of non-financial assets other than goodwill over which depreciation and impairment have been recorded, are reviewed at each reporting date for verifying possible depreciation and impairment reversals. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1.17. TRUST ASSETS The assets held by the Group in its trustee role are not reported in the consolidated statement of financial position, because the Group is not in control of the trust or the risks and rewards of the underlying assets. Fees received from trust activities are recorded in Fee Income. 1.18. OFFSETTING Financial assets and liabilities are offset by reporting the net amount in the Consolidated Statement of Financial Position only when there is a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. 1.19. FINANCING RECEIVED FROM THE ARGENTINE CENTRAL BANK AND OTHER FINANCIAL INSTITUTIONS The amounts owed to other Financial Institutions are recorded at the time the principal is disbursed to the Group. Non-derivative financial liabilities are measured at amortized cost. If the Group repurchases its own debt, this is eliminated from the consolidated financial statements, and the difference between the residual value of the financial liability and the amount paid is recognized as a financial income or expense. 1.20. PROVISIONS AND CONTINGENCIES In accordance with IFRS a provision will be recognized when: | a. | an Entity has a current obligation (either legal or implicit) as a consequence of a past event; |
| b. | it is probable that an outflow of resources embodying future economic benefits will be required to settle the obligation; and |
| c. | the amount can be reliably estimated. |
It will be understood that the Group has an implicit obligation if (a) as a result of previous practices or public policies, the Group has assumed certain liabilities; and (b) as a result, it has created expectations that it will comply with those obligations. The Group recognizes the following provisions: For labor, civil, and commercial lawsuits: provisions are determined based on the lawyers’ reports on the status of the lawsuits and the estimate made on the bankruptcy possibilities to be faced by the Group, as well as on past experience regarding this type of lawsuits. For miscellaneous risks: provisions are set up to face contingent situations that may give rise to obligations for the Group. When estimating the amounts, the probability of their materializing is taken into account, considering the opinion of the Group’s legal advisors and professionals. The amount recognized as provision must be the best estimate of the disbursement needed to cancel such obligation, at the end of the year being reported. When the financial effect produced by the discount becomes important, the amount of the provision must be the present value of the disbursements that are expected to be required to cancel the obligation by using a pre-tax interest rate that reflects the current market conditions on the value of money and the specific risks for such obligation. The increase in the provision for the lapsing of time is recognized in the Net Financial Income item of the Statement of Income. The Group will not record the positive contingencies, except those arising from deferred taxes and those which materialization is virtually certain. At the date of issuance of these consolidated financial statements, the Group Directors understand that there have been no elements that allow determining the existence of other contingencies that may be materialized and generate a negative impact on these consolidated financial statements, as detailed in Note 29. 1.21. OTHER NON-FINANCIAL LIABILITIES Non-financial accounts payable are accrued when the counterparty has complied its contractual obligations under the contract, and they are measured at amortized cost. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1.22. DEBT SECURITIES The Group’s Debt Securities are measured at amortized cost. If the Group purchases debt securities of their own, the obligation in Liabilities related to such debt securities is considered extinguished, and, therefore, it is derecognized. If the Group repurchases its own debt, this is eliminated from the Consolidated Financial Statements, and the difference between the residual value of the financial liability and the amount paid is recognized as a financial income or expense. 1.23. ASSETS AND LIABILITIES ARISING FROM INSURANCE CONTRACTS The valuation and recording of assets and liabilities arising from the Group’s insurance contracts is performed pursuant to the IFRS 4 “Insurance Contracts” criteria. Assets for Insurance Contracts Insurance contracts are contracts where the Group (the insurer) has accepted an insurance risk from another party (the insured) by agreeing to compensate the insured if a specified uncertain future event (the insured event) adversely affects the insured. Once a contract has been classified as an insurance contract, it remains an insurance contract for the rest of its useful life, even if the insurance risk is significantly reduced during this period, unless all rights and obligations are extinguished or expire. The insurance contracts offered by the Group include property insurance that covers fire, combined family insurance, theft and similar risks, property damage, personal accidents, among other risks. Life insurance and Retirement insurance contracts are also included. Total premiums are recognized as of the policy issuance date as an account receivable. At the same time, a reserve is recorded in Liabilities for unearned premiums representing premiums for risks that have not yet expired. The unearned premiums are recognized as Income for the contract period, which is also the coverage and risk period. The book value of insurance accounts receivable is reviewed for impairment if events or circumstances indicate that the book value may not be recoverable. Impairment loss is recorded in the Statement of Income. Liabilities Recognized for the Insurance Business Debts with Insured Persons Reserves for Insurance claims represent debts with insured persons for claims reported to the company, and an estimate of the claims that have already been incurred but have not yet been reported to the company. Reported claims are adjusted based on technical reports received from independent appraisers. Debts with Reinsurers and Co-insurers The Group mitigates the risk for some of its insurance business through coinsurance or reinsurance contracts in other companies. For coinsurance, the Company associates with another company to cover a risk, by assuming only a percentage of it and, therefore, also of the premium. For reinsurance, the risk is transferred to another insurance company both in proportional (as a risk percentage) and non-proportional form (the excess of loss above a certain limit is covered). The transferred reinsurance agreements do not exempt the Group from its obligations with the insured persons. Coinsurance and reinsurance liabilities represent balances owed under the same conditions, and the amounts payable are estimated in a manner consistent with the contract that gave rise to them. Debts with Producers They represent liabilities with insurance producers and independent agents arising from the commissions for the insurance transactions they bring for the Group’s companies. The checking account balances with such entities are also included. Technical Commitments Technical reserves include reserves for future benefit obligations under life, annuity and accident insurance policies, and reserves for retirement insurance contracts. The Group assesses, at the end of the reporting period, the adequacy of the insurance liabilities it has recognized, using current estimates of future cash flows from its insurance contracts. Should the evaluation show that the carrying amount of its liabilities for insurance contracts (minus deferred acquisition costs and related intangible assets) is not adequate, considering the estimated future cash flows, the total amount of the deficiency will be recognized in Income. In accordance with IFRS 4, the Group must determine the adequacy of the amount in books recorded in accordance with the guidelines established in IAS 37. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1.24. SHAREHOLDERS’ EQUITY Shareholders’ equity accounts are restated in accordance with Note 1.1.b., except for the item “Capital Stock”, which is carried at face value. The restatement adjustment is included in “Equity Adjustments”. Ordinary shares are classified in Shareholders’ Equity and remain recorded at their nominal value. When any company forming part of the Group buys Company shares (treasury shares in portfolio), the payment made, including any costs directly attributable to the transaction (net of taxes) is deducted from the Shareholders’ Equity until the shares are canceled or sold. 1.25. PROFIT RESERVES According to Art. 70 of the General Companies Act, the Company and its subsidiaries, except Banco Galicia, must transfer to Legal Reserve 5% of the profit for the year, until said reserve reaches 20% of the capital stock plus the balance of the Equity Adjustment account. Regarding Banco Galicia, in accordance with the regulations established by the Argentine Central Bank, it is appropriate to allocate to Legal Reserve 20% of the profits for the year, net of the eventual adjustments of previous fiscal years, if applicable. However, for the allocation of Other Reserves, the Financial Institutions must comply with the Argentine Central Bank provisions of the Amended Text on dividends distribution detailed in Note 52. 1.26. DIVIDENDS DISTRIBUTION The dividends distribution to the Group’s shareholders is recognized as a liability in the consolidated financial statements in the year in which the dividends are approved by the Group’s shareholders. 1.27. REVENUE RECOGNITION Financial income and expenses are recorded for all debt instruments according to the effective interest rate method, by which all gains and losses that are an integral part of the effective interest rate of the transaction are deferred. The income included in the effective interest rate includes disbursements or income related to the creation or acquisition of a financial asset or liability, such as, for example, the preparation and processing of the documents necessary to conclude the transaction and the compensation received by the granting of credit agreements. The Group records all its non-derivative financial liabilities at amortized cost, except those included in the item “Liabilities at Fair Value through Profit or Loss” which are measured at fair value. Fees received by the Group for the origination of syndicated loans are not part of the effective interest rate of the product, and are recognized in the statement of income at the time the service is provided, to the extent the Group does not retain part of it, or this is maintained in the same conditions as the rest of the participants. Commissions and fees earned by the Group on negotiations in third parties’ transactions are not part of the effective interest rate either, and are recognized at the time the transactions are executed. IFRS 15 establishes the principles that an entity shall apply to recognize revenue and cash flows from contracts with customers. The amount that should be recognized will be the amount that reflects the consideration to which the entity expects to be entitled in exchange for the services delivered to customers. The Group’s income from services is recognized in the statement of income to the extent the performance obligations are complied with, thus deferring those revenues related to customer loyalty programs, which are provisioned based on the fair value of each point and its redemption rate, until they are exchanged by the customer and can be recognized in the income for the year. Retail product and service fees related to savings and checking account operations have a monthly charging frequency; safe deposit boxes fees are charged quarterly; renewal of credit cards is charged annually, and bond and shares transactions are charged at the time the transactions are executed. Additionally, fees for wholesale products corresponding to maintenance of accounts, deposits and withdrawals between entities, are charged on a monthly basis; foreign trade transactions are charged at the time the transactions are executed. Below is a summary of the main commissions earned by the Bank: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheet | | Prior Accounting Framework 01.01.17 | | | Reclassifications | | | Adjustments | | | References(*) | | IFRS 01.01.17 | | LIABILITIES | | | | | | | | | | | | | | | | | | | Deposits | | | 279,493,299 | | | | 5,962 | | | | (2,421,699 | ) | | (**) | | | 277,077,562 | | Other Liabilities Resulting from Financial Brokerage | | | 106,487,811 | | | | (106,487,811 | ) | | | - | | | | | | - | | Miscellaneous Liabilities | | | 10,694,695 | | | | (10,694,695 | ) | | | - | | | | | | - | | Provisions | | | 708,432 | | | | - | | | | 781 | | | (n) | | | 709,213 | | Subordinated Debt Securities | | | 7,490,444 | | | | - | | | | - | | | | | | 7,490,444 | | Unallocated Items | | | 129,955 | | | | (129,955 | ) | | | - | | | | | | - | | Non-controlling Interest | | | 2,694,159 | | | | (2,675,170 | ) | | | (18,989 | ) | | | | | - | | Other Liabilities | | | 1,159,669 | | | | (1,159,669 | ) | | | - | | | (s) | | | - | | Liabilities at fair value through Profit or Loss | | | - | | | | - | | | | - | | | | | | - | | Derivative Financial Instruments | | | - | | | | 440,618 | | | | (150,234 | ) | | (f) | | | 290,384 | | Repo Transactions | | | - | | | | 3,284,482 | | | | (254,009 | ) | | (**) | | | 3,030,473 | | Other Financial Liabilities | | | - | | | | 57,594,377 | | | | (499,601 | ) | | (o) | | | 57,094,776 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | - | | | | 13,779,829 | | | | (1,062,684 | ) | | (p) | | | 12,717,145 | | Debt Securities | | | - | | | | 23,976,836 | | | | (2,128,376 | ) | | (**) | | | 21,848,460 | | Current Income Tax Liabilities | | | - | | | | 3,648,743 | | | | (489,400 | ) | | (**) | | | 3,159,343 | | Deferred Income Tax Liabilities | | | - | | | | 24,541 | | | | 1,819,056 | | | (q) | | | 1,843,597 | | Liabilities for Insurance Contracts | | | - | | | | 1,157,101 | | | | (2,939 | ) | | (s) | | | 1,154,162 | | Other Non-financial Liabilities | | | - | | | | 18,687,269 | | | | (161,312 | ) | | (r) | | | 18,525,957 | | TOTAL LIABILITIES | | | 408,858,464 | | | | 1,452,458 | | | | (5,369,406 | ) | | | | | 404,941,516 | | SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | - | | Capital Stock, Adjustments and Reserves | | | 26,412,657 | | | | - | | | | 14,561,204 | | | | | | 40,973,861 | | Retained Income | | | 11,088,251 | | | | - | | | | (9,632,425 | ) | | | | | 1,455,826 | | Other Accumulated Comprehensive Income | | | - | | | | - | | | | 523,621 | | | | | | 523,621 | | Net Income for the Year | | | - | | | | - | | | | - | | | | | | - | | Shareholders’ Equity Attributable to owners of the Parent | | | 37,500,908 | | | | - | | | | 5,452,400 | | | | | | 42,953,308 | | Shareholders' Equity Attributable to Non-controlling Interests | | | - | | | | 2,675,168 | | | | 44,402 | | | | | | 2,719,570 | | TOTAL SHAREHOLDERS’ EQUITY | | | 37,500,908 | | | | 2,675,168 | | | | 5,496,802 | | | | | | 45,672,878 | |
| | | Commissions | | Earning Frequency | | Retail Products and Services | | Savings Accounts | | Monthly | | Checking Accounts | | Monthly | | Credit-card Renewal | | Annual | | Safe Deposit Boxes | | Quarterly | | Bonds and Shares Transactions | | On each transaction | | Wholesale Products | | | | Account Maintenance | | Monthly | | Deposits and Withdrawals among Branches | | Monthly | | Foreign Trade Transactions | | On each transaction |
1.28. INCOME TAX The Income tax expense for the year comprises the current and the deferred taxes. Income tax is recognized in the consolidated statement of income, except when there are items that must be directly recognized in other comprehensive income. In this case, income tax liability related to such items is also recognized in this Statement. The current income tax expense is calculated based on the tax laws enacted, or substantially enacted as of the date of the consolidated financial statements in the countries where the Group operates and generates taxable income. The Group periodically assesses the position assumed in tax returns as regards the situations in which tax laws are subject to interpretation. Likewise, when applicable, the Group sets up provisions on the amounts that it expects to be paid to tax authorities. Deferred income tax is determined by the liability method on the temporary differences arising from the carrying amount of assets and liabilities and their tax base. However, the deferred tax that arises from the initial recognition of an asset or a liability in a transaction not corresponding to a business combination, which at the time of the transaction does not affect neither the profit nor the accounting or taxable loss, is not recorded. Deferred tax is determined using tax rates (and legislation) that have been enacted as of the date of the financial statements and are expected to be applicable when the deferred tax assets are realized, or the deferred tax liabilities are settled. Deferred tax assets are recognized only to the extent future tax benefits are likely to arise against which the temporary differences might be offset. The Group recognizes a deferred tax liability for taxable temporary differences related to investments in subsidiaries and affiliates, unless the following two conditions are met: | (i) | the Group controls the timing on which temporary differences will be reversed, and. |
| (ii) | such temporary differences are not likely to be reversed in the foreseeable future. |
The balances of deferred income tax assets and liabilities are offset when a legal right exists to offset current tax assets against current tax liabilities and to the extent such balances are related to the same tax authority of the Group or its subsidiaries, where tax balances are intended to be, and may be, settled on a net basis. 1.29. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the income attributable to parent company’s owners by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share is calculated by adjusting the figures used in the determination of basic earnings per share assuming the conversion of all dilutive potential ordinary shares. NOTE 2. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires Directors to exercise their judgment in applying the accounting standards to define the Group’s accounting policies. The Group has identified the following areas involving a greater degree of judgment or complexity, or areas in where the assumptions and estimates are significant for the consolidated financial statements and which are essential to understand the underlying accounting/financial reporting risks. | a. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
The fair value of financial instruments not listed in active markets is determined by using valuation techniques. Such techniques are periodically validated and reviewed by qualified personnel independent from the area or independent appraisers that developed them. All models are assessed and adjusted before they are used, to ensure that their results reflect the current information and comparable market prices. To the extent possible, the models rely only on observable inputs; however, certain factors such as projected cash flows, discount rates and volatilities and correlations relating to interest rates and spreads require the use of estimates. Changes in the assumptions about these factors can affect the reported fair value of the financial instruments. (*)
| The references are related to the explanations included in Note 3.5.
|
(**)
| The adjustments are related to the deconsolidation of Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A. (See Note 23).
|
F-28
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Consolidated Income Statement | | Prior Accounting Framework 12.31.17 | | | Reclassifications | | | Adjustments | | | IFRS 12.31.17 | | Financial Income | | | 66,765,368 | | | | (66,765,368 | ) | | | - | | | | - | | Financial Expenses | | | (30,038,123 | ) | | | 30,038,123 | | | | - | | | | - | | Loan and other Receivables Loss Provisions | | | (7,684,942 | ) | | | (18,664 | ) | | | 409,750 | | | | (7,293,856 | ) | Fee Income | | | 31,157,030 | | | | (31,157,030 | ) | | | - | | | | - | | Fee-related Expenses | | | (9,785,476 | ) | | | 9,785,476 | | | | - | | | | - | | Administrative Expenses | | | (33,945,130 | ) | | | 18,221,381 | | | | 1,300,192 | | | | (14,423,557 | ) | Income (Loss) from Insurance Business | | | 3,126,248 | | | | (90,404 | ) | | | 279,068 | | | | 3,314,912 | | Non-controlling Interest | | | (924,564 | ) | | | 924,558 | | | | 6 | | | | - | | Miscellaneous Income | | | 2,391,176 | | | | (2,391,176 | ) | | | - | | | | - | | Miscellaneous Losses | | | (1,447,703 | ) | | | 1,439,371 | | | | 8,332 | | | | - | | Interest Income | | | - | | | | 56,563,258 | | | | (1,869,536 | ) | | | 54,693,722 | | Interest-related Expenses | | | - | | | | (24,268,734 | ) | | | (550,953 | ) | | | (24,819,687 | ) | Fee Income | | | - | | | | 11,655,852 | | | | 13,742,609 | | | | 25,398,461 | | Fee-related Expenses | | | - | | | | (3,743,746 | ) | | | 490,911 | | | | (3,252,835 | ) | Net Income from Financial Instruments Measured at Fair Value through Profit or Loss | | | - | | | | 7,180,403 | | | | 1,280,935 | | | | 8,461,338 | | Gold and Foreign Currency Quotation Differences | | | - | | | | 3,161,203 | | | | 317,658 | | | | 3,478,861 | | Other Operating Income | | | - | | | | 21,442,293 | | | | (12,445,661 | ) | | | 8,996,632 | | Personnel Expenses | | | - | | | | (16,672,435 | ) | | | (416,237 | ) | | | (17,088,672 | ) | Depreciation and Impairment of Assets | | | - | | | | (1,554,602 | ) | | | 115,162 | | | | (1,439,440 | ) | Loss on Net Monetary Position | | | - | | | | - | | | | (6,823,296 | ) | | | (6,823,296 | ) | Other Operating Expenses | | | - | | | | (13,129,147 | ) | | | (1,476,079 | ) | | | (14,605,226 | ) | Share of profit from Associates and Joint Ventures | | | - | | | | 291,445 | | | | 29,737 | | | | 321,182 | | Income Tax from Continuing Operations | | | (7,315,790 | ) | | | 32,824 | | | | (36,061 | ) | | | (7,319,027 | ) | Income from Discontinued Operations | | | - | | | | - | | | | - | | | | - | | Income Tax from Discontinued Operations | | | - | | | | - | | | | (321,760 | ) | | | (321,760 | ) | Net Income | | | 12,298,094 | | | | 944,881 | | | | (5,965,223 | ) | | | 7,277,752 | | Other Comprehensive Income (Loss) | | | - | | | | - | | | | (434,732 | ) | | | (434,732 | ) | Total Comprehensive Income (Loss) | | | - | | | | - | | | | (434,732 | ) | | | (434,732 | ) | Total Comprehensive Income Attributable to owners of the Parent | | | 12,298,094 | | | | - | | | | (5,939,238 | ) | | | 6,358,856 | | Total Comprehensive Income (Loss) Attributable to Non-controlling Interests | | | - | | | | 944,881 | | | | (460,717 | ) | | | 484,164 | |
| b. | ALLOWANCE FOR LOAN LOSSES The significant adjustments to Cash Flows, as required by IFRS 1, paragraph 25 are as follows:
a.
| Under the prior accounting framework, Cash and Due from Banks and highly-liquid investments with original maturities of three months or less were considered to be Cash and Cash Equivalents. Under IFRS, Cash and Due from Banks, including foreign currency purchases and sales pending settlement with original maturities of three months or less, and highly-liquid investments with original maturities of three months or less are considered to be Cash and Cash Equivalents
|
b.
| Under the prior accounting framework, cash and cash equivalents of equity investments in Compañía Financiera Argentina S.A. (CFA) and Cobranzas y Servicios S.A. (CyS) were consolidated with those of the Group. Under IFRS, both companies are classified as Non-current Assets Held for Sale and, consequently, have not been consolidated.
|
The reconciliation of cash and cash equivalents is as follows:
|
The Group recognizes the allowance for loan losses under the expected credit losses method included in IFRS 9. The most significant judgments of the model relate to defining what is considered a significant increase in credit risk, identifying assets which are impaired or subject to serious risk of impairment, developing parameters such as the probabilities of default and the loss given default and making assumptions about macroeconomic scenarios. A high degree of uncertainty is involved in making estimations using assumptions that are highly subjective and very sensitive to the risk factors. Furthermore, the level of estimation uncertainty and judgement has increased during 2020 as a result of the economic effects of the Covid-19 outbreak. | | Prior Accounting Framework | | | Cash Flows from Discontinued Operations | | | | | | | IFRS | | Cash and Cash Equivalents | | 12.31.17 | | | Operations | | | Adjustments | | | 12.31.17 | | Cash and Due from Banks | | | 56,659,196 | | | | (321,544 | ) | | | 30,707,229 | | | | 87,044,881 | | Argentine Central Bank Bills and Notes Maturing within up to 90 days | | | 16,910,667 | | | | - | | | | 8,071,099 | | | | 24,981,766 | | Receivables from Reverse Repo Transactions | | | 9,654,517 | | | | - | | | | 4,599,952 | | | | 14,254,469 | | Local Interbank Loans | | | 365,000 | | | | 570,000 | | | | 445,486 | | | | 1,380,486 | | Overnight Placements in Banks Abroad | | | 269,278 | | | | - | | | | 157,404 | | | | 426,682 | | Other Cash and cash equivalents | | | 2,458,791 | | | | - | | | | 1,411,141 | | | | 3,869,932 | | Total | | | 86,317,449 | | | | 248,456 | | | | 45,392,311 | | | | 131,958,216 | |
| c. | F-29IMPAIRMENT OF NON-FINANCIAL ASSETS
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Intangible assets with finite useful lives and property, plant and equipment are amortized or depreciated on a straight-line basis during their estimated useful life. The Group monitors the conditions related to these assets to determine whether the events and circumstances require a review of the remaining amortization or depreciation term, and whether there are factors or circumstances indicating impairment in the value of the assets that cannot be recovered. The Group has applied judgment to identify impairment indicators for property, plant and equipment and intangible assets. The Group has concluded that there were no impairment indicators for any of the years reported in its consolidated financial statements. | d. | INCOME TAX AND DEFERRED TAX | | Prior Accounting Framework | | | Cash Flows from Discontinued Operations | | | | | | | IFRS | | Cash and Cash Equivalents | | 01.01.17 | | | Operations | | | Adjustments | | | 01.01.17 | | Cash and Due from Banks | | | 90,309,271 | | | | (580,607 | ) | | | 31,455,315 | | | | 121,183,979 | | Argentine Central Bank Bills and Notes Maturing within up to 90 days | | | 9,797,693 | | | | - | | | | 2,922,565 | | | | 12,720,258 | | Receivables from Reverse Repo Transactions | | | 1,273,148 | | | | - | | | | 315,684 | | | | 1,588,832 | | Local Interbank Loans | | | 1,811,761 | | | | - | | | | 454,493 | | | | 2,266,254 | | Overnight Placements in Banks Abroad | | | 4,718,842 | | | | - | | | | 1,159,788 | | | | 5,878,630 | | Total | | | 107,910,715 | | | | (580,607 | ) | | | 36,307,845 | | | | 143,637,953 | |
|
Significant judgment is required when determining current and deferred tax assets and liabilities. The current income tax is accounted according to the amounts expected to be paid; while deferred income tax is accounted on the basis of temporary differences between carrying amount of assets and liabilities and their tax base, at the rates expected to be in force at the time of their reversal. A deferred tax asset is recognized when future taxable income is expected to exist to offset such temporary differences, based on Management’s assumptions about the amounts and timing of such future taxable income. Then, management needs to determine whether deferred tax assets are likely to be used and offset against future taxable income. Actual results may differ from these estimates, for instance, changes in the applicable tax laws or the outcome of the final review of the tax returns by the tax authorities and tax courts. Future taxable income and the number of tax benefits likely to be available in the future are based on a medium-term business plan prepared by management, on the basis of expectations which are deemed reasonable. NOTE 3. FINANCIAL INSTRUMENTS Schedule P “Categories of Financial Assets and Liabilities”, discloses the measurement categories and fair value hierarchies for financial instruments. As of the indicated dates, the Group maintains the following portfolios of financial instruments: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | Portfolio of Instruments as of 12.31.2020 | | Fair Value
through Profit
or Loss | | | Amortized Cost | | | Fair Value
through OCI | | Assets | | | | | | | | | | | | | Cash and Due from Banks | | | — | | | | 175,423,476 | | | | — | | Argentine Central Bank’s Bills and Notes | | | 128,324,920 | | | | — | | | | — | | Government Securities | | | 24,282,643 | | | | — | | | | — | | Corporate Securities | | | 2,811,997 | | | | — | | | | — | | Derivative Financial Instruments | | | 2,165,032 | | | | — | | | | — | | Repurchase Transactions | | | — | | | | 60,995,643 | | | | — | | Other Financial Assets | | | 2,791,983 | | | | 7,301,643 | | | | — | | Loans and Other Financing | | | — | | | | 526,434,119 | | | | — | | Other Debt Securities | | | — | | | | 18,885,279 | | | | 4,185,098 | | Financial Assets Pledged as Collateral | | | 2,035,559 | | | | 16,681,884 | | | | — | | Investments in Equity Instruments | | | 5,711,684 | | | | — | | | | — | | Liabilities | | | | | | | | | | | | | Deposits | | | — | | | | 676,395,735 | | | | — | | Derivative Financial Instruments | | | 57,450 | | | | — | | | | — | | Other Financial Liabilities | | | — | | | | 97,471,465 | | | | — | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | — | | | | 13,833,439 | | | | — | | Debt Securities | | | — | | | | 17,073,898 | | | | — | | Subordinated Debt Securities | | | — | | | | 21,653,546 | | | | — | |
| | | | | | | | | | | | | Portfolio of Instruments as of 12.31.2019 | | Fair Value
through Profit
or Loss | | | Amortized Cost | | | Fair Value
through OCI | | Assets | | | | | | | | | | | | | Cash and Due from Banks | | | — | | | | 177,866,400 | | | | — | | Argentine Central Bank’s Bills and Notes | | | 79,153,628 | | | | — | | | | — | | Government Securities | | | 9,121,674 | | | | — | | | | — | | Corporate Securities | | | 1,156,076 | | | | — | | | | — | | Derivative Financial Instruments | | | 3,170,815 | | | | — | | | | — | | Repurchase Transactions | | | — | | | | 40,944,933 | | | | — | | Other Financial Assets | | | 6,840,391 | | | | 8,019,809 | | | | — | | Loans and Other Financing | | | — | | | | 488,144,152 | | | | — | | Other Debt Securities | | | — | | | | 4,224,883 | | | | 21,668,553 | | Financial Assets Pledged as Collateral | | | 2,362,981 | | | | 13,362,055 | | | | — | | Investments in Equity Instruments | | | 6,200,459 | | | | — | | | | — | | Liabilities | | | | | | | | | | | | | Deposits | | | — | | | | 536,033,696 | | | | — | | Liabilities at fair value through profit or loss | | | 1,936,133 | | | | — | | | | — | | Derivative Financial Instruments | | | 1,199,533 | | | | — | | | | — | | Other Financial Liabilities | | | — | | | | 97,153,624 | | | | — | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | — | | | | 30,936,161 | | | | — | | Debt Securities | | | — | | | | 39,808,666 | | | | — | | Subordinated Debt Securities | | | — | | | | 21,100,718 | | | | — | |
NOTE 4. FAIR VALUES The Group classifies the fair values of the financial instruments in 3 levels, according to the quality of the data used for their determination Fair Value Level 1: The fair value of financial instruments traded in active markets (as publicly traded derivative instruments, debt securities or instruments available for sale) is based on the quoted market prices as of the date of the reporting period. If the quoted price is available and there is an active market for the instrument, this will be included in Level 1. Otherwise, it will be included in Level 2. Fair Value Level 2: The fair value of financial instruments not traded in active markets, for example, over-the-counter derivatives, is determined using valuation techniques that maximize the use of observable inputs and rely to the lower extent possible in the Group’s specific estimates. If all the significant inputs required to obtain the fair value of a financial instrument are observable, the instrument is included in Level 2. If the inputs required to determine the price are not observable, the instrument will be included in Level 3. Fair Value Level 3: If one or more relevant inputs are not based on observable market data, the instrument is included in Level 3. This is the case of unlisted financial instruments. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS When observable market prices are no longer available, the instrument will be included in Level 3. The instrument will return to Level 1 only when it has observable market price, and it will maintain that Level if it continues quoting. This is called transfer between levels. Valuation Techniques The valuation techniques to determine fair values include: Market prices for similar instruments. c.
| Under the prior accounting framework, cash flows from Intangible Assets, Dividend Income from Investments in Associates and Cash Flows with the Argentine Central Bank were disclosed as cash flows provided by operating activities. Under IFRS, cash flows from Intangible Assets and Dividend Income from Investments in Subsidiaries and Associates are disclosed as cash flows provided by investing activities, while those from loans from the Argentine Central Bank are disclosed as cash flows provided by financing activities.
|
d.
| Cash flows from CFA and CyS, as mentioned in point b. above, have not been consolidated under IFRS.
|
The reconciliation of cash flows is as follows:
Determining the estimated present value of instruments. The valuation technique to determine the fair value Level 2 is based on data other than the quoted price included in Level 1, which are directly observable for assets or liabilities (i.e., prices). For those instruments with no secondary market and which, if having to reverse positions, the Group would have to sell them to the Argentine Central Bank at the rate originally agreed in accordance with the provisions of the controlling authority, the price has been prepared based on such rate accrual. Financial instruments classified as level 3 mainly include equity instruments for which the fair value was calculated with the assistance of independent appraisers using methods of future discounted cash flows involving a combined income and market approach. The fair value of the related put option derivative classified as level 3 was estimated using a valuation technique based on the binomial method considering different scenarios. The most relevant unobservable input data include the projected EBITDA and the discount rate (WACC—Weighted Average Cost of Capital) used in the estimations. The valuation technique to determine the fair value of other Level 3 financial instruments is based on a method that compares the existing spread between the curve of sovereign bonds and the average yield of primary offerings, for different segments, according to the different risk ratings. If there are no representative primary offerings during the month, the following alternatives will be used: | | Prior Accounting Framework | | | CFA + CyS Discontinued | | | Adjustments | | | Inflation effect | | | IFRS | | Cash and Cash Equivalents | | 12.31.17 | | | Operations | | | Adjustments | | | Inflation effect | | | 12.31.17 | | Operating Activities (I) | | | (1,305,475 | ) | | | 1,580,060 | | | | (3,172,810 | ) | | | (1,288,999 | ) | | | (4,187,224 | ) | Investing Activities (II) | | | (2,580,126 | ) | | | 459,805 | | | | 1,069,869 | | | | (592,368 | ) | | | (1,642,820 | ) | Financing Activities (III) | | | 15,816,746 | | | | (987,404 | ) | | | (4,316,983 | ) | | | 5,008,673 | | | | 15,521,032 | | Effect of exchange rate changes on cash and cash equivalents | | | 7,602,047 | | | | - | | | | (9,490,347 | ) | | | (899,692 | ) | | | (2,787,992 | ) | Total | | | 19,533,192 | | | | 1,052,461 | | | | (15,910,271 | ) | | | 2,227,614 | | | | 6,902,996 | |
| (i) | Secondary market prices of instruments under the same conditions, which had quoted in the evaluation month. |
(I) Operating Activities
| (ii) | prior-month bidding and/or secondary market prices, which will be taken based on their representativeness. |
| (iii) | | | | | | | | | | Cash Flows According to Prior Accounting Framework as of 12.31.17
| | | | | | | | | (1,305,475
| )
| Cash Flows from Discontinued Operations
| | | | | | | | | 1,580,060
| | Adjustments that Affect Cash Flows from Operating Activities
| | | | | | | | | (4,528,664
| )
| Inflation effect
| | | | | | | | | (1,288,999
| )
| Intangible Assets
| | | | | | | | | 2,317,755
| | Miscellaneous Assets
| | | | | | | | | (818,745
| )
| Other Collections Related to Subsidiaries
| | | | | | | | | 153,563
| | Dividends from Associates
| | | | | | | | | (296,719
| )
| Cash Flows According to IFRS as of 12.31.17
| | | | | | | | | (4,187,224
| )
|
(II) Investing Activities
| | | | | | | | | | | Cash Flows According to Prior Accounting Framework as of 12.31.17
| | | | | | | | | (2,580,126
| )
| Cash Flows from Discontinued Operations
| | | | | | | | | 459,805
| | Miscellaneous Assets
| | | | | | | | | 818,745
| | Dividends from Associates
| | | | | | | | | 296,719
| | Differences in the determination of Financing Activities
| | | | | | | | | 2,425,723
| | Other Collections Related to Subsidiaries
| | | | | | | | | (153,563
| )
| Inflation effect
| | | | | | | | | (592,368
| )
| Intangible Assets
| | | | | | | | | (2,317,755
| )
| Cash Flows According to IFRS as of 12.31.17
| | | | | | | | | (1,642,820
| )
|
(III) Financing Activities
| | | | | | | | | | | Cash Flows According to Prior Accounting Framework as of 12.31.17
| | | | | | | | | 15,816,746
| | Cash Flows from Discontinued Operations
| | | | | | | | | (987,404
| )
| Inflation effect
| | | | | | | | | 5,008,673
| | Differences in the determination of Financing Activities
| | | | | | | | | (4,316,983
| )
| Cash Flows According to IFRS as of 12.31.17
| | | | | | | | | 15,521,032
| |
Effect of Changes in the Exchange Rate
| | | | | | | | | | | Cash Flows According to Prior Accounting Framework as of 12.31.17
| | | | | | | | | 7,602,047
| | Inflation effect
| | | | | | | | | (899,692
| )
| Differences in the determination of Financing Activities
| | | | | | | | | (9,490,347
| )
| Cash Flows According to IFRS as of 12.31.17
| | | | | | | | | (2,787,992
| )
|
F-30
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.2.Optional Exemptions to IFRS
IFRS 1 allows entities that adopt IFRS for the first time to consider certain one-time exemptions. Such exemptions have been established by the IASB to make the first application of certain IFRS simpler, eliminating the mandatory nature of their retrospective application.
Below are the optional exemptions applicableprior month spread applied to the Group under IFRS 1:sovereign curve.
| (iv) | Deemed Cost of Property, Plant and Equipment: The fair value of certain items of property, plant and equipment has been adopted as deemed cost as of the date of transition to IFRS.
|
The accumulated fair value totaled $6,880,487 and the adjustment to the carrying amount presentedA specific margin is applied, defined according to the prior accounting framework amounted to $4,832,716, outhistorical yields of which $4,475,869 was recorded under "Property, Plant and Equipment" and $356,847 under "Other Non-financial Assets".
2.
| Business Combinations: The Group has opted for not applying IFRS 3 “Business Combinations” retrospectively for business combinations prior to the date of transition to IFRS.
|
3.
| Assets and Liabilities of Subsidiaries, Associates and Joint Ventures: The Group has adopted IFRS for the first time after its subsidiary Tarjetas Regionales S.A. and its related subsidiaries. Consequently, it has measured the assets and liabilities of such subsidiaries in its consolidated financial statements for the same carrying amounts disclosed in their financial statements.
|
The Group has not made use of other exemptions available in IFRS 1.
3.3.Mandatory Exceptions to IFRS
Below are the mandatory exceptions applicable to the Group under IFRS 1:
1.
| Estimates: The estimates made by the Group under to IFRS as of January 1, 2017 (date of transition to IFRS) are consistent with the estimates made as of the same date according to the prior accounting framework.
|
2.
| Derecognition of financial assets and liabilities: The Group applied the derecognition criteria of financial assets and liabilities under IFRS 9 prospectively for transactions occurred after January 1, 2017.
|
3.
| Classification and measurement of financial assets: The Group has considered the facts and circumstances at the date of transition to IFRS (January 1, 2017) to assess the classification of financial assets in the three measurement categories established by IFRS 9.
|
4.
| Impairment of financial assets: At the date of transition to IFRSs, the Group used reasonable and supportable information that was available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised (or for loan commitments and financial guarantee contracts the date that the entity became a party to the irrevocable commitment) and compare that to the credit risk at the date of transition to IFRSs. If, at the date of transition to IFRSs, determining whether there has been a significant increase in credit risk since the initial recognition of a financial instrument required undue cost or effort, the Group recognised a loss allowance at an amount equal to lifetime expected credit losses until that financial instrument is derecognised.
|
5.
| Other mandatory exceptions established by IFRS 1 that have not been applied because of not being material to the Group are:
|
| -
| Non-controlling interests
|
The other exceptions established by IFRS 1 have not been applied because of not being material to the Group.
F-31
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.4.RECLASSIFICATIONS
The items recognized under the prior accounting framework, which were reclassified accordingsame conditions.
|
As stated above, the rates and spreads to be used to discount future cash flows and originate the price of the instrument are determined. All the modifications to the valuation methods are previously discussed and approved by the Group’s key personnel. The Group’s financial instruments measured at fair value at the end of the reporting period are detailed below: | | | | | | | | | | | | | Portfolio of Instruments as of 12.31.20 | | Fair Value Level
1 | | | Fair Value Level
2 | | | Fair Value Level
3 | | Assets | | | | | | | | | | | | | Argentine Central Bank’s Bills and Notes | | | — | | | | 128,324,920 | | | | — | | Government Securities | | | 23,170,495 | | | | 911,380 | | | | 200,768 | | Corporate Securities | | | 1,653,980 | | | | — | | | | 1,158,017 | | Derivative Financial Instruments | | | — | | | | 547,929 | | | | 1,617,103 | | Other Financial Assets | | | 2,760,728 | | | | 31,255 | | | | — | | Other Debt Securities (*) | | | 604,996 | | | | 3,580,102 | | | | — | | Financial Assets Pledged as Collateral | | | 2,035,559 | | | | — | | | | — | | Investments in Equity Investments | | | 234,774 | | | | — | | | | 5,476,910 | | Liabilities | | | | | | | | | | | | | Derivative Financial Instruments | | | — | | | | 57,450 | | | | — | | | | | | | | | | | | | | | Total | | | 30,460,532 | | | | 133,338,136 | | | | 8,452,798 | | | | | | | | | | | | | | |
| (*) | It relates to IFRS and as detailed in point 3.1., are described below. 3.4.1. Assets
Spot Purchases and Sales Pending Settlement: According to prior accounting framework, these transactions were recorded as "Other Receivables Resulting from Financial Brokerage" and "Other Liabilities Resulting from Financial Brokerage", respectively. Upon adopting the trade-date accounting, a spot purchase transaction pending settlement will imply recording the security to be received in the respective account, with the applicable measurement criterion, while the spot sale pending settlement will imply the derecognition of the security. The currency transactions pending settlement have been reclassified as cash equivalents and those related to securities have been included in the respective holdings.
Reverse Repo Transactions: Under the prior accounting framework, the security was recognized in the holding and the obligation to deliver it at the end of the transaction in "Other Liabilities Resulting from Financial Brokerage". The loan granted was recorded in "Other Receivables Resulting from Financial Brokerage". Under IFRS, the financial assets acquired through reverse repo transactions for which the risks and rewards have not been transferred shall be recognized as a loan granted with securities offered as collateral. Therefore, the securities were derecognized.
Leasehold Improvements: According to the prior accounting framework, they were disclosed under "Intangible Assets". According to IFRS, they are part of "Property, Plant and Equipment".
Equity Investments: In Prisma Medios de Pago S.A.’s Ordinary and Extraordinary Shareholders’ Meeting held on August 31, 2017, the shareholders decided to transfer all of the shares held in the investee (see Note 55). Therefore, according to IFRS 5 is the investment was reclassified to "Non-current Assets Held for Sale" andGovernment Securities measured at the lower of the carrying amount and fair value less costs to sell at closing. Such reclassification was made as of December 31, 2017.
Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A. were disposed of on February 2, 2018 (see Note 23). Under the prior accounting framework they were disclosed under "Equity Investments". Under IFRS they were reclassified to "Non-current Assets Held for Sale" and measured at the lower of the carrying amount and fair value less cost to sell.
Repurchase of Debt Securities: Repurchased debt securities were included within the debt investment portfolio under the prior accounting framework. Under IFRS an issuer's repurchase of its own debt is considered a settlement of the related obligation.
Repurchase of Non-controlling Interests: As of December 31, 2017, a financial liability has been recognized for the purchase of a 6% interest in Tarjetas Regionales S.A. IFRS 32, paragraph 23, sets forth that a commitment to buy own shares is to be accounted for as a financial liability for the present value of the redemption price. The liability is recognized with its corresponding offsetting entry in equity, for the risks and rewards associated with the shares are retained by the non-controlling shareholders until the actual transfer of such shares. The transaction totaled $1,364,452 and the amount recognized against other shareholders' equity reserves was $593,980.
3.4.2. Income Statement
Fees on Origination of Loans and Lending Expenses: According to the prior accounting framework, structuring fees were disclosed under "Fee Income" and lending expenses under "Fee-related Expenses". According to IFRS 9, such fees are part of the cash flows taken into account to determine the IRR on loans.
3.5.ADJUSTMENTS AS OF THE DATE OF TRANSITION
(a)
| According to the prior accounting framework, structuring fees were disclosed under "Fee Income" and lending expenses under "Fee-related Expenses". According to IFRS 9, such fees are part of the cash flows taken into account to determine the IRR on loans.
|
(b)
| Equity Investments in Associates and Joint Ventures: Upon applying the equity method, the Group has used the associates' financial statements. The shareholders’ equity arising from the financial statements have been adjusted to reflect the adoption of IFRS in those entities.
|
| | 12.31.17 | | | 01.01.17 | | Prisma Medios de Pago S.A. | | | - | | | | 245,250 | | Ondara S.A. | | | - | | | | (102 | ) | Total | | | - | | | | 245,148 | |
F-32
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(c)
| Property, Plant and Equipment: The fair value of certain items of property, plant and equipment has been adopted as deemed cost as of the date of transition to IFRS, as described in 3.2, net of the related impact on accumulated depreciation.
|
(d)
| Intangible Assets: The prior accounting framework allowed the recognition of intangible assets items such as organization and reorganization expenses and other items. Under IFRS such assets have been derecognized and the amortization generated under the prior accounting framework has been reversed.
|
(e)
| Financial instruments at fair value through profit or loss: The prior accounting framework established that government and private securities included in the list of volatilities periodically published by the Argentine Central Bank should be measured at fair value. The securities not included in those lists were measured at acquisition cost plus the IRR.
|
The adjustment disclosed is the result of measuring at fair value through profit or loss the securities classified in that business model.
The Group has classified the following financial assets into this category: Holdings in government and private securities, in instruments issued by the Argentine Central Bank, in debt securities and certain investments in debt securities issued by financial trusts.
(f)
| Derivative Financial Instruments: The adjustment is that resulting from applying the techniques specified in Notes 1.10 and 8 to the Group's option portfolio.other comprehensive income.
|
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | Portfolio of Instruments as of 12.31.19 | | Fair Value Level
1 | | | Fair Value Level
2 | | | Fair Value Level
3 | | Assets | | | | | | | | | | | | | Argentine Central Bank’s Bills and Notes | | | — | | | | 79,153,628 | | | | — | | Government Securities | | | 2,052,669 | | | | — | | | | 7,069,005 | | Corporate Securities | | | 904,405 | | | | — | | | | 251,671 | | Derivative Financial Instruments | | | — | | | | 1,903,979 | | | | 1,266,836 | | Other Financial Assets | | | 6,789,474 | | | | 50,917 | | | | — | | Other Debt Securities (*) | | | 21,668,553 | | | | — | | | | — | | Financial Assets Pledged as Collateral | | | 957,979 | | | | — | | | | 1,405,002 | | Equity Investments | | | 220,552 | | | | — | | | | 5,979,907 | | Liabilities | | | | | | | | | | | | | Liabilities at fair value through profit or loss | | | 1,936,133 | | | | — | | | | — | | Derivative Financial Instruments | | | — | | | | 1,199,533 | | | | — | | | | | | | | | | | | | | | Total | | | 30,657,499 | | | | 79,908,991 | | | | 15,972,421 | | | | | | | | | | | | | | |
(g)
| (*) | Other Financial Assets: The adjustment is related to the consolidation of the financial assets under IFRS of Financial Trust Galtrust I and Financial Trust Saturno Créditos, which did not qualify as controlled entities under the prior accounting framework.
|
| | 12.31.17 | | | 01.01.17 | | Premiums for Financial Guarantee Contracts | | | 241,350 | | | | 248,044 | | CyS Deconsolidation | | | (13,005 | ) | | | - | | Consolidation of Financial Trusts that Were Not Subject to Consolidation under the Prior Accounting Framework | | | (169,207 | ) | | | (913,929 | ) | Total | | | 59,138 | | | | (665,885 | ) |
(h)
| Loans and Other Financing: In accordance to the prior accounting framework, they were recorded at their acquisition cost plus interest accrued based on the contractual rate. In compliance with the provisions set out in IFRS 9, they areIt relates to Government Securities measured at amortized cost.
|
(i)
| Other Debt Securities: As described in the preceding paragraph, the adjustment relates to debt securities of financial trusts which have been measured at amortized cost, based on the business model assessment types of cash flows.
|
The Financial Trust Galtrust I has measured its holding of government securities at fair value through OCI in accordance with IFRS, based onother comprehensive income.
|
The evolution of instruments included in Level 3 Fair Value is detailed below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Level 3 | | 12.31.19 | | | Transfers(*) | | | Recognition | | | Derecognition | | | Income
(Loss) | | | Inflation
Effect | | | 12.31.20 | | Government Securities | | | 7,069,005 | | | | (1,734,412 | ) | | | 18,522,437 | | | | (22,946,325 | ) | | | 915,243 | | | | (1,625,180 | ) | | | 200,768 | | Corporate Securities | | | 251,671 | | | | 123,615 | | | | 3,850,367 | | | | (2,996,313 | ) | | | 99,825 | | | | (171,148 | ) | | | 1,158,017 | | Derivative Financial Instruments | | | 1,266,836 | | | | — | | | | — | | | | — | | | | 686,568 | | | | (336,301 | ) | | | 1,617,103 | | Financial Assets Pledged as Collateral | | | 1,405,002 | | | | (209,844 | ) | | | 700,459 | | | | (1,580,566 | ) | | | (162,288 | ) | | | (152,763 | ) | | | — | | Investments in Equity Instruments | | | 5,979,907 | | | | — | | | | — | | | | — | | | | 1,052,243 | | | | (1,555,240 | ) | | | 5,476,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 15,972,421 | | | | (1,820,641 | ) | | | 23,073,263 | | | | (27,523,204 | ) | | | 2,591,591 | | | | (3,840,632 | ) | | | 8,452,798 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (*) | They include the business model assessments and the instrument’s cash flow characteristics (SPPI). (j)
| Investments in Equity Instruments: Under the IFRS, investments in equity instruments measured at cost under the prior accounting framework were reclassified to "Listed Private Securities" and measured at fair value through profit or loss.
|
| | 12.31.17 | | | 01.01.17 | | Banco Galicia's Holdings | | | 81,109 | | | | 73,888 | | Galicia Valores S.A.'s Holdings | | | - | | | | 57,211 | | Total | | | 81,109 | | | | 131,099 | |
F-33
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(k)
| Financial Assets Pledged as Collateral: The adjustment arises from the measurement at fair value with changes in profit or loss of monetary regulation instruments offered as collateral. Under the prior accounting framework, these assets were measured at cost plus IRR.
|
(l)
| Other Non-financial Assets: The adjustment corresponds to: (i) derecognition of systems licenses, the capitalization of which is not allowed under IFRS, and (ii) the adoption of fair value as deemed cost for miscellaneous assets.
|
| | 12.31.17 | | | 01.01.17 | | Derecognition of Advances for Systems Purchased | | | (659,590 | ) | | | (955,579 | ) | Miscellaneous Assets | | | 278,561 | | | | 382,079 | | Total | | | (381,029 | ) | | | (573,500 | ) |
(m)
| Non-current Assets Held for Sale: Under the prior accounting framework the investments in Prima Medios de Pago S.A. was measured at cost, however under IFRS the investment constitutes an associate under IAS 28. As a consequence, the adjustment corresponds to the application of the equity method prior to its reclassification as "Non-current Assets Held for Sale", as described in Note 3.5.
|
(n)
| Provisions: Relates to the adjustment for the measurement of the liability in accordance with the likelihood criteria of IAS 37 ("more likely than not") for contingencies related to labor and commercial legal actions.
|
(o)
| Other Financial Liabilities: The adjustment relates to the measurement of guarantees granted, according to paragraph 4.2.1 c) of IFRS 9, which did not require balance sheet disclosure under the prior accounting framework.
|
(p)
| Loans from the Argentine Central Bank and Other Financial Institutions: Relates to the measurement at amortized cost, of the loans received, in accordance with IFRS. Under the prior accounting framework, interest was accrued applying the contractual rate.
|
(q)
| Deferred Income Tax Assets and Liabilities: The deferred tax is recognized in accordance with the liability method, the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and is determined using tax rates (and laws) enacted or substantially enacted as of the balance sheet date and expected to be applicable when the related deferred tax assets are realized or the deferred tax liabilities are settled.
|
By applying the prior accounting framework, Banco Galicia only recognized the current tax for the fiscal year.
(r)
| Other Non-financial Liabilities: Relates to the deferred income for the Quiero! Customer loyalty program. Under the prior accounting framework the loyalty program was measured on the basis of the cost of granted points. Under IFRS, consideration is allocated based on the relative standalone selling prices for services rendered and points granted, which are accounted for at the fair value of the points and are accumulated based on the redemption rate, until such time as points are redeemed by costumers.
|
(s)
| Liabilities Recognized by Insurance Companies: Under IFRS, an insurance company will evaluate, at the end of the period reported, the adjustment of insurance liabilities that have been recognized, using the current estimates of future cash flows from insurance contracts. If the evaluation shows that the carrying amount of its liabilities for insurance contracts (less deferred acquisition costs and related intangible assets) is not adequate, considering the estimated future cash flows, the total amount of the inadequacy will be recognized in profit or loss. Under the prior accounting framework, the accounting policies followed by the insurance company do not require performing an adequacy test of liabilities. According to IFRS 4, in this case, the insurance company shall determine the adjustment of the carrying amount recorded according to the guidelines set out in IAS 37.
|
F-34
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. FINANCIAL INSTRUMENTS
Schedule P "Categoriesmovements of Financial Assets and Liabilities" discloses the measurement categories to which the consolidated balance sheet items and the fair value hierarchies relate.
As of the indicated dates, the Group maintains the following portfolios of financial instruments:
Instruments Portfolio as of 12.31.2018 | | Fair Value through Profit or Loss | | | Amortized Cost | | | Fair Value through OCI | | Assets | | | | | | | | | | | | | Argentine Central Bank's Bills and Notes | | | 70,097,764 | | | | - | | | | - | | Government Securities | | | 4,699,806 | | | | - | | | | - | | Private Securities | | | 1,137,593 | | | | - | | | | - | | Derivative Financial Instruments | | | 1,785,640 | | | | - | | | | - | | Repo Transactions | | | - | | | | 2,068,076 | | | | - | | Other Financial Assets | | | 4,303,431 | | | | 4,744,501 | | | | - | | Loans and Other Financing | | | - | | | | 282,710,068 | | | | - | | Other Debt Securities | | | - | | | | 5,312,035 | | | | 9,112,099 | | Financial Assets Pledged as Collateral | | | 3,459,712 | | | | 7,357,780 | | | | - | | Equity Instruments | | | 161,054 | | | | - | | | | - | | Liabilities | | | | | | | | | | | | | Deposits | | | - | | | | 360,097,275 | | | | - | | Liabilities at fair value through profit or loss | | | 2,144,664 | | | | - | | | | - | | Derivative Financial Instruments | | | 1,835,789 | | | | - | | | | - | | Repo Transactions | | | - | | | | 1,948,559 | | | | - | | Other Financial Liabilities | | | - | | | | 63,235,042 | | | | - | | Loans from the Argentine Central Bank and Other Financial Institutions | | | - | | | | 19,446,028 | | | | - | | Debt Securities | | | - | | | | 29,983,653 | | | | - | | Subordinated Debt Securities | | | - | | | | 9,767,874 | | | | - | |
Instruments Portfolio as of 12.31.2017 | | Fair Value through Profit or Loss | | | Amortized Cost | | | Fair Value through OCI | | Assets | | | | | | | | | | | | | Argentine Central Bank's Bills and Notes | | | 26,367,677 | | | | - | | | | - | | Government Securities | | | 13,923,160 | | | | - | | | | - | | Private Securities | | | 2,456,960 | | | | - | | | | - | | Derivative Financial Instruments | | | 775,674 | | | | - | | | | - | | Repo Transactions | | | - | | | | 14,286,336 | | | | - | | Other Financial Assets | | | 4,573,809 | | | | 5,765,447 | | | | - | | Loans and Other Financing | | | - | | | | 284,354,759 | | | | - | | Other Debt Securities | | | - | | | | 4,040,087 | | | | 142,450 | | Financial Assets Pledged as Collateral | | | 2,249,914 | | | | 7,096,874 | | | | - | | Equity Instruments | | | 111,923 | | | | - | | | | - | | Liabilities | | | | | | | | | | | | | Deposits | | | - | | | | 296,367,356 | | | | - | | Derivative Financial Instruments | | | 846,331 | | | | - | | | | - | | Repo Transactions | | | - | | | | 1,670,059 | | | | - | | Other Financial Liabilities | | | - | | | | 55,350,799 | | | | - | | Loans from the Argentine Central Bank and Other Financial Institutions | | | - | | | | 11,618,302 | | | | - | | Debt Securities | | | - | | | | 20,279,165 | | | | - | | Subordinated Debt Securities | | | - | | | | 7,128,356 | | | | - | |
F-35
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Instruments Portfolio as of 01.01.17 | | Fair Value through Profit or Loss | | | Amortized Cost | | | Fair Value through OCI | | Assets | | | | | | | | | | | | | Argentine Central Bank's Bills and Notes | | | 16,158,217 | | | | - | | | | - | | Government Securities | | | 9,659,559 | | | | - | | | | - | | Private Securities | | | 2,999,968 | | | | - | | | | - | | Derivative Financial Instruments | | | 229,436 | | | | - | | | | - | | Other Financial Assets | | | 4,616,737 | | | | 2,102,844 | | | | - | | Loans and Other Financing | | | - | | | | 245,703,421 | | | | - | | Other Debt Securities | | | - | | | | 2,253,595 | | | | 930,257 | | Financial Assets Pledged as Collateral | | | 4,205,704 | | | | 5,889,889 | | | | - | | Equity Instruments | | | 187,135 | | | | - | | | | - | | Liabilities | | | | | | | | | | | | | Deposits | | | - | | | | 277,077,562 | | | | - | | Derivative Financial Instruments | | | 290,384 | | | | - | | | | - | | Repo Transactions | | | - | | | | 3,030,473 | | | | - | | Other Financial Liabilities | | | - | | | | 57,094,776 | | | | - | | Loans from the Argentine Central Bank and Other Financial Institutions | | | - | | | | 12,717,145 | | | | - | | Debt Securities | | | - | | | | 21,848,460 | | | | - | | Subordinated Debt Securities | | | - | | | | 7,490,444 | | | | - | |
NOTE 5. FAIR VALUES
The Group classifies the fair valueslevels of financial instruments in three levels, according to the reliability of the inputs used to determine them.
Fair Value Level 1: The fair value of financial instruments traded in active markets (suchclassified as publicly-traded derivatives, debt securities or available for sale) is based on the quoted prices of markets (unadjusted) as of the date of the reporting period. If the quote price is available and there is an active market for the instrument, it will be included in Level 1. Otherwise, it will be included in Level 2.
Fair Value Level 2: The fair value of financial instruments that are not traded in active markets, for example, over-the-counter derivatives, is determined using valuation techniques that maximize the use of observable market data and rely as little as possible on the Group's specific estimates. If all the significant inputs required to fair value and instrument are observable, the instrument is included in Level 2. If the inputs used to determine the price are not observable and significant, the instrument will be included in Level 3.
Fair Value Level 3: If one or more significant inputs are not based on observable market data, the instrument is included in Level 3. This is the case of unlisted equity instruments.
That is to say, when observable market prices are no longer available, the instrument will be transferred into Level 3. Only when an instrument has an observable listed price in the market, it will return to Level 1 and will keep that Level while it continues to be quoted. This is known as transfer among levels.
Valuation Techniques
Valuation techniques to determine fair values include:
-
| Market or quoted prices for similar instruments.
|
-
| Determining the estimated present value of instruments.
|
The valuation technique to determine the fair value Level 2 is based on inputs other than the quoted price included in Level 1 that are readily observable for the asset or liability (i.e., prices). For those instruments for which there is no secondary market and, if positions should be disposed of, the Group should sell to the Argentine Central Bank at the originally agreed-upon rate, as established by the Regulator, the price has been determinated based on such rate accrual.
The valuation technique to determine the fair value of Level 3 financial instruments is based on a method that compares the existing spread between the curve of sovereign bonds and the average yield of primary offerings, for different segments, according to the different risk ratings. If there are no representative primary offerings during the month, the following alternatives will be used:
(i)
| Secondary market prices of securities under the same conditions, which have been quoted in the month of evaluation;
|
(ii)
| prior-month bidding and/or secondary market prices, and will be taken depending on how representative they are;
|
F-36
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(iii)
| prior month spread applied to the sovereign curve;
|
(iv)
| a specific margin is applied, determined based on comparable instruments historical return.
|
As stated above, the rates and spreads to be used to discount future cash flows and originate the price of the instrument are determined.
All the changes to valuation methods are previously discussed and approved by the Group's key personnel.
The Group's financial instruments measured at fair value at fiscal year-end are as follows:
Instruments Portfolio as of 12.31.18 | | Fair Value Level 1 | | | Fair Value Level 2 | | | Fair Value Level 3 | | Assets | | | | | | | | | | | | | Argentine Central Bank's Bills and Notes | | | - | | | | 70,097,764 | | | | - | | Government Securities | | | 2,952,344 | | | | 1,278,048 | | | | 469,414 | | Private Securities | | | 308,755 | | | | 36,270 | | | | 792,568 | | Derivative Financial Instruments | | | - | | | | 1,785,640 | | | | - | | Other Financial Assets | | | 4,264,431 | | | | 39,000 | | | | - | | Other Debt Securities (*) | | | 9,112,099 | | | | - | | | | - | | Financial Assets Pledged as Collateral | | | 3,184,346 | | | | 275,366 | | | | - | | Equity Instruments | | | 26,795 | | | | - | | | | 134,259 | | Liabilities | | | | | | | | | | | | | Liabilities at fair value through profit or loss | | | 1,366,785 | | | | 777,879 | | | | - | | Derivative Financial Instruments | | | - | | | | 1,835,789 | | | | - | | Total | | | 18,481,985 | | | | 70,898,420 | | | | 1,396,241 | |
It relates to Secured Bonds issued by Argentina measured at fair value with changes in OCI.
Instruments Portfolio as of 12.31.17 | | Fair Value Level 1 | | | Fair Value Level 2 | | | Fair Value Level 3 | | Assets | | | | | | | | | | | | | Argentine Central Bank's Bills and Notes | | | 26,367,677 | | | | - | | | | - | | Government Securities | | | 13,679,229 | | | | - | | | | 243,931 | | Private Securities | | | 1,009,000 | | | | 5,906 | | | | 1,442,054 | | Derivative Financial Instruments | | | - | | | | 775,674 | | | | - | | Other Financial Assets | | | 4,516,227 | | | | 57,582 | | | | - | | Other Debt Securities (*) | | | 142,450 | | | | - | | | | - | | Financial Assets Pledged as Collateral | | | 2,249,914 | | | | - | | | | - | | Equity Instruments | | | 28,233 | | | | - | | | | 83,690 | | Liabilities | | | | | | | | | | | | | Liabilities at fair value through profit or loss | | | - | | | | - | | | | - | | Derivative Financial Instruments | | | - | | | | 846,331 | | | | - | | Total | | | 47,992,730 | | | | (7,169 | ) | | | 1,769,675 | |
(*)
| It relates to Secured Bonds issued by Argentina measured at fair value with changes in OCI.
|
Instruments Portfolio as of 01.01.17 | | Fair Value Level 1 | | | Fair Value Level 2 | | | Fair Value Level 3 | | Assets | | | | | | | | | | | | | Argentine Central Bank's Bills and Notes | | | 16,158,217 | | | | - | | | | - | | Government Securities | | | 7,110,319 | | | | 1,972,400 | | | | 576,840 | | Private Securities | | | 778,214 | | | | 10,541 | | | | 2,211,213 | | Derivative Financial Instruments | | | - | | | | 229,436 | | | | - | | Other Debt Securities (*) | | | 930,257 | | | | - | | | | - | | Other Financial Assets | | | 4,544,877 | | | | 71,860 | | | | - | | Financial Assets Pledged as Collateral | | | 4,205,704 | | | | - | | | | - | | Equity Instruments | | | 93,727 | | | | - | | | | 93,408 | | Liabilities | | | | | | | | | | | | | Liabilities at fair value through profit or loss | | | - | | | | - | | | | - | | Derivative Financial Instruments | | | - | | | | 290,384 | | | | - | | Total | | | 33,821,315 | | | | 1,993,853 | | | | 2,881,461 | |
(*)
| It relates to Secured Bonds issued by Argentina measured at fair value with changes in OCI.
|
Changes in instruments included in fair value Level 3, are as follows:described above.
F-37
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Level 3 | | 12.31.18 | | | Transfers(*) | | | Recognition | | | Derecognition | | | Income
(Loss) | | | Inflation
Effect | | | 12.31.19 | | Government Securities | | | 983,085 | | | | 9,025,790 | | | | 24,808,830 | | | | (26,392,026 | ) | | | (1,247,071 | ) | | | (109,603 | ) | | | 7,069,005 | | Corporate Securities | | | 1,659,863 | | | | 29,357 | | | | 8,855,903 | | | | (9,903,261 | ) | | | 372,290 | | | | (762,481 | ) | | | 251,671 | | Derivative Financial Instruments | | | — | | | | — | | | | 1,743,456 | | | | — | | | | — | | | | (476,620 | ) | | | 1,266,836 | | Financial Assets Pledged as Collateral | | | — | | | | 2,962,544 | | | | 1,299,228 | | | | (2,378,488 | ) | | | (496,746 | ) | | | 18,464 | | | | 1,405,002 | | Investments in Equity Instruments | | | 281,177 | | | | (29,423 | ) | | | 7,198,058 | | | | — | | | | 438,721 | | | | (1,908,626 | ) | | | 5,979,907 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 2,924,125 | | | | 11,988,268 | | | | 43,905,475 | | | | (38,673,775 | ) | | | (932,806 | ) | | | (3,238,866 | ) | | | 15,972,421 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Level 3 | | 12.31.17 | | | Transfers(*) | | | Purchases | | | Sales | | | Income (Loss) | | | Inflation Effect | | | 12.31.18 | | Government Securities | | | 243,931 | | | | 1,255,553 | | | | 10,382,946 | | | | (11,115,519 | ) | | | 149,564 | | | | (447,061 | ) | | | 469,414 | | Private Securities | | | 1,442,054 | | | | 389,298 | | | | 6,352,483 | | | | (7,084,950 | ) | | | 372,340 | | | | (678,657 | ) | | | 792,568 | | Equity Instruments | | | 83,690 | | | | - | | | | - | | | | - | | | | 86,938 | | | | (36,369 | ) | | | 134,259 | | Total | | | 1,769,675 | | | | 1,644,851 | | | | 16,735,429 | | | | (18,200,469 | ) | | | 608,842 | | | | (1,162,087 | ) | | | 1,396,241 | |
(*)
| (*) | They include the movements of levels of financial instruments classified as fair value Level 3, as described above. |
Level 3 | | 01.01.17. | | | Transfers(*) | | | Purchases | | | Sales | | | Income (Loss) | | | Inflation Effect | | | 12.31.17 | | Government Securities | | | 576,840 | | | | (234,067 | ) | | | 450,486 | | | | (504,713 | ) | | | 46,969 | | | | (91,584 | ) | | | 243,931 | | Private Securities | | | 2,211,213 | | | | (434,784 | ) | | | 2,626,022 | | | | (2,789,653 | ) | | | 233,810 | | | | (404,554 | ) | | | 1,442,054 | | Equity Instruments | | | 93,408 | | | | - | | | | - | | | | - | | | | 9,776 | | | | (19,494 | ) | | | 83,690 | | Total | | | 2,881,461 | | | | (668,851 | ) | | | 3,076,508 | | | | (3,294,366 | ) | | | 290,555 | | | | (515,632 | ) | | | 1,769,675 | |
(*)
| They include the movements of levels of financial instruments classified as fair value Level 3, as described above.
|
The Group's policy is to recognize transfers among fair value levels only as of year-end dates. They resulted from the transfer to Level 3, of the instruments that no longer have observable inputs as of the year-end the movement to Level 1 of the instruments that have observable quoted prices.described above.
|
The Group’s policy is to recognize transfers between the fair value levels only at the end of the reporting period. Transfers occurred because the instruments without observable market prices were reclassified at Level 3, and the instruments with observable market prices at the end of the year were reclassified at Level 1. The Group included below the fair value of the instruments not carried at fair value as of the year-end. | | | | | | | | | | | | | | | | | | | | | Items of Assets/(Liabilities) as of 12.31.20 | | Book Value | | | Fair Value | | | Fair Value
Level 1 | | | Fair Value
Level 2 | | | Fair Value
Level 3 | | Assets | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 175,423,476 | | | | 175,423,476 | | | | 175,423,476 | | | | — | | | | — | | Repurchase Transactions | | | 60,995,643 | | | | 60,995,643 | | | | 60,995,643 | | | | — | | | | — | | Loans and Other Financing | | | 526,434,119 | | | | 527,834,544 | | | | — | | | | — | | | | 527,834,544 | | Other Financial Assets | | | 7,301,643 | | | | 7,161,885 | | | | 4,399,582 | | | | — | | | | 2,762,303 | | Other Debt Securities | | | 18,885,279 | | | | 18,878,854 | | | | — | | | | — | | | | 18,878,854 | | Financial Assets Pledged as Collateral | | | 16,681,884 | | | | 16,681,884 | | | | 16,681,884 | | | | — | | | | — | | Liabilities | | | | | | | | | | | | | | | | | | | | | Deposits | | | 676,395,735 | | | | 676,454,768 | | | | — | | | | — | | | | 676,454,768 | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | 13,833,439 | | | | 9,934,732 | | | | — | | | | — | | | | 9,934,732 | | Debt Securities | | | 17,073,898 | | | | 16,207,692 | | | | 12,208,069 | | | | — | | | | 3,999,623 | | Subordinated Debt Securities | | | 21,653,546 | | | | 18,850,289 | | | | — | | | | — | | | | 18,850,289 | | Other Financial Liabilities | | | 97,471,465 | | | | 97,083,349 | | | | — | | | | — | | | | 97,083,349 | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | Items of Assets/(Liabilities) as of 12.31.19 | | Book Value | | | Fair Value | | | Fair Value
Level 1 | | | Fair Value
Level 2 | | | Fair Value
Level 3 | | Assets | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 177,866,399 | | | | 177,866,399 | | | | 177,866,399 | | | | — | | | | — | | Repurchase Transactions | | | 40,944,933 | | | | 40,944,933 | | | | 40,944,933 | | | | — | | | | — | | Loans and Other Financing | | | 488,144,152 | | | | 487,184,349 | | | | — | | | | — | | | | 487,184,349 | | Other Financial Assets | | | 8,019,809 | | | | 8,796,107 | | | | 9,228 | | | | — | | | | 8,786,879 | | Other Debt Securities | | | 4,224,883 | | | | 4,233,738 | | | | — | | | | — | | | | 4,233,738 | | Financial Assets Pledged as Collateral | | | 13,362,055 | | | | 13,362,054 | | | | 13,362,054 | | | | — | | | | — | | Liabilities | | | | | | | | | | | | | | | | | | | | | Deposits | | | 536,033,696 | | | | 536,246,597 | | | | — | | | | — | | | | 536,246,597 | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | 30,936,161 | | | | 29,554,907 | | | | — | | | | — | | | | 29,554,907 | | Debt Securities | | | 39,808,666 | | | | 40,333,927 | | | | 40,333,927 | | | | — | | | | — | | Subordinated Debt Securities | | | 21,100,718 | | | | 20,384,249 | | | | — | | | | — | | | | 20,384,249 | | Other Financial Liabilities | | | 97,153,624 | | | | 96,516,196 | | | | — | | | | — | | | | 96,516,196 | |
NOTE 5. CASH AND CASH EQUIVALENTS Cash equivalents are held to meet short-term payment commitments, rather than for investment or similar purposes. A financial asset is classified as cash equivalent, if it can be readily convertible into a certain amount of cash and its risk of changes in value is immaterial. Accordingly, an investment with original maturity of three months or less is classified as cash equivalent. Equity interests are excluded from cash equivalents. Cash and cash equivalents break down as follows: | | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Cash and Due from Banks | | | 175,423,476 | | | | 177,866,399 | | | | 300,130,550 | | Argentine Central Bank’s Bills and Notes Maturing up to 90 Days | | | 128,324,920 | | | | 79,153,628 | | | | 146,845,198 | | Reverse repurchase Transactions Debtors | | | 60,842,046 | | | | 40,837,234 | | | | 4,309,110 | | Loans to Financial Institutions | | | 6,500,000 | | | | — | | | | 1,964,438 | | Overnight Placements in Foreign Banks | | | 1,661,834 | | | | 10,720,687 | | | | 11,101,128 | | Mutual Funds | | | 2,760,728 | | | | 6,764,519 | | | | 8,083,157 | | Time Deposits | | | 3,306,869 | | | | 665,630 | | | | 598,963 | | | | | | | | | | | | | | | Total Cash and Cash Equivalents | | | 378,819,873 | | | | 316,008,097 | | | | 473,032,544 | | | | | | | | | | | | | | |
The risk analysis for cash and cash equivalents is presented in Note 45. The information with related parties is disclosed in Note 51. NOTE 6. DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS The Group’s debt securities at fair value through profit or loss are detailed in Schedule A. The credit quality of debt securities is disclosed in Note 45. NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS FORWARD EXCHANGE CONTRACT WITH NO DELIVERY OF THE UNDERLYING ASSET The Electronic Open Market (Mercado Abierto Electrónico, MAE) and the Rosario Forward Market (ROFEX) have trading areas for the closing, recording and settlement of forward financial transactions between their Agents, including Banco Galicia. In general, the settlement of these transactions is made without delivering the underlying asset. The settlement is carried out daily in Argentine pesos for the difference, if any, between the closing price traded of the underlying asset and the closing price or value of the underlying asset of the previous day, the price difference impacting on Income. The transactions are recorded in Off-balance Sheet Items The accrued balances pending settlement are disclosed in the “Derivative Financial Instruments” line, in Assets and/or Liabilities, as appropriate. Assets/(Liabilities) Accounts | | Carrying Amount | | | Fair Value | | | Fair Value Level 1 | | | Fair Value Level 2 | | | Fair Value Level 3 | | Assets | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 143,309,428 | | | | 143,309,428 | | | | 143,309,428 | | | | - | | | | - | | Loans and Other Financing | | | 282,710,068 | | | | 289,581,428 | | | | - | | | | - | | | | 289,581,428 | | Other Financial Assets | | | 9,047,932 | | | | 9,047,932 | | | | 9,047,932 | | | | - | | | | - | | Other Debt Securities | | | 14,424,134 | | | | 14,631,751 | | | | 763,126 | | | | - | | | | 13,868,625 | | Repo Transactions | | | 2,068,076 | | | | 2,068,076 | | | | 2,068,076 | | | | - | | | | - | | Financial Assets Pledged as Collateral | | | 10,817,492 | | | | 10,817,492 | | | | 10,817,492 | | | | - | | | | - | | Liabilities | | | | | | | | | | | | | | | | | | | | | Deposits | | | 360,097,275 | | | | 359,875,025 | | | | - | | | | - | | | | 359,875,025 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 19,446,028 | | | | 17,689,372 | | | | - | | | | - | | | | 17,689,372 | | Debt Securities | | | 29,983,653 | | | | 29,269,086 | | | | 29,269,086 | | | | - | | | | - | | Subordinated Debt Securities | | | 9,767,874 | | | | 8,513,061 | | | | - | | | | - | | | | 8,513,061 | | Repo Transactions | | | 1,948,559 | | | | 1,944,965 | | | | - | | | | - | | | | 1,944,965 | | Other Financial Liabilities | | | 63,235,042 | | | | 63,235,113 | | | | - | | | | - | | | | 63,235,113 | |
NOTE 6. CASH AND CASH EQUIVALENTS
Cash equivalents are held to meet short-term payment commitments, rather than for investment or similar purposes. In order for a financial asset to be classified as cash equivalents, it should be readily convertible into a certain amount of cash and its risk of changes in value should be immaterial. Accordingly, an investment with original maturity of three months or less is classified as cash equivalent. Equity interests are excluded from cash equivalents.
Cash and cash equivalents break down as follows:
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Cash and Due from Banks | | | 143,309,428 | | | | 87,044,881 | | | | 121,183,979 | | Argentine Central Bank's Bills and Notes Maturing within up to 90 Days | | | 70,117,158 | | | | 24,981,766 | | | | 12,720,258 | | Receivables from Reverse Repo Transactions | | | 2,057,558 | | | | 14,254,469 | | | | - | | Local Interbank Loans | | | 938,000 | | | | 1,380,486 | | | | 1,588,832 | | Overnight Placements in Banks Abroad | | | 5,300,681 | | | | 426,682 | | | | 2,266,254 | | Mutual Funds | | | 3,859,629 | | | | 3,578,916 | | | | 4,040,608 | | Time Deposits | | | 285,999 | | | | 291,016 | | | | 7,084 | | Government Securities | | | - | | | | - | | | | 1,830,938 | | Total Cash and Cash Equivalents | | | 225,868,453 | | | | 131,958,216 | | | | 143,637,953 | |
The analysis of risk of "Cash and Cash Equivalents" is disclosed in Note 46. Related-party information is disclosed in Note 52.
NOTE 7. FAIR VALUE DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
The Group's fair value debt securities through Profit or Loss are detailed in Schedule A.
The credit quality of debt securities is disclosed in Note 46.
F-38
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS
FORWARD PURCHASE-SALE OF FOREIGN CURRENCY WITHOUT DELIVERY OF THE UNDERLYING ASSET
Mercado Abierto Electrónico (MAE) and Rosario Futures Exchange (ROFEX) have trading environments for the closing, recording and settlement of financial forward transactions carried out among its agents, being Banco Galicia one of them. The general settlement mode for these transactions is without delivery of the traded underlying asset. Settlement is carried out on a daily basis, in Pesos, for the difference, if any, between the closing price of the underlying asset and the closing price or value of the underlying asset corresponding to the previous day, the difference in price being charged to income.
The transactions are recorded in Off-Balance Sheet Items for the notional value traded. The accrued balances pending settlement are disclosed in the "Derivative Financial Instruments" line of Assets and/or Liabilities, as the case may be.
INTEREST RATE SWAPS These transactions are conductedtraded within the environment created byscope of the MAE, and feature the settlement thereof is carried out on a daily or monthly basis,settlement in Pesos, forArgentine pesos of the differencevariation between the cash flows calculated usingat a variable rate (Badlar(Private Badlar for private banks for time depositsa period of 30 to 35 days) and the cash flows calculated usingat a fixed rate or vice versa on the notional value agreed, the price difference in price being charged to income. CROSS CURRENCY SWAPS
These swap transactions in pesos and US Dollars relate to an exchange of a periodic flow of principal and interest. They are settled for the difference and it is a bilateral transaction with a counterparty abroad.
Both the interest rate swap and cross currency swaps are recorded in "Off-Balance Sheet Items" for the notional value traded. The accrued balances pending settlement are disclosed in the "Derivative Instruments" line of Assets and/or Liabilities, as the case may be.
WRITTEN AND PURCHASED CALL OPTIONS ON DOLLAR GOLD FUTURES WITHOUT DELIVERY OF THE UNDERLYING ASSET
These transactions have been conducted with the purpose of hedging the variable yield of the deposits received by Banco Galicia and set forth by the Argentine Central Bank.
The contract date, the term to exercise the option and the underlying asset are the same as those for the related deposit. Notional amounts have been computed so that the offset value of derivative financial instruments is similar to the variable yield of the investment. Changes in the value of the underlying asset at the time of the arrangement and at fiscal year-end, equivalent to the variable yield, have been recognized in income and are recorded under “Derivative Financial Instruments " line of Assets and/or Liabilities, as appropriate. Premiums received and/or paid have been accruedimpacting on a straight-line basis during the contract term.
WRITTEN AND PURCHASED DOLLAR FUTURES WITHOUT DELIVERY OF THE UNDERLYING ASSET
These transactions have been traded on ROFEX. Derivatives are accrued for at fair value. Premiums received are part of the fair value calculation.Income.
The amounts of transactions conducted as of the indicated datesDecember 31, 2020 and 2019 are as follows: | | Underlying Asset | | Type of Settlement | | 12.31.18(*) | | | 12.31.17(*) | | | 01.01.17(*) | | Forward Purchase – Sale of Foreign Currency | | | | | | | | | | | | | | | | | Purchases | | Foreign currency | | Daily difference | | | 38,861,567 | | | | 30,145,543 | | | | 27,648,329 | | Sales | | Foreign currency | | Daily difference | | | 32,277,374 | | | | 28,042,761 | | | | - | | Purchases by Customers | | Foreign currency | | Daily difference | | | 3,673,954 | | | | 583,221 | | | | 396,281 | | Sales by Customers | | Foreign currency | | Daily difference | | | 10,156,620 | | | | 5,472,881 | | | | 2,202,703 | | Interest Rate Swaps | | | | | | | | | | | | | | | | | Swaps | | Others | | Other | | | 460,242 | | | | 1,476 | | | | 138,192 | | Cross Currency Swaps | | Others | | Other | | | 1,561 | | | | - | | | | - | | Repo Transactions | | | | | | | | | | | | | | | | | Forward Purchases | | Government Securities | | With delivery of the underlying asset | | | 1,965,824 | | | | 1,672,194 | | | | 3,032,245 | | Forward Sales | | Government Securities | | With delivery of the underlying asset | | | 2,061,516 | | | | 15,678,531 | | | | - | | Call Options Bought and Written on Futures | | | | | | | | | | | | | | | | | Call Options Written on Dollar | | Dollar | | | | | - | | | | - | | | | 18,794 | | Call Options Purchase on Gold | | Gold | | | | | - | | | | - | | | | 275,484 | | Call Options Written on Gold | | Gold | | | | | - | | | | - | | | | 303,032 | |
F-39
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS See
| | | | | | | | | | | | | | | | | | | | Underlying Asset | | | Type of Settlement | | | 12.31.20(*) | | | 12.31.19(*) | | Currency Forward Transactions | | | | | | | | | | | | | | | | | Purchases | | | Foreign currency | | | | Daily difference | | | | 25,716,730 | | | | 24,787,263 | | Sales | | | Foreign currency | | | | Daily difference | | | | 14,328,423 | | | | 17,225,667 | | Customers´ Purchases | | | Foreign currency | | | | Daily difference | | | | 1,549,356 | | | | 13,531,017 | | Customers´ Sales | | | Foreign currency | | | | Daily difference | | | | 12,563,375 | | | | 21,060,236 | | Interest Rate Swaps | | | | | | | | | | | | | | | | | Swaps | | | Others | | | | Other | | | | 82,909 | | | | 490,436 | | Repurchase Transactions | | | | | | | | | | | | | | | | | Forward Sales | | | Government Securities | | |
| With delivery of the
underlying asset |
| | | 61,923,889 | | | | 40,799,609 | |
For further details, refer to Schedule O for further details.O. NOTE 9. REPO8. REPURCHASE TRANSACTIONS As of the indicated dates, the Group maintains the following reporepurchase transactions: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Receivables from Reverse Repo Transactions of Government Securities | | | 2,057,558 | | | | 14,254,469 | | | | - | | Accrued Interest Payable on Reverse Repo Transactions | | | 10,518 | | | | 31,867 | | | | - | | Total Reverse Repo Transactions | | | 2,068,076 | | | | 14,286,336 | | | | - | |
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Payables for Repo Transactions of Government Securities | | | 1,943,805 | | | | 1,666,386 | | | | 3,026,218 | | Accrued Interest Payable on Repo Transactions | | | 4,754 | | | | 3,673 | | | | 4,255 | | Total Repo Transactions | | | 1,948,559 | | | | 1,670,059 | | | | 3,030,473 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Debtors for Reserve Repurchase Transactions of Government Securities | | | 60,842,046 | | | | 40,837,234 | | Interest Accrued Receivable for Reserve Repurchase Transactions | | | 153,597 | | | | 107,699 | | | | | | | | | | | Total Repurchase Transactions—Assets | | | 60,995,643 | | | | 40,944,933 | | | | | | | | | | |
The Group carries out repo transactions in which it sales a security with the related forward purchase thereof, thus substantially retaining all the risks and rewards associated with the instruments and recognizing them in "Financial Assets Pledged as Collateral" at year-end, as the provisions set out in point 3.4.2 (Derecognition of Assets) of IFRS 9 "Financial Instruments") are not met. | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Reverse Repo Transactions recorded as Off-Balance Sheet Items | | | 2,061,516 | | | | 15,678,531 | | | | - | | Repo Transactions recorded in Financial Assets Pledged as Collateral | | | 1,965,824 | | | | 1,672,194 | | | | 3,032,245 | |
The residualnotional values of the assets transferred under repoin repurchase transactions are disclosedpresented in Note 87 and Schedule O.
