Exhibit 99.1
GRUPO FINANCIERO GALICIA S.A.
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
GRUPO FINANCIERO GALICIA S.A.
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
TABLE OF CONTENTS
CONSOLIDATED CONDENSED INTERIM BALANCE SHEET | 2 | |||
CONSOLIDATED CONDENSED INTERIM INCOME STATEMENT | 4 | |||
CONSOLIDATED CONDENSED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME | 5 | |||
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY | 6 | |||
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS | 7 | |||
NOTE 1. ACCOUNTING STANDARDS AND BASIS FOR PREPARATION | 9 | |||
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES | 13 | |||
NOTE 3. FAIR VALUES | 13 | |||
NOTE 4. CASH AND CASH EQUIVALENTS | 17 | |||
NOTE 5. FAIR VALUE DEBT SECURITIES WITH CHANGES TO INCOME | 17 | |||
NOTE 6. DERIVATIVE INSTRUMENTS | 17 | |||
NOTE 7. REPO TRANSACTIONS | 17 | |||
NOTE 8. OTHER FINANCIAL ASSETS | 18 | |||
NOTE 9. NET LOANS AND OTHER FINANCING | 18 | |||
NOTE 10. OTHER DEBT SECURITIES | 19 | |||
NOTE 11. FINANCIAL ASSETS PLEDGED AS COLLATERAL | 19 | |||
NOTE 12. CURRENT INCOME TAX ASSETS | 19 | |||
NOTE 13. INVESTMENTS IN EQUITY INSTRUMENTS | 19 | |||
NOTE 14. EQUITY INVESTMENTS IN ASSOCIATES AND JOINT VENTURES | 19 | |||
NOTE 15. LEASES | 20 | |||
NOTE 16. PROPERTY, PLANT AND EQUIPMENT | 20 | |||
NOTE 17. INTANGIBLE ASSETS | 20 | |||
NOTE 18. DEFERRED INCOME TAX ASSETS/LIABILITIES | 20 | |||
NOTE 19. ASSETS/LIABILITIES FOR INSURANCE CONTRACTS | 21 | |||
NOTE 20. OTHERNON-FINANCIAL ASSETS | 22 | |||
NOTE 21.NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | 22 | |||
NOTE 22. DEPOSITS | 23 | |||
NOTE 23. FAIR VALUE LIABILITIES WITH CHANGES TO INCOME | 23 | |||
NOTE 24. OTHER FINANCIAL LIABILITIES | 23 | |||
NOTE 25. LOANS FROM THE ARGENTINE CENTRAL BANK AND OTHER FINANCIAL INSTITUTIONS | 23 | |||
NOTE 27. SUBORDINATED DEBT SECURITIES | 28 | |||
NOTE 28. PROVISIONS | 28 | |||
NOTE 29. OTHERNON-FINANCIAL LIABILITIES | 29 | |||
NOTE 30. CAPITAL STOCK | 29 | |||
NOTE 31. INCOME STATEMENT BREAKDOWN | 29 | |||
NOTE 32. GOLD AND FOREIGN CURRENCY QUOTATION DIFFERENCES | 29 |
GRUPO FINANCIERO GALICIA S.A.
NOTE 33. OTHER OPERATING INCOME | 30 | |||
NOTE 34. UNDERWRITING INCOME FROM INSURANCE BUSINESS | 30 | |||
NOTE 35. LOAN LOSS PROVISION | 30 | |||
NOTE 36. PERSONNEL EXPENSES | 30 | |||
NOTE 37. ADMINISTRATIVE EXPENSES | 30 | |||
NOTE 38. DEPRECIATION AND IMPAIRMENT OF ASSETS | 31 | |||
NOTE 39. OTHER OPERATING EXPENSES | 31 | |||
NOTE 40. INCOME TAX/DEFERRED TAX | 31 | |||
NOTE 41. DIVIDENDS | 32 | |||
NOTE 42. EARNINGS PER SHARE | 32 | |||
NOTE 43. SEGMENT REPORTING | 32 | |||
NOTE 44. CAPITAL MANAGEMENT AND RISK POLICIES | 35 | |||
NOTE 45. CONTINGENCIES AND COMMITMENTS | 35 | |||
NOTE 46.OFF-BALANCE SHEET ITEMS | 36 | |||
NOTE 47. RELATED PARTY TRANSACTIONS | 37 | |||
NOTE 48. ACQUISITION OF DEBT SECURITIES UNDER SECTION 35 BIS OF FINANCIAL INSTITUTIONS LAW | 39 | |||
NOTE 49. ADDITIONAL INFORMATION REQUIRED BY THE ARGENTINE CENTRAL BANK | 39 | |||
NOTE 50. SUBSEQUENT EVENTS | 45 | |||
SCHEDULE A – BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES | 46 | |||
SCHEDULE B – CLASSIFICATION OF LOANS AND OTHER FINANCING BY STATUS AND GUARANTEES RECEIVED | 48 | |||
SCHEDULE C – CONCENTRATION OF LOANS AND OTHER FINANCING | 49 | |||
SCHEDULE D – BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING | 50 | |||
SCHEDULE F – CHANGES IN PROPERTY, PLANT AND EQUIPMENT | 51 | |||
SCHEDULE F – CHANGES IN INVESTMENT PROPERTIES | 53 | |||
SCHEDULE G – CHANGES IN INTANGIBLE ASSETS | 54 | |||
SCHEDULE H – CONCENTRATION OF DEPOSITS | 55 | |||
SCHEDULE I – BREAKDOWN OF FINANCIAL LIABILITIES BY REMAINING TERM | 56 | |||
SCHEDULE J – CHANGES IN PROVISIONS | 57 | |||
SCHEDULE L – FOREIGN CURRENCY BALANCES | 58 | |||
SCHEDULE O – DERIVATIVE INSTRUMENTS | 60 | |||
SCHEDULE Q – INCOME STATEMENT BREAKDOWN | 61 | |||
SCHEDULE R – VALUE ADJUSTMENT BY LOSSES – ALLOWANCE FOR LOAN LOSSES | 63 | |||
INFORMATIVE REVIEW AS OF MARCH 31, 2019 | 64 | |||
SEPARATE CONDENSED INTERIM BALANCE SHEET | 69 | |||
SEPARATE CONDENSED INTERIM INCOME STATEMENT | 70 | |||
SEPARATE CONDENSED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME | 71 | |||
SEPARATE CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY | 72 | |||
SEPARATE CONDENSED INTERIM STATEMENT OF CASH FLOWS | 73 | |||
NOTE 1. ACCOUNTING STANDARDS AND BASIS FOR PREPARATION | 74 | |||
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES | 77 |
GRUPO FINANCIERO GALICIA S.A.
NOTE 3. FAIR VALUES | 78 | |||
NOTE 4. CASH AND CASH EQUIVALENTS | 79 | |||
NOTE 5. OTHER FINANCIAL ASSETS | 79 | |||
NOTE 6. NET LOANS AND OTHER FINANCING | 79 | |||
NOTE 7. CURRENT INCOME TAX ASSETS | 80 | |||
NOTE 8. EQUITY INVESTMENTS | 80 | |||
NOTE 9. LEASES | 81 | |||
NOTE 10. PROPERTY, PLANT AND EQUIPMENT | 81 | |||
NOTE 11. DEFERRED INCOME TAX ASSETS/LIABILITIES | 81 | |||
NOTE 12. OTHERNON-FINANCIAL ASSETS | 82 | |||
NOTE 13. CURRENT INCOME TAX LIABILITIES | 83 | |||
NOTE 14. OTHERNON-FINANCIAL LIABILITIES | 83 | |||
NOTE 15. CAPITAL STOCK | 83 | |||
NOTE 16. INCOME STATEMENT BREAKDOWN | 83 | |||
NOTE 17. GOLD AND FOREIGN CURRENCY QUOTATION DIFFERENCES | 84 | |||
NOTE 18. OTHER OPERATING INCOME | 84 | |||
NOTE 19. PERSONNEL EXPENSES | 84 | |||
NOTE 20. ADMINISTRATIVE EXPENSES | 84 | |||
NOTE 21. DEPRECIATION AND IMPAIRMENT OF ASSETS | 84 | |||
NOTE 22. OTHER OPERATING EXPENSES | 85 | |||
NOTE 23. INCOME TAX/DEFERRED TAX | 85 | |||
NOTE 24. DIVIDENDS | 85 | |||
NOTE 25. EARNINGS PER SHARE | 85 | |||
NOTE 26. CAPITAL MANAGEMENT AND RISK POLICIES | 86 | |||
NOTE 27. RELATED PARTY TRANSACTIONS | 86 | |||
NOTE 28. ADDITIONAL INFORMATION REQUIRED BY THE ARGENTINE CENTRAL BANK | 87 | |||
NOTE 29. SUBSEQUENT EVENTS | 89 | |||
SCHEDULE A – BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES | 90 | |||
SCHEDULE D – BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING | 91 | |||
SCHEDULE F – CHANGES IN PROPERTY, PLANT AND EQUIPMENT | 92 | |||
SCHEDULE L – FOREIGN CURRENCY BALANCES | 93 | |||
SCHEDULE P – CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES | 94 | |||
SCHEDULE Q – INCOME STATEMENT BREAKDOWN | 95 | |||
ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS | 96 | |||
SUPPLEMENTARY AND EXPLANATORY STATEMENT BY THE BOARD OF DIRECTORS | 98 | |||
REPORT OF THE SUPERVISORY SYNDICS’ COMMITTEE | 100 | |||
INDEPENDENT AUDITOR’S LIMITED REVIEW REPORT | 104 | |||
INDEPENDENT AUDITOR’S LIMITED REVIEW REPORT | 107 |
GRUPO FINANCIERO GALICIA S.A.
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Fiscal Year No. 21, commenced January 1, 2019
Legal Domicile: Tte. Gral. Juan D. Perón No. 430 – 25th floor, Buenos Aires – Argentina -
Principal Line of Business: Financial and Investment Activities
Registration No. with the Corporation Control Authority (I.G.J.): 12,749
Sequential Number – Corporation Control Authority (I.G.J.): 1,671,058
Date of Registration with the Corporation Control Authority (I.G.J.):
Of Bylaws: September 30, 1999
Date of Latest Amendment to Bylaws: July 16, 2010
Date of Expiration of the Company’s Bylaws: June 30, 2100
Information on the Controlling Company:
Company’s Name: EBA HOLDING S.A.
Principal Line of Business: Financial and Investment Activities
Interest Held by the Controlling Company in the Shareholders’ Equity as of 03.31.19: 19.71%
Interest Held by the Controlling Company in the Votes as of 03.31.19: 55.11%
Capital Status as of 03.31.19 (Note 30):
Figures Stated in Thousands of Pesos, except for “Amount” and “Voting Rights per Share”
Shares | ||||||||||||||||||||
Amount | Type | Voting Rights per Share | Subscribed | Paid-in | Registered | |||||||||||||||
281,221,650 | Ordinary Class “A”, Face Value of 1 | 5 | 281,222 | 281,222 | 281,222 | |||||||||||||||
1,145,542,947 | Ordinary Class “B”, Face Value of 1 | 1 | 1,145,543 | 1,145,543 | 1,145,543 | |||||||||||||||
1,426,764,597 | 1,426,765 | 1,426,765 | 1,426,765 |
1
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED CONDENSED INTERIM BALANCE SHEET
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Notes | 03.31.19 | 12.31.18 | |||||||||||||||||||
Assets | ||||||||||||||||||||||
Cash and Due from Banks | 4 | 131,824,102 | 143,309,428 | |||||||||||||||||||
Cash | 25,994,782 | 21,189,989 | ||||||||||||||||||||
Financial Institutions and Correspondents | 105,829,320 | 122,119,439 | ||||||||||||||||||||
Argentine Central Bank (B.C.R.A.) | 103,580,007 | 119,190,612 | ||||||||||||||||||||
Other Local and Foreign Financial Institutions | 2,249,313 | 2,928,827 | ||||||||||||||||||||
Fair Value Debt Securities with Changes to Income | 5 | 108,810,103 | 75,989,171 | |||||||||||||||||||
Derivative Instruments | 6 | 636,124 | 1,785,640 | |||||||||||||||||||
Repo Transactions | 7 | 10,657,687 | 2,068,076 | |||||||||||||||||||
Other Financial Assets | 8 | 10,261,632 | 8,990,443 | |||||||||||||||||||
Net Loans and Other Financing | 9 | 301,476,655 | 286,952,476 | |||||||||||||||||||
Non-financial Public Sector | 226 | 11,777 | ||||||||||||||||||||
Argentine Central Bank | 533 | 533 | ||||||||||||||||||||
Other Financial Institutions | 7,651,421 | 7,872,353 | ||||||||||||||||||||
To theNon-financial Private Sector and Residents Abroad | 293,824,475 | 279,067,813 | ||||||||||||||||||||
Other Debt Securities | 10 | 16,905,289 | 14,489,766 | |||||||||||||||||||
Financial Assets Pledged as Collateral | 11 | 16,703,234 | 10,817,492 | |||||||||||||||||||
Current Income Tax Assets | 12 | 184,707 | 2,510,384 | |||||||||||||||||||
Investments in Equity Instruments | 13 | 2,516,578 | 161,054 | |||||||||||||||||||
Property, Plant and Equipment | 15 and 16 | 14,047,799 | 10,885,015 | |||||||||||||||||||
Intangible Assets | 17 | 4,254,238 | 3,743,723 | |||||||||||||||||||
Deferred Income Tax Assets | 18 | 899,574 | 867,785 | |||||||||||||||||||
Assets for Insurance Contracts | 19 | 1,004,660 | 957,210 | |||||||||||||||||||
OtherNon-financial Assets | 20 | 2,131,461 | 1,314,408 | |||||||||||||||||||
Non-current Assets Held for Sale | 21 | 205,743 | 404,106 | |||||||||||||||||||
Total Assets | 622,519,586 | 565,246,177 |
The accompanying Notes and Schedules are an integral part of these consolidated condensed interim financial statements.
2
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED BALANCE SHEET (Continued)
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Notes | 03.31.19 | 12.31.18 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Deposits | 22 | 407,769,485 | 360,097,275 | |||||||||||||||||||||
Non-financial Public Sector | 2,456,664 | 8,569,383 | ||||||||||||||||||||||
Financial Sector | 699,122 | 711,737 | ||||||||||||||||||||||
Non-financial Private Sector and Residents Abroad | 404,613,699 | 350,816,155 | ||||||||||||||||||||||
Liabilities at Fair Value Through Profit or Loss | 23 | 3,584,269 | 2,144,664 | |||||||||||||||||||||
Derivative Financial Instruments | 6 | 1,876,088 | 1,835,789 | |||||||||||||||||||||
Repo Transactions | 7 | 6,016,088 | 1,948,559 | |||||||||||||||||||||
Other Financial Liabilities | 24 | 56,224,494 | 63,235,042 | |||||||||||||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 25 | 14,626,842 | 19,446,028 | |||||||||||||||||||||
Debt Securities | 26 | 35,581,406 | 29,983,653 | |||||||||||||||||||||
Current Income Tax Liabilities | 6,175,179 | 5,873,075 | ||||||||||||||||||||||
Subordinated Debt Securities | 27 | 10,983,200 | 9,767,874 | |||||||||||||||||||||
Provisions | 28 | 1,556,590 | 1,449,323 | |||||||||||||||||||||
Deferred Income Tax Liabilities | 18 | 509,909 | 385,721 | |||||||||||||||||||||
Liabilities for Insurance Contracts | 19 | 1,170,943 | 1,103,220 | |||||||||||||||||||||
OtherNon-financial Liabilities | 29 | 10,837,842 | 11,377,079 | |||||||||||||||||||||
Total Liabilities | 556,912,335 | 508,647,302 | ||||||||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||
Capital Stock | 30 | 1,426,765 | 1,426,765 | |||||||||||||||||||||
Non-capitalized Contributions | 10,951,132 | 10,951,132 | ||||||||||||||||||||||
Capital Adjustments | 278,131 | 278,131 | ||||||||||||||||||||||
Profit Reserves | 25,024,870 | 25,024,870 | ||||||||||||||||||||||
Retained Income | 17,254,775 | 2,827,741 | ||||||||||||||||||||||
Other Accumulated Comprehensive Loss | (263,862 | ) | (57,361 | ) | ||||||||||||||||||||
Net Income for the Period | 42 | 9,037,359 | 14,427,034 | |||||||||||||||||||||
Shareholders’ Equity Attributable to the Controlling Company’s Shareholders | 63,709,170 | 54,878,312 | ||||||||||||||||||||||
Shareholders’ Equity Attributable toNon-controlling Interests | 1,898,081 | 1,720,563 | ||||||||||||||||||||||
Total Shareholders’ Equity | 65,607,251 | 56,598,875 |
The accompanying Notes and Schedules are an integral part of these consolidated condensed interim financial statements.