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Reverse Repurchase Transactions recorded in Off-Balance Sheet Items | | | 61,923,889 | | | | 40,799,609 | |
NOTE 10.9. OTHER FINANCIAL ASSETS As of the indicated dates, the balances of "Other“Other Financial Assets" relateAssets” correspond to: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Debtors from Spot Sales of Foreign Currency Pending Settlement | | | 1,947,184 | | | | 3,550,645 | | | | 5,918 | | Debtors from Spot Sales of Government Securities Pending Settlement | | | 1,607,601 | | | | 1,355,413 | | | | 1,312,067 | | Sundry Debtors | | | 810,757 | | | | 441,191 | | | | 447,246 | | Mutual Funds | | | 4,264,431 | | | | 4,516,228 | | | | 4,544,877 | | Others | | | 417,959 | | | | 475,779 | | | | 409,473 | | Total | | | 9,047,932 | | | | 10,339,256 | | | | 6,719,581 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Receivables from Spot Sales of Foreign Currency Pending Settlement | | | 107,542 | | | | 107,860 | | Receivables from Spot Sales of Government Securities Pending Settlement | | | 1,239,870 | | | | 243,816 | | Sundry Debtors | | | 4,819,857 | | | | 6,295,414 | | Mutual Funds | | | 2,760,728 | | | | 6,789,474 | | Premiums from financial guarantee contracts | | | 484,028 | | | | 875,839 | | Others | | | 737,305 | | | | 705,705 | | Minus: Allowances | | | (55,704 | ) | | | (157,908 | ) | | | | | | | | | | Total | | | 10,093,626 | | | | 14,860,200 | | | | | | | | | | |
Related-party information is disclosed in Note 52.51. The credit rating quality analysis of Other Financial Assets as of December 31, 2020 was as follows: NOTE 11. NET LOANS AND OTHER FINANCING | | | | | | | | | | | | | | | | | | | | | | | | | | | | Debtors
for Sale of
Foreign
Currency | | | Debtors for
Cash sale of
Government
Securities to
be Settled | | | Sundry
Debtors | | | Mutual
Funds | | | Premiums
from
financial
guarantee
contracts | | | Other | | Not yet due | | | 107,542 | | | | 1,239,870 | | | | 4,814,695 | | | | 2,760,728 | | | | 484,028 | | | | 737,305 | | Impaired/Uncollectible | | | — | | | | — | | | | 5,162 | | | | — | | | | — | | | | — | | Allowances | | | — | | | | — | | | | (55,704 | ) | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 107,542 | | | | 1,239,870 | | | | 4,764,153 | | | | 2,760,728 | | | | 484,028 | | | | 737,305 | | | | | | | | | | | | | | | | | | | | | | | | | | |
"Net Loans and Other Financing" break down as follows as of the indicated dates:
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Non-financial Public Sector | | | 11,777 | | | | 8,532 | | | | 26,457 | | Argentine Central Bank | | | 533 | | | | 3,604 | | | | 5,318 | | Financial Institutions | | | 7,942,382 | | | | 6,938,664 | | | | 5,106,758 | | Loans | | | 7,942,382 | | | | 6,938,664 | | | | 5,106,758 | | Non-financial Private Sector and Residents Abroad | | | 290,412,186 | | | | 286,639,194 | | | | 249,251,684 | | Loans | | | 283,543,722 | | | | 280,870,810 | | | | 244,082,260 | | Overdrafts | | | 14,430,578 | | | | 16,680,960 | | | | 18,501,897 | | Promissory Notes | | | 36,020,263 | | | | 52,455,181 | | | | 46,613,651 | | Mortgage Loans | | | 11,793,007 | | | | 8,435,337 | | | | 4,013,513 | | Collateralized Loans | | | 997,958 | | | | 1,591,432 | | | | 1,249,027 | | Personal Loans | | | 29,144,931 | | | | 34,632,328 | | | | 24,365,344 | | Credit Card Loans | | | 113,395,362 | | | | 125,176,057 | | | | 129,153,045 | | Other Loans | | | 74,793,302 | | | | 44,962,639 | | | | 23,313,178 | | Accrued Interest, Adjustments and Quotation Differences Receivable | | | 5,388,298 | | | | 335,344 | | | | (703,302 | ) | Documented Interest | | | (2,419,977 | ) | | | (3,398,468 | ) | | | (2,424,093 | ) | Financial Leases | | | 2,198,047 | | | | 2,475,878 | | | | 1,731,448 | | Other Financing | | | 4,670,417 | | | | 3,292,506 | | | | 3,437,976 | | Less: Allowances | | | (15,656,810 | ) | | | (9,235,235 | ) | | | (8,686,796 | ) | Total | | | 282,710,068 | | | | 284,354,759 | | | | 245,703,421 | |
Classification of "Loans and Other Financing" by status and collateral in Schedule B.
The concentration of "Net Loans and Other Financing" is detailed in Schedule C.
The breakdown by term of "Net Loans and Other Financing" is detailed in Schedule D.
F-40
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. LOANS AND OTHER FINANCING The analysiscomposition of risk of “Loansthe Loans and Other Financing"Financing portfolio as of the indicated dates is detailed below: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Non-financial Public Sector | | | 334 | | | | 9,297 | | Argentine Central Bank | | | 13,195 | | | | 30,460 | | Financial Institutions | | | 14,700,600 | | | | 14,697,129 | | Loans | | | 14,700,600 | | | | 14,697,129 | | Non-financial Private Sector and Residents Abroad | | | 548,953,562 | | | | 508,591,528 | | Loans | | | 537,206,661 | | | | 492,932,211 | | Advances | | | 29,219,431 | | | | 21,635,827 | | Notes | | | 143,769,344 | | | | 102,214,820 | | Mortgage Loans | | | 16,486,335 | | | | 20,492,746 | | Pledge Loans | | | 11,586,593 | | | | 4,368,295 | | Personal Loans | | | 36,504,158 | | | | 37,637,281 | | Credit Card Loans | | | 241,793,015 | | | | 203,475,676 | | Other Loans | | | 36,431,415 | | | | 84,111,147 | | Accrued Interest, Adjustments and Quotation Differences Receivable | | | 23,649,868 | | | | 20,755,403 | | Documented Interest | | | (2,233,498 | ) | | | (1,758,984 | ) | Financial Leases | | | 1,855,070 | | | | 3,030,008 | | Other Financing | | | 9,891,831 | | | | 12,629,309 | | Less: Allowances | | | (37,233,572 | ) | | | (35,184,262 | ) | | | | | | | | | | Total | | | 526,434,119 | | | | 488,144,152 | | | | | | | | | | |
Classification of Loans and Other Financing as per situation and guarantees received, is detailed in Schedule B. The concentration of Loans and Other Financing is detailed in Schedule C. The breakdown for term of Loans and Other Financing is detailed in Schedule D. The risk analysis for Loans and Other Financing is presented in Note 45. The information with related parties is disclosed in Note 46. Related-party information is disclosed in Note 52.51.
NOTE 12.11. OTHER DEBT SECURITIES The Group's "OtherGroup’s “Other Debt Securities"Securities” are detailed in Schedule A. Changes in the "AllowancesThe risk analysis for Loan Losses" related to "OtherOther Debt Securities" are detailedSecurities is presented in Note 46.45.
NOTE 13.12. FINANCIAL ASSETS PLEDGED AS COLLATERAL "
The Financial Assets Pledged as Collateral" valued according toCollateral valuated in accordance with their underlying asset for the fiscal years under analysis break down as follows:are detailed below: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Deposits as Collateral | | | 3,663,499 | | | | 2,344,791 | | | | 2,778,032 | | Special Escrow Accounts at the Argentine Central Bank | | | 5,188,169 | | | | 5,329,804 | | | | 4,285,315 | | Forward Purchases of Monetary Regulation Instruments | | | 53,736 | | | | 1,660,746 | | | | 3,032,246 | | Others | | | 1,912,088 | | | | 11,447 | | | | - | | Total | | | 10,817,492 | | | | 9,346,788 | | | | 10,095,593 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Deposits as Collateral | | | 6,899,443 | | | | 5,479,776 | | Special Accounts as Collateral—Argentine Central Bank | | | 11,444,550 | | | | 10,245,260 | | Trust as Collateral | | | 373,450 | | | | — | | | | | | | | | | | Total | | | 18,717,443 | | | | 15,725,036 | | | | | | | | | | |
RestrictedThe restricted availability assets are detailed in Note 54.2.52.2.
NOTE 14.13. CURRENT INCOME TAX ASSETS As of the indicated dates, the balances of "CurrentCurrent Income Tax Assets" relateAssets correspond to: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Tax Credits | | | 94,918 | | | | 134,740 | | | | 216,396 | | Minimum Presumed Income Tax – Tax Credit Loss carryfoward | | | - | | | | 142 | | | | 27,086 | | Less: Allowance for Impairment of Minimum Presumed Income Tax – Tax Credit | | | - | | | | (142 | ) | | | (8,551 | ) | Total | | | 94,918 | | | | 134,740 | | | | 234,931 | |
Tax loss carryfoward expiration dates of Minimum Presumed Income Tax are as follows:
| | Tax Loss Carryfoward as of | | | | Date of Generation | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | | Expiration Date | 2006 | | | - | | | | - | | | | 273 | | | 2016 | 2007 | | | - | | | | 77 | | | | 588 | | | 2017 | 2008 | | | - | | | | 12 | | | | 669 | | | 2018 | 2009 | | | - | | | | 10 | | | | 1,074 | | | 2019 | 2010 | | | - | | | | 13 | | | | 3,002 | | | 2020 | 2011 | | | - | | | | 6 | | | | 2,686 | | | 2021 | 2012 | | | - | | | | 6 | | | | 3,158 | | | 2022 | 2013 | | | - | | | | 4 | | | | 3,466 | | | 2023 | 2014 | | | - | | | | 4 | | | | 4,249 | | | 2024 | 2015 | | | - | | | | 3 | | | | 6,718 | | | 2025 | 2016 | | | - | | | | 4 | | | | 1,203 | | | 2026 | 2017 | | | - | | | | 3 | | | | - | | | 2027 | 2018 | | | - | | | | - | | | | - | | | 2028 | Total | | | - | | | | 142 | | | | 27,086 | | | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Tax Advances | | | 197,094 | | | | 54,577 | | Minimum Notional Income Tax – Tax Credit | | | — | �� | | | 564 | | | | | | | | | | | Total | | | 197,094 | | | | 55,141 | | | | | | | | | | |
NOTE 15.14. INVESTMENTS IN EQUITY INSTRUMENTS The Group's "InvestmentsGroup’s “Investments in Equity Instruments"Instruments” are detailed in Schedule A. F-41Prisma Medios de Pago S.A.:
Under the framework of the divestment commitment assumed by Prisma Medios de Pago S.A. and its shareholders before the National Commission of Competence Defense, on February 1, 2019, the Group transferred 3,182,444 ordinary shares, representing 7.7007% capital stock of Prisma Medios de Pago SA in favor of AL ZENITH (Netherlands) B.V. (a related party of Advent International Global Private Equity). GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The total price of the transaction amounted to USD 104,469 thousand, composed of USD 63,073 thousand received on transaction date and USD 41,396 thousand will be paid during the next 5 years. Additionally, the Group has a put option related to Banco Galicia’s right to sell its interest in Prisma Medios de Pago S.A. to AL ZENITH (Netherlands) B.V., the exercise date being 34 months from the date of the transaction. The Group´s remaining holding in Prisma Medios de Pago S.A. has been classified as Investment in equity securities and measured at fair value through profit or loss. NOTE 16.15. EQUITY INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES 16.1.Equity Investments in Subsidiaries
| 15.1 | Equity Investments in Subsidiaries |
The basic information regarding Grupo Financiero Galicia’s consolidated subsidiaries is detailed as follows: | | Direct and Indirect Shareholding | | | Equity Investment % | | Company | | 12.31.18 | | | 12.31.17 | | | 12.31.18 | | | 12.31.17 | | Banco de Galicia y Buenos Aires S.A.U. | | | 668,549,353 | | | | 795,973,974 | | | | 100 | | | | 100 | | Cobranzas Regionales S.A. | | | 8,300 | | | | 7,700 | | | | 83 | | | | 77 | | Galicia Administradora de Fondos S.A. | | | 20,000 | | | | 20,000 | | | | 100 | | | | 100 | | Galicia Broker Asesores de Seguros S.A. | | | 71,310 | | | | 71,310 | | | | 99.99 | | | | 99.99 | | Galicia Retiro Compañía de Seguros S.A. | | | 7,727,271 | | | | 7,727,271 | | | | 99.99 | | | | 99.99 | | Galicia Seguros S.A. | | | 1,830,883 | | | | 1,830,883 | | | | 99.99 | | | | 99.99 | | Galicia Valores S.A. | | | 1,000,000 | | | | 1,000,000 | | | | 100 | | | | 100 | | Galicia Warrants S.A. | | | 1,000,000 | | | | 1,000,000 | | | | 100 | | | | 100 | | Financial Trust Galtrust I | | | - | | | | - | | | | - | | | | 100 | | Financial Trust Saturno Créditos | | | - | | | | - | | | | 100 | | | | 100 | | Net Investment S.A. (in Liquidation)(*) | | | - | | | | 12,000 | | | | - | | | | 100 | | Ondara S.A. | | | 13,636,990 | | | | 12,709,967 | | | | 83.85 | | | | 78.15 | | Sudamericana Holding S.A. | | | 185,653 | | | | 185,653 | | | | 100 | | | | 100 | | Tarjeta Naranja S.A. | | | 2,344 | | | | 2,174 | | | | 83 | | | | 77 | | Tarjetas Regionales S.A. | | | 894,552,668 | | | | 829,886,212 | | | | 83 | | | | 77 | |
(*)
| The final distribution was paid out on January 9, 2018.
|
| | | | | | | | | | | | | | | | | | | | Direct and Indirect
Shareholding | | | Equity Investment
% | | Company | | 12.31.20 | | | 12.31.19 | | | 12.31.20 | | | 12.31.19 | | Banco de Galicia y Buenos Aires S.A.U. | | | 668,549,353 | | | | 668,549,353 | | | | 100.00 | % | | | 100.00 | % | Cobranzas Regionales S.A. | | | 3,910,000 | | | | 8,300 | | | | 100.00 | % | | | 83.00 | % | Galicia Administradora de Fondos S.A. | | | 20,000 | | | | 20,000 | | | | 100.00 | % | | | 100.00 | % | Galicia Broker Asesores de Seguros S.A. | | | 71,309 | | | | 71,310 | | | | 99.99 | % | | | 99.99 | % | Galicia Retiro Compañía de Seguros S.A. | | | 7,727,271 | | | | 7,727,271 | | | | 100.00 | % | | | 100.00 | % | Galicia Securities S.A. | | | 95,392,000 | | | | — | | | | 100.00 | % | | | — | | Galicia Seguros S.A. | | | 1,830,883 | | | | 1,830,883 | | | | 100.00 | % | | | 100.00 | % | Galicia Warrants S.A. | | | 1,000,000 | | | | 1,000,000 | | | | 100.00 | % | | | 100.00 | % | IGAM LLC | | | 77,643,963 | | | | 73,996,713 | | | | 100.00 | % | | | 100.00 | % | IGAM Uruguay Agente de Valores S.A. | | | 12,000 | | | | 12,000 | | | | 100.00 | % | | | 100.00 | % | INVIU S.A.U. | | | 1,000,000 | | | | 1,000,000 | | | | 100.00 | % | | | 100.00 | % | Naranja Digital Compañía Financiera S.A.U. | | | 1,012,567,500 | | | | 541,631,025 | | | | 100.00 | % | | | 83.00 | % | Ondara S.A. | | | 25,776,101 | | | | 12,955,140 | | | | 100.00 | % | | | 83.85 | % | Sudamericana Holding S.A. | | | 185,653 | | | | 185,653 | | | | 100.00 | % | | | 100.00 | % | Tarjeta Naranja S.A. | | | 2,824 | | | | 2,344 | | | | 100.00 | % | | | 83.00 | % | Tarjetas Regionales S.A. | | | 1,680,183,936 | | | | 894,552,668 | | | | 100.00 | % | | | 83.00 | % |
The following are the balances of subsidiaries, according to IFRS as of the indicated dates: | | | 12.31.18 | | | 12.31.20 | | Company | | Assets | | | Liabilities | | | Shareholders' Equity | | | Net Income(*) | | | Assets | | | Liabilities | | | Shareholders’
Equity | | | Net Income
(Loss)(*) | | Banco de Galicia y Buenos Aires S.A.U. | | | 517,877,929 | | | | 468,725,396 | | | | 49,152,533 | | | | (1,789,529 | ) | | | 946,019,300 | | | | 794,198,155 | | | | 151,821,145 | | | | 20,928,333 | | Cobranzas Regionales S.A. | | | 110,115 | | | | 67,750 | | | | 42,365 | | | | 6,887 | | | | 1,484,287 | | | | 1,263,843 | | | | 220,444 | | | | (567,858 | ) | Galicia Administradora de Fondos S.A. | | | 674,108 | | | | 229,514 | | | | 444,594 | | | | 385,151 | | | | 1,382,069 | | | | 468,718 | | | | 913,351 | | | | 1,121,556 | | Galicia Broker Asesores de Seguros S.A.(**) | | | 26,475 | | | | 13,382 | | | | 13,093 | | | | 25,056 | | | | 47,231 | | | | 20,345 | | | | 26,886 | | | | 40,720 | | Galicia Retiro Compañía de Seguros S.A.(**) | | | 249,069 | | | | 186,776 | | | | 62,293 | | | | 24,293 | | | | 507,046 | | | | 396,155 | | | | 110,891 | | | | 3,657 | | Galicia Securities S.A. (***) | | | | 2,566,696 | | | | 2,225,050 | | | | 341,646 | | | | 230,062 | | Galicia Seguros S.A.(**) | | | 2,703,486 | | | | 1,654,652 | | | | 1,048,834 | | | | 544,122 | | | | 4,717,752 | | | | 3,052,802 | | | | 1,664,950 | | | | 1,211,751 | | Galicia Valores S.A. | | | 258,936 | | | | 39,877 | | | | 219,059 | | | | 66,678 | | | Galicia Warrants S.A. | | | 442,502 | | | | 226,880 | | | | 215,622 | | | | 114 | | | | 702,846 | | | | 171,752 | | | | 531,094 | | | | (41,174 | ) | Financial Trust Saturno Créditos | | | 17,055 | | | | 1,184 | | | | 15,871 | | | | (2,586 | ) | | IGAM LLC | | | | 506,066 | | | | 161,584 | | | | 344,482 | | | | 156,518 | | IGAM Uruguay Agente de Valores S.A. | | | | 865 | | | | 2,800 | | | | (1,935 | ) | | | (2,802 | ) | INVIU S.A.U. | | | | 433,281 | | | | 160,078 | | | | 273,203 | | | | 160,450 | | Naranja Digital Compañía Financiera S.A.U. | | | | 833,786 | | | | 54,920 | | | | 778,866 | | | | (431,203 | ) | Ondara S.A. | | | 22,511 | | | | 22 | | | | 22,489 | | | | 1,636 | | | | 31,720 | | | | 94 | | | | 31,626 | | | | (13,533 | ) | Sudamericana Holding S.A.(**) | | | 3,307,403 | | | | 1,955,028 | | | | 1,352,375 | | | | 249,358 | | | | 5,916,613 | | | | 3,329,257 | | | | 2,587,356 | | | | 1,318,261 | | Tarjeta Naranja S.A. | | | 51,194,581 | | | | 41,875,082 | | | | 9,319,499 | | | | 2,068,688 | | | | 101,268 | | | | 77,416 | | | | 23,852 | | | | 3,315,984 | | Tarjetas Regionales S.A. | | | 52,713,479 | | | | 42,579,675 | | | | 10,133,804 | | | | (2,139,323 | ) | | | 103,071,416 | | | | 77,507,787 | | | | 25,563,629 | | | | 2,160,052 | |
(*) | Income attributable to the shareholder’sshareholders of the parent. Not including "Other“Other Comprehensive Income"Income”. |
(**) | Net income for the twelve-month period ended December 31, 2018.2020. |
| | 12.31.17 | | Company | | Assets | | | Liabilities | | | Shareholders’ Equity | | | Net Income(*) | | Banco de Galicia y Buenos Aires S.A.U. | | | 480,374,665 | | | | 416,511,409 | | | | 63,863,256 | | | | 5,664,659 | | Cobranzas Regionales S.A. | | | 85,518 | | | | 33,136 | | | | 52,382 | | | | 7,657 | | Galicia Administradora de Fondos S.A. | | | 1,087,676 | | | | 408,209 | | | | 679,467 | | | | 648,361 | | Galicia Broker Asesores de Seguros S.A. (**) | | | 47,408 | | | | 29,699 | | | | 17,709 | | | | 19,852 | | Galicia Retiro Compañía de Seguros S.A. (**) | | | 285,152 | | | | 224,780 | | | | 60,372 | | | | 6,384 | | Galicia Seguros S.A. (**) | | | 2,907,428 | | | | 1,739,299 | | | | 1,168,129 | | | | 599,791 | | Galicia Valores S.A. | | | 259,016 | | | | 34,034 | | | | 224,982 | | | | 73,052 | | Galicia Warrants S.A. | | | 3,624,332 | | | | 2,020,122 | | | | 1,604,210 | | | | 385,104 | | Financial Trust Galtrust I | | | 208,171 | | | | 503 | | | | 207,668 | | | | 97,817 | | Financial Trust Saturno Créditos | | | 34,508 | | | | 2,086 | | | | 32,422 | | | | 3,944 | | Net Investment S.A. (in Liquidation)(***) | | | 419 | | | | - | | | | 419 | | | | (55 | ) | Ondara S.A. | | | 37,738 | | | | 6,951 | | | | 30,787 | | | | 8,693 | | Sudamericana Holding S.A.(**) | | | 432,842 | | | | 217,333 | | | | 215,509 | | | | 7,886 | | Tarjeta Naranja S.A. | | | 53,189,426 | | | | 41,598,049 | | | | 11,591,377 | | | | 3,643,368 | | Tarjetas Regionales S.A. | | | 54,653,428 | | | | 42,229,161 | | | | 12,424,267 | | | | 4,017,095 | |
(***) | Income attributable to the shareholder’s of the parent. Not including "Other Comprehensive Income".
|
(**)
| Net income for the twelve-month period endedbetween the purchase date and December 31, 2017.31,2020. |
(***)
| The final distribution was paid out on January 9, 2018.
|
F-42
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | | | | | | | 12.31.19 | | Company | | Assets | | | Liabilities | | | Shareholders’
Equity | | | Net Income
(Loss)(*) | | Banco de Galicia y Buenos Aires S.A.U. | | | 839,110,959 | | | | 708,010,986 | | | | 131,099,973 | | | | 30,336,364 | | Cobranzas Regionales S.A. | | | 702,134 | | | | 316,551 | | | | 385,583 | | | | (299,779 | ) | Galicia Administradora de Fondos S.A. | | | 612,028 | | | | 98,149 | | | | 513,879 | | | | 302,238 | | Galicia Broker Asesores de Seguros S.A. (**) | | | 68,001 | | | | 38,917 | | | | 29,084 | | | | 44,140 | | Galicia Retiro Compañía de Seguros S.A. (**) | | | 488,839 | | | | 382,963 | | | | 105,876 | | | | (27,432 | ) | Galicia Securities S.A. | | | — | | | | — | | | | — | | | | — | | Galicia Seguros S.A. (**) | | | — | | | | 2,721,178 | | | | (2,721,178 | ) | | | 795,761 | | Galicia Warrants S.A. | | | 793,298 | | | | 170,513 | | | | 622,785 | | | | 171,212 | | IGAM LLC | | | 3,061,060 | | | | 2,877,270 | | | | 183,790 | | | | 71,697 | | IGAM Uruguay Agente de Valores S.A. | | | 1,119 | | | | — | | | | 1,119 | | | | (23 | ) | INVIU S.A.U. | | | 3,056,981 | | | | 2,875,233 | | | | 181,748 | | | | (19,591 | ) | Naranja Digital Compañía Financiera S.A.U. | | | 1,195,023 | | | | 354,860 | | | | 840,163 | | | | (120,719 | ) | Ondara S.A. | | | 48,201 | | | | 1,446 | | | | 46,755 | | | | (7,226 | ) | Sudamericana Holding S.A. (**) | | | 6,064,430 | | | | 3,356,339 | | | | 2,708,091 | | | | 862,867 | | Tarjeta Naranja S.A. | | | 86,914,652 | | | | 65,532,267 | | | | 21,382,385 | | | | 1,843,861 | | Tarjetas Regionales S.A. | | | 90,010,710 | | | | 66,840,431 | | | | 23,170,279 | | | | 888,870 | |
| (*) | Income attributable to the shareholders of the parent. Not including “Other Comprehensive Income”. |
| (**) | Net income for the twelve-month period ended December 31, 2019. |
Corporate Reorganization On September 14, 2020, a Prior Spin-off-Merger Agreement was signed, describing the terms and conditions of the merger by acquisition, by Grupo Financiero Galicia S.A. as the merging company, of the spin-off equity from Dusner S.A., Fedler S.A. and its shareholders, as spin-off companies, jointly holders of 17% of the capital stock of Tarjetas Regionales S.A. The Bank's General Ordinarydocuments related to the Spin-off-Merger Agreement, were approved by the Boards of Directors of Dusner S.A., Fedler S.A. and Grupo Financiero Galicia S.A. on September 14, 2020. At the Extraordinary Shareholders' Meeting heldof Grupo Financiero Galicia S.A. carried out on April 24, 2018November 10, 2020, it was approved the amendmentaforementioned documentation, the exchange ratio and the capital increase in the amount of Ps. 47,927, through the issuance of 47,927,494 class B ordinary book-entry shares with a nominal value of Ps. 1 (figure expressed in Argentine pesos) and one vote per share, with the right to Article 1participate in the profits of the Bylaws, changingfiscal year beginning on September 1, 2020. On December 15, 2020, the corporate nameFinal Spin-off-Merger Agreement was signed and registered as a public deed, in the terms of Banco de Galicia y Buenos Aires S.A. for Banco de Galicia y Buenos Aires S.A.U. The Argentine Central Bank, through Resolution No. 200 issued by its BoardParagraph 4 of Directors on July 5, 2018, did not object to such change. On October 2, 2018, the Corporation Control Authority registered the change under Number 18709 of Book 91 of Stock Companies. The General Ordinary Shareholders' Meeting of Net Investment S.A. held on May 16, 2017 resolved to unanimously approve the early dissolution and subsequent liquidationArt. 83 of the company, underCompanies Act, through which Grupo Financiero Galicia S.A. incorporated the provisions set out in Section 94, subsectionspin-off equity of the aforementioned companies with effect from September 1, 2020.
Consequently, Grupo Financiero Galicia S.A. now has control of General Corporations Law, i.e.1,680,183,936 shares of Tarjetas Regionales S.A., bywhich represent 100% of the shareholders' decision. The financial statements ascapital stock and 100% of the votes. As of December 31, 2017 are2020, the latest financial statements availableadministrative approval procedures for the spin-off of part of the equity of each of the spin-off companies were initiated, before Net Investmentthe Public Registry of Commerce, and for the merger by acquisition and capital increase of Grupo Financiero Galicia S.A.'s final liquidation., before the National Securities Commission. 16.2.InvestmentsOn March 16, 2021 the merger by acquisition and capital increase of Grupo Financiero Galicia S.A. was registered with the Public Registry of Commerce. (See Note 55).
Acquisition of an AlyC-type company On May 5, 2020, the Group acquired 100% of the capital stock of Galicia Securities S.A. for a total price of $32,158 paid in Associatesfull at the acquisition date. Galicia Securities S.A. is authorized to act as a settlement and Joint Ventures "Investmentscompensation agent and placement and distribution agent of mutual funds in AssociatesArgentine. The net identifiable assets and Joint Ventures" break down as followsgoodwill recognized as of the indicated dates:date of acquisition are $22,956 and $9,202, respectively. The goodwill is attributable to a broker dealer license and it will be deductible for tax purposes.
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Prisma Medios de Pago S.A.(*) | | | - | | | | - | | | | 259,687 | | Nova Re Compañía Argentina de Reaseguros S.A. (**) | | | - | | | | - | | | | 27,115 | | Others | | | 56 | | | | 83 | | | | 1,107 | | Allowances | | | (56 | ) | | | (83 | ) | | | (1,107 | ) | Total | | | - | | | | - | | | | 286,802 | |
| 15.2 | Equity Investments in Associates |
In this fiscal year, Banco Galicia, together with other financial entities, has set up Play Digital S.A. A company whose purpose is to develop and market a payment solution linked to the bank accounts of users of the financial system that will significantly improve their payment experience. The board of directors of said company is made up of key personnel of Banco Galicia, therefore, having significant influence, the investment is measured by the equity method. | | | | | | | | | | | | | | | Company | | Equity
Investment % | | | Place of
Business | | 12.31.20 | | | 12.31.19 | | Play Digital S.A. (*) | | | 15.58 | % | | Autonomous
City of
Buenos
Aires -
Argentina | | | 89,142 | | | | — | |
(*) | AsAfter the closing of December 31, 2017, itthese financial statements, Banco Galicia has accepted an offer for the sale of VN 31,145,090 shares to another financial entity. Consequently, the shareholding was classifiedreduced to "Non-current Assets Held for Sale"12.976%. (See Notes 23 and 55).
|
(**)
| Equity investment sold in September 2017.
|
NOTE 17. LEASES
17.1.Financial Leases
The "Property, Plant and Equipment" account includes the following amounts in which the Group is lessee under the terms of financial lease contracts.
| | Real Estate | | | Furniture and Fixtures | | | Machines and Equipment | | | Vehicles | | | Total | | Cost | | | - | | | | - | | | | 14,660 | | | | - | | | | 14,660 | | Accumulated Depreciation | | | - | | | | - | | | | (14,660 | ) | | | - | | | | (14,660 | ) | Balance as of 12.31.18 | | | - | | | | - | | | | - | | | | - | | | | - | |
| | Real Estate | | | Furniture and Fixtures | | | Machines and Equipment | | | Vehicles | | | Total | | Cost | | | - | | | | - | | | | 14,660 | | | | 440 | | | | 15,100 | | Accumulated Depreciation | | | - | | | | - | | | | (14,660 | ) | | | (198 | ) | | | (14,858 | ) | Balance as of 12.31.17 | | | - | | | | - | | | | - | | | | 242 | | | | 242 | |
| | Real Estate | | | Furniture and Fixtures | | | Machines and Equipment | | | Vehicles | | | Total | | Cost | | | - | | | | - | | | | 14,660 | | | | 1,576 | | | | 16,236 | | Accumulated Depreciation | | | - | | | | - | | | | (14,660 | ) | | | (811 | ) | | | (15,471 | ) | Balance as of 01.01.17 | | | - | | | | - | | | | - | | | | 765 | | | | 765 | |
17.2.Operating Leases
The Group records contractual obligations derived from the lease of certain properties used as part of the distribution network. The term of these contracts ranges from one to five years and most of them are renewable upon their expiration at market values. The estimated future lease payments in connection with these properties are as follows:
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Less than One Year | | | 906,405 | | | | 788,950 | | | | 672,834 | | Over One Year and up to Five Years | | | 5,284,731 | | | | 2,185,391 | | | | 1,917,092 | | Over Five Years | | | 6,191,137 | | | | 1,079,291 | | | | 430,597 | | Total | | | 12,382,273 | | | | 4,053,632 | | | | 3,020,523 | |
NOTE 18. PROPERTY, PLANT AND EQUIPMENT
Changes in "Property, Plant and Equipment" are detailed in Schedule F.
The carrying amounts of "Property, Plant and Equipment" do not exceed their recoverable values.
F-43
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The movements of such investment are as follows: | | | | | | | | | | | | | | | | | Company | | 12.31.19 | | | Contributions | | | Profit Sharing in
income
(loss) for the Year | | | 12.31.20 | | Play Digital S.A. | | | — | | | | 214,195 | | | | (125,053 | ) | | | 89,142 | |
The basic information regarding Grupo Financiero Galicia’s associates is detailed as follows: | | | | | | | | | | | | | | | | | | | | 12.31.20 | | Company | | Assets | | | Liabilities | | | Shareholders’
Equity | | | Net Income
(Loss) | | Play Digital S.A. | | | 882,481 | | | | 85,374 | | | | 797,107 | | | | (571,938 | ) |
For more details see Schedule E. NOTE 19. INTANGIBLE ASSETS16. LEASES This Note provides information for leases where the Grupo is the lessee: (i) Amounts recognized in the Statement of Financial Position: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Right-of-use asset (1) | | | 4,052,593 | | | | 5,011,534 | | Real estate | | | 4,052,593 | | | | 5,011,534 | | Lease Liabilities (2) | | | 4,363,406 | | | | 5,129,987 | |
| (1) | Recorded in the Property, Plant and Equipment item, for right of use of real property, see Note 17. |
| (2) | Recorded in the item Other Financial Liabilities, see Note 25. |
Additions to the right-of-use assets during the financial year were Ps.629,385. The maturity of lease liabilities is disclosed in Note 45. (ii) Amounts recognized in the Statement of Income: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Charge for depreciation of right-of-use assets (1)(2) | | | 1,312,301 | | | | 1,313,102 | | Interest Expenses (3) | | | 398,850 | | | | 511,138 | | Expenses related to short-term leases (4) | | | 141,700 | | | | 33,079 | | Expenses related to low-value assets leases (4) | | | 167,148 | | | | 102,714 | | Sublease Income (5) | | | 9,790 | | | | 2,146 | |
| (1) | Depreciation for right of use of Real Property. |
| (2) | Recorded in the item Depreciation and Impairment of assets, see Note 39. |
| (3) | Recorded in the item Other Operating Expenses, Lease Interest, see Note 40. |
| (4) | Recorded in the item Administrative Expenses, see Note 38. |
| (5) | Recorded in the item Other Operating Income, see Note 34. |
The evolution of right -of-use assets and lease liabilities during the years 2020 and 2019 and is as follows: | | | | | | | | | Right-of-use assets | | 12.31.20 | | | 12.31.19 | | Balances at the beginning of the year | | | 5,011,534 | | | | 6,073,274 | | Additions | | | 629,385 | | | | 251,362 | | Cancellation of contracts | | | (276,025 | ) | | | — | | Depreciation of the year | | | (1,312,301 | ) | | | (1,313,102 | ) | | | | | | | | | | Balances at the end of the year | | | 4,052,593 | | | | 5,011,534 | | | | | | | | | | |
| | | | | | | | | Lease liabilities(1) | | 12.31.20 | | | 12.31.19 | | Balances at the beginning of the year | | | 5,129,987 | | | | 6,073,274 | | New contracts | | | 629,385 | | | | 251,362 | | Cancellation of contracts | | | (269,503 | ) | | | — | | Lease payments | | | (1,333,090 | ) | | | (1,361,874 | ) | Leases financial cost | | | 398,850 | | | | 511,138 | | Translation differences and inflation adjustment | | | (192,223 | ) | | | (343,913 | ) | | | | | | | | | | Balances at the end of the year | | | 4,363,406 | | | | 5,129,987 | | | | | | | | | | |
| (1) | Recorded in the item Other Financial Liabilities, see Note 25. |
The total cash flows related to leases was Ps.1,333,090. NOTE 17. PROPERTY, PLANT AND EQUIPMENT Changes in "Intangible Assets"“Property, Plant and Equipment” are detailed in Schedule G.F. The carrying amounts of "Intangible Assets"“Property, Plant and Equipment” do not exceed their recoverable values. NOTE 20. DEFERRED INCOME TAX ASSETS/LIABILITIES
Changes in "Deferred Income Tax Assets and Liabilities" during the fiscal years ended December 31, 2018 and December 31, 2017 are as follows:
Deferred Tax Assets
Item | | 12.31.17 | | | Charge to Income | | | Allowance for Impairment | | | Others | | | 12.31.18 | | Valuation of Securities | | | 4,901 | | | | (3,325 | ) | | | - | | | | - | | | | 1,576 | | Other Financial Assets | | | - | | | | 1,901 | | | | - | | | | (2,179 | ) | | | (278 | ) | Loans and Other Financing | | | 927,737 | | | | 595,664 | | | | - | | | | - | | | | 1,523,401 | | Property, Plant and Equipment | | | (223,241 | ) | | | (455,616 | ) | | | - | | | | (21 | ) | | | (678,878 | ) | Intangible Assets | | | - | | | | - | | | | - | | | | - | | | | - | | Tax Loss Carry-forwards | | | - | | | | 7,612 | | | | (3,764 | ) | | | - | | | | 3,848 | | Other Non-financial Assets | | | 40,131 | | | | (6,137 | ) | | | - | | | | - | | | | 33,994 | | Non-current Assets Held for Sale | | | - | | | | (3,980 | ) | | | 1,876 | | | | 2,104 | | | | - | | Allowance for Impairment | | | 4,609 | | | | 20,401 | | | | - | | | | - | | | | 25,010 | | Other Financial Liabilities | | | 912 | | | | (16,843 | ) | | | - | | | | - | | | | (15,931 | ) | Provisions | | | 17,201 | | | | 92,545 | | | | - | | | | (55,234 | ) | | | 54,512 | | Other Non-financial Liabilities | | | 4,146 | | | | 12,974 | | | | - | | | | 558 | | | | 17,678 | | Quotation Difference | | | 5,548 | | | | 1,236 | | | | - | | | | - | | | | 6,784 | | Others | | | (19,374 | ) | | | 22,895 | | | | - | | | | (2,262 | ) | | | 1,259 | | Totals | | | 762,570 | | | | 269,327 | | | | (1,888 | ) | | | (57,034 | ) | | | 972,975 | |
Deferred Tax Liabilities
Item | | 12.31.17 | | | Charge to Income | | | Allowance for Impairment | | | Others | | | 12.31.18 | | Valuation of Securities | | | 16,718 | | | | (143,241 | ) | | | - | | | | - | | | | (126,523 | ) | Other Financial Assets | | | (37,930 | ) | | | (13,364 | ) | | | - | | | | 2,179 | | | | (49,115 | ) | Loans and Other Financing | | | 321,679 | | | | 1,049,720 | | | | - | | | | - | | | | 1,371,399 | | Property, Plant and Equipment | | | (2,784,001 | ) | | | (481,544 | ) | | | - | | | | 21 | | | | (3,265,524 | ) | Intangible Assets | | | 258,221 | | | | (433,524 | ) | | | - | | | | - | | | | (175,303 | ) | Tax Loss Carry-forwards | | | - | | | | - | | | | - | | | | - | | | | - | | Other Non-financial Assets | | | (154,315 | ) | | | (223,424 | ) | | | - | | | | - | | | | (377,739 | ) | Non-current Assets Held for Sale | | | (380,838 | ) | | | 383,774 | | | | - | | | | (2,104 | ) | | | 832 | | Allowance for Impairment | | | - | | | | - | | | | - | | | | - | | | | - | | Subordinated Debt Securities | | | (20,331 | ) | | | 2,734 | | | | - | | | | - | | | | (17,597 | ) | Provisions | | | 200,091 | | | | 131,926 | | | | - | | | | 55,234 | | | | 387,251 | | Other Non-financial Liabilities | | | 494,380 | | | | (89,776 | ) | | | - | | | | (558 | ) | | | 404,046 | | Others | | | (2,214 | ) | | | (55,421 | ) | | | - | | | | 2,262 | | | | (55,373 | ) | Totals | | | (2,088,540 | ) | | | 127,860 | | | | - | | | | 57,034 | | | | (1,903,646 | ) |
Deferred Tax Assets
Item | | 01.01.17 | | | Charge to Income | | | Allowance for Impairment | | | Others | | | 12.31.17 | | Valuation of Securities | | | 3,814 | | | | 1,087 | | | | - | | | | - | | | | 4,901 | | Other Financial Assets | | | (58 | ) | | | 58 | | | | - | | | | - | | | | - | | Loans and Other Financing | | | 1,190,776 | | | | (263,039 | ) | | | - | | | | - | | | | 927,737 | | Property, Plant and Equipment | | | (230,188 | ) | | | 83 | | | | - | | | | 6,864 | | | | (223,241 | ) | Intangible Assets | | | (92 | ) | | | 92 | | | | - | | | | - | | | | - | | Tax Loss Carry-forwards | | | 1,725 | | | | (1,725 | ) | | | - | | | | - | | | | - | | Other Non-financial Assets | | | 3,995 | | | | 36,136 | | | | - | | | | - | | | | 40,131 | | Non-current Assets Held for Sale | | | - | | | | - | | | | - | | | | - | | | | - | | Allowance for Impairment | | | 3,292 | | | | 1,301 | | | | 16 | | | | - | | | | 4,609 | | Other Financial Liabilities | | | - | | | | 912 | | | | - | | | | - | | | | 912 | | Provisions | | | 80,260 | | | | (9,796 | ) | | | - | | | | (53,263 | ) | | | 17,201 | | Other Non-financial Liabilities | | | 3,504 | | | | 642 | | | | - | | | | - | | | | 4,146 | | Quotation Difference | | | 16,022 | | | | (10,474 | ) | | | - | | | | - | | | | 5,548 | | Others | | | (37,790 | ) | | | 18,416 | | | | - | | | | - | | | | (19,374 | ) | Totals | | | 1,035,260 | | | | (226,307 | ) | | | 16 | | | | (46,399 | ) | | | 762,570 | |
F-44
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18. INTANGIBLE ASSETS Changes in “Intangible Assets” are detailed in Schedule G. The carrying amounts of “Intangible Assets” do not exceed their recoverable values. NOTE 19. DEFERRED INCOME TAX ASSETS/LIABILITIES Changes in “Deferred Income Tax Assets and Liabilities” during the fiscal years ended December 31, 2020 and December 31, 2019 are as follows: Deferred Tax Assets | | | | | | | | | | | | | | | | | Item | | 12.31.19 | | | Charge to
Income | | | Others | | | 12.31.20 | | Valuation of Securities | | | 51,229 | | | | (51,125 | ) | | | — | | | | 104 | | Loans and Other Financing | | | 4,278,791 | | | | 6,958,396 | | | | — | | | | 11,237,187 | | Tax Loss Carryforwards | | | 66,615 | | | | 246,174 | | | | — | | | | 312,789 | | Other Non-financial Assets | | | 15,463 | | | | 14,465 | | | | — | | | | 29,928 | | Allowance for Impairment | | | 9,541 | | | | (9,541 | ) | | | — | | | | — | | Other Financial Liabilities | | | — | | | | 1,861 | | | | — | | | | 1,861 | | Subordinated Negotiable Obligations | | | — | | | | 7,064 | | | | — | | | | 7,064 | | Provisions | | | 2,365,351 | | | | (1,577,952 | ) | | | — | | | | 787,399 | | Other Non-financial Liabilities | | | 616,418 | | | | (208,028 | ) | | | — | | | | 408,390 | | Inflation adjustment deferral | | | 7,914,417 | | | | 3,704,300 | | | | — | | | | 11,618,717 | | Others | | | 89,831 | | | | 125,895 | | | | — | | | | 215,726 | | | | | | | | | | | | | | | | | | | Totals | | | 15,407,656 | | | | 9,211,509 | | | | — | | | | 24,619,165 | | | | | | | | | | | | | | | | | | | Net deferred tax assets in subsidiaries with net liability position | | | (11,586,278 | ) | | | (3,820,292 | ) | | | — | | | | (15,406,570 | ) | | | | | | | | | | | | | | | | | | Deferred tax assets | | | 3,821,378 | | | | 5,391,217 | | | | — | | | | 9,212,595 | | | | | | | | | | | | | | | | | | |
Deferred Tax Liabilities | Item | | 01.01.17 | | | Charge to Income | | | Allowance for Impairment | | | Others | | | 12.31.17 | | | 12.31.19 | | | Charge to
Income | | | Others | | | 12.31.20 | | Valuation of Securities | | | (38,276 | ) | | | 54,994 | | | | - | | | | - | | | | 16,718 | | | | (28,583 | ) | | | (1,275,634 | ) | | | — | | | | (1,304,217 | ) | Other Financial Assets | | | (30,062 | ) | | | (7,503 | ) | | | - | | | | (365 | ) | | | (37,930 | ) | | | (71,037 | ) | | | 45,911 | | | | — | | | | (25,126 | ) | Loans and Other Financing | | | 387,020 | | | | (65,341 | ) | | | - | | | | - | | | | 321,679 | | | Property, Plant and Equipment | | | (3,415,959 | ) | | | 632,760 | | | | - | | | | (802 | ) | | | (2,784,001 | ) | | | (10,343,737 | ) | | | (985,021 | ) | | | — | | | | (11,328,758 | ) | Intangible Assets | | | 570,959 | | | | (312,738 | ) | | | - | | | | - | | | | 258,221 | | | | (995,392 | ) | | | (1,649,968 | ) | | | — | | | | (2,645,360 | ) | Tax Loss Carry-forwards | | | 272,828 | | | | (265,421 | ) | | | (7,716 | ) | | | 309 | | | | - | | | Other Non-financial Assets | | | 5,018 | | | | (159,333 | ) | | | - | | | | - | | | | (154,315 | ) | | | (843,466 | ) | | | 661,194 | | | | — | | | | (182,272 | ) | Non-current Assets Held for Sale | | | - | | | | (378,067 | ) | | | (2,771 | ) | | | - | | | | (380,838 | ) | | | (2,102,102 | ) | | | 2,102,102 | | | | — | | | | — | | Allowance for Impairment | | | (276,698 | ) | | | 54,977 | | | | 221,721 | | | | - | | | | - | | | Subordinated Debt Securities | | | (3,173 | ) | | | (17,158 | ) | | | - | | | | - | | | | (20,331 | ) | | Other Financial Liabilities | | | | (34,675 | ) | | | — | | | | — | | | | (34,675 | ) | Subordinated Negotiable Obligations | | | | (16,044 | ) | | | — | | | | — | | | | (16,044 | ) | Provisions | | | 632,800 | | | | (484,267 | ) | | | - | | | | 51,558 | | | | 200,091 | | | | (148,504 | ) | | | 148,504 | | | | — | | | | — | | Other Non-financial Liabilities | | | 50,291 | | | | 445,557 | | | | - | | | | (1,468 | ) | | | 494,380 | | | | (18,177 | ) | | | 17,769 | | | | — | | | | (408 | ) | Foreign Currency Exchange Differences | | | | (4,016 | ) | | | 1,591 | | | | — | | | | (2,425 | ) | Inflation adjustment deferral | | | | — | | | | (3,816 | ) | | | — | | | | (3,816 | ) | Others | | | 1,655 | | | | (2,248 | ) | | | - | | | | (1,621 | ) | | | (2,214 | ) | | | (1,099 | ) | | | 696 | | | | — | | | | (403 | ) | | | | | | | | | | | | | | | Totals | | | (1,843,597 | ) | | | (503,788 | ) | | | 211,234 | | | | 47,611 | | | | (2,088,540 | ) | | | (14,606,832 | ) | | | (936,672 | ) | | | — | | | | (15,543,504 | ) | | | | | | | | | | | | | | | Net deferred tax liabilities in subsidiaries with net asset position | | | | 11,586,278 | | | | 3,820,292 | | | | — | | | | 15,406,570 | | | | | | | | | | | | | | | | Deferred tax liabilities | | | | (3,020,554 | ) | | | 2,883,620 | | | | — | | | | (136,934 | ) | | | | | | | | | | | | | | |
Deferred Tax Assets | | | | | | | | | | | | | | | | | Item | | 12.31.18 | | | Charge to
Income | | | Others | | | 12.31.19 | | Valuation of Securities | | | 1,946 | | | | 50,636 | | | | (1,353 | ) | | | 51,229 | | Loans and Other Financing | | | 6,083,246 | | | | (1,804,455 | ) | | | — | | | | 4,278,791 | | Tax Loss Carryforwards | | | 8,060 | | | | 58,555 | | | | — | | | | 66,615 | | Other Non-financial Assets | | | 71,195 | | | | (55,732 | ) | | | — | | | | 15,463 | | Non-current Assets Held for Sale | | | 1,743 | | | | (1,743 | ) | | | — | | | | — | | Allowance for Impairment | | | 52,378 | | | | (42,837 | ) | | | — | | | | 9,541 | | Provisions | | | 925,174 | | | | 1,440,177 | | | | — | | | | 2,365,351 | | Other Non-financial Liabilities | | | 886,431 | | | | (270,013 | ) | | | — | | | | 616,418 | | Foreign Currency Exchange Differences | | | 10,987 | | | | (10,987 | ) | | | — | | | | — | | Inflation adjustment deferral | | | — | | | | 7,914,417 | | | | — | | | | 7,914,417 | | Others | | | 47,949 | | | | 41,882 | | | | — | | | | 89,831 | | | | | | | | | | | | | | | | | | | Totals | | | 8,089,109 | | | | 7,319,900 | | | | (1,353 | ) | | | 15,407,656 | | | | | | | | | | | | | | | | | | | Net deferred tax assets in subsidiaries with net liability position | | | (6,051,423 | ) | | | (5,534,855 | ) | | | — | | | | (11,586,278 | ) | | | | | | | | | | | | | | | | | | Deferred tax assets | | | 2,037,686 | | | | 1,785,045 | | | | (1,353 | ) | | | 3,821,378 | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Deferred Tax Liabilities | | | | | | | | | | | | | | | | | Item | | 12.31.18 | | | Charge to
Income | | | Others | | | 12.31.19 | | Valuation of Securities | | | (263,623 | ) | | | 235,040 | | | | — | | | | (28,583 | ) | Other Financial Assets | | | (103,444 | ) | | | 32,407 | | | | — | | | | (71,037 | ) | Loans and Other Financing | | | (20,712 | ) | | | 20,712 | | | | — | | | | — | | Property, Plant and Equipment | | | (8,260,698 | ) | | | (2,083,039 | ) | | | — | | | | (10,343,737 | ) | Intangible Assets | | | (367,136 | ) | | | (628,256 | ) | | | — | | | | (995,392 | ) | Other Non-financial Assets | | | (791,093 | ) | | | (52,373 | ) | | | — | | | | (843,466 | ) | Non-current Assets Held for Sale | | | — | | | | (2,102,102 | ) | | | — | | | | (2,102,102 | ) | Other Financial Liabilities | | | (33,364 | ) | | | (1,311 | ) | | | — | | | | (34,675 | ) | Subordinated Negotiable Obligations | | | (36,853 | ) | | | 20,809 | | | | — | | | | (16,044 | ) | Provisions | | | — | | | | (148,504 | ) | | | — | | | | (148,504 | ) | Other Non-financial Liabilities | | | — | | | | (18,177 | ) | | | — | | | | (18,177 | ) | Foreign Currency Exchange Differences | | | — | | | | (4,016 | ) | | | — | | | | (4,016 | ) | Others | | | (161,278 | ) | | | 160,179 | | | | — | | | | (1,099 | ) | | | | | | | | | | | | | | | | | | Totals | | | (10,038,201 | ) | | | (4,568,631 | ) | | | — | | | | (14,606,832 | ) | | | | | | | | | | | | | | | | | | Net deferred tax liabilities in subsidiaries with net asset position | | | 6,051,423 | | | | 5,534,855 | | | | — | | | | 11,586,278 | | | | | | | | | | | | | | | | | | | Deferred tax liabilities | | | (3,986,778 | ) | | | 966,224 | | | | — | | | | (3,020,554 | ) | | | | | | | | | | | | | | | | | |
In addition, the expiration dates of tax loss carry-forwardscarryforwards are as follows: Year of Generation | | Amount | | | Year Due | | Deferred Tax Assets | | 2018 | | | 25,373 | | | 2023 | | | 7,612 | |
The Group has determined an allowance for impairment as of December 31, 2018 amounting to $3,764, as it is not probable that future taxable amounts will be available to utilize those temporary differences and losses as of the date of these financial statements.
| | | | | | | | | | | | | Year of Generation | | Amount | | | Year
Due | | | Deferred Tax
Assets | | 2018 | | | 26,865 | | | | 2023 | | | | 8,060 | | 2019 | | | 195,185 | | | | 2024 | | | | 58,555 | | 2020 | | | 820,580 | | | | 2025 | | | | 246,174 | | | | | | | | | | | | | | | | | | | | | | | | | | 312,789 | | | | | | | | | | | | | | |
NOTE 21.20. ASSETS/LIABILITIES FOR INSURANCE CONTRACTS Assets related to insurance contracts as of the indicated dates are detailed as follows: Assets for Insurance Contracts | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Premiums Receivable | | | 964,214 | | | | 1,006,658 | | | | 962,651 | | Receivables from Reinsurers | | | 5,361 | | | | 5,128 | | | | 6,143 | | Fees to collect | | | 2,455 | | | | - | | | | 12,828 | | Others | | | 10,472 | | | | 9,917 | | | | 7,101 | | Total | | | 982,502 | | | | 1,021,703 | | | | 988,723 | |
| | | | | | | | | Assets from Insurance Contracts | | 12.31.20 | | | 12.31.19 | | Premiums Receivable | | | 1,857,975 | | | | 1,576,061 | | Credits with Reinsurers | | | 1,996 | | | | 873 | | Fees Receivables | | | 7,770 | | | | 5,056 | | Others | | | 17,649 | | | | 26,527 | | | | | | | | | | | Total | | | 1,885,390 | | | | 1,608,517 | | | | | | | | | | |
Liabilities related to insurance contracts as of the indicated dates are detailed as follows: | | | | | | | | | Liabilities from Insurance Contracts | | 12.31.20 | | | 12.31.19 | | Debts with Insured Persons | | | 535,743 | | | | 813,836 | | Debts with Reinsurers | | | 20,829 | | | | 4,561 | | Debts with Co-insurers | | | 1,525 | | | | 1,999 | | Debts with Producers | | | 371,664 | | | | 411,691 | | Technical Commitments | | | 1,114,124 | | | | 1,112,838 | | Others | | | 55,744 | | | | — | | Pending Claims in charge of Reinsures | | | (38,653 | ) | | | (345,517 | ) | | | | | | | | | | Total | | | 2,060,976 | | | | 1,999,408 | | | | | | | | | | |
Liabilities for Insurance Contracts | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Debts with Insured | | | 373,600 | | | | 416,318 | | | | 420,249 | | Debts with Reinsurers | | | 9,702 | | | | 25,904 | | | | (1,535 | ) | Debts with Co-insurers | | | 2,639 | | | | 3,608 | | | | 4,741 | | Debts with Insurance Brokers | | | 185,930 | | | | 191,681 | | | | 195,257 | | Statutory Reserves | | | 571,225 | | | | 589,255 | | | | 561,227 | | Unpaid Losses to Be Borne by Reinsurers (Offset Account) | | | (39,876 | ) | | | (31,119 | ) | | | (25,777 | ) | Total | | | 1,103,220 | | | | 1,195,647 | | | | 1,154,162 | |
Debts with Insured | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Property Insurance | | | 105,517 | | | | 93,082 | | | | 66,389 | | Administrative Direct Insurance | | | 60,118 | | | | 48,569 | | | | 37,146 | | Direct Insurance in Litigation | | | 9,966 | | | | 9,060 | | | | 4,710 | | Direct Insurance in Mediation | | | 426 | | | | 741 | | | | 702 | | Settled Losses to be Paid | | | 1,609 | | | | 2,438 | | | | 2,463 | | Unpaid Losses for Active Reinsurance and Retrocession | | | 1,038 | | | | 793 | | | | - | | Incurred But Not Reported Losses - IBNR | | | 32,360 | | | | 31,481 | | | | 21,368 | | Life Insurance | | | 268,074 | | | | 322,997 | | | | 353,615 | | Administrative Direct Insurance | | | 243,850 | | | | 294,959 | | | | 308,463 | | Direct Insurance in Litigation | | | 4,752 | | | | 5,528 | | | | 3,534 | | Direct Insurance in Mediation | | | 668 | | | | 1,389 | | | | 1,094 | | Settled Losses to be Paid | | | 1,424 | | | | 3,673 | | | | 4,907 | | Unpaid Losses for and Active Reinsurance and Retrocession | | | 4,400 | | | | 2,826 | | | | - | | Incurred But Not Reported Losses - IBNR | | | 12,714 | | | | 14,229 | | | | 35,125 | | Surrenders Payable | | | 265 | | | | 391 | | | | 488 | | Payables for Premiums to be Refunded | | | 1 | | | | 2 | | | | 4 | | Retirement Insurance | | | 9 | | | | 239 | | | | 245 | | Past Due Annuities Payable | | | 9 | | | | 239 | | | | 245 | | Total | | | 373,600 | | | | 416,318 | | | | 420,249 | |
F-45
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Debts with Reinsurers and Co-insurers | | Current Account | | | Reinstatement Premiums | | | Minimum Deposit Premium to Be Accrued | | | Deposits as Collateral | | | Unpaid Losses to Be Borne by Reinsurers | | | Total | | IBNR to Be Borne by Reinsurers | | | 21,852 | | | | - | | | | (12,150 | ) | | | - | | | | (39,876 | ) | | | (30,174 | ) | Debts with Co-insurers | | | 2,639 | | | | - | | | | - | | | | - | | | | - | | | | 2,639 | | Total as of 12.31.18 | | | 24,491 | | | | - | | | | (12,150 | ) | | | - | | | | (39,876 | ) | | | (27,535 | ) | Total as of 12.31.17 | | | 45,064 | | | | - | | | | (15,552 | ) | | | - | | | | (31,119 | ) | | | (1,607 | ) |
| | | | | | | | | Debts with Insured Persons | | 12.31.20 | | | 12.31.19 | | Property & Casualty Insurance | | | 245,028 | | | | 539,816 | | Direct Administrative Insurance | | | 135,738 | | | | 436,307 | | Direct Insurance in Lawsuits | | | 5,204 | | | | 15,323 | | Direct Insurance in Mediation | | | 1,957 | | | | 2,184 | | Settled Claims Payable | | | 5,802 | | | | 7,635 | | Pending Claims, Active Reinsurance and Retrocession | | | 3,348 | | | | 2,868 | | Claims Incurred but not Reported (IBNR) | | | 92,979 | | | | 75,499 | | Life Insurance | | | 290,715 | | | | 273,773 | | Direct Administrative Insurance | | | 223,359 | | | | 239,264 | | Direct Insurance in Lawsuits | | | 12,448 | | | | 7,519 | | Direct Insurance in Mediation | | | 7,988 | | | | 8,901 | | Settled Claims Payable | | | 26,487 | | | | 568 | | Pending Claims, Active Reinsurance and Retrocession | | | 11,949 | | | | 9,394 | | Claims Incurred but not Reported (IBNR) | | | 7,898 | | | | 7,979 | | Redemptions Payable | | | 586 | | | | 148 | | Creditors for Premiums to be Refunded | | | — | | | | — | | Retirement Insurance | | | — | | | | 247 | | Annuities Payable in Arrears | | | — | | | | 11 | | Others | | | — | | | | 236 | | | | | | | | | | | Total | | | 535,743 | | | | 813,836 | | | | | | | | | | |
Debts with Insurance Brokers | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Current Account - Insurance Brokers | | | 45,225 | | | | 47,263 | | | | 87,939 | | Commissions on Premiums Receivable | | | 113,238 | | | | 114,482 | | | | 62,016 | | Underwriting Expenses Payable | | | 27,467 | | | | 29,936 | | | | 45,302 | | Total | | | 185,930 | | | | 191,681 | | | | 195,257 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Debt with Reinsurers and Coinsurance | | Current
Account | | | Reinstatement
Premiums | | | Minimum Deposit
Premium to
Be Accrued | | | Deposits
as
Collateral | | | Unpaid Losses
to Be Borne
by Reinsurers | | | Total | | Debts with Reinsurers | | | 52,563 | | | | — | | | | (31,734 | ) | | | — | | | | (38,653 | ) | | | (17,824 | ) | IBNR in charge of Reinsurers | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Debts with Co-insurers | | | 1,525 | | | | — | | | | — | | | | — | | | | — | | | | 1,525 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total as of 12.31.20 | | | 54,088 | | | | — | | | | (31,734 | ) | | | — | | | | (38,653 | ) | | | (16,299 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total as of 12.31.19 | | | 30,624 | | | | — | | | | (24,064 | ) | | | — | | | | (345,517 | ) | | | (338,957 | ) | | | | | | | | | | | | | | | | | | | | | | | | | |
Statutory Reserves | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Unearned Premiums and Similar | | | 327,392 | | | | 296,487 | | | | 241,924 | | Premiums and Surcharges | | | 316,672 | | | | 301,076 | | | | 293,729 | | Premiums on Passive Reinsurance | | | (14,516 | ) | | | (35,710 | ) | | | (52,067 | ) | Active Reinsurance | | | 25,236 | | | | 30,948 | | | | - | | Insufficient Premiums | | | - | | | | 173 | | | | 262 | | Mathematical Reserves | | | 243,833 | | | | 292,768 | | | | 319,303 | | Mathematical Reserves - Individual Life Insurance | | | 80,545 | | | | 88,543 | | | | 91,918 | | Mathematical Reserves - Individual Retirement Insurance | | | 67,088 | | | | 47,960 | | | | 54,051 | | Mathematical Reserves of Life Annuities | | | 95,179 | | | | 118,224 | | | | 133,611 | | Provision for Restoring the Mathematical Reserve | | | 7 | | | | 12 | | | | 6 | | Fluctuation Funds | | | 1,014 | | | | 38,029 | | | | 39,717 | | Total | | | 571,225 | | | | 589,255 | | | | 561,227 | |
| | | | | | | | | Debts with Producers | | 12.31.20 | | | 12.31.19 | | Checking Account—Producers | | | 61,232 | | | | 110,950 | | Fees for Premiums Receivable | | | 291,724 | | | | 259,132 | | Production Expenses Payable | | | 18,708 | | | | 41,609 | | Others | | | — | | | | — | | | | | | | | | | | Total | | | 371,664 | | | | 411,691 | | | | | | | | | | |
| | | | | | | | | Technical Commitments | | 12.31.20 | | | 12.31.19 | | Ongoing and Similar Risk | | | 610,475 | | | | 610,592 | | Premiums and Surcharges | | | 567,071 | | | | 591,720 | | Premiums on Passive Reinsurance | | | (13,979 | ) | | | (19,727 | ) | Active Reinsurance | | | 57,383 | | | | 38,472 | | Insufficient Premiums | | | — | | | | 127 | | Mathematical Reserves | | | 503,649 | | | | 502,246 | | Mathematical Reserves for Individual Life Insurance | | | 154,345 | | | | 157,074 | | Mathematical Reserves for Individual Retirement Insurance | | | 113,185 | | | | 92,209 | | Mathematical Reserves of Life Annuities | | | 153,435 | | | | 183,800 | | Provision for the Mathematical Reserve Recomposition | | | 14 | | | | 38 | | Fluctuation Funds | | | 82,670 | | | | 69,125 | | | | | | | | | | | Total | | | 1,114,124 | | | | 1,112,838 | | | | | | | | | | |
Insurance liabilities were recorded according to the liability adequacy test, using the current estimates of future cash flows derived from insurance contracts. The assumptions used are as follows: Mortality Table
| GAM 94
| Investment (Discount) Rate
| 3.38%
| Benchmark Rate
| Projected benchmark rate based on a share of CER starting with 1.36% in the case of voluntary retirement and 1.63% in the case of life annuities.
| Administrative Expenses
| 682 in the case of voluntary retirement and 620 in the case of life annuities
|
| | | | | | | | 12.31.20 | | 12.31.19 | | Mortality Table | | GAM 94 | | GAM 94 | | Investment (Discount) Rate | | Products in USD: 14.77% annually | | 2.74% | | | Products in Ps.: 7.85% annually | | | | Life Insurance Reference Rate | | 75% of the projection of the BADLAR rate starting from 34.22% plus the correction according to Resolution 2020-321 of the Argentine Superintendency of Insurance. | | Projection of Life Insurance Reference Rate based on CER proportion, starting from 1.19% for voluntary retirement, and 0.88% for Annuities. | | Administrative Expenses | | 422.18 for voluntary retirement and 2640.45 for annuities | | 453 for voluntary retirement and 620 for annuities |
NOTE 22.21. OTHER NON-FINANCIAL ASSETS "
“Other Non-financial Assets"Assets” break down as follows: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Shareholders | | | - | | | | - | | | | 50,431 | | Payments in Advance of Directors' and Syndics' Fees | | | 2,071 | | | | 5,054 | | | | 19,527 | | Payments in Advance to Personnel | | | 50,385 | | | | 18,382 | | | | 18,416 | | Tax Credits | | | 115,558 | | | | 61,460 | | | | 251,330 | | Payments in Advance | | | 448,545 | | | | 449,312 | | | | 398,684 | | Advances for Purchase of Assets | | | 1,141,114 | | | | 2,180,993 | | | | 1,103,230 | | Investment properties (*) | | | 290,894 | | | | 296,418 | | | | 302,453 | | Other Miscellaneous Assets Measured at Cost | | | 696,996 | | | | 588,468 | | | | 681,033 | | Assets Acquired through Foreclosures | | | 32,852 | | | | 54,787 | | | | 31,041 | | Others | | | 46,354 | | | | 83,256 | | | | 163,523 | | Total | | | 2,824,769 | | | | 3,738,130 | | | | 3,019,668 | |
(*)
| Changes in "Investment Properties" are detailed in Schedule F.
|
Related-party information is disclosed in Note 52.
F-46
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Payments on behalf of third parties | | | 446,038 | | | | 380,239 | | Advances of fee to Directors and Syndics | | | 10,049 | | | | 6,213 | | Advance to Personnel | | | 3,558 | | | | 2,810 | | Tax Credits | | | 2,208,858 | | | | 655,859 | | Payments made in Advance | | | 2,331,734 | | | | 1,320,929 | | Advances for Purchase of Assets | | | 487,578 | | | | 4,032,303 | | Investment properties (*) | | | 580,667 | | | | 593,290 | | Other Sundry Assets Measured at Cost | | | 1,227,359 | | | | 1,397,084 | | Assets Taken in Defense of Credits | | | 5,176 | | | | 5,176 | | Others | | | 333,410 | | | | 389,085 | | | | | | | | | | | Total | | | 7,634,427 | | | | 8,782,988 | | | | | | | | | | |
| (*) | Changes in “Investment Properties” are detailed in Schedule F. |
Related-party information is disclosed in Note 51. NOTE 23.22. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS The Group has classified the following assets as "Assets“Assets Held for Sale and Discontinued Operations"Operations”: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Equity Investments | | | 414,778 | | | | 10,855,802 | | | | 10,914,825 | | Prisma Medios de Pago S.A. | | | 414,778 | | | | 374,937 | | | | - | | Compañía Financiera Argentina S.A.(*) | | | - | | | | 10,425,762 | | | | 10,859,722 | | Cobranzas y Servicios S.A.(*) | | | - | | | | 55,103 | | | | 55,103 | | Other Debt Securities | | | 188,947 | | | | - | | | | - | | Financial Trust Crecere III, IV, V, VI, VII and VIII | | | 188,947 | | | | - | | | | - | | Property, Plant and Equipment | | | 4,290 | | | | 4,289 | | | | 4,291 | | Real Estate | | | 4,290 | | | | 4,289 | | | | 4,291 | | Total | | | 608,015 | | | | 10,860,091 | | | | 10,919,116 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Property, Plant and Equipment | | | | | | | | | Real Estate | | | 29,328 | | | | 53,106 | | | | | | | | | | | Total | | | 29,328 | | | | 53,106 | | | | | | | | | | |
(*)
| The amount relates to the balance of assets held for sale were booked under “Non-current Assets Held for Sale”. The Liabilities related to this assets were booked under and “Other Non-financial Liabilities”
|
Prisma Medios de Pago S.A.: The Ordinary and Extraordinary Shareholders’ Meeting of Prisma Medios de Pago S.A. held on August 31, 2017, decided to transfer all of the shares of the Company in one-year term. Therefore, according to IFRS 5 the Group considered the investment as a "Non-current Assets Held for Sale" and measured the investment at the lowest of cost or fair value less cost to sell. The carrying amounts of the investment were $414,778 and $374,937 as of December 31, 2018 and 2017, respectively. The change is due to the company's capital stock increases, which took place in April and December 2018 in order to adjust it to its corporate businesses.
The General Ordinary Shareholders’ Meeting held on May 8, 2018 approved the distribution of cash dividends. According to the Bank’s equity interest, it was entitled to dividends in the amount of $490,393, which were recorded in the income statement.
On February 1, 2019, 51% of such company's equity interest was transferred. (See Note 55).
Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A.: On January 12, 2017, the Bank's Board of Directors accepted an offer to buy the equity investment in the subsidiaries Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A., made by Mr. Julio Alfredo Fraomeni and Galeno Capital S.A.U. By virtue of Resolution No. 414, the Argentine Central Bank authorized such transaction.
The sale of the shares in both companies was consummated on February 2, 2018, with the new holders having been registered in each of these companies’ books. The sale price was subject to the buyers' consent, who were entitled to raise objections for a term of up to 45 consecutive days to be counted as from January 29, 2018. On March 26, 2018, the sale of shares in Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A. was completed, establishing a final price of $1,527,013 and $31,790, respectively. The Loss from the sale of Compañía Financiera Argentina S.A. amounted to $(278,645) and the sale of Cobranzas y Servicios S.A has thrown an income of $18,889. The income tax impact for discontinued operations is disclosed separately in the "Income Tax from Discontinued Activities" account, which amounts to $31,675 as of December 31, 2018.
The information below is related to the Group's discontinued operations (Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A.):NOTE 23. DEPOSITS
Compañía Financiera Argentina S.A.
| | | | | | 12.31.2017
| | Assets
| | | 10,425,762
| | Cash and Due from Banks
| | | 754,856
| | Securities
| | | 30,911
| | Loans
| | | 9,058,863
| | Miscellaneous Receivables
| | | 383,937
| | Equity Investments
| | | 7,927
| | Bank Property, Plant and Equipment
| | | 73,093
| | Miscellaneous Assets
| | | 3,709
| | Intangible Assets
| | | 112,466
| | Liabilities(*)
| | | 8,620,104
| | Deposits
| | | 2,603,478
| | Debt Securities
| | | 2,304,169
| | Other Liabilities Resulting from Financial Brokerage
| | | 3,039,665
| | Miscellaneous Liabilities
| | | 594,386
| | Provisions
| | | 78,406
| |
(*)
| Recorded in "Other Non-financial Liabilities". See Note 31.
|
F-47
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cobranzas y Servicios S.A.
| | 12.31.2017
| | Assets
| | | 55,103
| | Cash and Due from Banks
| | | 545
| | Securities
| | | 23,707
| | Miscellaneous Receivables
| | | 30,851
| | Liabilities(*)
| | | 42,202
| | Miscellaneous Liabilities
| | | 42,202
| |
(*)
| Recorded in "Other Non-financial Liabilities". See Note 31.
|
Assets | | 12.31.17 | | | 01.01.17 | | Equity Investments in Subsidiaries | | | | | | | | | Compañía Financiera Argentina S.A. | | | 1,805,658 | | | | 2,239,617 | | Cobranzas y Servicios S.A. | | | 12,901 | | | | 12,902 | | Total Assets | | | 1,818,559 | | | | 2,252,519 | |
NOTE 24. DEPOSITS
Deposits break down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | In Pesos | | | 197,429,716 | | | | 192,412,724 | | | | 183,073,374 | | Checking Accounts | | | 39,854,371 | | | | 48,899,103 | | | | 51,553,662 | | Savings Accounts | | | 61,128,663 | | | | 61,068,905 | | | | 47,849,922 | | Time Deposits | | | 89,204,808 | | | | 78,139,750 | | | | 79,111,568 | | Time Deposits – UVA | | | 1,984,548 | | | | 889,541 | | | | 153,275 | | Others | | | 1,273,540 | | | | 1,307,966 | | | | 2,780,765 | | Interest and Adjustments | | | 3,983,786 | | | | 2,107,459 | | | | 1,624,182 | | In Foreign Currency | | | 162,667,559 | | | | 103,954,632 | | | | 94,004,188 | | Savings Accounts | | | 137,762,699 | | | | 87,181,645 | | | | 50,026,752 | | Time Deposits | | | 24,064,063 | | | | 16,162,106 | | | | 12,356,404 | | Others | | | 792,809 | | | | 587,628 | | | | 31,605,693 | | Interest and Adjustments | | | 47,988 | | | | 23,253 | | | | 15,339 | | Total | | | 360,097,275 | | | | 296,367,356 | | | | 277,077,562 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | In Pesos | | | 510,134,336 | | | | 341,083,760 | | Checking Accounts | | | 105,026,914 | | | | 91,984,479 | | Savings Accounts | | | 182,972,227 | | | | 80,995,302 | | Time Deposits | | | 208,712,623 | | | | 157,927,791 | | Time Deposits – UVA | | | 5,565,347 | | | | 1,021,392 | | Others | | | 1,980,204 | | | | 2,309,871 | | Interest and Adjustments | | | 5,877,021 | | | | 6,844,925 | | In Foreign Currency | | | 166,261,399 | | | | 194,949,936 | | Checking Accounts | | | — | | | | — | | Savings Accounts | | | 134,011,633 | | | | 160,463,701 | | Time Deposits | | | 31,133,525 | | | | 33,122,492 | | Others | | | 1,023,311 | | | | 1,277,254 | | Interest and Adjustments | | | 92,930 | | | | 86,489 | | | | | | | | | | | Total | | | 676,395,735 | | | | 536,033,696 | | | | | | | | | | |
The concentration of deposits is detailed in Schedule H. The breakdown of deposits by remaining term is detailed in Schedule I. The breakdown of deposits by sector is detailed in Schedule P. Related-party information is disclosed in Note 52. 51. NOTE 25.24. LIABILITIES MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS "
“Liabilities measured at fair value through profit or loss"loss” are detailed in Schedules I and P. They include liabilities for transactions with third-party government securities. NOTE 26.25. OTHER FINANCIAL LIABILITIES The account breaks down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Payables for Purchases Pending Settlement | | | 1,512,197 | | | | 1,597,375 | | | | 1,993,765 | | Collections and Other Transactions on Account of Third Parties | | | 7,646,888 | | | | 4,649,744 | | | | 5,891,142 | | Liabilities due to Financing of Purchases | | | 36,894,587 | | | | 39,185,267 | | | | 38,237,617 | | Payables for Foreign Currency Purchase Pending Settlement | | | 14,409,983 | | | | 7,455,274 | | | | 9,124,786 | | Commissions Accrued Payable | | | 344,570 | | | | 295,660 | | | | 205,413 | | Miscellaneous Subject to Minimum Cash Requirements | | | 507,101 | | | | 417,075 | | | | 584,706 | | Miscellaneous not Subject to Minimum Cash Requirements | | | 1,195,353 | | | | 918,298 | | | | 507,406 | | Other Financial Liabilities | | | 724,363 | | | | 832,106 | | | | 549,941 | | Total | | | 63,235,042 | | | | 55,350,799 | | | | 57,094,776 | |
F-48
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Creditors for Purchase to be Settled | | | 340,249 | | | | 76,689 | | Collections and Other Transactions on Behalf of Third Parties | | | 11,041,676 | | | | 15,977,376 | | Obligations for Purchase Financing | | | 74,952,107 | | | | 65,393,841 | | Creditors for Purchase of Foreign Currency to be Settled | | | 506,226 | | | | 2,237,420 | | Accrued Fees Payable | | | 608,453 | | | | 691,386 | | Sundry Items Subject to Minimum Cash | | | 1,249,817 | | | | 881,007 | | Sundry Items not Subject to Minimum Cash | | | 3,732,783 | | | | 5,596,529 | | Lease Liabilities | | | 4,363,406 | | | | 5,129,987 | | Other Financial Liabilities | | | 676,748 | | | | 1,169,389 | | | | | | | | | | | Total | | | 97,471,465 | | | | 97,153,624 | | | | | | | | | | |
NOTE 27.26. LOANS FROM THE ARGENTINE CENTRAL BANK AND OTHER FINANCIAL INSTITUTIONS The account breaks down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Loans from the Argentine Central Bank | | | 28,675 | | | | 22,623 | | | | 23,450 | | Correspondents | | | 1,583,638 | | | | 614,362 | | | | 2,104,863 | | Loans from Local Financial Institutions | | | 5,719,582 | | | | 3,552,963 | | | | 6,511,273 | | Loans from Foreign Financial Institutions | | | 7,474,069 | | | | 6,056,735 | | | | 3,840,658 | | Loans from International Entities | | | 4,640,064 | | | | 1,371,619 | | | | 236,901 | | Total | | | 19,446,028 | | | | 11,618,302 | | | | 12,717,145 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Argentine Central Bank Financing | | | 21,368 | | | | 30,562 | | Correspondents | | | 1,927,341 | | | | 509,031 | | Financing from Local Financial Institutions | | | 7,036,375 | | | | 7,621,082 | | Financing from Foreign Financial Institutions | | | — | | | | 14,253,902 | | Financing from International Financial Institutions | | | 4,848,355 | | | | 8,521,584 | | | | | | | | | | | Total | | | 13,833,439 | | | | 30,936,161 | | | | | | | | | | |
The following table details the credit lines with local and international financial institutions and entities as of the indicated dates: Financial Institutions and/or Entities | | Date of Placement | | Currency | | Term(*) | | Rate(*) | | | Maturity Date | | Amount as of 12.31.18(**) | | Local | | | | | | | | | | | | | | | 5,748,257 | | BICE | | Miscellaneous | | $ | | 1,838 days | | 50.88 | | | Miscellaneous | | | 2,844,547 | | BICE | | Miscellaneous | | US$ | | 1,792 days | | 4.36 | | | Miscellaneous | | | 115,799 | | Call Taken | | 12.28.18 | | $ | | 5 days | | 55.94 | | | 01.02.19 | | | 804,056 | | Argentine Central Bank | | 12.28.18 | | $ | | 5 days | | | - | | | 01.02.19 | | | 27,681 | | Argentine Central Bank | | 12.18.18 | | US$ | | 5 days | | | - | | | 01.02.19 | | | 994 | | Other Lines(1) | | Miscellaneous | | $ | | 364 days | | 45.89 | | | Miscellaneous | | | 1,955,180 | | International | | | | | | | | | | | | | | | 13,697,771 | | Correspondents | | 12.31.18 | | US$ | | 2 days | | | - | | | 01.02.19 | | | 1,583,638 | | IFC | | Miscellaneous | | US$ | | 945 days | | 5.78 | | | Miscellaneous | | | 4,591,008 | | Prefinancing | | Miscellaneous | | US$ | | 235 days | | 3.96 | | | Miscellaneous | | | 5,643,958 | | IDB | | Miscellaneous | | US$ | | 351 days | | 4.44 | | | Miscellaneous | | | 1,879,167 | | Total | | | | | | | | | | | | | | | 19,446,028 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Financial Institutions and/or Agencies | | Placement Date | | | Currency | | | Term(*) | | | Rate(*) | | | Maturity | | | Amount as
of
12.31.20(**) | | Local Institutions | | | | | | | | | | | | | | | | | | | | | | | 7,057,743 | | BICE | | | Sundry Dates | | | | Ps. | | | | 1,655 days | | | | 30.7 | | | | Sundry Dates | | | | 1,330,193 | | BICE | | | Sundry Dates | | | | USD | | | | 1,705 days | | | | 4.3 | | | | Sundry Dates | | | | 1,835,023 | | Agreements with Banks(1) | | | 12.14.20 | | | | Ps. | | | | 365 days | | | | 40.8 | | | | 12.14.21 | | | | 3,661,158 | | Call Taken | | | 12.30.20 | | | | Ps. | | | | 5 days | | | | 29 | | | | 01.04.21 | | | | 210,000 | | Argentine Central Bank | | | 12.30.20 | | | | Ps. | | | | 5 days | | | | — | | | | 04.01.21 | | | | 21,368 | | Other Lines(2) | | | Sundry Dates | | | | Ps. | | | | 11 days | | | | 48.1 | | | | 11.01.21 | | | | 1 | | International Institutions | | | | | | | | | | | | | | | | | | | | | | | 6,775,696 | | Correspondents | | | 12.30.20 | | | | USD | | | | 5 days | | | | — | | | | 11.04.21 | | | | 1,927,341 | | IFC | | | Sundry Dates | | | | USD | | | | 1,552 days | | | | 3.2 | | | | Sundry Dates | | | | 4,848,355 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | | | 13,833,439 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(**) | It includes principal and interest. |
(1) | Relates to regional credit-card companies'Ecosistema NaranjaX companies’ credit lines. |
Financial Institutions and/or Entities | | Date of Placement | | Currency | | Term(*) | | Rate(*) | | | Maturity Date | | Amount as of 12.31.17(**) | | Local | | | | | | | | | | | | | | | 3,575,586 | | BICE | | Miscellaneous | | $ | | 1,875 days | | 23.84 | | | Miscellaneous | | | 3,253,133 | | BICE | | Miscellaneous | | US$ | | 1,086 days | | 3.38 | | | Miscellaneous | | | 3,855 | | Call Taken | | 12.28.17 | | $ | | 5 days | | 24.5 | | | 01.02.18 | | | 93,699 | | Argentine Central Bank | | 12.28.17 | | $ | | 5 days | | | - | | | 01.02.18 | | | 21,565 | | Argentine Central Bank | | 12.28.17 | | US$ | | 5 days | | | - | | | 01.02.18 | | | 1,058 | | Other Lines(1) | | Miscellaneous | | $ | | 365 days | | 27.95 | | | Miscellaneous | | | 202,276 | | International | | | | | | | | | | | | | | | 8,042,716 | | Correspondents | | 12.29.17 | | US$ | | 4 days | | | - | | | 01.02.18 | | | 614,362 | | IFC | | Miscellaneous | | US$ | | 1,085 days | | 5.59 | | | Miscellaneous | | | 1,247,368 | | Prefinancing | | Miscellaneous | | US$ | | 208 days | | 2.89 | | | Miscellaneous | | | 5,701,293 | | Proparco | | Miscellaneous | | US$ | | 351 days | | 4.96 | | | Miscellaneous | | | 28,751 | | IDB | | Miscellaneous | | US$ | | 240 days | | 3.21 | | | Miscellaneous | | | 450,942 | | Total | | | | | | | | | | | | | | | 11,618,302 | |
(*)
(2) | Weighted average.Relates to subsidiaries’ credit lines.
|
| | | | | | | | | | | | | | | | | | | | | | | Financial Institutions and/or Agencies | | Placement Date | | | Currency | | Term(*) | | | Rate(*) | | | Maturity | | | Amount as
of
12.31.19(**) | | Local Institutions | | | | | | | | | | | | | | | | | | | | | 7,651,644 | | BICE | | | Sundry Dates | | | Ps. | | | 1,778 days | | | | 47 | | | | Sundry Dates | | | | 2,642,859 | | BICE | | | Sundry Dates | | | USD | | | 1,762 days | | | | 5.8 | | | | Sundry Dates | | | | 1,208,875 | | Call Taken | | | 12.30.19 | | | Ps. | | | 3 days | | | | 41.6 | | | | 01.02.20 | | | | 682,064 | | Argentine Central Bank | | | 12.30.19 | | | Ps. | | | 3 days | | | | — | | | | 02.01.20 | | | | 30,562 | | Other Lines(1) | | | Sundry Dates | | | Ps. | | | 364 days | | | | 53.9 | | | | Sundry Dates | | | | 3,087,284 | | International Institutions | | | | | | | | | | | | | | | | | | | | | 23,284,517 | | Correspondents | | | 12.31.19 | | | USD | | | 2 days | | | | — | | | | 02.01.20 | | | | 509,031 | | IFC | | | Sundry Dates | | | USD | | | 1,355 days | | | | 4.74 | | | | Sundry dates | | | | 8,521,584 | | Prefinancing(2) | | | Sundry Dates | | | USD | | | 167 days | | | | 6.03 | | | | Sundry dates | | | | 13,572,955 | | IDB | | | Sundry Dates | | | USD | | | 361 days | | | | 5.73 | | | | Sundry dates | | | | 680,947 | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | 30,936,161 | | | | | | | | | | | | | | | | | | | | | | | | |
| (**) | It includes principal and interest. |
| (1) | Relates to Ecosistema NaranjaX companies’ credit lines. |
(1)
| Relates to regional credit-card companies' credit lines.
|
Financial Institutions and/or Entities | | Date of Placement | | Currency | | Term(*) | | Rate(*) | | | Maturity Date | | Amount as of 01.01.17(**) | | Local | | | | | | | | | | | | | | | 6,578,602 | | BICE | | Miscellaneous | | $ | | 1,648 days | | 23.67 | | | Miscellaneous | | | 2,174,110 | | BICE | | Miscellaneous | | US$ | | 1,170 days | | 4.5 | | | Miscellaneous | | | 7,400 | | Call Taken | | 12.30.16 | | $ | | 3 days | | 25.38 | | | 01.02.17 | | | 304,021 | | Argentine Central Bank | | 12.30.16 | | $ | | 3 days | | | - | | | 01.02.17 | | | 21,180 | | Argentine Central Bank | | 12.30.16 | | US$ | | 3 days | | | - | | | 01.02.17 | | | 2,270 | | Other Lines(1) | | Miscellaneous | | $ | | 490 days | | 28.44 | | | Miscellaneous | | | 4,025,742 | | Correspondents | | 12.30.16 | | $ | | 3 days | | | - | | | 01.02.17 | | | 43,879 | | International | | | | | | | | | | | | | | | 6,138,543 | | Correspondents | | 12.30.16 | | US$ | | 3 days | | | - | | | 01.02.17 | | | 2,060,984 | | IFC | | Miscellaneous | | US$ | | 1,209 days | | 5.8 | | | Miscellaneous | | | 146,024 | | Prefinancing | | Miscellaneous | | US$ | | 267 days | | 2.57 | | | Miscellaneous | | | 3,840,658 | | Proparco | | Miscellaneous | | US$ | | 210 days | | 4.96 | | | Miscellaneous | | | 90,877 | | Total | | | | | | | | | | | | | | | 12,717,145 | |
F-49
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (**)
| It includes principal and interest.
|
(1)
| Primarily relates to regional credit-card companies' credit lines.
|
NOTE 28.27. DEBT SECURITIES The following is a breakdown of the Global Programs for the Issuance of Debt securities outstanding: | | | | | | | | | | | | | Company | | Authorized
Amount(*)
| | Type of Debt Securities | | Program
Term | | | Approval Date
by
Shareholders’
Meeting | | Term of
Program
| | Date of
CNV Approval by Shareholders’
Meeting
| | Approval by the C.N.V.
| Grupo Financiero Galicia S.A. | | US$
USD 100,000 | | Simple debt securities not convertible into shares | | | 5 years | | | 03.09.09
confirmed on
08.02.12 | | Resolution No. 16113 dated 04.29.09 and extended through by Resolution No. 17343 dated 05.08.14 and Provision No. DI-2019-63-APN-GE#CNV dated 08.06.19. Authorization of the increase,Increase, Resolution No. 17064
17,064 dated 04.25.13 | | | | | | | Banco de Galicia y Buenos Aires S.A.U. | | US$
USD 2,100,000 | | Simple debt securities, not convertible into shares, subordinated or not, to be adjusted or not, secured or unsecured. | | | 5 years | | 04.28.05, 04.14.10, 04.29.15 and 11.09.16
| 04.28.05,
04.14.10,
04.29.15,
11.09.16 and
04.28.20 | | Resolution No. 15228 dated 11.04.05 and extended through Resolution No. 16454 dated 11.11.10 and Resolution No. 17883 dated 11.20.15.11.20.15 and Resolution No. DI-2020-53-APN-GE#CNV dated 11.24.20. Increase of the amount approved by Resolutions Nos.No. 17883 dated 11.20.15, No. 18081 dated 06.10.16, No. 18480 dated 01.26.17 and No. 19520 dated 05.17.18 | | | | | | | Tarjeta Naranja S.A.Banco de Galicia y Buenos Aires S.A.U.
| | US$
650,000
USD 2,100,000 | | Simple debt securities not convertible into shares | | 5 years
| - | 03.08.12
| | 04.25.19 | | Frequent Issuer Registration No. 11, granted by Resolution No. 16822RESCFC-2019-2055-APN-DIR#CNV, dated 05.23.12 and extended through Resolution No. 17676 dated 05.21.15.11/13/19 of CNV´s Board of Directors | | | | | | | Tarjetas CuyanasTarjeta Naranja S.A.
| | US$
250,000
USD 1.000.000 | | Simple debt securities, not convertible into shares | | | 5 years | | | 03.08.12 | | Resolution No. 15220 dated 07.14.05 and extended through Resolution No. 17676 dated 05.21.15 and No. DI2020-20-APNGE#CNV dated 03.18.20. Increase of the amount approved by Resolutions No. 15.361 dated 03.23.06, 15.785 dated 11.16.07, 16.571 dated 05.24.11, 16.822 dated 05.23.12 and 19.508 dated 05.10.18 | | | | | | | Tarjetas Cuyanas S.A. | | USD 250,000 | | Simple debt securities, not convertible into shares | | | 5 years | | | 03.30.10
confirmed on
04.06.10 and
02.15.13 | | Resolution No. 16328 dated 05.18.10 Authorization05.18.10. Increase of the increase,amount approved by Resolution No. 17072 dated 05.02.13 |
(*)
| Or its equivalent in any other currency.
|
(*) Or its equivalent in any other currency. F-50
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company has the following Unsubordinated Debt securities outstanding issued under the Global Programs detailed in the table above as of December 31, 2018,2020, net of repurchases of Own Debt: Company | | Date of Placement | | Currency | | Class ON. | | Face Value | | | Type(**) | | Term | | Maturity Date | | | Rate | | Issuance Authorized by the C.N.V. | | Carrying Amount(*) as of 12.31.18 | | Banco de Galicia y Buenos Aires S.A.U. | | 02.17.17 | | $ | | Class III | | US$150,537(1) | | | Simple | | 36 Months | | | - | | | (1)(3) | | 02.06.17 | | | 2,471,648 | | Banco de Galicia y Buenos Aires S.A.U. | | 05.18.17 | | $ | | IV | | $ | 2,000,000 | | | Simple | | 36 Months | | | - | | | (2)(4) | | 05.08.17 | | | 2,126,523 | | Banco de Galicia y Buenos Aires S.A.U. | | 04.26.18 | | $ | | V Series I | | $ | 4,209,250 | | | Simple | | 24 Months | | | - | | | (5) | | 04.18.18 | | | 4,898,450 | | Banco de Galicia y Buenos Aires S.A.U. | | 04.26.18 | | $ | | V Series II | | $ | 2,032,833 | | | Simple | | 36 Months | | | - | | | (6) | | 04.18.18 | | | 2,174,984 | | Tarjeta Naranja S.A. | | 04.13.16 | | $ | | XXXIII Series II | | $ | 366,908 | | | Simple | | 1,095 days | | 04.13.19 | | | Minimum 37% Rate/Badlar +5.40% | | 03.28.16 | | | 412,803 | | Tarjeta Naranja S.A. | | 06.29.16 | | $ | | XXXIV Series II | | $ | 475,397 | | | Simple | | 1,461 days | | 06.29.20 | | | Minimum 32% Rate/Badlar +4.67% | | 06.21.16 | | | 541,106 | | Tarjeta Naranja S.A. | | 09.27.16 | | $ | | XXXV Series II | | $ | 774,389 | | | Simple | | 1,461 days | | 09.27.20 | | | Minimum 26% Rate/Badlar +3.99% | | 09.15.16 | | | 728,000 | | Tarjeta Naranja S.A. | | 12.07.16 | | $ | | XXXVI Series II | | $ | 636,409 | | | Simple | | 1,095 days | | 12.07.19 | | | Minimum 25.25% Rate/Badlar + 4% | | 11.23.16 | | | 648,695 | | Tarjeta Naranja S.A. | | 04.11.17 | | $ | | XXXVII | | $ | 3,845,700 | | | Simple | | 1,826 days | | 04.11.22 | | | Minimum 15% Rate/Badlar + 3.50% | | 03.30.17 | | | 4,083,446 | | Tarjeta Naranja S.A. | | 11.13.17 | | $ | | XXXVIII | | $ | 503,333 | | | Simple | | 546 days | | 05.13.19 | | | Minimum 29.05% Rate/MR20 + 4% | | 11.07.17 | | | 538,056 | | Tarjeta Naranja S.A. | | 02.14.18 | | $ | | XXXIX | | $ | 754,538 | | | Simple | | 546 days | | 09.14.19 | | | Minimum 26.75% Rate/MR 20 +3.4% | | 02.02.18 | | | 803,823 | | Tarjeta Naranja S.A. | | 04.10.18 | | $ | | XL Series I | | $ | 597,500 | | | Simple | | 548 days | | 10.10.19 | | | 25.98% Fixed Rate | | 03.27.18 | | | 708,732 | | Tarjeta Naranja S.A. | | 04.10.18 | | $ | | XL Series II | | $ | 1,402,500 | | | Simple | | 914 days | | 10.10.20 | | | Minimum 27% Rate/Badlar + 3.69% | | 03.27.18 | | | 1,547,760 | | Tarjeta Naranja S.A. | | 11.15.18 | | $ | | XLI Series I | | $ | 854,102 | | | Simple | | 365 days | | 11.15.19 | | | 54% Fixed Rate | | - | | | 905,479 | | Tarjeta Naranja S.A. | | 11.15.18 | | $ | | XLI Series II | | $ | 343,555 | | | Simple | | 547 days | | 05.15.20 | | | Badlar + 10% | | - | | | 346,775 | | Tarjeta Naranja S.A. | | 12.17.18 | | $ | | XLII | | $ | 1,266,303 | | | Simple | | 287 days | | 09.30.19 | | | 58% Fixed Rate | | - | | | 1,234,147 | | Tarjeta Naranja S.A.(***) | | 05.05.16 | | $ | | XXIV Series II | | $ | 234,309 | | | Simple | | 1,095 days | | 05.05.19 | | | Minimum 37% Rate/Badlar + 4.98% | | 04.22.16 | | | 172,255 | | Tarjeta Naranja S.A.(***) | | 07.26.16 | | $ | | XXV | | $ | 400,000 | | | Simple | | 1,461 days | | 07.26.20 | | | Minimum 30% Rate/Badlar + 3.94% | | 07.13.16 | | | 430,504 | | Tarjeta Naranja S.A.(***) | | 10.24.16 | | $ | | XXVI Series II | | $ | 350,237 | | | Simple | | 1,461 days | | 10.24.20 | | | Minimum 26% Rate/Badlar + 4.00% | | 10.14.16 | | | 358,563 | | Tarjeta Naranja S.A.(***) | | 02.10.17 | | $ | | XXVII Series II | | $ | 500,000 | | | Simple | | 1,095 days | | 02.10.20 | | | Minimum 23.5% Rate/Badlar + 3.50% | | 02.02.17 | | | 500,457 | | Tarjeta Naranja S.A.(***) | | 06.09.17 | | $ | | XXVIII Series I | | $ | 128,175 | | | Simple | | 730 days | | 06.09.19 | | | Minimum 25% Rate/Badlar + 3.05% | | 05.29.17 | | | 126,755 | | Tarjeta Naranja S.A.(***) | | 06.09.17 | | $ | | XXVIII Series II | | $ | 371,825 | | | Simple | | 1,461 days | | 06.09.21 | | | Minimum 25% Rate/Badlar + 3.70% | | 05.29.17 | | | 374,000 | | Total | | | | | | | | | | | | | | | | | | | | | | | | | 26,132,961 | |
(*) It includes principal and interest.
(**) Not convertible into shares.
(***) Negotiable Obligations merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A.
(1) As specified in the terms and conditions of the issuance, they were converted to $2,360,360 Investor assumes the exchange rate risk since the service of interest and principal is calculated on the basis of the principal amount in Pesos converted into US Dollars on each payment date.
(2) The net proceeds from this issuance of negotiable obligations was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Negotiable Obligations and the Argentine Central Bank regulations.
(3) Variable rate equal to the simple arithmetic average of private Badlar, plus 2.69%, which will be payable quarterly as from May 17, 2017.
F-51
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (4) Variable rate equal to the simple arithmetic average of private Badlar, plus 2.98%, which will be payable quarterly as from August 18, 2017.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Company | | Placement
Date | | | Currency | | | Class
N° | | | Face Value | | | Type(**) | | | Term | | | Maturity
Date | | | Rate | | | Issuance
Authorized by
the CNV | | | Book
Value(*) as
of 12.31.20 | | Banco de Galicia y Buenos Aires S.A.U. | | | 04.26.18 | | | | Ps. | | |
| V Series
II |
| | | 2,032,833 | | | | Simple | | | | 36 Months | | | | 04.26.21 | | | | Badlar + 3.50% | | | | 04.18.18 | | | | 1,732,315 | | Banco de Galicia y Buenos Aires S.A.U. | | | 11.20.20 | | | | Ps. | | | | VIII (1) | | | | 1,589,722 | | | | Simple | | | | 9 Months | | | | 08.20.21 | | |
| Badlar +
2.25% |
| | | 04.20.20 | | | | 1,255,566 | | Tarjeta Naranja S.A. | | | 04.11.17 | | | | Ps. | | | | XXXVII | | | | 3,845,700 | | | | Simple | | |
| 1,826
days |
| | | 04.11.22 | | |
| Minimum
15% Rate/
Badlar +
3.50% |
| | | 03.30.17 | | | | 2,644,989 | | Tarjeta Naranja S.A. | | | 07.08.20 | | | | Ps. | | | | XLIV | | | | 3,574,897 | | | | Simple | | | | 549 days | | | | 01.08.22 | | | | Badlar + 4% | | | | 06.30.20 | | | | 3,609,011 | | Tarjeta Naranja S.A. | | | 12.18.20 | | | | Ps. | | | | XLV | | | | 3,057,000 | | | | Simple | | | | 365 days | | | | 12.18.21 | | | | Badlar + 5% | | | | 12.14.20 | | | | 2,641,113 | | Tarjeta Naranja S.A.(***) | | | 06.09.17 | | | | Ps. | | |
| XXVIII
Series II |
| | | 371,825 | | | | Simple | | |
| 1,461
days |
| | | 06.09.21 | | |
| Minimum
25% Rate/
Badlar +
3.70% |
| | | 05.29.17 | | | | 362,247 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,245,241 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(5) Annual nominal fixed 25.98% rate; principal and interest will be settled in full upon maturity.
(6) Variable rate equal to the simple arithmetic average of private Badlar, plus 3.5%, which will be payable quarterly as from July 26, 2018. Principal in respect of this Series will be repaid upon maturity.
| (*) | It includes principal and interest. |
| (**) | Not convertible into shares. |
| (***) | Negotiable Obligations merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A. |
| (1) | Issued under the Frequent Issuer Regime. |
On June 21, 2018, Banco de Galicia y Buenos Aires S.A.U. issued the “Green Bond” which was entirely acquired by the International Finance Corporation. The Green Bond is a 7-year facility, with interest payable every six months. The Green Bond has a 36-month grace period in respect of the repayment of principal, followed by payments in 9 installments due every six months. As of December 31, 2018,2020, the carrying amount of the Green Bond totals $3,850,692. Under the Global Program for the IssuancePs.4,828,657, and it amounted to Ps.8,399,358 as of Debt Securities outstanding, after year-end, Banco Galicia issued Class VI for a face value of US$82,713 at a fixed 4.8% rate, with a 7-months maturity after issuance.
December 31, 2019. The Company has the following Unsubordinated Debt Securities outstanding issued under the Global Programs detailed in the table above as of December 31, 2017,2019 , net of repurchases of Own Debt: Company | | Date of Placement | | Currency | | Class ON. | | Face Value | | | Type(**) | | Term | | Maturity Date | | | Rate | | Issuance Authorized by the C.N.V. | | Carrying Amount(*) as of 12.31.17 | | Banco de Galicia y Buenos Aires S.A.U. | | 02.17.17 | | $ | | III | | US$150,537(1) | | | Simple | | 36 Months | | | - | | | (1)(3) | | 02.06.17 | | | 3,589,743 | | Banco de Galicia y Buenos Aires S.A.U. | | 05.18.17 | | $ | | IV | | $ | 2,000,000 | | | Simple | | 36 Months | | | - | | | (2)(4) | | 05.08.17 | | | 3,037,480 | | Tarjeta Naranja S.A. | | 04.13.16 | | $ | | XXXIII Series II | | $ | 366,908 | | | Simple | | 1,095 days | | 04.13.19 | | | Minimum 37% Rate/Badlar +5.40% | | 03.28.16 | | | 553,033 | | Tarjeta Naranja S.A. | | 06.29.16 | | $ | | XXXIV Series II | | $ | 475,397 | | | Simple | | 1,461 days | | 06.29.20 | | | Minimum 32% Rate/Badlar +4.67% | | 06.21.16 | | | 697,050 | | Tarjeta Naranja S.A. | | 09.27.16 | | $ | | XXXV Series I | | $ | 225,611 | | | Simple | | 546 days | | 03.27.18 | | | Minimum 26% Rate/Badlar +2.99% | | 09.15.16 | | | 335,414 | | Tarjeta Naranja S.A. | | 09.27.16 | | $ | | XXXV Series II | | $ | 774,389 | | | Simple | | 1,461 days | | 09.27.20 | | | Minimum 26% Rate/Badlar +3.99% | | 09.15.16 | | | 1,117,422 | | Tarjeta Naranja S.A. | | 12.07.16 | | $ | | XXXVI Series I | | $ | 210,571 | | | Simple | | 547 days | | 06.07.18 | | | Minimum 25.25% Rate/Badlar + 3.25% | | 11.23.16 | | | 313,977 | | Tarjeta Naranja S.A. | | 12.07.16 | | $ | | XXXVI Series II | | $ | 636,409 | | | Simple | | 1,095 days | | 12.07.19 | | | Minimum 25.25% Rate/Badlar + 4% | | 11.23.16 | | | 922,082 | | Tarjeta Naranja S.A. | | 04.11.17 | | $ | | XXXVII | | $ | 3,845,700 | | | Simple | | 1,826 days | | 04.11.22 | | | Minimum 15% Rate/Badlar + 3.50% | | 03.30.17 | | | 5,940,224 | | Tarjeta Naranja S.A. | | 11.13.17 | | $ | | XXXVIII | | $ | 503,333 | | | Simple | | 546 days | | 05.13.19 | | | Minimum 29.05% Rate/MR20 + 4% | | 11.07.17 | | | 762,789 | | Tarjeta Naranja S.A.(***) | | 05.05.16 | | $ | | XXIV Series II | | $ | 234,309 | | | Simple | | 1,095 days | | 05.05.19 | | | Minimum 37% Rate/Badlar + 4.98% | | 04.22.16 | | | 305,617 | | Tarjeta Naranja S.A.(***) | | 07.26.16 | | $ | | XXV | | $ | 400,000 | | | Simple | | 1,461 days | | 07.26.20 | | | Minimum 30% Rate/Badlar + 3.94% | | 07.13.16 | | | 619,400 | | Tarjeta Naranja S.A.(***) | | 10.24.16 | | $ | | XXVI Series I | | $ | 149,763 | | | Simple | | 547 days | | 04.24.18 | | | Minimum 26% Rate/Badlar + 2.75% | | 10.14.16 | | | 231,713 | | Tarjeta Naranja S.A.(***) | | 10.24.16 | | $ | | XXVI Series II | | $ | 350,237 | | | Simple | | 1,461 days | | 10.24.20 | | | Minimum 26% Rate/Badlar + 4% | | 10.14.16 | | | 448,220 | | Tarjeta Naranja S.A.(***) | | 02.10.17 | | $ | | XXVII Series II | | $ | 500,000 | | | Simple | | 1,095 days | | 02.10.20 | | | Minimum 23.5% Rate/Badlar + 3.5% | | 02.02.17 | | | 761,711 | | Tarjeta Naranja S.A.(***) | | 06.09.17 | | $ | | XXVIII Series I | | $ | 128,175 | | | Simple | | 730 days | | 06.09.19 | | | Minimum 25% Rate/Badlar + 3.05% | | 05.29.17 | | | 192,243 | | Tarjeta Naranja S.A.(***) | | 06.09.17 | | $ | | XXVIII Series II | | $ | 371,825 | | | Simple | | 1,461 days | | 06.09.21 | | | Minimum 25% Rate/Badlar + 3.7% | | 05.29.17 | | | 451,047 | | Total | | | | | | | | | | | | | | | | | | | | | | | | | 20,279,165 | |
(*) It includes principal and interest. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Company | | Placement
Date | | | Currency | | Class
N° | | | Face Value | | | Type(**) | | | Term | | | Maturity
Date | | | Rate | | | Issuance
Authorized by
the CNV | | | Book
Value(*) as
of 12.31.19 | | Banco de Galicia y Buenos Aires S.A.U. | | | 02.17.17 | | | Ps. | | | III | | |
| USD150,537
|
(1) | | | Simple | | | | 36 Months | | | | 02.17.20 | | |
| Badlar +
2.69% |
| | | 02.06.17 | | | | 1,443,765 | | Banco de Galicia y Buenos Aires S.A.U. | | | 05.18.17 | | | Ps. | | | IV | | | | 2,000,000 | | | | Simple | | | | 36 Months | | | | 05.18.20 | | |
| Badlar +
2.98% |
| | | 05.08.17 | | | | 2,357,013 | | Banco de Galicia y Buenos Aires S.A.U. | | | 04.26.18 | | | Ps. | |
| V Series
I |
| | | 4,209,250 | | | | Simple | | | | 24 Months | | | | 04.26.20 | | |
| Fixed
Rate
25.98% |
| | | 04.18.18 | | | | 5,265,353 | | Banco de Galicia y Buenos Aires S.A.U. | | | 04.26.18 | | | Ps. | |
| V Series
II |
| | | 2,032,833 | | | | Simple | | | | 36 Months | | | | 04.26.21 | | |
| Badlar +
3.50% |
| | | 04.18.18 | | | | 2,454,067 | | Banco de Galicia y Buenos Aires S.A.U. | | | 11.25.19 | | | Ps. | | | VII (2) | | | | 4,182,280 | | | | Simple | | | | 6 Months | | | | 05.25.20 | | |
| Badlar +
4% |
| | | 11.13.19 | | | | 5,815,305 | | Tarjeta Naranja S.A. | | | 06.29.16 | | | Ps. | |
| XXXIV
Series II |
| | | 475,397 | | | | Simple | | |
| 1,461
days |
| | | 06.29.20 | | |
| Minimum
32%
Rate/
Badlar +
4.67% |
| | | 06.21.16 | | | | 538,916 | | Tarjeta Naranja S.A. | | | 09.27.16 | | | Ps. | |
| XXXV
Series II |
| | | 774,389 | | | | Simple | | |
| 1,461
days |
| | | 09.27.20 | | |
| Minimum
26%
Rate/
Badlar +
3.99% |
| | | 09.15.16 | | | | 891,958 | | Tarjeta Naranja S.A. | | | 04.11.17 | | | Ps. | | | XXXVII | | | | 3,845,700 | | | | Simple | | |
| 1,826
days |
| | | 04.11.22 | | |
| Minimum
15%
Rate/
Badlar +
3.50% |
| | | 03.30.17 | | | | 5,911,129 | | Tarjeta Naranja S.A. | | | 04.10.18 | | | Ps. | |
| XL
Series II |
| | | 1,402,500 | | | | Simple | | | | 914 days | | | | 10.10.20 | | |
| Minimum
27%
Rate/
Badlar +
3.69% |
| | | 03.27.18 | | | | 1,992,957 | | Tarjeta Naranja S.A. | | | 11.15.18 | | | Ps. | |
| XLI
Series II |
| | | 343,555 | | | | Simple | | | | 547 days | | | | 05.15.20 | | |
| Badlar +
10% |
| | | 11.07.18 | | | | 478,609 | | Tarjeta Naranja S.A. | | | 02.19.19 | | | Ps. | | | XLIII | | | | 1,583,895 | | | | Simple | | | | 547 days | | | | 08.18.20 | | |
| Badlar +
7% |
| | | 02.07.19 | | | | 2,018,633 | | Tarjeta Naranja S.A.(***) | | | 07.26.16 | | | Ps. | | | XXV | | | | 400,000 | | | | Simple | | |
| 1,461
days |
| | | 07.26.20 | | |
| Minimum
30%
Rate/
Badlar +
3.94% |
| | | 07.13.16 | | | | 577,248 | | Tarjeta Naranja S.A.(***) | | | 10.24.16 | | | Ps. | |
| XXVI
Series II |
| | | 350,237 | | | | Simple | | |
| 1,461
days |
| | | 10.24.20 | | |
| Minimum
26%
Rate/
Badlar +
4% |
| | | 10.14.16 | | | | 507,796 | | Tarjeta Naranja S.A.(***) | | | 02.10.17 | | | Ps. | |
| XXVII
Series II |
| | | 500,000 | | | | Simple | | |
| 1,095
days |
| | | 02.10.20 | | |
| Minimum
23.5%
Rate/
Badlar +
3.50% |
| | | 02.02.17 | | | | 647,663 | | Tarjeta Naranja S.A.(***) | | | 06.09.17 | | | Ps. | |
| XXVIII
Series II |
| | | 371,825 | | | | Simple | | |
| 1,461
days |
| | | 06.09.21 | | |
| Minimum
25%
Rate/
Badlar +
3.70% |
| | | 05.29.17 | | | | 508,896 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 31,409,308 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F-52
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(**) Not convertible into shares.
(***) Negotiable Obligations merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A.
(1) As specified in the terms and conditions of the issuance, they were converted to $2,360,360. Investor assumes the exchange rate risk since the service of interest and principal is calculated on the basis of the principal amount in Pesos converted into US Dollars on each payment date.
(2) The net proceeds from this issuance of negotiable obligations was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Negotiable Obligations and the Argentine Central Bank regulations.
(3) Variable rate equal to the simple arithmetic average of private Badlar, plus 2.69%, which will be payable quarterly as from May 17, 2017.
(4) Variable rate equal to the simple arithmetic average of private Badlar, plus 2.98%, which will be payable quarterly as from August 18, 2017.
The Company has the following Unsubordinated Debt securities outstanding issued under the Global Programs detailed in the table above as of January 1, 2017, net of repurchases of Own Debt securities:
Company | | Date of Placement | | Currency | | Class ON. | | Face Value | | | Type(**) | | Term | | Maturity Date | | Rate | | Issuance Authorized by the C.N.V. | | Carrying Amount(*) as of 01.01.17 | | Grupo Financiero Galicia S.A. | | 01.30.14 | | $ | | V Series II | | $ | 78,200 | | | Simple | | 36 Months | | 01.31.17 | | Variable Badlar + 5.25% | | 04.25.13 | | | 150,085 | | Grupo Financiero Galicia S.A. | | 10.23.14 | | $ | | VI Series II | | $ | 109,845 | | | Simple | | 36 Months | | 10.23.17 | | Variable Badlar +4.25% | | 10.03.14 | | | 209,826 | | Grupo Financiero Galicia S.A. | | 07.27.15 | | $ | | VII | | $ | 160,000 | | | Simple | | 24 Months | | 07.27.17 | | (1) | | 07.16.15 | | | 298,906 | | Banco de Galicia y Buenos Aires S.A.U. | | 05.04.11 | | US$ | | - | | US$ 300,000 | | | Simple | | 84 Months | | - | | (2)(3) | | 04.14.11 | | | 8,666,274 | | Tarjeta Naranja S.A. | | 01.28.11 | | US$ | | XII | | US$ 200,000 | | | Simple | | 2,192 days | | 01.28.17 | | Annual Nominal Fixed at 9% | | 01.14.11 | | | 2,024,736 | | Tarjeta Naranja S.A. | | 02.26.14 | | $ | | XXIV Series II | | $ | 33,500 | | | Simple | | 1,096 days | | 02.26.17 | | Variable Badlar + 5% | | 02.14.14 | | | 63,583 | | Tarjeta Naranja S.A. | | 01.22.15 | | $ | | XXVIII Series II | | $ | 129,000 | | | Simple | | 731 days | | 01.22.17 | | Variable Badlar + 4.5% | | 01.09.15 | | | 48,759 | | Tarjeta Naranja S.A. | | 04.27.15 | | $ | | XXIX | | $ | 334,030 | | | Simple | | 731 days | | 04.27.17 | | 27.75% Mixed Rate/ Badlar + 4.5% | | 04.16.15 | | | 320,917 | | Tarjeta Naranja S.A. | | 06.29.15 | | $ | | XXX | | $ | 400,000 | | | Simple | | 731 days | | 06.29.17 | | 27.75% Mixed Rate/ Badlar + 4.5% | | 06.18.15 | | | 620,374 | | Tarjeta Naranja S.A. | | 10.19.15 | | $ | | XXXI | | $ | 370,851 | | | Simple | | 548 days | | 04.19.17 | | 27% Mixed Rate/Badlar + 4.5% | | 10.07.15 | | | 348,211 | | Tarjeta Naranja S.A. | | 01.20.16 | | $ | | XXXII | | $ | 260,811 | | | Simple | | 639 days | | 10.20.17 | | Variable Badlar +4.5% | | 12.15.15 | | | 293,380 | | Tarjeta Naranja S.A. | | 04.13.16 | | $ | | XXXIII Series I | | $ | 133,092 | | | Simple | | 548 days | | 10.13.17 | | Minimum 37% Rate/Badlar +4.5% | | 03.28.16 | | | 231,198 | | Tarjeta Naranja S.A. | | 04.13.16 | | $ | | XXXIII Series II | | $ | 366,908 | | | Simple | | 1,095 days | | 04.13.19 | | Minimum 37% Rate/Badlar +5.4% | | 03.28.16 | | | 704,916 | | Tarjeta Naranja S.A. | | 06.29.16 | | $ | | XXXIV Series I | | $ | 124,603 | | | Simple | | 548 days | | 12.29.17 | | Minimum 32% Rate/Badlar +3.38% | | 06.21.16 | | | 192,226 | | Tarjeta Naranja S.A. | | 06.29.16 | | $ | | XXXIV Series II | | $ | 475,397 | | | Simple | | 1,461 days | | 06.29.20 | | Minimum 32% Rate/Badlar +4.67% | | 06.21.16 | | | 859,445 | | Tarjeta Naranja S.A. | | 09.27.16 | | $ | | XXXV Series I | | $ | 225,611 | | | Simple | | 546 days | | 03.27.18 | | Minimum 26% Rate/Badlar +2.99% | | 09.15.16 | | | 413,913 | | Tarjeta Naranja S.A. | | 09.27.16 | | $ | | XXXV Series II | | $ | 774,389 | | | Simple | | 1,461 days | | 09.27.20 | | Minimum 26% Rate/Badlar +3.99% | | 09.15.16 | | | 1,385,944 | | Tarjeta Naranja S.A. | | 12.07.16 | | $ | | XXXVI Series I | | $ | 210,571 | | | Simple | | 547 days | | 06.07.18 | | Minimum 25.25% Rate/Badlar +3.25% | | 11.23.16 | | | 360,637 | | Tarjeta Naranja S.A. | | 12.07.16 | | $ | | XXXVI Series II | | $ | 636,409 | | | Simple | | 1,095 days | | 12.07.19 | | Minimum 25.25% Rate/Badlar +4% | | 11.23.16 | | | 1,023,720 | | Carry-foward | | | | | | | | | | | | | | | | | | | | | | | 18,217,050 | |
F-53
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Company | | Date of Placement | | Currency | | Class ON. | | Face Value | | | Type(**) | | Term | | Maturity Date | | Rate | | Issuance Authorized by the C.N.V. | | Carrying Amount(*) as of 01.01.2017 | | Carry-back | | | | | | | | | | | | | | | | | | | | | | | 18,217,050 | | Tarjeta Naranja S.A.(***) | | 02.20.15 | | $ | | XIX Series II | | $ | 75,555 | | | Simple | | 731 days | | 02.20.17 | | Variable Badlar + 4.95% | | 02.06.15 | | | 19,218 | | Tarjeta Naranja S.A.(***) | | 08.12.15 | | $ | | XXI | | $ | 232,000 | | | Simple | | 550 days | | 02.12.17 | | Variable Badlar +4.5% | | 07.29.15 | | | 381,218 | | Tarjeta Naranja S.A.(***) | | 11.13.15 | | $ | | XXII | | $ | 300,000 | | | Simple | | 547 days | | 05.13.17 | | Variable Badlar + 4.25% | | 11.03.15 | | | 570,817 | | Tarjeta Naranja S.A.(***) | | 03.16.16 | | $ | | XXIII | | $ | 242,000 | | | Simple | | 549 days | | 09.16.17 | | Minimum 35.25% Rate/Badlar +4.99% | | 03.07.16 | | | 302,381 | | Tarjeta Naranja S.A.(***) | | 05.05.16 | | $ | | XXIV Series I | | $ | 65,691 | | | Simple | | 549 days | | 11.05.17 | | Minimum 37% Rate/Badlar +4.08% | | 04.22.16 | | | 125,645 | | Tarjeta Naranja S.A.(***) | | 05.05.16 | | $ | | XXIV Series II | | $ | 234,309 | | | Simple | | 1,095 days | | 05.05.19 | | Minimum 37% Rate/Badlar + 4.98% | | 04.22.16 | | | 354,070 | | Tarjeta Naranja S.A.(***) | | 07.26.16 | | $ | | XXV | | $ | 400,000 | | | Simple | | 1,461 days | | 07.26.20 | | Minimum 30% Rate/Badlar + 3.94% | | 07.13.16 | | | 677,665 | | Tarjeta Naranja S.A.(***) | | 10.24.16 | | $ | | XXVI Series I | | $ | 149,763 | | | Simple | | 547 days | | 04.24.18 | | Minimum 26% Rate/Badlar + 2.75% | | 10.14.16 | | | 289,314 | | Tarjeta Naranja S.A.(***) | | 10.24.16 | | $ | | XXVI Series II | | $ | 350,237 | | | Simple | | 1,461 days | | 10.24.20 | | Minimum 26% Rate/Badlar + 4% | | 10.14.16 | | | 676,589 | | Tarjetas del Mar S.A. | | 02.19.16 | | $ | | I | | $ | 150,000 | | | Simple | | 18 Months | | 08.19.17 | | Variable Badlar +4.5% | | 02.04.16 | | | 234,493 | | Total | | | | | | | | | | | | | | | | | | | | | | | 21,848,460 | |
(*) It includes principal and interest.
(**) Not convertible into shares.
(1) Annual nominal 27% fixed rate during the first nine months, and variable Badlar plus an annual 4.25% rate for the following 15 months.
(2) On May 4, 2017, Banco Galicia redeemed all outstanding negotiable obligations due 2018, at a price equal to 100% of their residual face value, plus accrued interest up to, but excluding, the redemption date.
(3) The net proceeds from this issuance of negotiable obligations was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Negotiable Obligations and the Argentine Central Bank regulations.
| (*) | It includes principal and interest. |
| (**) | Not convertible into shares. |
| (***) | Negotiable Obligations merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A. |
| (1) | In accordance with the issuance conditions, they were converted into Ps. 2,360,360. The foreign exchange risk is assumed by the investor because the services of interest and principal are calculated based on the amount of principal in Argentine pesos and converted into payments in US dollars on each payment date. |
| (2) | Issued under the Frequent Issuer Regime. |
The repurchases of Own Debt securities as of the indicated dates are as follows: | Company | | ON Class | | Face Value as of 12.31.18 | | | Carrying Amount(*) as of 12.31.18 | | | ON Class | | | Nominal Value as of
12.31.20 | | | Book Value(*) as of
12.31.20 | | Banco de Galicia y Buenos Aires S.A.U. | | Class III | | | 2,335 | | | | 36,437 | | | | V Serie II | | | | 5,000 | | | | 5,330 | | Banco de Galicia y Buenos Aires S.A.U. | | Class V – Series II | | | 48,000 | | | | 47,178 | | | | VIII | | | | 79,000 | | | | 82,207 | | Tarjeta Naranja S.A. | | Class XXXV Series II | | | 51,500 | | | | 49,783 | | | | XXXVII | | | | 9,620 | | | | 106,451 | | Tarjeta Naranja S.A. | | Class XXXVI Series II | | | 10,000 | | | | 10,546 | | | | XLIV | | | | 235,000 | | | | 252,052 | | Tarjeta Naranja S.A. | | Class XXXVII | | | 11,783 | | | | 184,535 | | | | XLV | | | | 440,000 | | | | 443,520 | | Tarjeta Naranja S.A. | | Class XXXVIII | | | 3,870 | | | | 4,135 | | | Tarjeta Naranja S.A. | | Class XXXIX | | | 5,000 | | | | 5,351 | | | Tarjeta Naranja S.A. | | Class XL | | | 16,000 | | | | 17,504 | | | Tarjeta Naranja S.A. | | Class XLI Series I | | | 1,000 | | | | 936 | | | Tarjeta Naranja S.A. | | Class XLI Series II | | | 19,000 | | | | 20,227 | | | Tarjeta Naranja S.A. | | Class XLII | | | 50,000 | | | | 54,389 | | | Tarjeta Naranja S.A.(**) | | Class XXIV Series II | | | 80,000 | | | | 82,947 | | | | XXVIII Serie II | | | | 18,889 | | | | 19,398 | | Tarjeta Naranja S.A.(**) | | Class XXV Series II | | | 9,000 | | | | 8,984 | | | Tarjeta Naranja S.A.(**) | | Class XXVI Series II | | | 25,000 | | | | 27,027 | | | Tarjeta Naranja S.A.(**) | | Class XXVII Series I | | | 36,761 | | | | 37,282 | | | Tarjeta Naranja S.A.(**) | | Class XXVII Series II | | | 5,488 | | | | 5,757 | | | Tarjeta Naranja S.A.(**) | | Class XXVIII Series II | | | 8,254 | | | | 8,501 | | | | | | | | | | | | Total | | | | | | | | | 601,519 | | | | | | | | 908,958 | | | | | | | | | | |
(*) It includes principal and interest. (**) Debt securities merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A. F-54
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | Company | | ON Class | | | Nominal Value as of
12.31.19 | | | Book Value(*) as
of 12.31.19 | | Banco de Galicia y Buenos Aires S.A.U. | | | V Series II | | | | 5,000 | | | | 7,330 | | Tarjeta Naranja S.A. | | | XXXV Series II | | | | 38,500 | | | | 50,473 | | Tarjeta Naranja S.A. | | | XXXVII | | | | 1,468 | | | | 34,075 | | Tarjeta Naranja S.A. | | | XL Series II | | | | 34,500 | | | | 43,535 | | Tarjeta Naranja S.A. | | | XLI Series II | | | | 15,000 | | | | 21,716 | | Tarjeta Naranja S.A. | | | XLIII | | | | 16,500 | | | | 18,239 | | Tarjeta Naranja S.A.(**) | | | XXV | | | | 8,000 | | | | 11,319 | | Tarjeta Naranja S.A.(**) | | | XXVI Series II | | | | 10,000 | | | | 15,351 | | Tarjeta Naranja S.A.(**) | | | XXVII Series II | | | | 17,442 | | | | 25,330 | | Tarjeta Naranja S.A.(**) | | | XXVIII Series II | | | | 8,254 | | | | 11,535 | | | | | | | | | | | | | | | Total | | | | | | | | | | | 238,903 | | | | | | | | | | | | | | |
Company | | ON Class | | Face Value as of 12.31.17 | | | Carrying Amount(*) as of 12.31.17 | | Banco de Galicia y Buenos Aires S.A.U. | | Class III | | 290 | | | | 6,863 | | Tarjeta Naranja S.A. | | Class XXXIII Series II | | | 13,231 | | | | 21,313 | | Tarjeta Naranja S.A. | | Class XXXIV Series II | | | 2,111 | | | | 3,270 | | Tarjeta Naranja S.A. | | Class XXXV Series II | | | 15,500 | | | | 23,786 | | Tarjeta Naranja S.A. | | Class XXXVI Series I | | | 2,000 | | | | 2,984 | | Tarjeta Naranja S.A. | | Class XXXVI Series II | | | 20,000 | | | | 31,372 | | Tarjeta Naranja S.A. | | Class XXXVIII | | | 2,000 | | | | 3,040 | | Tarjeta Naranja S.A.(**) | | Class XXIV Series II | | | 35,000 | | | | 55,333 | | Tarjeta Naranja S.A.(**) | | Class XXVI Series II | | | 60,540 | | | | 94,889 | | Tarjeta Naranja S.A.(**) | | Class XXVII Series II | | | 2,871 | | | | 4,251 | | Tarjeta Naranja S.A.(**) | | Class XXVIII Series II | | | 66,659 | | | | 106,851 | | Total | | | | | | | | | 353,952 | |
(*) It includes principal and interest.
(**) Debt securities merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A.
Company | | ON Class | | Face Value as of 01.01.17 | | | Carrying Amount(*) as of 01.01.17 | | Grupo Financiero Galicia S.A. | | VII | | | 3,000 | | | | 5,776 | | Banco de Galicia y Buenos Aires S.A.U. | | - | | US$ 7,865 | | | | 241,671 | | Tarjeta Naranja S.A. | | XIII | | US$ 3,998 | | | | 40,031 | | Tarjeta Naranja S.A. | | XXVIII Series II | | | 35,000 | | | | 22,463 | | Tarjeta Naranja S.A. | | XXIX | | | 3,500 | | | | 6,729 | | Tarjeta Naranja S.A. | | XXX | | | 65,900 | | | | 119,696 | | Tarjeta Naranja S.A. | | XXXI | | | 20,730 | | | | 40,109 | | Tarjeta Naranja S.A. | | XXXII | | | 109,257 | | | | 211,429 | | Tarjeta Naranja S.A. | | XXXIII Series I | | | 14,000 | | | | 27,250 | | Tarjeta Naranja S.A. | | XXXIII Series II | | | 3,184 | | | | 6,335 | | Tarjeta Naranja S.A. | | XXXIV Series I | | | 20,000 | | | | 36,717 | | Tarjeta Naranja S.A. | | XXXIV Series II | | | 6,111 | | | | 11,286 | | Tarjeta Naranja S.A. | | XXXV Series II | | | 17,500 | | | | 32,460 | | Tarjeta Naranja S.A. | | XXXVI Series I | | | 16,610 | | | | 30,984 | | Tarjeta Naranja S.A. | | XXXVI Series II | | | 85,228 | | | | 159,460 | | Tarjeta Naranja S.A.(**) | | XIX Series II | | | 65,500 | | | | 123,871 | | Tarjeta Naranja S.A.(**) | | XXI | | | 31,383 | | | | 60,648 | | Tarjeta Naranja S.A.(**) | | XXIII | | | 79,243 | | | | 148,408 | | Tarjeta Naranja S.A.(**) | | XXIV Series II | | | 49,000 | | | | 94,683 | | Tarjeta Naranja S.A.(**) | | XXV | | | 52,000 | | | | 99,338 | | Tarjetas del Mar S.A. | | I | | | 30,259 | | | | 56,736 | | Total | | | | | | | | | 1,576,080 | |
(*) It includes principal and interest.
(**) Debt securities merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A.
| (*) | It includes principal and interest. |
| (**) | Debt securities merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A. |
Related-party information is disclosed in Note 52.51. NOTE 29.28. SUBORDINATED DEBT SECURITIES The Company has the following subordinated debt securities not convertible into shares issued under the Global Programs detailed in Note 2827 as of the close of the fiscal year: | Company | | Date of Placement | | Currency | | ON Class | | | Face Value | | Term | | Maturity Date | | | Rate | | Issuance Authorized by the C.N.V. | | Carrying Amount as of 12.31.18(*) | | | Placement Date | | Currency | | ON Class | | Nominal Value | | | Term | | Maturity
Date | | | Rate | | Issuance
Authorized
by the
CNV | | | Book Value
as of
12.31.20(*) | | Banco de Galicia y Bs. As. S.A.U. | | 07.19.16 | | US$ | | | - | | | US$ 250,000 | | 120 months(1) | | | - | | | (2)(3) | | 06.23.16 | | | 9,767,874 | | | 07.19.16 | | USD | | II | | | USD250,000 | | | | 120 months | (1) | | 07.19.26 | | | | (2 | ) | | 06.23.16 | | | | 21,653,546 | | | | | | | | | | | | | | | | | | | | | | |
(*) | It includes principal and interest. |
(1) | Amortization shall be fully made upon maturity, on July 19, 2026, unless redeemed, at the issuer’s option, fully at a price equal to 100% of the outstanding principal plus accrued and unpaid interest. |
(2) | Fixed 8.25% rate p.a. (as from the issuance date to July 19, 2021, inclusively); and margin to be added to the nominal Benchmark Readjustment Rate of 7.156% p.a. to the due date of Debt securities. Such interest shall be payable semiannually on January 19 and July 19 as from 2017. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Company | | Placement Date | | | Currency | | | ON Class | | | Nominal Value | | | Term | | | Maturity
Date | | | Rate | | | Issuance
Authorized
by the
CNV | | | Book Value
as of
12.31.19(*) | | Banco de Galicia y Bs. As. S.A.U. | | | 07.19.16 | | | | USD | | | | II | | | | USD250,000 | | | | 120 months | (1) | | | 07.19.26 | | | | (2 | ) | | | 06.23.16 | | | | 21,100,718 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(3)
(*) | The net proceeds from this issuance of debt securities was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Debt securities and the Argentine Central Bank regulations.
|
F-55
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Company | | Date of Placement | | Currency | | ON Class | | | Face Value | | Term | | Maturity Date | | | Rate | | Issuance Authorized by the C.N.V. | | Carrying Amount as of 12.31.17(*) | | Banco de Galicia y Bs. As. S.A.U. | | 07.19.16 | | US$ | | | - | | | US$ 250,000 | | 120 months(1) | | | - | | | (2)(3) | | 06.23.16 | | | 7,128,356 | |
(*)
| It includes principal and interest. |
(1) | Amortization shall be fully made upon maturity, on July 19, 2026, unless redeemed, at the issuer’s option, fully at a price equal to 100% of the outstanding principal plus accrued and unpaid interest. |
(2) | Fixed 8.25% rate p.a. (as from the issuance date to July 19, 2021, inclusively); and margin to be added to the nominal Benchmark Readjustment Rate of 7.156% p.a. until the date of Date Securities.. Such interest shall be payable semiannually on January 19 and July 19 as from 2017.
|
(3)
| The net proceeds from this issuance of debt securities was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Debt securities and the Argentine Central Bank regulations.
|
Company | | Date of Placement | | Currency | | ON Class | | | Face Value | | Term | | Maturity Date | | | Rate | | Issuance Authorized by the C.N.V. | | Carrying Amount as of 01.01.17(*) | | Banco de Galicia y Bs. As. S.A.U. | | 07.19.16 | | US$ | | | - | | | US$ 250,000 | | 120 months(1) | | | - | | | (2)(3) | | 06.23.16 | | | 7,490,444 | |
(*)
| It includes principal and interest.
|
(1)
| Amortization shall be fully made upon maturity, on July 19, 2026, unless redeemed, at the issuer’s option, fully at a price equal to 100% of the outstanding principal plus accrued and unpaid interest.
|
(2)
| Fixed 8.25% rate p.a. (as from the issuance date to July 19, 2021, inclusively); and margin to be added to the nominal Benchmark Readjustment Rate of 7.156% p.a. to the due date of Debt securities. Such interest shall be payable semiannually on January 19 and July 19 as from 2017. |
The net proceeds from this issuance of debt securities was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Debt securities and the Argentine Central Bank regulations. (3)
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | The net proceeds from this issuance of debt securities was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Debt securities and the Argentine Central Bank regulations.
|
NOTE 30.29. PROVISIONS The account breaks down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | For Administrative, Disciplinary and Criminal Penalties | | | 5,306 | | | | 7,357 | | | | 10,134 | | For Termination Benefits | | | 86,926 | | | | 109,295 | | | | 83,322 | | Others | | | 1,357,091 | | | | 780,608 | | | | 615,757 | | Total | | | 1,449,323 | | | | 897,260 | | | | 709,213 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | For Administrative, Disciplinary and Criminal Penalties | | | 5,306 | | | | 7,224 | | For Termination Benefits | | | 220,824 | | | | 233,287 | | Others | | | 3,550,167 | | | | 3,499,223 | | | | | | | | | | | Total | | | 3,776,297 | | | | 3,739,734 | | | | | | | | | | |
Changes in the "Provisions"“Provisions” account for FY 2018fiscal year 2020 are detailed in Schedule J. See Note 4746 for further details. Changes for FY 2017 are disclosed below:
| | | | | | | | | | Decreases | | | | | | | | | | Item | | Balances at Beginning of Year | | | Increases | | | Reversals | | | Uses | | | Inflation effect | | | Balances as of 12.31.17 | | Provisions | | | 709,213 | | | | 554,042 | | | | (48,493 | ) | | | (148,917 | ) | | | (168,585 | ) | | | 897,260 | | Total | | | 709,213 | | | | 554,042 | | | | (48,493 | ) | | | (148,917 | ) | | | (168,585 | ) | | | 897,260 | |
NOTE 31.30. OTHER NON-FINANCIAL LIABILITIES The account breaks down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | | | | | Withholdings and Additional Withholdings Payable | | | 2,901,402 | | | | 2,781,222 | | | | 3,212,628 | | | Salaries and Social Security Contributions Payable | | | 2,841,885 | | | | 2,227,181 | | | | 2,153,525 | | | Withholdings Payable on Salaries | | | 185,625 | | | | 160,765 | | | | 205,275 | | | | | | | 12.31.20 | | | 12.31.19 | | Creditors for sale of assets | | | | 594,481 | | | | 601,965 | | Tax withholdings and collections payable | | | | 6,755,148 | | | | 5,193,979 | | Payroll and Social Contributions Payable | | | | 7,057,226 | | | | 6,446,491 | | Withholdings on Payroll Payable | | | | 371,236 | | | | 366,972 | | Fess to Directors and Syndics | | | | 221,520 | | | | 96,834 | | Value-Added Tax | | | 527,563 | | | | 519,125 | | | | 492,704 | | | | 851,232 | | | | 867,885 | | Sundry Creditors | | | 1,601,166 | | | | 3,558,480 | | | | 1,267,562 | | | | 4,447,128 | | | | 4,097,837 | | Liabilities for Assets Held for Sale(*) | | | - | | | | 8,662,306 | | | | 8,662,306 | | | Taxes Payable | | | 1,930,074 | | | | 1,920,028 | | | | 1,390,508 | | | | 3,270,895 | | | | 3,600,729 | | Liabilities Arising from Contracts with Customers | | | 1,071,636 | | | | 1,061,197 | | | | 834,413 | | | Obligations Arising from Contracts with Customers | | | | 1,348,700 | | | | 1,654,612 | | Retirement payment orders pending settlement | | | | 90,588 | | | | 100,941 | | Other Non-financial Liabilities | | | 412,179 | | | | 252,150 | | | | 307,036 | | | | 250,074 | | | | 211,082 | | | | | | | | | | Total | | | 11,471,530 | | | | 21,142,454 | | | | 18,525,957 | | | | 25,258,228 | | | | 23,239,327 | | | | | | | | | |
(*)
| Liabilities of Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A. (See Note 23).
|
F-56
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferred income resulting from contracts with customers includes the liabilities for the “Quiero” Customers Loyalty Program. The Group estimates the fair value of the points assigned to customers under the above-mentioned program. This value is estimated by means of the use of a mathematical model that takes into accountconsiders certain assumptions of redemption rates, the fair value for the exchanged points based on the combination of available products and the customers'customers’ preferences, as well as breakage. As of December 31, 2018, $918,3752020, Ps.1,114,594 was recorded for non-exchanged points, whereas as of December 31, 2017 and January 1, 2017,2019, such amount totaled $1,061,197 and $834,413, respectively.Ps.1,384,660. The following table shows the estimated use of the liabilities recorded as of this fiscal year-end. | | Terms | | | | | | Item | | Up to 12 Months | | | Up to 24 Months | | | Over 24 Months | | | Total | | Liabilities – “Quiero” Customers Loyalty Program | | | 394,901 | | | | 330,615 | | | | 192,859 | | | | 918,375 | |
| | | | | | | | | | | | | | | | | | | | Terms | | Item | | Up to 12
Months | | | Up to 24
Months | | | Over 24
Months | | | Total | | Liabilities – “Quiero” Customers Loyalty Program | | | 632,815 | | | | 271,377 | | | | 210,402 | | | | 1,114,594 | | | | | | | | | | | | | | | | | | |
NOTE 32.31. CAPITAL STOCK The capital stock structure is detailed in Schedule K. The Ordinary and Extraordinary Shareholders’ MeetingDue to the spin-off-merger in Tarjetas Regionales S.A. non-controlling interest, mentioned in Note 15.1, the Company increased its capital by 47,927,494 Class B shares.
On March 16, 2021 the capital increase of Grupo Financiero Galicia S.A. held on August 15, 2017 decided to approve an increase in capital stock by means of the issuance of up to 150,000,000 ordinary book-entry Class “B” shares, entitled to one vote per share and with a face value of $1 each. These shares are entitled to dividends with the same rights to the shares outstanding at the time of the issuance. On September 7, 2017, the Board of Directors of the C.N.V., by means of Joint Resolution No. RESFC-2017-18927-APN-DIR#CNV, decided to authorize the public offering of 130,434,600 ordinary book-entry Class “B” shares, with a face value of $1 and one vote per share and, in case of over-subscription, an increase in such offering up to 19,565,190 ordinary book-entry Class “B” shares, with a face value of $1 and one vote each to be offered for public subscription, with preemptive and accretion rights.
The primary offering year ended on September 26, 2017, with 109,999,996 Class “B” shares having been subscribed at a price of US$5 each. On September 29, 2017, such shares were issued and integrated.
The Company granted over-subscription rights to international placement agents who, on October 2, 2017, enforced such rights and were awarded additional 16,500,004 Class “B” shares at a price of US$5 each, the issuance and payment of which took place on October 4, 2017.
The capital increase amounted to $11,004,383 (which is equal to $17,212,307 as of December 31, 2018), the expenses related thereto amounted to $146,347 (which is equal to $229,358 as of December 31, 2018) and were deducted from additional paid-in capital.
On November 8, 2017, the capital increase was registered with the Public Registry of Commerce.
The expenses related to the capital increase amounted to Ps. 13,149 and are deducted from the share premium. The Company has no own shares in portfolio. The Company'sCompany’s shares are listed on Bolsas y Mercados Argentinos (BYMA), Mercado Abierto Electrónico S.A. (MAE) and the National Association of Securities Dealers Automated Quotation (NASDAQ). NOTE 33.32. INCOME STATEMENT BREAKDOWN Breakdown of: Interest Income, Fee Income and Net Income from Financial Instruments Measured at Fair Value through Profit or Loss are detailed in Schedule Q. NOTE 34.33. EXCHANGE RATE DIFFERENCES ON GOLD AND FOREIGN CURRENCY QUOTATION DIFFERENCES The account breaks down as follows as of the indicated dates: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | Arising from: | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | For Purchase sale of foreign currency | | | 5,958,974 | | | | 17,214,089 | | | | 12,543,415 | | For Valuation of Assets and Liabilities in Foreign Currency | | | 1,088,473 | | | | (5,382,637 | ) | | | (4,633,158 | ) | | | | | | | | | | | | | | Total | | | 7,047,447 | | | | 11,831,452 | | | | 7,910,257 | | | | | | | | | | | | | | |
NOTE 34. OTHER OPERATING INCOME The account breaks down as follows as of the indicated dates: Originated by: | | 12.31.18 | | | 12.31.17 | | Foreign Currency Brokerage | | | 5,989,359 | | | | 2,942,860 | | Valuation of Foreign Currency Assets and Liabilities | | | (2,212,288 | ) | | | 536,001 | | Total | | | 3,777,071 | | | | 3,478,861 | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Fees for Product Package | | | 6,296,738 | | | | 5,684,656 | | | | 5,719,226 | | Other Adjustments and Interest on sundry Credits | | | 5,246,030 | | | | 3,110,290 | | | | 3,349,720 | | Rental of Safety Deposit Boxes | | | 1,295,199 | | | | 1,010,452 | | | | 1,080,908 | | Other Financial Income | | | 579,211 | | | | 1,577,962 | | | | 353,035 | | Other Income from Services | | | 4,237,539 | | | | 3,341,244 | | | | 6,176,597 | | Income for sale of non-currents assets held for sale(1) | | | — | | | | 9,676,346 | | | | 1,027,022 | | Others | | | 4,667,914 | | | | 4,368,482 | | | | 4,156,472 | | | | | | | | | | | | | | | Total | | | 22,322,631 | | | | 28,769,432 | | | | 21,862,980 | | | | | | | | | | | | | | |
| (1) | Includes the profit on sale of the interest in Prisma Medios de Pago S.A. See Note 14. |
F-57
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 35. OTHER OPERATINGUNDERWRITING INCOME FROM INSURANCE BUSINESS The account breaks down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | Commission on Product Package | | | 2,730,875 | | | | 2,803,596 | | Other Adjustments and Interest from Miscellaneous Receivables | | | 1,599,459 | | | | 456,234 | | Rental of Safe Deposit Boxes | | | 516,123 | | | | 512,318 | | Other Financial Income | | | 168,571 | | | | 58,113 | | Other Income from Services | | | 4,081,817 | | | | 3,176,518 | | Others | | | 2,475,068 | | | | 1,989,853 | | Total | | | 11,571,913 | | | | 8,996,632 | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Premiums and Surcharges Accrued | | | 7,789,375 | | | | 7,607,216 | | | | 9,816,413 | | Claims Accrued | | | (1,126,864 | ) | | | (1,052,763 | ) | | | (1,122,301 | ) | Redemptions | | | (16,844 | ) | | | (18,273 | ) | | | (12,084 | ) | Fixed and Periodic Annuities | | | (13,588 | ) | | | (15,758 | ) | | | (17,887 | ) | Production and Operating Expenses | | | (1,064,782 | ) | | | (1,515,532 | ) | | | (2,691,169 | ) | Other Income and Expenses | | | (65,490 | ) | | | (4,021 | ) | | | 36,195 | | | | | | | | | | | | | | | Total | | | 5,501,807 | | | | 5,000,869 | | | | 6,009,167 | | | | | | | | | | | | | | |
NOTE 36. UNDERWRITING INCOME FROM INSURANCE BUSINESS The account breaks down as follows as of the indicated dates:
| | 12.31.18 | | | 12.31.17 | | Premiums and Surcharges Accrued | | | 4,687,242 | | | | 5,260,902 | | Claims Accrued | | | (535,888 | ) | | | (604,908 | ) | Surrenders | | | (5,770 | ) | | | (7,564 | ) | Life and Ordinary Annuities | | | (8,541 | ) | | | (9,182 | ) | Underwriting and Operating Expenses | | | (1,285,007 | ) | | | (1,299,507 | ) | Other Income and Expenses | | | 17,283 | | | | (24,829 | ) | Total | | | 2,869,319 | | | | 3,314,912 | |
NOTE 37. LOAN LOSS PROVISION
The changes in the loss allowance between the beginning and the end of the annual period are detailed in Note 46. 45. NOTE 38.37. PERSONNEL EXPENSES The following are the items included in the account as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | Salaries | | | 11,657,815 | | | | 11,513,774 | | Social Security Contributions on Salaries | | | 1,715,592 | | | | 1,840,448 | | Severance Payments and Personnel Bonuses | | | 2,730,047 | | | | 2,908,611 | | Personnel Services | | | 538,941 | | | | 448,431 | | Other Short-term Employee Benefits | | | 328,052 | | | | 377,408 | | Other Long-term Employee Benefits | | | 55,800 | | | | - | | Total | | | 17,026,247 | | | | 17,088,672 | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Payroll | | | 19,789,826 | | | | 20,504,481 | | | | 24,414,768 | | Social Contributions on Payroll | | | 4,553,002 | | | | 4,500,774 | | | | 3,592,936 | | Personnel Compensations and Rewards | | | 5,811,760 | | | | 6,424,341 | | | | 5,717,492 | | Services for Personnel | | | 765,223 | | | | 972,727 | | | | 1,128,695 | | Other Short-term Personnel Expenses | | | 781,545 | | | | 746,668 | | | | 687,034 | | Other Long-term Personnel Expenses | | | 123,745 | | | | 135,970 | | | | 116,861 | | | | | | | | | | | | | | | Total | | | 31,825,101 | | | | 33,284,961 | | | | 35,657,786 | | | | | | | | | | | | | | |
NOTE 39.38. ADMINISTRATIVE EXPENSES The Group presented its statement of comprehensive income by function. Under this method, expenses are classified according to their function as part of the item “Administrative Expenses”. The table below provides the required additional information about expenses by nature and function as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | Fees and Compensation for Services | | | 1,216,542 | | | | 518,772 | | Directors’ and Syndics' Fees | | | 174,191 | | | | 134,483 | | Advertising and Publicity | | | 1,278,061 | | | | 1,237,729 | | Taxes | | | 3,369,396 | | | | 3,522,967 | | Maintenance and Repairs | | | 1,415,585 | | | | 1,035,880 | | Electricity and Communications | | | 961,421 | | | | 920,058 | | Entertainment and Transportation Expenses | | | 102,326 | | | | 130,526 | | Stationery and Office Supplies | | | 210,613 | | | | 201,747 | | Rentals | | | 826,357 | | | | 738,382 | | Administrative Services Hired | | | 1,293,996 | | | | 1,286,759 | | Security | | | 558,520 | | | | 624,814 | | Insurance | | | 454,476 | | | | 455,360 | | Others | | | 4,217,670 | | | | 3,616,080 | | Total | | | 16,079,154 | | | | 14,423,557 | |
F-58
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Fees and Remunerations for Services | | | 2,722,767 | | | | 3,980,217 | | | | 2,547,784 | | Directors’ and Syndics’ Fees | | | 472,614 | | | | 222,405 | | | | 364,805 | | Advertising and Publicity | | | 1,742,441 | | | | 2,959,534 | | | | 2,676,622 | | Taxes | | | 7,362,438 | | | | 7,051,537 | | | | 7,056,470 | | Maintenance and Repairs of Assets and Systems | | | 5,295,507 | | | | 4,911,367 | | | | 2,964,636 | | Electricity and Communications | | | 2,371,181 | | | | 2,484,059 | | | | 2,013,488 | | Representation and Travel Expenses | | | 58,367 | | | | 172,242 | | | | 214,300 | | Stationery and Office Supplies | | | 419,380 | | | | 513,980 | | | | 441,083 | | Rentals | | | 308,848 | | | | 135,793 | | | | 1,730,626 | | Administrative Services under Contract | | | 4,230,573 | | | | 3,369,599 | | | | 2,709,994 | | Security | | | 1,162,314 | | | | 1,332,404 | | | | 1,169,699 | | Insurance | | | 251,297 | | | | 179,940 | | | | 951,802 | | Armored Transportation Services | | | 1,559,087 | | | | 2,803,034 | | | | 2,367,736 | | Others | | | 3,414,808 | | | | 2,989,088 | | | | 6,465,260 | | | | | | | | | | | | | | | Total | | | 31,371,622 | | | | 33,105,199 | | | | 33,674,305 | | | | | | | | | | | | | | |
NOTE 40.39. DEPRECIATION AND IMPAIRMENT OF ASSETS The account breaks down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | Depreciation of Property, Plant and Equipment | | | 1,115,673 | | | | 1,040,438 | | Amortization of Organization and Development Expenses | | | 533,430 | | | | 394,885 | | Others | | | 2,872 | | | | 4,117 | | Total | | | 1,651,975 | | | | 1,439,440 | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Depreciation of Property, Plant and Equipment | | | 5,173,340 | | | | 4,979,957 | | | | 2,336,535 | | Amortization of Organization and Development Expenses | | | 2,989,613 | | | | 1,909,413 | | | | 1,117,154 | | Others | | | 121,333 | | | | 5,574 | | | | 6,015 | | | | | | | | | | | | | | | Total | | | 8,284,286 | | | | 6,894,944 | | | | 3,459,704 | | | | | | | | | | | | | | |
NOTE 41.40. OTHER OPERATING EXPENSES The account breaks down as follows as of the indicated dates: | | 12.31.18 | | | 12.31.17 | | Turnover Tax | | | 8,647,616 | | | | 6,976,566 | | Contributions to the Guarantee Fund | | | 510,843 | | | | 438,487 | | Charges for Other Provisions | | | 1,056,171 | | | | 360,530 | | Claims | | | 310,406 | | | | 199,172 | | Other Financial Income | | | 546,541 | | | | 319,634 | | Other Expenses from Services | | | 5,069,626 | | | | 4,796,835 | | Others | | | 757,862 | | | | 1,514,002 | | Total | | | 16,899,065 | | | | 14,605,226 | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Turnover Tax | | | 15,662,817 | | | | 17,813,939 | | | | 18,110,558 | | Contributions to the Deposit Insurance Scheme | | | 1,059,292 | | | | 1,175,021 | | | | 1,069,850 | | Charges for Other Provisions | | | 2,868,794 | | | | 2,314,952 | | | | 2,211,921 | | Claims | | | 375,311 | | | | 457,762 | | | | 650,078 | | Other Financial Expenses | | | 286,002 | | | | 2,498,764 | | | | 1,144,612 | | Interest on leases | | | 398,850 | | | | 511,138 | | | | - | | Credit-card-relates expenses | | | 4,486,875 | | | | 6,046,394 | | | | 6,161,264 | | Other Expenses from Services | | | 3,920,476 | | | | 2,978,819 | | | | 4,455,969 | | Others | | | 1,705,344 | | | | 1,286,029 | | | | 1,587,179 | | | | | | | | | | | | | | | Total | | | 30,763,761 | | | | 35,082,818 | | | | 35,391,431 | | | | | | | | | | | | | | |
NOTE 42.41. INCOME TAX/DEFERRED TAX The following is a reconciliation of income tax charged to income as of December 31, 2018,2020, as compared to the previous fiscal year: | | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Income Before Income Tax for the Year | | | 43,022,883 | | | | 51,046,575 | | | | 6,339,833 | | Current Tax Rate | | | 30 | % | | | 30 | % | | | 30 | % | | | | | | | | | | | | | | Income for the Year at Tax Rate | | | (12,906,866 | ) | | | (15,313,973 | ) | | | (1,901,950 | ) | Permanent Differences at Tax Rate | | | | | | | | | | | | | - Income for Equity Instruments | | | (37,516 | ) | | | - | | | | 434,390 | | - Untaxed Income | | | 166,909 | | | | 130,190 | | | | 378,202 | | - Donations and Other Non-deductible Expenses | | | (32,018 | ) | | | (21,627 | ) | | | (138,057 | ) | - Other | | | (3,001,548 | ) | | | (83,089 | ) | | | (851,579 | ) | - Allowance for Impairment | | | - | | | | - | | | | (3,954 | ) | - Inflation effect | | | (10,569,560 | ) | | | (12,260,928 | ) | | | (13,426,074 | ) | - Tax Adjustment under Law 27430 | | | 695,456 | | | | (116,806 | ) | | | 965,898 | | - Tax inflation adjustment | | | 2,895,013 | | | | 1,680,922 | | | | - | | - Tax inflation adjustment deferral | | | 5,090,717 | | | | 7,914,419 | | | | - | | | | | | | | | | | | | | | Total Income Tax Charge for the Year | | | (17,699,413 | ) | | | (18,070,892 | ) | | | (14,543,124 | ) | | | | | | | | | | | | | |
| | 12.31.18 | | | 12.31.17 | | Income for the Year Before Income Tax | | | (3,027,209 | ) | | | (14,483,807 | ) | Effective Tax Rate | | | 30 | % | | | 35 | % | Income (Loss) for the Year at the Tax Rate | | | (908,163 | ) | | | (5,069,332 | ) | Permanent Differences at the Tax Rate | | | | | | | | | - Income (Loss) from Equity Instruments | | | 207,417 | | | | 93,519 | | - Non-taxable Income (Loss) | | | 180,588 | | | | 94,244 | | - Donations and Other Non-deductible Expenses | | | (65,921 | ) | | | (82,312 | ) | - Other | | | (406,621 | ) | | | (302,991 | ) | - Allowance for Impairment | | | (1,888 | ) | | | 211,250 | | - Fines | | | - | | | | (63 | ) | - Inflation effect | | | (6,410,820 | ) | | | (3,303,793 | ) | - Law 27430 Rate Adjustment | | | 461,207 | | | | 718,691 | | Total Income Tax Charge for the Year | | | (6,944,201 | ) | | | (7,640,787 | ) |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | 12.31.18 | | | 12.31.17 | | Current Income Tax | | | (6,921,400 | ) | | | (6,971,658 | ) | Deferred Tax Charge(*) | | | 397,187 | | | | (730,095 | ) | Allowance for Impairment(*) | | | (1,888 | ) | | | 211,250 | | Adjustment to Prior-Year Tax Return | | | (82,340 | ) | | | (151,496 | ) | Law 27430 Adjustment | | | (335,760 | ) | | | 1,212 | | Total Income Tax Charge for the Year | | | (6,944,201 | ) | | | (7,640,787 | ) |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Current Income Tax | | | (26,644,905 | ) | | | (20,759,986 | ) | | | (14,495,373 | ) | Deferred Tax Charge(*) | | | 8,274,837 | | | | 2,751,269 | | | | 831,822 | | Allowance for Impairment(*) | | | — | | | | — | | | | (3,954 | ) | Tax Return adjustment from previous fiscal year | | | 670,655 | | | | (62,175 | ) | | | (172,442 | ) | Law 27430 adjustment | | | — | | | | — | | | | (703,177 | ) | | | | | | | | | | | | | | Total Income Tax Charge for the Year | | | (17,699,413 | ) | | | (18,070,892 | ) | | | (14,543,124 | ) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Current Income Tax | | | (26,644,905 | ) | | | (20,759,986 | ) | | | (14,495,373 | ) | Tax Advances | | | 11,417,431 | | | | 6,717,751 | | | | 7,254,160 | | | | | | | | | | | | | | | Current Income Tax Liabilities | | | (15,227,474 | ) | | | (14,042,235 | ) | | | (7,241,213 | ) | | | | | | | | | | | | | |
| | 12.31.18 | | | 12.31.17 | | Current Income Tax | | | (6,921,400 | ) | | | (6,971,658 | ) | Tax Advances | | | 3,463,791 | | | | 3,393,129 | | Current Income Tax Liabilities | | | (3,457,609 | ) | | | (3,578,529 | ) |
In September 2017,As of December 31, 2020, several claims filed by Banco Galicia filed with A.F.I.P. both actions for recoveryrefund of income taxthe Income Tax paid in excess for the fiscal years 2014, 2015, 2016, 2017, 2018 and 2016, totaling $433,8152019, for the amounts of Ps.433,815, Ps.459,319, Ps.944,338, Ps.866,842, Ps.3,646,842 and $944,338, respectively.Ps.4,403,712, respectively, were submitted to the Federal Administration of Public Revenue (Administración Federal de Ingresos Públicos, AFIP). These actions were groundedpresentations are based on case lawArgentine jurisprudence that declared unconstitutional certainestablishes the unconstitutionality of the rules and regulations banningdisabling the application of the inflation adjustment for tax purposes, withinflation, resulting in confiscatory situations. As the ensuing confiscatory effects.AFIP delayed its resolution, the corresponding judicial claims were filed. At the closing of these financial statements,Financial Statements, Banco Galicia hasdoes not recorded balances in respect ofrecord assets related to the contingent assets stemmingderived from the aforementioned actions.presentations.
Identical claims were filed by other Group subsidiaries before the AFIP: Tarjeta Naranja S.A., for 2014 and 2016 fiscal years, for a total amount of Ps. 580,164, nominal value. Tarjetas Cuyanas S.A., (Tarjeta Naranja S.A. predecessor company), for 2014 and 2016 fiscal years, for an amount of Ps. 145,478, nominal value, and Tarjetas Regionales S.A., for 2017 and 2018 periods, for an amount of Ps. 326,498 and Ps. 973,843, nominal value, respectively. In light of the delay in the resolution by the AFIP, the corresponding judicial claims were filed. In the same terms as for the rest of the years claimed, on May 26, 2020, Tarjeta Naranja S.A. filed before the AFIP a claim for the repetition of the Income Tax corresponding to fiscal year 2019 for Ps. 1,364,949 in nominal value. Tax Reform On December 29, 2017, the National Executive BranchGovernment enacted Income Tax Law No. 27430. This law has introduced several changes to the previous income tax treatment. Some of the key changes involved in the reform include: F-59
GRUPO FINANCIERO GALICIA S.A.Income Tax Rate: The income tax rate for Argentine companies shall be gradually reduced from 35% to 30% for fiscal years commencing on January 1, 2018 until December 31, 2019, and to 25% for fiscal years commencing on, and including, January 1, 2020.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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| Income Tax Rate: The income tax rate for Argentine companies shall be gradually reduced from 35% to 30% for fiscal years commencing on January 1, 2018 until December 31, 2019, and to 25% for fiscal years commencing on, and including, January 1, 2020.
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| Tax on Dividends: The law has introduced a tax on dividends or profits distributed by Argentine companies or permanent establishments, among others, to: individuals, undivided interests or foreign beneficiaries, subject to the following considerations: (i) dividends distributed out of the profits made during fiscal years commencing on January 1, 2018 until December 31, 2019 shall be subject to withholding at a 7% rate; and (ii) dividends distributed out of the profits made during fiscal years commencing on January 1, 2020 onwards shall be subject to withholding at a 13% rate. |
Dividends distributed from profits earned until the fiscal year before that commenced on January 1, 2018 shall remain subject, in respect of all beneficiaries, to withholding at the 35% rate on the amount in excess of tax-free distributable accumulated profits (equalization tax transition period). -
Optional Tax Revaluation: Regulations establish that, at the companies’ option, the tax revaluation of assets located in the country and that are used for generating taxable income may be made. The special tax on the revaluation amount depends on the asset: 8% is for real estate that does not qualify as inventories, 15% for real estate that qualifies as inventories and 10% for personal property and the remaining assets. Once the option for a given asset is exercised, all the other assets of the same category should be revalued. Taxable income resulting from the revaluation is not subject to income tax and the special tax on the revaluation amount will not be deductible from such tax. On December 23, 2019, the Argentine Government enacted Law 27,541, which introduced several changes for processing the Income Tax: Income tax rate: the reduction is suspended of the tax rate for fiscal years commenced up to January 1, 2021; therefore, for fiscal years closing on December 31, 2020 and December 31, 2021, the rate is established at 30%. Inflation adjustment: The inflation adjustment for the first and second fiscal year commenced January 1, 2019, must be charged one sixth (1/6) in that fiscal period, and the remaining five sixths (5/6), in equal parts, in the following five immediate fiscal periods. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of the closing date of these consolidated financial statements, the Group verified that the parameters established by the Law on Income Tax for the application of the tax inflation adjustment are met; consequently, this adjustment has been considered to determine the income tax for the fiscal year. The effect of the deferral of five-sixths of the inflation taxable income has been recognized as a deferred tax asset. (See Note 19). | Optional Tax Revaluation: Regulations establish that, at the companies' option, the tax revaluation of assets located in the country and that are used for generating taxable income may be made. The special tax on the revaluation amount depends on the asset: 8% is for real estate that does not qualify as inventories, 15% for real estate that qualifies as inventories and 10% for personal property and the remaining assets. Once the option for a given asset is exercised, all the other assets of the same category should be revalued. Taxable income resulting from the revaluation is not subject to income tax and the special tax on the revaluation amount will not be deductible from such tax.
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NOTE 43.42. DIVIDENDS The Ordinary and Extraordinary Shareholders'Shareholders’ Meeting held on April 28, 2020 approved the Financial Statements as of December 31, 2019 and the treatment of income for the fiscal year ended on that date. Said Meeting approved Retained Earnings distribution, allocating Ps. 4,000,000 (equivalent to Ps. 4,977,135 as of December 31, 2020) to Optional Reserve for Future Income Distribution. The Extraordinary Shareholders’ Meeting held on September 22, 2020, approved the partial use of the aforementioned reserve for the amount of Ps. 1,700,000 (equivalent to Ps.1,892,559 as of December 31, 2020) and the distribution of cash dividends for the same amount, which represented Ps. 1.19 (figure expressed in Argentine pesos) per share. On October 5, 2020, the aforementioned dividends were paid to the Company’s Shareholders. The Ordinary and Extraordinary Shareholders’ Meeting held on April 25, 2019 approved the financial statements as of December 31, 2018 and the treatment of income for the fiscal year then ended. The dividends approved by such Shareholders’ Meeting amounted to Ps.2,000,000 (which is equal to Ps.3,622,432 as of December 31, 2020) and represented Ps.1.40 (figure stated in Pesos) per share. The dividends mentioned above were paid to the Group’s shareholders on May 9, 2019. The Ordinary and Extraordinary Shareholders’ Meeting held on April 24, 2018 approved the financial statements as of December 31, 2017 and the treatment of income for the fiscal year then ended. The dividends approved by such Shareholders'Shareholders’ Meeting amounted to $1,200,000Ps.1,200,000 (which is equal to $1,616,849Ps.3,386,137 as of December 31, 2018)2020) and represented $0.84Ps.1.40 (figure stated in Pesos) per share. The dividends mentioned above were paid to the Group'sGroup’s shareholders on May 9, 2018. The Ordinary and Extraordinary Shareholders' Meeting held on April 25, 2017 approved the financial statements as of December 31, 2016 and the treatment of income for the fiscal year then ended.