3
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED CONDENSED INTERIM INCOME STATEMENT
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Notes | 03.31.19 | 03.31.18 | |||||||||||||||||||||
Interest Income | 31 | 21,981,626 | 11,059,021 | |||||||||||||||||||||
Interest Expenses | 31 | (17,772,522 | ) | (4,888,824 | ) | |||||||||||||||||||
Net Income from Interest | 4,209,104 | 6,170,197 | ||||||||||||||||||||||
Fee Income | 31 | 6,761,241 | 4,476,483 | |||||||||||||||||||||
Fee related Expenses | 31 | (749,061 | ) | (560,739 | ) | |||||||||||||||||||
Net Fee Income | 6,012,180 | 3,915,744 | ||||||||||||||||||||||
Net Income from Financial Instruments Measurement at Fair Value Through Profit or Loss | 31 | 15,718,455 | 1,846,981 | |||||||||||||||||||||
Income from Derecognition of Assets Measured at Amortized Cost | 31 | 16,268 | 15,777 | |||||||||||||||||||||
Gold and Foreign Currency Quotation Differences | 32 | (47,855 | ) | 774,770 | ||||||||||||||||||||
Other Operating Income | 33 | 6,493,748 | 1,454,348 | |||||||||||||||||||||
Underwriting Income from Insurance Business | 34 | 672,164 | 642,009 | |||||||||||||||||||||
Loan and Other Receivables Loss Provisions | 35 | (7,561,394 | ) | (1,621,747 | ) | |||||||||||||||||||
Net Operating Income | 25,512,670 | 13,198,079 | ||||||||||||||||||||||
Personnel Expenses | 36 | (4,062,501 | ) | (3,095,064 | ) | |||||||||||||||||||
Administrative Expenses | 37 | (4,065,088 | ) | (2,924,700 | ) | |||||||||||||||||||
Depreciation and Impairment of Assets | 38 | (568,644 | ) | (257,481 | ) | |||||||||||||||||||
Other Operating Expenses | 39 | (4,260,445 | ) | (2,444,862 | ) | |||||||||||||||||||
Operating Income | 12,555,992 | 4,475,972 | ||||||||||||||||||||||
Share of Profit From Associates and Joint Ventures | - | - | ||||||||||||||||||||||
Income from Continuing Operations before Taxes | 12,555,992 | 4,475,972 | ||||||||||||||||||||||
Income Tax from Continuing Operations | 40 | (3,341,115 | ) | (1,379,516 | ) | |||||||||||||||||||
Net Income from Continuing Operations | 9,214,877 | 3,096,456 | ||||||||||||||||||||||
Income from Discontinued Operations | 21 | - | 74,776 | |||||||||||||||||||||
Income Tax from Discontinued Operations | 40 | - | (22,882 | ) | ||||||||||||||||||||
Net Income for the Period | 9,214,877 | 3,148,350 | ||||||||||||||||||||||
Net Income for the Period Attributable to Owners of the parent Company | 9,037,359 | 3,005,171 | ||||||||||||||||||||||
Net Income for the Period Attributable toNon-controlling Interests | 177,518 | 143,179 | ||||||||||||||||||||||
Items | Notes | 03.31.19 | 03.31.18 | |||||||||||||||||||||
Income per Share | 42 | |||||||||||||||||||||||
Net Income Attributable to Owners of the parent Company | 9,037,359 | 3,005,171 | ||||||||||||||||||||||
Net Income Attributable to Owners of the parent Company Adjusted for Dilution | 9,037,359 | 3,005,171 | ||||||||||||||||||||||
Weighted-Average of Ordinary Shares Outstanding for the Period | 1,426,765 | 1,426,765 | ||||||||||||||||||||||
Diluted Weighted-Average of Ordinary Shares Outstanding for the Period | 1,426,765 | 1,426,765 | ||||||||||||||||||||||
Basic Income per Share | 6.33 | 2.11 | ||||||||||||||||||||||
Diluted Income per Share | 6.33 | 2.11 |
The accompanying Notes and Schedules are an integral part of these consolidated condensed interim financial statements.
4
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED CONDENSED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Notes | 03.31.19 | 03.31.18 | |||||||||||||||||||||
Net Income for the Period | 9,214,877 | 3,148,350 | ||||||||||||||||||||||
Items of Other Comprehensive Income (OCI) that may be Reclassified to Profit or Loss for the Period | ||||||||||||||||||||||||
Income or Loss from Financial Instruments at Fair Value through OCI (Item 4.1.2a of IFRS 9) | ||||||||||||||||||||||||
Loss for the Period from Financial Instruments at Fair Value with Changes through OCI(*) | 31 | (209,357 | ) | (14,425 | ) | |||||||||||||||||||
Total Other Comprehensive Income that may be Reclassified to Profit or Loss for the Period | (209,357 | ) | (14,425 | ) | ||||||||||||||||||||
Total Other Comprehensive Income (Loss) | (209,357 | ) | (14,425 | ) | ||||||||||||||||||||
Total Comprehensive Income | 9,005,520 | 3,133,925 | ||||||||||||||||||||||
Total Comprehensive Income for the Period Attributable to Owners of the parent Company | 8,828,002 | 2,990,746 | ||||||||||||||||||||||
Total Comprehensive Income Attributable toNon-controlling Interests | 177,518 | 143,179 |
(*) Net of Income Tax.
The accompanying Notes and Schedules are an integral part of these consolidated condensed interim financial statements.
5
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Movements | Notes | Capital Stock | Non- capitalized | Adjustments to Shareholders’ Equity | Other Comprehensive Income | Profit Reserves | Retained Income | Total Equity | Total Equity to Non- controlling | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding | Additional Paid-in Capital | Accumulated OCI | Others | Legal Reserve | Others | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 12.31.18 | 1,426,765 | 10,951,132 | 278,131 | (57,361 | ) | - | 340,979 | 24,683,891 | 17,254,775 | 54,878,312 | 1,720,563 | 56,598,875 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive Income for the Period | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income for the Period | 42 | - | - | - | - | - | - | - | - | 9,037,359 | 177,518 | 9,214,877 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from Sale of Fair Value Securities Through Changes in OCI from Subsidiaries | - | - | - | 2,856 | - | - | - | - | 2,856 | 2,856 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income for the Period | 31 | - | - | - | (209,357 | ) | - | - | - | - | (209,357 | ) | - | (209,357 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 03.31.19 | 1,426,765 | 10,951,132 | 278,131 | (263,862 | ) | - | 340,979 | 24,683,891 | 17,254,775 | 63,709,170 | 1,898,081 | 65,607,251 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 12.31.17 | 1,426,765 | 10,951,132 | 278,131 | 17,279 | - | 315,679 | 17,074,889 | 11,157,210 | 41,221,085 | 1,935,196 | 43,156,281 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase ofNon-controlling Interests | - | - | - | - | - | - | 504,833 | - | 504,833 | (504,833 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive Income for the Period | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income for the Period | 42 | - | - | - | - | - | - | - | 3,005,171 | 3,005,171 | 143,179 | 3,148,350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) for the Period | 31 | - | - | - | (14,425 | ) | - | - | - | - | (14,425 | ) | - | (14,425 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 03.31.18 | 1,426,765 | 10,951,132 | 278,131 | 2,854 | - | 315,679 | 17,579,722 | 14,162,381 | 44,716,664 | 1,573,542 | 46,290,206 |
6
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Notes | 03.31.19 | 03.31.18 | |||||||||||||
OPERATING ACTIVITIES CASH FLOWS | ||||||||||||||||
Net Income for the Period before Income Tax | 12,555,992 | 4,475,972 | ||||||||||||||
Adjustment to Obtain the Operating Activities Flows: | ||||||||||||||||
Interest Income | (21,981,626) | (11,059,021) | ||||||||||||||
Interest Expenses | 17,772,522 | 4,888,824 | ||||||||||||||
Net Loss from Measurement of Fair Value Financial Instruments with Changes to Income | (15,718,455) | (1,846,981) | ||||||||||||||
Loan Loss Provisions | 7,561,394 | 1,621,727 | ||||||||||||||
Depreciation and Impairment of Assets | 568,644 | 257,481 | ||||||||||||||
Other Allowances | 414,195 | 213,308 | ||||||||||||||
Quotation Difference | 57,484 | (601,675) | ||||||||||||||
Results from Associates and Joint Ventures | - | - | ||||||||||||||
Loss from Derecognition of Assets Measured at Amortized Cost | (16,268) | (15,777) | ||||||||||||||
Other Operations | (379,419) | 995,828 | ||||||||||||||
Net Increases/(Decreases) from Operating Assets: | ||||||||||||||||
Fair Value Debt Securities with Changes to Income | 9,037,808 | (1,368,185) | ||||||||||||||
Derivative Instruments | 1,951,758 | 387,888 | ||||||||||||||
Repo Transactions | 183,829 | 9,152 | ||||||||||||||
Other Financial Assets | (377,860) | 90,015 | ||||||||||||||
Net Loans and Other Financing | ||||||||||||||||
-Non-financial Public Sector | 11,551 | (81) | ||||||||||||||
- Other Financial Institutions | (65,545) | 402,748 | ||||||||||||||
-Non-financial Private Sector and Residents Abroad | 8,922,907 | (2,623,322) | ||||||||||||||
Other Debt Securities | (804,113) | (854,184) | ||||||||||||||
Financial Assets Pledged as Collateral | (4,493,969) | (2,525,522) | ||||||||||||||
Investments in Equity Instruments | - | (12,709) | ||||||||||||||
OtherNon-financial Assets | (536,203) | (252,340) | ||||||||||||||
Net Increases/(Decreases) from Operating Liabilities: | ||||||||||||||||
Deposits | ||||||||||||||||
-Non-financial Public Sector | (6,119,174) | 1,328,624 | ||||||||||||||
- Financial Sector | (316,624) | 50,263 | ||||||||||||||
-Non-financial Private Sector and Residents Abroad | 17,645,474 | (12,676,920) | ||||||||||||||
Fair Value Liabilities with Changes to Income | 653,955 | 1,796,550 | ||||||||||||||
Derivative Instruments | 24,272 | (403,867) | ||||||||||||||
Repo Transactions | 3,079,816 | 883,791 | ||||||||||||||
Other Financial Liabilities | (11,206,947) | (4,657,433) | ||||||||||||||
Provisions | (6,649) | (2,284) | ||||||||||||||
OtherNon-financial Liabilities | (550,763) | 1,073,851 | ||||||||||||||
Income Tax Collections/Payments | (725,941) | (845,059) | ||||||||||||||
TOTAL OPERATING ACTIVITIES (A) | 17,142,045 | (21,269,338) |
7
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS (Continued)
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Notes | 03.31.19 | 03.31.18 | |||||||||||||||||||||
INVESTMENT ACTIVITIES CASH FLOWS | ||||||||||||||||||||||||
Payments: | ||||||||||||||||||||||||
Purchase of PP&E, Intangible Assets and Other Assets | (862,616) | (524,348) | ||||||||||||||||||||||
Purchase ofNon-controlling Interests | - | (924,140) | ||||||||||||||||||||||
Collections: | ||||||||||||||||||||||||
Sale of PP&E, Intangible Assets and Other Assets | 20,986 | 6,224 | ||||||||||||||||||||||
Winding-up of Subsidiaries and Joint Ventures | - | 248 | ||||||||||||||||||||||
Other Collections Related to Investing Activities | 2,348,630 | 31,552 | ||||||||||||||||||||||
Discontinued Operations/Sale of Equity Investments in Associates and Joint Ventures | - | 909,921 | ||||||||||||||||||||||
TOTAL INVESTMENT ACTIVITIES (B) | 1,507,000 | (500,543) | ||||||||||||||||||||||
FINANCING ACTIVITIES CASH FLOWS | ||||||||||||||||||||||||
Payments: | ||||||||||||||||||||||||
Unsubordinated Debt Securities | (2,711,599) | (946,410) | ||||||||||||||||||||||
Argentine Central Bank | (2,423) | (3,760) | ||||||||||||||||||||||
Subordinated Debt Securities | (387,647) | (195,560) | ||||||||||||||||||||||
Loans from Local Financial Institutions | (771,410) | (80,121) | ||||||||||||||||||||||
Banks and International Entities | (7,281,856) | - | ||||||||||||||||||||||
Other Payments Related to Financing Activities | (128,910) | (18,421) | ||||||||||||||||||||||
Collections: | ||||||||||||||||||||||||
Unsubordinated Debt Securities | 4,555,584 | 754,539 | ||||||||||||||||||||||
Argentine Central Bank | - | 365 | ||||||||||||||||||||||
Loans from Local Financial Institutions | 101,880 | 282,950 | ||||||||||||||||||||||
Banks and International Entities | 932,186 | 1,461,304 | ||||||||||||||||||||||
Other Collections Related to Financing Activities | - | 120,152 | ||||||||||||||||||||||
TOTAL FINANCING ACTIVITIES (C) | (5,694,195) | 1,375,038 | ||||||||||||||||||||||
EFFECT OF CHANGES IN EXCHANGE RATE (D) | 13,357,725 | 2,740,094 | ||||||||||||||||||||||
INCREASE/(DECREASE) IN CASH, NET (A+B+C+D) | 26,312,575 | (17,654,749) | ||||||||||||||||||||||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 4 | 225,858,938 | 89,367,283 | |||||||||||||||||||||
CASH AND CASH EQUIVALENTS ATPERIOD-END | 4 | 252,171,513 | 71,712,534 |
8
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
NOTE 1. ACCOUNTING STANDARDS AND BASIS FOR PREPARATION
Grupo Financiero Galicia S.A. (individually referred to as the “Company” and jointly with its subsidiaries as the “Group”) was constituted on September 14, 1999, as a financial service holding company organized under the laws of Argentina. The Company’s main asset is its interest in Banco de Galicia y Buenos Aires S.A.U. (“Banco Galicia” or the “Bank”). Banco Galicia is a private-sector bank that offers a full spectrum of financial services to both individual and corporate customers. In addition, the Company has a controlling interest in Tarjetas Regionales S.A., which maintains investments related to the issuance of credit cards and supplementary services; Sudamericana Holding S.A., a company engaged in the insurance business; Galicia Administradora de Fondos S.A., a mutual fund manager, and Galicia Warrants S.A., a company engaged in the issuance of warrants.
These consolidated condensed interim financial statements were approved and authorized for publication pursuant to the Minutes of the Board of Directors’ Meeting No. 585, dated May 9, 2019.
1.1. ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
In the light of the fact that the Group is subject to the provisions of Article 2 – Section I – Chapter I of Title IV: Periodical Reporting Requirements of the Argentine National Securities Commission (“C.N.V.”) regulations, the Group is required to present its financial statements in accordance with the valuation and disclosure criteria set forth by the Argentine Central Bank. As required by the aforementioned article, we hereby report that:
- | The Company’s corporate purpose is exclusively related to financial and investment activities; |
- | The equity investment in the Bank and Tarjetas Regionales S.A., the latter being subject to the consolidated supervision requirements set forth by the Argentine Central Bank (Communiqué “A” 2989, and complementary), accounts for 94.75% of the Company’s assets, comprising the Company’s main asset. |
- | 97.29% of the Company’s income is derived from its share of profit (loss) in the entities referred to in the preceding paragraph; |
- | The Company has a 100% equity interest in the Bank and an 83% equity interest in Tarjetas Regionales S.A., thus having control over both entities. |
The Argentine Central Bank, through Communiqué D” “A” 5541, as amended, set forth a convergence plan towards compliance with the International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), addressed to entities under the Argentine Central Bank’s supervision, effective for fiscal years commenced on or after January 1, 2018, except for item 5.5 (Impairment) of IFRS 9 “Financial Instruments”, and IAS 29 “Financial Reporting in Hyperinflationary Economies”, both of which have been temporarily waived until January 1, 2020, at which time entities will be required to apply the provisions on Impairment of Financial Assets and restatement of financial statements in constant currency.
In addition, as described in Note 21, as concerns the measurement of our equity interest in Prisma Medios de Pago S.A. at fair value, the Argentine Regulatory Agency of Financial and Foreign Exchange Institutions has required that such value recognized be reduced to the portion of cash actually received upon the sale.
1.2. BASIS FOR PREPARATION
These consolidated condensed interim financial statements for the three-month period ended March 31, 2019 were prepared in accordance with the IFRS-based accounting framework set forth by the Argentine Central Bank and described in Note 1.1., and according to the provisions of IAS 34 “Interim Financing Reporting.” These consolidated condensed interim financial statements do not include all such information required to prepare a full set of annual financial statements, and users are encouraged to read them jointly with the Company’s annual financial statements as of December 31, 2018.
It has been concluded that these consolidated condensed interim financial statements fairly present the Group’s financial position, financial performance and cash flows, according to the IFRS-based accounting framework set forth by the Argentine Central Bank, as described in Note 1.2(a)—Measurement Unit. Net income (loss) for the three-month period ended March 31, 2019 is not necessarily reflective of a proportional share in the Group’s income (loss) for the full fiscal year.
9
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The accounting principles are consistent with those used in the financial statements as of December 2018, except for a change in the accounting principles applicable to leases, as described in Note 1.2(c).
The accounting principles have been consistently applied to all entities comprising the Group.
(a) Measurement Unit
The Group’s consolidated condensed interim financial statements reflect the effects of the changes in the purchasing power of currency until February 28, 2003, the date on which the adjustment for inflation was discontinued, as required by Communiqué “A” 3921 of the Argentine Central Bank.
Law No. 27468 enacted in November 2018 abrogated the prohibition to present the financial statements adjusted for inflation, as established by Decree 664/2003, entrusting each regulatory agency with its application. On February 22, 2019, through Communiqué “A” 6651, the Argentine Central Bank established that entities subject to its control shall restate the financial statements into constant currency for fiscal years commencing on or after January 1, 2020.
IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of an entity whose functional currency is that of a hyperinflationary economy be restated in terms of the current measurement unit as of the reportingperiod-end, irrespective of whether they are based on the historical cost or the current cost method. Accordingly, in general terms, inflation occurring since the acquisition date or since the revaluation date, as the case may be, should be accounted for innon-monetary items. These requirements are also applicable to the comparative information reported in the financial statements. According to IAS 29, monetary assets and liabilities are not required to be restated, for they are stated in the current unit of measurement as of the end of the reporting period. Assets and liabilities subject to adjustments based on specific agreements will be adjusted on the basis of such agreements.Non-monetary items measured at their current values at the end of the reporting period, such as net realizable value or otherwise, will not be restated. The othernon-monetary assets and liabilities will be restated by applying a general price index. The income (loss) from the net monetary position will be charged to net income for the reporting period under a separate item.
In order to conclude whether a given economy qualifies as hyperinflationary pursuant to the terms of IAS 29, certain factors should be considered, including a three-year cumulative inflation rate reaching or exceeding 100%.
The Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.) through Resolution J.G.539/18 and the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires (C.P.C.E.C.A.B.A.) through Resolution C.D. 107/2018 have pointed out that, effective since fiscal years ending on July 1, 2018 and thereafter, entities reporting under IFRS will be required to apply the inflation adjustment since the conditions for such application have been satisfied. In addition, on December 26, 2018, the C.N.V. issued General Resolution No. 777/2018 authorizing the issuing entities to present accounting information in constant currency for annual financial statements for interim and special periods ending on December 31, 2018 and thereafter, except for financial institutions and insurance companies.
IAS 29 has not been applied in these consolidated condensed interim financial statements, in compliance with the provisions set forth by Argentine Central Bank’s Communiqué “A” 6651 referred to above. Therefore, in reading and analyzing these financial statements, users should consider the last years’ cumulative inflation rates and certain macroeconomic variables affecting the Group’s business, including labor costs and prices for supplies.
The application of IAS 29 “ “Financial Reporting in Hyperinflationary Economies” has overall effects on these consolidated condensed interim financial statements. Accordingly, the reported amounts would be significantly affected. The Group’s shareholders’ equity and its comprehensive results of operations as of March 31, 2019 would amount to approximately $74,477 million and $4,089 million, respectively.
(b) Disclosure Criteria
Comparative information related to the consolidated condensed interim Balance Sheet, and notes to the consolidated condensed interim statements and consolidated schedules corresponds to the previous fiscalyear-end, while comparative information related to the consolidated condensed interim Income Statement, consolidated condensed interim Statement of other Comprehensive Income, consolidated condensed interim Statement of Changes in Shareholders’ Equity and consolidated condensed interim Statement of Cash Flows corresponds to the same period of the previous fiscal year.
10
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The figures from the financial statements presented in comparative format have been subject to certain reclassifications for the sake of a consistent disclosure with the figures for the reporting period.
(c) Foreign Currency Translation
- | Functional Currency and Reporting Currency |
The figures disclosed in the consolidated financial statements for each of the Group’s companies are stated in their functional currency, that is, the currency of the main economic environment in which they operate. These consolidated financial statements are stated in Argentine Pesos, which is the Group’s functional and reporting currency.
- | Transactions and Balances |
Transactions in foreign currency are translated to functional currency at the exchange rates prevailing on the transaction or valuation dates when such items are measured at closing. Gains and losses in foreign currency on the settlement of these transactions and on the translation of monetary assets and liabilities to foreign currency at the exchange rates prevailing at closing are recognized in the income statement under “Gold and Foreign Currency Quotation Differences,” except when deferred in equity as in the case of qualifying cash flow hedges, where applicable.
Balances are measured at the reference exchange rate of the U.S. Dollar set by the Argentine Central Bank prevailing at the close of operations on the last working day of each month.
As of March 31, 2019, December 31, 2018 and March 31, 2018, balances in U.S. Dollars were converted applying the reference exchange rate ($43.3533, $ 37.8083 and $ 20.1433, respectively) set by the Argentine Central Bank. Assets and liabilities valued in foreign currencies other than the U.S. Dollar were converted into the latter currency using the swap rates reported by the Argentine Central Bank.
(d) | New Accounting Standards, Amendments and Interpretations issued by the IASB that Have Been Adopted by the Group |
The Group has adopted the following standards for the first time as of January 1, 2019:
IFRS 16 “Leases”:In January 2016, the IASB issued IFRS 16 “Leases” which sets out a new accounting model for leases. Under IFRS 16, a contract is or contains a lease if the contract confers the lessee a right to control the use of an identified asset for a period of time, for consideration. IFRS 16 requires that the lessee recognize the liability arising from the lease reflecting the lease future payments and a right of use of the assets for substantially all leases, other than certain short-term leases and leases oflow-value assets. Lessor accounting is maintained as provided for in IAS 17. However, the new accounting model for lessee is expected to have an impact on negotiations between lessors and lessees. Entities are required to apply IFRS 16 for fiscal years commencing on or after January 1, 2019.
The Group leases several properties and equipment. Generally, these lease agreements are entered into for fixed terms ranging from one to 20 years, but in some cases there might be price agreements for shorter periods, with optional renewal. Lease terms are negotiated on an individual basis and contain a broad variety of different terms and conditions. Lease agreements do not include covenants, but the leased assets may not be used as loan collateral.
Leases are recognized as aright-of-use asset with its related liability on the date on which the leased asset becomes available for use by the Group. Theright-of-use asset is depreciated on a straight-line basis over the shorter of the asset’s useful life and the term of the lease. Lease liabilities are recorded at amortized cost.
Lease assets and liabilities are initially measured at their present values. Lease liabilities include the net present value of the following lease payments:
- | Fixed payments (includingin-substance fixed lease payments), net of lease incentives receivable; |
- | Variable lease payments that depend on an index or a rate; |
- | 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 on early termination, if the lease term reflects the lessee exercising that option. |
Lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or otherwise the Group’s incremental borrowing rate.
11
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Right-of-use assets are measured at cost, which include the following:
- | The lease liability amount at initial measurement; |
- | Lease payments made at or before the commencement of the lease (less any lease incentives received); |
- | Any initial direct costs; and |
- | Any repair costs. |
Payments associated with short-term leases and leases oflow-value assets are recognized as an expense on a straight-line basis. Short-term leases are agreements for a term of 12 months or less. Assets oflow-value are small physical spaces for the placement of equipment owned by the Group.
As of the adoption date, the Group recognized the lease liability related to leases classified as operating leases under IAS 17. These liabilities were measured at the present value of the remaining payments, discounted using the incremental borrowing rate as of January 1, 2018. The rate weighted average is 37.94% for Argentine peso-denominated contracts and 8.60% for contracts denominated in foreign currency.
IFRIC 23 “Uncertainty over Income Tax Treatment”: This interpretation clarifies how the recognition and measurement requirements of IAS 12 “Income Tax” should be applied when there is uncertainty over the income tax treatment. IFRIC 23 was published in June 2017 and became effective for fiscal years commencing on or after January 1, 2019. The adoption of this standard did not have a material impact on the Group.
Prepayment Features with Negative Compensation – Amendment to IFRS 9:This amendment to IFRS 9 enables entities to measure at amortized cost some prepayable financial assets with negative compensation. The assets affected, which include some loans and debt securities, would otherwise have been measured at fair value through profit or loss to qualify for amortized cost measurement, the negative compensation must be “reasonable compensation for early termination of the contract” and the asset must be held within a ‘held to collect’ business model. Entities are required to apply this amendment to IFRS 9 for fiscal years commencing on or after January 1, 2019. The adoption of this standard did not have a material impact for the Group.
Investments in Associates and Joint Ventures – Amendments to IAS 28: The amendments clarify the accounting for investments in associates and joint ventures for which the equity method is not applied. Entities shall account for such investments according to IFRS 9 “Financial Instruments” rather than applying the requirements for impairment set out in IAS 28 “Investments in Associates and Joint Ventures”. Entities are required to apply the amendments to IAS 28 for fiscal years commencing on or after January 1, 2019. The adoption of this standard did not have a material impact.
Annual Improvements to IFRS 2015–2017 Cycle:The following improvements were agreed to in December 2017.
✓ | IFRS 3: The amendments to IFRS 3 clarified that obtaining control of a joint operation is a business combination achieved in stages. |
✓ | IFRS 11: The amendments to IFRS 11 clarified that the party obtaining control of a business that is a joint operation should not remeasure its previously held interest in that joint operation. |
✓ | IAS 12: The amendments to IAS 12 clarified that the tax consequences of dividends on financial instruments classified as equity should be recognized in profit or loss where the transactions or events that generated distributable profits are recognized. |
✓ | IAS 23: The amendments to IAS 23 clarified that if any specific borrowing is recorded after the qualifying asset is ready for its intended use or sale, then that borrowing becomes part of the funds that an entity borrows generally. |
Entities are required to apply these amendments for fiscal years commencing on or after January 1, 2019. The Group believes that the application of this standard would not have a material impact on the Group.
(e) | New Accounting Standards and Amendments issued by the IASB that Have Not Been Adopted by the Group |
As provided for in the Argentine Central Bank’s Organic Charter and the Financial Institutions Law, as new IFRS are approved or amended, or as the IFRS currently in force are repealed, and once these changes are adopted by way of Adoption Circulars handed down by the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.), the Argentine Central Bank will decide whether to approve such changes for financial institutions. In general terms, the early adoption of any given IFRS will not be admitted, unless specifically admitted at the time of adoption.
12
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Below is a detail of the new standards, changes and interpretations which have been published but have not yet come into force for fiscal years commencing on or after January 1, 2019, and which have not been adopted earlier.
IFRS 17 “Insurance Contracts”: On May 18, 2017, the IASB issued IFRS 17 “Insurance Contracts,” establishing a comprehensive accounting framework based on measurement and disclosure principles for insurance contracts. The new standard supersedes IFRS 4 “Insurance Contracts,” and requires that insurance contracts be measured using current fulfillment cash flows and that revenues be recognized as the insurance service is delivered during the term of the coverage. Entities are required to apply IFRS 17 for fiscal years commencing on or after January 1, 2021. The Group is assessing the potential impact that this standard may have on its financial statements.
Sale or Contributions of Assets Between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 and IAS 28: The IASB made limited amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”. The amendments clarify the accounting for sales or contributions of assets between the investor and its associates and joint ventures. This confirms that the accounting treatment depends on whethernon-monetary assets sold or contributed to the associate or joint venture constitute a “business” (as defined in IFRS 3).
Whennon-monetary assets constitute a business, the investor will recognize the gain or loss on the sale or contribution of assets. If assets do not constitute a business, the gain or loss is recognized by the investor only up to the amount recognized by the other investor in the associate or joint venture. The amendments apply prospectively.
The IASB has decided to defer the date of application of this amendment until it completes its research project on the equity method of accounting.
There are no other IFRS or IFRIC interpretations which have not yet come into force and which are expected to have a material impact on the Group.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
The preparation of these consolidated condensed interim financial statements in accordance with the IFRS-based accounting framework requires the use of certain significant accounting estimates. It also requires that management make judgments in applying the accounting standards set forth by the Argentine Central Bank to define the Group’s accounting criteria.
In preparing these consolidated condensed interim financial statements, the Group is required to make estimates and assessments to determine the reported amounts of assets and liabilities, and contingent assets and liabilities disclosed as of the date of these consolidated condensed interim financial statements, as well as the reported amounts of income and expenses for the period. Therefore, estimates are made in order to calculate, at a given time, the recoverable value of assets, the loan loss provisions and provisions for other contingencies, the depreciation charges and the income tax charge, among other things. Future actual results may differ from estimates and assessments made as of the date these consolidated condensed interim financial statements were prepared.
In preparing these consolidated condensed interim financial statements, the critical judgments made by the Group in applying the accounting policies and the sources of information used for the respective estimates are the same as those applied to the consolidated financial statements for the year ended December 31, 2018.
NOTE 3. FAIR VALUES
The Group classifies the fair values of financial instruments in three levels according to the quality of data used to determine them.
Fair Value Level 1: The fair value of financial instruments traded in active markets (such 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 within 5 business days from the valuation date and there is an active market for the instrument, it will be included in Level 1. Otherwise, it will be valued in Level 2.
Fair Value Level 2: The fair value of financial instruments that are not traded in active markets, for example, the derivatives available over the counter, is determined using valuation techniques that maximize the use of observable information and relies the least possible on the Group’s specific estimates. If all the material variables to establish the fair value of a financial instrument are observable, the instrument is included in Level 2. If the variables to determine the price are not observable, the instrument will be valued in Level 3.
13
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Fair Value Level 3: If one or more material variables are not based on observable market information, the instrument is included in Level 3. This is the case for unquoted equity instruments and unquoted financial instruments.
That is to say, when observable market prices are not available for validation, the instrument will be transferred into Level 3. Only when an instrument has an observable quoted 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 of similar instruments. |
- | Determining the estimated present value of instruments. |
The valuation technique used to determine the fair value Level 2 is based on inputs other than the quoted price included in Level 1 that are observable for the asset or liability, both directly (i.e., prices) and indirectly (i.e., price derivatives). For those instruments for which there is no secondary trading 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 regulatory agency. The price has been prepared based on such rate accrual.
The valuation technique to determine fair value Level 3 of financial instruments is based on the price prepared by curve, which is a method that compares the existing spread between the curve of sovereign bonds and the average hurdle rates of primary issuances, representing the different segments, according to the different risk ratings. If there are no representative primary issuances during the month, the following variants 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; |
(iii) | spread calculated in the prior month and will be applied to the sovereign curve, according to the reasonableness thereof; |
(iv) | a specific margin is applied, determined based on historical returns of instruments of similar conditions, based on justified reasons therefor. |
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.