The dividends approved by such Shareholders' Meeting amounted to $240,000 (which is equal to $405,825 as of December 31, 2017) and represented $0.18 (figure stated in Pesos) per share. The dividends mentioned above were paid to the Group's shareholders on May 9, 2017.
NOTE 44.43. EARNINGS PER SHARE Earnings per share are calculated by dividing income attributable to the Group's shareholdersparent company´s owners by the weighted average number of outstanding commonordinary shares during the year. As the Group does not have preferred shares or debt convertible into shares, basic earnings are equal to diluted earnings per share. | | 12.31.18 | | | 12.31.17 | | Net Income for the Year Attributable to owners of the Parent | | | (3,465,822 | ) | | | 6,793,588 | | Weighted Average Common Shares | | | 1,426,765 | | | | 1,332,617 | | Income per Share | | | (2.43 | ) | | | 5.10 | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Net Income (Loss) for the Year Attributable to Parent Company´s Owners | | | 25,191,673 | | | | 32,276,377 | | | | (7,258,414 | ) | Weighted Average Ordinary Shares | | | 1,442,740 | | | | 1,426,765 | | | | 1,426,765 | | | | | | | | | | | | | | | Earnings per Share | | | 17.46 | | | | 22.62 | | | | (5.09 | ) | | | | | | | | | | | | | |
NOTE 45.44. SEGMENT REPORTING The Group determines segments based on management reports that are reviewed by the Board of Directors and updated as they show changes. Reportable segments are one or more operating segments with similar economic characteristics, distribution channels and regulatory environments. Below there is a description of each business segment’s composition: a. | Banks: It represents the banking business operation results. |
b. | Regional Credit Cards:Ecosistema Naranja X: This segment represents the results of operations of the regionalbrand credit card businesscards, consumer finance and includesdigital banking services business. Includes the results of operations of Tarjetas Regionales S.A. consolidated with its subsidiaries, as follows: Cobranzas Regionales S.A., Ondara S.A., Naranja Digital Companía Financiera S.A.U. and Tarjeta Naranja S.A.
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c. | Insurance: This segment represents the results of operations of the insurance companies'companies’ business and includes the results of operations of Sudamericana Holding S.A. consolidated with its subsidiaries, as follows: Galicia Retiro Cía. de Seguros S.A., Galicia Seguros S.A. and Galicia Broker Asesores de Seguros S.A. |
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GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS d. | Other Businesses: This segment shows the results of operations of Galicia Administradora de Fondos S.A., Galicia Warrants S.A., IGAM LLC, Inviu S.A.U., IGAM Uruguay Agente de Valores S.A., Galicia ValoresSecurities S.A. and Grupo Financiero Galicia S.A., the last two net of eliminations of the income from equity investments. As of December 31, 2017, it as well included the results of operations of Net Investment S.A. (in liquidation). |
e. | Adjustments: This segment includes consolidation adjustments and eliminations of transactions among subsidiaries. |
The operating income (loss) of the Group'sGroup’s different operating segments is monitored separately in order to make decisions on resource allocation and the evaluation of each segment'ssegment’s performance. Segment performance is evaluated based on operating income or losses and is consistently measured with the operating income and losses of the consolidated income statement. Intersegment transactions are at arm'sarm’s length similarly to transactions performed with third parties. Income, expenses and income (losses) resulting from the transfers among operating segments are then eliminated from consolidation. The Group operates in one geographic segment, Argentina. The relevant segment reporting as of the indicated dates is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Banks | | | Ecosistema
Naranja X | | | Insurance | | | Other
Businesses | | | Adjustments | | | Total as of
12.31.20 | | Net Income from interest | | | 58,831,043 | | | | 16,840,974 | | | | 726,890 | | | | 6,846 | | | | 226,467 | | | | 76,632,220 | | Net fee Income | | | 20,979,744 | | | | 16,669,667 | | | | — | | | | (6,111 | ) | | | (1,085,741 | ) | | | 36,557,559 | | Net Income from Financial Instruments measured at fair value through Profit or Loss | | | 65,986,310 | | | | 1,989,036 | | | | 77,616 | | | | 1,279,844 | | | | (904 | ) | | | 69,331,902 | | Income from Derecognition of Assets Measured at Amortized Cost | | | (3,129 | ) | | | — | | | | — | | | | — | | | | — | | | | (3,129 | ) | Exchange rate Differences on Gold and Foreign Currency | | | 6,024,766 | | | | 370,320 | | | | (27,351 | ) | | | 679,712 | | | | — | | | | 7,047,447 | | Other Operating Income | | | 17,172,602 | | | | 3,474,652 | | | | 504,655 | | | | 2,364,197 | | | | (1,193,475 | ) | | | 22,322,631 | | Income from Insurance Business | | | — | | | | — | | | | 3,496,191 | | | | — | | | | 2,005,616 | | | | 5,501,807 | | Loan and other Receivables Loss Provisions | | | (29,971,572 | ) | | | (4,724,863 | ) | | | 16,686 | | | | — | | | | — | | | | (34,679,749 | ) | Personnel Expenses | | | (22,089,728 | ) | | | (8,079,947 | ) | | | (1,217,560 | ) | | | (437,866 | ) | | | — | | | | (31,825,101 | ) | Administrative Expenses | | | (21,429,312 | ) | | | (8,678,399 | ) | | | (656,618 | ) | | | (728,295 | ) | | | 121,002 | | | | (31,371,622 | ) | Depreciation and Impairment of Assets | | | (6,116,752 | ) | | | (1,868,167 | ) | | | (270,398 | ) | | | (28,969 | ) | | | — | | | | (8,284,286 | ) | Other Operating Expenses | | | (23,844,607 | ) | | | (6,669,879 | ) | | | (4,357 | ) | | | (259,377 | ) | | | 14,459 | | | | (30,763,761 | ) | Loss on net monetary position | | | (30,367,677 | ) | | | (4,918,855 | ) | | | (815,279 | ) | | | (861,402 | ) | | | — | | | | (36,963,213 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Operating Income | | | 35,171,688 | | | | 4,404,539 | | | | 1,830,475 | | | | 2,008,579 | | | | 87,424 | | | | 43,502,705 | | Share of profit from Associates and Joint Ventures | | | 33,214 | | | | — | | | | — | | | | — �� | | | | (158,267 | ) | | | (125,053 | ) | Income before Taxes from Continuing Operations | | | 35,204,902 | | | | 4,404,539 | | | | 1,830,475 | | | | 2,008,579 | | | | (70,843 | ) | | | 43,377,652 | | Income Tax from Continuing Operations | | | (14,276,569 | ) | | | (2,245,164 | ) | | | (512,214 | ) | | | (810,925 | ) | | | — | | | | (17,844,872 | ) | Net Income / (Loss) from Continuing Operations | | | 20,928,333 | | | | 2,159,375 | | | | 1,318,261 | | | | 1,197,654 | | | | (70,843 | ) | | | 25,532,780 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Income / (Loss) for the Year | | | 20,928,333 | | | | 2,159,375 | | | | 1,318,261 | | | | 1,197,654 | | | | (70,843 | ) | | | 25,532,780 | | Other Comprehensive Income (Loss) | | | (206,818 | ) | | | 210 | | | | (2,861 | ) | | | 159 | | | | — | | | | (209,310 | ) | Net Income (Loss) for the Year Attributable to Parent Company´s Owners | | | 20,721,515 | | | | 2,160,262 | | | | 1,315,400 | | | | 1,197,813 | | | | (412,627 | ) | | | 24,982,363 | | Net Income for the Year Attributable to Non-controlling Interests | | | — | | | | (677 | ) | | | — | | | | — | | | | 341,784 | | | | 341,107 | |
| | Banks | | | Regional Credit Cards | | | Insurance | | | Other Businesses | | | Adjustments | | | Total as of 12.31.18 | | Net Income from interest | | | 23,616,496 | | | | 9,178,072 | | | | 423,260 | | | | 117,660 | | | | 27,975 | | | | 33,363,463 | | Net fee Income (Expense) | | | 12,476,489 | | | | 8,930,089 | | | | - | | | | (1,493 | ) | | | (1,166,922 | ) | | | 20,238,163 | | Net Income from Financial Instruments measured at fair value through Profit or Loss | | | 16,047,772 | | | | 885,187 | | | | 21,800 | | | | 397,959 | | | | - | | | | 17,352,718 | | Income from Derecognition of Assets Measured at Amortized Cost | | | 221,639 | | | | - | | | | - | | | | - | | | | - | | | | 221,639 | | Gold and Foreign Currency Quotation Differences | | | 3,735,237 | | | | (50,793 | ) | | | 4,139 | | | | 88,488 | | | | - | | | | 3,777,071 | | Other Operating Income (Expense) | | | 6,960,582 | | | | 3,682,154 | | | | 163,789 | | | | 615,585 | | | | 149,803 | | | | 11,571,913 | | Underwriting Income from Insurance Business | | | - | | | | - | | | | 1,612,319 | | | | - | | | | 1,257,000 | | | | 2,869,319 | | Loan and other Receivables Loss Provisions | | | (10,872,910 | ) | | | (5,348,897 | ) | | | (77,920 | ) | | | - | | | | - | | | | (16,299,727 | ) | Personnel Expenses | | | (11,544,850 | ) | | | (4,791,219 | ) | | | (574,795 | ) | | | (115,383 | ) | | | - | | | | (17,026,247 | ) | Administrative Expenses | | | (10,466,492 | ) | | | (4,955,287 | ) | | | (408,662 | ) | | | (279,696 | ) | | | 30,983 | | | | (16,079,154 | ) | Depreciation and Impairment of Assets | | | (1,019,284 | ) | | | (533,666 | ) | | | (91,474 | ) | | | (7,551 | ) | | | - | | | | (1,651,975 | ) | Other Operating Expenses | | | (12,823,603 | ) | | | (4,004,676 | ) | | | (402 | ) | | | (70,384 | ) | | | - | | | | (16,899,065 | ) | Loss on net monetary position | | | (11,204,647 | ) | | | (3,844,676 | ) | | | (560,529 | ) | | | (2,453,816 | ) | | | - | | | | (18,063,668 | ) | Operating Income | | | 5,126,429 | | | | (853,712 | ) | | | 511,525 | | | | (1,708,631 | ) | | | 298,839 | | | | 3,374,450 | | Share of profit from Associates and Joint Ventures | | | 44,146 | | | | - | | | | - | | | | (18,065 | ) | | | (26,081 | ) | | | - | | Income before Taxes from Continuing Operations | | | 5,170,575 | | | | (853,712 | ) | | | 511,525 | | | | (1,726,696 | ) | | | 272,758 | | | | 3,374,450 | | Income Tax from Continuing Operations | | | (6,636,632 | ) | | | (1,285,983 | ) | | | (309,769 | ) | | | 1,319,858 | | | | - | | | | (6,912,526 | ) | Net Income from Continuing Operations | | | (1,466,057 | ) | | | (2,139,695 | ) | | | 201,756 | | | | (406,838 | ) | | | 272,758 | | | | (3,538,076 | ) | Income from Discontinued Operations | | | (225,501 | ) | | | - | | | | - | | | | (34,255 | ) | | | - | | | | (259,756 | ) | Income Tax from Discontinued Operations | | | (30,306 | ) | | | - | | | | - | | | | (1,369 | ) | | | - | | | | (31,675 | ) | Net Income (Loss) for the Year | | | (1,721,864 | ) | | | (2,139,695 | ) | | | 201,756 | | | | (442,462 | ) | | | 272,758 | | | | (3,829,507 | ) | Other Comprehensive Income (Loss) | | | (78,249 | ) | | | - | | | | (10,555 | ) | | | (87,485 | ) | | | 88,804 | | | | (87,485 | ) | Net Income for the Year Attributable to Non-controlling Interests | | | 59 | | | | 372 | | | | - | | | | - | | | | 363,254 | | | | 363,685 | | Net Income (Loss) for the Year Attributable to owners of the Parent | | | (1,800,054 | ) | | | (2,139,323 | ) | | | 191,201 | | | | (529,947 | ) | | | 724,816 | | | | (3,553,307 | ) |
F-61
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | Banks | | | Ecosistema
Naranja X | | | Insurance | | | Other
Businesses | | | Adjustments | | | Total as of
12.31.19 | | Net Income from interest | | | 32,442,139 | | | | 13,268,259 | | | | 1,144,609 | | | | 72,097 | | | | 490,269 | | | | 47,417,373 | | Net fee Income | | | 21,760,110 | | | | 17,674,484 | | | | — | | | | 494 | | | | (1,201,852 | ) | | | 38,233,236 | | Net Income from Financial Instruments measured at fair value through Profit or Loss | | | 95,152,485 | | | | 3,505,253 | | | | 97,496 | | | | 396,262 | | | | — | | | | 99,151,496 | | Income from Derecognition of Assets Measured at Amortized Cost | | | 298,801 | | | | — | | | | — | | | | — | | | | — | | | | 298,801 | | Exchange rate Differences on Gold and Foreign Currency | | | 11,298,851 | | | | 165,900 | | | | (3,767 | ) | | | 370,468 | | | | — | | | | 11,831,452 | | Other Operating Income | | | 23,726,714 | | | | 4,921,986 | | | | 538,849 | | | | 1,158,077 | | | | (1,576,194 | ) | | | 28,769,432 | | Income from Insurance Business | | | — | | | | — | | | | 2,611,331 | | | | — | | | | 2,389,538 | | | | 5,000,869 | | Loan and other Receivables Loss Provisions | | | (22,228,541 | ) | | | (8,088,703 | ) | | | 89,576 | | | | — | | | | — | | | | (30,227,668 | ) | Personnel Expenses | | | (24,303,615 | ) | | | (7,543,907 | ) | | | (1,109,048 | ) | | | (328,391 | ) | | | — | | | | (33,284,961 | ) | Administrative Expenses | | | (23,885,413 | ) | | | (8,247,798 | ) | | | (711,576 | ) | | | (434,955 | ) | | | 174,543 | | | | (33,105,199 | ) | Depreciation and Impairment of Assets | | | (5,021,671 | ) | | | (1,558,316 | ) | | | (291,429 | ) | | | (23,528 | ) | | | — | | | | (6,894,944 | ) | Other Operating Expenses | | | (28,555,476 | ) | | | (6,378,283 | ) | | | (501 | ) | | | (157,840 | ) | | | 9,282 | | | | (35,082,818 | ) | Loss on net monetary position | | | (33,702,521 | ) | | | (6,306,209 | ) | | | (1,035,951 | ) | | | (884,221 | ) | | | — | | | | (41,928,902 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Operating Income | | | 46,981,863 | | | | 1,412,666 | | | | 1,329,589 | | | | 168,463 | | | | 285,586 | | | | 50,178,167 | | Share of profit from Associates and Joint Ventures | | | 78,244 | | | | — | | | | — | | | | — | | | | (78,244 | ) | | | — | | Income before Taxes from Continuing Operations | | | 47,060,107 | | | | 1,412,666 | | | | 1,329,589 | | | | 168,463 | | | | 207,342 | | | | 50,178,167 | | Income Tax from Continuing Operations | | | (16,723,744 | ) | | | (523,435 | ) | | | (466,721 | ) | | | (36,782 | ) | | | — | | | | (17,750,682 | ) | Net Income / (Loss) from Continuing Operations | | | 30,336,363 | | | | 889,231 | | | | 862,868 | | | | 131,681 | | | | 207,342 | | | | 32,427,485 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Income / (Loss) for the Year | | | 30,336,363 | | | | 889,231 | | | | 862,868 | | | | 131,681 | | | | 207,342 | | | | 32,427,485 | | Other Comprehensive Income (Loss) | | | 562,786 | | | | — | | | | (14,588 | ) | | | — | | | | — | | | | 548,198 | | Net Income (Loss) for the Year Attributable to Parent Company´s Owners | | | 30,899,149 | | | | 888,870 | | | | 848,280 | | | | 131,681 | | | | 56,595 | | | | 32,824,575 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Income for the Year Attributable to Non-controlling Interests | | | — | | | | 361 | | | | — | | | | — | | | | 150,747 | | | | 151,108 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Banks | | | Ecosistema
Naranja X | | | Insurance | | | Other
Businesses | | | Adjustments | | | Total as of
12.31.18 | | Net Income from interest | | | 49,448,811 | | | | 19,221,483 | | | | 886,426 | | | | 257,238 | | | | 58,588 | | | | 69,872,546 | | Net fee Income | | | 26,131,171 | | | | 18,702,137 | | | | — | | | | (4,995 | ) | | | (71,981 | ) | | | 44,756,332 | | Net Income from Financial Instruments measured at fair value through Profit or Loss | | | 33,481,710 | | | | 1,853,832 | | | | 45,655 | | | | 960,312 | | | | — | | | | 36,341,509 | | Income from Derecognition of Assets Measured at Amortized Cost | | | 464,175 | | | | — | | | | — | | | | — | | | | — | | | | 464,175 | | Exchange rate Differences on Gold and Foreign Currency | | | 7,726,274 | | | | (106,375 | ) | | | 8,668 | | | | 281,690 | | | | — | | | | 7,910,257 | | Other Operating Income | | | 14,553,653 | | | | 7,711,474 | | | | 343,021 | | | | 1,937,686 | | | | (2,682,854 | ) | | | 21,862,980 | | Income from Insurance Business | | | — | | | | — | | | | 3,376,653 | | | | — | | | | 2,632,514 | | | | 6,009,167 | | Loan and other Receivables Loss Provisions | | | (22,770,955 | ) | | | (11,202,106 | ) | | | (163,186 | ) | | | — | | | | — | | | | (34,136,247 | ) | Personnel Expenses | | | (24,154,702 | ) | | | (10,034,170 | ) | | | (1,203,784 | ) | | | (265,130 | ) | | | — | | | | (35,657,786 | ) | Administrative Expenses | | | (21,900,686 | ) | | | (10,377,775 | ) | | | (855,854 | ) | | | (604,877 | ) | | | 64,887 | | | | (33,674,305 | ) | Depreciation and Impairment of Assets | | | (2,134,670 | ) | | | (1,117,648 | ) | | | (191,572 | ) | | | (15,814 | ) | | | — | | | | (3,459,704 | ) | Other Operating Expenses | | | (26,853,098 | ) | | | (8,386,926 | ) | | | (842 | ) | | | (150,565 | ) | | | — | | | | (35,391,431 | ) | Loss on net monetary position | | | (27,237,770 | ) | | | (8,051,841 | ) | | | (1,173,907 | ) | | | (1,366,921 | ) | | | — | | | | (37,830,439 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Operating Income | | | 6,753,913 | | | | (1,787,915 | ) | | | 1,071,278 | | | | 1,028,624 | | | | 1,154 | | | | 7,067,054 | | Share of profit from Associates and Joint Ventures | | | 39,842 | | | | — | | | | — | | | | — | | | | (39,842 | ) | | | — | | Income before Taxes from Continuing Operations | | | 6,793,755 | | | | (1,787,915 | ) | | | 1,071,278 | | | | 1,028,624 | | | | (38,688 | ) | | | 7,067,054 | | Income Tax from Continuing Operations | | | (10,491,620 | ) | | | (2,693,213 | ) | | | (648,744 | ) | | | (643,211 | ) | | | — | | | | (14,476,788 | ) | Net Income / (Loss) from Continuing Operations | | | (3,697,865 | ) | | | (4,481,128 | ) | | | 422,534 | | | | 385,413 | | | | (38,688 | ) | | | (7,409,734 | ) | Loss from Discontinued Operations | | | (526,463 | ) | | | — | | | | — | | | | (17,540 | ) | | | — | | | | (544,003 | ) | Income Tax from Discontinued Operations | | | (63,469 | ) | | | — | | | | — | | | | (2,867 | ) | | | — | | | | (66,336 | ) | Net Income / (Loss) for the Year | | | (4,287,797 | ) | | | (4,481,128 | ) | | | 422,534 | | | | 365,006 | | | | (38,688 | ) | | | (8,020,073 | ) | Other Comprehensive Income (Loss) | | | (161,113 | ) | | | — | | | | (22,105 | ) | | | — | | | | — | | | | (183,218 | ) | Net Income (Loss) for the Year Attributable to Parent Company´s Owners | | | (4,448,910 | ) | | | (4,480,349 | ) | | | 400,429 | | | | 365,006 | | | | 722,192 | | | | (7,441,632 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Net Income for the Year Attributable to Non-controlling Interests | | | — | | | | (779 | ) | | | — | | | | — | | | | (760,880 | ) | | | (761,659 | ) | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Banks | | | Regional Credit Cards | | | Insurance | | | Other Businesses | | | Adjustments | | | Total as of 12.31.17 | | Net Income from interest | | | 19,724,848 | | | | 9,550,812 | | | | 427,948 | | | | 127,966 | | | | 42,461 | | | | 29,874,035 | | Net fee Income (Expense) | | | 12,163,079 | | | | 10,028,406 | | | | - | | | | (2,847 | ) | | | (43,012 | ) | | | 22,145,626 | | Net Income from Financial Instruments measured at fair value through Profit or Loss | | | 6,725,615 | | | | 616,589 | | | | (16,744 | ) | | | 1,130,565 | | | | 5,313 | | | | 8,461,338 | | Gold and Foreign Currency Quotation Differences | | | 3,316,161 | | | | 17,642 | | | | 1,986 | | | | 143,072 | | | | - | | | | 3,478,861 | | Other Operating Income | | | 5,082,425 | | | | 4,057,565 | | | | 72,879 | | | | 1,372,584 | | | | (1,588,821 | ) | | | 8,996,632 | | Underwriting Income from Insurance Business | | | - | | | | - | | | | 1,704,918 | | | | 7,320 | | | | 1,602,674 | | | | 3,314,912 | | Loan and other Receivables Loss Provisions | | | (3,898,951 | ) | | | (3,272,811 | ) | | | - | | | | (122,094 | ) | | | - | | | | (7,293,856 | ) | Personnel Expenses | | | (11,355,757 | ) | | | (5,010,769 | ) | | | (551,418 | ) | | | (170,728 | ) | | | - | | | | (17,088,672 | ) | Administrative Expenses | | | (9,287,356 | ) | | | (4,516,331 | ) | | | (450,112 | ) | | | (198,830 | ) | | | 29,072 | | | | (14,423,557 | ) | Depreciation and Impairment of Assets | | | (917,564 | ) | | | (460,394 | ) | | | (48,335 | ) | | | (13,147 | ) | | | - | | | | (1,439,440 | ) | Other Operating Expenses | | | (10,506,788 | ) | | | (4,019,688 | ) | | | (1,614 | ) | | | (77,241 | ) | | | 105 | | | | (14,605,226 | ) | Loss on net monetary position | | | (2,629,379 | ) | | | (2,140,368 | ) | | | (346,257 | ) | | | (1,707,292 | ) | | | - | | | | (6,823,296 | ) | Operating Income | | | 8,416,333 | | | | 4,850,653 | | | | 793,251 | | | | 489,328 | | | | 47,792 | | | | 14,597,357 | | Share of profit from Associates and Joint Ventures | | | 2,048,332 | | | | - | | | | 3,318 | | | | - | | | | (1,730,468 | ) | | | 321,182 | | Income before Taxes from Continuing Operations | | | 10,464,665 | | | | 4,850,653 | | | | 796,569 | | | | 489,328 | | | | (1,682,676 | ) | | | 14,918,539 | | Income Tax from Continuing Operations | | | (4,478,396 | ) | | | (2,721,222 | ) | | | (411,465 | ) | | | 292,056 | | | | - | | | | (7,319,027 | ) | Net Income from Continuing Operations | | | 5,986,269 | | | | 2,129,431 | | | | 385,104 | | | | 781,384 | | | | (1,682,676 | ) | | | 7,599,512 | | Income from Discontinued Operations | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Income Tax from Discontinued Operations | | | (321,760 | ) | | | - | | | | - | | | | - | | | | - | | | | (321,760 | ) | Net Income (Loss) for the Year | | | 5,664,509 | | | | 2,129,431 | | | | 385,104 | | | | 781,384 | | | | (1,682,676 | ) | | | 7,277,752 | | Other Comprehensive Income (Loss) | | | (454,753 | ) | | | - | | | | 23,053 | | | | (3,032 | ) | | | - | | | | (434,732 | ) | Net Income for the Year Attributable to Non-controlling Interests | | | - | | | | 105 | | | | - | | | | 5,866 | | | | (490,135 | ) | | | (484,164 | ) | Net Income (Loss) for the Year Attributable to owners of the Parent | | | 5,209,756 | | | | 2,129,536 | | | | 408,157 | | | | 784,218 | | | | (2,172,811 | ) | | | 6,358,856 | |
F-62
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | Banks | | | Ecosistema
Naranja X | | | Insurance | | | Other
Businesses | | | Adjustments | | | Total as of
12.31.20 | | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 172,308,807 | | | | 2,188,741 | | | | 39,612 | | | | 2,278,879 | | | | (1,392,563 | ) | | | 175,423,476 | | Debt Securities at fair value through profit or loss | | | 155,892,300 | | | | 91,762 | | | | — | | | | 173,800 | | | | (738,302 | ) | | | 155,419,560 | | Derivative Financial Instruments | | | 2,165,032 | | | | — | | | | — | | | | — | | | | — | | | | 2,165,032 | | Repurchase Transactions | | | 60,995,643 | | | | — | | | | — | | | | — | | | | — | | | | 60,995,643 | | Other Financial Assets | | | 6,920,271 | | | | 1,281,954 | | | | 815,104 | | | | 1,077,956 | | | | (1,659 | ) | | | 10,093,626 | | Loans and Other Financing | | | 439,306,303 | | | | 88,545,787 | | | | 473,165 | | | | 1,463,755 | | | | (3,354,891 | ) | | | 526,434,119 | | Other Debt Securities | | | 21,448,751 | | | | 174,456 | | | | 1,617,826 | | | | — | | | | (170,656 | ) | | | 23,070,377 | | Financial Assets Pledged as Collateral | | | 18,639,697 | | | | 9,126 | | | | — | | | | 68,620 | | | | — | | | | 18,717,443 | | Current Income Tax Assets | | | — | | | | 36,242 | | | | 160,852 | | | | — | | | | — | | | | 197,094 | | Investments in Equity Instruments | | | 5,709,565 | | | | — | | | | — | | | | 2,119 | | | | — | | | | 5,711,684 | | Equity Investments in Associates and Joint Ventures | | | 480,530 | | | | — | | | | — | | | | — | | | | (391,388 | ) | | | 89,142 | | Property, Plant and Equipment | | | 38,189,687 | | | | 4,859,111 | | | | 646,688 | | | | 35,934 | | | | — | | | | 43,731,420 | | Intangible Assets | | | 12,850,061 | | | | 1,534,001 | | | | 73,415 | | | | 4,436,289 | | | | (4,424,945 | ) | | | 14,468,821 | | Deferred Income Tax Assets | | | 5,300,716 | | | | 3,625,102 | | | | 176,642 | | | | 110,135 | | | | — | | | | 9,212,595 | | Assets for Insurance Contracts | | | — | | | | — | | | | 1,885,937 | | | | — | | | | (547 | ) | | | 1,885,390 | | Other Non-financial Assets | | | 5,782,609 | | | | 725,134 | | | | 27,372 | | | | 1,099,312 | | | | — | | | | 7,634,427 | | Non-current Assets Held for Sale | | | 29,328 | | | | — | | | | — | | | | — | | | | — | | | | 29,328 | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL ASSETS | | | 946,019,300 | | | | 103,071,416 | | | | 5,916,613 | | | | 10,746,799 | | | | (10,474,951 | ) | | | 1,055,279,177 | | | | | | | | | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 678,102,758 | | | | 5 | | | | — | | | | — | | | | (1,707,028 | ) | | | 676,395,735 | | Liabilities at Fair Value Through Profit or Loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Derivative Financial Instruments | | | 57,450 | | | | — | | | | — | | | | — | | | | — | | | | 57,450 | | Other Financial Liabilities | | | 40,888,983 | | | | 55,323,990 | | | | — | | | | 2,107,556 | | | | (849,064 | ) | | | 97,471,465 | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | 10,192,180 | | | | 5,794,722 | | | | — | | | | 1 | | | | (2,153,464 | ) | | | 13,833,439 | | Debt Securities | | | 7,904,075 | | | | 10,078,781 | | | | — | | | | — | | | | (908,958 | ) | | | 17,073,898 | | Current Income Tax Liabilities | | | 13,030,588 | | | | 1,189,775 | | | | 446,188 | | | | 560,923 | | | | — | | | | 15,227,474 | | Subordinated Debt Securities | | | 21,653,546 | | | | — | | | | — | | | | — | | | | — | | | | 21,653,546 | | Provisions | | | 3,432,729 | | | | 145,058 | | | | 136,010 | | | | 62,500 | | | | — | | | | 3,776,297 | | Deferred Income Tax Liabilities | | | — | | | | — | | | | — | | | | 136,934 | | | | — | | | | 136,934 | | Liabilities for Insurance Contracts | | | — | | | | — | | | | 2,060,999 | | | | — | | | | (23 | ) | | | 2,060,976 | | Other Non-financial Liabilities | | | 18,935,846 | | | | 4,975,456 | | | | 686,060 | | | | 700,947 | | | | (40,081 | ) | | | 25,258,228 | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL LIABILITIES | | | 794,198,155 | | | | 77,507,787 | | | | 3,329,257 | | | | 3,568,861 | | | | (5,658,618 | ) | | | 872,945,442 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Banks | | | Regional Credit Cards | | | Insurance | | | Other Businesses | | | Adjustments | | | Total as of 12.31.18 | | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 142,049,436 | | | | 1,364,452 | | | | 55,184 | | | | 93,007 | | | | (252,651 | ) | | | 143,309,428 | | Debt Securities at fair value through profit or loss | | | 75,911,796 | | | | - | | | | 83,476 | | | | 81,501 | | | | (141,610 | ) | | | 75,935,163 | | Derivative Financial Instruments | | | 1,785,640 | | | | - | | | | - | | | | - | | | | - | | | | 1,785,640 | | Repo Transactions | | | 2,068,076 | | | | - | | | | - | | | | - | | | | - | | | | 2,068,076 | | Other Financial Assets | | | 4,691,607 | | | | 3,677,018 | | | | 234,656 | | | | 503,650 | | | | (58,999 | ) | | | 9,047,932 | | Loans and Other Financing | | | 243,232,186 | | | | 44,050,906 | | | | 426,159 | | | | (1,887,892 | ) | | | (3,111,291 | ) | | | 282,710,068 | | Other Debt Securities | | | 13,630,604 | | | | - | | | | 990,929 | | | | (65,632 | ) | | | (131,767 | ) | | | 14,424,134 | | Financial Assets Pledged as Collateral | | | 10,812,499 | | | | 4,993 | | | | - | | | | - | | | | - | | | | 10,817,492 | | Current Income Tax Assets | | | 2,267,500 | | | | 11,939 | | | | 82,004 | | | | (2,266,525 | ) | | | - | | | | 94,918 | | Investments in Equity Instruments | | | 159,602 | | | | - | | | | - | | | | 1,452 | | | | - | | | | 161,054 | | Equity Investments in Associates and Joint Ventures | | | 397,754 | | | | - | | | | - | | | | 59,395,513 | | | | (59,793,267 | ) | | | - | | Property, Plant and Equipment | | | 9,869,201 | | | | 1,806,613 | | | | 294,461 | | | | 7,392,310 | | | | - | | | | 19,362,585 | | Intangible Assets | | | 3,259,794 | | | | 645,580 | | | | 89,798 | | | | 591,975 | | | | - | | | | 4,587,147 | | Deferred Income Tax Assets | | | - | | | | 868,671 | | | | 99,867 | | | | 4,437 | | | | - | | | | 972,975 | | Assets for Insurance Contracts | | | - | | | | - | | | | 982,502 | | | | - | | | | - | | | | 982,502 | | Other Non-financial Assets | | | 798,367 | | | | 283,307 | | | | 18,669 | | | | 1,724,421 | | | | 5 | | | | 2,824,769 | | Non-current Assets Held for Sale | | | 404,106 | | | | - | | | | - | | | | 203,909 | | | | - | | | | 608,015 | | TOTAL ASSETS | | | 511,338,168 | | | | 52,713,479 | | | | 3,357,705 | | | | 65,772,126 | | | | (63,489,580 | ) | | | 569,691,898 | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 361,445,778 | | | | - | | | | - | | | | - | | | | (1,348,503 | ) | | | 360,097,275 | | Liabilities at Fair Value Through Profit or Loss | | | 2,685,471 | | | | - | | | | - | | | | - | | | | (540,807 | ) | | | 2,144,664 | | Derivative Financial Instruments | | | 1,835,789 | | | | - | | | | - | | | | - | | | | - | | | | 1,835,789 | | Repo Transactions | | | 1,948,559 | | | | - | | | | - | | | | - | | | | - | | | | 1,948,559 | | Other Financial Liabilities | | | 40,976,456 | | | | 23,419,918 | | | | - | | | | 36,311 | | | | (1,197,643 | ) | | | 63,235,042 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 17,490,792 | | | | 1,955,180 | | | | 56 | | | | - | | | | - | | | | 19,446,028 | | Debt Securities Issued | | | 15,527,765 | | | | 14,979,260 | | | | - | | | | - | | | | (523,372 | ) | | | 29,983,653 | | Current Income Tax Liabilities | | | 5,442,791 | | | | 38,137 | | | | 203,147 | | | | (2,226,466 | ) | | | - | | | | 3,457,609 | | Subordinated Debt Securities | | | 9,767,874 | | | | - | | | | - | | | | - | | | | - | | | | 9,767,874 | | Provisions | | | 1,248,998 | | | | 64,997 | | | | 78,328 | | | | 57,000 | | | | - | | | | 1,449,323 | | Deferred Income Tax Liabilities | | | 289,493 | | | | - | | | | 106,709 | | | | 1,507,444 | | | | - | | | | 1,903,646 | | Liabilities for Insurance Contracts | | | - | | | | - | | | | 1,146,515 | | | | - | | | | (43,295 | ) | | | 1,103,220 | | Other Non-financial Liabilities | | | 8,709,240 | | | | 2,122,183 | | | | 420,273 | | | | 246,661 | | | | (26,827 | ) | | | 11,471,530 | | TOTAL LIABILITIES | | | 467,369,006 | | | | 42,579,675 | | | | 1,955,028 | | | | (379,050 | ) | | | (3,680,447 | ) | | | 507,844,212 | |
F-63
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | Banks | | | Regional Credit Cards | | | Insurance | | | Other Businesses | | | Adjustments | | | Total as of 12.31.17 | | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 86,314,938 | | | | 801,270 | | | | 34,593 | | | | 91,521 | | | | (197,441 | ) | | | 87,044,881 | | Debt Securities at fair value through profit or loss | | | 39,232,822 | | | | 370,046 | | | | 1,060,464 | | | | 2,349,286 | | | | (264,821 | ) | | | 42,747,797 | | Derivative Financial Instruments | | | 775,674 | | | | - | | | | - | | | | 17,183 | | | | (17,183 | ) | | | 775,674 | | Repo Transactions | | | 14,286,336 | | | | - | | | | - | | | | - | | | | - | | | | 14,286,336 | | Other Financial Assets | | | 6,035,372 | | | | 3,202,795 | | | | 278,548 | | | | 1,107,730 | | | | (285,189 | ) | | | 10,339,256 | | Loans and Other Financing | | | 237,690,649 | | | | 47,421,104 | | | | 20,631 | | | | 19,375 | | | | (797,000 | ) | | | 284,354,759 | | Other Debt Securities | | | 3,306,706 | | | | - | | | | 688,814 | | | | 263,322 | | | | (76,305 | ) | | | 4,182,537 | | Financial Assets Pledged as Collateral | | | 9,339,920 | | | | 6,868 | | | | - | | | | - | | | | - | | | | 9,346,788 | | Current Income Tax Assets | | | 1,856,223 | | | | 30,227 | | | | 126,227 | | | | (1,873,897 | ) | | | (4,040 | ) | | | 134,740 | | Investments in Equity Instruments | | | 111,923 | | | | - | | | | - | | | | - | | | | - | | | | 111,923 | | Equity Investments in Associates and Joint Ventures | | | 10,340,901 | | | | - | | | | - | | | | 63,094,393 | | | | (73,435,294 | ) | | | - | | Property, Plant and Equipment | | | 16,203,040 | | | | 1,724,338 | | | | 271,373 | | | | 10,264 | | | | - | | | | 18,209,015 | | Intangible Assets | | | 1,098,519 | | | | 532,156 | | | | 94,136 | | | | 103 | | | | - | | | | 1,724,914 | | Deferred Income Tax Assets | | | - | | | | 705,405 | | | | 52,556 | | | | 4,609 | | | | - | | | | 762,570 | | Assets for Insurance Contracts | | | - | | | | - | | | | 1,021,703 | | | | - | | | | - | | | | 1,021,703 | | Other Non-financial Assets | | | 3,097,128 | | | | 286,272 | | | | 5,308 | | | | 355,961 | | | | (6,539 | ) | | | 3,738,130 | | Non-current Assets Held for Sale | | | 8,506,288 | | | | - | | | | - | | | | 2,353,803 | | | | - | | | | 10,860,091 | | TOTAL ASSETS | | | 438,196,439 | | | | 55,080,481 | | | | 3,654,353 | | | | 67,793,653 | | | | (75,083,812 | ) | | | 489,641,114 | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 296,596,968 | | | | - | | | | - | | | | - | | | | (229,612 | ) | | | 296,367,356 | | Derivative Financial Instruments | | | 863,514 | | | | - | | | | - | | | | - | | | | (17,183 | ) | | | 846,331 | | Repo Transactions | | | 1,670,059 | | | | - | | | | - | | | | - | | | | - | | | | 1,670,059 | | Other Financial Liabilities | | | 31,345,885 | | | | 24,409,668 | | | | - | | | | 291,371 | | | | (696,125 | ) | | | 55,350,799 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 11,410,915 | | | | 490,169 | | | | - | | | | (282,083 | ) | | | (699 | ) | | | 11,618,302 | | Debt Securities | | | 6,627,223 | | | | 13,999,030 | | | | 5,111 | | | | (11,074 | ) | | | (341,125 | ) | | | 20,279,165 | | Current Income Tax Liabilities | | | 3,862,407 | | | | 1,028,814 | | | | 237,944 | | | | (1,550,636 | ) | | | - | | | | 3,578,529 | | Subordinated Debt Securities | | | 7,128,356 | | | | - | | | | - | | | | - | | | | - | | | | 7,128,356 | | Provisions | | | 665,288 | | | | 71,258 | | | | 82,382 | | | | 78,332 | | | | - | | | | 897,260 | | Deferred Income Tax Liabilities | | | 1,941,104 | | | | - | | | | 61,587 | | | | 85,849 | | | | - | | | | 2,088,540 | | Liabilities for Insurance Contracts | | | - | | | | - | | | | 1,195,647 | | | | 34,704 | | | | (34,704 | ) | | | 1,195,647 | | Other Non-financial Liabilities | | | 15,177,593 | | | | 2,230,117 | | | | 402,746 | | | | 2,642,765 | | | | 689,233 | | | | 21,142,454 | | TOTAL LIABILITIES | | | 377,289,312 | | | | 42,229,056 | | | | 1,985,417 | | | | 1,289,228 | | | | (630,215 | ) | | | 422,162,798 | |
F-64
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | Banks | | | Regional Credit Cards | | | Insurance | | | Other Businesses | | | Adjustments | | | Total as of 01.01.17 | | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 120,510,951 | | | | 855,572 | | | | 117,750 | | | | 165,275 | | | | (465,569 | ) | | | 121,183,979 | | Debt Securities at fair value through profit or loss | | | 27,893,048 | | | | 137,324 | | | | 1,912,151 | | | | 275,098 | | | | (1,399,877 | ) | | | 28,817,744 | | Derivative Financial Instruments | | | 229,436 | | | | - | | | | - | | | | - | | | | - | | | | 229,436 | | Other Financial Assets | | | 3,118,715 | | | | 3,919,010 | | | | 231,213 | | | | 613,070 | | | | (1,162,427 | ) | | | 6,719,581 | | Loans and Other Financing | | | 195,873,323 | | | | 48,933,879 | | | | 47,379 | | | | 2,436,269 | | | | (1,587,429 | ) | | | 245,703,421 | | Other Debt Securities | | | 1,860,045 | | | | - | | | | 381,793 | | | | 942,014 | | | | - | | | | 3,183,852 | | Financial Assets Pledged as Collateral | | | 9,870,728 | | | | 224,692 | | | | - | | | | 173 | | | | - | | | | 10,095,593 | | Current Income Tax Assets | | | 3,967 | | | | 27,474 | | | | 182,291 | | | | 21,199 | | | | - | | | | 234,931 | | Investments in Equity Instruments | | | 125,962 | | | | - | | | | - | | | | 61,173 | | | | - | | | | 187,135 | | Equity Investments in Associates and Joint Ventures | | | 9,614,493 | | | | - | | | | 27,115 | | | | 2,325,267 | | | | (11,680,073 | ) | | | 286,802 | | Property, Plant and Equipment | | | 14,289,988 | | | | 1,716,579 | | | | 289,207 | | | | 52,586 | | | | - | | | | 16,348,360 | | Intangible Assets | | | 1,109,456 | | | | 485,282 | | | | 63,345 | | | | 2,710 | | | | - | | | | 1,660,793 | | Deferred Income Tax Assets | | | - | | | | 942,720 | | | | 64,865 | | | | 27,675 | | | | - | | | | 1,035,260 | | Assets for Insurance Contracts | | | - | | | | - | | | | 960,393 | | | | 28,330 | | | | - | | | | 988,723 | | Other Non-financial Assets | | | 2,369,045 | | | | 169,999 | | | | 19,509 | | | | 375,930 | | | | 85,185 | | | | 3,019,668 | | Non-current Assets Held for Sale | | | 10,593,323 | | | | - | | | | - | | | | 67,191 | | | | 258,602 | | | | 10,919,116 | | TOTAL ASSETS | | | 397,462,480 | | | | 57,412,531 | | | | 4,297,011 | | | | 7,393,960 | | | | (15,951,588 | ) | | | 450,614,394 | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 277,560,473 | | | | - | | | | - | | | | - | | | | (482,911 | ) | | | 277,077,562 | | Derivative Financial Instruments | | | 264,172 | | | | 217,832 | | | | - | | | | 9,297 | | | | (200,917 | ) | | | 290,384 | | Repo Transactions | | | 3,030,473 | | | | - | | | | - | | | | - | | | | - | | | | 3,030,473 | | Other Financial Liabilities | | | 31,465,537 | | | | 25,149,569 | | | | - | | | | 1,354,339 | | | | (874,669 | ) | | | 57,094,776 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 8,647,524 | | | | 3,991,530 | | | | 12,948 | | | | 420,188 | | | | (355,045 | ) | | | 12,717,145 | | Debt Securities | | | 8,731,727 | | | | 13,536,489 | | | | - | | | | 955,820 | | | | (1,375,576 | ) | | | 21,848,460 | | Current Income Tax Liabilities | | | 1,824,390 | | | | 750,927 | | | | 443,077 | | | | 140,949 | | | | - | | | | 3,159,343 | | Subordinated Debt Securities | | | 7,490,444 | | | | - | | | | - | | | | - | | | | - | | | | 7,490,444 | | Provisions | | | 467,831 | | | | 89,496 | | | | 54,048 | | | | 97,838 | | | | - | | | | 709,213 | | Deferred Income Tax Liabilities | | | 1,667,167 | | | | - | | | | 51,870 | | | | 124,560 | | | | - | | | | 1,843,597 | | Liabilities for Insurance Contracts | | | - | | | | - | | | | 1,229,435 | | | | - | | | | (75,273 | ) | | | 1,154,162 | | Other Non-financial Liabilities | | | 15,379,938 | | | | 2,299,474 | | | | 522,863 | | | | 547,281 | | | | (223,599 | ) | | | 18,525,957 | | TOTAL LIABILITIES | | | 356,529,676 | | | | 46,035,317 | | | | 2,314,241 | | | | 3,650,272 | | | | (3,587,990 | ) | | | 404,941,516 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Banks | | | Ecosistema
Naranja X | | | Insurance | | | Other
Businesses | | | Adjustments | | | Total as of
12.31.19 | | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 175,814,936 | | | | 5,618,935 | | | | 103,152 | | | | 963,415 | | | | (4,634,039 | ) | | | 177,866,399 | | Debt Securities at fair value through profit or loss | | | 89,441,583 | | | | — | | | | 49,837 | | | | 70 | | | | (60,112 | ) | | | 89,431,378 | | Derivative Financial Instruments | | | 3,170,815 | | | | — | | | | — | | | | — | | | | — | | | | 3,170,815 | | Repurchase Transactions | | | 40,944,933 | | | | — | | | | — | | | | — | | | | — | | | | 40,944,933 | | Other Financial Assets | | | 7,780,625 | | | | 6,186,615 | | | | 435,406 | | | | 467,944 | | | | (10,390 | ) | | | 14,860,200 | | Loans and Other Financing | | | 421,122,047 | | | | 65,928,775 | | | | 358,620 | | | | 3,428,355 | | | | (2,693,645 | ) | | | 488,144,152 | | Other Debt Securities | | | 21,962,083 | | | | 1,786,664 | | | | 2,323,480 | | | | — | | | | (178,791 | ) | | | 25,893,436 | | Financial Assets Pledged as Collateral | | | 15,713,219 | | | | 9,617 | | | | 555 | | | | 2,200 | | | | (555 | ) | | | 15,725,036 | | Current Income Tax Assets | | | — | | | | 20,983 | | | | — | | | | 34,158 | | | | — | | | | 55,141 | | Investments in Equity Instruments | | | 6,200,459 | | | | — | | | | — | | | | — | | | | — | | | | 6,200,459 | | Equity Investments in Associates and Joint Ventures | | | 419,309 | | | | — | | | | — | | | | — | | | | (419,309 | ) | | | — | | Property, Plant and Equipment | | | 39,565,282 | | | | 4,636,630 | | | | 621,167 | | | | 54,281 | | | | — | | | | 44,877,360 | | Intangible Assets | | | 9,698,756 | | | | 1,995,236 | | | | 140,317 | | | | 1,243,959 | | | | (1,243,960 | ) | | | 11,834,308 | | Deferred Income Tax Assets | | | — | | | | 3,428,499 | | | | 260,000 | | | | 132,879 | | | | — | | | | 3,821,378 | | Assets for Insurance Contracts | | | — | | | | — | | | | 1,608,517 | | | | — | | | | — | | | | 1,608,517 | | Other Non-financial Assets | | | 7,223,806 | | | | 398,757 | | | | 163,377 | | | | 1,000,001 | | | | (2,953 | ) | | | 8,782,988 | | Non-current Assets Held for Sale | | | 53,106 | | | | — | | | | — | | | | — | | | | — | | | | 53,106 | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL ASSETS | | | 839,110,959 | | | | 90,010,711 | | | | 6,064,428 | | | | 7,327,262 | | | | (9,243,754 | ) | | | 933,269,606 | | | | | | | | | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | — | | Deposits | | | 541,621,151 | | | | — | | | | — | | | | — | | | | (5,587,455 | ) | | | 536,033,696 | | Liabilities at Fair Value Through Profit or Loss | | | 1,936,133 | | | | — | | | | — | | | | — | | | | — | | | | 1,936,133 | | Derivative Financial Instruments | | | 1,199,533 | | | | — | | | | — | | | | — | | | | — | | | | 1,199,533 | | Other Financial Liabilities | | | 51,640,464 | | | | 43,416,663 | | | | — | | | | 2,844,848 | | | | (748,351 | ) | | | 97,153,624 | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | 27,848,878 | | | | 3,999,344 | | | | 4,205 | | | | — | | | | (916,266 | ) | | | 30,936,161 | | Debt Securities | | | 25,742,191 | | | | 14,305,377 | | | | — | | | | — | | | | (238,902 | ) | | | 39,808,666 | | Current Income Tax Liabilities | | | 12,544,435 | | | | 1,249,899 | | | | 203,138 | | | | 44,763 | | | | — | | | | 14,042,235 | | Subordinated Debt Securities | | | 21,100,718 | | | | — | | | | — | | | | — | | | | — | | | | 21,100,718 | | Provisions | | | 3,379,110 | | | | 147,522 | | | | 174,984 | | | | 38,118 | | | | — | | | | 3,739,734 | | Deferred Income Tax Liabilities | | | 2,577,307 | | | | — | | | | 324,818 | | | | 118,429 | | | | — | | | | 3,020,554 | | Liabilities for Insurance Contracts | | | — | | | | — | | | | 2,004,865 | | | | — | | | | (5,457 | ) | | | 1,999,408 | | Other Non-financial Liabilities | | | 18,421,066 | | | | 3,721,626 | | | | 644,329 | | | | 536,361 | | | | (84,055 | ) | | | 23,239,327 | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL LIABILITIES | | | 708,010,986 | | | | 66,840,431 | | | | 3,356,339 | | | | 3,582,519 | | | | (7,580,486 | ) | | | 774,209,789 | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOTE 46.45. CAPITAL MANAGEMENT AND RISK POLICIES The tasks related to risk information and internal control of each of the companies controlled by Grupo Financiero Galicia are defined and carried out rigorously by each of them. Apart from applicable local regulations, Grupo Financiero Galicia S.A., in its capacity as a listed company in the United States of America, complies with the certification of its internal controls pursuant to Section 302 of the Sarbanes Oxley Act (Sarbanes Oxley). Corporate risk management is monitored by the Audit Committee, which as well gathers and analyzes the information submitted by the main controlled companies. As concerns risks, Banco Galicia embraces a policy that takes into consideration several aspects of the business and operations, abiding by the main guidelines of internationally accepted standards. The specific function of the comprehensive management of Banco Galicia’s risks has been allocated to the Risk Division, guaranteeing its independence from the rest of the business areas since it directly reports to the Bank’s General Division and, at the same time, is involved in the decisions made by each area. In addition, the control and prevention of risks related to money laundering, funding of terrorist activities and other illegal activities are allocated to the Prevention of Asset Laundering Division, which reports to the Board of Directors. The aim of both divisions is to guarantee the Board of Directors is fully aware of the risks that the Bank is exposed to, and to design and propose policies and procedures necessary to identify, assess, follow up, control and mitigate such risks. A Risk Appetite framework has been specified, which has risk acceptance levels, both on an individual and a consolidated basis. Metrics have been defined within such framework, which are monitored in order to detect situations that may affect the normal course of business, the noncompliance with the strategy and undesired results and/or situations of vulnerability in the face of changes in market conditions. The Risk and Capital Allocation Committee considers and controls the Bank’s risk profile through a risk appetite report and defines the actions to be carried out in case of potential deviations from the thresholds set. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Capital Management The Company'sCompany’s goals are to generate returns to its shareholders, benefits to other groups of interest and keep the best capital structure. The latter will be given by the needs for investment in subsidiaries and new ventures, keeping the expected profitability levels and complying with the liquidity and solvency goals set. F-65
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Banco Galicia'sGalicia’s subsidiary determines the minimum capital requirement for each risk, in accordance with Argentine Central Bank regulations. The capital risk management is cross-sectional with respect to the other risks. Senior management is responsible for monitoring, overseeing, adjusting and ensuring compliance with its stated goals concerning capital management. The Capital Adequacy Assessment Process (Proceso de Evaluación de Suficiencia de Capital - —PESC) (reflected in the Capital Adequacy Report - Report—IAC, as per its acronym in Spanish) enables to assess the relationship between own resources available and necessary resources to maintain an appropriate risk profile. This process also allows for the identification of both the economic capital needs and the sources to meet such needs. To perform stress tests, four scenarios with different likelihood of occurrence are defined, which could affect the solvency and liquidity. The most-likelymost likely to occur scenarios are used in management stress testing and are referred to when defining Risk Appetite thresholds. The least-likely to occur or least-severe scenarios are used in developing the Recovery Plan, which specifies the protocol defined for situations or events that may compromise the Bank'sBank’s operational capacity. As of December 31, 20182020, and December 31, 2017,2019, Banco Galicia complied with the minimum capital requirement established by the Argentine Central Bank regulations. Computable Regulatory Capital (R.P.C.,(RPC, as per the initials in Spanish) is made up of Core Capital and Supplementary Capital. Banco Galicia'sGalicia’s balance for such items as of December 31, 20182020 and December 31, 20172019 is as follows: | | 12.31.18 | | | 12.31.17 | | Core Capital | | | 36,584,326 | | | | 22,581,424 | | Tier 1 Common Capital | | | 41,863,969 | | | | 26,244,839 | | (Deductible Items) | | | (5,279,643 | ) | | | (3,663,415 | ) | Additional Tier 1 Capital | | | | | | | | | Supplementary Capital | | | 12,745,132 | | | | 6,947,945 | | Tier 2 Capital | | | 12,745,132 | | | | 6,947,945 | | (Deductible Items) | | | | | | | | | Computable Regulatory Capital (R.P.C.) | | | 49,329,458 | | | | 29,529,369 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Basic Shareholders´ Equity | | | 162,178,965 | | | | 74,314,620 | | (Deductible Items) | | | (32,594,504 | ) | | | (12,922,467 | ) | Equity Tier 1 | | | 129,584,461 | | | | 61,392,153 | | Complementing shareholders’ Equity | | | 27,477,066 | | | | 19,392,341 | | Equity Tier 2 | | | 27,477,066 | | | | 19,392,341 | | Regulatory Capital (RPC) | | | 157,061,527 | | | | 80,784,494 | |
The breakdown of the minimum capital requirement determined for the Group is shown below: | | 12.31.18 | | | 12.31.17 | | Credit Risk | | | 22,170,572 | | | | 17,263,077 | | Market Risk | | | 969,226 | | | | 1,126,159 | | Operational Risk | | | 4,023,443 | | | | 4,220,503 | | Minimum Capital Requirement | | | 27,163,241 | | | | 22,609,739 | | Paid-in | | | 49,329,458 | | | | 29,529,369 | | Excess | | | 22,166,217 | | | | 6,919,630 | |
Financial Risks
Financial risk is a phenomenon inherent to the financial brokerage activity. The exposure to the different financial risk factors is a natural circumstance that cannot be completely avoided without affecting the Group’s long-term economic viability. However, the lack of management with regard to risk exposures is one of the most significant short-term threats. Risk factors need to be identified and managed within a specific policy framework that envisages the profile and the level of risk it has been decided to take to achieve long-term strategic goals.
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Credit Risk | | | 42,457,859 | | | | 29,148,582 | | Market Risk | | | 1,419,264 | | | | 904,939 | | The "price risk" is the possibility of incurring losses as a consequence of the variation of the market price of financial assets whose value is subject to negotiation. Financial assets subject to "trading" or allocated to "own positions"Operational Risk
| | | 12,192,078 | | | | 7,608,102 | | Minimum Capital Requirement | | | 56,069,201 | | | | 37,661,623 | | Integration | | | 157,061,527 | | | | 80,784,494 | | Excess | | | 100,992,326 | | | | 43,122,871 | |
Financial Risks Financial risk is a phenomenon inherent to the financial brokerage activity. The exposure to the different financial risk factors is a natural circumstance that cannot be completely avoided without affecting the Group’s long-term economic viability. However, the lack of management regarding risk exposures is one of the most significant short-term threats. Risk factors need to be identified and managed within a specific policy framework that envisages the profile and the level of risk it has been decided to take to achieve long-term strategic goals. Market Risk The “price risk” is the possibility of incurring losses as a consequence of the variation of the market price of financial assets whose value is subject to negotiation. Financial assets subject to “trading” or allocated to “own positions” will be government and private debt securities, shares, currencies, derivatives and debt instruments issued by the Argentine Central Bank. Brokerage/trading transactions that are allowed and regulated by the Policy are as follows: -
| Brokerage of Government and Provincial Securities. |
-
| Brokerage of Currencies on the Spot and Futures Markets
|
-
| Brokerage of Interest Rate Derivatives. Interest Rate Futures and Interest Rate Swaps.
|
-
| Brokerage of Debt Instruments Issued by the Argentine Central Bank.
|
-
| Brokerage of Third-party Debt securities.
|
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GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year 2018, the following limits were established, within which the estimated risk for each type of instrument described above should be classified:
Risk | | Policy on Limits | Currency | | $ | 78 | | | million | Fixed-Income | | $ | 61 | | | million | Interest Rate Derivatives | | $ | 110 | | | million | Variable Income | | $ | 1 | | | million |
The "price risk" (market) is daily managed according to the strategy approved, the purpose of which is to keep the Group present in the different currencies, variable- and fixed-income and derivatives markets, while obtaining the maximum return as possible on brokerage, without exposing the latter to excessive risk levels. Finally, the designed policy contributes to providing transparency and facilitates the perception of the risk levels to which it is exposed. In order to measure and monitor risks derived from the variation in the price of financial instruments that form the trading or brokerage securities portfolio, a model known as “Value at Risk” (also known as "VaR") is used. This model determines the possible loss that could be generated by different financial instruments at each time under the following critical parameters.
Currency Risk
The Group's exposure to the foreign exchange risk as of year-end by type of currency is shown below:
Currency | | Balances as of 12.31.18 | | Currency | | Monetary Financial Assets | | | Monetary Financial Liabilities | | | Derivatives | | | Net Position | | U.S. Dollar | | | 196,546 | | | | (199,229 | ) | | | 101 | | | | (2,582 | ) | Euro | | | (557 | ) | | | 1,998 | | | | - | | | | 1,441 | | Canadian Dollar | | | (9 | ) | | | 42 | | | | - | | | | 33 | | Real | | | - | | | | - | | | | - | | | | - | | Swiss Franc | | | (13 | ) | | | 21 | | | | - | | | | 8 | | Others | | | (2 | ) | | | 49 | | | | - | | | | 47 | | Total | | | 195,965 | | | | (197,119 | ) | | | 101 | | | | (1,053 | ) |
Currency | | Balances as of 12.31.17 | | Currency | | Monetary Financial Assets | | | Monetary Financial Liabilities | | | Derivatives | | | Net Position | | U.S. Dollar | | | 126,277 | | | | (120,163 | ) | | | (4,155 | ) | | | 1,959 | | Euro | | | 793 | | | | (208 | ) | | | - | | | | 585 | | Canadian Dollar | | | 30 | | | | (6 | ) | | | - | | | | 24 | | Real | | | 18 | | | | - | | | | - | | | | 18 | | Swiss Franc | | | 16 | | | | (9 | ) | | | - | | | | 7 | | Others | | | 32 | | | | (1 | ) | | | - | | | | 31 | | Total | | | 127,166 | | | | (120,387 | ) | | | (4,155 | ) | | | 2,624 | |
Currency | | Change | | | Balances as of 12.31.18 | | | Balances as of 12.31.17 | | Currency | | Change | | | Income (Loss) | | | Shareholders' Equity | | | Income (Loss) | | | Shareholders' Equity | | U.S. Dollar | | | 10 | % | | | (258 | ) | | | (2,848 | ) | | | 196 | | | | 2,154 | | | | | -10 | % | | | 258 | | | | (2,323 | ) | | | (196 | ) | | | 1,763 | | Euro | | | 10 | % | | | 143 | | | | 1,575 | | | | 59 | | | | 644 | | | | | -10 | % | | | (143 | ) | | | 1,289 | | | | (59 | ) | | | 527 | | Canadian Dollar | | | 10 | % | | | 3 | | | | 366 | | | | 3 | | | | 27 | | | | | -10 | % | | | (3 | ) | | | 30 | | | | (3 | ) | | | 21 | | Real | | | 10 | % | | | - | | | | - | | | | 1 | | | | 21 | | | | | -10 | % | | | - | | | | - | | | | (1 | ) | | | 16 | | Swiss Franc | | | 10 | % | | | 1 | | | | 9 | | | | - | | | | 7 | | | | | -10 | % | | | (1 | ) | | | 7 | | | | - | | | | 6 | | Others | | | 10 | % | | | 5 | | | | 53 | | | | 3 | | | | 35 | | | | | -10 | % | | | (5 | ) | | | 43 | | | | (3 | ) | | | 30 | |
Interest Rate Risk
The different sensitivity of assets and liabilities to changes in "market interest rates" exposes the Group to the "interest rate risk". It is the risk that the financial margin and the economic value of equity may vary as a consequence of fluctuations in market interest rates. The magnitude of such variation is associated with the sensitivity to interest rates of the structure of the Group's assets and liabilities.
This risk factor (the change in interest rates) has an impact on two key variables: the "Net Financial Income (Expense)" and the "Present Value of Shareholders' Equity".
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GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
These methodologies imply a "short-term" approach for which a "base scenario" is subject to an increase in "interest rates" estimating the variation in "Financial Income (Expense)". Caps on such changes in variables subject to control are fixed. As regards the "long-term" approach, statistical interest rate simulations are made and a "critical" scenario results from the interest rate risk exposure presented by the financial statements structure. The economic capital arises from the resulting difference between the "critical" scenario and the market value as per the financial statements.
The Group's exposure to the interest rate risk is detailed below. This table shows the residual value of assets and liabilities, classified by the sooner of the interest renegotiation date or the maturity date.
| | Term (in Days) | | | Total | | Assets and Liabilities at Variable Rate | | Up to 30 days | | | 30 to 90 | | | 90 to 180 | | | 180 to 365 | | | Over 365 | | | Total | | As of 12.31.18 | | | | | | | | | | | | | | | | | | | | | | | | | Total Financial Assets | | | 205,717,873 | | | | 31,633,572 | | | | 33,104,131 | | | | 43,318,473 | | | | 168,405,494 | | | | 482,179,543 | | Total Financial Liabilities | | | 317,505,256 | | | | 27,996,087 | | | | 7,287,605 | | | | 4,351,288 | | | | 90,658,702 | | | | 447,798,938 | | Net Amount | | | (111,787,383 | ) | | | 3,637,485 | | | | 25,816,526 | | | | 38,967,185 | | | | 77,746,792 | | | | 34,380,605 | | As of 12.31.17 | | | | | | | | | | | | | | | | | | | | | | | | | Total Financial Assets | | | 229,078,934 | | | | 48,709,932 | | | | 38,560,371 | | | | 41,915,133 | | | | 22,166,248 | | | | 380,430,618 | | Total Financial Liabilities | | | 247,229,636 | | | | 30,430,892 | | | | 8,610,522 | | | | 7,702,696 | | | | 69,461,219 | | | | 363,434,965 | | Net Amount | | | (18,150,702 | ) | | | 18,279,040 | | | | 29,949,849 | | | | 34,212,437 | | | | (47,294,971 | ) | | | 16,995,653 | |
The table below shows the sensitivity to potential additional changes in interest rates in the next fiscal year, taking into account the breakdown as of December 31, 2018. The percentage change budgeted by the Group for fiscal year 2018 was determined considering 100 bps and changes are considered reasonably possible on the basis on an observation of market conditions.
| | Additional Changes to the Interest Rate | | Increase/(Decrease) in Income before Income Tax in Pesos | | | Increase/(Decrease) in Shareholders’ Equity in Pesos | | Decrease in Interest Rate | | -100 bps | | | (144,653 | ) | | | -0.4 | % | Increase in Interest Rate | | +100 bps | | | 144,653 | | | | 0.4 | % |
Liquidity Risk
It contemplates the risk that the Group is unable to offset or liquidate a position at market value because:
-
Brokerage of Currencies on the Spot and Futures Markets. | the assets that are part thereof do not have a sufficient secondary market; or
|
In measuring and daily following up the "stock liquidity" an internal model is used, which contemplates the characteristics of behavior of the Group's main funding sources. Based on the Group's experience in connection with the changes in deposits and other liabilities, this model determines the "liquidity requirements" applied to liabilities subject to the policy and give rise to the "Management Liquidity Requirement". In determining these liquid resources, the remaining term of liabilities is also contemplated, as well as the currency in which they are denominated. The resulting liquidity requirement is allocated to "eligible assets" set by the policy. The management liquidity requirement, along with the legal minimum cash requirements, are part of the total liquidity available.
Daily liquidity management is supplemented by the estimated available funds or needs for the day, considering the opening balance of Argentine Central Bank's account, deducting the daily minimum requirement and including the main movements for the day. The latter results in the overestimated/underestimated balance that will be taken into account by operators in order to place funds or meet the financing needs.
The monthly liquidity follow-up and control from the "flow" standpoint, called "liquidity mismatch/liquidity gap", are performed by estimating the accumulated mismatches within the first year as a percentage of total liabilities. The gap methodology used (contractual gaps) is consistent with the best international practices in the field.
In addition, the concentration of deposits is followed up and measured. In order to mitigate this risk factor, the policy designed restricts the involvement of two groups of customers to the total deposits: the first 10 customers and second 50 customers.
F-68
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The table below shows an analysis of maturities of assets and liabilities, determined on the basis of the remaining period as of December 31, 2018 and December 31, 2017, based on undiscounted cash flows:
| | Less than 1 Month | | | 1 to 6 Months | | | 6 to 12 Months | | | 12 Months to 5 Years | | | More than 5 Years | | | Total as of 12.31.18 | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | Debt Securities measured at Fair Value through Profit or Loss | | | 76,849,406 | | | | 249,268 | | | | 373,823 | | | | 1,035,345 | | | | 157,067 | | | | 78,664,909 | | Derivative Financial Instruments | | | 1,785,640 | | | | - | | | | - | | | | - | | | | - | | | | 1,785,640 | | Repo Transactions | | | 2,112,250 | | | | - | | | | - | | | | - | | | | - | | | | 2,112,250 | | Other Financial Assets | | | 9,056,190 | | | | - | | | | - | | | | - | | | | - | | | | 9,056,190 | | Loans and Other Financing | | | 93,109,786 | | | | 102,383,777 | | | | 55,974,479 | | | | 65,838,369 | | | | 9,507,527 | | | | 326,813,938 | | Other Debt Securities | | | 14,491,625 | | | | - | | | | - | | | | - | | | | - | | | | 14,491,625 | | Financial Assets Pledged as Collateral | | | 10,817,492 | | | | - | | | | - | | | | - | | | | - | | | | 10,817,492 | | Investments in Equity Instruments | | | 161,064 | | | | - | | | | - | | | | - | | | | - | | | | 161,064 | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 334,200,194 | | | | 29,585,189 | | | | 3,188,378 | | | | 76,741 | | | | 36 | | | | 367,050,538 | | Liabilities at fair value through profit or loss | | | 2,144,664 | | | | - | | | | - | | | | - | | | | - | | | | 2,144,664 | | Derivative Financial Instruments | | | 1,835,789 | | | | - | | | | - | | | | - | | | | - | | | | 1,835,789 | | Repo Transactions | | | 1,948,559 | | | | - | | | | - | | | | - | | | | - | | | | 1,948,559 | | Other Financial Liabilities | | | 63,065,272 | | | | 27,072 | | | | 33,365 | | | | 146,180 | | | | 7,145 | | | | 63,279,034 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 7,013,910 | | | | 8,149,083 | | | | 3,181,270 | | | | 7,455,499 | | | | 72,524 | | | | 25,872,286 | | Debt Securities | | | 1,301,031 | | | | 7,657,224 | | | | 13,262,785 | | | | 26,226,582 | | | | 1,260,277 | | | | 49,707,899 | | Subordinated Debt Securities | | | 384,557 | | | | - | | | | 384,557 | | | | 3,378,758 | | | | 11,422,006 | | | | 15,569,878 | |
| | Less than 1 Month | | | 1 to 6 Months | | | 6 to 12 Months | | | 12 Months to 5 Years | | | More than 5 Years | | | Total as of 12.31.17 | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | Debt Securities measured at Fair Value through Profit or Loss | | | 40,822,900 | | | | 316,471 | | | | 156,817 | | | | 1,423,261 | | | | 197,466 | | | | 42,916,915 | | Derivative Financial Instruments | | | 775,674 | | | | - | | | | - | | | | - | | | | - | | | | 775,674 | | Repo Transactions | | | 14,286,336 | | | | - | | | | - | | | | - | | | | - | | | | 14,286,336 | | Other Financial Assets | | | 10,214,745 | | | | - | | | | - | | | | - | | | | - | | | | 10,214,745 | | Loans and Other Financing | | | 94,765,477 | | | | 100,466,108 | | | | 50,269,774 | | | | 66,942,156 | | | | 8,623,630 | | | | 321,067,145 | | Other Debt Securities | | | 3,999,205 | | | | - | | | | - | | | | - | | | | - | | | | 3,999,205 | | Financial Assets Pledged as Collateral | | | 9,346,788 | | | | - | | | | - | | | | - | | | | - | | | | 9,346,788 | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 269,207,286 | | | | 24,546,832 | | | | 7,021,479 | | | | 145,716 | | | | - | | | | 300,921,313 | | Derivative Financial Instruments | | | 846,331 | | | | - | | | | - | | | | - | | | | - | | | | 846,331 | | Repo Transactions | | | 1,670,059 | | | | - | | | | - | | | | - | | | | - | | | | 1,670,059 | | Other Financial Liabilities | | | 57,997,972 | | | | - | | | | - | | | | - | | | | - | | | | 57,997,972 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 14,142,054 | | | | 17,263,524 | | | | 3,285,039 | | | | 6,949,390 | | | | 202,647 | | | | 41,842,654 | | Debt Securities | | | - | | | | 2,620,071 | | | | 1,564,903 | | | | 22,520,599 | | | | - | | | | 26,705,573 | | Subordinated Debt Securities | | | 257,269 | | | | 7,163,107 | | | | - | | | | - | | | | - | | | | 7,420,376 | |
Credit Risk
Credit risk arises from the possibility of suffering losses due to a debtor’s or counterparty’s noncompliance with its contractual obligations. It is the one that requires the greatest need for capital, including that arising from the risk of individual and sectorial concentration, which represents supplementary approximations to the intrinsic credit risk.
Accordingly, the Group uses credit assessment and risk monitoring tools that allow the entity to manage risks in a streamlined and controlled manner and that foster the adequate diversification of portfolios, both on an individual basis and by economic sector, thus controlling its exposure to potential risks.