14
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The Group’s financial instruments measured at fair value at period/fiscalyear-end are as follows:
Instruments Portfolio as of 03.31.19 | Fair Value Level 1 | Fair Value Level 2 | Fair Value Level 3 | |||||||||||||||
Assets | ||||||||||||||||||
- Argentine Central Bank’s Bills and Notes | 18,779,072 | 80,700,777 | - | |||||||||||||||
- Government Securities | 8,593,677 | 48,136 | 196,781 | |||||||||||||||
- Private Securities | 105,056 | - | 386,604 | |||||||||||||||
- Derivative Instruments | - | 636,124 | - | |||||||||||||||
- Other Financial Assets | 2,927,299 | 39,000 | - | |||||||||||||||
- Other Debt Securities(*) | 10,662,088 | - | - | |||||||||||||||
- Financial Assets Pledged as Collateral | 8,876,005 | - | - | |||||||||||||||
- Equity Instruments | 50,817 | - | 2,465,761 | |||||||||||||||
Liabilities | ||||||||||||||||||
- Fair Value Liabilities with Changes to Income | 3,584,269 | - | - | |||||||||||||||
- Derivative Instruments | - | 1,876,088 | - | |||||||||||||||
Total | 46,409,745 | 79,547,949 | 3,049,146 |
(*) It relates to Treasury Bonds due in 2020 measured at fair value with changes in OCI.
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 | 54,008 | 70,097,764 | - | |||||||||||||||
- Government Securities | 2,952,344 | 1,278,048 | 469,414 | |||||||||||||||
- Private Securities | 308,755 | 36,270 | 792,568 | |||||||||||||||
- Derivative Instruments | - | 1,785,640 | - | |||||||||||||||
- Other Financial Assets | 4,264,431 | 39,000 | - | |||||||||||||||
- Other Debt Securities(*) | 9,129,045 | - | - | |||||||||||||||
- Financial Assets Pledged as Collateral | 3,184,346 | 275,366 | - | |||||||||||||||
- Equity Instruments | 26,795 | - | 134,259 | |||||||||||||||
Liabilities | ||||||||||||||||||
- Fair Value Liabilities with Changes to Income | 1,366,785 | 777,879 | - | |||||||||||||||
- Derivative Instruments | - | 1,835,789 | - | |||||||||||||||
Total | 18,552,939 | 70,898,420 | 1,396,241 |
(*) It relates to Treasury Bonds due in 2020 measured at fair value with changes in OCI.
Changes in instruments included in fair value Level 3 are as follows:
Level 3 | 12.31.18 | Transfers(*) | Purchases | Sales | Income (Loss) | 03.31.19 | ||||||||||||||||||||||||||||||
- Government Securities | 469,414 | (177,728 | ) | 2,405,385 | (2,503,258 | ) | 2,968 | 196,781 | ||||||||||||||||||||||||||||
- Private Securities | 792,568 | 63,188 | 743,213 | (1,218,728 | ) | 6,363 | 386,604 | |||||||||||||||||||||||||||||
- Equity Instruments | 134,259 | (15,704 | ) | 2,346,763 | - | 443 | 2,465,761 | |||||||||||||||||||||||||||||
Total | 1,396,241 | (130,244 | ) | 5,495,361 | (3,721,986 | ) | 9,774 | 3,049,146 | ||||||||||||||||||||||||||||
(*) They include the movements of levels of financial instruments classified as fair value Level 3, as described above.
|
| |||||||||||||||||||||||||||||||||||
Level 3 | 12.31.17 | Transfers(*) | Purchases | Sales | Income (Loss) | 12.31.18 | ||||||||||||||||||||||||||||||
- Government Securities | 165,214 | 1,032,909 | 8,448,863 | (9,311,230 | ) | 133,658 | 469,414 | |||||||||||||||||||||||||||||
- Private Securities | 976,700 | 320,265 | 5,314,682 | (6,144,835 | ) | 325,756 | 792,568 | |||||||||||||||||||||||||||||
- Equity Instruments | 56,684 | - | - | - | 77,575 | 134,259 | ||||||||||||||||||||||||||||||
Total | 1,198,598 | 1,353,174 | 13,763,545 | (15,456,065 | ) | 536,989 | 1,396,241 |
(*) 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 ofperiod/year-end. They resulted from the transfer to Level 3 of the instruments that do not have observable valuation prices and the movement to Level 1 of the instruments that have observable quoted price in the market as ofperiod/year-end. That is to say, the Level 1 instrument was no longer quoted and, therefore, was transferred to Level 3 and vice versa.
15
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Below is the difference between the carrying amount and the fair value of the main assets and liabilities recorded at amortized cost, as of the dates indicated below:
Assets/(Liabilities) Accounts as of March 31, 2019 | Carrying Amount | Fair Value | ||||||||||
Assets | ||||||||||||
Cash and Due from Banks | 131,824,102 | 131,824,102 | ||||||||||
Net Loans and Other Financing | 301,476,655 | 303,619,268 | ||||||||||
Other Financial Assets | 10,261,632 | 10,832,194 | ||||||||||
Other Debt Securities | 16,905,289 | 16,865,393 | ||||||||||
Repo Transactions | 10,657,687 | 10,657,687 | ||||||||||
Financial Assets Pledged as Collateral | 16,703,234 | 16,703,234 | ||||||||||
Liabilities | ||||||||||||
Deposits | 407,769,485 | 407,036,768 | ||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 14,626,842 | 14,210,950 | ||||||||||
Debt Securities Issued | 35,581,406 | 34,531,623 | ||||||||||
Subordinated Debt Securities | 10,983,200 | 10,362,875 | ||||||||||
Repo Transactions | 6,016,088 | 5,981,815 | ||||||||||
Other Financial Liabilities | 56,224,494 | 56,224,490 | ||||||||||
Assets/(Liabilities) Accounts as of December 31, 2018 | Carrying Amount | Fair Value | ||||||||||
Assets | ||||||||||||
Cash and Due from Banks | 143,309,428 | 143,309,428 | ||||||||||
Net Loans and Other Financing | 286,952,476 | 289,581,428 | ||||||||||
Other Financial Assets | 8,990,443 | 8,990,443 | ||||||||||
Other Debt Securities | 14,489,766 | 14,631,751 | ||||||||||
Repo Transactions | 2,068,076 | 2,068,076 | ||||||||||
Financial Assets Pledged as Collateral | 10,817,492 | 10,817,492 | ||||||||||
Liabilities | ||||||||||||
Deposits | 360,097,275 | 359,875,025 | ||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 19,446,028 | 17,689,372 | ||||||||||
Debt Securities Issued | 29,983,653 | 29,269,086 | ||||||||||
Subordinated Debt Securities | 9,767,874 | 8,513,061 | ||||||||||
Repo Transactions | 1,948,559 | 1,944,965 | ||||||||||
Other Financial Liabilities | 63,235,042 | 63,235,113 |
16
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
NOTE 4. CASH AND CASH EQUIVALENTS
The table below shows a breakdown of items comprising cash and cash equivalents:
03.31.19 | 12.31.18 | 03.31.18 | 12.31.17 | |||||||||||||||||||||
Cash and Due from Banks | 131,824,102 | 143,309,428 | 46,441,210 | 58,955,287 | ||||||||||||||||||||
Argentine Central Bank’s Bills and Notes Maturing within up to 90 Days | 99,937,999 | 70,117,158 | 14,955,913 | 16,920,090 | ||||||||||||||||||||
Receivables from Reverse Repo Transactions | 10,606,698 | 2,057,558 | 4,492,816 | 9,654,517 | ||||||||||||||||||||
Local Interbank Loans | - | 938,000 | 1,231,778 | 935,000 | ||||||||||||||||||||
Overnight Placements in Banks Abroad | 3,827,692 | 5,300,681 | 1,461,845 | 288,991 | ||||||||||||||||||||
Mutual Funds | 5,614,713 | 3,850,114 | 2,339,553 | 2,416,294 | ||||||||||||||||||||
Government Securities | - | - | 780,141 | - | ||||||||||||||||||||
Time Deposits | 360,309 | 285,999 | 9,278 | 197,104 | ||||||||||||||||||||
Total Cash and Cash Equivalents | 252,171,513 | 225,858,938 | 71,712,534 | 89,367,283 |
Related-party information is disclosed in Note 47.
NOTE 5. FAIR VALUE DEBT SECURITIES WITH CHANGES TO INCOME
The Group’s fair value debt securities with changes to income are detailed in Schedule A.
NOTE 6. DERIVATIVE INSTRUMENTS
The amounts of transactions conducted as of the indicated dates are as follows:
Underlying Asset | Type of Settlement | 03.31.19(*) | 12.31.18(*) | |||||||||||||||||||||
Forward Purchase – Sale of Foreign Currency | ||||||||||||||||||||||||
Purchases | Foreign currency | Daily difference | 34,189,231 | 38,861,567 | ||||||||||||||||||||
Sales | Foreign currency | Daily difference | 37,013,871 | 32,277,374 | ||||||||||||||||||||
Purchases by Customers | Foreign currency | Daily difference | 28,860,993 | 3,673,954 | ||||||||||||||||||||
Sales by Customers | Foreign currency | Daily difference | 12,169,850 | 10,156,620 | ||||||||||||||||||||
Interest Rate Swaps | ||||||||||||||||||||||||
Swaps | Others | Other | 460,242 | 460,242 | ||||||||||||||||||||
Cross Currency Swaps | Others | Other | 30,941 | 1,561 | ||||||||||||||||||||
Repo Transactions | ||||||||||||||||||||||||
Forward Purchases | | Government Securities | | | With delivery of the underlying asset | | 6,121,089 | 1,965,824 | ||||||||||||||||
Forward Sales | | Government Securities | | | With delivery of the underlying asset | | 10,673,453 | 2,061,516 |
(*) Notional values.
See Schedule O for further details.
NOTE 7. REPO TRANSACTIONS
As of the indicated dates, the Group maintains the following repo transactions:
03.31.19 | 12.31.18 | |||||||||||
Receivables from Reverse Repo Transactions of Government Securities | 10,606,698 | 2,057,558 | ||||||||||
Accrued Interest Payable on Reverse Repo Transactions | 50,989 | 10,518 | ||||||||||
Total Reverse Repo Transactions | 10,657,687 | 2,068,076 | ||||||||||
03.31.19 | 12.31.18 | |||||||||||
Payables for Repo Transactions of Government Securities | 5,995,016 | 1,943,805 | ||||||||||
Accrued Interest Payable on Repo Transactions | 21,072 | 4,754 | ||||||||||
Total Repo Transactions | 6,016,088 | 1,948,559 |
The Group maintains repo transactions for which it performs the spot sale of a security with the related forward purchase thereof, thus substantially retaining all the risks and benefits associated with the instruments and recognizing them in “Financial Assets Pledged as Collateral” atperiod-end, as the provisions set out in point 3.4.2 (Derecognition of Assets) of IFRS 9 “Financial Instruments”) are not met.
03.31.19 | 12.31.18 | |||||||||||
Reverse Repo Transactions Carried inOff-Balance Sheet Items | 10,673,453 | 2,061,516 | ||||||||||
Repo Transactions Carried in Financial Assets Pledged as Collateral | 5,977,933 | 1,965,824 |
17
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The residual values of assets transferred under repo transactions are disclosed in Note 6 and Schedule O.
NOTE 8. OTHER FINANCIAL ASSETS
As of the indicated dates, the balances of “Other Financial Assets” relate to:
03.31.19 | 12.31.18 | |||||||||||
Debtors from Spot Sales of Foreign Currency Pending Settlement | 1,178,524 | 1,947,184 | ||||||||||
Debtors from Spot Sales of Government Securities Pending Settlement | 4,957,693 | 1,607,601 | ||||||||||
Sundry Debtors | 2,651,321 | 842,453 | ||||||||||
Mutual Funds | 2,927,298 | 4,264,431 | ||||||||||
Others | 442,721 | 363,951 | ||||||||||
Less: Allowances for Loan Losses | (1,895,925 | ) | (35,177 | ) | ||||||||
Total | 10,261,632 | 8,990,443 |
Related-party information is disclosed in Note 47.
Changes in the “Allowances for Loan Losses” related to “Other Financial Assets” are disclosed in Schedule R.
NOTE 9. NET LOANS AND OTHER FINANCING
“Net Loans and Other Financing” break down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
Non-financial Public Sector | 226 | 11,777 | ||||||||||
Argentine Central Bank | 533 | 533 | ||||||||||
Financial Institutions | 7,651,421 | 7,942,382 | ||||||||||
Loans | 7,651,421 | 7,942,382 | ||||||||||
Other Financing | - | - | ||||||||||
Non-financial Private Sector and Residents Abroad | 309,674,214 | 290,412,287 | ||||||||||
Loans | 300,233,763 | 283,543,722 | ||||||||||
Overdrafts | 12,891,157 | 14,430,578 | ||||||||||
Promissory Notes | 35,208,337 | 36,020,263 | ||||||||||
Mortgage Loans | 11,954,985 | 11,793,007 | ||||||||||
Collateral Loans | 953,891 | 997,958 | ||||||||||
Personal Loans | 28,464,892 | 29,144,931 | ||||||||||
Credit Card Loans | 115,488,093 | 113,395,362 | ||||||||||
Other Loans | 90,989,548 | 74,793,302 | ||||||||||
Accrued Interest, Adjustments and Quotation Differences Receivable | 6,241,799 | 5,388,298 | ||||||||||
Documented Interest | (1,958,939 | ) | (2,419,977 | ) | ||||||||
Financial Leases | 2,206,680 | 2,198,047 | ||||||||||
Other Financing | 7,233,771 | 4,670,518 | ||||||||||
Less: Allowances | (15,849,739) | (11,414,503) | ||||||||||
Total | 301,476,655 | 286,952,476 |
“Net Loans and Other Financing” are classified by status and guarantees received 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.
Changes in the “Allowances for Loan Losses” related to “Net Loans and Other Financing” are disclosed in Schedule R.
Related-party information is disclosed in Note 47.
Expected Credit Loss Model – Application of Point 5.5 (Impairment) of IFRS 9
Such application is temporarily waived until January 1, 2020 (see Note 1.1.). In compliance with the schedule established by the Argentine Central Bank, the Group is currently reviewing the calculation method. The effective standards on “Minimum Allowances for Loan Losses” set out in Section 8 of the Liquidity and Solvency Circular (LISOL) have been applied to calculate allowances for loan losses, as required by the Argentine Central Bank. As of the previous fiscalyear-end, total allowances measured in accordance with the expected credit loss model would have increased by approximately $4,300 million.
18
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
NOTE 10. OTHER DEBT SECURITIES
The Group’s “Other Debt Securities” are detailed in Schedule A.
Changes in the “Allowances for Loan Losses” related to “Other Debt Securities” are detailed in Schedule R.
NOTE 11. FINANCIAL ASSETS PLEDGED AS COLLATERAL
“Financial Assets Pledged as Collateral” are valued according to their underlying asset for the periods/fiscal year under analysis and break down as follows:
03.31.19 | 12.31.18 | |||||||||||
Deposits as Collateral | 5,074,058 | 3,663,499 | ||||||||||
Special Escrow Accounts at the Argentine Central Bank | 5,399,953 | 5,188,169 | ||||||||||
Forward Purchases of Monetary Regulation Instruments | - | 53,736 | ||||||||||
Equity Instruments | 108,134 | - | ||||||||||
Others | 6,121,089 | 1,912,088 | ||||||||||
Total | 16,703,234 | 10,817,492 |
Restricted assets are detailed in Note 49.
NOTE 12. CURRENT INCOME TAX ASSETS
As of the indicated dates, the balances of “Current Income Tax Assets” relate to:
03.31.19 | 12.31.18 | |||||||||||
Tax Advances | 184,332 | 2,510,384 | ||||||||||
Minimum Presumed Income Tax – Tax Credit | 375 | - | ||||||||||
Total | 184,707 | 2,510,384 |
NOTE 13. INVESTMENTS IN EQUITY INSTRUMENTS
The Group’s “Investments in Equity Instruments” are detailed in Schedule A.
NOTE 14. EQUITY INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
14.1. Equity Investments in Subsidiaries
The basic information regarding the Company’s consolidated controlled companies is detailed as follows:
Company | Direct and Indirect Shareholding | Equity Investment % | ||||||||||||||||||||||
03.31.19 | 12.31.18 | 03.31.18 | 12.31.18 | |||||||||||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | 668,549,353 | 668,549,353 | 100.00 | 100.00 | ||||||||||||||||||||
Cobranzas Regionales S.A. | 8,300 | 8,300 | 83.00 | 83.00 | ||||||||||||||||||||
Galicia Administradora de Fondos S.A. | 20,000 | 20,000 | 100.00 | 100.00 | ||||||||||||||||||||
Galicia Broker Asesores de Seguros S.A. | 71,310 | 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 | 100.00 | 100.00 | ||||||||||||||||||||
Galicia Warrants S.A. | 1,000,000 | 1,000,000 | 100.00 | 100.00 | ||||||||||||||||||||
Financial Trust Saturno Créditos | - | - | 100.00 | 100.00 | ||||||||||||||||||||
Ondara S.A. | 13,636,990 | 13,636,990 | 83.85 | 83.85 | ||||||||||||||||||||
Sudamericana Holding S.A. | 185,653 | 185,653 | 100.00 | 100.00 | ||||||||||||||||||||
Tarjeta Naranja S.A. | 2,344 | 2,344 | 83.00 | 83.00 | ||||||||||||||||||||
Tarjetas Regionales S.A. | 894,552,668 | 894,552,668 | 83.00 | 83.00 |
14.2. Investments in Associates and Joint Ventures
“Investments in Associates and Joint Ventures” break down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||||||
Others | 56 | 56 | ||||||||||||||
Allowances | (56 | ) | (56 | ) | ||||||||||||
Total | - | - |
19
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
NOTE 15. LEASES
The “Property, Plant and Equipment” account includes the following amounts in which the Group is lessee.
Changes in “Property, Plant and Equipment” are detailed in Schedule F.
NOTE 16. 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.
NOTE 17. INTANGIBLE ASSETS
Changes in “Intangible Assets” are detailed in Schedule G.
The carrying amounts of “Intangible Assets” do not exceed their recoverable values.
NOTE 18. DEFERRED INCOME TAX ASSETS/LIABILITIES
Changes in “Deferred Income Tax Assets and Liabilities” during the period/fiscal year ended March 31, 2019 and December 31, 2018 are as follows:
Deferred Tax Assets
Item | 12.31.18 | Charge to Income | Allowance for Impairment | Others | 03.31.19 | |||||||||||||||||||||||||||||||||||
Valuation of Securities | (17,800) | - | - | - | (17,800) | |||||||||||||||||||||||||||||||||||
Other Financial Assets | (1,026) | (38,391) | - | - | (39,417) | |||||||||||||||||||||||||||||||||||
Net Loans and Other Financing | 775,315 | - | - | - | 775,315 | |||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | (16,953) | 356 | - | - | (16,597) | |||||||||||||||||||||||||||||||||||
Tax Loss Carry-forwards | 3,288 | - | - | - | 3,288 | |||||||||||||||||||||||||||||||||||
OtherNon-financial Assets | 15,796 | 81,296 | - | - | 97,092 | |||||||||||||||||||||||||||||||||||
Other Financial Liabilities | 18,969 | (1,638) | - | - | 17,331 | |||||||||||||||||||||||||||||||||||
Provisions | 71,237 | - | - | - | 71,237 | |||||||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 13,746 | - | - | - | 13,746 | |||||||||||||||||||||||||||||||||||
Quotation Difference | 3,710 | 177 | - | - | 3,887 | |||||||||||||||||||||||||||||||||||
Others | 1,503 | (10,011) | - | - | (8,508) | |||||||||||||||||||||||||||||||||||
Totals | 867,785 | 31,789 | - | - | 899,574 | |||||||||||||||||||||||||||||||||||
Deferred Tax Liabilities
| ||||||||||||||||||||||||||||||||||||||||
Item | 12.31.18 | Charge to Income | Allowance for Impairment | Others | 03.31.19 | |||||||||||||||||||||||||||||||||||
Valuation of Securities | (126,523) | 22,702 | - | - | (103,821) | |||||||||||||||||||||||||||||||||||
Other Financial Assets | (28,713) | (66,093) | - | - | (94,806) | |||||||||||||||||||||||||||||||||||
Net Loans and Other Financing | 495,974 | (386) | - | - | 495,588 | |||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | (1,323,970) | (11,868) | - | - | (1,335,838) | |||||||||||||||||||||||||||||||||||
Intangible Assets | (27,310) | 38 | - | - | (27,272) | |||||||||||||||||||||||||||||||||||
OtherNon-financial Assets | (33,414) | 16,625 | - | - | (16,789) | |||||||||||||||||||||||||||||||||||
Non-current Assets Held for Sale | (60,340) | - | - | - | (60,340) | |||||||||||||||||||||||||||||||||||
Subordinated Debt Securities | (17,597) | (157,071) | - | - | (174,668) | |||||||||||||||||||||||||||||||||||
Provisions | 332,015 | 82,226 | - | - | 414,241 | |||||||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 404,044 | (10,361) | - | - | 393,683 | |||||||||||||||||||||||||||||||||||
Others | 113 | - | - | - | 113 | |||||||||||||||||||||||||||||||||||
Totals | (385,721) | (124,188) | - | - | (509,909) |
20
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Item | 12.31.17 | Charge to Income | Allowance for Impairment | Others | 12.31.18 | |||||||||||||||||||||||||||||||||||
Valuation of Securities | (13,164) | (5,460) | - | 824 | (17,800) | |||||||||||||||||||||||||||||||||||
Other Financial Assets | - | - | - | (1,026) | (1,026) | |||||||||||||||||||||||||||||||||||
Net Loans and Other Financing | 554,489 | 220,611 | - | 215 | 775,315 | |||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | (10,901) | (6,081) | - | 29 | (16,953) | |||||||||||||||||||||||||||||||||||
Intangible Assets | (47) | 47 | - | - | - | |||||||||||||||||||||||||||||||||||
Tax Loss Carry-forwards | 157 | 3,838 | (3,764) | 3,057 | 3,288 | |||||||||||||||||||||||||||||||||||
OtherNon-financial Assets | 21,951 | (5,704) | - | (451) | 15,796 | |||||||||||||||||||||||||||||||||||
Non-current Assets Held for Sale | - | (3,301) | 1,876 | 1,425 | - | |||||||||||||||||||||||||||||||||||
Other Financial Liabilities | 19,067 | 181 | - | (279) | 18,969 | |||||||||||||||||||||||||||||||||||
Provisions | 47,717 | 23,520 | - | - | 71,237 | |||||||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 1,382 | 16,039 | - | (3,675) | 13,746 | |||||||||||||||||||||||||||||||||||
Quotation Difference | 3,758 | (48) | - | - | 3,710 | |||||||||||||||||||||||||||||||||||
Others | (64) | 1,574 | - | (7) | 1,503 | |||||||||||||||||||||||||||||||||||
Totals | 624,345 | 245,216 | (1,888) | 112 | 867,785 | |||||||||||||||||||||||||||||||||||
Deferred Tax Liabilities
| ||||||||||||||||||||||||||||||||||||||||
Item | 12.31.17 | Charge to Income | Allowance for Impairment | Others | 12.31.18 | |||||||||||||||||||||||||||||||||||
Valuation of Securities | 11,323 | 137,846 | - | - | (126,523) | |||||||||||||||||||||||||||||||||||
Other Financial Assets | (25,240) | (4,499) | - | 1,026 | (28,713) | |||||||||||||||||||||||||||||||||||
Net Loans and Other Financing | 269,774 | 226,200 | - | - | 495,974 | |||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | (1,355,552) | - | - | (5,260) | (1,323,970) | |||||||||||||||||||||||||||||||||||
Intangible Assets | 210,993 | 36,842 | - | - | (27,310) | |||||||||||||||||||||||||||||||||||
OtherNon-financial Assets | (30,231) | (3,634) | - | 451 | (33,414) | |||||||||||||||||||||||||||||||||||
Non-current Assets Held for Sale | (244,277) | 185,362 | - | (1,425) | (60,340) | |||||||||||||||||||||||||||||||||||
Subordinated Debt Securities | (13,770) | (3,827) | - | - | (17,597) | |||||||||||||||||||||||||||||||||||
Provisions | 100,070 | 231,945 | - | - | 332,015 | |||||||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 335,205 | 69,216 | - | (377) | 404,044 | |||||||||||||||||||||||||||||||||||
Others | (1,499) | 81 | - | 1,531 | 113 | |||||||||||||||||||||||||||||||||||
Totals | (743,204) | 361,537 | - | (4,054) | (385,721) |
In addition, the expiration dates of tax loss carry-forwards are as follows:
Year of Generation | Amount | Year Due | Deferred Tax Assets | |||||||||||||||||||||
2018 | 1,203 | 2013 | 361 | |||||||||||||||||||||
2018 | 22,306 | 2023 | 6,692 | |||||||||||||||||||||
23,509 | 7,053 |
An allowance for impairment has been set for the deferred tax asset as of March 31, 2019, amounting to $3,764, as it is believed that the recovery thereof is not likely as of the date of these consolidated condensed interim financial statements.
NOTE 19. ASSETS/LIABILITIES FOR INSURANCE CONTRACTS
Assets related to insurance contracts as of the indicated dates are detailed as follows:
Assets for Insurance Contracts | 03.31.19 | 12.31.18 | ||||||||||||||
Premiums Receivable | 979,018 | 938,922 | ||||||||||||||
Receivables from Reinsurers | 10,066 | 5,361 | ||||||||||||||
Others | 6,087 | 2,455 | ||||||||||||||
Allowances | 9,489 | 10,472 | ||||||||||||||
Total | 1,004,660 | 957,210 |
21
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Liabilities related to insurance contracts as of the indicated dates are detailed as follows:
Liabilities for Insurance Contracts | 03.31.19 | 12.31.18 | ||||||||||
Debts with Insureds | 364,327 | 373,600 | ||||||||||
Debts with Reinsurers | 26,435 | 9,702 | ||||||||||
Debts withCo-insurers | 1,939 | 2,639 | ||||||||||
Debts with Insurance Brokers | 182,320 | 185,930 | ||||||||||
Statutory Reserves | 595,922 | 571,225 | ||||||||||
Unpaid Losses to Be Borne by Reinsurers (Offset Account) | - | (39,876 | ) | |||||||||
Total | 1,170,943 | 1,103,220 |
NOTE 20. OTHERNON-FINANCIAL ASSETS
“OtherNon-financial Assets” break down as follows:
03.31.19 | 12.31.18 | |||||||||||
Payments in Advance of Directors’ and Syndics’ Fees | 2,019 | 2,071 | ||||||||||
Payments in Advance to Personnel | 8,115 | 50,385 | ||||||||||
Tax Credits | 335,267 | 115,572 | ||||||||||
Payments in Advance | 960,644 | 449,374 | ||||||||||
Advances for Purchase of Assets | 83,578 | 83,167 | ||||||||||
Other Miscellaneous Assets Measured at Cost | 507,278 | 395,735 | ||||||||||
Assets Acquired through Foreclosures | 30,182 | 14,762 | ||||||||||
Impairment of Assets Acquired through Foreclosures | (15,477 | ) | - | |||||||||
Investment Properties(*) | 156,982 | 156,982 | ||||||||||
Others | 62,873 | 46,360 | ||||||||||
Total | 2,131,461 | 1,314,408 |
(*) Changes in “Investment Properties” are detailed in Schedule F.
Related-party information is disclosed in Note 47.
NOTE 21.NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
The Group has classified the following assets as “Assets Held for Sale and Discontinued Operations”:
03.31.19 | 12.31.18 | |||||||||||
Equity Investments | ||||||||||||
Prisma Medios de Pago S.A. | - | 212,831 | ||||||||||
Other Debt Securities | ||||||||||||
Financial Trust Crecere III, IV, V, VI, VII and VIII | 203,415 | 188,947 | ||||||||||
Property, Plant and Equipment | ||||||||||||
Real Estate | 2,328 | 2,328 | ||||||||||
Total | 205,743 | 404,106 |
Prisma Medios de Pago S.A.:
As of December 31, 2018, the Group classified its equity interest in Prisma Medios de Pago S.A. as assets held for sale, the book value of which as of such date amounted to $ 212,831.
Under the framework of the divestment commitment undertaken by Prisma Medios de Pago S.A. and its shareholders with respect to the Argentine Commission of Competence Defense, on February 1, 2019, Banco Galicia transferred its 3,182,444 book-entry common shares, with face value of $1 each and one vote per share, to AL ZENITH (Netherlands) B.V. (an affiliate of Advent International Global Private Equity), equivalent to Banco Galicia’s 51% equity interest in that company.
The estimated total price of the transaction amounted to approximately U.S. $106,258, out of which Banco Galicia received U.S. $63,073 on February 1, 2019 (the date on which the shares were transferred). The remainder of the purchase price, approximately U.S. $43,185, will be payable during the next 5 years and has been fully included in a provision, as required by the Argentine Central Bank. To date, the parties are in the process of determining the final price, in accordance with the terms of the respective share purchase agreement.
Furthermore, the remaining 49% interest was reclassified to Private Securities at Fair Value with Changes in Income under the item Investments in Equity Instruments, for the conditions set out in IFRS 5 to qualify as anon-current asset held for sale are not met. The fair value of Prisma S.A. as of December 31, 2018 has been measured on the basis of
22
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
two appraisals from independent consulting firms. As required by the Argentine Regulatory Agency of Financial and Foreign Exchange Institutions, the value recognized in respect of such equity interest was written down to the portion of cash actually received upon the sale. However, the measurement criteria applied are subject to review during the fiscal year. In addition, the Group is entitled to a put option in the equity interest as of the fiscalyear-end, which valuation is currently being determined.
NOTE 22. DEPOSITS
Deposits break down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
In Pesos | 226,200,221 | 197,429,716 | ||||||||||
Checking Accounts | 39,512,754 | 39,854,371 | ||||||||||
Savings Accounts | 56,157,255 | 61,128,663 | ||||||||||
Time Deposits | 121,302,915 | 89,204,808 | ||||||||||
Time Deposits – UVA | 1,962,949 | 1,984,548 | ||||||||||
Others | 1,444,256 | 1,273,540 | ||||||||||
Interest and Adjustments | 5,820,092 | 3,983,786 | ||||||||||
In Foreign Currency | 181,569,264 | 162,667,559 | ||||||||||
Savings Accounts | 154,823,751 | 137,762,699 | ||||||||||
Time Deposits | 25,749,148 | 24,064,063 | ||||||||||
Others | 950,598 | 792,809 | ||||||||||
Interest and Adjustments | 45,767 | 47,988 | ||||||||||
Total | 407,769,485 | 360,097,275 |
The concentration of deposits is detailed in Schedule H.
The breakdown of deposits by remaining term is detailed in Schedule I.
Related-party information is disclosed in Note 47.
NOTE 23. FAIR VALUE LIABILITIES WITH CHANGES TO INCOME
“Fair Value Liabilities with Changes to Income” are detailed in Schedule I. They include the obligations for transactions with third-party government securities.
NOTE 24. OTHER FINANCIAL LIABILITIES
The account breaks down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
Payables for Purchases Pending Settlement | 5,074,858 | 1,512,197 | ||||||||||
Collections and Other Transactions on Account of Third Parties | 7,642,086 | 7,646,888 | ||||||||||
Liabilities due to Financing of Purchases | 35,643,989 | 36,894,587 | ||||||||||
Payables for Foreign Currency Purchase Pending Settlement | 2,521,562 | 14,409,983 | ||||||||||
Commissions Accrued Payable | 464,100 | 344,570 | ||||||||||
Miscellaneous Subject to Minimum Cash Requirements | 331,289 | 507,101 | ||||||||||
Miscellaneous not Subject to Minimum Cash Requirements | 1,055,842 | 1,195,353 | ||||||||||
Other Financial Liabilities | 3,490,768 | 724,363 | ||||||||||
Total | 56,224,494 | 63,235,042 |
NOTE 25. LOANS FROM THE ARGENTINE CENTRAL BANK AND OTHER FINANCIAL INSTITUTIONS
The account breaks down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
Loans from the Argentine Central Bank | 26,252 | 28,675 | ||||||||||
Correspondents | 190,442 | 1,583,638 | ||||||||||
Loans from Local Financial Institutions | 3,550,113 | 5,719,582 | ||||||||||
Loans from Foreign Financial Institutions | 5,579,017 | 7,474,069 | ||||||||||
Loans from International Entities | 5,281,018 | 4,640,064 | ||||||||||
Total | 14,626,842 | 19,446,028 |
23
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The following is a breakdown of the Global Programs for the Issuance of Debt Securities outstanding:
Company | Authorized Amount(*) | Type of Debt Securities | Term of Program | Date of Approval by Shareholders’ Meeting | Approval by the C.N.V. | |||||||||||||||
Grupo Financiero Galicia S.A. | U.S.$ 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 Resolution No. 17343 dated 05.08.14 Authorization of the increase, Resolution No. 17064 dated 04.25.13(**) | |||||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | U.S.$ 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 | 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 Increase of the amount approved by Resolutions Nos. 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. | U.S.$ 650,000 | Simple Debt Securities, not convertible into shares | 5 years | 03.08.12 | Resolution No. 16822 dated 05.23.12 and extended through Resolution No. 17676 dated 05.21.15 | |||||||||||||||
Tarjetas Cuyanas S.A. | U.S.$ 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. 16,328 dated 05.18.10 Authorization of the increase, Resolution No. 17072 dated 05.02.13 |
(*) Or its equivalent in any other currency.