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GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The credit quality of debt securities as of December 31, 2018 is as follows:
| | Government Securities | | | | | | | | | | | | | | Rating | | Government Bonds | | | Provincial Bonds | | | Autonomous City of Buenos Aires Bonds | | | Treasury Bills | | | Argentine Central Bank's Bills | | | Private Securities | | | Total | | AAA | | | 1,473,352 | | | | - | | | | - | | | | 2,116,944 | | | | - | | | | 78,658 | | | | 3,668,954 | | Aaa | | | - | | | | - | | | | - | | | | - | | | | - | | | | 36,622 | | | | 36,622 | | Aaa.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 196,475 | | | | 196,475 | | AA+ | | | - | | | | - | | | | 37,166 | | | | - | | | | - | | | | 20,875 | | | | 58,041 | | AA | | | - | | | | - | | | | - | | | | - | | | | - | | | | 283,224 | | | | 283,224 | | AA(arg) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 11,161 | | | | 11,161 | | raAA | | | - | | | | 447,942 | | | | - | | | | - | | | | - | | | | - | | | | 447,942 | | AA- | | | - | | | | - | | | | - | | | | - | | | | - | | | | 276 | | | | 276 | | A+ | | | - | | | | - | | | | - | | | | 1,071 | | | | - | | | | 141,125 | | | | 142,196 | | A1.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 14,063 | | | | 14,063 | | A | | | - | | | | - | | | | - | | | | 70,350 | | | | - | | | | 3,047 | | | | 73,397 | | A(arg) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 29,450 | | | | 29,450 | | A- | | | - | | | | - | | | | - | | | | - | | | | - | | | | 41,041 | | | | 41,041 | | A3.ar | | | - | | | | 146,997 | | | | - | | | | - | | | | - | | | | - | | | | 146,997 | | BBB+ | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,326 | | | | 1,326 | | Baa1.ar | | | - | | | | - | | | | 5,073 | | | | - | | | | - | | | | 9,775 | | | | 14,848 | | BBB | | | 11,544 | | | | 9,110 | | | | - | | | | - | | | | - | | | | 26,956 | | | | 47,610 | | BBB(arg) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 31,173 | | | | 31,173 | | BBB- | | | - | | | | 266,229 | | | | - | | | | - | | | | - | | | | - | | | | 266,229 | | Baa3.ar | | | - | | | | 113,517 | | | | - | | | | - | | | | - | | | | - | | | | 113,517 | | B+ | | | 511 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 511 | | B- | | | - | | | | - | | | | - | | | | - | | | | - | | | | 3,098 | | | | 3,098 | | CCC(arg) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 209,248 | | | | 209,248 | | No Rating | | | - | | | | - | | | | - | | | | - | | | | 70,097,764 | | | | - | | | | 70,097,764 | | Total | | | 1,485,407 | | | | 983,795 | | | | 42,239 | | | | 2,188,365 | | | | 70,097,764 | | | | 1,137,593 | | | | 75,935,163 | |
The credit quality of debt securities as of December 31, 2017
Brokerage of Interest Rate Derivatives. Interest Rate Futures and Interest Rate Swaps. Brokerage of Debt Instruments Issued by the Argentine Central Bank. Brokerage of Third-party Debt securities. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the fiscal year 2020, a unified limit was set for all operations of $4,250,000. The “price risk” (market) is daily managed according to the strategy approved, the purpose of which is to keep the Group present in the different currencies, variable- and fixed-income and derivatives markets, while obtaining the maximum return as possible on brokerage, without exposing the latter to excessive risk levels. Finally, the designed policy contributes to providing transparency and facilitates the perception of the risk levels to which it is exposed. In order to measure and monitor risks derived from the variation in the price of financial instruments that form the trading or brokerage securities portfolio, a model known as “Value at Risk” (also known as “VaR”) is used. This model determines the possible loss that could be generated by different financial instruments at each time under the following critical parameters. Currency Risk The Group’s exposure to the foreign exchange risk as of year-end by type of currency is shown below: | | | | | | | | | | | | | | | | | | | | Balances as of 12.31.20 | | Currency | | Monetary
Financial
Assets | | | Monetary
Financial
Liabilities | | | Derivatives | | | Net Position | | US Dollar | | | 212,122 | | | | (210,940 | ) | | | — | | | | 1,182 | | Euro | | | 4,401 | | | | (802 | ) | | | — | | | | 3,599 | | Canadian Dollar | | | 134 | | | | (4 | ) | | | — | | | | 130 | | Real | | | 34 | | | | — | | | | — | | | | 34 | | Swiss Franc | | | 52 | | | | (30 | ) | | | — | | | | 22 | | Others | | | 103 | | | | (3 | ) | | | — | | | | 100 | | | | | | | | | | | | | | | | | | | Total | | | 216,846 | | | | (211,779 | ) | | | — | | | | 5,067 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Balances as of 12.31.19 | | Currency | | Monetary
Financial
Assets | | | Monetary
Financial
Liabilities | | | Derivatives | | | Net Position | | US Dollar | | | 265,631 | | | | (267,422 | ) | | | 30 | | | | (1,761 | ) | Euro | | | 3,105 | | | | (399 | ) | | | — | | | | 2,706 | | Canadian Dollar | | | 116 | | | | (5 | ) | | | — | | | | 111 | | Real | | | 1 | | | | — | | | | — | | | | 1 | | Swiss Franc | | | 44 | | | | (23 | ) | | | — | | | | 21 | | Others | | | 103 | | | | (5 | ) | | | — | | | | 98 | | | | | | | | | | | | | | | | | | | Total | | | 269,000 | | | | (267,854 | ) | | | 30 | | | | 1,176 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of 12.31.20 | | | Balances as of 12.31.19 | | Currency | | Change | | | Income
(Loss) | | | Shareholders’
Equity | | | Income
(Loss) | | | Shareholders’
Equity | | US Dollar | | | 10 | % | | | 118 | | | | 1,300 | | | | 176 | | | | (1,937 | ) | | | | -10 | % | | | (118 | ) | | | 1,064 | | | | (176 | ) | | | (1,585 | ) | Euro | | | 10 | % | | | 360 | | | | 3,959 | | | | 271 | | | | 2,977 | | | | | -10 | % | | | (360 | ) | | | 3,239 | | | | (271 | ) | | | 2,436 | | Canadian Dollar | | | 10 | % | | | 13 | | | | 143 | | | | 11 | | | | 121 | | | | | -10 | % | | | (13 | ) | | | 117 | | | | (11 | ) | | | 99 | | Real | | | 10 | % | | | 3 | | | | 37 | | | | — | | | | 1 | | | | | -10 | % | | | (3 | ) | | | 31 | | | | — | | | | 1 | | Swiss Franc | | | 10 | % | | | 2 | | | | 24 | | | | 1 | | | | 22 | | | | | -10 | % | | | (2 | ) | | | 20 | | | | (1 | ) | | | 18 | | Others | | | 10 | % | | | 10 | | | | 110 | | | | 10 | | | | 108 | | | | | -10 | % | | | (10 | ) | | | 90 | | | | (10 | ) | | | 88 | |
Interest Rate Risk The different sensitivity of assets and liabilities to changes in “market interest rates” exposes the Group to the “interest rate risk”. It is the risk that the financial margin and the economic value of equity may vary as a consequence of fluctuations in market interest rates. The magnitude of such variation is associated with the sensitivity to interest rates of the structure of the Group’s assets and liabilities. This risk factor (the change in interest rates) has an impact on two key variables: the “Net Financial Income (Expense)” and the “Present Value of Shareholders’ Equity”. These methodologies imply a “short-term” approach for which a “base scenario” is subject to an increase in “interest rates” estimating the variation in “Financial Income (Expense)”. Caps on such changes in variables subject to control are fixed. As regards the “long-term” approach, statistical interest rate simulations are made and a “critical” scenario GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS results from the interest rate risk exposure presented by the financial statements structure. The economic capital arises from the resulting difference between the “critical” scenario and the market value as per the financial statements. The Group’s exposure to the interest rate risk is detailed below. This table shows the residual value of assets and liabilities, classified by the sooner of the interest renegotiation date or the maturity date. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Term (in Days) | | | | | Assets and Liabilities at Variable Rate | | Up to 30 | | | From 30 to
90 | | | From 90 to
180 | | | From 180 to
365 | | | More than
365 | | | Total | | As of 12.31.20 | | | | | | | | | | | | | | | | | | | | | | | | | Total Financial Assets | | | 329,561,051 | | | | 81,048,347 | | | | 73,404,578 | | | | 122,032,475 | | | | 331,583,426 | | | | 937,629,877 | | Total Financial Liabilities | | | 525,873,217 | | | | 66,622,888 | | | | 17,447,849 | | | | 8,728,360 | | | | 204,482,905 | | | | 823,155,219 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Amount | | | (196,312,166 | ) | | | 14,425,459 | | | | 55,956,729 | | | | 113,304,115 | | | | 127,100,521 | | | | 114,474,658 | | | | | | | | | | | | | | | | | | | | | | | | | | | As of 12.31.19 | | | | | | | | | | | | | | | | | | | | | | | | | Total Financial Assets | | | 274,590,418 | | | | 69,553,555 | | | | 69,742,708 | | | | 61,211,792 | | | | 340,621,292 | | | | 815,719,765 | | Total Financial Liabilities | | | 377,563,393 | | | | 61,431,217 | | | | 33,503,067 | | | | 4,678,139 | | | | 212,118,123 | | | | 689,293,939 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Amount | | | (102,972,975 | ) | | | 8,122,338 | | | | 36,239,641 | | | | 56,533,653 | | | | 128,503,169 | | | | 126,425,826 | | | | | | | | | | | | | | | | | | | | | | | | | | |
The table below shows the sensitivity to potential additional changes in interest rates in the next fiscal year, considering the breakdown as of December 31, 2020. The percentage change budgeted by the Group for fiscal year 2020 was determined considering 100 bps and changes are considered reasonably possible on the basis on an observation of market conditions. | | | | | | | | | | | | | | | | Additional
Changes to the
Interest Rate | | | Increase/(Decrease)
in Income before
Income Tax in
Pesos | | | Increase/(Decrease)
in Shareholders’
Equity in % | | Decrease in Interest Rate | | | -100 pb | | | | (1,130,532 | ) | | | -1 | % | Increase in Interest Rate | | | +100 pb | | | | 1,130,532 | | | | 1 | % |
Liquidity Risk It contemplates the risk that the Group is unable to offset or liquidate a position at market value because: the assets that are part thereof do not have a sufficient secondary market; or In measuring and daily following up the “stock liquidity” an internal model is used, which contemplates the characteristics of behavior of the Group’s main funding sources. Based on the Group’s experience in connection with the changes in deposits and other liabilities, this model determines the “liquidity requirements” applied to liabilities subject to the policy and give rise to the “Management Liquidity Requirement”. In determining these liquid resources, the remaining term of liabilities is also contemplated, as well as the currency in which they are denominated. The resulting liquidity requirement is allocated to “eligible assets” set by the policy. The management liquidity requirement, along with the legal minimum cash requirements, are part of the total liquidity available. Daily liquidity management is supplemented by the estimated available funds or needs for the day, considering the opening balance of Argentine Central Bank’s account, deducting the daily minimum requirement and including the main movements for the day. The latter results in the overestimated/underestimated balance that will be considered by operators in order to place funds or meet the financing needs. The monthly liquidity follow-up and control from the “flow” standpoint, called “liquidity mismatch/liquidity gap”, are performed by estimating the accumulated mismatches within the first year as a percentage of total liabilities. The gap methodology used (contractual gaps) is consistent with the best international practices in the field. In addition, the concentration of deposits is followed up and measured. In order to mitigate this risk factor, the policy designed restricts the involvement of two groups of customers to the total deposits: the first 10 customers and second 50 customers. The table below shows an analysis of maturities of assets and liabilities, determined based on the remaining period as of December 31, 2020 and December 31, 2019, based on undiscounted cash flows: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | Less than 1
Month | | | 1 to 6
Months | | | 6 to 12
Months | | | 12 Months
to 5 Years | | | More than
5 Years | | | Total as of
12.31.20 | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | Debt Securities measured at Fair Value through Profit or Loss | | | 152,729,877 | | | | 564,114 | | | | 3,180,660 | | | | 432,222 | | | | — | | | | 156,906,873 | | Derivative Financial Instruments | | | 547,929 | | | | — | | | | — | | | | — | | | | — | | | | 547,929 | | Repurchase Transactions | | | 61,778,505 | | | | — | | | | — | | | | — | | | | — | | | | 61,778,505 | | Other Financial Assets | | | 7,677,635 | | | | 100,805 | | | | 122,168 | | | | 3,065,831 | | | | — | | | | 10,966,439 | | Loans and Other Financing | | | 165,672,357 | | | | 204,326,574 | | | | 135,444,263 | | | | 93,566,134 | | | | 30,542,150 | | | | 629,551,478 | | Other Debt Securities | | | 25,403,983 | | | | — | | | | — | | | | — | | | | — | | | | 25,403,983 | | Financial Assets Pledged as Collateral | | | 18,717,443 | | | | — | | | | — | | | | — | | | | — | | | | 18,717,443 | | Investments in Equity Instruments | | | 3,745,893 | | | | — | | | | — | | | | — | | | | — | | | | 3,745,893 | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 636,596,852 | | | | 45,007,577 | | | | 2,563,927 | | | | 122,377 | | | | 27 | | | | 684,290,760 | | Liabilities at fair value through profit or loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Derivative Financial Instruments | | | 57,450 | | | | — | | | | — | | | | — | | | | — | | | | 57,450 | | Other Financial Liabilities | | | 93,004,399 | | | | 24,479 | | | | 27,441 | | | | 80,500 | | | | — | | | | 93,136,819 | | Lease liabilities | | | 154,855 | | | | 724,867 | | | | 795,298 | | | | 3,700,393 | | | | 1,376,069 | | | | 6,751,482 | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | 2,607,987 | | | | 3,290,896 | | | | 6,137,695 | | | | 3,736,864 | | | | — | | | | 15,773,442 | | Debt Securities | | | 736,438 | | | | 6,156,557 | | | | 8,055,337 | | | | 6,349,253 | | | | — | | | | 21,297,585 | | Subordinated Debt Securities | | | 855,858 | | | | — | | | | 855,858 | | | | 7,559,716 | | | | 21,871,443 | | | | 31,142,875 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Less than 1
Month | | | 1 to 6
Months | | | 6 to 12
Months | | | 12 Months
to 5 Years | | | More than
5 Years | | | Total as of
12.31.19 | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | Debt Securities measured at Fair Value through Profit or Loss | | | 88,378,198 | | | | 1,197,484 | | | | 19,642 | | | | 212,016 | | | | 7,157 | | | | 89,814,497 | | Derivative Financial Instruments | | | 1,903,979 | | | | — | | | | — | | | | — | | | | — | | | | 1,903,979 | | Repurchase Transactions | | | 41,828,680 | | | | — | | | | — | | | | — | | | | — | | | | 41,828,680 | | Other Financial Assets | | | 11,221,494 | | | | — | | | | — | | | | — | | | | — | | | | 11,221,494 | | Loans and Other Financing | | | 180,043,930 | | | | 178,211,585 | | | | 80,880,191 | | | | 131,022,366 | | | | 35,994,787 | | | | 606,152,859 | | Other Debt Securities | | | 28,143,083 | | | | — | | | | — | | | | — | | | | — | | | | 28,143,083 | | Financial Assets Pledged as Collateral | | | 15,725,036 | | | | — | | | | — | | | | — | | | | — | | | | 15,725,036 | | Investments in Equity Instruments | | | 3,400,065 | | | | — | | | | — | | | | — | | | | — | | | | 3,400,065 | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 488,012,093 | | | | 56,841,558 | | | | 2,974,312 | | | | 105,337 | | | | 44 | | | | 547,933,344 | | Liabilities at fair value through profit or loss | | | 1,936,133 | | | | — | | | | — | | | | — | | | | — | | | | 1,936,133 | | Derivative Financial Instruments | | | 1,199,533 | | | | — | | | | — | | | | — | | | | — | | | | 1,199,533 | | Other Financial Liabilities | | | 92,068,438 | | | | — | | | | — | | | | — | | | | — | | | | 92,068,438 | | Lease Liabilities | | | 83,613 | | | | 434,437 | | | | 542,376 | | | | 2,630,481 | | | | 1,439,080 | | | | 5,129,987 | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | 5,064,925 | | | | 14,694,200 | | | | 5,828,763 | | | | 8,446,270 | | | | — | | | | 34,034,158 | | Debt Securities | | | 4,721,798 | | | | 24,857,077 | | | | 5,653,122 | | | | 13,796,603 | | | | 930,705 | | | | 49,959,305 | | Subordinated Debt Securities | | | 827,691 | | | | — | | | | 827,691 | | | | 7,279,079 | | | | 22,997,121 | | | | 31,931,582 | |
Credit Risk Credit risk arises from the possibility of suffering losses due to a debtor’s or counterparty’s noncompliance with its contractual obligations. It is the one that requires the greatest need for capital, including that arising from the risk of individual and sectorial concentration, which represents supplementary approximations to the intrinsic credit risk. Accordingly, the Group uses credit assessment and risk monitoring tools that allow the entity to manage risks in a streamlined and controlled manner and that foster the adequate diversification of portfolios, both on an individual basis and by economic sector, thus controlling its exposure to potential risks. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The credit quality of debt securities as of December 31, 2020 is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Government Securities | | | | | | | | | | | Rating | | Government
Bonds | | | Provincial
Bonds | | | Autonomous
City of
Buenos
Aires Bonds | | | Treasury
Bills | | | Argentine
Central
Bank’s Bills | | | Private
Securities | | | Total as of
12.31.20 | | AAA | | | 2,335,283 | | | | — | | | | — | | | | 16,964,950 | | | | — | | | | 703,421 | | | | 20,003,654 | | AA+ | | | — | | | | — | | | | 90,199 | | | | — | | | | — | | | | 296 | | | | 90,495 | | AA | | | — | | | | — | | | | — | | | | — | | | | — | | | | 56,802 | | | | 56,802 | | Aa2 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 32,226 | | | | 32,226 | | AA- | | | 47,643 | | | | — | | | | — | | | | — | | | | — | | | | 894,582 | | | | 942,225 | | A+ | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,263 | | | | 1,263 | | A1 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 180,683 | | | | 180,683 | | A1+ | | | — | | | | — | | | | — | | | | — | | | | — | | | | 820,913 | | | | 820,913 | | A | | | — | | | | — | | | | — | | | | — | | | | — | | | | 21,481 | | | | 21,481 | | A2 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 108 | | | | 108 | | A- | | | — | | | | — | | | | — | | | | — | | | | — | | | | 40,605 | | | | 40,605 | | A3 | | | — | | | | 200,768 | | | | — | | | | — | | | | — | | | | — | | | | 200,768 | | Baa1 | | | — | | | | — | | | | 1,000 | | | | — | | | | — | | | | 29,226 | | | | 30,226 | | Baa3 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 13,293 | | | | 13,293 | | B | | | — | | | | 539,371 | | | | — | | | | — | | | | — | | | | — | | | | 539,371 | | CCC | | | 4,103,429 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,103,429 | | C | | | — | | | | — | | | | — | | | | — | | | | 128,324,920 | | | | 17,098 | | | | 128,342,018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 6,486,355 | | | | 740,139 | | | | 91,199 | | | | 16,964,950 | | | | 128,324,920 | | | | 2,811,997 | | | | 155,419,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The credit quality of debt securities as of December 31, 2019 is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Government Securities | | | | | | | | | | | Rating | | Government
Bonds | | | Provincial
Bonds | | | Autonomous
City of
Buenos
Aires Bonds | | | Treasury
Bills | | | Argentine
Central
Bank’s Bills | | | Private
Securities | | | Total as of
12.31.19 | | AAA | | | 422,241 | | | | — | | | | — | | | | 8,485,627 | | | | — | | | | — | | | | 8,907,868 | | AA+ | | | — | | | | — | | | | 60,303 | | | | — | | | | — | | | | 7,229 | | | | 67,532 | | AA | | | — | | | | — | | | | — | | | | — | | | | — | | | | 130,577 | | | | 130,577 | | AA- | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,920 | | | | 14,920 | | A+ | | | — | | | | — | | | | — | | | | — | | | | — | | | | 175,635 | | | | 175,635 | | A1+ | | | — | | | | — | | | | — | | | | — | | | | — | | | | 639,014 | | | | 639,014 | | A- | | | — | | | | — | | | | — | | | | — | | | | — | | | | 48,862 | | | | 48,862 | | A3 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 102,484 | | | | 102,484 | | Baa1 | | | — | | | | — | | | | 103,666 | | | | — | | | | — | | | | — | | | | 103,666 | | BBB | | | 12,875 | | | | — | | | | — | | | | — | | | | — | | | | 20,580 | | | | 33,455 | | B- | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,336 | | | | 6,336 | | CC | | | 36,962 | | | | — | | | | — | | | | — | | | | 79,153,628 | | | | — | | | | 79,190,590 | | C | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,439 | | | | 10,439 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 472,078 | | | | — | | | | 163,969 | | | | 8,485,627 | | | | 79,153,628 | | | | 1,156,076 | | | | 89,431,378 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Summary of credit risk The following disclosures present the gross carrying amount of financial instruments to which the impairment requirements in IFRS 9 are applied and the associated allowance for loan losses. Those credits that do not have reasonable expectations of recovering the contractual cash flows are eliminated from the Group’s assets and are recognized in “Off-balance Items”. The credit quality related to loans granted is detailed in Schedule B. The breakdown by term of “Net Loans and Other Financing” is detailed in Schedule D. Impairment of financial assets The “Expected Credit Loss” (“ECL”) model applies to financial assets which are valued at both amortized cost and fair value through OCI. The standard establishes three categories to classify financial instruments, primarily considering the credit risk evolution over time. Stage 1 includes financial assets with normal or no significant risk associated; Stage 2 includes financial assets for which a significant increase in credit risk (“SICR”) has been identified but they are not yet deemed to be credit-impaired and Stage 3 comprises financial assets which are impaired and/or subject to serious risk of impairment. To calculate the provisions for credit impairment risk, IFRS 9 differentiates between each of the three stages. The resulting concepts are explained as follows: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Expected Credit Losses within a 12-month period: possible events of default within the 12 months following the date of the presentation of financial statements. Assets included in Stage 1 have their ECL measured at 12-month ECL. Lifetime Expected Credit Losses: ECL during the active period of the financial asset, which results of calculating the probability of impairment of an asset throughout its duration, up until its maturity. Instruments in Stage 2 or 3 have their ECL measured based on lifetime ECL. A pervasive concept in measuring ECL in accordance with IFRS 9 is that it should consider forward looking information. The Group has included below an explanation on how it has incorporated this in its ECL models. Grouping of instruments for losses measured on a collective basis For expected credit loss provisions modelled on a collective basis, a grouping of exposures is performed based on shared risks characteristics, such that risk exposures within group are homogeneous. In performing this grouping, there must be sufficient information for the group to be statistically credible. Where sufficient information is not available internally, the Group has considered benchmarking internal/external supplementary data to use for modelling purposes. The Group has identified four groupings: Retail, Retail-like, Wholesale and Naranja, amongst these four segments the Group estimates parameters in a more granular way based on the shared risk characteristics. Stage classification Each subsidiary of Grupo Galicia classifies financial instruments subject to impairment under IFRS 9 in stages, as follows: | | Government Securities | | | | | | | | | | | | | | Rating | | Government Bonds | | | Provincial Bonds | | | Autonomous City of Buenos Aires Bonds | | | Treasury Bills | | | Argentine Central Bank's Bills | | | Private Securities | | | Total | | AAA | | | 1,252,988 | | | | - | | | | - | | | | 7,848,448 | | | | - | | | | 224,986 | | | | 9,326,422 | | AAA(arg) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 33,736 | | | | 33,736 | | Aaa | | | - | | | | - | | | | - | | | | - | | | | - | | | | 565 | | | | 565 | | raAAA | | | - | | | | - | | | | - | | | | - | | | | - | | | | 37,322 | | | | 37,322 | | Aaa.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 117,712 | | | | 117,712 | | AA+ | | | - | | | | - | | | | 1,030,605 | | | | - | | | | - | | | | 122,603 | | | | 1,153,208 | | AA | | | - | | | | - | | | | - | | | | - | | | | - | | | | 864,685 | | | | 864,685 | | AA(arg) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 54,610 | | | | 54,610 | | Aa2.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 56,894 | | | | 56,894 | | AA- | | | - | | | | - | | | | 35,488 | | | | - | | | | - | | | | 274,928 | | | | 310,416 | | Aa3.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13,338 | | | | 13,338 | | A+ | | | - | | | | - | | | | - | | | | - | | | | - | | | | 188,641 | | | | 188,641 | | A1.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,456 | | | | 21,456 | | A | | | - | | | | - | | | | - | | | | - | | | | - | | | | 24,040 | | | | 24,040 | | A(arg) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 104,592 | | | | 104,592 | | A2.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 3,783 | | | | 3,783 | | A- | | | - | | | | - | | | | - | | | | - | | | | - | | | | 55,729 | | | | 55,729 | | A3.ar | | | - | | | | 279,262 | | | | - | | | | - | | | | - | | | | - | | | | 279,262 | | BBB+ | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,483 | | | | 4,483 | | Baa1.ar | | | - | | | | - | | | | 65,677 | | | | - | | | | - | | | | 216,292 | | | | 281,969 | | BBB | | | - | | | | 1,104 | | | | - | | | | - | | | | - | | | | - | | | | 1,104 | | raBBB | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,506 | | | | 1,506 | | Baa2.ar | | | - | | | | 24,140 | | | | - | | | | - | | | | - | | | | - | | | | 24,140 | | BBB- | | | - | | | | 1,289,436 | | | | - | | | | - | | | | - | | | | - | | | | 1,289,436 | | Baa3.ar | | | - | | | | 2,096,012 | | | | - | | | | - | | | | - | | | | - | | | | 2,096,012 | | B2.ar | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,348 | | | | 5,348 | | B- | | | - | | | | - | | | | - | | | | - | | | | - | | | | 29,711 | | | | 29,711 | | No Rating | | | - | | | | - | | | | - | | | | - | | | | 26,367,677 | | | | - | | | | 26,367,677 | | Total | | | 1,252,988 | | | | 3,689,954 | | | | 1,131,770 | | | | 7,848,448 | | | | 26,367,677 | | | | 2,456,960 | | | | 42,747,797 | |
| • | | F-70
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SummaryStage 1: in the case of credit risk
The following disclosure presents the gross carrying/nominal amount of financial instrumentsretail portfolios, it includes every operation up to which the impairment requirements in IFRS 9 are applied and the associated allowance for ECL.
Loans classified as uncollectible for 7 months are eliminated from the Group’s assets and are recognized in "Off-Balance Sheet Items".
The credit quality related to loans granted is detailed in Schedule B.
The breakdown by term of "Net Loans and Other Financing" is detailed in Schedule D.
Impairment of financial assets
The “Expected Credit Loss” (“ECL”) model applies to financial assets which are valued at both amortized cost and fair value through OCI.
The standard establishes three categories to classify financial instruments, primarily taking into account the credit risk evolution over time. Stage 1 includes financial assets with normal or no significant risk associated; Stage 2 includes financial assets for which a significant increase in credit risk (“SICR”) has been identified but they are not yet deemed to be credit-impaired and Stage 3 comprises financial assets which are impaired and/or subject to serious risk of impairment.
To calculate the provisions for credit impairment risk, IFRS 9 differentiates between each of the three stages. The resulting concepts are explained as follows:
| -
| Expected Credit Losses within a 12-month period: possible events of default within the 12 months following the date of the presentation of financial statements. Assets included in Stage 1 have their ECL measured at 12 month ECL.
|
| -
| Lifetime Expected Credit Losses: ECL during the active period of the financial asset, which results of calculating the probability of impairment of an asset throughout its duration, up until its maturity. Instruments in Stage 2 or 3 have their ECL measured based on lifetime ECL.
|
A pervasive concept in measuring ECL in accordance with IFRS 9 is that it should consider forward looking information. The Group has included below an explanation on how it has incorporated this in its ECL models.
Grouping of instruments for losses measured on a collective basis
For expected credit loss provisions modelled on a collective basis, a grouping of exposures is performed on the basis of shared risks characteristics, such that risk exposures within group are homogeneous. In performing this grouping, there must be sufficient information for the group to be statistically credible. Where sufficient information is not available internally, the Group has considered benchmarking internal/external supplementary data to use for modelling purposes. The Group has identified four groupings: Retail, Retail-like, Wholesale and Tarjeta Naranja, amongst these four segments the Group estimates parameters in a more granular way based on the shared risk characteristics.
Stage classification
Each subsidiary of Grupo Galicia classifies financial instruments subject to impairment under IFRS 9 in stages, as follows:
| -
| Stage 1: in the case of retail portfolios, it includes every operation up to 31 days past due.
|
31 days past due. In the case of wholesale portfolios, it considers every client whose Central Bank of the Argentine Republic (B.C.R.A.)BCRA situation indicates a normal status (A1) (i.e. low risk of bankruptcy). |
| -
| Stage 2: considers two groups: |
| o
| Portfolios between 31 and 90 days past due. |
| o
| Probability of Default (“PD”) or Score with impairment risk.
|
| o
| For wholesale, it considers credit ratings for which the risk of default has increased significantly.
|
Probability of Default (“PD”) or Score with impairment risk. | -
| Stage 3: For retail portfolios, it includes every operation amounting 90 or more days past due.
|
For wholesale portfolios, it considers every client whose B.C.R.A. situation indicates serious risk of bankruptcy (C, D, E, F).
| For wholesale, it considers credit ratings for which the risk of default has increased significantly (see definition in section below). |
1
| The analysis of the customer's cash flow shows that it is capable of attend adequately all its financial commitments.
|
Stage 3: For retail portfolios, it includes every operation amounting 90 or more days past due. For wholesale portfolios, it considers every client whose BCRA situation indicates serious risk of bankruptcy (C, D, E). F-71
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Significant Increase in credit risk The Group considers a financial instrument to have experienced a significant increase in credit risk when any of the following conditions exist: Retail Portfolio
| 1 | The analysis of the customer’s cash flow shows that it is capable of attend adequately all its financial commitments. |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | Lifetime PD band at initial recognition
| | | | | Retail Portfolio | | | | | BCRA situation | | Extra conditions to be considered stage 2 | <6%
| | -Cure
| | | -Between 30 and 90 past due days
| | | | | >6%
| | -It does not apply to defaulted clients
| | | | | Retail-like portfolio
| | | | Rating Ranges
| | Extra conditions to be considered stage 2
| | | -Cure
| | A, AA, AA+, B, BB, BBB
| | -Between 30 and 90 past due days
| | | | | C, CC, CCC
| | -It does not apply to defaulted clients
| | | | Wholesale portfolio
| | | | Rating Ranges
| | Extra conditions to be considered stage 2
| | | | | A, AA, AA+, B, BB, BBB
| | - B.C.R.A. situation B1
| | | | | C, CC, CCC
| | -It does not apply to defaulted clients
| | | | |
Definition of Default
A financial asset is considered to be in default whenever a payment is more thanconsidered stage 2
| A, B1 | | - Cure | | | - Between 30 and 90 days past due or if the Company considers the payment will not be fully reimbursed.However, given the credit analysis for wholesale loans is not managed and classified the same way as retail loans, the default definition associated to wholesale portfolios is ultimately linked to the individual analysis provided by credit analysts.
The default definition has been applied consistently to model thedays
| | | - Probability of Default (PD), Exposure at(“PD”) or Score(*) with impairment risk | C | | - It does not apply to defaulted clients | | | | Retail-like Portfolio | | | | | BCRA situation | | Extra conditions to be considered stage 2 | A, B1 | | - Cure | | | - Between 30 and 90 past due days | | | - Probability of Default (EAD) and Loss given(“PD”) or Score(*) with impairment risk | C | | - It does not apply to defaulted clients | | | | Wholesale Portfolio | | | | | BCRA situation | | Extra conditions to be considered stage 2 | A | | - Cure | | | - BCRA situation B1 | | | - Probability of Default (LGD) throughout the Group’s expected loss calculations:(“PD”) or Score(*) with impairment riskC | | - It does not apply to defaulted clients | | -
Definition of Default A financial asset is in default whenever a payment is more than 90 days past due, or if the Company considers the payment will not be fully reimbursed. However, given the credit analysis for wholesale loans is not managed and classified the same way as retail loans, the default definition associated to wholesale portfolios is ultimately linked to the individual analysis provided by credit analysts. The default definition has been applied consistently to model the Probability of Default (PD), Exposure at Default (EAD) and Loss given Default (LGD) throughout the Group’s expected loss calculations: Probability of Default (“PD”): it represents the likelihood of a borrower defaulting on its financial obligation (as per the definition of default included above), either over the next 12 months or the remaining lifetime of the obligation. |
| -
| Exposure at the moment of Default (“EAD”): it is based on the amounts the Group expects to be owed at the time of default, over the next 12 months or over the remaining lifetime. For example, for a revolving commitment, the Group includes the current draw down balance plus any further amount that it is expected to be drawn up to the current contractual limit by the time of default, should it have occurred. |
| -
| Loss given Default (“LGD”): represents the Group´s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type of seniority of claim and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default. LGD is calculated on a 12 month or lifetime basis, where 12-month LGD is the percentage of loss expected to be made if a default occurs in the next 12 months and Lifetime LGD is the percentage of loss expected to be made if a default occurs over the remaining expected lifetime of the loan. |
An instrument is considered to no longer be in default when it no longer meets any of the default criteria above mentioned. Methodology for Expected Credit Loss estimation
Expected credit loss impairment allowances recognized in the financial statements reflect the effect of a range of possible economic outcomes, calculated on a probability-weighted basis, based on the economic scenarios described below. The recognition and measurement of expected credit losses (‘ECL’) involves the use of significant judgment and estimation. It is necessary to formulate multiple forward-looking economic forecasts and incorporate them into the ECL estimates. Grupo Galicia uses a standard framework to form economic scenarios to reflect assumptions about
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GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Methodology for Expected Credit Loss estimation Expected credit loss impairment allowances recognized in the financial statements reflect the effect of a range of possible economic outcomes, calculated on a probability-weighted basis, based on the economic scenarios described below. The recognition and measurement of expected credit losses (‘ECL’) involves the use of significant judgment and estimation. It is necessary to formulate multiple forward-looking economic forecasts and incorporate them into the ECL estimates. Grupo Galicia uses a standard framework to form economic scenarios to reflect assumptions about future economic conditions, supplemented with the use of management judgment, which may result in using alternative or additional economic scenarios and/or management adjustments. IFRS 9 establishes the following standards regarding the estimation of credit loss: | -
| An unbiased weighted probability index determined by the evaluation of different outcomes. |
| -
| Reasonable and sustainable information available at no additional cost or effort that provides evidence to support forecasts, as well as present conditions and past events.
|
According to IFRS 9, the company prepared three different scenarios with different probabilities: a central scenario with 70 % probability of occurrence, a downside scenario with 15 % probability of occurrence and an upside scenario with 15 % probability of occurrence.
In order to account for time value of money, the Company assumes expected losses will take place according to the PD behavior.
The ECL is determined by projecting the PD, EAD and LGD for each future month or collective segment. These three components are multiplied together and adjusted for forward looking information. This effectively calculates an ECL for each future month, which is then discounted back to the reporting date and summed. The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
Key macroeconomic variables used in the scenarios described below are shown in the table:
Macroeconomic Variable Projections | | | | QI - 2019 | | | QII - 2019 | | | QIII - 2019 | | | QIV - 2019 | | Monthly Estimator of Economic Activity (EMAE) | | Base | | | -7.7 | % | | | -1.7 | % | | | -1.2 | % | | | 1.4 | % | | | Upside | | | -6.6 | % | | | 0.6 | % | | | 2.3 | % | | | 6.2 | % | | | Downside | | | -8.5 | % | | | -3.3 | % | | | -3.5 | % | | | -1.8 | % | Inflation Rate (IPC) | | Base | | | 47.3 | % | | | 43.8 | % | | | 32.4 | % | | | 25.0 | % | | | Upside | | | 43.5 | % | | | 38.0 | % | | | 26.0 | % | | | 20.0 | % | | | Downside | | | 47.7 | % | | | 46.3 | % | | | 41.7 | % | | | 40.0 | % | Exchange Rate | | Base | | | 99.2 | % | | | 58.5 | % | | | 14.3 | % | | | 20.0 | % | | | Upside | | | 96.3 | % | | | 54.6 | % | | | 9.9 | % | | | 15.3 | % | | | Downside | | | 115.8 | % | | | 84.3 | % | | | 40.6 | % | | | 56.7 | % | Unemployment Rate | | Base | | | 13.1 | % | | | 4.0 | % | | | 0.3 | % | | | -4.3 | % | | | Upside | | | 10.4 | % | | | -0.9 | % | | | -7.6 | % | | | -15.7 | % | | | Downside | | | 22.9 | % | | | 22.5 | % | | | 30.0 | % | | | 38.6 | % | (Badlar) | | Base | | | 79.7 | % | | | 22.7 | % | | | -16.4 | % | | | -29.2 | % | | | Upside | | | 71.0 | % | | | 9.6 | % | | | -30.7 | % | | | -45.8 | % | | | Downside | | | 102.7 | % | | | 57.0 | % | | | 21.2 | % | | | 14.6 | % | Real Salary | | Base | | | -9.5 | % | | | -7.1 | % | | | 1.0 | % | | | 2.4 | % | | | Upside | | | -8.8 | % | | | -6.5 | % | | | 2.6 | % | | | 4.3 | % | | | Downside | | | -11.2 | % | | | -11.3 | % | | | -5.1 | % | | | -5.2 | % | PIB | | Base | | | -7.0 | % | | | -1.5 | % | | | -0.1 | % | | | 2.6 | % | | | Upside | | | -2.3 | % | | | 1.5 | % | | | 2.9 | % | | | 6.2 | % | | | Downside | | | -7.1 | % | | | -3.7 | % | | | -3.5 | % | | | -1.8 | % | Current Account | | Base | | | -64.9 | % | | | -87.2 | % | | | -45.0 | % | | | 19.1 | % | | | Upside | | | -50.7 | % | | | -86.8 | % | | | -64.5 | % | | | 44.9 | % | | | Downside | | | -54.6 | % | | | -97.8 | % | | | -92.9 | % | | | -77.8 | % |
This variations were calculated bases on data from December-2018
Scenario Probabilities | | Base | | | Optimistic | | | Pessimistic | | Retail, Retail like and Wholesale | | | 70 | % | | | 15 | % | | | 15 | % | Tarjeta Naranja | | | 70 | % | | | 15 | % | | | 15 | % |
Grupo Galicia has also carried out sensitivity analysis to assess the impact of volatility on macroeconomic variables on the result of the expected credit losses.
Scenario 1 (change in the probability of the macroeconomic scenarios) | | | | | | | | | | | Base scenario | | | Sensitivity | | Regular scenario | | | 70.0 | % | | | 45.0 | % | Positive scenario | | | 15.0 | % | | | 10.0 | % | Negative scenario | | | 15.0 | % | | | 45.0 | % | GFG ECL | | | 15,782,416 | | | | 16,547,663 | | Retail, Retail like and Wholesale ECL | | | 10,475,119 | | | | 10,596,393 | | Naranja ECL | | | 5,307,297 | | | | 5,497,757 | |
F-73
Time value of money GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Reasonable and sustainable information available at no additional cost or effort that provides evidence to support forecasts, as well as present conditions and past events. According to IFRS 9, the company prepared three different scenarios with different probabilities: a central scenario with 70 % probability of occurrence, a downside scenario with 15 % probability of occurrence and an upside scenario with 15 % probability of occurrence. | | | | | | | | | | | | | Scenario Probabilities | | Base | | | Optimistic | | | Pessimistic | | Retail, Retail like and Wholesale | | | 70 | % | | | 15 | % | | | 15 | % | Naranja | | | 70 | % | | | 15 | % | | | 15 | % |
In order to account for time value of money, the Company assumes expected losses will take place according to the PD behavior. The ECL is determined by projecting the PD, EAD and LGD for each future month or collective segment. These three components are multiplied together and adjusted for forward looking information. This effectively calculates an ECL for each future month, which is then discounted back to the reporting date and summed. The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof. Key macroeconomic variables used in the scenarios described below are shown in the table: | | | | | | | | | | | | | | | | | | | Macroeconomic Variable Projections | | | | QI - 2020 | | | QII - 2020 | | | QIII - 2020 | | | QIV - 2020 | | GDP | | Base | | | -2.8 | % | | | 15.6 | % | | | 2.5 | % | | | -0.7 | % | GDP | | Optimistic | | | -2.2 | % | | | 17.8 | % | | | 5.1 | % | | | 2.7 | % | GDP | | Pessimistic | | | -3.1 | % | | | 14.2 | % | | | -3.8 | % | | | -10.2 | % | Unemployment Rate | | Base | | | 7.6 | % | | | -15.6 | % | | | -10.4 | % | | | -12.3 | % | Unemployment Rate | | Optimistic | | | 16.3 | % | | | -10.1 | % | | | -11.3 | % | | | -15.3 | % | Unemployment Rate | | Pessimistic | | | 20.1 | % | | | 6.2 | % | | | 21.9 | % | | | 34.8 | % | Real Salary | | Base | | | -16.6 | % | | | -8.6 | % | | | -1.7 | % | | | 3.3 | % | Real Salary | | Optimistic | | | -13.2 | % | | | -7.7 | % | | | -2.1 | % | | | 4.3 | % | Real Salary | | Pessimistic | | | -10.9 | % | | | -4.7 | % | | | -3.7 | % | | | -5.9 | % | Badlar | | Base | | | 48.8 | % | | | 42.2 | % | | | 31.1 | % | | | 4.3 | % | Badlar | | Optimistic | | | 38.3 | % | | | 25.9 | % | | | 13.0 | % | | | -13.0 | % | Badlar | | Pessimistic | | | 15.0 | % | | | 35.4 | % | | | 101.7 | % | | | 44.9 | % |
These variations were calculated based on annual basis. Grupo Galicia has also carried out sensitivity analysis to assess the impact of volatility on macroeconomic variables on the result of the expected credit losses. | | | | | | | | | Scenario 1 (change in the probability of the macroeconomic scenarios) | | Base scenario | | | Sensitivity | | Regular scenario | | | 70 | % | | | 45 | % | Positive scenario | | | 15 | % | | | 10 | % | Negative scenario | | | 15 | % | | | 45 | % | | | | | | | | | | Grupo Financiero Galicia ECL | | | 37,332,952 | | | | 38,008,542 | | Retail, Retail like and Wholesale ECL | | | 31,187,671 | | | | 31,703,980 | | Naranja ECL | | | 6,145,281 | | | | 6,304,562 | |
| | | | | | | | | | | | | Scenario 2 (change in forecast PIB, inflation, nominal exchange rate, unemployment, current account) | | Regular
scenario | | | Positive
scenario | | | Negative
scenario | | Macroeconomic scenario probability | | | 70 | % | | | 15 | % | | | 15 | % | | | | | | | | | | | Sensitivity | | | | | GDP | | | -5 | % | | | 1 | % | | | -15 | % | Unemployment Rate | | | -8 | % | | | -6 | % | | | 40 | % | Real Salary | | | -2 | % | | | -4 | % | | | -5 | % | Badlar | | | 40 | % | | | 10 | % | | | 120 | % | | | | | | | | | | | | | | Grupo Financiero Galicia ECL | | | | | | | 37,467,704 | | | | | | Retail, Retail like and Wholesale RCL | | | | | | | 31,101,450 | | | | | | Naranja ECL | | | | | | | 6,366,254 | | | | | |
Post-model adjustments Since March 2020, the Argentine Central Bank implemented a series of measures to reduce the economic consequences of COVID-19 pandemic, among which are the deferral of payments and suspension of the collection of punitive interest in case of default in payments of loan installments, being the credit cards loans excluded from this benefit. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Thus, considering the adverse economic context that the country is going through, borrower credit uncertainty and measures issued by the Argentine Central Bank, the management recognized an additional credit loss allowance to that obtained through the statistical model of ECL on the deferred loan portfolio, which shows the potential impairment due to the macroeconomic context, once the implemented measures are lifted by the Argentine Central Bank. The management measured the additional impact on the allowance from the estimation of the expected credit loss of loan portfolios which have deferred payments, based on new probabilities of default (PD) estimated using adjusted roll rates for the affected segments (mortgage, personal ,and restructured loans within the retail portfolio and debt notes of the retail like portfolio). The overlay also included a “Lifetime Adjustment”. Maximum exposure to credit risk Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 30 days past due (“DPD”) and are transferred from stage 1 to stage 2. The following disclosure presents the ageing of stage 2 financial assets. It distinguishes those assets that are classified as stage 2 when they are less than 30 days past due (1-29 DPD) from those that are more than 30 DPD (30 and >DPD). Past due financial instruments are those loans where customers have failed to make payments in accordance with the contractual terms of their facilities. The following table contains an analysis of the credit risk exposure of financial instruments for which an ECL allowance is recognized. | | | | | | | | | | | | | | | | | | | | | | | | Retail Portfolio | | | | | | | | December 31, 2020 | | | December 31,
2019 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month
ECL | | | Lifetime
ECL | | | Lifetime
ECL | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 115,540,641 | | | | 47,518,146 | | | | — | | | | 163,058,787 | | | | 147,407,781 | | 1-30 | | | 1,378,181 | | | | 1,164,534 | | | | 1,509,705 | | | | 4,052,420 | | | | 4,448,958 | | 31-60 | | | — | | | | 997,662 | | | | 48,665 | | | | 1,046,327 | | | | 1,940,358 | | 61-90 | | | — | | | | 561,381 | | | | 94,732 | | | | 656,113 | | | | 1,093,520 | | Default | | | — | | | | — | | | | 5,556,973 | | | | 5,556,973 | | | | 5,829,065 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 116,918,822 | | | | 50,241,723 | | | | 7,210,075 | | | | 174,370,620 | | | | 160,719,682 | | Loss allowance | | | (4,954,235 | ) | | | (12,628,050 | ) | | | (5,893,949 | ) | | | (23,476,234 | ) | | | (14,299,064 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 111,964,587 | | | | 37,613,673 | | | | 1,316,126 | | | | 150,894,386 | | | | 146,420,618 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Retail like Portfolio | | | | | | | | December 31, 2020 | | | December 31,
2019 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month
ECL | | | Lifetime
ECL | | | Lifetime
ECL | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 104,800,495 | | | | 12,159,876 | | | | 961,171 | | | | 117,921,542 | | | | 51,512,818 | | 1-30 | | | 968,840 | | | | 542,107 | | | | 218,040 | | | | 1,728,987 | | | | 2,729,542 | | 31-60 | | | — | | | | 209,942 | | | | 6,511 | | | | 216,453 | | | | 305,087 | | 61-90 | | | — | | | | 45,021 | | | | 15,885 | | | | 60,906 | | | | 435,629 | | Default | | | — | | | | — | | | | 1,187,351 | | | | 1,187,351 | | | | 3,318,130 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 105,769,335 | | | | 12,956,946 | | | | 2,388,958 | | | | 121,115,239 | | | | 58,301,206 | | Loss allowance | | | (559,205 | ) | | | (2,130,872 | ) | | | (1,831,739 | ) | | | (4,521,816 | ) | | | (4,103,299 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 105,210,130 | | | | 10,826,074 | | | | 557,219 | | | | 116,593,423 | | | | 54,197,907 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Wholesale Portfolio | | | | | | | | December 31, 2020 | | | December 31,
2019 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month
ECL | | | Lifetime
ECL | | | Lifetime
ECL | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | A | | | 263,742,041 | | | | 12,556,395 | | | | — | | | | 276,298,436 | | | | 288,340,517 | | B1 | | | — | | | | 1,002,250 | | | | — | | | | 1,002,250 | | | | 514,223 | | Default | | | — | | | | — | | | | 796,138 | | | | 796,138 | | | | 6,638,965 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 263,742,041 | | | | 13,558,645 | | | | 796,138 | | | | 278,096,824 | | | | 295,493,705 | | Loss allowance | | | (1,959,717 | ) | | | (623,103 | ) | | | (606,801 | ) | | | (3,189,621 | ) | | | (7,096,646 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 261,782,324 | | | | 12,935,542 | | | | 189,337 | | | | 274,907,203 | | | | 288,397,059 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Naranja | | | | | | | | December 31, 2020 | | | December 31,
2019 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month
ECL | | | Lifetime
ECL | | | Lifetime
ECL | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 85,988,867 | | | | 1,003,472 | | | | 263,172 | | | | 87,255,511 | | | | 61,842,678 | | 1-30 | | | 3,231,993 | | | | 225,959 | | | | 56,048 | | | | 3,514,000 | | | | 3,652,592 | | 31-60 | | | — | | | | 853,081 | | | | 47,855 | | | | 900,936 | | | | 1,760,530 | | 61-90 | | | — | | | | 373,206 | | | | 30,348 | | | | 403,554 | | | | 919,425 | | Default | | | — | | | | — | | | | 1,974,836 | | | | 1,974,836 | | | | 7,597,388 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 89,220,860 | | | | 2,455,718 | | | | 2,372,259 | | | | 94,048,837 | | | | 75,772,613 | | Loss allowance | | | (3,707,641 | ) | | | (589,155 | ) | | | (1,848,485 | ) | | | (6,145,281 | ) | | | (10,092,365 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 85,513,219 | | | | 1,866,563 | | | | 523,774 | | | | 87,903,556 | | | | 65,680,248 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Retail Portfolio | | | | | | | | December 31, 2019 | | | December 31,
2018 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 106,961,239 | | | | 39,204,462 | | | | 1,242,080 | | | | 147,407,781 | | | | 189,552,804 | | 1-30 | | | 2,127,002 | | | | 2,069,604 | | | | 252,352 | | | | 4,448,958 | | | | 7,164,281 | | 31-60 | | | — | | | | 1,718,377 | | | | 221,981 | | | | 1,940,358 | | | | 3,190,264 | | 61-90 | | | — | | | | 719,178 | | | | 374,342 | | | | 1,093,520 | | | | 1,652,119 | | Default | | | — | | | | — | | | | 5,829,065 | | | | 5,829,065 | | | | 7,080,891 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 109,088,241 | | | | 43,711,621 | | | | 7,919,820 | | | | 160,719,682 | | | | 208,640,359 | | Loss allowance | | | (5,514,025 | ) | | | (2,554,594 | ) | | | (6,230,445 | ) | | | (14,299,064 | ) | | | (15,659,979 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 103,574,216 | | | | 41,157,027 | | | | 1,689,375 | | | | 146,420,618 | | | | 192,980,380 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Retail like Portfolio | | | | | | | | December 31, 2019 | | | December 31,
2018 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 44,985,250 | | | | 5,850,798 | | | | 676,770 | | | | 51,512,818 | | | | 67,804,625 | | 1-30 | | | 1,779,010 | | | | 725,260 | | | | 225,272 | | | | 2,729,542 | | | | 2,774,228 | | 31-60 | | | — | | | | 217,775 | | | | 87,312 | | | | 305,087 | | | | 704,220 | | 61-90 | | | — | | | | 234,578 | | | | 201,051 | | | | 435,629 | | | | 548,510 | | Default | | | — | | | | — | | | | 3,318,130 | | | | 3,318,130 | | | | 3,764,864 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 46,764,260 | | | | 7,028,411 | | | | 4,508,535 | | | | 58,301,206 | | | | 75,596,447 | | Loss allowance | | | (480,463 | ) | | | (199,468 | ) | | | (3,423,368 | ) | | | (4,103,299 | ) | | | (3,616,367 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 46,283,797 | | | | 6,828,943 | | | | 1,085,167 | | | | 54,197,907 | | | | 71,980,080 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Wholesale Portfolio | | | | | | | | December 31, 2019 | | | December 31,
2018 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | A | | | 280,598,191 | | | | 7,742,326 | | | | — | | | | 288,340,517 | | | | 296,480,994 | | B1 | | | ��� | | | | 514,223 | | | | — | | | | 514,223 | | | | (4,604,821 | ) | Default | | | — | | | | — | | | | 6,638,965 | | | | 6,638,965 | | | | 5,268,147 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 280,598,191 | | | | 8,256,549 | | | | 6,638,965 | | | | 295,493,705 | | | | 297,144,320 | | Loss allowance | | | (679,001 | ) | | | (301,216 | ) | | | (6,116,429 | ) | | | (7,096,646 | ) | | | (2,661,522 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 279,919,190 | | | | 7,955,333 | | | | 522,536 | | | | 288,397,059 | | | | 294,482,798 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Naranja | | | | | | | | December 31, 2019 | | | December 31,
2018 | | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Total | | | Total | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 60,762,833 | | | | 724,351 | | | | 355,494 | | | | 61,842,678 | | | | 82,799,332 | | 1-30 | | | 3,314,275 | | | | 216,244 | | | | 122,073 | | | | 3,652,592 | | | | 7,369,251 | | 31-60 | | | — | | | | 1,656,414 | | | | 104,116 | | | | 1,760,530 | | | | 3,564,361 | | 61-90 | | | — | | | | 856,384 | | | | 63,041 | | | | 919,425 | | | | 1,967,627 | | Default | | | — | | | | — | | | | 7,597,388 | | | | 7,597,388 | | | | 7,931,114 | | | | | | | | | | | | | | | | | | | | | | | Gross Carrying amount | | | 64,077,108 | | | | 3,453,393 | | | | 8,242,112 | | | | 75,772,613 | | | | 103,631,685 | | Loss allowance | | | (2,754,583 | ) | | | (958,629 | ) | | | (6,379,153 | ) | | | (10,092,365 | ) | | | (11,114,984 | ) | | | | | | | | | | | | | | | | | | | | | | Net Carrying amount | | | 61,322,525 | | | | 2,494,764 | | | | 1,862,959 | | | | 65,680,248 | | | | 92,516,701 | | | | | | | | | | | | | | | | | | | | | | |
The Grupo Galicia employs a range of policies and practices to mitigate credit risk. The most common of these is accepting collateral for loans or funds advanced. The Group has internal policies on the acceptability of specific classes of collateral. The Grupo Galicia policies regarding obtaining collateral have not significantly changed during the reporting period and there has been no significant change in the overall quality of the collateral held by the Group since the prior period. This table provides information on balance sheet items and their collateral in offsets as well as loan and other credit-related commitments. Assets Subject to Impairment | | | | | | | | | | | | | | | | | Item | | Carrying Amount | | | Loss Allowances | | | Gross Carrying
Amount | | | Collateral´s Fair
Value | | Advances | | | 29,219,431 | | | | (679,786 | ) | | | 28,539,645 | | | | — | | Mortgage Loans | | | 143,769,344 | | | | (522,696 | ) | | | 143,246,648 | | | | — | | Pledge Loans | | | 16,486,335 | | | | (5,320,236 | ) | | | 11,166,099 | | | | 148,099,128 | | Personal Loans | | | 11,586,593 | | | | (109,735 | ) | | | 11,476,858 | | | | 32,538,883 | | Credit Card Loans | | | 36,504,158 | | | | (8,787,760 | ) | | | 27,716,398 | | | | — | | Financial Leases | | | 241,793,015 | | | | (16,713,933 | ) | | | 225,079,082 | | | | — | | Overdrafts | | | 1,855,070 | | | | (36,388 | ) | | | 1,818,682 | | | | — | | Pre-financing export loans | | | 29,487,016 | | | | (629,027 | ) | | | 28,857,989 | | | | — | | Others | | | 138,001,603 | | | | (4,489,715 | ) | | | 133,511,888 | | | | 1,784,133 | | Other Debt Securities | | | 18,928,955 | | | | (43,676 | ) | | | 18,885,279 | | | | — | | | | | | | | | | | | | | | | | | | Total as of December 31, 2020 | | | 667,631,520 | | | | (37,332,952 | ) | | | 630,298,568 | | | | 182,422,144 | | | | | | | | | | | | | | | | | | |
The following table shows information about the mortgage portfolio LTV distribution. Scenario 2 (change in forecast PIB, inflation, nominal exchange rate, unemployment, current account) | | | | | | | | | | | | | | | Regular scenario | | | Positive scenario | | | Negative scenario | | Macroeconomic scenario probability | | | 70.0 | % | | | 15.0 | % | | | 15.0 | % | | | | | | | | | | | | | | | | | | | | Sensivity | | | | | | PIB | | | 1.86 | % | | | 4.73 | % | | | -6.75 | % | Inflation | | | 35 | % | | | 25 | % | | | 50 | % | Nominal exchange rate | | | 29.87 | % | | | 20.00 | % | | | 81.82 | % | Unemployment | | | 5 | % | | | 10 | % | | | 20 | % | Current account | | | -11.21 | % | | | -29.25 | % | | | -82 | % | GFG ECL | | | | | | | 16,515,901 | | | | | | Retail, Retail like and Wholesale ECL | | | | | | | 11,193,327 | | | | | | Naranja ECL | | | | | | | 5,322,574 | | | | | |
| | | | | Percentages referMortgages Portfolio -LTV Distribution
| | Exposure | | Lower than 50% | | | 3,807 | | 50 to increase/decrease against real December 2018.60% | | | 282 | | Maximum exposure60 to credit risk70%
| | | 576 | | Unless identified at an earlier stage, all financial assets are deemed70 to have suffered a significant increase in credit risk when they are 30 days past due (“DPD”) and are transferred from stage 180%
| | | 436 | | 80 to stage 2. The following disclosure presents the ageing of stage 2 financial assets. It distinguishes those assets that are classified as stage 2 when they are less90% | | | 495 | | 90 to 100% | | | 4,765 | | Higher than 30 days past due (1-29 DPD) from those that are more than 30 DPD (30 and >DPD). Past due financial instruments are those loans where customers have failed to make payments in accordance with the contractual terms of their facilities.100% The following table contains an analysis of the credit risk exposure of financial instruments for which an ECL allowance is recognized.
| | | 20,599 | | | | | | Retail Portfolio | | | | | | | | December 31, 2018 | | | December 31, 2017 | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month ECL | | | Lifetime ECL | | | Lifetime ECL | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 80,123,131 | | | | 10,386,495 | | | | - | | | | 90,509,626 | | | | 102,251,974 | | 1-30 | | | 2,220,365 | | | | 1,200,510 | | | | - | | | | 3,420,875 | | | | 3,432,010 | | 31-60 | | | - | | | | 1,523,320 | | | | - | | | | 1,523,320 | | | | 1,137,401 | | 61-90 | | | - | | | | 788,871 | | | | - | | | | 788,871 | | | | 490,172 | | Default | | | - | | | | - | | | | 3,381,057 | | | | 3,381,057 | | | | 2,606,255 | | Gross Carrying amount | | | 82,343,496 | | | | 13,899,196 | | | | 3,381,057 | | | | 99,623,749 | | | | 109,917,812 | | Loss allowance | | | 2,600,458 | | | | 2,317,516 | | | | 2,559,514 | | | | 7,477,488 | | | | 3,686,934 | | Carrying amount | | | 79,743,038 | | | | 11,581,680 | | | | 821,543 | | | | 92,146,261 | | | | 106,230,878 | |
| | | Retail like Portfolio | | | | | | | | December 31, 2018 | | | December 31, 2017 | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month ECL | | | Lifetime ECL | | | Lifetime ECL | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 29,273,332 | | | | 3,102,719 | | | | - | | | | 32,376,051 | | | | 30,599,160 | | 1-30 | | | 866,912 | | | | 457,755 | | | | - | | | | 1,324,667 | | | | 711,005 | | 31-60 | | | - | | | | 336,258 | | | | - | | | | 336,258 | | | | 136,622 | | 61-90 | | | - | | | | 261,908 | | | | - | | | | 261,908 | | | | 97,848 | | Default | | | - | | | | - | | | | 1,797,686 | | | | 1,797,686 | | | | 802,398 | | Gross Carrying amount | | | 30,140,244 | | | | 4,158,640 | | | | 1,797,686 | | | | 36,096,570 | | | | 32,347,033 | | Loss allowance | | | 266,947 | | | | 280,127 | | | | 1,179,706 | | | | 1,726,780 | | | | 965,360 | | Net Carrying amount | | | 29,873,297 | | | | 3,878,513 | | | | 617,980 | | | | 34,369,790 | | | | 31,381,673 | |
| | Total | | | 30,960 | | | | F-74
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | |
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees The following disclosure provides a reconciliation by stage of the Group’s gross carrying/nominal amount and allowances for loans and advances to banks and customers, including loan commitments and financial guarantees. The transfers of financial instruments represent the impact of stage transfers upon the gross carrying/nominal amount and associated allowance for ECL. The net remeasurement of ECL arising from stage transfers represents the increase or decrease due to these transfers, for example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL measurement basis. This is captured, along with other credit quality movements in the ‘changes in PD/LGD/EAD’ line item. The ‘New financial assets originated or repurchased’ represent the gross carrying/nominal amount and associated allowance ECL impact from volume movements within the Group’s lending portfolio. | | Wholesale Portfolio | | | | | | | | December 31, 2018 | | | December 31, 2017 | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month ECL | | | Lifetime ECL | | | Lifetime ECL | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | A | | | 135,513,044 | | | | 6,048,342 | | | | 5,413 | | | | 141,566,799 | | | | 130,441,016 | | B1 | | | (2,237,665 | ) | | | 38,908 | | | | - | | | | (2,198,757 | ) | | | 77,335 | | Default | | | - | | | | - | | | | 2,515,489 | | | | 2,515,489 | | | | 808,091 | | Gross Carrying amount | | | 133,275,379 | | | | 6,087,250 | | | | 2,520,902 | | | | 141,883,531 | | | | 131,326,442 | | Loss allowance | | | 525,757 | | | | 77,364 | | | | 667,730 | | | | 1,270,851 | | | | 750,612 | | Net Carrying amount | | | 132,749,622 | | | | 6,009,886 | | | | 1,853,172 | | | | 140,612,680 | | | | 130,575,830 | |
| | Naranja | | | | | | | | December 31, 2018 | | | December 31, 2017 | | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month ECL | | | Lifetime ECL | | | Lifetime ECL | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 36,512,083 | | | | 3,023,795 | | | | - | | | | 39,535,878 | | | | 43,394,982 | | 1-30 | | | 2,571,877 | | | | 946,869 | | | | - | | | | 3,518,746 | | | | 3,389,912 | | 31-60 | | | - | | | | 1,701,948 | | | | - | | | | 1,701,948 | | | | 1,128,408 | | 61-90 | | | - | | | | 939,523 | | | | - | | | | 939,523 | | | | 526,990 | | Default | | | - | | | | - | | | | 3,787,030 | | | | 3,787,030 | | | | 2,934,995 | | Gross Carrying amount | | | 39,083,960 | | | | 6,612,135 | | | | 3,787,030 | | | | 49,483,125 | | | | 51,375,287 | | Loss allowance | | | 1,376,585 | | | | 1,842,615 | | | | 2,088,097 | | | | 5,307,297 | | | | 3,877,715 | | Net Carrying amount | | | 37,707,375 | | | | 4,769,520 | | | | 1,698,933 | | | | 44,175,828 | | | | 47,497,572 | |
| | Retail Portfolio | | | | | | | December 31, 2017 | | | January 01, 2017 | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month | | | Lifetime | | | Lifetime | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 90,744,245 | | | | 11,507,729 | | | | - | | | | 102,251,974 | | | | 77,585,443 | | 1-30 | | | 2,266,370 | | | | 1,165,640 | | | | - | | | | 3,432,010 | | | | 4,686,395 | | 31-60 | | | - | | | | 1,137,401 | | | | - | | | | 1,137,401 | | | | 1,109,964 | | 61-90 | | | - | | | | 490,172 | | | | - | | | | 490,172 | | | | 511,715 | | Default | | | - | | | | - | | | | 2,606,255 | | | | 2,606,255 | | | | 2,209,277 | | Gross Carrying amount | | | 93,010,615 | | | | 14,300,942 | | | | 2,606,255 | | | | 109,917,812 | | | | 86,102,794 | | Loss allowance | | | 1,093,601 | | | | 917,070 | | | | 1,676,263 | | | | 3,686,934 | | | | 3,448,164 | | Net Carrying amount | | | 91,917,014 | | | | 13,383,872 | | | | 929,992 | | | | 106,230,878 | | | | 82,654,630 | |
| | Retail like Portfolio | | | | | | | December 31, 2017 | | | January 01, 2017 | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month | | | Lifetime | | | Lifetime | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 27,628,736 | | | | 2,970,424 | | | | - | | | | 30,599,160 | | | | 24,473,623 | | 1-30 | | | 393,902 | | | | 317,103 | | | | - | | | | 711,005 | | | | 450,049 | | 31-60 | | | - | | | | 136,622 | | | | - | | | | 136,622 | | | | 485,422 | | 61-90 | | | - | | | | 97,848 | | | | - | | | | 97,848 | | | | 73,407 | | Default | | | - | | | | - | | | | 802,398 | | | | 802,398 | | | | 472,030 | | Gross Carrying amount | | | 28,022,638 | | | | 3,521,997 | | | | 802,398 | | | | 32,347,033 | | | | 25,954,531 | | Loss allowance | | | 221,758 | | | | 127,030 | | | | 616,572 | | | | 965,360 | | | | 619,208 | | Net Carrying amount | | | 27,800,880 | | | | 3,394,967 | | | | 185,826 | | | | 31,381,673 | | | | 25,335,323 | |
F-75
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | Wholesale Portfolio | | | | | | | December 31, 2017 | | | January 01, 2017 | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month | | | Lifetime | | | Lifetime | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | A | | | 122,301,109 | | | | 8,138,330 | | | | 1,577 | | | | 130,441,016 | | | | 99,417,742 | | B1 | | | - | | | | 77,335 | | | | - | | | | 77,335 | | | | 319,115 | | Default | | | - | | | | - | | | | 808,091 | | | | 808,091 | | | | 339,002 | | Gross Carrying amount | | | 122,301,109 | | | | 8,215,665 | | | | 809,668 | | | | 131,326,442 | | | | 100,075,859 | | Loss allowance | | | 211,775 | | | | 45,209 | | | | 493,628 | | | | 750,612 | | | | 496,885 | | Net Carrying amount | | | 122,089,334 | | | | 8,170,456 | | | | 316,040 | | | | 130,575,830 | | | | 99,578,974 | |
| | Naranja | | | | | | | December 31, 2017 | | | January 01, 2017 | | | ECL Staging | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | Total | | | Total | | | | 12-month | | | Lifetime | | | Lifetime | | | | | | | | | | Days past due | | | | | | | | | | | | | | | | | | | | | 0 | | | 39,229,241 | | | | 4,165,741 | | | | - | | | | 43,394,982 | | | | 45,435,532 | | 1-30 | | | 1,810,650 | | | | 1,579,262 | | | | - | | | | 3,389,912 | | | | 3,075,142 | | 31-60 | | | - | | | | 1,128,408 | | | | - | | | | 1,128,408 | | | | 1,121,215 | | 61-90 | | | - | | | | 526,990 | | | | - | | | | 526,990 | | | | 588,117 | | Default | | | - | | | | - | | | | 2,934,995 | | | | 2,934,995 | | | | 3,251,395 | | Gross Carrying amount | | | 41,039,891 | | | | 7,400,401 | | | | 2,934,995 | | | | 51,375,287 | | | | 53,471,401 | | Loss allowance | | | 904,291 | | | | 1,270,258 | | | | 1,703,166 | | | | 3,877,715 | | | | 4,160,322 | | Net Carrying amount | | | 40,135,600 | | | | 6,130,143 | | | | 1,231,829 | | | | 47,497,572 | | | | 49,311,079 | |
The Grupo Galicia employs a range of policies and practices to mitigate credit risk. The most common of these is accepting collateral for loans or funds advanced. The Group has internal policies on the acceptability of specific classes of collateral.
The Grupo Galicia policies regarding obtaining collateral have not significantly changed during the reporting period and there has been no significant change in the overall quality of the collateral held by the Group since the prior period.
This table provides information on balance sheet items and their collateral in offsets as well as loan and other credit-related commitments.
Assets Subject to Impairment | | | | | | | | | | | | | | | | | Item | | Carrying Amount | | | Loss Allowances | | | Gross Carrying Amount | | | Collateral´s Fair Value | | Overdrafts | | | 14,430,578 | | | | 443,681 | | | | 13,986,897 | | | | - | | Mortagage Loans | | | 11,793,007 | | | | 253,178 | | | | 11,539,829 | | | | 48,761,041 | | Collateral Loans | | | 997,958 | | | | 10,255 | | | | 987,703 | | | | 4,037,908 | | Personal Loans | | | 29,144,931 | | | | 1,122,335 | | | | 28,022,596 | | | | - | | Credit Card Loans | | | 113,395,362 | | | | 9,406,437 | | | | 103,988,925 | | | | - | | Financial Leases | | | 2,198,047 | | | | 26,424 | | | | 2,171,623 | | | | - | | Promisory Notes | | | 36,020,263 | | | | 422,487 | | | | 35,597,776 | | | | - | | Pre-financing export loans | | | 69,536,225 | | | | 1,642,944 | | | | 67,893,281 | | | | - | | Others | | | 35,020,864 | | | | 2,329,069 | | | | 32,691,795 | | | | 2,428,566 | | Public Securities | | | 14,549,740 | | | | 125,606 | | | | 14,424,134 | | | | 55,227,515 | | Total as of December 31, 2018 | | | 327,086,975 | | | | 15,782,416 | | | | 311,304,559 | | | | 110,455,030 | |
The following table shows information about the mortgage portfolio LTV distribution.
Mortgages Portfolio -LTV Distribution
| | Exposure
| | Lower than 50%
| | | 8,283
| | 50 a 60%
| | | 2,940
| | 60 a 70%
| | | 4,562
| | 70 a 80%
| | | 2,084
| | 80 a 90%
| | | 349
| | 90 a 100%
| | | 878
| | Higher than 100%
| | | 612
| | Total
| | | 19,708
| |
F-76
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees
The following disclosure provides a reconciliation by stage of the Group’s gross carrying/nominal amount and allowances for loans and advances to banks and customers, including loan commitments and financial guarantees. The transfers of financial instruments represents the impact of stage transfers upon the gross carrying/nominal amount and associated allowance for ECL. The net remeasurement of ECL arising from stage transfers represents the increase or decrease due to these transfers, for example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL measurement basis. This is captured, along with other credit quality movements in the ‘changes in PD/LGD/EAD’ line item. The ‘New financial assets originated or repurchased’ represent the gross carrying/nominal amount and associated allowance ECL impact from volume movements within the Group’s lending portfolio.