(**) The shareholders, gathered at the Ordinary and Extraordinary Shareholders’ Meeting held on April 25, 2019, decided to extend the term of said program for additional 5 years. To date, such filing with the C.N.V. is still pending.
24
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The Company has the following Unsubordinated Debt Securities outstanding issued under the Global Programs detailed in the table above as of March 31, 2019, net of repurchases of Own Debt Securities:
Company | Date of Placement | Currency | Class No. | Face Value | Type(**) | Term | Maturity Date | Rate | Issuance Authorized by the C.N.V. | Carrying Amount(*) as of 03.31.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Banco de Galicia y Bs. As. S.A.U. | 02.17.17 | $ | Class III | U.S. $ | 150,537 | (1) | Simple | 36 Months | - | (1)(2) | 02.06.17 | 2,478,255 | ||||||||||||||||||||||||||||||||||||||||||||||||
Banco de Galicia y Bs. As. S.A.U. | 05.18.17 | $ | IV | $ | 2,000,000 | Simple | 36 Months | - | (3) | 05.08.17 | 2,099,388 | |||||||||||||||||||||||||||||||||||||||||||||||||
Banco de Galicia y Bs. As. S.A.U. | 04.26.18 | $ | V Series I | $ | 4,209,250 | Simple | | 24 Months | | - | (4) | 04.18.18 | 4,907,225 | |||||||||||||||||||||||||||||||||||||||||||||||
Banco de Galicia y Bs. As. S.A.U. | 04.26.18 | $ | | V Series II | | $ | 2,032,833 | Simple | | 36 Months | | - | (5) | 04.18.18 | 2,178,764 | |||||||||||||||||||||||||||||||||||||||||||||
Banco de Galicia y Bs. As. S.A.U. | 02.22.19 | U.S.$ | U.S. $ | 82,713 | Simple | | 7 Months | | - | (6) | 02.14.19 | 3,599,100 | ||||||||||||||||||||||||||||||||||||||||||||||||
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 | 275,489 | |||||||||||||||||||||||||||||||||||||||||||
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 | 475,007 | |||||||||||||||||||||||||||||||||||||||||||
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 | 741,832 | |||||||||||||||||||||||||||||||||||||||||||
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 | 635,820 | |||||||||||||||||||||||||||||||||||||||||||
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 | 4,037,920 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 414,885 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 787,054 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 726,130 | |||||||||||||||||||||||||||||||||||||||||||
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 | 1,520,281 | |||||||||||||||||||||||||||||||||||||||||||
Tarjeta Naranja S.A. | 11.15.18 | $ | | XLI Series I | | $ | 854,102 | Simple | | 365 days | | 11.15.19 | | 54% Fixed Rate | | - | 862,694 | |||||||||||||||||||||||||||||||||||||||||||
Tarjeta Naranja S.A. | 11.15.18 | $ | | XLI Series II | | $ | 343,555 | Simple | | 547 days | | 05.15.20 | | Badlar + 10% | | - | 346,039 | |||||||||||||||||||||||||||||||||||||||||||
Tarjeta Naranja S.A. | 12.17.18 | $ | XLII | $ | 1,266,303 | Simple | | 287 days | | 09.30.19 | | 58% Fixed Rate | | - | 1,458,394 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 239,319 | |||||||||||||||||||||||||||||||||||||||||||
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 | 423,782 | ||||||||||||||||||||||||||||||||||||||||||||||
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 | 366,434 | |||||||||||||||||||||||||||||||||||||||||||
Carry-back | 28,573,812 |
(*) It includes principal and interest.
(**) Not convertible into shares.
(***) Debt Securities 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 $2,360,360. Investor assumes the exchange rate risk since the service of interest and principal is calculated on the basis of the principal amount in Pesos converted into U.S. Dollars on each payment date.
(2) Variable rate equal to the simple arithmetic average of private Badlar, plus 2.69%, which will be payable quarterly as from May 17, 2017.
(3) Variable rate equal to the simple arithmetic average of private Badlar, plus 2.98%, which will be payable quarterly as from August 18, 2017.
(4) Annual nominal fixed 25.98% rate; principal and interest will be settled in full upon maturity.
(5) Variable rate equal to the simple arithmetic average of private Badlar, plus 3.5%, which will be payable quarterly as from July 26, 2018. Principal in respect of this Series will be repaid upon maturity.
(6) Annual nominal fixed 4.80% rate; principal and interest will be settled in full upon maturity.
25
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Company | Date of Placement | Currency | Class No. | Face Value | Type(**) | Term | Maturity Date | Rate | Issuance Authorized by the C.N.V. | Carrying Amount(*) as of 03.31.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Carry-back | 28,573,812 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 526,465 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 96,900 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 380,805 | |||||||||||||||||||||||||||||||||||||||||||||
Tarjeta Naranja S.A.(***) | 02.19.19 | $ | XLIII | $ | 1,583,895 | Simple | 547 days | 08.18.20 | | Badlar + 7.00% | | 02.19.19 | 1,647,863 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | 31,225,845 |
(*) It includes principal and interest.
(**) Not convertible into shares.
(***) Debt Securities merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A.
The Company has the following Unsubordinated Debt Securities outstanding issued under the Global Programs detailed in the table above as of December 31, 2018, net of repurchases of Own Debt Securities:
Company | Date of Placement | Currency | Class No. | 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 Bs. As. S.A.U. | 02.17.17 | $ | Class III | U.S. $ | 150,537 | (1) | Simple | 36 Months | - | (1)(3) | 02.06.17 | 2,471,648 | ||||||||||||||||||||||||||||||||||||||||||||||||
Banco de Galicia y Bs. As. 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 Bs. As. 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 Bs. As. 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 | |||||||||||||||||||||||||||||||||||||||||||||
Carry-back | 22,936,280 |
26
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Company | Date of Placement | Currency | Class No. | Face Value | Type(**) | Term | Maturity Date | Rate | Issuance Authorized by the C.N.V. | Carrying Amount(*) as of 03.31.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Carry-back | 22,936,280 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||
Carry-back | 25,131,749 |
(*) It includes principal and interest.
(**) Not convertible into shares.
(***) Debt Securities 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 U.S. Dollars on each payment date.
(2) 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) 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.
(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.
On June 21, 2018, Banco Galicia issued the “Green Bond” which was entirely acquired by the International Finance Corporation. The Green Bond is a7-year facility, with interest payable every six months. The Green Bond has a36-month grace period in respect of the repayment of principal, followed by payments in 9 installments due every six months. As of March 31, 2019 and as of December 31, 2018, the carrying amount of the Green Bond totals $4,355,561 and $3,850,692, respectively.
The shareholders, gathered at the Shareholders’ Meeting held on April 25, 2019, decided to apply for authorization to have Banco Galicia registered as a Frequent Issuer, in accordance with General Resolution No. 721/2018 of the C.N.V. for the issuance of debt securities. Such resolution provides for simplified public offering authorization processes to take advantage of the opportunities benefits that may arise at times when market conditions are most favorable.
The repurchases of Own Debt Securities as of the indicated dates are as follows:
Face Value as of | Carrying Amount(*) as of | |||||||||||||||
Company | NO Class | 03.31.19 | 03.31.19 | |||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | Class V – Series II | 5,000 | 5,428 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXIV – Series II | - | 1,872 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXV – Series II | 38,500 | 36,171 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXVI – Series II | 30,000 | 31,407 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXVII | 13,563 | 213,716 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXVIII | 1,870 | 1,967 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXIX | 9,100 | 9,581 | |||||||||||||
Tarjeta Naranja S.A. | Class XL – Series II | 16,000 | 17,402 | |||||||||||||
Tarjeta Naranja S.A. | Class XLI – Series I | 39,239 | 44,119 | |||||||||||||
Tarjeta Naranja S.A. | Class XLI – Series II | 15,000 | 16,000 | |||||||||||||
Tarjeta Naranja S.A. | Class XLIII | 8,047 | 8,508 | |||||||||||||
Tarjeta Naranja S.A.(**) | Class XLII | 8,000 | 9,553 | |||||||||||||
Tarjeta Naranja S.A.(**) | Class XXV – Series II | 8,000 | 7,816 | |||||||||||||
Tarjeta Naranja S.A.(**) | Class XXVI – Series II | 1,000 | 1,014 | |||||||||||||
Tarjeta Naranja S.A.(**) | Class XXVII - Series II | 2,871 | 3,056 | |||||||||||||
Tarjeta Naranja S.A.(**) | Class XXVIII - Series II | 8,254 | 8,476 | |||||||||||||
Total | 416,086 |
(*) It includes principal and interest.
(**) Debt Securities merged into by Tarjeta Naranja S.A. following its merger with Tarjetas Cuyanas S.A.
27
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Face Value as of | Carrying Amount(*) as of | |||||||||||||||
Company | NO Class | 12.31.18 | 12.31.18 | |||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | Class III | 2,335 | 36,437 | |||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | Class V – Series II | 48,000 | 47,178 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXV – Series II | 51,500 | 49,783 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXVI – Series II | 10,000 | 10,546 | |||||||||||||
Tarjeta Naranja S.A. | Class XXXVII | 11,783 | 184,535 | |||||||||||||
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 | |||||||||||||
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 |
(*) 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 47.
NOTE 27. SUBORDINATED DEBT SECURITIES
The Group has the following Subordinated Debt Securities not convertible into shares issued under the Global Programs detailed in Note 26 as of the period/ fiscalyear-end:
Company | Date of Placement | Currency | Class No. | Face Value | Term | Maturity Date | Rate | Issuance Authorized by the C.N.V. | Carrying Amount as of 03.31.19(*) | |||||||||
Banco de Galicia y Bs. As. S.A.U. | 07.19.16 | U.S.$ | - | U.S. $250,000 | 120 months(1) | - | (2)(3) | 06.23.16 | 10,983,200 |
(*) It includes principal and interest.
(1) Amortization shall be fully made upon maturity, net of expenses, on July 19, 2026, unless fully redeemed, at the issuer’s option, at a price equal to 100% of the outstanding principal plus accrued and unpaid interest.
(2) Fixed 8.25% rate p.a. (as from the issuance date to July 19, 2021, inclusively); and margin to be added to the nominal Benchmark Readjustment Rate of 7.156% p.a. to the due date of Debt Securities. Such interest shall be payable semiannually on January 19 and July 19 as from 2017.
(3) The net proceeds from this issuance of Debt Securities was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Debt Securities and the Argentine Central Bank regulations.
Company | Date of Placement | Currency | Class No. | Face Value | Term | Maturity Date | Rate | Issuance Authorized by the C.N.V. | Carrying Amount as of 12.31.18(*) | |||||||||
Banco de Galicia y Bs. As. S.A.U. | 07.19.16 | U.S.$ | - | U.S. $250,000 | 120 months(1) | - | (2)(3) | 06.23.16 | 9,767,874 |
(*) It includes principal and interest.
(1) Amortization shall be fully made upon maturity, on July 19, 2026, unless redeemed, at the issuer’s option, fully at a price equal to 100% of the outstanding principal plus accrued and unpaid interest.
(2) Fixed 8.25% rate p.a. (as from the issuance date to July 19, 2021, inclusively); and margin to be added to the nominal Benchmark Readjustment Rate of 7.156% p.a. to the due date of Debt Securities. Such interest shall be payable semiannually on January 19 and July 19 as from 2017.
(3) The net proceeds from this issuance of Debt Securities was applied to investments in working capital, loans, other loans and other uses envisaged by the provisions of the Law on Debt Securities and the Argentine Central Bank regulations.
NOTE 28. PROVISIONS
The account breaks down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
For Administrative, Disciplinary and Criminal Penalties | 5,306 | 5,306 | ||||||||||
For Termination Benefits | 98,368 | 86,926 | ||||||||||
Others | 1,452,916 | 1,357,091 | ||||||||||
Total | 1,556,590 | 1,449,323 |
Changes for the period in the “Provisions” account are detailed in Schedule J. See Note 45 for further details.
28
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
NOTE 29. OTHERNON-FINANCIAL LIABILITIES
The account breaks down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
Withholdings and Additional Withholdings Payable | 2,625,426 | 2,901,402 | ||||||||||
Salaries and Social Security Contributions Payable | 2,309,317 | 2,841,885 | ||||||||||
Withholdings Payable on Salaries | 159,663 | 185,624 | ||||||||||
Value-Added Tax | 381,380 | 527,577 | ||||||||||
Sundry Creditors | 2,091,882 | 1,598,731 | ||||||||||
Taxes Payable | 1,798,640 | 1,838,045 | ||||||||||
Liabilities Arising from Contracts with Customers | 1,112,312 | 1,071,636 | ||||||||||
OtherNon-financial Liabilities | 359,222 | 412,179 | ||||||||||
Total | 10,837,842 | 11,377,079 |
NOTE 30. CAPITAL STOCK
The Ordinary and Extraordinary Shareholders’ Meeting of the Company held on August 15, 2017 authorized an increase in capital stock of the Company 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 and also entitled to dividends on an equal footing with such ordinary book-entry 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 U.S. $5 each. On September 29, 2017, such shares were issued and paid in.
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 U.S. $5 each, the issuance and payment of which took place on October 4, 2017.
The capital increase amounted to $11,004,383. The expenses related thereto amounted to $146,347 and were deducted from additionalpaid-in capital.
On November 8, 2017, the capital increase was registered with the Public Registry of Commerce.
The Company has no own shares in portfolio.
The Company’s shares are listed on Bolsas y Mercados Argentinos (BYMA), Mercado Abierto Electrónico S.A. (MAE) and the National Association of Securities Dealers Automated Quotation (NASDAQ).
NOTE 31. INCOME STATEMENT BREAKDOWN
Breakdown of: Net Income from Interest, Net Fee Income and Net Income from Measurement of Fair Value Financial Instruments with Changes to Income are detailed in Schedule Q.
NOTE 32. GOLD AND FOREIGN CURRENCY QUOTATION DIFFERENCES
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Originated by: | ||||||||||||
Foreign Currency Brokerage | - | 577,329 | ||||||||||
Valuation of Foreign Currency Assets and Liabilities | 47,855 | 197,441 | ||||||||||
Total | 47,855 | 774,770 |
29
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
NOTE 33. OTHER OPERATING INCOME
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Commission on Product Package | 731,904 | 517,031 | ||||||||||
Other Adjustments and Interest from Miscellaneous Receivables | 571,361 | 192,278 | ||||||||||
Rental of Safe Deposit Boxes | 119,946 | 90,548 | ||||||||||
Other Financial Income | 134,963 | 49,094 | ||||||||||
Other Income from Services | 346,833 | 345,651 | ||||||||||
Others | 4,588,741 | 259,746 | ||||||||||
Total | 6,493,748 | 1,454,348 |
NOTE 34. UNDERWRITING INCOME FROM INSURANCE BUSINESS
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Premiums and Surcharges Accrued | 1,089,283 | 907,589 | ||||||||||
Claims Accrued | (173,351 | ) | (94,877 | ) | ||||||||
Surrenders | (1,267 | ) | (230 | ) | ||||||||
Life and Ordinary Annuities | (2,096 | ) | (1,695 | ) | ||||||||
Underwriting and Operating Expenses | (255,047 | ) | (174,328 | ) | ||||||||
Other Income and Expenses | 14,642 | 5,550 | ||||||||||
Total | 672,164 | 642,009 |
NOTE 35. LOAN LOSS PROVISION
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Loan Loss Provision and Other Financing | 7,359,488 | 1,477,046 | ||||||||||
Private Securities Uncollectibility Charge | 21,207 | 41,669 | ||||||||||
Direct Loan Charges | 180,699 | 102,580 | ||||||||||
Others | - | 452 | ||||||||||
Total | 7,561,394 | 1,621,747 |
NOTE 36. PERSONNEL EXPENSES
The following are the items included in the account, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Salaries | 2,533,089 | 2,001,729 | ||||||||||
Social Security Contributions on Salaries | 572,942 | 424,000 | ||||||||||
Severance Payments and Personnel Bonuses | 703,715 | 492,148 | ||||||||||
Personnel Services | 113,281 | 77,050 | ||||||||||
Other Short-term Employee Benefits | 123,148 | 93,883 | ||||||||||
Other Long-term Employee Benefits | 16,326 | 6,254 | ||||||||||
Total | 4,062,501 | 3,095,064 |
NOTE 37. ADMINISTRATIVE EXPENSES
The Group presented its statement of comprehensive income under the expenditure function method. Under this method, expenses are classified according to their function as part of the item “Administrative Expenses”.
30
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The table below provides the required additional information about expenses by nature and function, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Fees and Compensation for Services | 361,003 | 233,264 | ||||||||||
Directors’ and Syndics’ Fees | 21,901 | 36,865 | ||||||||||
Advertising and Publicity | 234,126 | 220,865 | ||||||||||
Taxes | 980,305 | 666,854 | ||||||||||
Maintenance and Repairs | 308,067 | 210,863 | ||||||||||
Electricity and Communications | 336,563 | 155,924 | ||||||||||
Entertainment and Transportation Expenses | 14,103 | 29,869 | ||||||||||
Stationery and Office Supplies | 51,314 | 40,844 | ||||||||||
Rentals | 16,371 | 137,880 | ||||||||||
Administrative Services Hired | 458,353 | 311,422 | ||||||||||
Security | 186,226 | 164,740 | ||||||||||
Insurance | 34,871 | 16,562 | ||||||||||
Others | 1,061,885 | 698,748 | ||||||||||
Total | 4,065,088 | 2,924,700 |
NOTE 38. DEPRECIATION AND IMPAIRMENT OF ASSETS
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Depreciation of Property, Plant and Equipment | 418,425 | 176,692 | ||||||||||
Amortization of Organization and Development Expenses | 149,659 | 80,183 | ||||||||||
Others | 560 | 606 | ||||||||||
Total | 568,644 | 257,481 |
NOTE 39. OTHER OPERATING EXPENSES
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Turnover Tax | 2,371,811 | 1,439,383 | ||||||||||
Contributions to the Guarantee Fund | 153,204 | 82,449 | ||||||||||
Charges for Other Provisions | 77,715 | 221,286 | ||||||||||
Claims | 57,539 | 40,942 | ||||||||||
Other Financial Income | 292,032 | 1,825 | ||||||||||
Other Expenses from Services | 1,139,607 | 625,242 | ||||||||||
Others | 168,537 | 33,735 | ||||||||||
Total | 4,260,445 | 2,444,862 |
NOTE 40. INCOME TAX/DEFERRED TAX
The following is a reconciliation of income tax charged to income as of March 31, 2019, presented on a comparative basis to the same quarter of the previous year, to that which would result from applying the tax rate in force to book income:
03.31.19 | 03.31.18 | |||||||||||
Income for the Period Before Income Tax | 12,346,635 | 4,536,323 | ||||||||||
Effective Tax Rate | 30 | % | 30 | % | ||||||||
Income for the Period at the Tax Rate | 3,703,991 | 1,360,897 | ||||||||||
Permanent Differences at the Tax Rate | ||||||||||||
- Income (Loss) from Equity Instruments | 14,474 | (18,075 | ) | |||||||||
-Non-taxable Income (Loss) | (24,667 | ) | (11,244 | ) | ||||||||
- Donations and OtherNon-deductible Expenses | 14,895 | 9,808 | ||||||||||
- Others | (224,344 | ) | 20,499 | |||||||||
- Allowance for Impairment | - | 1,888 | ||||||||||
- Accrued Adjustment Payable | (79,100 | ) | - | |||||||||
- Law 27430 Rate Adjustment | (64,134 | ) | 38,625 | |||||||||
Total Income Tax Charge for the Period | 3,341,115 | 1,402,398 |
31
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE FISCAL YEAR COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$), Except as Otherwise Stated
In September 2017, Banco Galicia filed with A.F.I.P. both actions for recovery of income tax paid in excess for fiscal years 2014 and 2016, totaling $433,815 and $944,338, respectively. These actions were grounded on case law that declared unconstitutional certain rules and regulations banning the application of the inflation adjustment for tax purposes, with the ensuing confiscatory effects. As of the date of these consolidated condensed interim financial statements, Banco Galicia has not recorded balances in respect of the contingent assets stemming from the aforementioned actions.
NOTE 41. DIVIDENDS
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 $2,000,000 and represented $1.40 (figure stated in Pesos) per share.
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’ Meeting amounted to $1,200,000 and represented $0.84 (figure stated in Pesos) per share. The dividends mentioned above were paid to the Group’s shareholders on May 9, 2018.
NOTE 42. EARNINGS PER SHARE
Earnings per share are calculated by dividing income attributable to the Group’s shareholders by the weighted average of outstanding common 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.
03.31.19 | 03.31.18 | |||||||||||
Net Income for the Period Attributable to the Controlling Company’s Shareholders | 9,037,359 | 3,005,171 | ||||||||||
Subscribed Shares Weighted Average | 1,426,765 | 1,426,765 | ||||||||||
Earnings per Share | 6.33 | 2.11 |
NOTE 43. 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 made up of 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: Represents the banking business operation results. |
b. | Regional Credit Cards: This segment represents the results of operations of the regional credit card business and includes the results of operations of Tarjetas Regionales S.A. consolidated with its subsidiaries, as follows: Cobranzas Regionales S.A., Ondara S.A. and Tarjeta Naranja S.A. |
c. | Insurance: This segment represents the results of operations of the insurance 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. |
d. | Other Businesses: This segment shows the results of operations of Galicia Administradora de Fondos S.A., Galicia Warrants S.A., Galicia Valores S.A. and the Company, the last two net of eliminations of the income from equity investments. |
e. | Adjustments: This segment includes consolidation adjustments and eliminations of transactions among subsidiaries. |
The operating income (loss) of the Group’s different operating segments is monitored separately in order to make decisions on resource allocation and the evaluation of each segment’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.
When any transaction occurs, the transfer pricing among operating segments is at arm’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.
32
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The Group operates in one geographic segment, Argentina.
The relevant segment reporting as of the indicated dates is as follows:
Banks | Regional Credit Cards | Insurance | Other Businesses | Adjustments | Total as of 03.31.19 | |||||||||||||||||||||||||||||||
Net Income from Interest | 1,837,608 | 2,147,059 | 110,567 | 8,282 | 105,588 | 4,209,104 | ||||||||||||||||||||||||||||||
Net Fee Income (Expense) | 3,350,523 | 2,959,189 | - | (228) | (297,304) | 6,012,180 | ||||||||||||||||||||||||||||||
Net Income from Measurement of Fair Value Financial Instruments with Changes to Income | 15,285,565 | 368,172 | 7,251 | 57,467 | - | 15,718,455 | ||||||||||||||||||||||||||||||
Income from Derecognition of Assets Measured at Amortized Cost | 16,268 | - | - | - | - | 16,268 | ||||||||||||||||||||||||||||||
Gold and Foreign Currency Quotation Differences | (57,484) | (9,804) | (23,213) | 42,646 | - | (47,855) | ||||||||||||||||||||||||||||||
Other Operating Income (Expense) | 5,875,950 | 376,744 | 95,254 | 230,235 | (84,435) | 6,493,748 | ||||||||||||||||||||||||||||||
Underwriting Income from Insurance Business | - | - | 359,860 | - | 312,304 | 672,164 | ||||||||||||||||||||||||||||||
Loan Loss Provisions | (6,142,558) | (1,418,836) | - | - | - | (7,561,394) | ||||||||||||||||||||||||||||||
Personnel Expenses | (2,903,368) | (962,303) | (131,615) | (65,215) | - | (4,062,501) | ||||||||||||||||||||||||||||||
Administrative Expenses | (2,513,975) | (1,414,431) | (79,574) | (62,699) | 5,591 | (4,065,088) | ||||||||||||||||||||||||||||||
Depreciation and Impairment of Assets | (418,342) | (126,391) | (20,040) | (3,871) | - | (568,644) | ||||||||||||||||||||||||||||||
Other Operating Expenses | (3,461,644) | (774,668) | (235) | (23,898) | - | (4,260,445) | ||||||||||||||||||||||||||||||
Operating Income | 10,868,543 | 1,144,731 | 318,255 | 182,719 | 41,744 | 12,555,992 | ||||||||||||||||||||||||||||||
Results from Associates and Joint Ventures | 32,229 | - | - | (32,229) | - | |||||||||||||||||||||||||||||||
Income before Taxes from Continuing Activities | 10,900,772 | 1,144,731 | 318,225 | 150,490 | 41,744 | 12,555,992 | ||||||||||||||||||||||||||||||
Income Tax from Continuing Activities | (3,061,842) | (100,466) | (95,606) | (83,201) | - | (3,341,115) | ||||||||||||||||||||||||||||||
Net Income from Continuing Activities | 7,838,930 | 1,044,265 | 222,649 | 67,289 | 41,744 | 9,214,877 | ||||||||||||||||||||||||||||||
Income from Discontinued Operations | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Income Tax from Discontinued Operations | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Net Income for the Period | 7,838,930 | 1,044,265 | 222,649 | 67,289 | 41,744 | 9,214,877 | ||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | 210,931 | - | (1,799) | (209,357) | (209,132) | (209,357) | ||||||||||||||||||||||||||||||
Net Income (Loss) for the Period Attributable toNon-controlling Interests | (192) | (44) | - | - | (177,282) | (177,518) | ||||||||||||||||||||||||||||||
Net Income (Loss) for the Period Attributable to the Controlling Company’s Shareholders | 8,049,669 | 1,044,221 | 220,850 | (142,068 | ) | (334,670 | ) | 8,828,002 | ||||||||||||||||||||||||||||
Banks | Regional Credit Cards | Insurance | Others | Adjustments | Total as of 03.31.18 | |||||||||||||||||||||||||||||||
Net Income from Interest | 4,154,424 | 1,929,493 | 76,052 | 18,085 | (7,857) | 6,170,197 | ||||||||||||||||||||||||||||||
Net Fee Income (Expense) | 1,081,905 | 2,804,361 | - | (522) | 30,000 | 3,915,744 | ||||||||||||||||||||||||||||||
Net Income from Measurement of Fair Value Financial Instruments with Changes to Income | 1,639,934 | 107,415 | 19,360 | 80,272 | - | 1,846,981 | ||||||||||||||||||||||||||||||
Income from Derecognition of Assets Measured at Amortized Cost | 15,777 | - | - | - | - | 15,777 | ||||||||||||||||||||||||||||||
Gold and Foreign Currency Quotation Differences | 744,119 | 3,538 | 901 | 26,212 | - | 774,770 | ||||||||||||||||||||||||||||||
Other Operating Income (Expense) | 2,326,348 | 1,822,620 | 3,087 | 266,566 | (2,964,273) | 1,454,348 | ||||||||||||||||||||||||||||||
Underwriting Income from Insurance Business | - | - | 369,441 | - | 272,568 | 642,009 | ||||||||||||||||||||||||||||||
Loan Loss Provisions | (963,053) | (658,694) | (121) | - | 121 | (1,621,747) | ||||||||||||||||||||||||||||||
Personnel Expenses | (2,123,011) | (848,107) | (99,108) | (24,838) | - | (3,095,064) | ||||||||||||||||||||||||||||||
Administrative Expenses | (1,767,388) | (1,048,099) | (63,570) | (47,759) | 2,116 | (2,924,700) | ||||||||||||||||||||||||||||||
Depreciation and Impairment of Assets | (185,807) | (60,391) | (11,082) | (201) | - | (257,481) | ||||||||||||||||||||||||||||||
Other Operating Expenses | (2,219,222) | (437,250) | (29,444) | (16,537) | 257,571 | (2,444,862) | ||||||||||||||||||||||||||||||
Operating Income (Expense) | 2,704,026 | 3,614,886 | 265,516 | 301,298 | (2,409,754) | 4,475,972 | ||||||||||||||||||||||||||||||
Results from Associates and Joint Ventures | 31,334 | - | - | 2,971,793 | (3,003,127) | - | ||||||||||||||||||||||||||||||
Income (Loss) before Taxes from Continuing Activities | 2,735,360 | 3,614,886 | 265,516 | 3,258,952 | (5,412,881) | 4,475,972 | ||||||||||||||||||||||||||||||
Income Tax from Continuing Activities | (830,579) | (369,713) | (98,165) | (81,059) | - | (1,379,516) | ||||||||||||||||||||||||||||||
Net Income (Loss) from Continuing Activities | 1,904,781 | 3,245,173 | 167,351 | 3,192,032 | (5,412,881) | 3,096,456 | ||||||||||||||||||||||||||||||
Income from Discontinued Operations | 72,970 | - | - | 1,806 | - | 74,776 | ||||||||||||||||||||||||||||||
Income Tax from Discontinued Operations | (21,893) | - | - | (989) | - | (22,882) | ||||||||||||||||||||||||||||||
Net Income (Loss) for the Period | 1,955,858 | 3,245,173 | 167,351 | 3,192,849 | (5,412,881) | 3,148,350 | ||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | (3,259) | - | (12,761) | (14,425) | 16,020 | (14,425) | ||||||||||||||||||||||||||||||
Net Income (Loss) for the Period Attributable toNon-controlling Interests | (133) | - | 3 | - | (143,049) | (143,179) | ||||||||||||||||||||||||||||||
Net Income (Loss) for the Period Attributable to the Controlling Company’s Shareholders | 1,952,466 | 842,230 | 154,593 | 3,164,283 | (5,539,910 | ) | 2,990,746 |
33
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
Banks | Regional Credit Cards | Insurance | Other Businesses | Adjustments | Total as of 03.31.19 | |||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||
Cash and Due from Banks | 130,541,556 | 1,247,315 | 57,474 | 92,193 | (114,436) | 131,824,102 | ||||||||||||||||||||||||||||||
Fair Value Debt Securities with Changes to Income | 108,943,125 | - | 62,211 | 113,558 | (308,791) | 108,810,103 | ||||||||||||||||||||||||||||||
Derivative Instruments | 636,124 | - | - | - | - | 636,124 | ||||||||||||||||||||||||||||||
Repo Transactions | 10,657,687 | - | - | - | - | 10,657,687 | ||||||||||||||||||||||||||||||
Other Financial Assets | 7,141,176 | 2,808,520 | 179,858 | 197,257 | (65,179) | 10,261,632 | ||||||||||||||||||||||||||||||
Net Loans and Other Financing | 256,083,254 | 46,326,637 | 526,822 | 1,656,732 | (3,116,790) | 301,476,655 | ||||||||||||||||||||||||||||||
Other Debt Securities | 15,896,762 | - | 1,138,302 | - | (129,775) | 16,905,289 | ||||||||||||||||||||||||||||||
Financial Assets Pledged as Collateral | 16,700,275 | 2,959 | - | - | - | 16,703,234 | ||||||||||||||||||||||||||||||
Current Income Tax Assets | - | 2,149 | 156,334 | 12,980 | - | 171,463 | ||||||||||||||||||||||||||||||
Investments in Equity Instruments | 2,516,213 | - | - | 365 | - | 2,516,578 | ||||||||||||||||||||||||||||||
Equity Investments in Associates and Joint Ventures | 445,156 | - | - | 62,464,825 | (62,909,981) | - | ||||||||||||||||||||||||||||||
Property, Plant and Equipment | 12,369,552 | 1,493,973 | 178,495 | 5,779 | - | 14,047,799 | ||||||||||||||||||||||||||||||
Intangible Assets | 3,720,338 | 463,197 | 70,701 | 419,309 | (419,307) | 4,254,238 | ||||||||||||||||||||||||||||||
Deferred Income Tax Assets | - | 862,562 | 25,210 | 11,802 | - | 899,574 | ||||||||||||||||||||||||||||||
Assets for Insurance Contracts | - | - | 1,004,660 | - | - | 1,004,660 | ||||||||||||||||||||||||||||||
OtherNon-financial Assets | 1,472,162 | 224,624 | 25,562 | 422,146 | 211 | 2,144,705 | ||||||||||||||||||||||||||||||
Non-current Assets Held for Sale | 205,743 | - | - | - | - | 205,743 | ||||||||||||||||||||||||||||||
TOTAL ASSETS | 567,329,123 | 53,431,936 | 3,425,629 | 65,396,946 | (67,064,048) | 622,519,586 | ||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||||||
Deposits | 410,203,922 | - | - | 109,946 | (2,544,383) | 407,769,485 | ||||||||||||||||||||||||||||||
Fair Value Liabilities with Changes to Income | 3,584,269 | - | - | - | - | 3,584,269 | ||||||||||||||||||||||||||||||
Derivative Instruments | 1,876,088 | - | - | - | - | 1,876,088 | ||||||||||||||||||||||||||||||
Repo Transactions | 6,016,088 | - | - | - | - | 6,016,088 | ||||||||||||||||||||||||||||||