The following tables explain the changes in the loss allowance between the beginning and the end of the annual period due to these factors:
Retail Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 1,093,601 | | | | 917,070 | | | | 1,676,263 | | | | - | | | | 3,686,934 | | Inflation effect | | | (352,907 | ) | | | (295,942 | ) | | | (540,935 | ) | | | - | | | | (1,189,784 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (36,452 | ) | | | 36,452 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (12,985 | ) | | | - | | | | 12,985 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 61,669 | | | | (61,669 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 680,315 | | | | 1,376,390 | | | | 1,615,940 | | | | - | | | | 3,672,645 | | Changes in PDs/LGDs/EADs | | | 1,229,264 | | | | 637,622 | | | | 836,772 | | | | - | | | | 2,703,658 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | 46,707 | | | | 26,548 | | | | (9,776 | ) | | | - | | | | 63,479 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 a stage 3 | | | - | | | | (40,809 | ) | | | 40,809 | | | | - | | | | - | | Transfer from Stage 3 to stage 2 | | | - | | | | 28,664 | | | | (28,664 | ) | | | - | | | | - | | Financial assets derecognized during the period | | | (216,869 | ) | | | (611,817 | ) | | | (2,081,627 | ) | | | - | | | | (2,910,313 | ) | Write-offs | | | 108,115 | | | | 305,007 | | | | 1,037,747 | | | | - | | | | 1,450,869 | | Loss Allowance as of December 31, 2018 | | | 2,600,458 | | | | 2,317,516 | | | | 2,559,514 | | | | - | | | | 7,477,488 | |
Retail Like Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 221,758 | | | | 127,030 | | | | 616,572 | | | | - | | | | 965,360 | | Inflation effect | | | | | (71,562 | ) | | | (40,993 | ) | | | (198,969 | ) | | | - | | | | (311,524 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (3,911 | ) | | | 3,911 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (743 | ) | | | - | | | | 743 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 9,575 | | | | (9,575 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 181,218 | | | | 195,991 | | | | 868,022 | | | | - | | | | 1,245,231 | | Changes in PDs/LGDs/EADs | | | 17,285 | | | | 38,295 | | | | 166,277 | | | | - | | | | 221,857 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | 17,044 | | | | 16,267 | | | | 88,193 | | | | - | | | | 121,504 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | - | | | | (2,935 | ) | | | 2,935 | | | | - | | | | - | | Transfer from Stage 3 to Stage 2 | | | - | | | | 3,145 | | | | (3,145 | ) | | | - | | | | - | | Financial assets derecognized during the period | | | (206,825 | ) | | | (101,718 | ) | | | (719,723 | ) | | | - | | | | (1,028,266 | ) | Write-offs | | | 103,108 | | | | 50,709 | | | | 358,801 | | | | - | | | | 512,618 | | Loss Allowance as of December 31, 2018 | | | 266,947 | | | | 280,127 | | | | 1,179,706 | | | | - | | | | 1,726,780 | |
F-77
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Wholesale Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 211,775 | | | | 45,209 | | | | 493,628 | | | | - | | | | 750,612 | | Inflation effect | | | | | (68,341 | ) | | | (14,588 | ) | | | (159,293 | ) | | | - | | | | (242,222 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (1,872 | ) | | | 1,872 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (179 | ) | | | - | | | | 179 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 2,797 | | | | (2,797 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 398,510 | | | | 43,148 | | | | - | | | | - | | | | 441,658 | | Changes in PDs/LGDs/EADs | | | 69,078 | | | | 20,034 | | | | 76,416 | | | | - | | | | 165,528 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | (6,823 | ) | | | 9,991 | | | | 250,650 | | | | - | | | | 253,818 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | - | | | | (6,150 | ) | | | 6,150 | | | | - | | | | - | | Transfer from Stage 3 to Stage 2 | | | - | | | | - | | | | - | | | | - | | | | - | | Financial assets derecognized during the period | | | (157,912 | ) | | | (38,596 | ) | | | - | | | | - | | | | (196,508 | ) | Write-offs | | | 78,724 | | | | 19,241 | | | | - | | | | - | | | | 97,965 | | Loss Allowance as of December 31, 2018 | | | 525,757 | | | | 77,364 | | | | 667,730 | | | | - | | | | 1,270,851 | |
Naranja | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 904,291 | | | | 1,270,258 | | | | 1,703,166 | | | | - | | | | 3,877,715 | | Inflation effect | | | | | (291,817 | ) | | | (409,915 | ) | | | (549,616 | ) | | | | | | | (1,251,348 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (111,156 | ) | | | 111,156 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (40,296 | ) | | | - | | | | 40,296 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 215,544 | | | | (215,544 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 514,603 | | | | 735,092 | | | | 518,621 | | | | - | | | | 1,768,316 | | Changes in PDs/LGDs/EADs | | | 328,246 | | | | 1,003,381 | | | | 1,122,398 | | | | - | | | | 2,454,025 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | (128,575 | ) | | | (210,087 | ) | | | - | | | | - | | | | (338,662 | ) | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | - | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | - | | | | (280,363 | ) | | | 280,363 | | | | - | | | | - | | Transfer from Stage 3 to Stage 2 | | | - | | | | 10,906 | | | | (10,906 | ) | | | - | | | | - | | Transfer from Stage 3 to Stage 1 | | | 9,664 | | | | - | | | | (9,664 | ) | | | - | | | | - | | Financial assets derecognized during the period | | | (53,058 | ) | | | (382,131 | ) | | | (2,232,778 | ) | | | - | | | | (2,667,967 | ) | Write-offs | | | 29,139 | | | | 209,862 | | | | 1,226,217 | | | | - | | | | 1,465,218 | | Loss Allowance as of December 31, 2018 | | | 1,376,585 | | | | 1,842,615 | | | | 2,088,097 | | | | - | | | | 5,307,297 | |
Retail Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of January 1, 2017 | | | 1,275,440 | | | | 696,665 | | | | 1,476,059 | | | | - | | | | 3,448,164 | | Inflation effect | | | | | (253,416 | ) | | | (138,420 | ) | | | (293,277 | ) | | | | | | | (685,113 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (37,260 | ) | | | 37,260 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (12,603 | ) | | | - | | | | 12,603 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 136,516 | | | | (136,516 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 307,212 | | | | 619,118 | | | | 970,014 | | | | - | | | | 1,896,344 | | Changes in PDs/LGDs/EADs | | | (110,722 | ) | | | 90,105 | | | | 592,974 | | | | - | | | | 572,357 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | 10,539 | | | | 1,326 | | | | (11,577 | ) | | | - | | | | 288 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | - | | | | (33,992 | ) | | | 33,992 | | | | - | | | | - | | Transfer from Stage 3 to Stage 2 | | | - | | | | 29,170 | | | | (29,170 | ) | | | - | | | | - | | Financial assets derecognized during the period | | | (362,292 | ) | | | (403,954 | ) | | | (1,754,093 | ) | | | - | | | | (2,520,339 | ) | Write-offs | | | 140,187 | | | | 156,308 | | | | 678,738 | | | | - | | | | 975,233 | | Loss Allowance as of December 31, 2017 | | | 1,093,601 | | | | 917,070 | | | | 1,676,263 | | | | - | | | | 3,686,934 | |
F-78
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Retail Like Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of January 1, 2017 | | | 57,285 | | | | 189,219 | | | | 372,704 | | | | - | | | | 619,208 | | Inflation effect | | | | | (11,381 | ) | | | (37,596 | ) | | | (74,053 | ) | | | | | | | (123,030 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (4,026 | ) | | | 4,026 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (371 | ) | | | - | | | | 371 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 43,613 | | | | (43,613 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 181,012 | | | | 82,364 | | | | 401,713 | | | | - | | | | 665,089 | | Changes in PDs/LGDs/EADs | | | (34,518 | ) | | | 2,759 | | | | 103,879 | | | | - | | | | 72,120 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | 912 | | | | 11,434 | | | | 44,207 | | | | - | | | | 56,553 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | - | | Transfer from Stage 2 to Stage 3 | | | - | | | | (6,279 | ) | | | 6,279 | | | | - | | | | - | | Transfer from Stage 3 to Stage 2 | | | - | | | | 6,665 | | | | (6,665 | ) | | | - | | | | - | | Financial assets derecognized during the period | | | (17,564 | ) | | | (133,673 | ) | | | (378,210 | ) | | | - | | | | (529,447 | ) | Write-offs | | | 6,796 | | | | 51,724 | | | | 146,347 | | | | - | | | | 204,867 | | Loss Allowance as of December 31, 2017 | | | 221,758 | | | | 127,030 | | | | 616,572 | | | | - | | | | 965,360 | |
Wholesale Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of January 1, 2017 | | | 166,413 | | | | 106,888 | | | | 223,584 | | | | - | | | | 496,885 | | Inflation effect | | | | | (33,066 | ) | | | (21,237 | ) | | | (44,424 | ) | | | | | | | (98,727 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (2,693 | ) | | | 2,693 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (61 | ) | | | - | | | | 61 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 2,228 | | | | (2,228 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 170,640 | | | | 29,321 | | | | - | | | | - | | | | 199,961 | | Changes in PDs/LGDs/EADs | | | 568 | | | | 20,024 | | | | 47,276 | | | | - | | | | 67,868 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | 10,972 | | | | (10,901 | ) | | | 257,364 | | | | - | | | | 257,435 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | - | | | | (9,767 | ) | | | 9,767 | | | | - | | | | - | | Transfer from Stage 3 to Stage 2 | | | - | | | | - | | | | - | | | | - | | | | - | | Financial assets derecognized during the period | | | (168,380 | ) | | | (113,504 | ) | | | - | | | | - | | | | (281,884 | ) | Write-offs | | | 65,154 | | | | 43,920 | | | | - | | | | - | | | | 109,074 | | Loss Allowance as of December 31, 2017 | | | 211,775 | | | | 45,209 | | | | 493,628 | | | | - | | | | 750,612 | |
Naranja | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Loss Allowance as of January 1, 2017 | | | 775,611 | | | | 1,566,226 | | | | 1,818,485 | | | | - | | | | 4,160,322 | | Inflation effect | | | | | (154,106 | ) | | | (311,192 | ) | | | (361,314 | ) | | | - | | | | (826,612 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (60,573 | ) | | | 60,573 | | | | - | | | | - | | | | - | | Transfer from Stage 1 to Stage 3 | | | (24,779 | ) | | | - | | | | 24,779 | | | | - | | | | - | | Transfer from Stage 2 to Stage 1 | | | 423,002 | | | | (423,002 | ) | | | - | | | | - | | | | - | | New Financial Assets Originated or Purchased | | | 244,074 | | | | 445,054 | | | | 67,264 | | | | - | | | | 756,392 | | Changes in PDs/LGDs/EADs | | | (226,555 | ) | | | 601,910 | | | | 921,399 | | | | - | | | | 1,296,754 | | Changes to model assumptions and methodologies | | | - | | | | - | | | | - | | | | - | | | | - | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Foreign exchange and other movements | | | (85,307 | ) | | | (164,172 | ) | | | - | | | | - | | | | (249,479 | ) | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | - | | | | (257,026 | ) | | | 257,026 | | | | - | | | | - | | Transfer from Stage 3 to Stage 2 | | | - | | | | 1,138 | | | | (1,138 | ) | | | - | | | | - | | Transfer from Stage 3 to Stage 1 | | | 36,652 | | | | - | | | | (36,652 | ) | | | - | | | | - | | Financial assets derecognized during the period | | | (31,508 | ) | | | (330,971 | ) | | | (1,310,183 | ) | | | - | | | | (1,672,662 | ) | Write-offs | | | 7,780 | | | | 81,720 | | | | 323,500 | | | | - | | | | 413,000 | | Loss Allowance as of December 31, 2017 | | | 904,291 | | | | 1,270,258 | | | | 1,703,166 | | | | - | | | | 3,877,715 | |
The following table further explains changes in the gross carrying amount of specific segment portfolio to help explain their significance to the changes in the loss allowance:
F-79
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Retail like Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of December 31, 2017 | | | 28,022,638 | | | | 3,521,997 | | | | 802,398 | | | | - | | | | 32,347,033 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (566,583 | ) | | | 566,583 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (106,715 | ) | | | - | | | | 106,715 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | (61,468 | ) | | | 61,468 | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | 355,843 | | | | (355,843 | ) | | | - | | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | - | | | | 3,276 | | | | (3,276 | ) | | | - | | | | - | | Financial assets derecognized during the period other than writte-offs | | | (6,202,481 | ) | | | (1,062,828 | ) | | | (358,539 | ) | | | - | | | | (7,623,848 | ) | New financial assets originated or purchased | | | 17,476,427 | | | | 2,679,052 | | | | 1,321,045 | | | | - | | | | 21,476,524 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | 204,089 | | | | 4,429 | | | | 126,809 | | | | - | | | | 335,327 | | Inflation effect | | | (9,042,974 | ) | | | (1,136,558 | ) | | | (258,934 | ) | | | - | | | | (10,438,466 | ) | Gross carrying amount as of December 31, 2018 | | | 30,140,244 | | | | 4,158,640 | | | | 1,797,686 | | | | - | | | | 36,096,570 | |
Retail Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of December 31, 2017 | | | 93,010,615 | | | | 14,300,942 | | | | 2,606,255 | | | | - | | | | 109,917,812 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (2,127,658 | ) | | | 2,127,658 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (688,232 | ) | | | - | | | | 688,232 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | (373,079 | ) | | | 373,079 | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | 2,094,139 | | | | (2,094,139 | ) | | | - | | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | - | | | | 32,103 | | | | (32,103 | ) | | | - | | | | - | | Financial assets derecognized during the period other than writte-offs | | | (5,384,216 | ) | | | (1,611,202 | ) | | | (1,108,128 | ) | | | - | | | | (8,103,546 | ) | New financial assets originated or purchased | | | 24,098,264 | | | | 6,011,249 | | | | 1,474,390 | | | | - | | | | 31,583,903 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | 1,355,335 | | | | 120,613 | | | | 220,377 | | | | - | | | | 1,696,325 | | Inflation Effect | | | (30,014,751 | ) | | | (4,614,949 | ) | | | (841,045 | ) | | | - | | | | (35,470,745 | ) | Gross carrying amount as of December 31, 2018 | | | 82,343,496 | | | | 13,899,196 | | | | 3,381,057 | | | | - | | | | 99,623,749 | |
Wholesale Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of December 31, 2017 | | | 122,301,109 | | | | 8,215,665 | | | | 809,668 | | | | - | | | | 131,326,442 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (555,567 | ) | | | 555,567 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (9,894 | ) | | | - | | | | 9,894 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | - | | | | - | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | 469,663 | | | | (469,663 | ) | | | - | | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | - | | | | - | | | | - | | | | - | | | | - | | Financial assets derecognized during the period other than writte-offs | | | (36,157,200 | ) | | | (3,276,411 | ) | | | 1,525,251 | | | | - | | | | (37,908,360 | ) | New financial assets originated or purchased | | | 80,611,231 | | | | 4,520,606 | | | | 49,053 | | | | - | | | | 85,180,890 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | 5,423,721 | | | | (807,299 | ) | | | 388,318 | | | | - | | | | 5,004,740 | | Inflation Effect | | | (38,807,684 | ) | | | (2,651,215 | ) | | | (261,282 | ) | | | - | | | | (41,720,181 | ) | Gross carrying amount as of December 31, 2018 | | | 133,275,379 | | | | 6,087,250 | | | | 2,520,902 | | | | - | | | | 141,883,531 | |
F-80
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Naranja | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of December 31, 2017 | | | 41,039,891 | | | | 7,400,401 | | | | 2,934,995 | | | | - | | | | 51,375,287 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (3,933,644 | ) | | | 3,933,644 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (1,398,286 | ) | | | - | | | | 1,398,286 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | (1,288,696 | ) | | | 1,288,696 | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | - | | | | 21,883 | | | | (21,883 | ) | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | 1,127,915 | | | | (1,127,915 | ) | | | - | | | | - | | | | - | | Transfers from Stage 3 to Stage 1 | | | 18,738 | | | | - | | | | (18,738 | ) | | | - | | | | - | | Financial assets derecognized during the period other than writte-offs | | | (724,768 | ) | | | (727,919 | ) | | | (1,810,868 | ) | | | - | | | | (3,263,555 | ) | New financial assets originated or purchased | | | 16,179,401 | | | | 767,534 | | | | 1,003,388 | | | | - | | | | 17,950,323 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | | | 18,384 | | | | 21,332 | | | | (39,716 | ) | | | - | | | | - | | Inflation Effect | | | (13,243,671 | ) | | | (2,388,129 | ) | | | (947,130 | ) | | | - | | | | (16,578,930 | ) | Gross carrying amount as of December 31, 2018 | | | 39,083,960 | | | | 6,612,135 | | | | 3,787,030 | | | | - | | | | 49,483,125 | |
Retail like Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of January 1, 2017 | | | 24,312,706 | | | | 1,169,795 | | | | 472,030 | | | | - | | | | 25,954,531 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (977,594 | ) | | | 977,594 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (98,440 | ) | | | - | | | | 98,440 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | (40,969 | ) | | | 40,969 | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | - | | | | 12,791 | | | | (12,791 | ) | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | 270,525 | | | | (270,525 | ) | | | - | | | | - | | | | - | | Financial assets derecognized during the period other than writte-offs | | | (10,394,945 | ) | | | (687,029 | ) | | | (358,303 | ) | | | - | | | | (11,440,277 | ) | New financial assets originated or purchased | | | 21,198,887 | | | | 2,931,419 | | | | 707,794 | | | | - | | | | 24,838,100 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | (1,457,820 | ) | | | (338,653 | ) | | | (51,951 | ) | | | - | | | | (1,848,424 | ) | Inflation Effect | | | (4,830,681 | ) | | | (232,426 | ) | | | (93,790 | ) | | | - | | | | (5,156,897 | ) | Gross carrying amount as of December 31, 2017 | | | 28,022,638 | | | | 3,521,997 | | | | 802,398 | | | | - | | | | 32,347,033 | |
Retail Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of January 1, 2017 | | | 73,592,991 | | | | 10,300,527 | | | | 2,209,276 | | | | - | | | | 86,102,794 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (2,677,919 | ) | | | 2,677,919 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (788,355 | ) | | | - | | | | 788,355 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | (451,953 | ) | | | 451,953 | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | - | | | | 53,083 | | | | (53,083 | ) | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | 3,471,756 | | | | (3,471,756 | ) | | | - | | | | - | | | | - | | Financial assets derecognized during the period other than writte-offs | | | (7,860,281 | ) | | | (2,394,705 | ) | | | (1,554,807 | ) | | | - | | | | (11,809,793 | ) | New financial assets originated or purchased | | | 37,281,613 | | | | 9,754,613 | | | | 1,430,839 | | | | - | | | | 48,467,065 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | 4,612,978 | | | | (120,178 | ) | | | (227,318 | ) | | | - | | | | 4,265,482 | | Inflation Effect | | | (14,622,168 | ) | | | (2,046,608 | ) | | | (438,960 | ) | | | - | | | | (17,107,736 | ) | Gross carrying amount as of December 31, 2017 | | | 93,010,615 | | | | 14,300,942 | | | | 2,606,255 | | | | - | | | | 109,917,812 | |
F-81
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Wholesale Portfolio | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of January 1, 2017 | | | 98,531,831 | | | | 989,840 | | | | 554,188 | | | | - | | | | 100,075,859 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (1,307,936 | ) | | | 1,307,936 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (99,272 | ) | | | - | | | | 99,272 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | (55,374 | ) | | | 55,374 | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | 61,382 | | | | (61,382 | ) | | | - | | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | - | | | | - | | | | - | | | | - | | | | - | | Financial assets derecognized during the period other than writte-offs | | | (71,205,950 | ) | | | (785,321 | ) | | | - | | | | - | | | | (71,991,271 | ) | New financial assets originated or purchased | | | 116,853,630 | | | | 7,856,759 | | | | 225,382 | | | | - | | | | 124,935,771 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | (955,314 | ) | | | (840,121 | ) | | | (14,438 | ) | | | - | | | | (1,809,873 | ) | Inflation Effect | | | | | (19,577,262 | ) | | | (196,672 | ) | | | (110,110 | ) | | | | | | | (19,884,044 | ) | Gross carrying amount as of December 31, 2017 | | | 122,301,109 | | | | 8,215,665 | | | | 809,668 | | | | - | | | | 131,326,442 | |
Naranja | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | | | | | | 12-month | | | Lifetime | | | Lifetime | | | Purchased credit- impaired | | | Total | | Gross carrying amount as of January 1, 2017 | | | 40,052,780 | | | | 10,167,226 | | | | 3,251,395 | | | | - | | | | 53,471,401 | | Transfers: | | | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (2,177,809 | ) | | | 2,177,809 | | | | - | | | | - | | | | - | | Transfers from Stage 1 to Stage 3 | | | (832,017 | ) | | | - | | | | 832,017 | | | | - | | | | - | | Transfers from Stage 2 to Stage 3 | | | - | | | | (1,265,342 | ) | | | 1,265,342 | | | | - | | | | - | | Transfers from Stage 3 to Stage 2 | | | - | | | | 2,315 | | | | (2,315 | ) | | | - | | | | - | | Transfers from Stage 2 to Stage 1 | | | 3,233,170 | | | | (3,233,170 | ) | | | - | | | | - | | | | - | | Transfers from Stage 3 to Stage 1 | | | 66,293 | | | | - | | | | (66,293 | ) | | | | | | | | | Financial assets derecognized during the period other than writte-offs | | | (720,307 | ) | | | (1,045,183 | ) | | | (1,754,350 | ) | | | - | | | | (3,519,840 | ) | New financial assets originated or purchased | | | 9,370,544 | | | | 2,621,787 | | | | 55,611 | | | | - | | | | 12,047,942 | | Modification of contractual cash flows of financial assets | | | - | | | | - | | | | - | | | | - | | | | - | | Changes in interest accrual | | | | | - | | | | - | | | | - | | | | - | | | | - | | FX and other movements | | | 5,312 | | | | (4,919 | ) | | | (393 | ) | | | - | | | | - | | Inflation Effect | | | | | (7,958,075 | ) | | | (2,020,122 | ) | | | (646,019 | ) | | | - | | | | (10,624,216 | ) | Gross carrying amount as of December 31, 2017 | | | 41,039,891 | | | | 7,400,401 | | | | 2,934,995 | | | | - | | | | 51,375,287 | |
The following tables explain the changes in the loss allowance between the beginning and the end of the annual period due to these factors: | | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2019 | | | 5,514,025 | | | | 2,554,594 | | | | 6,230,445 | | | | — | | | | 14,299,064 | | Inflation effect | | | (2,119,898 | ) | | | (2,350,556 | ) | | | (2,434,533 | ) | | | — | | | | (6,904,987 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (498,483 | ) | | | 498,483 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (118,204 | ) | | | — | | | | 118,204 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 387,515 | | | | (387,515 | ) | | | — | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | — | | | | (336,064 | ) | | | 336,064 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | 198,995 | | | | — | | | | (198,995 | ) | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 361,066 | | | | (361,066 | ) | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 1,024,326 | | | | 679,012 | | | | 1,779,747 | | | | — | | | | 3,483,085 | | Changes in PDs/LGDs/EADs | | | (129,815 | ) | | | 1,080,703 | | | | 1,028,008 | | | | — | | | | 1,978,896 | | Changes to model assumptions and methodologies | | | 1,010,684 | | | | 9,351,243 | | | | 2,365,584 | | | | — | | | | 12,727,511 | | Foreign exchange and other movements | | | 651,290 | | | | 1,716,169 | | | | 335,600 | | | | — | | | | 2,703,059 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (966,200 | ) | | | (539,085 | ) | | | (3,305,109 | ) | | | — | | | | (4,810,394 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2020 | | | 4,954,235 | | | | 12,628,050 | | | | 5,893,949 | | | | — | | | | 23,476,234 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Like Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2019 | | | 480,463 | | | | 199,468 | | | | 3,423,368 | | | | — | | | | 4,103,299 | | Inflation effect | | | (217,336 | ) | | | (395,100 | ) | | | (1,202,902 | ) | | | — | | | | (1,815,338 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (36,222 | ) | | | 36,222 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (3,402 | ) | | | — | | | | 3,402 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 29,362 | | | | (29,362 | ) | | | — | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | — | | | | (8,796 | ) | | | 8,796 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | (17,165 | ) | | | — | | | | 17,165 | | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 72,278 | | | | (72,278 | ) | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 396,426 | | | | 133,391 | | | | 1,107,514 | | | | — | | | | 1,637,331 | | Changes in PDs/LGDs/EADs | | | 1,213,269 | | | | 384,169 | | | | 58,150 | | | | — | | | | 1,655,588 | | Changes to model assumptions and methodologies | | | (1,192,104 | ) | | | 1,471,030 | | | | 541,170 | | | | — | | | | 820,096 | | Foreign exchange and other movements | | | 104,533 | | | | 377,770 | | | | 283,658 | | | | — | | | | 765,961 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (198,619 | ) | | | (110,198 | ) | | | (2,336,304 | ) | | | — | | | | (2,645,121 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2020 | | | 559,205 | | | | 2,130,872 | | | | 1,831,739 | | | | — | | | | 4,521,816 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Wholesale Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2019 | | | 679,001 | | | | 301,216 | | | | 6,116,429 | | | | — | | | | 7,096,646 | | Inflation effect | | | (562,741 | ) | | | (201,577 | ) | | | (1,742,132 | ) | | | — | | | | (2,506,450 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (60,395 | ) | | | 60,395 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (13 | ) | | | — | | | | 13 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 5,354 | | | | (5,354 | ) | | | — | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | — | | | | (17,065 | ) | | | 17,065 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | — | | | | — | | | | — | | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | — | | | | — | | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 516,802 | | | | 85,037 | | | | 43,764 | | | | — | | | | 645,603 | | Changes in PDs/LGDs/EADs | | | 118,388 | | | | 26,417 | | | | 13 | | | | — | | | | 144,818 | | Changes to model assumptions and methodologies | | | 1,521,179 | | | | 363,383 | | | | 779,725 | | | | — | | | | 2,664,287 | | Foreign exchange and other movements | | | 455,386 | | | | 138,548 | | | | 134,717 | | | | — | | | | 728,651 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (713,244 | ) | | | (127,897 | ) | | | (4,742,793 | ) | | | — | | | | (5,583,934 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2020 | | | 1,959,717 | | | | 623,103 | | | | 606,801 | | | | — | | | | 3,189,621 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Naranja | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2019 | | | 2,754,583 | | | | 958,629 | | | | 6,379,153 | | | | — | | | | 10,092,365 | | Inflation effect | | | (1,139,035 | ) | | | (319,282 | ) | | | (1,896,750 | ) | | | — | | | | (3,355,067 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (72,171 | ) | | | 72,171 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (145,729 | ) | | | — | | | | 145,729 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | — | | | | (155,018 | ) | | | 155,018 | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | 173,949 | | | | (173,949 | ) | | | — | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | 108,373 | | | | — | | | | (108,373 | ) | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 13,578 | | | | (13,578 | ) | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 2,549,927 | | | | 199,345 | | | | 168,275 | | | | — | | | | 2,917,547 | | Changes in PDs/LGDs/EADs | | | 265,208 | | | | 66,142 | | | | 186,064 | | | | — | | | | 517,414 | | Changes to model assumptions and methodologies | | | — | | | | — | | | | — | | | | — | | | | — | | Foreign exchange and other movements | | | 773,817 | | | | 124,733 | | | | 391,352 | | | | — | | | | 1,289,902 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (1,561,281 | ) | | | (197,194 | ) | | | (3,558,405 | ) | | | — | | | | (5,316,880 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2020 | | | 3,707,641 | | | | 589,155 | | | | 1,848,485 | | | | — | | | | 6,145,281 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2018 | | | 5,446,096 | | | | 4,853,535 | | | | 5,360,348 | | | | — | | | | 15,659,979 | | Inflation effect | | | (2,638,825 | ) | | | (2,033,094 | ) | | | (2,699,649 | ) | | | — | | | | (7,371,568 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (737,405 | ) | | | 737,405 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (76,120 | ) | | | — | | | | 76,120 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 629,942 | | | | (629,942 | ) | | | — | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | — | | | | (454,456 | ) | | | 454,456 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | 28,855 | | | | — | | | | (28,855 | ) | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 47,182 | | | | (47,182 | ) | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 1,327,881 | | | | 774,816 | | | | 3,411,401 | | | | — | | | | 5,514,098 | | Changes in PDs/LGDs/EADs | | | 1,186,973 | | | | (329,590 | ) | | | 49,940 | | | | — | | | | 907,323 | | Changes to model assumptions and methodologies | | | (235,416 | ) | | | 1,000,727 | | | | 265,557 | | | | — | | | | 1,030,868 | | Foreign exchange and other movements | | | 1,147,613 | | | | 116,244 | | | | 1,016,936 | | | | — | | | | 2,280,793 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (565,569 | ) | | | (1,528,233 | ) | | | (1,628,627 | ) | | | — | | | | (3,722,429 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2019 | | | 5,514,025 | | | | 2,554,594 | | | | 6,230,445 | | | | — | | | | 14,299,064 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Like Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2018 | | | 559,063 | | | | 586,665 | | | | 2,470,639 | | | | — | | | | 3,616,367 | | Inflation effect | | | (297,080 | ) | | | (247,408 | ) | | | (1,587,345 | ) | | | — | | | | (2,131,833 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (33,806 | ) | | | 33,806 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (1,955 | ) | | | — | | | | 1,955 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 23,109 | | | | (23,109 | ) | | | — | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | — | | | | (39,816 | ) | | | 39,816 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | 1,600 | | | | — | | | | (1,600 | ) | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 12,684 | | | | (12,684 | ) | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 324,042 | | | | 96,077 | | | | 2,747,257 | | | | — | | | | 3,167,376 | | Changes in PDs/LGDs/EADs | | | 61,555 | | | | (13,733 | ) | | | 137,977 | | | | — | | | | 185,799 | | Changes to model assumptions and methodologies | | | (66,337 | ) | | | 49,762 | | | | 377,340 | | | | — | | | | 360,765 | | Foreign exchange and other movements | | | 156,997 | | | | 34,393 | | | | 839,392 | | | | — | | | | 1,030,782 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (246,725 | ) | | | (289,853 | ) | | | (1,589,379 | ) | | | — | | | | (2,125,957 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2019 | | | 480,463 | | | | 199,468 | | | | 3,423,368 | | | | — | | | | 4,103,299 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Wholesale Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2018 | | | 1,101,084 | | | | 162,022 | | | | 1,398,416 | | | | — | | | | 2,661,522 | | Inflation effect | | | (644,265 | ) | | | (116,256 | ) | | | (1,698,724 | ) | | | — | | | | (2,459,245 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (38,584 | ) | | | 38,584 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (79 | ) | | | — | | | | 79 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 84,927 | | | | (84,927 | ) | | | — | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | — | | | | (1,398 | ) | | | 1,398 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | 3 | | | | — | | | | (3 | ) | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 56,497 | | | | (56,497 | ) | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 524,555 | | | | 127,939 | | | | 287,888 | | | | — | | | | 940,382 | | Changes in PDs/LGDs/EADs | | | (151,260 | ) | | | 9,780 | | | | 5,051,844 | | | | — | | | | 4,910,364 | | Changes to model assumptions and methodologies | | | (22,269 | ) | | | 155,158 | | | | 16,239 | | | | — | | | | 149,128 | | Foreign exchange and other movements | | | 291,778 | | | | 63,427 | | | | 1,445,286 | | | | — | | | | 1,800,491 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (466,889 | ) | | | (109,610 | ) | | | (329,497 | ) | | | — | | | | (905,996 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2019 | | | 679,001 | | | | 301,216 | | | | 6,116,429 | | | | — | | | | 7,096,646 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Naranja | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2018 | | | 2,882,959 | | | | 3,858,958 | | | | 4,373,067 | | | | — | | | | 11,114,984 | | Inflation effect | | | (1,447,146 | ) | | | (1,502,938 | ) | | | (2,545,295 | ) | | | — | | | | (5,495,379 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (69,501 | ) | | | 69,501 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (146,043 | ) | | | — | | | | 146,043 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 926,454 | | | | (926,454 | ) | | | — | | | | — | | | | — | | Transfer from Stage 2 to Stage 3 | | | — | | | | (926,550 | ) | | | 926,550 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | 12,958 | | | | — | | | | (12,958 | ) | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 3,767 | | | | (3,767 | ) | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 147,103 | | | | 1,287,841 | | | | 4,156,431 | | | | — | | | | 5,591,375 | | Changes in PDs/LGDs/EADs | | | 537,543 | | | | 452,605 | | | | 582,337 | | | | — | | | | 1,572,485 | | Changes to model assumptions and methodologies | | | (421,414 | ) | | | (944,633 | ) | | | (11,813 | ) | | | — | | | | (1,377,860 | ) | Foreign exchange and other movements | | | 601,532 | | | | 204,060 | | | | 1,357,907 | | | | — | | | | 2,163,499 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Write-offs and other movements | | | (269,862 | ) | | | (617,528 | ) | | | (2,589,349 | ) | | | — | | | | (3,476,739 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2019 | | | 2,754,583 | | | | 958,629 | | | | 6,379,153 | | | | — | | | | 10,092,365 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 2,290,310 | | | | 1,920,604 | | | | 3,510,570 | | | | — | | | | 7,721,484 | | Inflation effect | | | (739,086 | ) | | | (619,787 | ) | | | (1,132,871 | ) | | | — | | | | (2,491,744 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (76,341 | ) | | | 76,341 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (27,194 | ) | | | — | | | | 27,194 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 129,152 | | | | (129,152 | ) | | | — | | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 1,424,772 | | | | 2,882,551 | | | | 3,384,236 | | | | — | | | | 7,691,559 | | Changes in PDs/LGDs/EADs | | | 2,800,850 | | | | 1,974,132 | | | | 3,925,774 | | | | — | | | | 8,700,756 | | Foreign exchange and other movements | | | 97,818 | | | | 55,599 | | | | (20,473 | ) | | | — | | | | 132,944 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | — | | | | (85,466 | ) | | | 85,466 | | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 60,031 | | | | (60,031 | ) | | | — | | | | — | | Write-offs and other movements | | | (454,185 | ) | | | (1,281,318 | ) | | | (4,359,517 | ) | | | — | | | | (6,095,020 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2018 | | | 5,446,096 | | | | 4,853,535 | | | | 5,360,348 | | | | — | | | | 15,659,979 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Like Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 464,424 | | | | 266,037 | | | | 1,291,276 | | | | — | | | | 2,021,737 | | Inflation effect | | | (149,871 | ) | | | (85,853 | ) | | | (416,696 | ) | | | — | | | | (652,420 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (8,191 | ) | | | 8,191 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (1,556 | ) | | | — | | | | 1,556 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 20,053 | | | | (20,053 | ) | | | — | | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 379,522 | | | | 410,461 | | | | 1,817,884 | | | | — | | | | 2,607,867 | | Changes in PDs/LGDs/EADs | | | 252,137 | | | | 186,400 | | | | 1,099,662 | | | | — | | | | 1,538,199 | | Foreign exchange and other movements | | | 35,695 | | | | 34,068 | | | | 184,701 | | | | — | | | | 254,464 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | — | | | | (6,147 | ) | | | 6,147 | | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 6,587 | | | | (6,587 | ) | | | — | | | | — | | Write-offs and other movements | | | (433,150 | ) | | | (213,026 | ) | | | (1,507,304 | ) | | | — | | | | (2,153,480 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2018 | | | 559,063 | | | | 586,665 | | | | 2,470,639 | | | | — | | | | 3,616,367 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Wholesale Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 443,517 | | | | 94,680 | | | | 1,033,797 | | | | — | | | | 1,571,994 | | Inflation effect | | | (143,127 | ) | | | (30,550 | ) | | | (333,605 | ) | | | — | | | | (507,282 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (3,920 | ) | | | 3,920 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (375 | ) | | | — | | | | 375 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 5,858 | | | | (5,858 | ) | | | — | | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 834,593 | | | | 90,364 | | | | — | | | | — | | | | 924,957 | | Changes in PDs/LGDs/EADs | | | 309,539 | | | | 82,253 | | | | 160,037 | | | | — | | | | 551,829 | | Foreign exchange and other movements | | | (14,289 | ) | | | 20,924 | | | | 524,932 | | | | — | | | | 531,567 | | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | — | | | | (12,880 | ) | | | 12,880 | | | | — | | | | — | | Write-offs and other movements | | | (330,712 | ) | | | (80,831 | ) | | | — | | | | — | | | | (411,543 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2018 | | | 1,101,084 | | | | 162,022 | | | | 1,398,416 | | | | — | | | | 2,661,522 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Naranja | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Loss Allowance as of December 31, 2017 | | | 1,893,842 | | | | 2,660,280 | | | | 3,566,912 | | | | — | | | | 8,121,034 | | Inflation effect | | | (611,149 | ) | | | (858,476 | ) | | | (1,151,051 | ) | | | — | | | | (2,620,676 | ) | Movements with P&L Impact | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 1 to Stage 2 | | | (232,792 | ) | | | 232,792 | | | | — | | | | — | | | | — | | Transfer from Stage 1 to Stage 3 | | | (84,391 | ) | | | — | | | | 84,391 | | | | — | | | | — | | Transfer from Stage 2 to Stage 1 | | | 451,410 | | | | (451,410 | ) | | | — | | | | — | | | | — | | New Financial Assets Originated or Purchased | | | 1,077,725 | | | | 1,539,491 | | | | 1,086,139 | | | | — | | | | 3,703,355 | | Changes in PDs/LGDs/EADs | | | 748,465 | | | | 2,540,874 | | | | 4,918,665 | | | | — | | | | 8,208,004 | | Foreign exchange and other movements | | | (269,272 | ) | | | (439,982 | ) | | | — | | | | — | | | | (709,254 | ) | Other movements with no P&L impact | | | | | | | | | | | | | | | | | | | | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfer from Stage 2 to Stage 3 | | | — | | | | (587,160 | ) | | | 587,160 | | | | — | | | | — | | Transfer from Stage 3 to Stage 1 | | | 20,239 | | | | — | | | | (20,239 | ) | | | — | | | | — | | Transfer from Stage 3 to Stage 2 | | | — | | | | 22,840 | | | | (22,840 | ) | | | — | | | | — | | Write-offs and other movements | | | (111,118 | ) | | | (800,291 | ) | | | (4,676,070 | ) | | | — | | | | (5,587,479 | ) | | | | | | | | | | | | | | | | | | | | | | Loss Allowance as of December 31, 2018 | | | 2,882,959 | | | | 3,858,958 | | | | 4,373,067 | | | | — | | | | 11,114,984 | | | | | | | | | | | | | | | | | | | | | | |
The following table further explains changes in the gross carrying amount of specific segment portfolio to help explain their significance to the changes in the loss allowance: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2019 | | | 109,088,241 | | | | 43,711,621 | | | | 7,919,820 | | | | — | | | | 160,719,682 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (13,927,874 | ) | | | 13,927,874 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | (1,547,026 | ) | | | — | | | | 1,547,026 | | | | — | | | | — | | Transfers from Stage 2 to stage 1 | | | 9,476,779 | | | | (9,476,779 | ) | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | — | | | | (1,510,981 | ) | | | 1,510,981 | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | 559,745 | | | | (559,745 | ) | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | 290,100 | | | | — | | | | (290,100 | ) | | | — | | | | — | | Financial assets derecognized during the period other than write-offs | | | (11,928,884 | ) | | | (3,444,031 | ) | | | (3,940,595 | ) | | | — | | | | (19,313,510 | ) | New financial assets originated or purchased | | | 29,264,738 | | | | 8,648,366 | | | | 2,189,870 | | | | — | | | | 40,102,974 | | FX and other movements | | | 25,161,879 | | | | 9,429,822 | | | | 935,254 | | | | — | | | | 35,526,955 | | Inflation Effect | | | (28,959,131 | ) | | | (11,603,914 | ) | | | (2,102,436 | ) | | | — | | | | (42,665,481 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2020 | | | 116,918,822 | | | | 50,241,723 | | | | 7,210,075 | | | | — | | | | 174,370,620 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail like Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2019 | | | 46,764,260 | | | | 7,028,411 | | | | 4,508,535 | | | | — | | | | 58,301,206 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (3,290,768 | ) | | | 3,290,768 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | (132,027 | ) | | | — | | | | 132,027 | | | | — | | | | — | | Transfers from Stage 2 to Stage 1 | | | 1,697,439 | | | | (1,697,439 | ) | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | — | | | | (110,371 | ) | | | 110,371 | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | 142,658 | | | | (142,658 | ) | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | 32,005 | | | | — | | | | (32,005 | ) | | | — | | | | | | Financial assets derecognized during the period other than write-offs | | | (17,132,751 | ) | | | (1,255,604 | ) | | | (2,968,605 | ) | | | — | | | | (21,356,960 | ) | New financial assets originated or purchased | | | 76,897,926 | | | | 4,573,084 | | | | 1,465,317 | | | | — | | | | 82,936,327 | | FX and other movements | | | 13,347,534 | | | | 2,851,237 | | | | 512,835 | | | | — | | | | 16,711,606 | | Inflation Effect | | | (12,414,283 | ) | | | (1,865,798 | ) | | | (1,196,859 | ) | | | — | | | | (15,476,940 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2020 | | | 105,769,335 | | | | 12,956,946 | | | | 2,388,958 | | | | — | | | | 121,115,239 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Wholesale Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2019 | | | 280,598,191 | | | | 8,256,549 | | | | 6,638,965 | | | | — | | | | 295,493,705 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (6,918,520 | ) | | | 6,918,520 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | — | | | | — | | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 1 | | | 471,842 | | | | (471,842 | ) | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | — | | | | (132,221 | ) | | | 132,221 | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | — | | | | — | | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | — | | | | — | | | | — | | | | — | | | | — | | Financial assets derecognized during the period other than write-offs | | | (102,627,396 | ) | | | (2,758,287 | ) | | | (325,587 | ) | | | — | | | | (105,711,270 | ) | New financial assets originated or purchased | | | 218,915,986 | | | | 4,227,395 | | | | 81,296 | | | | — | | | | 223,224,677 | | FX and other movements | | | (52,209,009 | ) | | | (289,643 | ) | | | (3,968,340 | ) | | | — | | | | (56,466,992 | ) | Inflation Effect | | | (74,489,053 | ) | | | (2,191,826 | ) | | | (1,762,417 | ) | | | — | | | | (78,443,296 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2020 | | | 263,742,041 | | | | 13,558,645 | | | | 796,138 | | | | — | | | | 278,096,824 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Naranja | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2019 | | | 64,077,108 | | | | 3,453,393 | | | | 8,242,112 | | | | — | | | | 75,772,613 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (1,125,451 | ) | | | 1,125,451 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | (1,376,997 | ) | | | — | | | | 1,376,997 | | | | — | | | | — | | Transfers from Stage 2 to Stage 1 | | | — | | | | (505,324 | ) | | | 505,324 | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | 869,079 | | | | (869,079 | ) | | | — | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | 23,171 | | | | (23,171 | ) | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | 183,698 | | | | — | | | | (183,698 | ) | | | — | | | | — | | Financial assets derecognized during the period other than write-offs | | | (2,811,379 | ) | | | (942,188 | ) | | | (5,698,219 | ) | | | — | | | | (9,451,786 | ) | New financial assets originated or purchased | | | 46,738,397 | | | | 1,058,663 | | | | 273,158 | | | | — | | | | 48,070,218 | | FX and other movements | | | (440,215 | ) | | | 38,646 | | | | 92,235 | | | | — | | | | (309,334 | ) | Inflation Effect | | | (16,893,380 | ) | | | (927,015 | ) | | | (2,212,479 | ) | | | — | | | | (20,032,874 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2020 | | | 89,220,860 | | | | 2,455,718 | | | | 2,372,259 | | | | — | | | | 94,048,837 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2018 | | | 172,450,615 | | | | 29,108,855 | | | | 7,080,891 | | | | — | | | | 208,640,361 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (37,581,890 | ) | | | 37,581,890 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | (2,165,255 | ) | | | — | | | | 2,165,255 | | | | — | | | | — | | Transfers from Stage 2 to Stage 1 | | | 13,388,560 | | | | (13,388,560 | ) | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | — | | | | (1,915,261 | ) | | | 1,915,261 | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | 74,220 | | | | (74,220 | ) | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | 49,640 | | | | — | | | | (49,640 | ) | | | — | | | | — | | Financial assets derecognized during the period other than write-offs | | | (20,427,940 | ) | | | (5,018,864 | ) | | | (4,264,363 | ) | | | — | | | | (29,711,167 | ) | New financial assets originated or purchased | | | 26,894,580 | | | | 9,264,446 | | | | 4,491,277 | | | | — | | | | 40,650,303 | | FX and other movements | | | 16,827,627 | | | | (1,808,697 | ) | | | (866,741 | ) | | | — | | | | 14,152,189 | | Inflation Effect | | | (60,347,696 | ) | | | (10,186,408 | ) | | | (2,477,900 | ) | | | — | | | | (73,012,004 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2019 | | | 109,088,241 | | | | 43,711,621 | | | | 7,919,820 | | | | — | | | | 160,719,682 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Retail like Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2018 | | | 63,122,213 | | | | 8,709,371 | | | | 3,764,864 | | | | — | | | | 75,596,448 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (4,996,285 | ) | | | 4,996,285 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | (245,369 | ) | | | — | | | | 245,369 | | | | — | | | | — | | Transfers from Stage 2 to Stage 1 | | | 828,828 | | | | (828,828 | ) | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | — | | | | (406,583 | ) | | | 406,583 | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | 26,100 | | | | (26,100 | ) | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | 7,576 | | | | — | | | | (7,576 | ) | | | — | | | | — | | Financial assets derecognized during the period other than write-offs | | | (20,470,141 | ) | | | (4,219,661 | ) | | | (2,287,429 | ) | | | — | | | | (26,977,231 | ) | New financial assets originated or purchased | | | 28,523,815 | | | | 2,004,755 | | | | 3,724,145 | | | | — | | | | 34,252,715 | | FX and other movements | | | 2,082,732 | | | | (205,253 | ) | | | 6,163 | | | | — | | | | 1,883,642 | | Inflation Effect | | | (22,089,109 | ) | | | (3,047,775 | ) | | | (1,317,484 | ) | | | — | | | | (26,454,368 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2019 | | | 46,764,260 | | | | 7,028,411 | | | | 4,508,535 | | | | — | | | | 58,301,206 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Wholesale Portfolio | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2018 | | | 279,116,409 | | | | 12,748,427 | | | | 5,279,483 | | | | — | | | | 297,144,319 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (8,442,902 | ) | | | 8,442,902 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | (8,821 | ) | | | — | | | | 8,821 | | | | — | | | | — | | Transfers from Stage 2 to Stage 1 | | | 2,469,057 | | | | (2,469,057 | ) | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | — | | | | (28,659 | ) | | | 28,659 | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | 123,716 | | | | (123,716 | ) | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | 972 | | | | — | | | | (972 | ) | | | — | | | | — | | Financial assets derecognized during the period other than write-offs | | | (127,647,061 | ) | | | (6,101,582 | ) | | | (161,928 | ) | | | — | | | | (133,910,571 | ) | New financial assets originated or purchased | | | 225,010,476 | | | | 4,050,575 | | | | 430,415 | | | | — | | | | 229,491,466 | | FX and other movements | | | 4,728,212 | | | | (4,048,564 | ) | | | 3,025,715 | | | | — | | | | 3,705,363 | | Inflation Effect | | | (94,628,151 | ) | | | (4,461,209 | ) | | | (1,847,512 | ) | | | — | | | | (100,936,872 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2019 | | | 280,598,191 | | | | 8,256,549 | | | | 6,638,965 | | | | — | | | | 295,493,705 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Stage 1 | | | Stage 2 | | | Stage 3 | | | | | | | | | Naranja | | 12-month | | | Lifetime | | | Lifetime | | | Purchased
credit-
impaired | | | Total | | Gross carrying amount as of December 31, 2018 | | | 81,852,887 | | | | 13,847,683 | | | | 7,931,114 | | | | — | | | | 103,631,684 | | Transfers: | | | | | | | | | | | | | | | | | | | | | Transfers from Stage 1 to Stage 2 | | | (1,511,927 | ) | | | 1,511,927 | | | | — | | | | — | | | | — | | Transfers from Stage 1 to Stage 3 | | | (2,532,826 | ) | | | — | | | | 2,532,826 | | | | — | | | | — | | Transfers from Stage 2 to Stage 1 | | | 3,537,875 | | | | (3,537,875 | ) | | | — | | | | — | | | | — | | Transfers from Stage 2 to Stage 3 | | | — | | | | (3,074,964 | ) | | | 3,074,964 | | | | — | | | | — | | Transfers from Stage 3 to Stage 2 | | | — | | | | 7,711 | | | | (7,711 | ) | | | — | | | | — | | Transfers from Stage 3 to Stage 1 | | | 26,448 | | | | — | | | | (26,448 | ) | | | — | | | | — | | Financial assets derecognized during the period other than write-offs | | | (2,185,596 | ) | | | (1,586,931 | ) | | | (3,469,725 | ) | | | — | | | | (7,242,252 | ) | New financial assets originated or purchased | | | 14,124,048 | | | | 1,344,667 | | | | 1,174,583 | | | | — | | | | 16,643,298 | | FX and other movements | | | (590,047 | ) | | | (212,942 | ) | | | (192,062 | ) | | | — | | | | (995,051 | ) | Inflation Effect | | | (28,643,754 | ) | | | (4,845,883 | ) | | | (2,775,429 | ) | | | — | | | | (36,265,066 | ) | | | | | | | | | | | | | | | | | | | | | | Gross carrying amount as of December 31, 2019 | | | 64,077,108 | | | | 3,453,393 | | | | 8,242,112 | | | | — | | | | 75,772,613 | | | | | | | | | | | | | | | | | | | | | | |
Use of information Grupo Financiero Galicia, according to IFRS 9 standards, uses all information available, past, present and future to identify and estimate expected credit loss. Operational Risk The operational risk management is understood as the identification, assessment, monitoring, control and mitigation of this risk. It is an ongoing process carried out throughout the Group, which fosters a risk management culture at all organization levels through an effective policy and a program led by Senior Management. Identification The starting point of the operational risk management is the identification of risks and their association with the controls established to mitigate them, considering internal and external factors that may affect the process development. The results of this exercise are entered into a log of risks, which acts as a central repository of the nature and status of each risk and controls thereof. Assessment Once risks have been identified, the size in terms of impact, frequency and likelihood of risk occurrence is determined, considering the existing controls. The combination of impact with likelihood of occurrence determines the risk exposure level. Finally, the estimated risk levels are compared to pre-established criteria, considering the balance of potential benefits and adverse results. Monitoring The monitoring process allows detecting and correcting the possible deficiencies in operational risk management policies, processes and procedures and their update. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Risk Control and Mitigation F-82
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The control process ensures compliance with internal policies and analyzes risks and responses to avoid, accept, mitigate or share them, by aligning them with the risk tolerance defined. IT Risk The Group manages the IT risk inherent to its products, activities and business processes. It also manages the risk associated with the material information systems, technology and information security processes. It also covers the risks derived from subcontracted activities and from services rendered by providers. Reputational Risk The reputational risk may result from the materialization of other risks: Legal, Compliance, Operational, Technological, Strategic, Market, Liquidity, Credit, etc. The groups of interest are at the core of management, being considered upon establishing any type of mitigation measure. Banco Galicia'sGalicia’s reputational risk management function was allocated to the Compliance Management Division, seeking to obtain a more comprehensive vision and be able to make immediate decisions that protect the entity'sentity’s image and reputation by using tools that enable to monitor and follow up to the perception of different groups of interest. Banco Galicia defined an internal policy to reduce the occurrence of reputational events with negative impact, by defining a governance model with roles and responsibilities, and identifying critical scenarios that require management and visibility. Contacts have been established with key business areas, devising a work scheme based on synergy and ongoing communication in order to spread the risk culture across the organization. The Reputational Crisis Committee is in charge of becoming aware of the events that may affect the Bank'sBank’s reputation. In the face of an event of such characteristics, all the necessary information is gathered in the shortest time possible in order to be able to make assertive decisions, formally declare the crisis situation, if appropriate, and define the action plan to alleviate the crisis. In addition, such committee determines the communication strategy to be followed, considering the groups of interest involved. Finally, the strategy and related actions are followed to tackle the crisis. Strategic Risk Strategic risk is that which arises from an inappropriate business strategy or an adverse change in forecasts, parameters, goals and other functions that support such strategy. It represents the possibility of fluctuations in placements that prevent Banco Galicia or its subsidiaries from obtaining the expected results of operations. ThisThese potential affected results of operations would give rise to lower income or higher costs regardless of what was budgeted. Money Laundering Risk As regards the control and prevention of asset laundering and funding of terrorist activities, Banco Galicia complies with the regulations set forth by the Argentine Central Bank, the Financial Information Unit and Law No. 25246, as amended, which creates the Financial Information Unit (U.I.F.)(UIF), within the purview of Argentina’s Ministry of Treasury and Public Finance with functional autarchy. The Financial Information Unit is in charge of analyzing, addressing and reporting the information received, in order to prevent and avoid both asset laundering and funding of terrorist activities. The Bank has promoted the implementation of measures designed to fight against the use of the international financial system by criminal organizations. For such purposes, Banco Galicia has control policies, procedures and structures that are applied using a “risk-based approach”, which allow for the monitoring of transactions, pursuant to the "customer profile"“customer profile” (defined individually based on the information and documentation related to the economic and financial condition of the customer), in order to detect such transactions that should be considered unusual, and to report them to the U.I.F.UIF in applicable cases. The Anti-Money Laundering Management Division (“PLA”, as per its initials in Spanish) is in charge of managing this activity, through the implementation of control and prevention procedures as well as the communication thereof to the rest of the organization by drafting the related handbooks and training all employees. In addition, the management of this risk is regularly reviewed by Internal Audit. The Bank has appointed a director as Compliance Officer, pursuant to Resolution 121/11, as amended, handed down by the U.I.F.,UIF, who shall be responsible for ensuring compliance with and implementation of the proceedings and obligations on the issue. The Bank contributes to the prevention and mitigation of risks from these transaction-related criminal behaviors, by being involved in the international regulatory standards adoption process. F-83
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cybersecurity Risk The use of technologies in place facilitates us a significant number of tools that expedite and improve the Bank'sBank’s processes, having a positive impact on our products and services. However, along with the above-mentioned benefits, risks and/or threats related to these new opportunities provided by digital technologies appear. The cybersecurity-related risk is a matter inherent to the introduction of these new technologies. On one hand, such risk management stands out among Banco Galicia'sGalicia’s main goals, and, on the other, all the personnel'spersonnel’s as well as customers'customers’ awareness of the considerations as regards the use of the above-mentioned technologies. In this respect, it is vital for the organization to understand thoroughly its internal processes, the tools used and the available techniques to mitigate cybersecurity-related risks. NOTE 47.46. CONTINGENCIES AND COMMITMENTS a) Tax Issues At the date of these consolidated financial statements, provincial tax collection authorities, as well as tax collection authorities from the Autonomous City of Buenos Aires, are in the process (in different degrees of completion) of conducting reviews and assessments mainly in respect of matters resulting from applying turnover tax. These proceedings and their possible effects are constantly being monitored. Even though it is considered that it has complied with its tax liabilities in full pursuant to current regulations, the provisions deemed adequate pursuant to the evolution of each proceeding have been set up. b) Consumer Protection Associations Consumer Protection Associations, on behalf of consumers, have filed claims against Banco Galicia with regard toregarding the collection of certain financial charges. The Group believes that the resolution of these controversies will not have a significant impact on its financial condition. c) Penalties Imposed on Banco de Galicia y Buenos Aires S.A.U. and Summary Proceedings Commenced by the Argentine Central Bank The penalties imposed and the summary proceedings commenced by the Argentine Central Bank are detailed in Note 54.52. The provisions for contingencies recorded are as follows: | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Other Contingencies | | | 1,329,142 | | | | 760,379 | | | | 594,461 | | For Commercial Lawsuits/Legal Affairs | | | 1,058,636 | | | | 527,338 | | | | 455,462 | | For Labor Lawsuits | | | 96,311 | | | | 52,095 | | | | 41,408 | | For Claims and Credit Cards | | | 1,097 | | | | 1,620 | | | | 2,021 | | For Guarantees Granted | | | 1,142 | | | | 1,686 | | | | 2,104 | | For Other Contingencies | | | 171,956 | | | | 177,640 | | | | 93,466 | | Termination Benefits | | | 86,926 | | | | 109,295 | | | | 83,322 | | Court Deposits Dollarization Difference under Communiqué "A" 4686 | | | 27,949 | | | | 20,229 | | | | 21,296 | | Administrative, Disciplinary and Criminal Penalties | | | 5,306 | | | | 7,357 | | | | 10,134 | | Total | | | 1,449,323 | | | | 897,260 | | | | 709,213 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Other Contingencies | | | 3,708,589 | | | | 3,672,138 | | For Commercial Lawsuits/Legal matters | | | 2,758,425 | | | | 2,862,007 | | For Labor Lawsuits | | | 268,689 | | | | 230,095 | | For Claims and Credit Cards | | | 1,097 | | | | 1,493 | | For Guarantees Granted | | | 1,142 | | | | 1,555 | | For Other Contingencies | | | 458,412 | | | | 343,701 | | For Termination Benefits | | | 220,824 | | | | 233,287 | | Difference for Dollarization of Judicial Deposits—Communication “A” 4686 | | | 62,402 | | | | 60,372 | | Administrative, Disciplinary and Criminal Penalties | | | 5,306 | | | | 7,224 | | | | | | | | | | | Total | | | 3,776,297 | | | | 3,739,734 | | | | | | | | | | |
NOTE 48.47. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES Financial assets and liabilities are offset and the net amount is reported in the statement of financial position where the Group currently has a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The disclosures in the following tables include financial assets and liabilities that: -
| are offset in the Group's consolidated balance sheet;
are offset in the Group’s consolidated statement of financial position; or |
-
| are subject to a master netting for offsetting required
are subject to a netting agreement or similar agreement that covers similar financial instruments, regardless of whether they are offset in the consolidated balance sheet. |
Similar agreements include derivative offsetting agreements and master netting agreements with clearing houses. Similar financial instruments, include derivatives, loans and other financing, and otherregardless of whether they are offset in the consolidated statement of financial liabilities. position.
Financial instruments such as loans and deposits are not disclosed in the following tables since they are not offset in the consolidated balance sheet.statement of financial position. F-84
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The financial instruments subject to offsetting, master netting agreements and similar agreements as of December 31, 20182020 and 2019 are as follows: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | Amounts Subject to Master Netting Agreement Not Offset in the Financial Statements | | | Total Net Amount | | Financial Instrument | | Gross Amount (a) | | | Gross amounts set off in the balance sheet (b) | | | Net amounts presented in the balance sheet (c)=(a)-(b) | | | Financial Instruments (d) | | | Cash Collaterals Received (e) | | | (c)-(d)-(e) | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | Loans and Other Financing | | | | | | | | | | | | | | | | | | | | | | | | | Credit Card Loans | | | 113,420,510 | | | | | | | | 113,420,510 | | | | - | | | | 3,042,254 | | | | 110,378,256 | | Derivative Financial Instruments | | | 1,792,170 | | | | 6,530 | | | | 1,785,640 | | | | - | | | | 1,223,847 | | | | 561,793 | | Total Assets Subject to Offsetting | | | 115,212,680 | | | | 6,530 | | | | 115,206,150 | | | | - | | | | 4,266,101 | | | | 110,940,049 | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | Derivative Financial Instruments | | | 1,842,319 | | | | (6,530 | ) | | | 1,835,789 | | | | - | | | | 1,223,847 | | | | 611,942 | | Liabilities from Financing of Credit Card Purchases | | | 36,894,587 | | | | — | | | | 36,894,587 | | | | - | | | | 3,042,254 | | | | 33,852,333 | | Total Liabilities Subject to Offset | | | 38,736,906 | | | | (6,530 | ) | | | 38,730,376 | | | | - | | | | 4,266,101 | | | | 34,464,275 | |
| | | | | | | | | | | | | | | | | | | | | | | | Offsetting effects on Statement of
Financial Position | | | Related amounts not
offset | | 12.31.20 | | Gross
Amount | | | Offset
Amount | | | Net
amounts in
Statement
Financial
Position | | | Subject to
netting
agreements | | | Total Net
Amount | | Financial Assets | | | | | | | | | | | | | | | | | | | | | Derivate Instruments | | | 27,671 | | | | — | | | | 27,671 | | | | (25,086 | ) | | | 2,585 | | | | | | | | | | | | | | | | | | | | | | | Total | | | 27,671 | | | | — | | | | 27,671 | | | | (25,086 | ) | | | 2,585 | | | | | | | | | | | | | | | | | | | | | | | Financial Liabilities | | | | | | | | | | | | | | | | | | | | | Derivate Instruments | | | 31,493 | | | | — | | | | 31,493 | | | | (25,086 | ) | | | 6,407 | | | | | | | | | | | | | | | | | | | | | | | Total | | | 31,493 | | | | — | | | | 31,493 | | | | (25,086 | ) | | | 6,407 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Offsetting effects on Statement of
Financial Position | | | Related amounts not
offset | | 12.31.19 | | Gross
Amount | | | Offset
Amount | | | Net
amounts in
Statement
Financial
Position | | | Subject to
netting
agreements | | | Total Net
Amount | | Financial Assets | | | | | | | | | | | | | | | | | | | | | Derivate Instruments | | | 116,438 | | | | — | | | | 116,438 | | | | (99,124 | ) | | | 17,314 | | | | | | | | | | | | | | | | | | | | | | | Total | | | 116,438 | | | | — | | | | 116,438 | | | | (99,124 | ) | | | 17,314 | | | | | | | | | | | | | | | | | | | | | | | Financial Liabilities | | | | | | | | | | | | | | | | | | | | | Derivate Instruments | | | 170,930 | | | | — | | | | 170,930 | | | | (99,124 | ) | | | 71,806 | | | | | | | | | | | | | | | | | | | | | | | Total | | | 170,930 | | | | — | | | | 170,930 | | | | (99,124 | ) | | | 71,806 | | | | | | | | | | | | | | | | | | | | | | |
NOTE 49.48. OFF-BALANCE SHEET ITEMS In the normal course of business and in order to meet customers'customers’ financing needs, off-balance sheet transactions are performed. These instruments expose the Group to the credit risk, in addition to loans recognized in assets. These financial instruments include credit lending commitments, letters of credit reserve, guarantees granted and acceptances. The same credit policies for agreed credits, guarantees and loan granting are used. Outstanding commitments and guarantees do not represent an unusually high credit risk. Agreed Credits They are commitments to grant loans to a customer in a future date, subject to compliance with certain contractual agreements that usually have fixed maturity dates or other termination clauses and may require a fee payment. Commitments are expected to expire without resorting to them. The total amounts of agreed commitments do not necessarily represent future cash requirements. Each customer’s solvency is assessed case by case. Guarantees Granted The issuing bank commits to reimbursing the loss to the beneficiary if the secured debtor does not comply with its obligation upon maturity. Export and Import Documentary Credits They are conditional commitments issued by the Group to secure a customer’s compliance towards a third party. Responsibilities for Foreign Trade Transactions They are conditional commitments for foreign trade transactions. Our exposure to credit loss upon the other party’s default in the financial instrument is represented by the contractual notional amount of the same investments. The credit exposure for these transactions is detailed below. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Agreed Credits | | | 33,133,907 | | | | 27,162,163 | | They are commitments to grant loans to a customer in a future date, subject to compliance with certain contractual agreements that usually have fixed maturity dates or other termination clauses and may require a fee payment.
Commitments are expected to expire without resorting to them. The total amounts of agreed commitments do not necessarily represent future cash requirements. Each customer's solvency is evaluated case by case.
Guarantees Granted
The issuing bank commits to reimbursing the loss to the beneficiary if the secured debtor does not comply with its obligation upon maturity.
Documentary Export and Import Documentary Credits | | | 2,483,005 | | | | 3,534,722 | | They are conditional commitments issued by the Group to secure a customer's compliance towards a third party.Guarantees Granted
| | | 12,658,942 | | | | 21,963,779 | | ResponsibilitiesLiabilities for Foreign Trade TransactionsOperations
They are conditional commitments for foreign trade transactions.
Our exposure to credit loss upon the other party's default in the financial instrument is represented by the contractual notional amount of the same investments.
The credit exposure for these transactions is detailed below.
| | | 916,751 | | | | 2,317,141 | |
The fees and commissions related to the items mentioned above as of the indicated dates were as follows: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | For Agreed Credits | | | 19,432 | | | | 141,340 | | For Documentary Export and Import Credits | | | 104,595 | | | | 123,828 | | For Guarantees Granted | | | 72,070 | | | | 327,608 | |
The credit risk of these instruments is essentially the same as that involved in lending credit facilities to customers. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS To grant guarantees to our customers, we may require counter-guarantees, which, classified by type, amount to: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Other Preferred Guarantees Received | | | 65,887 | | | | 1,265,645 | | Other Guarantees Received | | | 285,247 | | | | 713,086 | |
Additionally, checks to be debited and credited, as well as other elements in the collection process, such as, notes, invoices and miscellaneous items, are recorded in memorandum accounts until the related instrument is approved or accepted. The risk of loss in these offsetting transactions is not significant. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Values to be Debited | | | 7,001,365 | | | | 7,311,215 | | Values to be Credited | | | 10,518,835 | | | | 9,197,463 | | Values for Collection | | | 85,197,420 | | | | 52,424,444 | |
The Group acts as trustee by virtue of trust agreements to secure obligations derived from several agreements between parties. The amounts of trust funds and securities held in custody as of the indicated dates are as follows: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Trust Funds | | | 8,780,506 | | | | 9,480,177 | | Securities Held in Escrow | | | 804,332,490 | | | | 633,438,634 | |
These trusts are not included in the consolidation since the Group does not exert control on them. NOTE 49. TRANSFER OF FINANCIAL ASSETS All portfolio sales carried out by the Group are without recourse; therefore, they all qualify for the full derecognition of financial assets. When this derecognition takes place, the difference between the book value and the value in the offsetting entry is charged to Income. NOTE 50. NON-CONTROLLING INTEREST The following tables provide information about each subsidiary that has a non-controlling interest. The non-controlling equity investment percentages and votes as of the indicated dates are as follows: | | | | | | | | | | | Company | | Place of Business | | 12.31.20 | | | 12.31.19 | | Cobranzas Regionales S.A. | | Códoba - Argentina | | | 0.00 | % | | | 17.00 | % | Galicia Broker Asesores de Seguros S.A. | | CABA - Argentina | | | 0.01 | % | | | 0.01 | % | Galicia Retiro Compañía de Seguros S.A. | | CABA - Argentina | | | 0.00 | % | | | 0.00 | % | Galicia Seguros S.A. | | CABA - Argentina | | | 0.00 | % | | | 0.00 | % | Naranja Digital Compañía Financiera S.A.U. | | CABA - Argentina | | | 0.00 | % | | | 17.00 | % | Ondara S.A. | | CABA - Argentina | | | 0.00 | % | | | 16.15 | % | Tarjeta Naranja S.A. | | Códoba - Argentina | | | 0.00 | % | | | 17.00 | % | Tarjetas Regionales S.A. | | CABA - Argentina | | | 0.00 | % | | | 17.00 | % |
Changes in the Group’s non-controlling interests as of the indicated dates were as follows: | | | | | | | | | | | | | | | | | | | | | Company | | Balance as
of
12.31.19 | | | Purchases /
Contributions
/ Sales | | | Cash
Dividends | | | Profit
Sharing in
income
(loss)
for the
Year | | | Balance as
of
12.31.20 | | Cobranzas Regionales S.A. | | | (26,636 | ) | | | — | | | | — | | | | (49,983 | ) | | | (76,619 | ) | Galicia Broker Asesores de Seguros S.A. | | | 4 | | | | — | | | | — | | | | (1 | ) | | | 3 | | Galicia Retiro Compañía de Seguros S.A. | | | 4 | | | | — | | | | — | | | | (4 | ) | | | — | | Galicia Seguros S.A. | | | 5 | | | | — | | | | — | | | | (5 | ) | | | — | | Naranja Digital Compañía Financiera S.A.U. | | | (20,522 | )�� | | | — | | | | — | | | | (50,273 | ) | | | (70,795 | ) | Ondara S.A. | | | 11,382 | | | | — | | | | — | | | | (879 | ) | | | 10,503 | | Tarjeta Naranja S.A. | | | 3,439,901 | | | | — | | | | — | | | | 514,371 | | | | 3,954,272 | | Tarjetas Regionales S.A. | | | 534,426 | | | | (4,135,824 | ) | | | (143,844 | ) | | | (72,119 | ) | | | (3,817,361 | ) | | | | | | | | | | | | | | | | | | | | | | Total | | | 3,938,564 | | | | (4,135,824 | ) | | | (143,844 | ) | | | 341,107 | | | | 3 | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | | | | | | | | Company | | Balance as
of
12.31.18 | | | Purchases /
Contributions
/ Sales | | | Cash
Dividends | | | Profit
Sharing in
income
(loss)
for the
Year | | | Balance as
of
12.31.19 | | Cobranzas Regionales S.A. | | | 24,327 | | | | — | | | | — | | | | (50,963 | ) | | | (26,636 | ) | Galicia Broker Asesores de Seguros S.A. | | | 4 | | | | — | | | | — | | | | — | | | | 4 | | Galicia Retiro Compañía de Seguros S.A. | | | 4 | | | | — | | | | — | | | | — | | | | 4 | | Galicia Seguros S.A. | | | 5 | | | | — | | | | — | | | | — | | | | 5 | | Naranja Digital Compañía Financiera S.A.U. | | | — | | | | — | | | | — | | | | (20,522 | ) | | | (20,522 | ) | Ondara S.A. | | | 12,660 | | | | — | | | | — | | | | (1,278 | ) | | | 11,382 | | Tarjeta Naranja S.A. | | | 3,121,583 | | | | — | | | | — | | | | 318,318 | | | | 3,439,901 | | Tarjetas Regionales S.A. | | | 448,887 | | | | 179,986 | | | | — | | | | (94,447 | ) | | | 534,426 | | | | | | | | | | | | | | | | | | | | | | | Total | | | 3,607,470 | | | | 179,986 | | | | — | | | | 151,108 | | | | 3,938,564 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Company | | Balance as
of
12.31.17 | | | Purchases /
Contributions
/ Sales | | | Cash
Dividends | | | Profit
Sharing in
income
(loss)
for the
Year | | | Balance as
of
12.31.18 | | Cobranzas Regionales S.A. | | | 27,814 | | | | — | | | | — | | | | (3,487 | ) | | | 24,327 | | Galicia Broker Asesores de Seguros S.A. | | | 4 | | | | — | | | | — | | | | — | | | | 4 | | Galicia Retiro Compañía de Seguros S.A. | | | 4 | | | | — | | | | — | | | | — | | | | 4 | | Galicia Seguros S.A. | | | 5 | | | | — | | | | — | | | | — | | | | 5 | | Naranja Digital Compañía Financiera S.A.U. | | | — | | | | — | | | | — | | | | — | | | | — | | Ondara S.A. | | | 14,815 | | | | — | | | | 109 | | | | (2,264 | ) | | | 12,660 | | Tarjeta Naranja S.A. | | | 5,688,995 | | | | (1,613,587 | ) | | | (287,822 | ) | | | (666,003 | ) | | | 3,121,583 | | Tarjetas Regionales S.A. | | | 453,788 | | | | — | | | | 85,004 | | | | (89,905 | ) | | | 448,887 | | | | | | | | | | | | | | | | | | | | | | | Total | | | 6,185,425 | | | | (1,613,587 | ) | | | (202,709 | ) | | | (761,659 | ) | | | 3,607,470 | | | | | | | | | | | | | | | | | | | | | | |
Summary information on subsidiaries is detailed in Note 15. NOTE 51. RELATED PARTY TRANSACTIONS Related parties are all those entities that directly, or indirectly through other entities, have control over another, are under the same controlling party or may have significant influence on another entity’s financial or operational decisions. The Group controls another entity when it has the power over other entities’ financial and operating decisions and also has a share of profits thereof. Additionally, the Group considers that it has joint control when there is an agreement between parties regarding the control of a common economic activity. Finally, those cases where the Group has significant influence is due to the capacity to take part in decisions about the company’s financial policy and operations. Those shareholders who hold an equity investment equal to or higher than 20% of the total votes of the Group or its subsidiaries are considered to have significant influence. To determine those situations, not only the legal aspects are observed, but also the nature and substance of the relationship. Furthermore, the key personnel of the Group’s Management (Board of Directors members and Managers of the Group and its subsidiaries), as well as the entities over which the key personnel may have significant influence or control are considered as related parties. | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Agreed Commitments | | | 14,947,369 | | | | 17,223,135 | | | | 16,756,545 | | Export and Import Documentary Credits | | | 1,080,047 | | | | 2,005,839 | | | | 1,198,508 | | Guarantees Granted | | | 16,292,630 | | | | 3,493,810 | | | | 2,090,979 | | Responsibilities for Foreign Trade Transactions | | | 234,609 | | | | 674,101 | | | | 1,080,067 | |
The fees and commissions related to the items mentioned above as of the indicated dates were as follows:
| | 12.31.18 | | | 12.31.17 | | For Agreed Credits | | | 121,515 | | | | 89,471 | | For Export and Import Documentary Credits | | | 68,882 | | | | 31,459 | | For Guarantees Granted | | | 82,041 | | | | 45,058 | |
F-85
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The credit risk of these instruments is essentially the same as that involved in lending credit facilities to customers.
To grant guarantees to our customers, we may require counter-guarantees, which, classified by type, amount to:3
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Other Preferred Guarantees Received | | | 6,796,492 | | | | 67,032 | | | | 111,747 | | Other Guarantees Received | | | 296,362 | | | | 471,506 | | | | 445,115 | |
Additionally, checks to be debited and credited, as well as other elements in the collection process, such as, notes, invoices and miscellaneous items, are recorded in memorandum accounts until the related instrument is approved or accepted.
The risk of loss in these offsetting transactions is not significant.
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Checks and Drafts to be Debited | | | 3,448,362 | | | | 3,110,534 | | | | 3,710,115 | | Checks and Drafts to be Credited | | | 4,443,878 | | | | 4,553,727 | | | | 4,716,211 | | Values for Collection | | | 27,625,864 | | | | 34,014,115 | | | | 33,736,055 | |
The Group acts as trustee by virtue of trust agreements to secure obligations derived from several agreements between parties. The amounts of trust funds and securities held in custody as of the indicated dates are as follows:
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Trust Funds | | | 5,868,530 | | | | 13,165,493 | | | | 15,077,049 | | Securities Held in Custody | | | 432,046,616 | | | | 552,773,188 | | | | 476,985,232 | |
These trusts are not included in the consolidation since the Group does not exert control on them.
NOTE 50. TRANSFER OF FINANCIAL ASSETS
All transfers of financial assets qualify for derecognition of financial assets in their entirety.
In derecognizing a financial asset, the difference between the carrying amount and the amount received as consideration is charged to income.
The Group mainly makes non-recourse portfolio sales. The loan portfolio sold, net of allowances, amounted to: $561,812 as of December 31, 2018, $480,021 as of December 31, 2017 and $226,798 as of January 1, 2017; whereas cash flows received from such transactions amounted to: $138,510 as of December 31, 2018, $45,987 as of December 31, 2017 and $166,454 as of January 1, 2017.
NOTE 51. NON-CONTROLLING INTEREST
The following tables provide information about each subsidiary that has a non-controlling interest.
The non-controlling equity investment percentages and votes as of the indicated dates are as follows:
Company | | Place of Business | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Cobranzas Regionales S.A. | | Córdoba – Argentina | | | 17.00 | % | | | 23.00 | % | | | 23.00 | % | Galicia Broker Asesores de Seguros S.A. | | Autonomous City of Buenos Aires – Argentina | | | 0.01 | % | | | 0.01 | % | | | 0.01 | % | Galicia Retiro Compañía de Seguros S.A. | | Autonomous City of Buenos Aires – Argentina | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | Galicia Seguros S.A. | | Autonomous City of Buenos Aires – Argentina | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | Galicia Valores S.A. | | Autonomous City of Buenos Aires – Argentina | | - | | | - | | | | 0.09 | % | Ondara S.A. | | Autonomous City of Buenos Aires – Argentina | | | 16.15 | % | | | 21.85 | % | | | 21.85 | % | Tarjetas del Mar S.A. | | Córdoba – Argentina | | - | | | - | | | | 41.20 | % | Tarjeta Naranja S.A. | | Córdoba – Argentina | | | 17.00 | % | | | 23.00 | % | | | 23.00 | % | Tarjetas Regionales S.A. | | Autonomous City of Buenos Aires – Argentina | | | 17.00 | % | | | 23.00 | % | | | 23.00 | % |
F-86
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Changes in the Group's non-controlling interests as of the indicated dates were as follows:
Company | | Balance as of 12.31.17 | | | Purchases / Sales | | | Cash Dividends | | | Share of Profit (Loss) for the Year | | | Balance as of 12.31.18 | | Cobranzas Regionales S.A. | | | 13,281 | | | | - | | | | - | | | | (1,665 | ) | | | 11,616 | | Galicia Broker Asesores de Seguros S.A. | | | 2 | | | | - | | | | - | | | | - | | | | 2 | | Galicia Retiro Compañía de Seguros S.A. | | | 2 | | | | - | | | | - | | | | - | | | | 2 | | Galicia Seguros S.A. | | | 2 | | | | - | | | | - | | | | - | | | | 2 | | Ondara S.A. | | | 7,074 | | | | - | | | | 52 | | | | (1,081 | ) | | | 6,045 | | Tarjeta Naranja S.A. | | | 2,716,440 | | | | (770,472 | ) | | | (137,432 | ) | | | (318,010 | ) | | | 1,490,526 | | Tarjetas Regionales S.A. | | | 216,679 | | | | - | | | | 40,591 | | | | (42,929 | ) | | | 214,341 | | Total | | | 2,953,480 | | | | (770,472 | ) | | | (96,789 | ) | | | (363,685 | ) | | | 1,722,534 | |
Company | | Balance as of 01.01.17 | | | Purchases / Sales | | | Cash Dividends | | | Share of Profit (Loss) for the Year | | | Balance as of 12.31.17 | | Cobranzas Regionales S.A. | | | 13,751 | | | | - | | | | - | | | | (470 | ) | | | 13,281 | | Galicia Broker Asesores de Seguros S.A. | | | 2 | | | | - | | | | - | | | | - | | | | 2 | | Galicia Retiro Compañía de Seguros S.A. | | | 2 | | | | - | | | | - | | | | - | | | | 2 | | Galicia Seguros S.A. | | | 2 | | | | - | | | | - | | | | - | | | | 2 | | Galicia Valores S.A. | | | 5,688 | | | | (5,688 | ) | | | - | | | | - | | | | - | | Ondara S.A. | | | 6,801 | | | | - | | | | - | | | | 273 | | | | 7,074 | | Tarjetas del Mar S.A. | | | 91,871 | | | | (91,871 | ) | | | - | | | | - | | | | - | | Tarjeta Naranja S.A. | | | 2,371,252 | | | | - | | | | (159,604 | ) | | | 504,792 | | | | 2,716,440 | | Tarjetas Regionales S.A. | | | 230,201 | | | | - | | | | 6,909 | | | | (20,431 | ) | | | 216,679 | | Total | | | 2,719,570 | | | | (97,559 | ) | | | (152,695 | ) | | | 484,164 | | | | 2,953,480 | |
Summary information on subsidiaries is detailed in Note 16.
NOTE 52. RELATED PARTY TRANSACTIONS
Related parties are considered to be all those entities that directly, or indirectly through other entities, have control over another, are under the same controlling party or may have significant influence on another entity's financial or operational decisions.
The Group controls another entity when it has the power over other entities' financial and operating decisions and also has a share of profits thereof.
Additionally, the Group considers that it has joint control when there is an agreement between parties regarding the control of a common economic activity.
Finally, those cases where the Group has significant influence is due to the capacity to take part in decisions about the company's financial policy and operations. Those shareholders who hold an equity investment equal to or higher than 20% of the total votes of the Group or its subsidiaries are considered to have significant influence. To determine those situations, not only the legal aspects are observed, but also the nature and substance of the relationship.
Furthermore, the key personnel of the Group's Management (Board of Directors members and Managers of the Group and its subsidiaries), as well as the entities over which the key personnel may have significant influence or control are considered as related parties.
52.1.
The Group is controlled by: | | | | | | | | | | | Name | | Nature | | Principal Line of Business | | Place of Business | | Equity Investment % | | EBA Holding S.A. | | 54.09% of voting rights | | Financial and Investment Operations | | Autonomous City of Buenos Aires – Argentina | | | 19.07 | % |
| Nature
| | Principal Line of Business
| | Place of Business
| | Equity Investment %
| | 51.2. | Key Personnel’s Compensation | EBA Holding S.A.
| | 55.11% of voting rights
| | Financial and Investment
Operations
| | Autonomous City of
Buenos Aires – Argentina
| | 19.71%
| |
Key Personnel's Compensation
The compensation earned by the Group's key personnel as of December 31, 2018 and December 31, 2017 amounts to $522,038 and $442,289,
|
The compensation earned by the Group’s key personnel as of December 31, 2020 and December 31, 2019 amounts to Ps.1,307,741 and Ps.976,364 respectively. F-87
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
52.2.
| 51.3. | Key Personnel's Structure
|
Key personnel'sPersonnel’s Structure |
Key personnel’s structure as of the indicated dates is as follows: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Regular Directors | | | 79 | | | | 74 | | General Manager | | | 2 | | | | 2 | | Area Managers | | | 13 | | | | 10 | | Department Managers | | | 46 | | | | 67 | | | | | | | | | | | Total | | | 140 | | | | 153 | | | | | | | | | | |
| | 12.31.18 | | 12.31.17 | | Directors | | 67 | | | 67 | | General Manager | | 1 | | | 1 | | Division Managers | | 11 | | | 11 | | Department Managers | | 70 | | | 66 | | Total | | 149 | | 145 | |
52.3.
| 51.4. | Related Party Transactions |
The following table shows the total credit assistance granted by the Group to key personnel, syndics, majority shareholders, as well as all individuals who are related to them by a family relationship of up to the second degree of consanguinity or first degree by affinity (pursuant to the Argentine Central Bank’s definition of related individual) and any entity affiliated with any of these parties, not required to be consolidated. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Total Amount of Credit Assistance | | | 1,991,604 | | | | 1,499,910 | | Number of Addressees (quantities) | | | 269 | | | | 283 | | - Natural Persons | | | 208 | | | | 229 | | - Legal Entities | | | 61 | | | | 54 | | Average Amount of Credit Assistance | | | 7,404 | | | | 5,300 | | Maximum Assistance | | | 508,945 | | | | 596,026 | |
Financial assistance, including the one that was restructured, was granted in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other non-related parties. Besides, this financial assistance did not involve more than the normal risk of loan losses or present other unfavorable features. The information about the credit assistance granted to affiliates based on the quality of receivables, their documentation and preferred guarantees is stated in Schedule N. | 51.5. | Amounts of Related Party Transactions |
The amounts of related party transactions conducted as of the indicated dates are as follows: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Assets | | | | | | | | | Cash and Due from Banks | | | 1,392,563 | | | | 4,634,039 | | Debt Securities at Fair Value through Profit or Loss | | | 738,302 | | | | 60,112 | | Other Financial Assets | | | 1,659 | | | | 10,390 | | Loans and Other Financing | | | 3,354,891 | | | | 2,693,645 | | Other Debt Securities | | | 170,656 | | | | 178,791 | | Financial Assets Pledged as Collateral | | | — | | | | 555 | | Assets for Insurance Contracts | | | 547 | | | | — | | Other Non-financial Assets | | | — | | | | 2,953 | | | | | | | | | | | Total Assets | | | 5,658,618 | | | | 7,580,485 | | | | | | | | | | | Liabilities | | | | | | | | | Deposits | | | 1,707,028 | | | | 5,587,455 | | Derivative Financial Instruments | | | — | | | | — | | Other Financial Liabilities | | | 849,064 | | | | 748,351 | | Financing Received from the Argentine Central Bank and other Financial Institutions | | | 2,153,464 | | | | 916,266 | | Debt Securities Issued | | | 908,958 | | | | 238,903 | | Liabilities for Insurance Contracts | | | 23 | | | | 5,457 | | Other Non-financial Liabilities | | | 40,081 | | | | 84,053 | | | | | | | | | | | Total Liabilities | | | 5,658,618 | | | | 7,580,485 | | | | | | | | | | |
| | | | | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | | 12.31.18 | | Income (Loss) | | | | | | | | | | | | | Net Income (Loss) from Interest | | | 226,467 | | | | 490,269 | | | | 58,588 | | Net Fee Income (Expense) | | | (1,085,741 | ) | | | (1,201,852 | ) | | | (71,981 | ) | Net Income from Financial Instruments Measured at Fair Value through Profit or Loss | | | (904 | ) | | | — | | | | — | | Other Operating Income (Expense) | | | (1,193,475 | ) | | | (1,576,194 | ) | | | (2,682,854 | ) | Income from Insurance Business | | | 2,005,616 | | | | 2,389,538 | | | | 2,632,514 | | Administrative Expenses | | | 121,002 | | | | 174,543 | | | | 64,887 | | Other Operating Expenses | | | 14,459 | | | | 9,282 | | | | — | | | | | | | | | | | | | | | Total Income | | | 87,424 | | | | 285,586 | | | | 1,154 | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 52. ADDITIONAL INFORMATION REQUIRED BY THE ARGENTINE CENTRAL BANK 52.1. CONTRIBUTION TO THE DEPOSIT INSURANCE SYSTEM Law No. 24485 and Decree No. 540/95 established the creation of the Deposit Insurance System to cover the risk attached to bank deposits, in addition to the system of privileges and safeguards envisaged in the Financial Institutions Law. The National Executive Branch through Decree No. 1127/98 established the maximum amount for this insurance system to demand deposits and time deposits denominated either in Pesos and/or in foreign currency. Such limit was set at Ps.1,500 as from May 1, 2020. This system does not cover deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by parties related to the Bank, either directly or indirectly, deposits of securities, acceptances or guarantees and those deposits set up at an interest rate exceeding the one established regularly by the Argentine Central Bank. Deposits acquired through endorsement, placements made as a result of incentives other than interest rates and locked-up balances from deposits and other excluded transactions are also excluded. This system has been implemented through the creation of the Deposit Insurance Fund (“FGD”), which is managed by a company called Seguros de Depósitos S.A. (“SEDESA”). SEDESA’s shareholders are the Argentine Central Bank and the financial institutions in the proportion determined for each one by the Argentine Central Bank based on the contributions made to the fund. The monthly contribution institutions should make to the FGD is 0.015% on the monthly average of total deposits. 52.2. RESTRICTED ASSETS As of December 31, 2020, and 2019, the ability to freely dispose of the following assets is restricted, as follows: Banco de Galicia y Buenos Aires S.A.U. | a) | Cash and Government Securities |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | For transactions in ROFEX, MAE and BYMA | | | 3,905,372 | | | | 1,782,587 | | For debit / credit cards transactions | | | 3,020,109 | | | | 3,083,168 | | For attachments | | | 9,410 | | | | 12,811 | | Liquid offsetting entry required to operate as CNV agent | | | 64,020 | | | | 14,641 | | For contribution to M.A.E.’ s Joint Guarantee Fund (Fondo de Garantía Mancomunada) | | | 1,100 | | | | 122,322 | | Guarantees for the Regional Economies Competitiveness Program | | | 184,744 | | | | 444,927 | | For other transactions (includes guarantees linked to rental contracts) | | | 19,802 | | | | 20,313 | |
| b) | Special Guarantees Accounts |
Special guarantee accounts have been opened at the Argentine Central Bank as collateral for transactions involving electronic clearing houses, checks for settling debts and other similar transactions as of the indicated dates, which amount to: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Escrow Accounts | | | 11,444,550 | | | | 10,245,260 | |
| c) | Deposits in favor of the Argentine Central Bank’s definition of related individual) and any entity affiliated with any of these parties, not required to be consolidated.Bank |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Unavailable deposits due to exchange transactions | | | 533 | | | | 726 | |
The account “Equity Investments” includes 1,222,406 non-transferable non-endorsable registered ordinary shares in Electrigal S.A., the transfer of which is subject to approval by the national authorities, according to the terms of the previously executed concession contract. | | 12.31.18 | | | 12.31.17 | | Total Amount of Credit Assistance | | | 956,439 | | | | 999,909 | | Number of Recipients (Amounts) | | | 329 | | | | 364 | | - Natural Persons | | | 269 | | | | 299 | | - Entities / Corps. | | | 60 | | | | 65 | | Average Amount of Credit Assistance | | | 2,907 | | | | 2,748 | | Maximum Assistance | | | 362,713 | | | | 288,089 | |
| e) | Contributions to Garantizar S.G.R.’s Risk Fund |
Banco de Galicia y Buenos Aires S.A.U., in its capacity as sponsoring partner of Garantizar S.G.R.’s Risk Fund, is committed to maintaining the contributions made to the fund for two (2) years. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Contributions to the Fund | | | 990,000 | | | | 1,347,792 | |
INVIU S.A.U. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Liquid offsetting entry required to operate as CNV agents | | | 18,469 | | | | 22,753 | | Guarantees linked to surety bonds | | | 7,417 | | | | — | |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Tarjeta Naranja S.A. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Attachments arising from judicial cases | | | 973 | | | | 3,188 | | Guarantees linked to rental contracts | | | 7,076 | | | | 9,209 | |
Galicia Administradora de Fondos S.A. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Liquid offsetting entry required to operate as collective investment products administration agents of mutual funds, as required by CNV(*) | | | 13,903 | | | | 13,803 | |
| (*) | Financial assistance, including the one that was restructured, was granted in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other non-related parties. Besides, this financial assistance did not involve more than the normal risk of loan losses or present other unfavorable features.
The information about the credit assistance granted to affiliates based on the quality of receivables, their documentation and preferred guarantees is stated in Schedule N.
52.4.
| Amounts of Related Party Transactions
|
The amounts of related party transactions conducted as of the indicated dates are as follows:
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Assets | | | | | | | | | | | | | Cash and Due from Banks | | | 252,651 | | | | 197,441 | | | | 465,569 | | Debt Securities at Fair Value through Profit or Loss | | | 141,610 | | | | 264,821 | | | | 1,399,877 | | Derivative Financial Instruments | | | - | | | | 17,183 | | | | - | | Other Financial Assets | | | 58,999 | | | | 285,189 | | | | 1,162,427 | | Loans and Other Financing | | | 3,111,291 | | | | 797,000 | | | | 1,587,429 | | Other Debt Securities | | | 131,767 | | | | 76,305 | | | | - | | Other Non-financial Assets | | | (5 | ) | | | 6,539 | | | | (85,185 | ) | Total Assets | | | 3,696,313 | | | | 1,644,478 | | | | 4,530,117 | | Liabilities | | | | | | | | | | | | | Deposits | | | 1,348,503 | | | | 229,612 | | | | 482,911 | | Derivative Financial Instruments | | | - | | | | 17,183 | | | | 200,917 | | Other Financial Liabilities | | | 1,197,643 | | | | 696,125 | | | | 874,669 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | - | | | | 699 | | | | 355,045 | | Debt Securities Issued | | | 523,372 | | | | 341,125 | | | | 1,375,576 | | Liabilities for Insurance Contracts | | | 43,295 | | | | 34,704 | | | | 75,273 | | Other Non-financial Liabilities | | | 26,827 | | | | (689,233 | ) | | | 223,599 | | Total Liabilities | | | 3,139,640 | | | | 630,215 | | | | 3,587,990 | |
| | 12.31.18 | | | 12.31.17 | | Income (Loss) | | | | | | | | | Net Income (Loss) from Interest | | | 27,975 | | | | 42,461 | | Net Fee Income (Expense) | | | (1,166,922 | ) | | | (43,012 | ) | Net Income (Loss) from Instruments Measured at Fair Value through | | | - | | | | 5,313 | | Underwriting Income from Insurance Business | | | 1,257,000 | | | | 1,602,674 | | Other Operating Income (Expense) | | | 149,803 | | | | (1,588,821 | ) | Administrative Expenses | | | (30,983 | ) | | | 29,072 | | Other Operating Expenses | | | - | | | | 105 | | Total Income | | | 236,873 | | | | 47,792 | |
F-88
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 53. ACQUISITION OF DEBT SECURITIES UNDER SECTION 35 BIS OF FINANCIAL INSTITUTIONS LAW
Banco Finansur S.A. was temporarily suspended to operate by the Argentine Central Bank from November 9, 2017 to February 9, 2018. On January 12, 2018, Banco Galicia reported about its participation in the process under Section 35 bis of Financial Institutions Law. In addition, on March 9, 2018, Banco Galicia reported that the Argentine Central Bank approved the transfer of certain secured liabilities of Banco Finansur S.A. in exchange for debt securities by creating a Private Financial Trust called Fidensur.
Banco Galicia holds debt securities but it does not hold the participation certificate in the Financial Trust not it is the Beneficiary of the Financial Trust. As Consequence we understand that the Group is neither exposed to variable returns nor to the Trust's residual risk. Therefore, the holding was recorded as an investment in a financial debt instrument measured at amortized cost.
As a result of the foregoing, the trust was not consolidated in these consolidated financial statements.
The Group recorded debt securities in the "Other Debt Securities" account, which are measured at amortized cost in the amount of $74,775 as of December 31, 2018.
NOTE 54. ADDITIONAL INFORMATION REQUIRED BY THE ARGENTINE CENTRAL BANK
54.1.Contribution to the Deposit Insurance System
Law No. 24485 and Decree No. 540/95 established the creation of the Deposit Insurance System to cover the risk attached to bank deposits, in addition to the system of privileges and safeguards envisaged in the Financial Institutions Law.
The National Executive Branch through Decree No. 1127/98 established the maximum amount for this insurance system to demand deposits and time deposits denominated either in Pesos and/or in foreign currency. Such limit was set at $1,000 as from March 1, 2019.
This system does not cover deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by parties related to the Bank, either directly or indirectly, deposits of securities, acceptances or guarantees and those deposits set up at an interest rate exceeding the one established regularly by the Argentine Central Bank.
Deposits acquired through endorsement, placements made as a result of incentives other than interest rates and locked-up balances from deposits and other excluded transactions are also excluded. This system has been implemented through the creation of the Deposit Insurance Fund (“FGD”), which is managed by a company called Seguros de Depósitos S.A. (“SEDESA”). SEDESA’s shareholders are the Argentine Central Bank and the financial institutions in the proportion determined for each one by the Argentine Central Bank based on the contributions made to the fund.
The monthly contribution institutions should make to the FGD is 0.015% on the monthly average of total deposits.
54.2.RESTRICTED ASSETS
As of December 31, 2018,2020, it corresponds to 1,620,000 shares of Fima Premium Class “B” Mutual Fund. |
Galicia Securities S.A. | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | For transactions in the market | | | 48,015 | | | | — | | Liquid offsetting entry required to operate as CNV agents | | | 11,270 | | | | — | | Guarantees linked to surety bonds | | | 1,129 | | | | — | |
The total amount of restricted assets for the reasons stated above in the aforementioned controlled companies, as of the indicated dates, is as follows: | | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Total Restricted Assets | | | 19,747,892 | | | | 17,123,500 | |
52.3. TRUST ACTIVITIES | a) | Trust Contracts for Purposes of Guaranteeing Compliance with Obligations: |
Purpose: In order to guarantee compliance with contractual obligations, the parties to these agreements have agreed to deliver to Banco de Galicia y Buenos Aires S.A.U., as fiduciary property, amounts to be applied according to the following breakdown: | | | | | | | | | | | Date of Contract | | Trustor | | Balances of Trust
Funds | | | Maturity (1) | | 04.17.12 | | Exxon Mobil | | | 13,540 | | | | 04.19.21 | | 09.12.14 | | Coop. de Trab. Portuarios | | | 1,009 | | | | 09.12.22 | | 04.14.16 | | Rios Belt | | | 121 | | | | 12.31.21 | | 05.24.17 | | MSU | | | 33 | | | | 12.31.21 | | | | | | | | | | | | | Total | | | | | 14,703 | | | | | | | | | | | | | | | | |
| (1) | These amounts shall be released monthly until settlement date of trustor obligations or maturity date, whichever occurs first. |
| b) | Financial Trust Contracts: |
Purpose: To administer and exercise the fiduciary ownership of the trust assets until the redemption of debt securities and participation certificates: | | | | | | | | | | | Contract date | | Trust | | Balances of Trust Funds | | | Maturity(*) | | 12.06.06 | | GAS I | | | 133,278 | | | | 12.31.21 | | 05.14.09 | | GAS II | | | 8,614,193 | | | | 12.31.22 | | 06.08.11 | | MILA III | | | 17,118 | | | | 12.31.21 | | 01.09.11 | | MILA IV | | | 295 | | | | 12.31.21 | | 06.12.17 | | MILA XVIII | | | 919 | | | | 01.31.24 | | | | | | | | | | | | | Total | | | | | 8,765,803 | | | | | | | | | | | | | | | | |
| (*) | Estimated date, since maturity date shall occur at the ability to freely disposetime of the following assets is restricted, as follows: Banco de Galicia y Buenos Aires S.A.U.
a)
| Cash and Government Securities
|
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | For transactions carried out at RO.F.EX. | | | 379,006 | | | | 345,717 | | | | 782,773 | | For repo transactions haircuts | | | 584,631 | | | | 185,799 | | | | 336,918 | | For debit / credit cards transactions | | | 2,151,565 | | | | 1,748,680 | | | | 1,370,107 | | For attachments | | | 211 | | | | 326 | | | | 188 | | Liquidity required to conduct transactions as agents at the C.N.V. | | | 20,410 | | | | 25,233 | | | | 33,752 | | For the contribution to the M.A.E.’ s Joint Guarantee Fund (Fondo de Garantía Mancomunada) | | | 260,210 | | | | 20,970 | | | | 20,016 | | Collaterals of Inter-American Development Bank's credit lines | | | 85,067 | | | | - | | | | - | | Guarantees under the Regional Economies Competitiveness Program (PROCER, as per its initials in Spanish) | | | 165,665 | | | | 301,965 | | | | 279,224 | | For other transactions | | | 11,953 | | | | 11,524 | | | | 10,928 | |
b)
| Special Guarantees Accounts
|
F-89
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Special guarantee accounts have been opened at the Argentine Central Bank as collateral for transactions involving electronic clearing houses, checks for settling debts and other similar transactions as of the indicated dates, which amount to:
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Special Guarantees Accounts | | | 5,188,169 | | | | 5,329,804 | | | | 4,285,315 | |
c)
| Deposits in favor of the Argentine Central Bank
|
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Unavailable deposits related to foreign exchange transactions | | | 533 | | | | 787 | | | | 982 | | For custody and registrar agent of book-entry mortgage securities | | | - | | | | - | | | | 4,164 | | Custody role of securities representing the investments in ANSES's Sustainability Guarantee Fund (FGS, as per its initials in Spanish). | | | - | | | | - | | | | 868,336 | |
The account “Equity Investments” includes 1,222,406 non-transferable non-endorsable registered ordinary shares in Electrigal S.A., the transfer of which is subject to approval by the national authorities, according to the terms of the previously executed concession contract.
e)
| Contributions to Garantizar S.G.R.’s Risk Fund
|
Banco de Galicia y Buenos Aires S.A.U., in its capacity as sponsoring partner of Garantizar S.G.R.’s Risk Fund, is committed to maintaining the contributions made to the fund for two (2) years.
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Contributions to the Fund | | | 390,000 | | | | 224,421 | | | | 184,255 | |
f)
| Guarantees Granted for Direct Obligations
|
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | PROPARCO’s credit lines | | | - | | | | 58,661 | | | | 91,486 | | Credit Program granted to the province of San Juan | | | - | | | | 75,211 | | | | 60,316 | | Global Credit Program for the Micro-, Small- and Medium-sized Companies | | | - | | | | - | | | | 11,763 | | FMO’s credit lines | | | - | | | | - | | | | 33,109 | |
Financial assets were given as collateral as part of these agreements for loans borrowed by Banco Galicia related to first pledges.
Galicia Valores S.A.
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Liquidity required to conduct transactions as agents at the C.N.V. | | | 9,568 | | | | 6,792 | | | | 7,232 | | Share of Mercado de Valores de Buenos Aires | | | - | | | | - | | | | 3,961 | |
Tarjeta Naranja S.A.
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Attachments in connection with lawsuits | | | 1,803 | | | | 1,688 | | | | 521 | | Guarantees related to lease agreements | | | 4,993 | | | | 6,870 | | | | 7,593 | | For transactions carried out at RO.F.EX. | | | - | | | | - | | | | 216,577 | |
Galicia Administradora de Fondos S.A.
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Liquidity required to operate as agent for the management of collective investment products corresponding to mutual funds, as required by the C.N.V.(*) | | | 9,094,885 | | | | 4,504,899 | | | | 2,118,935 | |
Tarjetas del Mar S.A.
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Guarantees related to lease agreements(*) | | | - | | | | - | | | | 171 | |
Total restricted assets for the items stated in the subsidiaries mentioned above as of the indicated dates are as follows:
| | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | Total Restricted Assets | | | 18,348,669 | | | | 12,849,347 | | | | 10,728,622 | |
54.3.Trust Activities
As of December 31, 2018, December 31, 2017 and January 1, 2017, the Group recorded participation certificates and debt securities of financial trusts held in its own portfolio for $6,301,550, $3,374,285 and $1,819,850 respectively.
F-90
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trusts have been excluded from consolidation for neither has the Bank control over them nor has it any of the following:
-
| power over the trust to run material activities;
|
-
| exposure or right to variable returns;
|
-
| capacity to have influence on the amount of returns to be received for the involvement.
|
a)
| Trust Contracts for Purposes of Guaranteeing Compliance with Obligations:
|
Purpose: In order to guarantee compliance with contractual obligations, the parties to these agreements have agreed to deliver to Banco de Galicia y Buenos Aires S.A.U., as fiduciary property, amounts to be applied according to the following breakdown:
Date of Contract | | Trustor | | Balances of Trust Funds | | | Maturity Date(1) | 04.17.12 | | Exxon Mobil | | | 5,310 | | | 04.19.19 | 04.29.13 | | Profertil | | | 28 | | | 12.31.18 | 09.12.14 | | Coop. de Trab. Portuarios | | | 1,033 | | | 09.12.20 | 04.14.16 | | Rios Belt | | | 198 | | | 04.14.19 | 05.24.17 | | MSU | | | 130 | | | 07.29.20 | 06.22.17 | | SACDE | | | 1 | | | 06.22.20 | 06.28.17 | | Dist. Gas del Centro | | | 258 | | | 12.31.18 | 07.19.17 | | Dist. Gas Cuyana | | | 568 | | | 12.31.18 | 08.08.17 | | Dist. Gas del Centro | | | 495 | | | 12.31.18 | Total | | | | | 8,021 | | | |
(1)
| These amounts shall be released monthly until settlement date of trustor obligations or maturity date, whichever occurs first.
|
b)
| Financial Trust Contracts:
|
Purpose: To administer and exercise the fiduciary ownership of the trust assets until the redemption of debt securities and participation certificates:
Date of Contract | | Trust | | Balances of Trust Funds | | | Maturity Date(*) | 12.06.06 | | Gas I | | | 65,484 | | | 12.31.18 | 05.14.09 | | Gas II | | | 5,545,230 | | | 12.31.22 | 02.10.11 | | Cag S.A. | | | 421 | | | 12.31.18 | 06.08.11 | | Mila III | | | 6,367 | | | 12.31.18 | 09.01.11 | | Mila IV | | | 893 | | | 12.31.18 | 09.14.11 | | Cag S.A. II | | | 638 | | | 12.31.18 | 02.13.14 | | Mila V | | | 1,212 | | | 05.20.20 | 06.06.14 | | Mila VI | | | 831 | | | 10.20.20 | 06.18.14 | | Red Surcos II | | | 1,354 | | | 12.31.18 | 10.03.14 | | Mila VII | | | 1,087 | | | 01.20.21 | 01.13.15 | | Red Surcos III | | | 766 | | | 12.31.18 | 01.27.15 | | Mila VIII | | | 4,417 | | | 06.15.21 | 05.18.15 | | Mila IX | | | 4,074 | | | 09.15.21 | 08.24.15 | | Mila X | | | 4,956 | | | 12.20.21 | 10.30.15 | | Mila XI | | | 6,073 | | | 01.15.22 | 01.14.16 | | Mila XII | | | 8,177 | | | 11.15.21 | 02.05.16 | | Red Surcos IV | | | 900 | | | 12.31.18 | 05.13.16 | | Mila XIII | | | 15,685 | | | 09.15.22 | 09.01.16 | | Mila XIV | | | 17,252 | | | 01.31.23 | 10.27.16 | | Mila XV | | | 23,714 | | | 03.31.23 | 01.10.17 | | Mila XVI | | | 32,047 | | | 06.30.23 | 02.24.17 | | Mila XVII | | | 52,113 | | | 09.30.23 | 05.29.17 | | Fedeicred Agro Series IV | | | 121 | | | 12.31.18 | 06.12.17 | | Mila XVIII | | | 62,932 | | | 01.31.24 | 06.21.17 | | Mas Cuotas Series VIII | | | 743 | | | 12.31.18 | 08.16.17 | | Mas Cuotas Series IX | | | 251 | | | 12.31.18 | 10.20.17 | | Mas Cuotas Series X | | | 2,233 | | | 10.15.18 | 10.27.17 | | Mila XIX | | | 450 | | | 05.31.24 | 02.16.18 | | Mila XX | | | 88 | | | 09.30.24 | Totals | | | | | 5,860,509 | | | |
(*)
| Estimated date, since maturity date shall occur at the time of the distribution of all of trust assets.
|
c)
| Activities as Security Agent:
|
c.1)
| Banco de Galicia y Buenos Aires S.A.U. has been appointed Security Agent of the National Treasury’s endorsement guarantees in favor of ENARSA (Energía Argentina S.A.) that were assigned in favor of Nación Fideicomisos S.A. in its capacity as Trustee of the “ENARSA-BARRAGAN” and “ENARSA-BRIGADIER LOPEZ” financial trusts.
|
F-91
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Said endorsement guarantees the secure payment of all obligations arising from the above-mentioned trusts.of trust assets.
|
| c) | Banco de Galicia y Buenos Aires S.A.U., in its capacityActivities as Security Agent, will take custody of the documents regarding the National Treasury’s endorsement guarantees and will be in charge of managing all legal and notarial proceedings with respect to the enforcement thereof.Agent:
As of December 31, 2018, December 31, 2017 and January 1, 2017, the balances recorded from these transactions amount to US$1,364,097 and $408, respectively.
|
c.2)
| c.1) | In April 2013, at the time of entering into the Contract for the Fiduciary Assignment and Trust for Guarantee Purposes “Profertil S.A.”, Banco de Galicia y Buenos Aires S.A.U. was appointed security agent with regard to the Chattel Mortgage Agreement, a transaction that was completed on June 18, 2013, which additionally secures all the obligations undertaken.
|
As of December 31, 2018, December 31, 2017 and January 1, 2017, the balances recorded from these transactions amount to US$116,500.
All the transactions detailed above are recorded in off-balance sheet items - trust funds.
d)
| Setting Up of Financial Trusts
|
As of December 31, 2018, December 31, 2017 and January 1, 2017, the Group recorded participation certificates and debt securities of financial trusts held in its own portfolio for $5,042,730, $3,406,706 and $1,866,441 respectively.
54.4. Compliance with the Regulations
54.4.1. Agents – Minimum Liquidity Requirement
Within the framework of Resolution No. 622/13 of the C.N.V., Banco de Galicia y Buenos Aires S.A.U. has been registered, in such agency’s registry, as settlement and clearing agent –comprehensive- No. 22 (ALyC and AN – INTEGRAL), custodial agent of collective investment products corresponding to mutual funds No. 3 (ACPIC FCI), and manager of collective investment products at the registry of financial trustees No. 54.
As of December 31, 2018, Banco de Galicia y Buenos Aires S.A.U.’s Shareholders’ Equity exceeds that required by the C.N.V. to act as agent in the categories in which the Bank has been registered. Such requirement amounts to $32,000 with a minimum liquidity requirement of $16,000, which Banco de Galicia y Buenos Aires S.A.U. paid with Argentine Central Bank’s monetary regulation instruments, which are held in custody at Caja de Valores (Depositor No. 100100) in the amount of $20,410.
Moreover, Galicia Valores S.A. has received the authorization to act as “Settlement and Clearing Agent and Trading Agent – Own”, as established by C.N.V.'s General Resolution No. 622/13. According to the minimum requirements established, the minimum shareholders' equity required to act in this agent's category amounts to $3,500 and the minimum liquidity amounts to $1,750.
As of December 31, 2018, the minimum liquidity is made up of a sight account opened at Banco Galicia in the amount of US$70.
54.4.2. Custodialappointed Security Agent of Collective Investment Products Corresponding to Mutual Funds
Furthermore,the National Treasury’s endorsement guarantees in compliance with Section 7favor of Chapter II, Title VENARSA (Energía Argentina S.A.) that were assigned in favor of that Resolution,Nación Fideicomisos S.A. in its capacity as custodial agent of collective investment products corresponding to mutual funds (depository)Trustee of the “FIMA ACCIONES”, “FIMA P.B. ACCIONES”, “FIMA RENTA EN PESOS”, “FIMA AHORRO PESOS”, “FIMA RENTA PLUS”, “FIMA PREMIUM”, “FIMA AHORRO PLUS”, “FIMA CAPITAL PLUS”, “FIMA ABIERTO PYMES”, “FIMA MIX I”, “FIMA RENTA DÓLARES I”“ENARSA-BARRAGAN” and “FIMA RENTA DOLARES II” funds, as of December 31, 2018, Banco de Galicia y Buenos Aires S.A.U. holds a total of 9,623,110,829 units under custody for a market value of $60,431,318, which is included in the “Depositors of Securities Held in Custody” account. As of previous fiscal year-end and January 1, 2017, the securities held in custody totaled 10,254,289,765 and 7,777,368,861 units and their market value amounted to $100,358,508 and $68,796,939, respectively.“ENARSA-BRIGADIER LOPEZ” financial trusts.
F-92
|
Said endorsement guarantees the secure payment of all obligations arising from the above-mentioned trusts. Banco de Galicia y Buenos Aires S.A.U., as Security Agent, safeguarded the documentation of the National Treasury sureties and was responsible for managing all the legal and notarial aspects in relation to their execution. When the obligation was extinguished, sureties were returned to BICE Fideicomisos S.A. on October 22, 2019; at the closing of said year, the repayment of the expense fund was pending. Said expenses amounted to Ps. 555 as of December 31, 2019. All the transactions detailed above are recorded in off-balance sheet items—trust funds. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | d) | The balancesCreation Up of the Mutual Funds as of the indicated dates are detailed as follows:Financial Trusts
|
As December 31, 2019, the Group records in its own portfolio, participation certificates and Debt Securities from financial trusts amounting to Ps.474,161, valued at amortized cost. 52.4. COMPLIANCE WITH THE REGULATIONS 52.4.1. Agents – Minimum Liquidity requirement Banco de Galicia y Buenos Aires S.A.U. Within the framework of CNV Resolution No. 622/13, Banco de Galicia y Buenos Aires S.A.U. has been duly registered with such agency in the following categories: Escrow Agent for Collective Investment Products in the Financial Trustors’ Registry No. 54, and Settlement and Integral Compensation Agent No. 22 (AlyC and AN—INTEGRAL). As of December 31, 2020, for the Escrow Agent for Collective Investment Products in the Financial Trustors’ Registry, the required Shareholders’ Equity amounts to Ps.61,104, and the minimum required offsetting entry is Ps.30,552. For AlyC and AN—INTEGRAL, said requirement amounts to Ps. 30,253, with the minimum offsetting entry required of Ps. 15,126, which the Bank integrated with Treasury Bills in Argentine pesos for Ps. 64,020, registered in escrow accounts of Caja de Valores (Principal 100100). Galicia Administradora de Fondos S.A. In accordance with the requirements set forth in CNV Resolution No. 792, the minimum Shareholders’ Equity required to operate as Escrow Agent for Collective Investment Products, Mutual Funds amounts to Ps.27,658 and the minimum offsetting entry amounts to Ps.13,829. Galicia Administradora de Fondos S.A. integrated said requirement with 1,620,000 shares of Fondo Fima Premium Class “C”, equivalent to Ps.13,903. Galicia Securities S.A. In accordance with the requirements set forth in General Resolution No. 622, the ALyC and AN Integral must have a minimum Shareholders’ Equity equivalent to 470,350 Units of Purchasing Value (UVA), with said requirement amounting to Ps.30,253 as of December 31, 2020, and the minimum offsetting entry required is Ps.15,126. For Placement and Distribution Agents of Mutual Funds, said requirement amounts to Ps.2,500, and the minimum required liquid offsetting entry is Ps.1,250. As of December 31, 2020 , Galicia Securities S.A. integrated said requirements in government securities for an amount of Ps.12,270 and a bank guarantee for Ps. 6,171. INVIU S.A.U. In accordance with the requirements set forth in General Resolution No. 622, the ALyC and AN Integral must have a minimum Shareholders’ Equity equivalent to 470,350 Units of Purchasing Value (UVA), with said requirement amounting to Ps.30,253 as of December 31, 2020, and the minimum offsetting entry required is Ps.15,126. As of December 31, 2020, INVIU S.A.U. integrated said requirements in a demand account for an amount of thousand USD220. 52.4.2. Custodial Agent of Collective Investment Products Corresponding to Mutual Funds Furthermore, in compliance with Section 7 of Chapter II, Title V of that Resolution, in its capacity as custodial agent of collective investment products corresponding to mutual funds (depository) of the “FIMA ACCIONES”, “FIMA P.B. ACCIONES”, “FIMA RENTA EN PESOS”, “FIMA AHORRO PESOS”, “FIMA RENTA PLUS”, “FIMA PREMIUM”, “FIMA AHORRO PLUS”, “FIMA CAPITAL PLUS”, “FIMA ABIERTO PYMES”, “FIMA MIX I”, “FIMA RENTA DÓLARES I” and “FIMA RENTA DOLARES II” funds, as of December 31, 2020, Banco de Galicia y Buenos Aires S.A.U. holds a total of 22,081,526,592 units under custody for a market value of Ps.192,415,131, which is included in the “Depositors of Securities Held in Custody” account. As the closing of previous fiscal year, the securities held in custody totaled 11,045,967,403 units and their market value amounted to Ps.109,892,525. The balances of the Mutual Funds as of the indicated dates are detailed as follows: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | Mutual Fund | | 12.31.20 | | | 12.31.19 | | FIMA Acciones | | | 590,257 | | | | 548,757 | | FIMA P.B. Acciones | | | 633,036 | | | | 941,220 | | FIMA Renta en pesos | | | 1,098,300 | | | | 319,338 | | FIMA Ahorro pesos | | | 7,252,021 | | | | 3,626,852 | | FIMA Renta Plus | | | 739,739 | | | | 200,953 | | FIMA Premium | | | 148,692,964 | | | | 93,646,912 | | FIMA Ahorro Plus | | | 12,706,534 | | | | 3,718,984 | | FIMA Capital Plus | | | 16,650,938 | | | | 154,164 | | FIMA Abierto PyMES | | | 758,538 | | | | 795,135 | | FIMA Mix I | | | 2,047,362 | | | | 77,755 | | FIMA Renta Dólares I (*) | | | — | | | | 2,259,686 | | FIMA Renta Dólares II (*) | | | — | | | | 739,938 | | FIMA Renta Fija Internacional | | | 1,172,774 | | | | 2,735,979 | | FIMA Acciones Latinoamericanas Dólares(*) | | | 72,668 | | | | 126,852 | | | | | | | | | | | Total | | | 192,415,131 | | | | 109,892,525 | | | | | | | | | | |
Mutual Fund | | 12.31.18 | | | 12.31.17 | | | 01.01.17 | | FIMA Acciones | | | 328,125 | | | | 609,485 | | | | 217,062 | | FIMA P.B. Acciones | | | 718,431 | | | | 1,688,067 | | | | 562,550 | | FIMA Renta en pesos | | | 245,333 | | | | 776,359 | | | | 440,492 | | FIMA Ahorro pesos | | | 9,891,974 | | | | 30,744,494 | | | | 29,398,557 | | FIMA Renta Plus | | | 145,308 | | | | 546,213 | | | | 455,650 | | FIMA Premium | | | 29,475,771 | | | | 14,909,786 | | | | 13,137,998 | | FIMA Ahorro Plus | | | 9,967,609 | | | | 25,452,146 | | | | 18,784,320 | | FIMA Capital Plus | | | 205,069 | | | | 559,840 | | | | 1,035,146 | | FIMA Abierto PyMES | | | 312,788 | | | | 390,089 | | | | 344,786 | | FIMA Mix I | | | 6,686 | | | | 243,453 | | | | 279,123 | | FIMA Renta Dólares I (*) | | | 7,373,261 | | | | 18,284,933 | | | | 4,137,019 | | FIMA Renta Dólares II (*) | | | 1,554,263 | | | | 6,153,642 | | | | 4,238 | | FIMA Renta Fija Internacional | | | 193,618 | | | | - | | | | - | | FIMA Acciones Latinoamericanas Dólares(*) | | | 13,082 | | | | - | | | | - | | Total | | | 60,431,318 | | | | 100,358,507 | | | | 68,796,941 | |
(*)
| (*) | Stated at the reference exchange rate of the U.S. Dollar set by the Argentine Central Bank. See Note 1.7.(b). |
All the transactions detailed above are recorded in off-balance sheet items - securities held in custody.
The mutual funds detailed above have not been consolidated as the Group is not a controlling company thereof, since the depository role does not imply in this case:
-
| power over the trust to run material activities;
|
-
| exposure or right to variable returns;
|
-
| capacity to have influence on the amount of returns to be received for the involvement.
|
54.4.3. Storage of Documents
Pursuant to General Resolution No. 629 of the C.N.V., Banco de Galicia y Buenos Aires S.A.U. notes that it has supporting documents regarding accounting and management transactions, which are stored at AdeA (C.U.I.T. No. 30-68233570-6), Plant III located at Ruta Provincial 36 km 31.5 No. 6471 (CP 1888) Bosques, Province of Buenos Aires, with legal domicile at Av. Pte. Roque Sáenz Peña 832, 1st. floor, Autonomous City of Buenos Aires.
54.5. Compliance with Minimum Cash Requirements:
As of December 31, 2018, the balances recorded as computable items are as follows:
| | Currency | | | Government Securities | | Item | | $ | | | US$ | | | Euros(*) | | | $ | | | US$ | | Checking Accounts at the Argentine Central Bank | | | 40,110,751 | | | 1,783,087 (1) | | | 15 (3) | | | | - | | | | - | | Special Guarantees Accounts at the Argentine Central Bank | | | 4,730,689 | | | 12,100 (2) | | | | - | | | | - | | | | - | | Argentine Treasury Bonds in Pesos at Fixed Rate Due November 2020 | | | 8,755,174 | | | | - | | | | - | | | | - | | | | - | | Liquidity Bills | | | 20,804,813 | | | | - | | | | - | | | | - | | | | - | | 60 EM Subaccount in CRYL (Center of Registration and Settlement) of Government Securities and Debt Instruments Issued by the Argentine Central Bank | | | - | | | | - | | | | - | | | | 1,032,796 | | | 364 (4) | | Total Computable Items to Meet Minimum Cash Requirements | | | 74,401,427 | | | | 1,795,187 | | | | 15 | | | | 1,032,796 | | | | 364 | |
(*)
| Stated in thousands of US$.
|
(1)
| Equivalent to $67,415,488.
|
(2)
| Equivalent to $457,480.
|
(3)Equivalent to $580.
(4)
| Equivalent to $13,876.
|
54.6. Penalties Imposed on Banco de Galicia y Buenos Aires S.A.U. and Summary Proceedings Commenced by the Argentine Central Bank
Penalties Imposed on Banco de Galicia y Buenos Aires S.A.U. Existing as of December 31, 2018:
U.I.F.’s Summary Proceedings No. 68/09. Penalty notification date: February 25, 2010. Reason for the imposition of the penalty: Alleged omission to report suspicious activities, in possible infringement of Act No. 25246. As a consequence of the aforementioned summary proceedings, Banco de Galicia y Buenos Aires S.A.U., one of its directors and one of its officers were punished with a fine in the amount of $4,483. Status of the proceedings: Division I of the Argentine Federal Court of Appeals in Administrative Matters partially revoked the penalties, releasing
F-93
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Eduardo A. Fanciulli from any liability and reducing the fines imposed. The U.I.F., Banco de Galicia y Buenos Aires S.A.U. and Mr. Enrique M. Garda Olaciregui filed federal extraordinary appeals before Argentine Supreme Court (CSJN). Accounting treatment: As of December 31, 2018, a provision for $5,306 is recorded, whereas a provision for $7,357 and $10,134 was recorded as of December 31, 2017 and January 1, 2017, respectively.
Summary Proceedings No. 1544: Penalty notification date: November 9, 2018. Reason for the imposition of the penalty: Alleged breach of the provisions set out in Argentine Central Bank's Communiqué "A" 6242, SINAP 1 - 61. As a consequence of the aforementioned summary proceedings, Banco de Galicia y Buenos Aires S.A.U., three of its directors and certain relevant officers were punished with a fine in the amount of $1,497. Status of the proceedings: The Bank will file an appeal against the penalty with the Argentine Federal Court of Appeals in Administrative Matters of the Autonomous City of Buenos Aires, under the terms of section 42 of Law No. 21526, as amended by Law No. 24144.
54.7. ISSUANCE OF DEBT SECURITIES
The issuance of debt securities is detailed in Notes 28 and 29.
54.8. Restrictions Imposed on the Distribution of Profits
Pursuant to Section 70 of the General Corporations Law, Grupo Financiero Galicia S.A. should transfer 5% of the net income for the year to the Legal Reserve until 20% of the capital stock is reached, plus the balance of the Capital Adjustment account.
With respect to Banco Galicia, the Argentine Central Bank regulations require that 20% of the profits shown in the Income Statement at fiscal year-end, plus (or less), the adjustments made in previous fiscal years and, less, if any, the loss accumulated at previous fiscal year-end, be allocated to the legal reserve.
This proportion applies regardless of the ratio of the Legal Reserve fund to Capital Stock. Should the Legal Reserve be used to absorb losses, earnings shall be distributed only if the value of the Legal Reserve reaches 20% of the Capital Stock plus the Capital Adjustment.
The Argentine Central Bank sets rules for the conditions under which financial institutions can make distributions of profits. According to these rules, profits can be distributed as long as results of operations are positive after deducting not only the Reserves, which may be legally and statutory required, but also the following items from Retained Income: The difference between the carrying amount and the market value of public sector assets and/or debt instruments issued by the Argentine Central Bank not valued at market price, the amounts capitalized for lawsuits related to deposits and any unrecorded adjustments required by the external auditors or the Argentine Central Bank.
Moreover, in order that a financial institution be able to distribute profits, said institution must comply with the capital adequacy rule, i.e. with the calculation of minimum capital requirements and the regulatory capital.
For these purposes, this shall be done by deducting from its assets and Retained Income all the items mentioned in the paragraph above. Moreover, in such calculation, a financial institution shall not be able to compute the temporary reductions that affect minimum capital requirements, computable regulatory capital or its capital adequacy.
Since January 2016, the Argentine Central Bank determined that banks shall meet an additional capital conservation buffer apart from the minimum capital requirement equal to 3.5% of risk-weighted assets. This shall be made up only of Tier 1 Common Capital, net of deductible items. Distribution of profits shall be restricted when the Bank’s computable regulatory capital level and structure is within the range of the capital conservation buffer.
The prior authorization of the Argentine Regulatory Agency of Financial and Foreign Exchange Institutions (SEFyC, as per its initials in Spanish) shall not be required for the distribution of profits, except in the cases where a financial institution is within the capital conservation buffer and to determine distributable profits the Tier 1 common capital range had not been increased by 1 percentage point, net of deductible items. Such restriction was established until March 31, 2020.
Tarjeta Naranja S.A.’s Ordinary and Extraordinary Shareholders’ Meeting held on March 16, 2006 decided to set the maximum limit for the distribution of dividends at 25% of the realized and liquid profits of each fiscal year. This restriction shall remain in force as long as the company’s Shareholders’ Equity is below $300,000.
Pursuant to the Price Supplement of the Class XXXVII Notes, Tarjeta Naranja S.A. has agreed not to distribute dividends that may exceed 50% of the company’s net income. This restriction also applies in the event of any excess over certain indebtedness ratios.
Notwithstanding the aforementioned, profits resulting from the first-time application of IFRS may not be distributed; instead, such profits, if any, will be appropriated to a special reserve recorded under equity which might only be released for capitalization purposes, or otherwise to offset potential losses.
The Group may pay dividends to the extent that it has distributable retained earnings and distributable reserves calculated in accordance with the rules of the Argentine Central Bank described in See Note 1.1. Therefore, retained earnings included in the consolidated financial statements may not be wholly distributable.1.6.(b).
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GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Shareholders' equity under the rules of the Argentine Central Bank comprise the following captions:
|
All the transactions detailed above are recorded in off-balance sheet items—securities held in custody. The mutual funds detailed above have not been consolidated as the Group is not a controlling company thereof, since the depository role does not imply in this case: power over the trust to run material activities; exposure or right to variable returns; capacity to have influence on the amount of returns to be received for the involvement. 52.4.3. Storage of Documents Pursuant to General Resolution No. 629 of the CNV, Banco de Galicia y Buenos Aires S.A.U. notes that it has supporting documents regarding accounting and management transactions, which are stored at AdeA (C.U.I.T. No. 30-68233570-6), Plant III located at Ruta Provincial 36 km 31.5 No. 6471 (CP 1888) Bosques, Province of Buenos Aires, with legal domicile at Av. Juramento 1775, 4th. floor, (CP 1428), Autonomous City of Buenos Aires. 52.5. COMPLIANCE WITH MINIMUM CASH REQUIREMENTS: As of December 31, 2020, the balances recorded as computable items are as follows: | | | | | | | | | | | | | | | | Currency | | Item | | Ps. | | | USD | | | Euros(*) | | Checking Accounts held in Argentine Central Bank | | | 1,000 | | | | 1,217,252 | | | | 31 | | Escrow Accounts held in Argentine Central Bank | | | 11,148,780 | | | | 3,515 | | | | — | | National Treasury Bonds in Argentine Pesos computable for minimum cash | | | 18,343,599 | | | | — | | | | — | | Liquidity Bills computable for minimum cash | | | 46,617,121 | | | | — | | | | — | | | | | | | | | | | | | | | Total for integration Minimum Cash | | | 76,110,500 | | | | 1,220,767 | | | | 31 | | | | | | | | | | | | | | |
| 12.31.18
| | (*) | Stated in thousands of USD. | Share Capital
| | 1,426,765
| | Additional paid in Capital
| | 10,951,132
| | Adjustments to Shareholders´equity
| | 278,131
| | Legal reserve
| | 340,979
| | Distribuitable reserves
| | 25,103,198
| | Non distributable reserves
| | 2,770,380
| | Profit for the year
| | 14,427,034
| | Total Shareholder's equity under the rules of the Argentine Central Bank
| | 55,297,619
| |
Plan for the distribution
|
52.6. PENALTIES IMPOSED ON BANCO DE GALICIA Y BUENOS AIRES S.A.U. AND SUMMARY PROCEEDINGS COMMENCED BY THE ARGENTINE CENTRAL BANK Penalties Imposed on Banco de Galicia y Buenos Aires S.A.U. Existing as of December 31, 2020: U.I.F.’s Summary Proceedings No. 68/09. Penalty notification date: February 25, 2010. Reason for the imposition of the penalty: Alleged omission to report suspicious activities, in possible infringement of Act No. 25246. As a consequence of the aforementioned summary proceedings, Banco de Galicia y Buenos Aires S.A.U., one of its directors and one of its officers were punished with a fine in the amount of Ps.4,483. Status of the proceedings: Division I of the Argentine Federal Court of Appeals in Administrative Matters partially revoked the penalties, releasing Eduardo A. Fanciulli from any liability and reducing the fines imposed. The UIF, Banco de Galicia y Buenos Aires S.A.U. and Mr. Enrique M. Garda Olaciregui filed federal extraordinary appeals before Argentine Supreme Court (CSJN). Accounting treatment: a provision of Ps.5,306 is recorded as of December 31, 2020. Summary Proceedings No. 1544. Penalty notification date: November 9, 2018. Reason for the imposition of the penalty: Alleged breach of the provisions set out in Argentine Central Bank’s Communiqué “A” 6242, SINAP 1—61. As a consequence of the aforementioned summary proceedings, Banco de Galicia y Buenos Aires S.A.U., three of its directors and certain relevant officers. Status of the proceedings: On November 26, 2018, a direct appeal to the penalty was filed before the National Court of Appeals for Federal Administrative Disputes of the Federal Capital, under the terms of Article 42 of Law No. 21,526, amended by Law No. 24,144; Room V was drawn to issue judgment. On February 26, 2020 said Room V decided to reject the direct appeal and confirm the penalties, which was notified on February 27. Against said resolution, on March 12, 2020, an extraordinary federal appeal was filed which is actually being treated by Room V. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS UIF Proceedings -Docket 867/13. Penalty Notification date: June 19, 2020. Reason of the Penalty: Alleged non-compliance with the provisions of Article 21 of the Anti-Money Laundering Law and alleged non-compliance with the provisions of UIF Resolution No. 121/11, especially with the provisions of Article 13 (subsections i and j, and section II); Article 14 (subsection h); Article 21 (subsection a); Article 23; and Article 24 (subsections d, e and h). These objections are related to the transactions monitoring system regarding prevention of money laundering and terrorist financing, and required information allegedly missing. Amount applied and responsible persons receiving penalties: Penalties for global amounts of Ps.440 applied to the Bank and eight Directors. Status of the Case: On September 14, 2020, the direct appeal to the penalty was filed before the National Court of Appeals for Federal Administrative Disputes of the Federal Capital, under the terms of Article 25 of Law No. 25,246, amended by Law No. 24,144; Room III, where the proceeding is pending, was designated to issue judgment. The Group considers that the resolution of these proceedings will not have significant impact on its equity. 52.7. ISSUANCE OF DEBT SECURITIES The issuance of debt securities is detailed in Notes 27 and 28. 52.8. RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF PROFITS Pursuant to Section 70 of the General Corporations Law, Grupo Financiero Galicia S.A. should transfer 5% of the net income for the year to the Legal Reserve until 20% of the capital stock is reached, plus the balance of the Capital Adjustment account. With respect to Banco Galicia, the Argentine Central Bank regulations require that 20% of the profits shown in the Income Statement at fiscal year-end, plus (or less), the adjustments made in previous fiscal years and, less, if any, the loss accumulated at previous fiscal year-end, be allocated to the legal reserve. This proportion applies regardless of the ratio of the Legal Reserve fund to Capital Stock. Should the Legal Reserve be used to absorb losses, earnings shall be distributed only if the value of the Legal Reserve reaches 20% of the Capital Stock plus the Capital Adjustment. The Argentine Central Bank sets rules for the conditions under which financial institutions can make distributions of profits. According to these rules, profits can be distributed as long as results of operations are positive after deducting not only the Reserves, which may be legally and statutory required, but also the following items from Retained Income: The difference between the carrying amount and the market value of public sector assets and/or debt instruments issued by the Argentine Central Bank not valued at market price, the amounts capitalized for lawsuits related to deposits and any unrecorded adjustments required by the external auditors or the Argentine Central Bank. Moreover, in order that a financial institution be able to distribute profits, such institution must comply with the capital adequacy rule, i.e. with the calculation of minimum capital requirements and the regulatory capital. For these purposes, this shall be done by deducting from its assets and Retained Income all the items mentioned in the paragraph above. Moreover, in such calculation, a financial institution shall not be able to compute the temporary reductions that affect minimum capital requirements, computable regulatory capital or its capital adequacy. Since January 2016, the Argentine Central Bank determined that banks shall meet an additional capital conservation buffer apart from the minimum capital requirement equal to 3.5% of risk-weighted assets. This shall be made up only of Tier 1 Common Capital, net of deductible items. Distribution of profits shall be restricted when the Bank’s computable regulatory capital level and structure is within the range of the capital conservation buffer. The Argentine Central Bank provided that income distribution must have its authorization. In said authorization process, the SEFYC will consider, among other elements, the total impact of credit losses determined according to IFRS 9. Likewise, the Argentine Central Bank issued Communication “A” 7181 where suspension of income distribution is set forth until June 30, 2021. Tarjeta Naranja S.A.’s Ordinary and Extraordinary Shareholders’ Meeting held on March 16, 2006 decided to set the maximum limit for the distribution of dividends at 25% of the realized and liquid profits of each fiscal year. This restriction shall remain in force as long as the company’s Shareholders’ Equity is below Ps.300,000. Pursuant to the Price Supplement of the Class XXXVII Notes, Tarjeta Naranja S.A. has agreed not to distribute dividends that may exceed 50% of the company’s net income. This restriction also applies in the event of any excess over certain indebtedness ratios. Notwithstanding the aforementioned, profits resulting from the first-time application of IFRS may not be distributed; instead, such profits, if any, will be appropriated to a special reserve recorded under equity which might only be released for capitalization purposes, or otherwise to offset potential losses. The Group may pay dividends to the extent that it has distributable retained earnings and distributable reserves calculated in accordance with the rules of the Argentine Central Bank. Therefore, retained earnings included in the consolidated financial statements may not be wholly distributable. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Argentine Central Bank, through Communications “A” 5541 and its amendments, established a convergence plan towards the adoption of IFRS as issued by the IASB, and the interpretations issued by the IFRIC, for the entities under its supervision, effective for fiscal years commencing January 1, 2018, with certain exceptions currently including the non-application of item 5.5 (Impairment) of IFRS 9 to the financial instruments issued by the Non-Financial Public Sector. Additionally, the Superintendence of Financial Institutions has established that the measurement of the investment in Prisma Medios de Pago SA, which is recognized at fair value through profit and loss under IFRS cannot exceed the proportional amount received in cash at the time of its sale. The Group has presented its local financial statements under these rules on March 9, 2021. Shareholders’ equity under the rules of the Argentine Central Bank comprise the following captions: | | | Unappropriated Retained Income(1)
| | | 42,357,973
| | To Special Reserve “First-time Application of IFRS”(2)
| | | 2,827,741
| | Subtotal
| | | 39,530,232
| | Distributable Amount
| | | 39,530,232
| | Distributed Income
| | | | | To Discretionary Reserve
| | | 12,427,034
| | To Cash Dividends
| | | 2,000,000
| | To Common Shares (140.1773% of $1,426,765)
| | | 2,000,000
| | Unappropriated Retained Income(3)
| | | 37,530,232
| |
(1)
| It includes Unappropiated Retained Earnings, plus Discretionary Reserve, less purchase of minority interest.
| | | 12.31.20 | |
(2)
| According to the provisions of Communiqué “A” 6618, such reserve, which includes the amount of income resulting from the first-time application of IFRS, shall be set at the first Shareholders' Meeting to be held after fiscal year-end.
| Share Capital | | | 1,474,692 | |
(3)
| Relates to the Discretionary Reserve for Future Distributions of Profits.
| Additional paid in Capital | | | 17,281,187 | |
54.9. Capital Management and Corporate Governance Transparency Policy
Grupo Financiero Galicia S.A.
Board of Directors
Grupo Financiero Galicia S.A.’s Board of Directors is the Company's highest management body. It is made up of nine directors and three alternate directors, who must have the necessary knowledge and skillsAdjustments to clearly understand their responsibilities and duties within the corporate governance, and to act with the loyalty and diligence of a good businessman.shareholders´ equity
| | | 61,548,313 | | As set out in its bylaws, the term of office for both directors and alternate directors is three (3) years; they are partially changed every year and may be reelected indefinitely.Legal reserve
| | | 714,107 | | The Company complies with the appropriate standards regarding total number of directors, as well as the number of independent directors. Furthermore, its bylaws provideDistributable reserves
| | | 116,312,804 | | Non distributable reserves | | | 5,047,825 | | Retained results | | | (44,533,351 | ) | Profit for the flexibility necessary to adaptyear | | | 26,439,048 | | | | | | | Total Shareholder’s equity under the number of directors to the possible changes in the conditions in which the Company carries out its activities, from three (3) to nine (9) directors. The Board of Directors complies, in every relevant respect, with the recommendations included in the Code on Corporate Governance as Schedule IV to Title IVrules of the regulations issued by the National Securities Commission (Text amended in 2013).Argentine Central Bank
| | | 184,284,625 | | | | It also monitors the application of the corporate governance policies provided for by the regulations in force through the Executive Committee, the Audit Committee and the Committee for Information Integrity. Periodically, the Committees provide the Board of Directors with information, and the Board gets to know the decisions of each Committee. What is appropriate is transcribed in the minutes drafted at the Board of Directors' meetings.
| Executive Committee
In July 2018, Grupo Financiero Galicia S.A.'s Board of Directors approved the creation of the Executive Committee, along with its governing rules and regulations. It is made up of five directors, and the purpose of its creation is to contribute to the conduction of the Company's
| | |
As exposed in the Statements of Changes in Equity, Grupo Financiero Galicia S.A. has followed the option established in Art. 3, Paragraph b), Chapter III of Title Periodic Information Regime of CNV Standards, which stipulates, subject to approval by the shareholders annual general meeting, the absorption of negative retained earnings that may arise on the date of transition as a consequence of the inflation adjustment. Negative retained earnings for the fiscal year ended December 31, 2020 amounted to thousand Ps. 18,094,303, so the Board of Directors will propose that they be absorbed, affecting for this purpose the Special Reserve arising from the first-time application of the IFRS and the remainder with the Optional Reserve for development of new businesses and support of investee companies. Additionally, the Board of Directors will propose the distribution of cash dividends by an amount that, once adjusted according to inflation, in accordance with Art. 3, Paragraph e), Chapter III of Title Periodic Information Regime of CNV Standards, results in Ps. 1,500,000, through partial use of the Optional Reserve for Future Income Distribution. 52.9. CAPITAL MANAGEMENT AND CORPORATE GOVERNANCE TRANSPARENCY POLICY Grupo Financiero Galicia S.A. Board of Directors Grupo Financiero Galicia S.A.’s Board of Directors is the Company’s highest management body. It is made up of nine directors and three alternate directors, who must have the necessary knowledge and skills to clearly understand their responsibilities and duties within the corporate governance, and to act with the loyalty and diligence of a good businessman. As set out in its bylaws, the term of office for both directors and alternate directors is three (3) years; they are partially changed every year and may be reelected indefinitely. The Company complies with the appropriate standards regarding total number of directors, as well as the number of independent directors. Furthermore, its bylaws provide for the flexibility necessary to adapt the number of directors to the possible changes in the conditions in which the Company carries out its activities, from three (3) to nine (9) directors. The Board of Directors complies, in every relevant respect, with the recommendations included in the Code on Corporate Governance as Schedule IV to Title IV of the regulations issued by the National Securities Commission (Text amended in 2013). It also monitors the application of the corporate governance policies provided for by the regulations in force through the Executive Committee, the Audit Committee and the Committee for Information Integrity. Periodically, the Committees provide the Board of Directors with information, and the Board gets to know the decisions of each Committee. What is appropriate is transcribed in the minutes drafted at the Board of Directors’ meetings. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Executive Committee In July 2018, Grupo Financiero Galicia S.A.‘s Board of Directors approved the creation of the Executive Committee, along with its governing rules and regulations. It is made up of five directors, and the purpose of its creation is to contribute to the conduction of the Company’s ordinary business and the efficient performance of the Board of Directors’ duties. Audit Committee The Audit Committee set by Capital Markets Law No. 26831 and the CNV’s regulations is formed by three directors, two of whom are independent, and meets the requirements set out in U.S. Sarbanes-Oxley Act. Such Committee’s mission is to provide the Board of Directors with assistance in overseeing the financial statements, as well as in the task of controlling Grupo Financiero Galicia and its subsidiaries. Committee for Information Integrity The Committee for Information Integrity was created in compliance with the recommendations of U.S. Sarbanes Oxley Act, and is made up of the General Manager, the Administrative and Finance Manager and two supervisors of the Administrative and Finance Division. Its most important duties are monitoring the Company’s internal controls, reviewing the financial statements and other information published, preparing Board of Directors’ reports with the activities carried out by the Committee. Its operation has been adapted to local laws and it currently performs important administrative and reporting duties, which are used by the Board of Directors and the Audit Committee, contributing to the transparency of the information provided to markets. Basic Holding Structure Grupo Financiero Galicia S.A. is a company whose sole purpose is to conduct financial and investment activities as per Section 31 of the General Corporations Law. That is to say, it is a holding company whose activity involves managing its equity investments, assets and resources. Within the group of companies in which the Company has an interest, Banco de Galicia y Buenos Aires S.A.U. stands out, which is its main asset and a wholly owned subsidiary. Banco de Galicia y Buenos Aires S.A.U., as a bank institution, is subject to certain regulatory restrictions imposed by the Argentine Central Bank. Among such restrictions, there is one that limits the equity interest to a maximum of 12.5% of the capital stock in companies that do not perform activities qualified as supplementary. Therefore, Grupo Financiero Galicia S.A. directly and indirectly holds those equity interests in companies that carry out activities defined as non-supplementary. Grupo Financiero Galicia S.A. has a reduced structure due to its nature as holding company of a group of financial services. Accordingly, certain typical organizational aspects of large operating companies are not applicable thereto. To conclude, one should note that Grupo Financiero Galicia S.A. is under the control of a pure holding company, EBA Holding S.A., which has the number of votes necessary to hold the majority of votes at the Shareholders’ Meetings, although it does not have any managerial functions over the former. Compensation Systems Directors’ compensation is defined by the General Shareholders’ Meeting and is fixed within the limits established by law and the corporate bylaws. The Audit Committee expresses its opinion on whether compensation proposals for Directors are reasonable, taking into consideration market standards. Business Conduct Policy The Company has consistently shown respect for the rights of its shareholders, reliability and accuracy in the information provided, transparency as to its policies and decisions, and caution with regard to the disclosure of strategic business issues. Code of Ethics Grupo Financiero Galicia S.A. has a Code of Ethics formally approved that guides its policies and activities. It considers business objectivity and conflict-of-interests related-aspects, and how the employee should act upon identifying a breach of the Code of Ethics. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Banco de Galicia y Buenos Aires S.A.U. Banco Galicia’s Board of Directors is the Company’s highest management body. As of the date of preparation of these consolidated financial statements, it is made up of seven directors and four alternate directors, who have the necessary knowledge and skills to clearly understand their responsibilities and duties within the corporate governance, and act with the loyalty and diligence of a good businessman. Banco Galicia complies with the appropriate standards regarding total number of directors, as well as number of independent directors. Furthermore, its bylaws provide for the flexibility necessary to adapt from three (3) to nine (9) directors to the possible changes in the conditions in which the Bank carries out its activities. The General Shareholders’ Meeting has the power to establish the number of directors, both independent and non-independent ones, and appoint them. Out of the seven directors, one of them is independent. In addition, two of the alternate directors are independent. The independence concept is defined in the regulations set forth by the CNV and the Argentine Central Bank regulations. As regards prevention of conflicts of interest, the provisions set forth in the General Corporations Law and the Capital Markets Law are applicable. As set out in the bylaws, the term of office for both directors and alternate directors is three years; two thirds of them (or a fraction of at least three) are changed every year and may be reelected indefinitely. The Board of Directors’ meeting is held at least once a week and when required by any director. The Board of Directors is responsible for the Bank’s general management and makes all the necessary decisions to such end. The Board of Directors’ members also take part, to a greater or lesser extent, in the commissions and committees created. Therefore, they are continuously informed about the Bank’s course of business and become aware of the decisions made by such bodies, which are transcribed into minutes. Additionally, the Board of Directors receives a monthly report prepared by the General Manager, the purpose of which is to report the material issues and events addressed at the different meetings held between the General Manager and Senior Management. The Board of Directors becomes aware of such reports, as evidenced in the minutes. In connection with directors’ training and development, the Bank has a program, which is reviewed every nine months, whereby they regularly attend courses and seminars of different kinds and subjects. According to the activities carried out by the Bank, effective laws and corporate strategies, the following committees have been created to achieve an effective control over all activities performed by the Bank: Risk and Capital Allocation Committee It is in charge of approving and analyzing capital allocation, establishing risk policies and monitoring the Bank’s risk. This committee’s function is to approve and sign credit ratings and grant transactions related to high-risk groups and customers, i.e., greater than 2.5% of the Bank’s individual Computable Regulatory Capital, loans to financial institutions (local or foreign) and related customers, in which case two thirds of the Board of Directors is required to participate. This committee’s function is to approve and sign the credit ratings and grant transactions related to medium-risk groups and customers, equal to amounts greater than 1% of the Bank’s individual Computable Regulatory Capital. Asset and Liability Management Committee It is in charge of analyzing the fundraising and its placement in different assets, the follow-up and control of liquidity, interest-rate and currency mismatches, and management thereof. Information Technology Committee This Committee is in charge of supervising and approving the development plans of new systems and their budgets, as well as supervising these systems’ budget control. It is also responsible for approving the general design of the systems’ structure, the main processes thereof and the systems implemented, as well as monitoring the quality of the Bank’s systems, within the policies established by the Board of Directors. Audit Committee The Audit Committee set by Capital Markets Law No. 26831 and the C.N.V.’s regulations is formed by three directors, two of whom are independent, and meets the requirements set out in U.S. Sarbanes-Oxley Act.
Such Committee’s mission is to provide the Board of Directors with assistance in overseeing the financial statements, as well as in the task of controlling Grupo Financiero Galicia and its subsidiaries.
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GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Committee for Information Integrity
The Committee for Information Integrity was created in compliance with the recommendations of U.S. Sarbanes Oxley Act, and is made up of the General Manager, the Administrative and Finance Manager and two supervisors of the Administrative and Finance Division.
Its most important duties are monitoring the Company's internal controls, reviewing the financial statements and other information published, preparing Board of Directors' reports with the activities carried out by the Committee. Its operation has been adapted to local laws and it currently performs important administrative and reporting duties, which are used by the Board of Directors and the Audit Committee, contributing to the transparency of the information provided to markets.
Basic Holding Structure
Grupo Financiero Galicia S.A. is a company whose sole purpose is to conduct financial and investment activities as per Section 31 of the General Corporations Law. That is to say, it is a holding company whose activity involves managing its equity investments, assets and resources.
Within the group of companies in which the Company has an interest, Banco de Galicia y Buenos Aires S.A.U. stands out, which is its main asset and a wholly-owned subsidiary. Banco de Galicia y Buenos Aires S.A.U., as a bank institution, is subject to certain regulatory restrictions imposed by the Argentine Central Bank. Among such restrictions, there is one that limits the equity interest to a maximum of 12.5% of the capital stock in companies that do not perform activities qualified as supplementary.
Therefore, Grupo Financiero Galicia S.A. directly and indirectly holds those equity interests in companies that carry out activities defined as non-supplementary.
Grupo Financiero Galicia S.A. has a reduced structure due to its nature as holding company of a group of financial services. Accordingly, certain typical organizational aspects of large operating companies are not applicable thereto.
To conclude, one should note that Grupo Financiero Galicia S.A. is under the control of a pure holding company, EBA Holding S.A., which has the number of votes necessary to hold the majority of votes at the Shareholders’ Meetings, although it does not have any managerial functions over the former.
Compensation Systems
Directors’ compensation is defined by the General Shareholders’ Meeting and is fixed within the limits established by law and the corporate bylaws.
The Audit Committee expresses its opinion on whether compensation proposals for Directors are reasonable, taking into consideration market standards.
Business Conduct Policy
The Company has consistently shown respect for the rights of its shareholders, reliability and accuracy in the information provided, transparency as to its policies and decisions, and caution with regard to the disclosure of strategic business issues.
Code of Ethics
Grupo Financiero Galicia S.A. has a Code of Ethics formally approved that guides its policies and activities. It considers business objectivity and conflict-of-interests related-aspects, and how the employee should act upon identifying a breach of the Code of Ethics.
Banco de Galicia y Buenos Aires S.A.U.
Banco Galicia’s Board of Directors is the Company's highest management body. As of the date of preparation of these consolidated financial statements, it is made up of seven directors and four alternate directors, who have the necessary knowledge and skills to clearly understand their responsibilities and duties within the corporate governance, and act with the loyalty and diligence of a good businessman.
Banco Galicia complies with the appropriate standards regarding total number of directors, as well as number of independent directors. Furthermore, its bylaws provide for the flexibility necessary to adapt from three (3) to nine (9) directors to the possible changes in the conditions in which the Bank carries out its activities.
The General Shareholders’ Meeting has the power to establish the number of directors, both independent and non-independent ones, and appoint them. Out of the seven directors, one of them is independent. In addition, two of the alternate directors are independent. The independence concept is defined in the regulations set forth by the C.N.V. and the Argentine Central Bank regulations.
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GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As regards prevention of conflicts of interest, the provisions set forth in the General Corporations Law and the Capital Markets Law are applicable.
As set out in the bylaws, the term of office for both directors and alternate directors is three years; two thirds of them (or a fraction of at least three) are changed every year and may be reelected indefinitely.
The Board of Directors' meeting is held at least once a week and when required by any director. The Board of Directors is responsible for the Bank’s general management and makes all the necessary decisions to such end. The Board of Directors' members also take part, to a greater or lesser extent, in the commissions and committees created. Therefore, they are continuously informed about the Bank’s course of business and become aware of the decisions made by such bodies, which are transcribed into minutes.
Additionally, the Board of Directors receives a monthly report prepared by the General Manager, the purpose of which is to report the material issues and events addressed at the different meetings held between the General Manager and Senior Management. The Board of Directors becomes aware of such reports, as evidenced in the minutes.
In connection with directors’ training and development, the Bank has a program, which is reviewed every nine months, whereby they regularly attend courses and seminars of different kinds and subjects.
According to the activities carried out by the Bank, effective laws and corporate strategies, the following committees have been created to achieve an effective control over all activities performed by the Bank:
- Risk and Capital Allocation Committee
It is in charge of approving and analyzing capital allocation, establishing risk policies and monitoring the Bank’s risk.
- High Credit Committee
This committee’s function is to approve and sign credit ratings and grant transactions related to high-risk groups and customers, i.e., greater than 2.5% of the Bank’s individual Computable Regulatory Capital, loans to financial institutions (local or foreign) and related customers, in which case two thirds of the Board of Directors is required to participate.
- Low Credit Committee
This committee’s function is to approve and sign the credit ratings and grant transactions related to medium-risk groups and customers, equal to amounts greater than 1% of the Bank’s individual Computable Regulatory Capital.
- Asset and Liability Management Committee
It is in charge of analyzing the fundraising and its placement in different assets, the follow-up and control of liquidity, interest-rate and currency mismatches, and management thereof.
- Information Technology Committee
This Committee is in charge of supervising and approving the development plans of new systems and their budgets, as well as supervising these systems’ budget control. It is also responsible for approving the general design of the systems’ structure, the main processes thereof and the systems implemented, as well as monitoring the quality of the Bank’s systems, within the policies established by the Board of Directors.
- Audit Committee
The Audit Committee is responsible for helping the Board of Directors, in performing the control function of the Bank and its controlled companies and the companies in which it owns a stake, in order to fairly ensure the following objectives: GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Effectiveness and efficiency of operations; Reliability of the accounting information; Compliance with applicable laws and regulations; and Compliance with the goals and strategy set by the Board of Directors. -
Committee for the Control and Prevention of Money Laundering and Funding of Terrorist Activities (CPLA/FT, as per its initials in Spanish) It is in charge of planning, coordinating and ensuring compliance with the policies on anti-money laundering and funding of terrorist activities set and approved by the Board of Directors. -
Committee for Information Integrity It is in charge of encouraging compliance with the provisions of Sarbanes-Oxley (2002). F-97
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- Human Resources and Governance Committee
It is in charge of presenting the succession of the General Manager and Division Managers, analyzing and establishing the General Manager’s and Division Managers’ compensation, and monitoring the performance matrix of Department and Division Managers. -
Performance Reporting Committee It is in charge of monitoring the performance and results of operations and evaluating the macro situation. -
Liquidity Crisis Committee It is in charge of evaluating the situation upon facing a liquidity crisis and deciding the steps to be implemented to tackle it. -
Strategy and New Businesses Committee It is in charge of analyzing new businesses. -
It is in charge of instilling respect for Banco Galicia’s rules, code of conduct and ethics, and mitigating the risk of default, by defining policies and establishing controls and reports in the best interests of the Bank and its employees, shareholders and customers. -
Committee for the Protection of Users of Financial Services It is responsible for following up on the activities developed by Banco Galicia’s management involved in user protection internal processes to ensure adequate compliance with legal and regulatory standards. The Bank considers the General Manager and Division Management reporting to the General Manager as Senior Management. These are detailed as follows: Wholesale Banking Division Comprehensive Corporate Services DivisionProducts and Tecnology
Organizational Development and Human Resources Division Strategic Planning and Management Control Division Customer’s Experience Division
Senior Management’s main duties are as follows: -
Ensure that the Bank’s activities are consistent with the business strategy, the policies approved by the Board of Directors and the risks to be assumed. -
Implement the necessary policies, procedures, processes and controls to manage operations and risks cautiously, meet the strategic goals set by the Board of Directors and ensure that the latter receives material, full and timely information so that it may assess management and analyze whether the responsibilities assigned are effectively fulfilled. -
Monitor the managers from different divisions, in line with the policies and procedures set by the Board of Directors and establish an effective internal control system. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Basic Holding Structure The Bank’s majority shareholder is Grupo Financiero Galicia S.A., which has full control of its shares and votes. In turn, the Bank holds equity investments in supplementary companies as shareholders of the parent, as well as minority interests in companies whose controlling company is its own shareholders of the parent. From a business point of view, this structure allows the Bank to take advantage of significant synergies that guarantee the loyalty of its customers and additional businesses. All business relationships with these companies, whether permanent or occasional in nature, are fostered under the normal and usual market conditions and this is true when the Bank holds either a majority or minority interest. Grupo Financiero Galicia S.A.'s‘s Board of Directors submits to the Shareholders' Meeting'sShareholders’ Meeting’s vote which shall be the Company'sCompany’s vote in its capacity as shareholders of the parent at the Bank's Shareholders'Bank’s Shareholders’ Meeting. The same method of transparency and information as to its controlled companies and the F-98
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
companies it owns a stake in is applied at the Bank’s Shareholders’ Meetings, which are always attended by directors and officers thereof and the Board of Directors always provides detailed information about the Company’s activities. Business Conduct Policy and/or Code of Ethics The Bank has a formally approved Code of Ethics that guides its policies and activities. It considers business objectivity and conflict of interest related aspects, and how the employee should act upon identifying a breach of the Code of Ethics, with the involvement of the Conduct Committee. Information Related to Personnel Economic Incentive Practices The Human Resources and Governance Committee, composed of two (2) Directors, the General Manager and the Organizational Development and Human Resources Division Manager, is in charge of establishing the compensation policy for Banco Galicia’s personnel. It is the policy of Banco Galicia to manage the full compensation of its personnel based on the principles of fairness, meritocracy and justice, within the framework of the legal regulations in force. The aim of this policy is to provide an objective and fair basis, through the design and implementation of tools for the management of the fixed and variable compensation paid to each employee, based on the scope and complexity of each position’s responsibilities, individual performance with regard to compliance thereof, contribution to the Bank’s results and conformity to market values, with the purpose of: -
| Attracting and creating loyalty with regard to quality personnel suitable for the achievement of the business strategy and goals. |
-
| Being an individual motivation means. |
-
| Easing the decentralized management of compensation administration. |
-
| Allowing the effective budget control of personnel costs. |
-
| Guaranteeing the internal fairness in order to monitor and ensure both external and internal fairness with regard to the payment of fixed and variable compensation. The Compensation area uses and puts at the disposal of the Senior Management and the Human Resources Committee market surveys published by consulting firms specialized in compensation issues, pursuant to the market positioning policies defined by the management division for the different corporate levels. |
With the purpose of gearing individuals towards the achievement of attainable results that contribute to the global performance of the Bank/Area, and to the increase in motivation for the common attainment of goals, differentiating individual contribution, Banco Galicia has different variable compensation systems: 1) | Business Incentives and/or Incentives through Commissions system for business areas. |
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2) | Annual Bonus System for management levels, officers and the rest of the employees who are not included in the business incentives system. The annual bonus is determined based on individual performance and the Bank’s results and is paid in the first quarter of the next fiscal year. To determine the variable compensation for the Senior Management and Middle Management, the Bank uses the Management Performance Assessment System. This system has been designed including both qualitative and quantitative KPI (Key Performance Indicators). In particular, quantitative Key Performance Indicators are designed with respect to at least three minimum aspects: |
| b) | Business volume or size. |
| c) | Projections: Indicators that protect the business for the future (For example: Quality, internal and external customer satisfaction, risk coverage, work environment, etc.). |
The significance or impact of each of them is monitored and adjusted yearly pursuant to the strategy approved by the Board of Directors. The interaction among these three aspects seeks to make incentives related to results and growth consistent with the risk thresholds determined by the Board of Directors. In turn, there is no deferred payment of variable compensation subject to the occurrence of future events or in the long term, taking into consideration that the business environment in the Argentine financial system is characterized by being mainly transactional, with lending and borrowing transactions with a very short seasoning term. Annual budget and management control – the latter carried out monthly in a general manner and quarterly in a more detailed manner - manner—include different risk ratios, including the ratio between compensation and risks undertaken. F-99
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Variable compensation is only paid in cash. There are no share-based payments. Every change to this policy is submitted to Banco de Galicia y Buenos Aires S.A.’s Human Resources Committee for its consideration. NOTE 55. SUBSEQUENT EVENTS53. IMPACT OF COVID-19 ON THE GROUP OPERATIONS Prisma Medios de Pago S.A.
UnderDuring this period, Grupo Financiero Galicia has performed its operations under the frameworkchallenging circumstances arising from the pandemic declared by the World Health Organization in March 2020, resulting from the Covid-19 virus.
The pandemic continues to generate consequences in businesses and economic activities at global and local level. In Argentina, the measures taken by the National Government to contain the spread of the divestment commitment undertaken by Prisma Medios de Pago S.A.virus included, among others, the closure of borders and its shareholders towards the Argentine Commissionmandatory isolation or distancing of Competence Defense, on January 21, 2019, Banco Galicia,the population along with the other shareholders, acceptedcessation of non-essential commercial activities for an offer madeextended period of time, with variants according to the local region and activity. On the date of issuance of these Financial Statements, commercial activities are gradually becoming normal and in compliance with the protocols established by AI Zenith (Netherlands) B.V. to buy 3,182,444 book-entry common shares, with face value of $1 each and one vote per share, representing 7.7007% of this company's capital stock.the Government. The estimated total pricefinal scope of the transaction amounted to US$106,258, outcoronavirus outbreak and its impact on global and local economies is unknown, and the governments may take stricter measures, which are unpredictable at this time. As of the date of issuance of these Financial Statements, Grupo Financiero Galicia has not experienced significant impacts on its income resulting from the pandemic. However, in this context, the Argentine Central Bank ordered a series of measures, of which Banco Galicia received US$ 63,073 on February 1, 2019 (date onthe following stand out: (i) customer service by prior appointment, (ii) suspension of commissions collection for the use of ATMs, (iii) suspension of income distribution until December 31, 2020, (iv) the extension of expiration dates for credit cards; (v) the financing of unpaid credit card balances at maximum rates, (vi) the postponement of maturities of unpaid credit balances, (vii) the granting of zero-rate financing to the self-employed and taxpayers under the simplified tax scheme; (viii) the granting of financing to SMEs at a rate of 24%, (ix) a Financing Line for productive investment of SMEs, (x) the granting of financing to companies for payment of salaries, (xi) the setting of minimum rates for fixed-term deposits, (xii) flexibilization in parameters for the classification of bank debtors, and (xiii) controls to the exchange market. By virtue of the aforementioned, the extent to which the shares were transferred). The price remainder, i.e. US$43,185,coronavirus will be payable duringaffect the next five years: (i) 30% will be payableGroup’s business in Pesos at UVA rate, plus an annual nominal 15% ratethe future and (ii) 70% will be payable in US Dollars at an annual nominal 10% rate. Banco Galicia continues to hold 3,057,642 shares in Prisma Medios de Pago S.A., which represent 7.3988%the income of its capital stock.operations cannot be reasonably quantified, should this situation continue for a long time.
The Board of Directors is closely monitoring this situation and taking all the required measures within their reach to preserve human life and our operations. NOTE 54. ECONOMIC CONTEXT WHERE THE GROUP’S OPERATIONS The Company operates in a complex economic context, whose main variables have experienced strong volatility, both in the national and international spheres. F-100
GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In March 2020, the outbreak of the pandemic caused by covid-19 generated significant consequences at global level, since most of the world’s countries reacted by implementing a series of unprecedented restrictions on moving from one place to another. The different measures of sanitary restrictions imposed generated, to a greater or lesser extent, an almost immediate impact on the economies, whose production and activity indicators dropped fast. In response, most governments have implemented aid packages to sustain the income of part of the population and reduce the risks of disruption in payment chains and company bankruptcies, aiming to lessen the impact of the crisis. Argentina has not been the exception, and the Government implemented actions as soon as the pandemic was declared. The Argentine economy was already in recession when the pandemic broke out, and the latter made this scenario more complex, giving rise to historical collapses in economic activity during the months with more restrictions on circulation. Despite the fact that there was an economic recovery in comparison with the first months in which the Social and Mandatory Preventive Isolation was implemented, the pre-pandemic activity levels have yet to be reached. The country ended the year 2020 with a fall in its annual Gross Domestic Product of around 10.1%. The increase in public spending associated with the implementation of programs of various kinds to absorb the impact of the pandemic and the quarantine on the economic activity, together with the sharp drop in income that resulted from the recession, have led to a primary deficit of around 6.5% during 2020. The “red” of the public accounts was financed mainly through the assistance of the Central Bank to the Treasury (via transfers of via Temporary Advances and transfers of Profits corresponding to fiscal year 2019) due to the lack of access to the international capital market resulting from the process of foreign debt restructuring that the country went through during the first half of the year. Negotiations with external creditors were completed in the third quarter of 2020. The inflationary effect of the aforementioned issuance of Argentine pesos has not yet been fully observed due to a series of factors: the restrictions on circulation that prevailed most of the year, the freezing of utility rates and other regulated prices, and the existence of programs such as “Precios Máximos” (Maximum Prices) and “Precios Cuidados” (Controlled Prices). However, in the last months of 2020 the price increase began to accelerate, in line with the gradual reopening of some sectors of the economy and the authorization by the government to increase some prices. In 2020, the variation of the Consumer Price Index closed with an annual variation of 36.1%. However, the exchange rate regime did account for the strong issuance of Argentine pesos verified during 2020. The official exchange rate, defined daily by the Argentine Central Bank through Communication “A” 3500, devalued 28.8%, going from Ps. 1/USD 59.90 to Ps. 1/USD 84.15 between the last business day of 2019 and the last business day of 2020. In parallel, the International Reserves of the monetary entity fell to USD 39,410,000 at the end of 2020, from the USD 44,781,000 with which it had closed 2019. The reduction of the Reserves was mainly due to the cancellation of financial loans and lines of credit, particularly from the private sector. Added to this was the formation of external assets from the non-financial private sector, mainly explained by the acquisition of foreign currency by natural persons for savings. In order to contain the decline in International Reserves, the monetary authority imposed increasing exchange restrictions throughout 2020. Additionally, these also had an upward impact on financial exchange rates used for restricted exchange transactions in the official market. Among these measures is the need to request prior authorization from the Argentine Central Bank to carry out certain transactions. Likewise, the exchange rate regime already determined as mandatory the entry and settlement in national currency of the funds obtained resulting from exports of goods and services, collections of pre-financing, advances and post-financing of exports of goods, and sale of non-produced non-financial assets, and external assets. The exchange restrictions, or those that may be established in the future, could affect the Company’s ability to access the Single Free Exchange Market (Mercado Único y Libre de Cambios, MULC) to acquire the necessary foreign exchange to meet its financial obligations. The assets and liabilities in foreign currency as of December 31, 2020 have been valuated considering MULC quotes in force. The volatility and uncertainty context continues on the date of issuance of these Consolidated Financial Statements. The Company’s Management permanently monitors the evolution of the variables that affect their business to define their course of action and identify the potential impacts on their equity and financial position. The Company’s Consolidated Financial Statements must be read in the light of these circumstances. GRUPO FINANCIERO GALICIA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 55. SUBSEQUENT EVENTS Cash Dividends On February 24, 2021, the Extraordinary Shareholders’ Meeting of Sudamericana Holding S.A. was held, which decided to partially use the “Optional Reserve” for the subsequent distribution of cash dividends or in kind in the amount of Ps. 1,100,000. On March 29, 2021, the Ordinary Shareholders’ Meeting of Galicia Warrants S.A. was held, which decided to partially use the “Optional Reserve” for the subsequent distribution of cash dividends or in kind in the amount of Ps. 40,000. On March 29, 2021, the Ordinary Shareholders’ Meeting of Galicia Administradora de Fondos S.A. was held, which decided the distribution of cash dividends or in kind in the amount of Ps. 800,000. On March 30, 2021, the Ordinary Shareholders’ Meeting of Galicia Securities S.A. was held, which decided the distribution of cash dividends or in kind in the amount of Ps. 150,000. Corporate Reorganization On February 25, 2021, the National Securities Commission, through Resolution RESFC-2021-20999-APN-DIR, issued the administrative approval of the Spin-off-Merger requested by the Group, in its capacity of merging company of the spin-off equity of Fedler S.A. and Dusner S.A., in their capacity as spin-off companies. The same resolution also authorized for the Group the public offering of 47,927,494 Class B ordinary book-entry shares with a nominal value of one Argentine peso (NV Ps. 1) each and entitled to one vote per share, to be delivered in exchange to the shareholders of the spin-off companies. On March 16, 2021 the merger by acquisition and capital increase of Grupo Financiero Galicia S.A. was registered with the Public Registry of Commerce. GRUPO FINANCIERO GALICIA S.A. SCHEDULE A – BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | | | | | | Holdings | | | | | | | | Carrying Amount | | Item | | Fair Value
Level | | | 12.31.20 | | | 12.31.19 | | DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS | | | | | | | 155,419,560 | | | | 89,431,378 | | Argentine | | | | | | | 155,419,560 | | | | 89,431,378 | | Government Securities | | | | | | | 24,282,643 | | | | 9,121,674 | | Argentine Government Bonds | | | Level 1 | | | | 6,486,355 | | | | 460,008 | | Argentine Government Bonds | | | Level 3 | | | | — | | | | 12,070 | | Provincial Government Bonds | | | Level 1 | | | | 539,371 | | | | — | | Provincial Government Bonds | | | Level 3 | | | | 200,768 | | | | — | | City of Buenos Aires Bonds | | | Level 1 | | | | 91,199 | | | | 163,969 | | Treasury Bills | | | Level 1 | | | | 16,053,570 | | | | 1,428,693 | | Treasury Bills | | | Level 2 | | | | 911,380 | | | | — | | Treasury Bills | | | Level 3 | | | | — | | | | 7,056,934 | | Argentine Central Bank’s Bills | | | | | | | 128,324,920 | | | | 79,153,628 | | Liquidity Bills | | | Level 2 | | | | 128,324,920 | | | | 79,153,628 | | Corporate Securities | | | | | | | 2,811,997 | | | | 1,156,076 | | Debt Securities | | | Level 1 | | | | 1,653,980 | | | | 836,335 | | Debt Securities | | | Level 3 | | | | 1,088,186 | | | | 191,649 | | Debt Securities of Financial Trusts | | | Level 1 | | | | — | | | | 68,070 | | Debt Securities of Financial Trusts | | | Level 3 | | | | 69,831 | | | | 60,022 | | OTHER DEBT SECURITIES | | | | | | | 23,070,377 | | | | 25,893,436 | | Measured at Fair Value through OCI | | | | | | | 4,185,098 | | | | 21,668,553 | | Argentine | | | | | | | 4,185,098 | | | | 21,668,553 | | Government Securities | | | | | | | 4,010,642 | | | | 21,668,553 | | Argentine Government Bonds | | | Level 1 | | | | 353,640 | | | | 21,572,682 | | Argentine Government Bonds | | | Level 2 | | | | 3,580,102 | | | | — | | Treasury Bills | | | Level 1 | | | | 76,900 | | | | — | | City of Buenos Aires Bonds | | | Level 1 | | | | — | | | | 95,871 | | Argentine Central Bank’s Bills | | | | | | | 174,456 | | | | — | | Liquidity Bills | | | Level 1 | | | | 174,456 | | | | — | | Measurement at Amortized Cost | | | | | | | 18,885,279 | | | | 4,224,883 | | Argentine | | | | | | | 18,880,939 | | | | 1,045,799 | | Government Securities | | | | | | | 17,886,824 | | | | (37,054 | ) | Argentine Government Bonds | | | | | | | 17,930,500 | | | | 1,960 | | Treasury Bills | | | | | | | — | | | | — | | Allowance for Uncollectible Accounts Risk | | | | | | | (43,676 | ) | | | (39,014 | ) | Corporate Securities | | | | | | | 994,115 | | | | 1,082,853 | | Debt Securities | | | | | | | 940,190 | | | | 582,239 | | Debt Securities of Financial Trusts | | | | | | | 36,010 | | | | 692,249 | | Others | | | | | | | 17,915 | | | | 18,555 | | Allowance for Uncollectible Accounts Risk | | | | | | | — | | | | (210,190 | ) | From Abroad | | | | | | | 4,340 | | | | 3,179,084 | | Government Securities | | | | | | | 4,340 | | | | 3,179,084 | | Treasury Bills | | | | | | | 4,340 | | | | 3,179,084 | | INVESTMENTS IN EQUITY INSTRUMENTS | | | | | | | 5,711,684 | | | | 6,200,459 | | Measured at Fair Value through profit or loss | | | | | | | 5,711,684 | | | | 6,200,459 | | Argentine | | | | | | | 5,655,017 | | | | 6,143,058 | | Shares | | | Level 1 | | | | 184,341 | | | | 170,445 | | Shares | | | Level 3 | | | | 5,470,676 | | | | 5,972,613 | | From Abroad | | | | | | | 56,667 | | | | 57,401 | | Shares | | | Level 1 | | | | 50,433 | | | | 50,107 | | Shares | | | Level 3 | | | | 6,234 | | | | 7,294 | |
| | Holdings | | | | | | | | Carrying Amount | | Item | | Fair Value | | Fair Value Level | | 12.31.18 | | | 12.31.17 | | DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS | | | | | | | 75,935,163 | | | | 42,747,797 | | Argentine | | | | | | | 75,935,163 | | | | 42,747,797 | | Government Securities | | | | | | | 4,699,806 | | | | 13,923,160 | | Government Bonds | | | | Level 1 | | | 1,466,270 | | | | 1,238,644 | | Government Bonds | | | | Level 3 | | | 19,137 | | | | 14,344 | | Provincial Bonds | | | | Level 1 | | | 538,591 | | | | 3,460,367 | | Provincial Bonds | | | | Level 3 | | | 445,204 | | | | 229,587 | | Autonomous City of Buenos Aires Bonds | | | | Level 1 | | | 37,166 | | | | 1,131,770 | | Autonomous City of Buenos Aires Bonds | | | | Level 3 | | | 5,073 | | | | - | | Treasury Bills | | | | Level 1 | | | 910,317 | | | | 7,848,448 | | Treasury Bills | | | | Level 2 | | | 1,278,048 | | | | - | | Argentine Central Bank's Bills and Notes | | | | | | | 70,097,764 | | | | 26,367,677 | | Lebacs | | | | Level 1 | | | - | | | | 26,367,677 | | Liquidity Bills | | | | Level 2 | | | 70,097,764 | | | | - | | Private Securities | | | | | | | 1,137,593 | | | | 2,456,960 | | Debt Securities | | | | Level 1 | | | 270,470 | | | | 916,066 | | Debt Securities | | | | Level 2 | | | - | | | | 5,906 | | Debt Securities | | | | Level 3 | | | 418,728 | | | | 962,364 | | Debt Securities of Financial Trusts | | | | Level 1 | | | 38,285 | | | | 89,151 | | Debt Securities of Financial Trusts | | | | Level 3 | | | 63,559 | | | | 271,523 | | Participation Certificates in Financial Trusts | | | | Level 1 | | | - | | | | 3,783 | | Participation Certificates in Financial Trusts | | | | Level 2 | | | 36,270 | | | | - | | Participation Certificates in Financial Trusts | | | | Level 3 | | | 310,281 | | | | 208,167 | | OTHER DEBT SECURITIES | | | | | | | 14,424,134 | | | | 4,182,537 | | Measured at Fair Value through OCI | | | | | | | 9,112,099 | | | | 142,450 | | Argentine | | | | | | | 9,112,099 | | | | 142,450 | | Government Securities | | | | | | | 9,112,099 | | | | 142,450 | | Government Bonds | | | | Level 1 | | | 9,074,420 | | | | 142,450 | | Autonomous City of Buenos Aires Bonds | | | | Level 1 | | | 54,625 | | | | - | | Allowance for Loan Losses | | | | | | | (16,946 | ) | | | - | | Measurement at Amortized Cost | | | | | | | 5,312,035 | | | | 4,040,087 | | Argentine | | | | | | | 5,310,204 | | | | 4,038,729 | | Government Securities | | | | | | | 222,588 | | | | 108,822 | | Government Bonds | | | | | | | 3,255 | | | | 34,590 | | Treasury Bills | | | | | | | 219,333 | | | | 74,232 | | Argentine Central Bank's Bills | | | | | | | - | | | | 166,258 | | Lebacs | | | | | | | - | | | | 166,258 | | Private Securities | | | | | | | 5,087,616 | | | | 3,763,649 | | Debt Securities | | | | | | | 485,923 | | | | 505,793 | | Debt Securities of Financial Trusts | | | | | | | 4,710,353 | | | | 3,303,242 | | Allowance for Loan Losses | | | | | | | (108,660 | ) | | | (45,386 | ) | Foreign | | | | | | | 1,831 | | | | 1,358 | | Government Securities | | | | | | | 1,831 | | | | 1,358 | | Treasury Bills | | | | | | | 1,831 | | | | 1,358 | | INVESTMENTS IN EQUITY INSTRUMENTS | | | | | | | 161,054 | | | | 111,923 | | Measured at Fair Value through OCI | | | | | | | 161,054 | | | | 111,923 | | Argentine | | | | | | | 132,839 | | | | 81,338 | | Shares | | | | Level 1 | | | 2,030 | | | | - | | Shares | | | | Level 3 | | | 130,809 | | | | 81,338 | | Foreign | | | | | | | 28,215 | | | | 30,585 | | Shares | | | | Level 1 | | | 24,765 | | | | 28,233 | | Shares | | | | Level 3 | | | 3,450 | | | | 2,352 | |
F-101
GRUPO FINANCIERO GALICIA S.A. SCHEDULE B – CLASSIFICATION OF LOANS AND OTHER FINANCING BY STATUS AND GUARANTEES RECEIVED FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated Item | | 12.31.18 | | | 12.31.17 | | COMMERCIAL LOAN PORTFOLIO | | | | | | | | | Normal | | | 146,937,906 | | | | 131,249,396 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | 7,695,607 | | | | 94,173 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 7,905,793 | | | | 7,961,114 | | With No Preferred Guarantees or Counter-guarantees | | | 131,336,506 | | | | 123,194,109 | | With Special Follow-Up – Under Observation | | | 1,800,930 | | | | 75,320 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 8,000 | | | | 3,789 | | With No Preferred Guarantees or Counter-guarantees | | | 1,792,930 | | | | 71,531 | | With Problems | | | 471,695 | | | | 230,740 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 439,072 | | | | 146,244 | | With No Preferred Guarantees or Counter-guarantees | | | 32,623 | | | | 84,496 | | High Risk of Insolvency | | | 207,358 | | | | 272,040 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 29,047 | | | | 82,349 | | With No Preferred Guarantees or Counter-guarantees | | | 178,311 | | | | 189,691 | | Uncollectible | | | 1,321 | | | | 27,928 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | - | | | | 12,352 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | - | | | | 3,073 | | With No Preferred Guarantees or Counter-guarantees | | | 1,321 | | | | 12,503 | | TOTAL COMMERCIAL LOAN PORTFOLIO | | | 149,419,210 | | | | 131,855,424 | |
| | | | | | | | | Item | | 12.31.20 | | | 12.31.19 | | COMMERCIAL PORTFOLIO | | | | | | | | | In Normal Situation | | | 194,116,454 | | | | 240,409,007 | | | | | | | | | | | With Preferred Guarantees and Counter-guarantees “A” | | | 2,832,229 | | | | 2,586,795 | | With Preferred Guarantees and Counter-guarantees “B” | | | 11,631,927 | | | | 17,595,836 | | Without Preferred Guarantees or Counter-guarantees | | | 179,652,298 | | | | 220,226,376 | | With Special Follow-Up – In Observation | | | 1,002,543 | | | | 550,699 | | | | | | | | | | | With Preferred Guarantees and Counter-guarantees “A” | | | 12,182 | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | 274,614 | | | | 442,319 | | Without Preferred Guarantees or Counter-guarantees | | | 715,747 | | | | 108,380 | | | | | | | | | | | With Problems | | | 446,425 | | | | — | | With Preferred Guarantees and Counter-guarantees “A” | | | 968 | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | 95,016 | | | | — | | Without Preferred Guarantees or Counter-guarantees | | | 350,441 | | | | — | | | | | | | | | | | High Insolvency Risk | | | 119,579 | | | | 3,628,103 | | With Preferred Guarantees and Counter-guarantees “A” | | | — | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | 115,817 | | | | 1,033,809 | | Without Preferred Guarantees or Counter-guarantees | | | 3,762 | | | | 2,594,294 | | Uncollectible | | | 121,483 | | | | 3,365,400 | | With Preferred Guarantees and Counter-guarantees “A” | | | — | | | | 59,478 | | With Preferred Guarantees and Counter-guarantees “B” | | | — | | | | 226,452 | | Without Preferred Guarantees or Counter-guarantees | | | 121,483 | | | | 3,079,470 | | | | | | | | | | | TOTAL COMMERCIAL PORTFOLIO | | | 195,806,484 | | | | 247,953,209 | | | | | | | | | | |
F-102
GRUPO FINANCIERO GALICIA S.A. SCHEDULE B – CLASSIFICATION OF LOANS AND OTHER FINANCING BY STATUS AND GUARANTEES RECEIVED (Continued) FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated Item | | 12.31.18 | | | 12.31.17 | | CONSUMER AND HOUSING LOAN PORTFOLIO | | | | | | | | | Normal Performance | | | 174,203,923 | | | | 179,634,460 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | 242,856 | | | | 19,944 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 14,207,918 | | | | 7,827,255 | | With No Preferred Guarantees or Counter-guarantees | | | 159,753,149 | | | | 171,787,261 | | Low Risk | | | 5,795,602 | | | | 4,251,152 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | 12,629 | | | | 1,788 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 152,754 | | | | 33,699 | | With No Preferred Guarantees or Counter-guarantees | | | 5,630,219 | | | | 4,215,665 | | Medium Risk | | | 4,323,373 | | | | 2,736,130 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | 2,265 | | | | - | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 108,582 | | | | 11,890 | | With No Preferred Guarantees or Counter-guarantees | | | 4,212,526 | | | | 2,724,240 | | High Risk | | | 4,430,239 | | | | 3,469,992 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | 11,616 | | | | 537 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 49,860 | | | | 8,967 | | With No Preferred Guarantees or Counter-guarantees | | | 4,368,763 | | | | 3,460,488 | | Uncollectible | | | 1,180,349 | | | | 1,516,405 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | 9,916 | | | | 114 | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 64,262 | | | | 32,150 | | With No Preferred Guarantees or Counter-guarantees | | | 1,106,171 | | | | 1,484,141 | | Uncollectible due to Technical Reasons | | | 6,507 | | | | 9,848 | | With No Preferred Guarantees or Counter-guarantees | | | 6,507 | | | | 9,848 | | TOTAL CONSUMER AND HOUSING LOAN PORTFOLIO | | | 189,939,993 | | | | 191,617,987 | | GRAND TOTAL(1) | | | 339,359,203 | | | | 323,473,411 | |
| | | | | | | | | Item | | 12.31.20 | | | 12.31.19 | | CONSUMER AND HOUSING PORTFOLIO | | | | | | | | | Normal Performance | | | 389,298,300 | | | | 281,906,272 | | | | | | | | | | | With Preferred Guarantees and Counter-guarantees “A” | | | 17,117,203 | | | | 226,081 | | With Preferred Guarantees and Counter-guarantees “B” | | | 21,076,265 | | | | 24,573,975 | | Without Preferred Guarantees or Counter-guarantees | | | 351,104,832 | | | | 257,106,216 | | Low Risk | | | 1,823,149 | | | | 8,833,908 | | | | | | | | | | | With Preferred Guarantees and Counter-guarantees “A” | | | 25,637 | | | | 20,777 | | With Preferred Guarantees and Counter-guarantees “B” | | | 81,510 | | | | 284,949 | | Without Preferred Guarantees or Counter-guarantees | | | 1,716,002 | | | | 8,528,182 | | Medium Risk | | | 999,797 | | | | 5,734,894 | | | | | | | | | | | With Preferred Guarantees and Counter-guarantees “A” | | | 71,652 | | | | 10,080 | | With Preferred Guarantees and Counter-guarantees “B” | | | 67,159 | | | | 221,257 | | Without Preferred Guarantees or Counter-guarantees | | | 860,986 | | | | 5,503,557 | | High Risk | | | 2,470,873 | | | | 8,767,203 | | | | | | | | | | | With Preferred Guarantees and Counter-guarantees “A” | | | 42,666 | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | 100,223 | | | | 237,792 | | Without Preferred Guarantees or Counter-guarantees | | | 2,327,984 | | | | 8,529,411 | | Uncollectible | | | 3,697,725 | | | | 7,093,842 | | | | | | | | | | | With Preferred Guarantees and Counter-guarantees “A” | | | 47,067 | | | | 16,245 | | With Preferred Guarantees and Counter-guarantees “B” | | | 180,545 | | | | 162,945 | | Without Preferred Guarantees or Counter-guarantees | | | 3,470,113 | | | | 6,914,652 | | | | | | | | | | | TOTAL CONSUMER AND HOUSING PORTFOLIO | | | 398,289,844 | | | | 312,336,119 | | | | | | | | | | | GRAND TOTAL(1) | | | 594,096,328 | | | | 560,289,328 | | | | | | | | | | |
(1) | Reconciliation between Schedule B and the Balance Sheet:Statement of Financial Position: |
| | 12.31.18 | | | 12.31.17 | | Loans and Other Financing | | | 282,710,068 | | | | 284,354,759 | | Other Debt Securities | | | 14,424,134 | | | | 4,182,537 | | Off-Balance Sheet Agreed Loans and Guarantees Granted | | | 32,554,655 | | | | 23,396,885 | | Plus Allowances for Loan Losses | | | 15,782,416 | | | | 9,280,621 | | Plus Adjustments under the IFRS that Are Not Computable for the Statement of Debtors' Status | | | 4,239,608 | | | | 3,204,876 | | Less Other Non-computable Items for the Statement of Debtors' Status | | | (1,222,633 | ) | | | (803,817 | ) | Less Government Securities Measured at Fair Value through OCI | | | (9,129,045 | ) | | | (142,450 | ) | Total | | | 339,359,203 | | | | 323,473,411 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Loans and Other Financing | | | 526,434,119 | | | | 488,144,152 | | Other Debt Securities | | | 23,070,377 | | | | 25,893,436 | | Agreed Credits and Guarantees Granted Accounted Off-Balance Sheet | | | 17,236,805 | | | | 28,614,207 | | Plus, Allowances for Uncollectible Accounts | | | 37,277,248 | | | | 35,433,465 | | Plus, Adjustments to the IFRS based accounting framework, not Computable for the Statement of Debtors’ Financial Position | | | 13,901,166 | | | | 8,948,415 | | Minus Others Non-computable for the Statement of Debtors’ Financial Position | | | (19,812,745 | ) | | | (5,075,794 | ) | Minus Government Securities Measured at Fair Value through OCI | | | (4,010,642 | ) | | | (21,668,553 | ) | | | | | | | | | | Total | | | 594,096,328 | | | | 560,289,328 | | | | | | | | | | |
F-103
GRUPO FINANCIERO GALICIA S.A. SCHEDULE C – CONCENTRATION OF LOANS AND OTHER FINANCING FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | LOANS | | | LOANS | | | | 12.31.18 | | | 12.31.17 | | | 12.31.20 | | 12.31.19 | | Number of Customers | | Outstanding Balance | | | % of Total Portfolio | | | Outstanding Balance | | | % of Total Portfolio | | | Outstanding
Balance | | | % of Total
Portfolio | | Outstanding
Balance | | | % of Total
Portfolio | | 10 Largest Customers | | | 38,508,659 | | | | 11 | | | | 22,478,641 | | | | 7 | | | | 54,335,287 | | | | 9 | % | | 59,930,266 | | | | 11 | % | 50 Following Largest Customers | | | 52,229,882 | | | | 15 | | | | 38,718,987 | | | | 12 | | | 100 Following Largest Customers | | | 22,627,832 | | | | 7 | | | | 17,977,128 | | | | 6 | | | Remaining Customers | | | 225,992,830 | | | | 67 | | | | 244,298,655 | | | | 75 | | | next 50 Largest Customers | | | | 64,276,214 | | | | 11 | % | | 89,520,651 | | | | 16 | % | next 100 Largest Customers | | | | 31,622,602 | | | | 5 | % | | 42,166,421 | | | | 8 | % | Rest of Customers | | | | 443,862,225 | | | | 75 | % | | 368,671,990 | | | | 65 | % | | | | | | | | | | | | | | | TOTAL(1) | | | 339,359,203 | | | | 100 | | | | 323,473,411 | | | | 100 | | | | 594,096,328 | | | | 100 | % | | | 560,289,328 | | | | 100 | % | | | | | | | | | | | | | | |
(1) | Reconciliation between Schedule C and the Balance Sheet:Statement of Financial Position: |
| | 12.31.18 | | | 12.31.17 | | Loans and Other Financing | | | 282,710,068 | | | | 284,354,759 | | Other Debt Securities | | | 14,424,134 | | | | 4,182,537 | | Off-Balance Sheet Agreed Loans and Guarantees Granted | | | 32,554,655 | | | | 23,396,885 | | Plus Allowances for Loan Losses | | | 15,782,416 | | | | 9,280,621 | | Plus Adjustments under the IFRS that Are Not Computable for the Statement of Debtors' Status | | | 4,239,608 | | | | 3,204,876 | | Less Other Non-computable Items for the Statement of Debtors' Status | | | (1,222,633 | ) | | | (803,817 | ) | Less Government Securities Measured at Fair Value through OCI | | | (9,129,045 | ) | | | (142,450 | ) | Total | | | 339,359,203 | | | | 323,473,411 | |
| | | | | | | | | | | | 12.31.20 | | | 12.31.19 | | Loans and Other Financing | | | 526,434,119 | | | | 488,144,152 | | Other Debt Securities | | | 23,070,377 | | | | 25,893,436 | | Agreed Credits and Guarantees Granted Accounted Off-Balance Sheet | | | 17,236,805 | | | | 28,614,207 | | Plus, Allowances for Uncollectible Accounts | | | 37,277,248 | | | | 35,433,465 | | Plus, Adjustments to the IFRS based accounting framework, not Computable for the Statement of Debtors’ Financial Position | | | 13,901,166 | | | | 8,948,415 | | Minus Others Non-computable for the Statement of Debtors’ Financial Position | | | (19,812,745 | ) | | | (5,075,794 | ) | Minus Government Securities Measured at Fair Value through OCI | | | (4,010,642 | ) | | | (21,668,553 | ) | | | | | | | | | | Total | | | 594,096,328 | | | | 560,289,328 | | | | | | | | | | |
F-104
GRUPO FINANCIERO GALICIA S.A. SCHEDULE D – BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING FOR THE FISCAL YEAR COMMENCED JANUARY 1, 20182020 AND ENDED DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated The following table shows contractual cash flows, including interest and other expenses to be accrued until contractual maturity. | | | | | | | Terms Remaining to Maturity | | | | | | | | | Terms Remaining to Maturity | | | | Item | | Past-due Loan Portfolio | | | 1 Month | | | 3 Months | | | 6 Months | | | 12 Months | | | 24 Months | | | Over 24 Months | | | Total | | | Past-due
Loan
Portfolio | | 1 Month | | 3 Months | | 6 Months | | 12 Months | | 24 Months | | Over 24
Months | | Total | | Non-financial Public Sector | | | - | | | | 13,898 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13,898 | | | | — | | | 966,210 | | | | — | | | | — | | | | — | | | | — | | | | — | | | 966,210 | | Financial Sector | | | - | | | | 5,268,328 | | | | 416,764 | | | | 2,060,109 | | | | 565,261 | | | | 1,262,095 | | | | 1,353,638 | | | | 10,926,195 | | | | — | | | 11,146,614 | | | 2,134,838 | | | 873,292 | | | 1,101,873 | | | 699,566 | | | 134,539 | | | 16,090,722 | | Non-financial Private Sector and Residents Abroad | | | 7,463,062 | | | | 135,460,826 | | | | 53,723,309 | | | | 44,579,000 | | | | 55,151,796 | | | | 27,618,114 | | | | 38,922,796 | | | | 362,918,903 | | | 12,882,538 | | | 256,842,146 | | | 116,789,460 | | | 127,717,254 | | | 147,475,699 | | | 68,383,858 | | | 64,820,792 | | | 794,911,747 | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 7,463,062 | | | | 140,743,052 | | | | 54,140,073 | | | | 46,639,109 | | | | 55,717,057 | | | | 28,880,209 | | | | 40,276,434 | | | | 373,858,996 | | | | 12,882,538 | | | | 268,954,970 | | | | 118,924,298 | | | | 128,590,546 | | | | 148,577,572 | | | | 69,083,424 | | | | 64,955,331 | | | | 811,968,679 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F-105
GRUPO FINANCIERO GALICIA S.A. SCHEDULE E – DETAIL OF INTERESTS IN OTHER COMPANIES FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2020 AND ENDED DECEMBER 31, 2020 Figures Stated in Thousands of Pesos (Ps.), Except as Otherwise Stated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares | | | | | | | | | | | | Data from the last financial statement | | Denomination | | Class | | | Nominal
Value per
Share | | | Votes per
Share | | | Quantity | | | 12.31.20 | | | 12.31.19 | | | Principal
Line of
Business | | | Year-
end
Date | | | Capital | | | Shareholders´
Equity | | | Net
Income
/ (Loss) | | In complementary service companies | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Associates and Joint Ventures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Argentine | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Play Digital S.A. | |
| Ords.
Esc. |
| | | 1 | | | | 1 | | | | 186,496,457 | | | | 89,142 | | | | — | | | | Services | | | | 31.12.20 | | | | 1,197,221 | | | | 797,107 | | | | (571,938 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | | | | | | | | | | | | | | | | | 89,142 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
GRUPO FINANCIERO GALICIA S.A. SCHEDULE F – CHANGES IN PROPERTY, PLANT AND EQUIPMENT FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 ANDYEARS ENDED DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | Net Book Value as of | | Item | | Value at
Beginning
of Fiscal
Year | | | Estimated
Useful
Life in
Years | | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Transfers | | | Disposals | | | For the
Fiscal
Year | | | At Fiscal
Year-end | | | 12.31.20 | | | 12.31.19 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate | | | 31,612,897 | | | | 50 | | | | 185,927 | | | | (11,314 | ) | | | 350,294 | | | | (2,684,207 | ) | | | (15 | ) | | | 11,314 | | | | (609,178 | ) | | | (3,282,086 | ) | | | 28,855,718 | | | | 28,928,690 | | Furniture and Facilities | | | 6,350,571 | | | | 10 | | | | 126,464 | | | | (21,621 | ) | | | 831,813 | | | | (3,943,625 | ) | | | — | | | | 19,319 | | | | (520,739 | ) | | | (4,445,045 | ) | | | 2,842,182 | | | | 2,406,946 | | Machines and Equipment | | | 19,548,282 | | | | 3 y 5 | | | | 3,093,145 | | | | (4,828,173 | ) | | | 109,039 | | | | (14,061,784 | ) | | | — | | | | 4,659,889 | | | | (2,304,709 | ) | | | (11,706,604 | ) | | | 6,215,689 | | | | 5,486,498 | | Vehicles | | | 237,271 | | | | 5 | | | | 55,339 | | | | (12,698 | ) | | | — | | | | (100,553 | ) | | | — | | | | 8,753 | | | | (47,320 | ) | | | (139,120 | ) | | | 140,792 | | | | 136,718 | | Right of use of real property | | | 6,324,636 | | | | — | | | | 629,385 | | | | (289,598 | ) | | | 31,405 | | | | (1,313,102 | ) | | | (31,405 | ) | | | 13,573 | | | | (1,312,301 | ) | | | (2,643,235 | ) | | | 4,052,593 | | | | 5,011,534 | | Personal Property Acquired for Finance Leases | | | 92,429 | | | | 5 | | | | — | | | | (92,429 | ) | | | — | | | | (92,429 | ) | | | — | | | | 92,429 | | | | — | | | | — | | | | — | | | | — | | Sundry | | | 2,099,672 | | | | 5 y 10 | | | | 14,432 | | | | (178,120 | ) | | | 694,777 | | | | (1,159,447 | ) | | | — | | | | 129,368 | | | | (366,470 | ) | | | (1,396,549 | ) | | | 1,234,212 | | | | 940,225 | | Work in Progress | | | 1,966,749 | | | | — | | | | 240,422 | | | | (16,656 | ) | | | (1,800,281 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 390,234 | | | | 1,966,749 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 68,232,507 | | | | | | | | 4,345,114 | | | | (5,450,609 | ) | | | 217,047 | | | | (23,355,147 | ) | | | (31,420 | ) | | | 4,934,645 | | | | (5,160,717 | ) | | | (23,612,639 | ) | | | 43,731,420 | | | | 44,877,360 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | Net Book Value as of | | Item | | Value at
Beginning
of Fiscal
Year | | | Estimated
Useful
Life in
Years | | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Transfers | | | Disposals | | | For the
Fiscal
Year | | | At Fiscal
Year-end | | | 12.31.19 | | | 12.31.18 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate | | | 30,712,569 | | | | 50 | | | | 1,546,936 | | | | (817,265 | ) | | | 170,657 | | | | (2,862,846 | ) | | | — | | | | 781,432 | | | | (602,793 | ) | | | (2,684,207 | ) | | | 28,928,690 | | | | 27,849,723 | | Furniture and Facilities | | | 5,871,592 | | | | 10 | | | | 393,878 | | | | (1,510,499 | ) | | | 1,595,600 | | | | (3,868,904 | ) | | | — | | | | 372,920 | | | | (447,641 | ) | | | (3,943,625 | ) | | | 2,406,946 | | | | 2,002,688 | | Machines and Equipment | | | 18,796,916 | | | | 3 y 5 | | | | 1,801,898 | | | | (1,050,544 | ) | | | 12 | | | | (12,542,287 | ) | | | — | | | | 710,092 | | | | (2,229,589 | ) | | | (14,061,784 | ) | | | 5,486,498 | | | | 6,254,629 | | Vehicles | | | 230,192 | | | | 5 | | | | 87,378 | | | | (80,299 | ) | | | — | | | | (105,504 | ) | | | — | | | | 42,379 | | | | (37,428 | ) | | | (100,553 | ) | | | 136,718 | | | | 124,688 | | Right of use of real property | | | — | | | | — | | | | 6,324,636 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,313,102 | ) | | | (1,313,102 | ) | | | 5,011,534 | | | | — | | Personal Property Acquired for Finance Leases | | | 92,429 | | | | 5 | | | | — | | | | — | | | | — | | | | (92,429 | ) | | | — | | | | — | | | | — | | | | (92,429 | ) | | | — | | | | — | | Sundry | | | 1,968,824 | | | | 5 y 10 | | | | 147,231 | | | | (309,826 | ) | | | 293,443 | | | | (825,968 | ) | | | — | | | | — | | | | (333,479 | ) | | | (1,159,447 | ) | | | 940,225 | | | | 1,142,856 | | Work in Progress | | | 3,176,154 | | | | — | | | | 850,307 | | | | — | | | | (2,059,712 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,966,749 | | | | 3,176,154 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 60,848,676 | | | | | | | | 11,152,264 | | | | (3,768,433 | ) | | | — | | | | (20,297,938 | ) | | | — | | | | 1,906,823 | | | | (4,964,032 | ) | | | (23,355,147 | ) | | | 44,877,360 | | | | 40,550,738 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Depreciation | | | Net Book Value as of | | Item | | Value at Beginning of Fiscal Year | | | Estimated Useful Life in Years | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Disposals | | | For the Fiscal Year | | | At Fiscal Year-end | | | 12.31.18 | | | 12.31.17 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate | | | 14,753,741 | | | 50 | | | 19,119 | | | | (52,547 | ) | | | 176,501 | | | | (1,415,996 | ) | | | 40,074 | | | | (222,920 | ) | | | (1,598,842 | ) | | | 13,297,972 | | | | 13,337,745 | | Furniture and Fixtures | | | 1,254,157 | | | 10 | | | 244,713 | | | | (49,002 | ) | | | 216,453 | | | | (623,555 | ) | | | 35,567 | | | | (122,069 | ) | | | (710,057 | ) | | | 956,264 | | | | 630,602 | | Machines and Equipment | | | 4,907,977 | | | 3 y 5 | | | 1,103,043 | | | | (185,473 | ) | | | (111,495 | ) | | | (2,233,531 | ) | | | 153,010 | | | | (647,007 | ) | | | (2,727,528 | ) | | | 2,986,524 | | | | 2,674,446 | | Vehicles | | | 67,031 | | | 5 | | | 31,468 | | | | (7,521 | ) | | | 440 | | | | (24,740 | ) | | | 3,979 | | | | (11,119 | ) | | | (31,880 | ) | | | 59,538 | | | | 42,291 | | Personal Property Acquired for Financial Leases | | | 15,100 | | | 5 | | | - | | | | - | | | | (440 | ) | | | (14,858 | ) | | | 198 | | | | - | | | | (14,660 | ) | | | - | | | | 242 | | Miscellaneous | | | 660,824 | | | 5 y 10 | | | 5,884 | | | | (3,084 | ) | | | 178,700 | | | | (191,034 | ) | | | 837 | | | | (106,423 | ) | | | (296,620 | ) | | | 545,704 | | | | 469,790 | | Work in Progress | | | 1,053,899 | | | - | | | 932,965 | | | | (32,244 | ) | | | (438,037 | ) | | | - | | | | - | | | | - | | | | - | | | | 1,516,583 | | | | 1,053,899 | | Total | | | 22,712,729 | | | | | | 2,337,192 | | | | (329,871 | ) | | | 22,122 | | | | (4,503,714 | ) | | | 233,665 | | | | (1,109,538 | ) | | | (5,379,587 | ) | | | 19,362,585 | | | | 18,209,015 | |
| | | Depreciation | | | Net Book Value as of | | Item | | Value at Beginning of Fiscal Year | | | Estimated Useful Life in Years | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Disposals | | | For the Fiscal Year | | | At Fiscal Year-end | | | 12.31.17 | | | 01.01.17 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate | | | 13,297,545 | | | 50 | | | 107,671 | | | | (1,037,503 | ) | | | 2,386,028 | | | | (1,620,243 | ) | | | 463,458 | | | | (259,211 | ) | | | (1,415,996 | ) | | | 13,337,745 | | | | 11,677,302 | | Furniture and Fixtures | | | 1,147,022 | | | 10 | | | 181,703 | | | | (146,090 | ) | | | 71,522 | | | | (666,098 | ) | | | 136,995 | | | | (94,452 | ) | | | (623,555 | ) | | | 630,602 | | | | 480,924 | | Machines and Equipment | | | 3,862,680 | | | 3 y 5 | | | 1,202,178 | | | | (293,867 | ) | | | 136,986 | | | | (1,959,086 | ) | | | 284,422 | | | | (558,867 | ) | | | (2,233,531 | ) | | | 2,674,446 | | | | 1,903,594 | | Vehicles | | | 55,971 | | | 5 | | | 22,875 | | | | (12,053 | ) | | | 238 | | | | (21,633 | ) | | | 6,952 | | | | (10,059 | ) | | | (24,740 | ) | | | 42,291 | | | | 34,338 | | Personal Property Acquired for Financial Leases | | | 16,235 | | | 5 | | | - | | | | (897 | ) | | | (238 | ) | | | (15,470 | ) | | | 701 | | | | (89 | ) | | | (14,858 | ) | | | 242 | | | | 765 | | Miscellaneous | | | 409,734 | | | 5 y 10 | | | 47,659 | | | | (3,381 | ) | | | 206,812 | | | | (79,409 | ) | | | - | | | | (111,625 | ) | | | (191,034 | ) | | | 469,790 | | | | 330,325 | | Work in Progress | | | 1,921,112 | | | - | | | 1,159,461 | | | | (246,338 | ) | | | (1,780,336 | ) | | | - | | | | - | | | | - | | | | - | | | | 1,053,899 | | | | 1,921,112 | | Total | | | 20,710,299 | | | | | | 2,721,547 | | | | (1,740,129 | ) | | | 1,021,012 | | | | (4,361,939 | ) | | | 892,528 | | | | (1,034,303 | ) | | | (4,503,714 | ) | | | 18,209,015 | | | | 16,348,360 | |
F-106
GRUPO FINANCIERO GALICIA S.A. SCHEDULE F – CHANGES IN INVESTMENT PROPERTIES FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 ANDYEARS ENDED DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated Changes in investment properties recorded in the "Other“Other Non-financial Assets"Assets” account are detailed below. | | | | | | | | | | | | | | | | | | | | | Depreciation | | | Net Book Value as of | | | | Depreciation | | Net Book Value as of | | Item | | Value at Beginning of Fiscal Year | | | Estimated Useful Life in Years | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Disposals | | | For the Fiscal Year | | | At Fiscal Year-end | | | 12.31.18 | | | 12.31.17 | | | Value at
Beginning
of Fiscal
Year | | Estimated
Useful
Life in
Years | | Additions | | Disposals | | Transfers | | Accumulated | | Transfers | | Disposals | | For
the
Fiscal
Year | | At Fiscal
Year-end | | 12.31.20 | | 12.31.19 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate Leased | | | 306,758 | | | 50 | | | 4 | | | | - | | | | 607 | | | | (10,340 | ) | | | - | | | | (6,135 | ) | | | (16,475 | ) | | | 290,894 | | | | 296,418 | | | 643,718 | | | 50 | | | | — | | | | — | | | | — | | | (50,428 | ) | | | — | | | | — | | | (12,623 | ) | | (63,051 | ) | | 580,667 | | | 593,290 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 306,758 | | | | | | 4 | | | | - | | | | 607 | | | | (10,340 | ) | | | - | | | | (6,135 | ) | | | (16,475 | ) | | | 290,894 | | | | 296,418 | | | | 643,718 | | | | | | — | | | | — | | | | — | | | | (50,428 | ) | | | — | | | | — | | | | (12,623 | ) | | | (63,051 | ) | | | 580,667 | | | | 593,290 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | Net Book Value as
of | | Item | | | Value at
Beginning
of Fiscal
Year | | Estimated
Useful
Life in
Years | | Additions | | Disposals | | Transfers | | Accumulated | | Transfers | | Disposals | | For
the
Fiscal
Year | | At Fiscal
Year-end | | 12.31.19 | | 12.31.18 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate Leased | | | 643,718 | | | 50 | | | | — | | | | — | | | | — | | | (34,503 | ) | | | — | | | | — | | | (15,925 | ) | | (50,428 | ) | | 593,290 | | | 609,215 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 643,718 | | | | | | — | | | | — | | | | — | | | | (34,503 | ) | | | — | | | | — | | | | (15,925 | ) | | | (50,428 | ) | | | 593,290 | | | | 609,215 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Depreciation | | | Net Book Value as of | | Item | | Value at Beginning of Fiscal Year | | | Estimated Useful Life in Years | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Disposals | | | For the Fiscal Year | | | At Fiscal Year-end | | | 12.31.17 | | | 01.01.17 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate Leased | | | 306,658 | | | 50 | | | 100 | | | | - | | | | - | | | | (4,205 | ) | | | - | | | | (6,135 | ) | | | (10,340 | ) | | | 296,418 | | | | 302,453 | | Total | | | 306,658 | | | | | | 100 | | | | - | | | | - | | | | (4,205 | ) | | | - | | | | (6,135 | ) | | | (10,340 | ) | | | 296,418 | | | | 302,453 | |
F-107
GRUPO FINANCIERO GALICIA S.A. SCHEDULE G – CHANGES IN INTANGIBLE ASSETS FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 ANDYEARS ENDED DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | | | | | | | | | | | Amortization | | | Net Book Value as of | | | | Amortization | | Net Book Value as of | | Item | | Value at Beginning of Year | | | Estimated Useful Life in Years | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Disposals | | | For the Fiscal Year | | | Transfers | | | At Fiscal Year-end | | | 12.31.18 | | | 12.31.17 | | | Value at
Beginning
of Year | | Estimated
Useful
Life
in Years | | Additions | | Disposals | | Transfers | | Accumulated | | Disposals | | For the
Fiscal
Year | | Transfers | | At Fiscal
Year-end | | 12.31.20 | | 12.31.19 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Licenses | | | 2,396,683 | | | 5 | | | 902,855 | | | | (274,782 | ) | | | 165,582 | | | | (1,532,497 | ) | | | 269,303 | | | | (443,768 | ) | | | - | | | | (1,706,962 | ) | | | 1,483,376 | | | | 864,186 | | | 9,207,786 | | | 5 | | | 1,538,775 | | | (883,326 | ) | | 285,602 | | | (4,876,308 | ) | | 880,785 | | | (1,775,717 | ) | | | — | | | (5,771,240 | ) | | 4,377,597 | | | 4,331,478 | | Intangible Assets Acquired for Financial Lease | | | 48,555 | | | 5 | | | - | | | | - | | | | - | | | | (46,956 | ) | | | - | | | | (1,599 | ) | | | - | | | | (48,555 | ) | | | - | | | | 1,599 | | | Intangible Assets Acquired through Finance Leases | | | | — | | | 5 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Intangible Assets | | | 2,709,892 | | | 5 | | | 447,905 | | | | 1,153 | | | | 1,884,800 | | | | (1,850,763 | ) | | | (1,153 | ) | | | (88,063 | ) | | | - | | | | (1,939,979 | ) | | | 3,103,771 | | | | 859,129 | | | 9,192,848 | | | 5 | | | 1,869,450 | | | (65,848 | ) | | 1,954,963 | | | (1,690,018 | ) | | 43,725 | | | (1,213,896 | ) | | | — | | | (2,860,189 | ) | | 10,091,224 | | | 7,502,830 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 5,155,130 | | | | | | 1,350,760 | | | | (273,629 | ) | | | 2,050,382 | | | | (3,430,216 | ) | | | 268,150 | | | | (533,430 | ) | | | - | | | | (3,695,496 | ) | | | 4,587,147 | | | | 1,724,914 | | | | 18,400,634 | | | | | | 3,408,225 | | | | (949,174 | ) | | | 2,240,565 | | | | (6,566,326 | ) | | | 924,510 | | | | (2,989,613 | ) | | | — | | | | (8,631,429 | ) | | | 14,468,821 | | | | 11,834,308 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization | | Net Book Value as of | | Item | | | Value at
Beginning
of Year | | Estimated
Useful
Life
in Years | | Additions | | Disposals | | Transfers | | Accumulated | | Disposals | | For the
Fiscal
Year | | Transfers | | At Fiscal
Year-end | | 12.31.19 | | 12.31.18 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Licenses | | | 7,725,431 | | | 5 | | | 2,428,246 | | | (945,891 | ) | | | — | | | (4,660,546 | ) | | 1,066,224 | | | (1,281,986 | ) | | | — | | | (4,876,308 | ) | | 4,331,478 | | | 3,064,885 | | Intangible Assets Acquired through Finance Leases | | | 247,205 | | | 5 | | | | — | | | (247,205 | ) | | | — | | | (247,205 | ) | | 247,205 | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Intangible Assets | | | 10,791,075 | | | 5 | | | 3,495,284 | | | (5,093,511 | ) | | | — | | | (4,249,172 | ) | | 3,186,581 | | | (627,427 | ) | | | — | | | (1,690,018 | ) | | 7,502,830 | | | 6,541,903 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 18,763,711 | | | | | | 5,923,530 | | | | (6,286,607 | ) | | | — | | | | (9,156,923 | ) | | | 4,500,010 | | | | (1,909,413 | ) | | | — | | | | (6,566,326 | ) | | | 11,834,308 | | | | 9,606,788 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | Amortization | | | Net Book Value as of | | Item | | Value at Beginning of Year | | | Estimated Useful Life in Years | | | Additions | | | Disposals | | | Transfers | | | Accumulated | | | Disposals | | | For the Fiscal Year | | | Transfers | | | At Fiscal Year-end | | | 12.31.17 | | | 01.01.17 | | Measurement at Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Licenses | | | 1,975,897 | | | | 5 | | | | 459,933 | | | | (8,776 | ) | | | (30,371 | ) | | | (1,195,405 | ) | | | 5,320 | | | | (342,412 | ) | | | - | | | | (1,532,497 | ) | | | 864,186 | | | | 746,274 | | Intangible Assets Acquired for Financial Lease | | | 48,555 | | | | 5 | | | | - | | | | - | | | | - | | | | (42,599 | ) | | | - | | | | (4,357 | ) | | | - | | | | (46,956 | ) | | | 1,599 | | | | 5,957 | | Other Intangible Assets | | | 2,601,004 | | | | 5 | | | | 78,517 | | | | - | | | | 30,371 | | | | (1,726,658 | ) | | | - | | | | (48,116 | ) | | | (75,989 | ) | | | (1,850,763 | ) | | | 859,129 | | | | 908,562 | | Total | | | 4,625,456 | | | | | | | | 538,450 | | | | (8,776 | ) | | | - | | | | (2,964,662 | ) | | | 5,320 | | | | (394,885 | ) | | | (75,989 | ) | | | (3,430,216 | ) | | | 1,724,914 | | | | 1,660,793 | |
F-108
GRUPO FINANCIERO GALICIA S.A. SCHEDULE H – CONCENTRATION OF DEPOSITS FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | DEPOSITS | | | DEPOSITS ACCOUNTS | | | | 12.31.18 | | | 12.31.17 | | | 12.31.20 | | 12.31.19 | | Number of Customers | | Outstanding Balance | | | % of Total Portfolio | | | Outstanding Balance | | | % of Total Portfolio | | | Debt Balance | | | % on Total
Portfolio | | Debt Balance | | | % on Total
Portfolio | | 10 Largest Customers | | | 26,929,214 | | | | 7.0 | % | | | 15,086,593 | | | | 5.0 | % | | | 83,211,045 | | | | 12 | % | | 37,985,581 | | | | 7 | % | 50 Following Largest Customers | | | 21,892,330 | | | | 6.0 | % | | | 16,602,732 | | | | 6.0 | % | | 100 Following Largest Customers | | | 15,684,961 | | | | 4.0 | % | | | 10,232,826 | | | | 3.0 | % | | Remaining Customers | | | 295,590,770 | | | | 83.0 | % | | | 254,445,205 | | | | 86.0 | % | | next 50 Largest Customers | | | | 73,182,821 | | | | 11 | % | | 46,224,244 | | | | 9 | % | next 100 Largest Customers | | | | 34,377,015 | | | | 5 | % | | 25,050,997 | | | | 4 | % | Rest of Customers | | | | 485,624,854 | | | | 72 | % | | 426,772,874 | | | | 80 | % | | | | | | | | | | | | | | | TOTAL | | | 360,097,275 | | | | 100.0 | % | | | 296,367,356 | | | | 100.0 | % | | | 676,395,735 | | | | 100 | % | | | 536,033,696 | | | | 100 | % | | | | | | | | | | | | | | |
F-109
GRUPO FINANCIERO GALICIA S.A. SCHEDULE I – BREAKDOWN OF FINANCIAL LIABILITIES BY REMAINING CONTRACTUAL TERM FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated The following table shows the decline in contractual cash flows, including interest and other expenses to be accrued until undiscounted contractual maturity. | | | Terms Remaining to Maturity | | | | | | | Terms until Maturity | | | | | Item | | 1 Month | | | 3 Months | | | 6 Months | | | 12 Months | | | 24 Months | | | Over 24 Months | | | Total | | | 1 Month | | | 3 Months | | | 6 Months | | | 12 Months | | | 24 Months | | | More than
24 Months | | | Total | | Deposits (1) | | | 334,200,194 | | | | 24,450,601 | | | | 5,134,588 | | | | 3,188,378 | | | | 48,018 | | | | 28,759 | | | | 367,050,538 | | | | 636,596,852 | | | | 41,458,685 | | | | 3,548,892 | | | | 2,563,927 | | | | 79,300 | | | | 43,104 | | | | 684,290,760 | | Non-financial Public Sector | | | 8,339,749 | | | | 234,368 | | | | 31,446 | | | | - | | | | - | | | | - | | | | 8,605,563 | | | | 19,851,114 | | | | 1,591,515 | | | | 221,268 | | | | — | | | | — | | | | — | | | | 21,663,897 | | Financial Sector | | | 711,737 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 711,737 | | | | 1,947,127 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,947,127 | | Non-financial Private Sector and Residents Abroad | | | 325,148,708 | | | | 24,216,233 | | | | 5,103,142 | | | | 3,188,378 | | | | 48,018 | | | | 28,759 | | | | 357,733,238 | | | | 614,798,611 | | | | 39,867,170 | | | | 3,327,624 | | | | 2,563,927 | | | | 79,300 | | | | 43,104 | | | | 660,679,736 | | Liabilities Measured at fair value through profit or loss | | | 2,144,664 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,144,664 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Derivative Financial Instruments | | | 1,835,789 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,835,789 | | | | 57,450 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 57,450 | | Repo Transactions | | | 1,948,559 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,948,559 | | | Repurchase Transactions | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Liabilities | | | 63,065,272 | | | | 13,610 | | | | 13,462 | | | | 33,365 | | | | 54,096 | | | | 99,229 | | | | 63,279,034 | | | | 93,159,254 | | | | 310,057 | | | | 439,288 | | | | 822,739 | | | | 1,241,160 | | | | 3,915,802 | | | | 99,888,300 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 7,013,910 | | | | 4,277,657 | | | | 3,871,426 | | | | 3,181,270 | | | | 3,075,806 | | | | 4,452,217 | | | | 25,872,286 | | | Debt Instruments Issued | | | 1,301,031 | | | | 3,595,675 | | | | 4,061,549 | | | | 13,262,785 | | | | 18,941,709 | | | | 8,545,150 | | | | 49,707,899 | | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | | 2,607,987 | | | | 566,135 | | | | 2,724,761 | | | | 6,137,695 | | | | 2,209,308 | | | | 1,527,556 | | | | 15,773,442 | | Debt Securities | | | | 736,438 | | | | 1,142,112 | | | | 5,014,445 | | | | 8,055,337 | | | | 3,440,751 | | | | 2,908,502 | | | | 21,297,585 | | Subordinated Debt Securities | | | 384,557 | | | | - | | | | - | | | | 384,557 | | | | 769,114 | | | | 14,031,650 | | | | 15,569,878 | | | | 855,858 | | | | — | | | | — | | | | 855,858 | | | | 1,711,717 | | | | 27,719,442 | | | | 31,142,875 | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 411,893,976 | | | | 32,337,543 | | | | 13,081,025 | | | | 20,050,355 | | | | 22,888,743 | | | | 27,157,005 | | | | 527,408,647 | | | | 734,013,839 | | | | 43,476,989 | | | | 11,727,386 | | | | 18,435,556 | | | | 8,682,236 | | | | 36,114,406 | | | | 852,450,412 | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Maturities in the first month include: |
| • | | Checking Accounts Ps.64,981,553. |
| • | | Savings Accounts Ps.180,314,499. |
| • | | Time Deposit Ps.110,225,705. |
| • | | Other Deposits Ps.2,939,696. |
| • | | Interest to be Accrued Ps.414. |
- Checking Accounts $40,597,351
- Savings Accounts $198,745,046
- Time Deposit $92,624,930
- Other Deposits $2,214,249
- Interest to be Accrued $18,618
F-110
GRUPO FINANCIERO GALICIA S.A. SCHEDULE J – CHANGES IN PROVISIONS FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 ANDYEARS ENDED DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | Decreases | | | | | | | Balances as of | | | Balances as of | | | | | | | | | Decreases | | | | Balances as of | | Item | | Balances at Beginning of Fiscal Year | | | Increases | | | Reversals | | | Uses | | | Inflation Effect | | | 12.31.18 | | | 12.31.17 | | | Balances at
the Beginning
of the Year | | | Increase | | | Reversals | | Charge offs | | Inflation
Effect | | 12.31.20 | | | 12.31.19 | | INCLUDED IN LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FROM LIABILITIES | | | | | | | | | | | | | | | | For Administrative, Disciplinary and Criminal Penalties | | | 7,357 | | | | 459 | | | | - | | | | - | | | | (2,510 | ) | | | 5,306 | | | | 7,357 | | | | 7,224 | | | | 517 | | | | — | | | (517 | ) | | (1,918 | ) | | 5,306 | | | | 7,224 | | Provisions for Termination Benefits | | | 109,295 | | | | 43,130 | | | | - | | | | (11,532 | ) | | | (53,967 | ) | | | 86,926 | | | | 109,295 | | | For Termination Benefits | | | | 233,287 | | | | 68,372 | | | | — | | | (14,880 | ) | | (65,955 | ) | | 220,824 | | | | 233,287 | | Others | | | 780,608 | | | | 1,186,137 | | | | (26,426 | ) | | | (103,990 | ) | | | (479,238 | ) | | | 1,357,091 | | | | 780,608 | | | | 3,499,223 | | | | 2,895,867 | | | | (1,694 | ) | | (1,699,888 | ) | | (1,143,341 | ) | | 3,550,167 | | | | 3,499,223 | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL PROVISIONS | | | 897,260 | | | | 1,229,726 | | | | (26,426 | ) | | | (115,522 | ) | | | (535,715 | ) | | | 1,449,323 | | | | 897,260 | | | | 3,739,734 | | | | 2,964,756 | | | | (1,694 | ) | | | (1,715,285 | ) | | | (1,211,214 | ) | | | 3,776,297 | | | | 3,739,734 | | | | | | | | | | | | | | | | | | | | | | | | |
F-111
GRUPO FINANCIERO GALICIA S.A. SCHEDULE K – CAPITAL STOCK STRUCTURE FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | Shares | Shares | | | Capital Stock | | Shares | | | Capital Stock | | | | | | | | | | | | | | | | Issued | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issued | | | | | | | | | | | | | | Class | | Amount | | | Face Value per Share(*) | | | Votes per Share | | | Outstanding | | | Treasury shares | | | Pending Issuance or Distribution | | | Allocated | | | Paid-in | | | Not Paid-in | | | Quantity | | | Nominal Value
per
Share(*) | | | Votes per Share | | | Outstanding | | | Portfolio shares | | | Pending
Issuance or
Distribution | | | Allocated | | | Paid-in | | | Not Paid-in | | Class “A” | | | 281,221,650 | | | | 1 | | | | 5 | | | | 281,222 | | | | - | | | | - | | | | - | | | | 281,222 | | | | - | | | | 281,221,650 | | | | 1 | | | | 5 | | | | 281,222 | | | | — | | | | — | | | | — | | | | 281,222 | | | | — | | Class “B” | | | 1,145,542,947 | | | | 1 | | | | 1 | | | | 1,145,543 | | | | - | | | | - | | | | - | | | | 1,145,543 | | | | - | | | | 1,193,470,441 | | | | 1 | | | | 1 | | | | 1,145,543 | | | | — | | | | 47,927 | | | | — | | | | 1,193,470 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 1,426,764,597 | | | | | | | | | | | | 1,426,765 | | | | - | | | | - | | | | - | | | | 1,426,765 | | | | - | | | | 1,474,692,091 | | | | | | | | 1,426,765 | | | | — | | | | 47,927 | | | | — | | | | 1,474,692 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(*) | Face value per share stated in Pesos. |
F-112
GRUPO FINANCIERO GALICIA S.A. SCHEDULE L – FOREIGN CURRENCY BALANCES FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | 12.31.18 | | | | | | | | | | | | | 12.31.20 | | | | | Items | | Head Office and Argentine Branches | | | 12.31.18 | | | Dollar | | | Euro | | | Real | | | Others | | | 12.31.17 | | | Headquarters
and Branches
in the country | | | 12.31.20 | | | Dollar | | | Euro | | | Real | | | Others | | | 12.31.19 | | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 95,156,786 | | | | 95,156,786 | | | | 93,228,764 | | | | 1,784,180 | | | | 29,919 | | | | 113,923 | | | | 55,022,288 | | | | 154,833,168 | | | | 154,833,168 | | | | 150,152,951 | | | | 4,294,070 | | | | 34,040 | | | | 352,107 | | | | 123,758,431 | | Debt Securities at Fair Value through Profit or Loss | | | 1,459,314 | | | | 1,459,314 | | | | 1,459,314 | | | | - | | | | - | | | | - | | | | 8,559,346 | | | | 4,491,304 | | | | 4,491,304 | | | | 4,491,304 | | | | — | | | | — | | | | — | | | | 7,573,471 | | Derivative Financial Instruments | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Assets | | | 696,796 | | | | 696,796 | | | | 696,796 | | | | - | | | | - | | | | - | | | | 1,110,544 | | | | 2,566,427 | | | | 2,566,427 | | | | 2,566,427 | | | | — | | | | — | | | | — | | | | 3,271,423 | | Loans and Other Financing | | | 96,433,507 | | | | 96,433,507 | | | | 96,251,314 | | | | 180,546 | | | | - | | | | 1,647 | | | | 60,023,454 | | | | 52,701,585 | | | | 52,701,585 | | | | 52,682,847 | | | | 6,794 | | | | — | | | | 11,944 | | | | 129,341,899 | | Argentine Central Bank | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,817 | | | Non-financial Public Sector | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | BCRA | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Institutions | | | 881,831 | | | | 881,831 | | | | 881,831 | | | | - | | | | - | | | | - | | | | 487,227 | | | | 1,637,121 | | | | 1,637,121 | | | | 1,637,121 | | | | — | | | | — | | | | — | | | | 2,224,703 | | To the Non-financial Private Sector and Residents Abroad | | | 95,551,676 | | | | 95,551,676 | | | | 95,369,483 | | | | 180,546 | | | | - | | | | 1,647 | | | | 59,533,410 | | | | 51,064,464 | | | | 51,064,464 | | | | 51,045,726 | | | | 6,794 | | | | — | | | | 11,944 | | | | 127,117,196 | | Other Debt Securities | | | 4,381,538 | | | | 4,381,538 | | | | 4,381,538 | | | | - | | | | - | | | | - | | | | 2,369,176 | | | | 336,293 | | | | 336,293 | | | | 336,293 | | | | — | | | | — | | | | — | | | | 7,236,300 | | Financial Assets Pledged as Collateral | | | 3,350,460 | | | | 3,350,460 | | | | 3,350,460 | | | | - | | | | - | | | | - | | | | 207,176 | | | | 2,150,738 | | | | 2,150,738 | | | | 2,150,738 | | | | — | | | | — | | | | — | | | | 3,536,129 | | Investments in Equity Instruments | | | 28,215 | | | | 28,215 | | | | 24,765 | | | | 3,450 | | | | - | | | | - | | | | 30,585 | | | | 56,667 | | | | 56,667 | | | | 50,433 | | | | 6,234 | | | | — | | | | — | | | | 57,401 | | Assets for Insurance Contracts | | | 2,695 | | | | 2,695 | | | | 2,695 | | | | - | | | | - | | | | - | | | | 17,103 | | | | 9,885 | | | | 9,885 | | | | 9,885 | | | | — | | | | — | | | | — | | | | — | | Other Non-financial Assets | | | 23,313 | | | | 23,313 | | | | 23,313 | | | | - | | | | - | | | | - | | | | 14,452 | | | | 15,247 | | | | 15,247 | | | | 15,247 | | | | — | | | | — | | | | — | | | | 19,257 | | TOTAL ASSETS | | | 201,532,624 | | | | 201,532,624 | | | | 199,418,959 | | | | 1,968,176 | | | | 29,919 | | | | 115,570 | | | | 127,354,143 | | | | 217,161,314 | | | | 217,161,314 | | | | 212,456,125 | | | | 4,307,098 | | | | 34,040 | | | | 364,051 | | | | 274,794,311 | | | | | | | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 162,667,559 | | | | 162,667,559 | | | | 162,667,559 | | | | - | | | | - | | | | - | | | | 103,954,632 | | | | 166,261,399 | | | | 166,261,399 | | | | 166,261,399 | | | | — | | | | — | | | | — | | | | 194,949,936 | | Non-financial Public Sector | | | 6,225,968 | | | | 6,225,968 | | | | 6,225,968 | | | | - | | | | - | | | | - | | | | 9,104 | | | | 3,103,854 | | | | 3,103,854 | | | | 3,103,854 | | | | — | | | | — | | | | — | | | | 105,889 | | Financial Sector | | | 9,866 | | | | 9,866 | | | | 9,866 | | | | - | | | | - | | | | - | | | | 5,897 | | | | 3,411 | | | | 3,411 | | | | 3,411 | | | | — | | | | — | | | | — | | | | 18,910 | | Non-financial Private Sector and Residents Abroad | | | 156,431,725 | | | | 156,431,725 | | | | 156,431,725 | | | | - | | | | - | | | | - | | | | 103,939,631 | | | | 163,154,134 | | | | 163,154,134 | | | | 163,154,134 | | | | — | | | | — | | | | — | | | | 194,825,137 | | Liabilities at fair value through profit or loss | | | 115,761 | | | | 115,761 | | | | 115,761 | | | | - | | | | - | | | | - | | | | - | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 507,440 | | Derivative Financial Instruments | | | 21,173 | | | | 21,173 | | | | 21,173 | | | | - | | | | - | | | | - | | | | - | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,999 | | Repo Transactions | | | 1,894,876 | | | | 1,894,876 | | | | 1,894,876 | | | | - | | | | - | | | | - | | | | - | | | Repurchase Transactions | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Liabilities | | | 8,003,308 | | | | 8,003,308 | | | | 7,660,730 | | | | 319,285 | | | | - | | | | 23,293 | | | | 4,464,789 | | | | 13,815,626 | | | | 13,815,626 | | | | 13,044,070 | | | | 725,685 | | | | — | | | | 45,871 | | | | 17,565,301 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 13,814,564 | | | | 13,814,564 | | | | 13,575,771 | | | | 237,974 | | | | - | | | | 819 | | | | 8,047,630 | | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | | 8,610,719 | | | | 8,610,719 | | | | 8,610,719 | | | | — | | | | — | | | | — | | | | 24,493,392 | | Debt Securities | | | 3,886,288 | | | | 3,886,288 | | | | 3,886,288 | | | | - | | | | - | | | | - | | | | - | | | | 4,828,657 | | | | 4,828,657 | | | | 4,828,657 | | | | — | | | | — | | | | — | | | | 8,399,357 | | Subordinated Debt Securities | | | 9,802,983 | | | | 9,802,983 | | | | 9,802,983 | | | | - | | | | - | | | | - | | | | 7,187,089 | | | | 21,653,546 | | | | 21,653,546 | | | | 21,653,546 | | | | — | | | | — | | | | — | | | | 21,100,718 | | Liabilities for Insurance Contracts | | | 2,967 | | | | 2,967 | | | | 2,967 | | | | - | | | | - | | | | - | | | | 21,351 | | | | 2,070 | | | | 2,070 | | | | 2,070 | | | | — | | | | — | | | | — | | | | 3,345 | | Other Non-financial Liabilities | | | 303,899 | | | | 303,899 | | | | 303,776 | | | | 123 | | | | - | | | | - | | | | 1,414,169 | | | | 1,033,146 | | | | 1,033,146 | | | | 1,032,065 | | | | 1,081 | | | | — | | | | — | | | | 652,975 | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL LIABILITIES | | | 200,513,378 | | | | 200,513,378 | | | | 199,931,884 | | | | 557,382 | | | | - | | | | 24,112 | | | | 125,089,660 | | | | 216,205,163 | | | | 216,205,163 | | | | 215,432,526 | | | | 726,766 | | | | — | | | | 45,871 | | | | 267,675,463 | | | | | | | | | | | | | | | | | | | | | | | | |
F-113
GRUPO FINANCIERO GALICIA S.A. SCHEDULE N – CREDIT ASSISTANCE TO AFFILIATES FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated Normal | | | | | | | | With Problems / Medium Risk | | With High Risk of Insolvency / High Risk | | | | | | Total | | Items | | Situation | | | With Special Follow- up / Low Risk | | Not Past Due | | Past Due | | Not Past Due | | Past Due | | Uncollectible | | Uncollectible due to Technical Reasons | | 12.31.18 | | | 12.31.17 | | Loans and Other Financing | | | 624,172 | | | - | | - | | - | | - | | - | | - | | - | | | 624,172 | | | | 676,181 | | - Overdrafts | | | 367,390 | | | - | | - | | - | | - | | - | | - | | - | | | 367,390 | | | | 227,294 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | With No Preferred Guarantees or Counter-guarantees | | | 367,390 | | | - | | - | | - | | - | | - | | - | | - | | | 367,390 | | | | 227,294 | | - Promissory Notes | | | 65,701 | | | - | | - | | - | | - | | - | | - | | - | | | 65,701 | | | | 211,542 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | With No Preferred Guarantees or Counter-guarantees | | | 65,701 | | | - | | - | | - | | - | | - | | - | | - | | | 65,701 | | | | 211,542 | | - Mortgage and Collateral Loans | | | 34,616 | | | - | | - | | - | | - | | - | | - | | - | | | 34,616 | | | | 51,930 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | 30,847 | | | - | | - | | - | | - | | - | | - | | - | | | 30,847 | | | | 47,385 | | With No Preferred Guarantees or Counter-guarantees | | | 3,769 | | | - | | - | | - | | - | | - | | - | | - | | | 3,769 | | | | 4,545 | | - Personal Loans | | | 2,050 | | | - | | - | | - | | - | | - | | - | | - | | | 2,050 | | | | 4,561 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | With No Preferred Guarantees or Counter-guarantees | | | 2,050 | | | - | | - | | - | | - | | - | | - | | - | | | 2,050 | | | | 4,561 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Situation | | | | | | | | With Problems /
Medium Risk | | | With High Insolvency
Risk / High
Risk | | | | | | | | | Total | | Items | | Normal | | | With
Special
Follow-
up / Low
Risk | | | Not
Past
Due | | | Past
Due | | | Not Past
Due | | | Past Due | | | Uncollectible | | | Uncollectible
due to
Technical
Reasons | | | 12.31.20 | | | 12.31.19 | | Loans and Other Financing | | | 952,242 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 952,242 | | | | 857,397 | | - Advances | | | 458,828 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 458,828 | | | | 57,481 | | With Preferred Guarantees and Counter-guarantees “A” | | | 928 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 928 | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Without Preferred Guarantees or Counter-guarantees | | | 457,900 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 457,900 | | | | 57,481 | | - Overdraft | | | 204,694 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 204,694 | | | | 523,465 | | With Preferred Guarantees and Counter-guarantees “A” | | | 180 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 180 | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Without Preferred Guarantees or Counter-guarantees | | | 204,514 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 204,514 | | | | 523,465 | | - Mortgage and Collateral Loans | | | 16,911 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 16,911 | | | | 47,901 | | With Preferred Guarantees and Counter-guarantees “A” | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | 12,591 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,591 | | | | 34,041 | | Without Preferred Guarantees or Counter-guarantees | | | 4,320 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,320 | | | | 13,860 | | - Personal Loans | | | 39,539 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 39,539 | | | | 1,753 | | With Preferred Guarantees and Counter-guarantees “A” | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Without Preferred Guarantees or Counter-guarantees | | | 39,539 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 39,539 | | | | 1,753 | |
F-114
GRUPO FINANCIERO GALICIA S.A. SCHEDULE N – CREDIT ASSISTANCE TO AFFILIATES (Continued) FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 AND 2019 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Situation | | | | | | | | With Problems /
Medium Risk | | | With High Insolvency
Risk / High
Risk | | | | | | | | | Total | | Items | | Normal | | | With
Special
Follow-
up / Low
Risk | | | Not
Past
Due | | | Past
Due | | | Not Past
Due | | | Past Due | | | Uncollectible | | | Uncollectible
due to
Technical
Reasons | | | 12.31.20 | | | 12.31.19 | | - Credit Cards | | | 217,867 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 217,867 | | | | 204,101 | | With Preferred Guarantees and Counter-guarantees “A” | | | 424 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 424 | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Without Preferred Guarantees or Counter-guarantees | | | 217,443 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 217,443 | | | | 204,101 | | - Other | | | 14,403 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,403 | | | | 22,696 | | With Preferred Guarantees and Counter-guarantees “A” | | | 2 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | — | | With Preferred Guarantees and Counter-guarantees “B” | | | 2,660 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,660 | | | | 862 | | Without Preferred Guarantees or Counter-guarantees | | | 11,741 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,741 | | | | 21,834 | | Debt Securities | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 132,318 | | Investments in Equity Instruments | | | 392,757 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 392,757 | | | | 274,752 | | Contingent Commitments | | | 646,605 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 646,605 | | | | 235,443 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 1,991,604 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,991,604 | | | | 1,499,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ALLOWANCES | | | 57,387 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 57,387 | | | | 9,897 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Normal | | | | | | | | With Problems / Medium Risk | | With High Risk of Insolvency / High Risk | | | | | | Total | | Items | | Situation | | | With Special Follow- up / Low Risk | | Not Past Due | | Past Due | | Not Past Due | | Past Due | | Uncollectible | | Uncollectible due to Technical Reasons | | 12.31.18 | | | 12.31.17 | | - Credit Cards | | | 146,205 | | | - | | - | | - | | - | | - | | - | | - | | | 146,205 | | | | 141,669 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | Backed by Preferred Guarantees and Counter-guarantees “B” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | With No Preferred Guarantees or Counter-guarantees | | | 146,205 | | | - | | - | | - | | - | | - | | - | | - | | | 146,205 | | | | 141,669 | | - Other | | | 8,210 | | | - | | - | | - | | - | | - | | - | | - | | | 8,210 | | | | 39,185 | | Backed by Preferred Guarantees and Counter-guarantees “A” | | | - | | | - | | - | | - | | - | | - | | - | | - | | | - | | | | - | | Backed by Preferred Guarantees and Counter-guarantees ��B” | | | 2,945 | | | - | | - | | - | | - | | - | | - | | - | | | 2,945 | | | | - | | With No Preferred Guarantees or Counter-guarantees | | | 5,265 | | | - | | - | | - | | - | | - | | - | | - | | | 5,265 | | | | 39,185 | | Debt Securities | | | 97,057 | | | - | | - | | - | | - | | - | | - | | - | | | 97,057 | | | | 78,909 | | Equity Instruments | | | 72,015 | | | - | | - | | - | | - | | - | | - | | - | | | 72,015 | | | | 13,892 | | Contingent Commitments | | | 163,195 | | | - | | - | | - | | - | | - | | - | | - | | | 163,195 | | | | 234,470 | | TOTAL | | | 956,439 | | | - | | - | | - | | - | | - | | - | | - | | | 956,439 | | | | 1,003,452 | | ALLOWANCES | | | 7,212 | | | - | | - | | - | | - | | - | | - | | - | | | 7,212 | | | | 7,515 | |
F-115
GRUPO FINANCIERO GALICIA S.A. SCHEDULE O – DERIVATIVE FINANCIAL INSTRUMENTS FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | Type of Contract | | Purpose of Transactions | | Underlying Asset | | Type of Settlement | | Trading Environment or Counterparty | | Originally- Agreed Weighted Average Term | | | Residual Weighted Average Term | | | Weighted Average Term for Settlement of Differences | | | Amount(*) | | | Objective of
the
Operations | | Underlying
Asset | | Type of
Settlement | | Scope of Negotiation
or
Counterpart | | Weighted
Average
Term
Originally-
Agreed | | Residual
Weighted
Average
Term | | Weighted
Average
Term to
Settle
Differences | | Amount(*) | | Foreign Currency Forwards | | | | | | | | | | | | | | | | | | | | | | | | | | Forwards in Foreign Currency | | | | | | | | | | | | | | | | | | OTC - Purchases | | Brokerage - own account | | Foreign currency | | Daily settlement of the difference | | MAE | | 2 | | | 1 | | | 1 | | | | 6,266,280 | | |
| Brokerage
- own
account |
| |
| Foreign
currency |
| |
| Daily settlement
of the difference |
| | MAE | | 4 | | | 1 | | | 1 | | | | 7,921,087 | | OTC - Sales | | Brokerage - own account | | Foreign currency | | Daily settlement of the difference | | MAE | | 2 | | | 1 | | | 1 | | | | 598,865 | | | ROFEX - Purchases | | Brokerage - own account | | Foreign currency | | Daily settlement of the difference | | ROFEX | | 4 | | | 2 | | | 1 | | | | 32,595,287 | | |
| Brokerage
- own
account |
| |
| Foreign
currency |
| |
| Daily settlement
of
the difference |
| | ROFEX | | 3 | | | 2 | | | 1 | | | 17,795,643 | | ROFEX - Sales | | Brokerage - own account | | Foreign currency | | Daily settlement of the difference | | ROFEX | | 3 | | | 2 | | | 1 | | | | 31,678,509 | | |
| Brokerage
- own
account |
| |
| Foreign
currency |
| |
| Daily settlement
of
the difference |
| | ROFEX | | 3 | | | 2 | | | 1 | | | 14,328,423 | | Forwards with Customers | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchases | | Brokerage - own account | | Foreign currency | | Upon maturity of differences | | OTC - Residents in Argentina - Non-financial sector | | 2 | | | 1 | | | 59 | | | | 4,768 | | |
| Brokerage
- own
account |
| |
| Foreign
currency |
| |
| Upon maturity
of
differences |
| | OTC -
Residents inArgentina - Non-financial
sector | | 7 | | | 3 | | | 202 | | | 1,549,356 | | Purchases | | Brokerage - own account | | Foreign currency | | Upon maturity of differences | | OTC – Residents Abroad | | 2 | | | 1 | | | 59 | | | | 3,669,186 | | | Sales | | Brokerage - own account | | Foreign currency | | Upon maturity of differences | | OTC - Residents in Argentina - Non-financial sector | | 4 | | | 1 | | | 110 | | | | 10,156,620 | | |
| Brokerage
- own
account |
| |
| Foreign
currency |
| |
| Upon maturity
of
differences |
| | OTC -
Residents inArgentina - Non-financial
sector | | 4 | | | 2 | | | 123 | | | 12,563,375 | | Repo Transactions | | | | | | | | | | | | | | | | | | | | | | | | | | Forward Purchases | | Brokerage - own account | | Argentine government securities | | With delivery of the underlying asset | | MAE | | | - | | | | - | | | | - | | | | 1,965,824 | | | Repurchase Transactions | | | | | | | | | | | | | | | | | | Forward Sales | | Brokerage - own account | | Argentine government securities | | With delivery of the underlying asset | | MAE | | | - | | | | - | | | | - | | | | 2,061,516 | | |
| Brokerage
- own
account |
| |
| Argentine
government
securities |
| |
| With delivery of
the
underlying asset |
| | MAE | |
| -
|
| |
| -
|
| | | - | | | 61,923,889 | | Swaps with Customers | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed for Variable Interest Rate Swaps | | Brokerage - own account | | Others | | Others | | MAE | | 26 | | | 14 | | | 1 | | | | 460,242 | | | Cross Currency Swaps – Other Forward Purchases | | Brokerage - own account | | Others | | Others | | OTC – Residents in Argentina – Financial sector | | 61 | | | 60 | | | | - | | | | 1,561 | | | Swaps of Fixed Interest Rate for Variable Rate | | |
| Brokerage
- own
account |
| | Others | | | Others | | | MAE | | 36 | | | 3 | | | 1 | | | 82,909 | |
(*) | Relates to the notional amount. |
F-116
GRUPO FINANCIERO GALICIA S.A. SCHEDULE P – CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | Fair Value through Profit or Loss | | | Fair Value Hierarchy | | | | | | | | | Fair Value
through Profit
or Loss | | | Fair Value Hierarchy | | Items | | Amortized Cost | | | Fair Value through OCI | | | Mandatory Measurement | | | Level 1 | | | Level 2 | | | Level 3 | | | Amortized Cost | | | Fair Value
through
OCI | | | Mandatory
Measurement | | | Level 1 | | | Level 2 | | | Level 3 | | FINANCIAL ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and Due from Banks | | | 143,309,428 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 175,423,476 | | | | — | | | | — | | | | — | | | | — | | | | — | | Cash | | | 21,189,989 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 66,932,871 | | | | — | | | | — | | | | — | | | | — | | | | — | | Financial Institutions and Correspondents | | | 122,119,439 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 108,490,605 | | | | — | | | | — | | | | — | | | | — | | | | — | | Debt Securities at Fair Value through Profit or Loss | | | - | | | | - | | | | 75,935,163 | | | | 3,261,099 | | | | 71,412,082 | | | | 1,261,982 | | | | — | | | | — | | | | 155,419,560 | | | | 24,824,475 | | | | 129,236,300 | | | | 1,358,785 | | Derivative Financial Instruments | | | - | | | | - | | | | 1,785,640 | | | | - | | | | 1,785,640 | | | | - | | | | — | | | | — | | | | 2,165,032 | | | | — | | | | 547,929 | | | | 1,617,103 | | Repo Transactions | | | 2,068,076 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Repurchase Transactions | | | | 60,995,643 | | | | — | | | | — | | | | — | | | | — | | | | — | | Argentine Central Bank | | | 10,209 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 60,995,643 | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Institutions | | | 2,057,867 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Assets | | | 4,744,501 | | | | - | | | | 4,303,431 | | | | 4,264,431 | | | | 39,000 | | | | - | | | | 7,301,643 | | | | — | | | | 2,791,983 | | | | 2,760,728 | | | | 31,255 | | | | — | | Loans and Other Financing | | | 282,710,068 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 526,434,119 | | | | — | | | | — | | | | — | | | | — | | | | — | | Non-financial Public Sector | | | 11,777 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 334 | | | | — | | | | — | | | | — | | | | — | | | | — | | Argentine Central Bank | | | 533 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13,195 | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Institutions | | | 7,519,894 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 14,700,600 | | | | — | | | | — | | | | — | | | | — | | | | — | | Non-financial Private Sector and Residents Abroad | | | 275,177,864 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 511,719,990 | | | | — | | | | — | | | | — | | | | — | | | | — | | Overdrafts | | | 14,430,578 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Promissory Notes | | | 36,020,263 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Advances | | | | 29,219,431 | | | | — | | | | — | | | | — | | | | — | | | | — | | Overdraft | | | | 143,769,344 | | | | — | | | | — | | | | — | | | | — | | | | — | | Mortgage Loans | | | 11,793,007 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 16,486,335 | | | | — | | | | — | | | | — | | | | — | | | | — | | Collateral Loans | | | 997,958 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Pledge Loans | | | | 11,586,593 | | | | — | | | | — | | | | — | | | | — | | | | — | | Personal Loans | | | 29,144,931 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 36,504,158 | | | | — | | | | — | | | | — | | | | — | | | | — | | Credit-card loans | | | 113,395,362 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 241,793,015 | | | | — | | | | — | | | | — | | | | — | | | | — | | Financial Leases | | | 2,168,862 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Finance Leases | | | | 1,819,883 | | | | — | | | | — | | | | — | | | | — | | | | — | | Others | | | 67,226,903 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 30,541,231 | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Debt Securities | | | 5,312,035 | | | | 9,112,099 | | | | - | | | | 9,112,099 | | | | - | | | | - | | | | 18,885,279 | | | | 4,185,098 | | | | — | | | | 604,996 | | | | 3,580,102 | | | | — | | Financial Assets Pledged as Collateral | | | 7,357,780 | | | | - | | | | 3,459,712 | | | | 3,184,346 | | | | 275,366 | | | | - | | | | 16,681,884 | | | | — | | | | 2,035,559 | | | | 2,035,559 | | | | — | | | | — | | Investments in Equity Instruments | | | - | | | | - | | | | 161,054 | | | | 26,795 | | | | - | | | | 134,259 | | | | — | | | | — | | | | 5,711,684 | | | | 234,774 | | | | — | | | | 5,476,910 | | | | | | | | | | | | | | | | | | | | | | TOTAL FINANCIAL ASSETS | | | 445,501,888 | | | | 9,112,099 | | | | 85,645,000 | | | | 19,848,770 | | | | 73,512,088 | | | | 1,396,241 | | | | 805,722,044 | | | | 4,185,098 | | | | 168,123,818 | | | | 30,460,532 | | | | 133,395,586 | | | | 8,452,798 | | | | | | | | | | | | | | | | | | | | | |
F-117
GRUPO FINANCIERO GALICIA S.A. SCHEDULE P – CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES (Continued) FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2018 AND ENDED
AS OF DECEMBER 31, 2018, PRESENTED IN COMPARATIVE FORMAT2020 Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | | | | | | | | | Fair Value through Profit or Loss | | | Fair Value Hierarchy | | | | | | | | | Fair Value
through Profit
or Loss | | | Fair Value Hierarchy | | Items | | Amortized Cost | | | Fair Value through OCI | | | Mandatory Measurement | | | Level 1 | | | Level 2 | | | Level 3 | | | Amortized Cost | | | Fair Value
through
OCI | | | Mandatory
Measurement | | | Level 1 | | | Level 2 | | | Level 3 | | FINANCIAL LIABILITIES | | | | | | | | | | | | | | | - | | | | - | | | | - | | | | | | | | | | | | | | Deposits | | | 360,097,275 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 669,282,956 | | | | — | | | | — | | | | — | | | | — | | | | — | | Non-financial Public Sector | | | 8,569,383 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,537,481 | | | | — | | | | — | | | | — | | | | — | | | | — | | Financial Sector | | | 711,737 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,947,127 | | | | — | | | | — | | | | — | | | | — | | | | — | | Non-financial Private Sector and Residents Abroad | | | 350,816,155 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 645,798,348 | | | | — | | | | — | | | | — | | | | — | | | | — | | Checking Accounts | | | 38,716,061 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 101,777,665 | | | | — | | | | — | | | | — | | | | — | | | | — | | Savings Accounts | | | 192,476,801 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 313,702,281 | | | | — | | | | — | | | | — | | | | — | | | | — | | Time Deposit and Term Investments | | | 114,172,231 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 230,318,402 | | | | — | | | | — | | | | — | | | | — | | | | — | | Others | | | 5,451,062 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,112,779 | | | | — | | | | — | | | | — | | | | — | | | | — | | Liabilities at fair value through profit or loss | | | - | | | | - | | | | 2,144,664 | | | | 1,366,785 | | | | 777,879 | | | | - | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Derivative Financial Instruments | | | - | | | | - | | | | 1,835,789 | | | | - | | | | 1,835,789 | | | | - | | | | — | | | | — | | | | 57,450 | | | | — | | | | 57,450 | | | | — | | Repo Transactions | | | 1,948,559 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Repurchase Transactions | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Argentine Central Bank | | | 1,948,559 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Institutions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other Financial Liabilities | | | 63,235,042 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 97,471,465 | | | | — | | | | — | | | | — | | | | — | | | | — | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 19,446,028 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Debt Instruments Issued | | | 29,983,653 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | | 13,833,439 | | | | — | | | | — | | | | — | | | | — | | | | — | | Debt Securities | | | | 17,073,898 | | | | — | | | | — | | | | — | | | | — | | | | — | | Subordinated Debt Securities | | | 9,767,874 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,653,546 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL FINANCIAL LIABILITIES | | | 484,478,431 | | | | - | | | | 3,980,453 | | | | 1,366,785 | | | | 2,613,668 | | | | - | | | | 826,428,083 | | | | — | | | | 57,450 | | | | — | | | | 57,450 | | | | — | | | | | | | | | | | | | | | | | | | | | |
F-118
GRUPO FINANCIERO GALICIA S.A. SCHEDULE Q – INCOME STATEMENT BREAKDOWN FOR THE FISCAL YEAR COMMENCED JANUARY 1, 20182020 AND ENDED DECEMBER 31, 2018,2020, PRESENTED IN COMPARATIVE FORMAT Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | | | Net Financial Income/(Expense) | | | Net Financial Income/(Expense) | | | | | | | Net Financial Income/(Expense) | | Items | | Originally Designated or According to Point 6.7.1 of IFRS 9 | | | Mandatory Measurement | | | OCI | | | Originally
Designated or
According to
Point 6.7.1 of
IFRS 9 | | Mandatory
Measurement | | OCI | | From Measurement of Financial Assets at Fair Value through Profit or Loss | | | | | | | | | | | | | | | | | | | Income (loss) from Government Securities | | | - | | | | 13,907,910 | | | | 87,485 | | | | — | | | 62,140,975 | | | (337,707 | ) | Income (loss) from Private Securities | | | - | | | | 1,545,299 | | | | - | | | Income (loss) from Corporate Securities | | | | — | | | 4,721,625 | | | | — | | Income (Loss) from Derivative Financial Instruments | | | - | | | | 2,089,012 | | | | - | | | | — | | | 2,469,302 | | | | — | | Repo Transactions | | | - | | | | 2,089,012 | | | | - | | | Repurchase Transactions | | | | — | | | 1,746,892 | | | | — | | Interest Rate Swaps | | | | — | | | 35,862 | | | | — | | Options | | | | — | | | 686,548 | | | | — | | Income from Other Financial Assets | | | - | | | | 10,231 | | | | - | | | | — | | | | — | | | (17,221 | ) | | | | | | | | | | | | Total as of 12.31.20 | | | | — | | | | 69,331,902 | | | | (354,928 | ) | | | | | | | | | | | | | | | | | Net Financial Income/(Expense) | | Items | | | Originally
Designated or
According to
Point 6.7.1 of
IFRS 9 | | Mandatory
Measurement | | OCI | | From Measurement of Financial Assets at Fair Value through Profit or Loss | | | | | | | | Income (loss) from Government Securities | | | | — | | | 84,885,379 | | | 847,564 | | Income (loss) from Corporate Securities | | | | — | | | 12,698,057 | | | | — | | Income (Loss) from Derivative Financial Instruments | | | | — | | | 1,745,597 | | | | — | | Repurchase Transactions | | | | — | | | 1,745,597 | | | | — | | Income from other Financial Assets | | | | — | | | (28,681 | ) | | 20,844 | | From Measurement of Financial Liabilities at Fair Value through in Profit or Loss | | | | | | | | | | | | | | | | | | | Income (Loss) from Derivative Financial Instruments | | | - | | | | (199,734 | ) | | | - | | | | — | | | (148,856 | ) | | | — | | Repo Transactions | | | - | | | | (89,686 | ) | | | - | | | Rate Swaps | | | - | | | | (110,048 | ) | | | | | | Interest Rate Swaps | | | | — | | | (148,856 | ) | | | — | | | | | | | | | | | | | Total as of 12.31.19 | | | | — | | | | 99,151,496 | | | | 868,408 | | | | | | | | | | | | | | | | | | Net Financial Income/(Expense) | | Items | | | Originally
Designated or
According to
Point 6.7.1 of
IFRS 9 | | Mandatory
Measurement | | OCI | | From Measurement of Financial Assets at Fair Value through Profit or Loss | | | | | | | | Income (loss) from Government Securities | | | | — | | | 29,127,105 | | | (182,617 | ) | Income (loss) from Corporate Securities | | | | — | | | 3,236,294 | | | | — | | Income (Loss) from Derivative Financial Instruments | | | | — | | | 4,374,983 | | | | — | | Repurchase Transactions | | | | — | | | 4,374,901 | | | | — | | Interest Rate Swaps | | | | — | | | 82 | | | | — | | Income from other Financial Assets | | | | — | | | 21,427 | | | | — | | From Measurement of Financial Liabilities at Fair Value through in Profit or Loss | | | | | | | | Income (Loss) from Derivative Financial Instruments | | | | — | | | (418,300 | ) | | | — | | Repurchase Transactions | | | | — | | | (187,828 | ) | | | — | | Interest Rate Swaps | | | | — | | | (230,472 | ) | | | — | | | | | | | | | | | | | Total as of 12.31.18 | | | - | | | | 17,352,718 | | | | 87,485 | | | | — | | | | 36,341,509 | | | | (182,617 | ) | | | | | | | | | | | |
| | Net Financial Income/(Expense) | | | Net Financial Income/(Expense) | | | | | | Items | | Originally Designated or According to Point 6.7.1 of IFRS 9 | | | Mandatory Measurement | | | OCI | | From Measurement of Financial Assets at Fair Value through Profit or Loss | | | | | | | | | | | | | Income (loss) from Government Securities | | | - | | | | 7,488,192 | | | | 434,732 | | Income (loss) from Private Securities | | | - | | | | 1,570,577 | | | | - | | Income (Loss) from Derivative Financial Instruments | | | - | | | | 1,633 | | | | - | | Repo Transactions | | | - | | | | (1,944 | ) | | | - | | Rate Swaps | | | - | | | | 41 | | | | - | | Options | | | - | | | | 3,536 | | | | - | | From Measurement of Financial Liabilities at Fair Value through in Profit or Loss | | | - | | | | - | | | | - | | Income (Loss) from Derivative Financial Instruments | | | - | | | | (599,064 | ) | | | - | | Repo Transactions | | | - | | | | (592,595 | ) | | | - | | Rate Swaps | | | - | | | | (9 | ) | | | - | | Options | | | - | | | | (6,460 | ) | | | - | | Total as of 12.31.17 | | | - | | | | 8,461,338 | | | | 434,732 | |
F-119
GRUPO FINANCIERO GALICIA S.A. SCHEDULE Q – INCOME STATEMENT BREAKDOWN (Continued) FOR THE FISCAL YEAR COMMENCED JANUARY 1, 20182020 AND ENDED DECEMBER 31, 2018,2020, PRESENTED IN COMPARATIVE FORMAT Figures Stated in Thousands of Pesos ($(Ps.), Except as Otherwise Stated | Interest and Adjustments for Application of Effective Interest Rate of Financial Assets Measured at Amortized Cost | | 12.31.18 | | | 12.31.17 | | | 12.31.20 | | 12.31.19 | | 12.31.18 | | Interest Income | | | | | | | | | | | | | | | On Cash and Due from Banks | | | 794 | | | | 174 | | | | 2,842 | | | 10,804 | | | 1,663 | | On Private Securities | | | 329,998 | | | | 249,621 | | | On Corporate Securities | | | | 311,974 | | | 531,312 | | | 691,109 | | On Government Securities | | | 1,388,727 | | | | 448,856 | | | | 9,183,108 | | | 6,405,292 | | | 2,908,388 | | On Others Financial Assets | | | | — | | | | — | | | | — | | On Loans and Other Financing | | | 75,808,217 | | | | 52,711,908 | | | | 148,447,000 | | | 161,010,334 | | | 158,763,887 | | Non-financial Public Sector | | | 255 | | | | 3,895 | | | | — | | | | — | | | 534 | | Financial Sector | | | 2,103,750 | | | | 1,106,641 | | | | 3,126,359 | | | 4,300,203 | | | 4,405,849 | | Non-financial Private Sector | | | 73,704,212 | | | | 51,601,372 | | | | 145,320,641 | | | 156,710,131 | | | 154,357,504 | | Overdrafts | | | 9,838,737 | | | | 4,409,363 | | | Advances | | | | 11,887,470 | | | 17,145,365 | | | 20,605,103 | | Mortgage Loans | | | 5,950,813 | | | | 940,748 | | | | 13,075,809 | | | 17,497,492 | | | 12,462,689 | | Collateral Loans | | | 425,676 | | | | 184,372 | | | Pledge Loans | | | | 1,421,653 | | | 956,238 | | | 891,486 | | Personal Loans | | | 9,148,888 | | | | 7,717,394 | | | | 16,298,802 | | | 16,635,559 | | | 19,160,364 | | Credit Card Loans | | | 29,356,225 | | | | 24,900,179 | | | | 47,207,293 | | | 64,903,224 | | | 61,485,538 | | Financial Leases | | | 604,211 | | | | 539,236 | | | Finance Leases | | | | 351,863 | | | 760,736 | | | 1,266,432 | | Others | | | 18,379,662 | | | | 12,910,080 | | | | 55,077,751 | | | 38,811,517 | | | 38,485,892 | | On Repo Transactions | | | 746,052 | | | | 1,283,163 | | | On Repurchase Transactions | | | | 8,861,754 | | | 9,713,712 | | | 1,562,445 | | Argentine Central Bank and Other Financial Institutions | | | 746,052 | | | | 1,283,163 | | | | 8,788,748 | | | 9,246,541 | | | 669,436 | | Other Financial Institutions | | | | 73,006 | | | 467,171 | | | 893,009 | | | | | | | | | | | | | Total | | | 78,273,788 | | | | 54,693,722 | | | | 166,806,678 | | | | 177,671,454 | | | | 163,927,492 | | | | | | | | | | | | | | Interest-related Expenses | | | 12.31.20 | | 12.31.19 | | 12.31.18 | | On Deposits | | | | (79,482,905 | ) | | (103,158,332 | ) | | (68,499,156 | ) | Non-financial Private Sector | | | | (79,482,905 | ) | | (103,158,332 | ) | | (68,499,156 | ) | Checking Accounts | | | | — | | | | — | | | | — | | Savings Accounts | | | | (11,312 | ) | | (8,577 | ) | | (11,127 | ) | Time Deposit and Term Investments | | | | (62,823,955 | ) | | (90,832,354 | ) | | (59,908,890 | ) | Others | | | | (16,647,638 | ) | | (12,317,401 | ) | | (8,579,139 | ) | Financing Received from the Argentine Central Bank and Other Financial Institutions | | | | (1,744,423 | ) | | (3,340,252 | ) | | (4,525,891 | ) | On Repurchase Transactions | | | | (303,406 | ) | | (921,267 | ) | | (462,321 | ) | BCRA | | | | — | | | | — | | | | — | | Other Financial Institutions | | | | (303,406 | ) | | (921,267 | ) | | (462,321 | ) | On Other Financial Liabilities | | | | (953,190 | ) | | (1,777,996 | ) | | (1,629,043 | ) | On Debt Securities | | | | (6,097,288 | ) | | (19,388,515 | ) | | (17,407,231 | ) | On Subordinated Debt Securities | | | | (1,593,246 | ) | | (1,667,719 | ) | | (1,531,304 | ) | | | | | | | | | | | | Total | | | | (90,174,458 | ) | | | (130,254,081 | ) | | | (94,054,946 | ) | | | | | | | | | | | | | Fee Income | | | 12.31.20 | | 12.31.19 | | 12.31.18 | | Fee Related to Credit cards | | | | 21,255,723 | | | 21,604,202 | | | 20,435,229 | | Fee related to Insurance | | | | 1,715,661 | | | 1,797,953 | | | 1,873,037 | | Fee related to Obligation | | | | 11,468,853 | | | 12,432,094 | | | 13,500,354 | | Fee Related to Credits | | | | 8,152,466 | | | 6,720,278 | | | 9,844,715 | | Fee Related to Loan Commitments and Financial Guarantees | | | | 109,796 | | | 488,101 | | | 445,892 | | Fee Related to Securities | | | | 1,774,362 | | | 1,960,554 | | | 2,216,784 | | Fee for Collections Management | | | | 352,494 | | | 701,034 | | | 620,683 | | Fee for Foreign and Exchange Transactions | | | | 1,646,077 | | | 2,142,517 | | | 2,157,143 | | | | | | | | | | | | | Total | | | | 46,475,432 | | | | 47,846,733 | | | | 51,093,837 | | | | | | | | | | | | | | Fee-related Expenses | | | 12.31.20 | | 12.31.19 | | 12.31.18 | | Fees related to Transactions with Securities | | | | (161,629 | ) | | (669,422 | ) | | (116,951 | ) | Fees related to Credit Cards | | | | (5,348,957 | ) | | (4,787,867 | ) | | (3,867,245 | ) | Fees related to foreign operations and exchange | | | | (483,529 | ) | | (214,548 | ) | | (122,656 | ) | Others | | | | (3,923,758 | ) | | (3,941,660 | ) | | (2,230,653 | ) | | | | | | | | | | | | Total | | | | (9,917,873 | ) | | | (9,613,497 | ) | | | (6,337,505 | ) | | | | | | | | | | | |
F-110 Interest-related Expenses | | | | 12.31.18 | | | 12.31.17 | | On Deposits | | | 32,707,683 | | | | 17,513,792 | | Non-financial Private Sector | | | 32,707,683 | | | | 17,513,792 | | Checking Accounts | | | - | | | | 1,050 | | Savings Accounts | | | 5,313 | | | | 5,577 | | Time Deposit and Term Investments | | | 28,705,508 | | | | 16,757,655 | | Others | | | 3,996,862 | | | | 749,510 | | Loans from the Argentine Central Bank and Other Financial Institutions | | | 2,161,069 | | | | 1,194,039 | | On Repo Transactions | | | 220,754 | | | | 358,122 | | Other Financial Institutions | | | 220,754 | | | | 358,122 | | On Other Financial Liabilities | | | 5,631,783 | | | | 3,840,613 | | On Debt Securities Issued | | | 3,457,853 | | | | 1,352,934 | | On Subordinated Debt Securities | | | 731,183 | | | | 560,187 | | Total | | | 44,910,325 | | | | 24,819,687 | |
Fee Income | | | | 12.31.18 | | | 12.31.17 | | Fee and Commissions Related to Transactions | | | 7,180,303 | | | | 7,231,662 | | Fee and Commissions Related to Credits | | | 13,748,348 | | | | 16,339,180 | | Fee and Commissions Related to Loan Commitments and Financial Guarantees | | | | | 212,909 | | | | 206,141 | | Fee and Commissions Related to Transferable Securities | | | 1,058,493 | | | | 797,022 | | Fee and Commissions on Collection Proceedings | | | 34,192 | | | | 44,186 | | Fee and Commissions on Foreign and Exchange Rate Transactions | | | 1,030,015 | | | | 780,270 | | Total | | | 23,264,260 | | | | 25,398,461 | |
Fee-related Expenses | | | | 12.31.18 | | | 12.31.17 | | Fees and Commissions Related to Transactions with Securities | | | 55,843 | | | | 29,489 | | Others | | | 2,970,254 | | | | 3,223,346 | | Total | | | 3,026,097 | | | | 3,252,835 | |
F-120
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