Other Financial Liabilities | 33,481,102 | 23,307,177 | - | 18,320 | (582,105) | 56,224,494 | ||||||||||||||||||||||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 14,243,896 | 369,914 | 18,391 | 162,049 | (167,408) | 14,626,842 | ||||||||||||||||||||||||||||||
Debt Securities Issued | 19,623,721 | 16,396,251 | - | - | (438,566) | 35,581,406 | ||||||||||||||||||||||||||||||
Current Income Tax Liabilities | 5,302,415 | 252,205 | 274,037 | 346,522 | - | 6,173,030 | ||||||||||||||||||||||||||||||
Subordinated Debt Securities | 10,983,200 | - | - | - | - | 10,983,200 | ||||||||||||||||||||||||||||||
Provisions | 1,330,760 | 79,981 | 88,849 | 57,000 | - | 1,556,590 | ||||||||||||||||||||||||||||||
Deferred Income Tax Liabilities | 442,276 | - | 31,515 | 36,118 | - | 509,909 | ||||||||||||||||||||||||||||||
Liabilities for Insurance Contracts | - | - | 1,231,650 | - | (60,707) | 1,170,943 | ||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 8,641,575 | 1,860,075 | 303,681 | 67,349 | (34,838) | 10,839,991 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 515,729,312 | 42,265,603 | 1,948,123 | 797,304 | (3,828,007 | ) | 556,912,335 |
34
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
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 | ||||||||||||||||||||||||||||||
Fair Value Debt Securities with Changes to Income | 75,911,796 | 54,008 | 83,476 | 81,501 | (141,610) | 75,989,171 | ||||||||||||||||||||||||||||||
Derivative Instruments | 1,785,640 | - | - | - | - | 1,785,640 | ||||||||||||||||||||||||||||||
Repo Transactions | 2,068,076 | - | - | - | - | 2,068,076 | ||||||||||||||||||||||||||||||
Other Financial Assets | 4,691,607 | 3,623,010 | 234,656 | 500,169 | (58,999) | 8,990,443 | ||||||||||||||||||||||||||||||
Net Loans and Other Financing | 243,232,186 | 45,313,187 | 426,159 | 1,092,235 | (3,111,291) | 286,952,476 | ||||||||||||||||||||||||||||||
Other Debt Securities | 13,630,604 | - | 990,929 | - | (131,767) | 14,489,766 | ||||||||||||||||||||||||||||||
Financial Assets Pledged as Collateral | 10,812,499 | 4,993 | - | - | - | 10,817,492 | ||||||||||||||||||||||||||||||
Current Income Tax Assets | 2,267,500 | 18,125 | 82,004 | 142,755 | - | 2,510,384 | ||||||||||||||||||||||||||||||
Investments in Equity Instruments | 159,602 | - | - | 1,452 | - | 161,054 | ||||||||||||||||||||||||||||||
Equity Investments in Associates and Joint Ventures | 397,754 | - | - | 54,074,665 | (54,472,419) | - | ||||||||||||||||||||||||||||||
Property, Plant and Equipment | 9,869,201 | 834,886 | 177,932 | 2,996 | - | 10,885,015 | ||||||||||||||||||||||||||||||
Intangible Assets | 3,259,794 | 422,877 | 61,050 | 419,309 | (419,307) | 3,743,723 | ||||||||||||||||||||||||||||||
Deferred Income Tax Assets | - | 788,252 | 74,857 | 4,676 | - | 867,785 | ||||||||||||||||||||||||||||||
Assets for Insurance Contracts | - | - | 957,210 | - | - | 957,210 | ||||||||||||||||||||||||||||||
OtherNon-financial Assets | 798,367 | 284,136 | 18,669 | 213,231 | 5 | 1,314,408 | ||||||||||||||||||||||||||||||
Non-current Assets Held for Sale | 404,106 | - | - | - | - | 404,106 | ||||||||||||||||||||||||||||||
TOTAL ASSETS | 511,338,168 | 52,707,926 | 3,162,126 | 56,625,996 | (58,588,039) | 565,246,177 | ||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||||||
Deposits | 361,445,778 | - | - | - | (1,348,503) | 360,097,275 | ||||||||||||||||||||||||||||||
Fair Value Liabilities with Changes to Income | 2,685,471 | - | - | - | (540,807) | 2,144,664 | ||||||||||||||||||||||||||||||
Derivative Instruments | 1,835,789 | - | - | - | - | 1,835,789 | ||||||||||||||||||||||||||||||
Repo Transactions | 1,948,559 | - | - | - | - | 1,948,559 | ||||||||||||||||||||||||||||||
Other Financial Liabilities | 40,976,456 | 23,244,061 | - | 36,311 | (1,021,786) | 63,235,042 | ||||||||||||||||||||||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 17,490,792 | 2,131,037 | 56 | - | (175,857) | 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 | 183,000 | - | 5,873,075 | ||||||||||||||||||||||||||||||
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 | - | 60,748 | 35,480 | - | 385,721 | ||||||||||||||||||||||||||||||
Liabilities for Insurance Contracts | - | - | 1,146,515 | - | (43,295) | 1,103,220 | ||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 8,709,240 | 2,122,183 | 420,271 | 74,546 | (26,827) | 11,377,079 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 467,369,006 | 42,579,675 | 1,909,065 | 470,003 | (3,680,447 | ) | 508,647,302 |
NOTE 44. CAPITAL MANAGEMENT AND RISK POLICIES
The major risks the Group is exposed to are classified into seven categories: capital risk, financial risks (market risk, currency risk, interest rate risk, and liquidity risk), credit risk, operational risk, IT risk, cybersecurity risk, and reputational risk.
There have not been material changes in the Group’s risk management policies to address the aforementioned risks relative to those disclosed in the financial statements as of December 31, 2018.
NOTE 45. CONTINGENCIES AND COMMITMENTS
a) Tax Issues
At the date of these consolidated condensed interim 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 to the collection of certain financial charges.
35
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The Group believes that the resolution of these controversies will not have a significant impact on its financial condition.
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 49.
The provisions for contingencies recorded are as follows:
03.31.19 | 12.31.18 | |||||||||||
Other Contingencies | 1,420,832 | 1,329,142 | ||||||||||
-For Commercial Lawsuits/Legal Affairs | 1,114,461 | 1,058,636 | ||||||||||
-For Labor Lawsuits | 108,128 | 96,311 | ||||||||||
-For Claims and Credit Cards | 1,097 | 1,097 | ||||||||||
-For Guarantees Granted | 1,142 | 1,142 | ||||||||||
-For Other Contingencies | 196,004 | 171,956 | ||||||||||
Termination Benefits | 98,368 | 86,926 | ||||||||||
Court Deposits Dollarization Difference under Communiqué “A” 4686 | 32,084 | 27,949 | ||||||||||
Administrative, Disciplinary and Criminal Penalties | 5,306 | 5,306 | ||||||||||
Total | 1,556,590 | 1,449,323 |
NOTE 46.OFF-BALANCE SHEET ITEMS
In the normal course of business and in order to meet 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 unusual 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 credits 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.
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.
03.31.19 | 12.31.18 | |||||||||||
Agreed Credits | 14,788,279 | 14,947,369 | ||||||||||
Export and Import Documentary Credits | 2,051,303 | 1,080,047 | ||||||||||
Guarantees Granted | 19,091,375 | 16,292,630 | ||||||||||
Responsibilities for Foreign Trade Transactions | 1,377,521 | 234,609 |
36
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The fees and commissions related to the items mentioned above as of the indicated dates were as follows:
03.31.19 | 03.31.18 | |||||||||||
For Agreed Credits | 29,637 | 25,277 | ||||||||||
For Export and Import Documentary Credits | 16,500 | 13,984 | ||||||||||
For Guarantees Granted | 44,062 | 13,757 |
The credit risk of these instruments is essentially the same as that involved in lending credit facilities to customers.
As a condition to grant guarantees to our customers, we may require counter-guarantees under certain circumstances. Below is a detail of guarantees classified by type, with their respective amounts:
03.31.19 | 12.31.18 | |||||||||||
Other Preferred Guarantees Received | 6,998,091 | 6,796,492 | ||||||||||
Other Guarantees Received | 353,426 | 296,362 |
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.
03.31.19 | 12.31.18 | |||||||||||
Checks and Drafts to be Debited | 3,106,774 | 3,448,362 | ||||||||||
Checks and Drafts to be Credited | 3,876,452 | 4,443,878 | ||||||||||
Values for Collection | 31,108,940 | 27,625,864 |
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:
03.31.19 | 12.31.18 | |||||||||||
Trust Funds | 5,869,385 | 5,868,530 | ||||||||||
Securities Held in Custody | 475,591,344 | 429,896,258 |
These trusts are not included in the consolidation since the Group does not exert control on them.
NOTE 47. 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 control 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, the Group considers that it may have control in those cases where the Group has significant influence due its capacity to take part in decisions regarding 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.
37
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
47.1. Controlling Entity
The Group is controlled by:
Name | Nature | Principal Line of Business | Place of Business | Equity Investment % | ||||||||||||
EBA Holding S.A. | 55.11% of voting rights | Financial and Investment Activities | Autonomous City of Buenos Aires – Argentina | 19.71% |
Key Personnel’s Compensation
The compensation earned by the Group’s key personnel as of March 31, 2019 and March 31, 2018 amounts to $328,894 and $522,038, respectively.
47.2 Key Personnel’s Structure
Key personnel’s structure as of the indicated dates is as follows:
03.31.19 | 12.31.18 | |||||||||||
Directors | 84 | 67 | ||||||||||
General Manager | 11 | 11 | ||||||||||
Division Managers | 1 | 1 | ||||||||||
Department Managers | 70 | 70 | ||||||||||
Total | 166 | 149 |
47.3. 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.
03.31.19 | 12.31.18 | |||||||||||
Total Amount of Credit Assistance | 620,672 | 956,439 | ||||||||||
Number of Recipients (Amounts) | 318 | 329 | ||||||||||
- Natural Persons | 260 | 269 | ||||||||||
- Artificial Persons | 58 | 60 | ||||||||||
Average Amount of Credit Assistance | 2,178 | 2,907 | ||||||||||
Maximum Assistance | 116,455 | 362,713 |
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 othernon-related parties. Besides, this financial assistance did not involve more than the normal risk of loan losses or present other unfavorable features.
47.4. Amounts of Related Party Transactions
The amounts of related party transactions conducted as of the indicated dates are as follows:
03.31.19 | 12.31.18 | |||||||||||
Assets | ||||||||||||
Cash and Due from Banks | 82,019 | 252,651 | ||||||||||
Fair Value Debt Securities with Changes to Income | 308,791 | 736,590 | ||||||||||
Other Financial Assets | 48,269 | 630,879 | ||||||||||
Net Loans and Other Financing | 3,115,782 | 861,538 | ||||||||||
Other Debt Securities | 129,775 | - | ||||||||||
OtherNon-financial Assets | (211) | (24,721) | ||||||||||
Total Assets | 3,684,425 | 2,456,937 | ||||||||||
Liabilities | ||||||||||||
Deposits | 2,401,012 | 262,088 | ||||||||||
Derivative Instruments | - | 109,043 | ||||||||||
Other Financial Liabilities | 582,105 | 256,779 | ||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 167,408 | 410,618 | ||||||||||
Debt Securities Issued | 438,566 | 736,581 | ||||||||||
Liabilities for Insurance Contracts | 60,707 | 40,853 | ||||||||||
OtherNon-financial Liabilities | 34,838 | 74,863 | ||||||||||
Total Liabilities | 3,684,636 | 1,890,825 |
38
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
03.31.19 | 03.31.18 | |||||||||||
Income (Loss) | ||||||||||||
Net Income from Interest | 105,588 | - | ||||||||||
Net Fee Income (Expense) | (297,307 | ) | (272,568 | ) | ||||||||
Underwriting Income from Insurance Business | 321,304 | - | ||||||||||
Other Operating Income (Expense) | (84,435 | ) | 1,055 | |||||||||
Administrative Expenses | 5,591 | (272,568 | ) | |||||||||
Other Operating Expenses | - | - | ||||||||||
Total Income | 50,741 | 1,055 |
NOTE 48. ACQUISITION OF DEBT SECURITIES UNDER SECTION 35 BIS OF FINANCIAL INSTITUTIONS LAW
Banco Finansur S.A.’s operation was temporarily suspended by the Argentine Central Bank from November 9, 2017 to February 9, 2018. On January 12, 2018, Banco Galicia reported its participation in the process under Section 35 bis of the Argentine 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.
As they are holders of debt securities rather than the participation certificate, and as they are not beneficiaries since that role was taken over by virtue of the bankruptcy of Banco Finansur S.A., we understand that the Group is neither exposed to variable returns nor to the Trust’s residual risk. Therefore, the holding was recorded as financial debt instrument, rather than as a financial equity instrument.
The business model that relates to such financial instrument is to collect cash flows as liquidity flows into the trust due to the settlement of loans and the sale of other assets. Therefore, measurement should be made at amortized cost.
As a result of the foregoing, the trust was not consolidated in these consolidated condensed interim financial statements.
The Group recorded debt securities in the “Other Debt Securities” account, which are measured at amortized cost in the amount of $78,021 and $74,775 as of March 31, 2019 and December 31, 2018, respectively.
NOTE 49. ADDITIONAL INFORMATION REQUIRED BY THE ARGENTINE CENTRAL BANK
49.1. CONTRIBUTION TO THE DEPOSIT INSURANCE SYSTEM
Law No. 24,485 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 Argentine National Executive Branch, through Decree No. 1127/98, established the maximum amount for the insurance system to demand deposits and time deposits denominated either in Pesos and/or in foreign currency. Such limit was set at $1,000 as from March 1, 2019.
This system does not cover deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by parties related to the Bank, either directly or indirectly, deposits of securities, acceptances or guarantees and those deposits set up at an interest rate exceeding the one established regularly by the Argentine Central Bank.
Deposits acquired through endorsement, placements made as a result of incentives other than interest rates andlocked-up balances from deposits and other excluded transactions are also excluded. This system has been implemented through the creation of the Deposit Insurance Fund (“FGD”), which is managed by a company called Seguros de Depósitos S.A. (“SEDESA”). SEDESA’s shareholders are the Argentine Central Bank and the financial institutions in the proportion determined for each one by the Argentine Central Bank based on the contributions made to the fund.
The monthly contribution institutions should make to the FGD is 0.015% on the monthly average of total deposits.
39
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
49.2. RESTRICTED ASSETS
As of March 31, 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 |
03.31.19 | 12.31.18 | |||||||||||
For transactions carried out at RO.F.EX. | 501,703 | 379,006 | ||||||||||
For repo transactions haircuts | 1,805,737 | 584,631 | ||||||||||
For debit / credit cards transactions | 2,410,142 | 2,151,565 | ||||||||||
For attachments | 9,430 | 211 | ||||||||||
Liquidity required to conduct transactions as agents at the C.N.V. | 24,529 | 20,410 | ||||||||||
For the contribution to the M.A.E.’s Joint Guarantee Fund (Fondo de Garantía Mancomunada) | 133,796 | 260,210 | ||||||||||
Guarantees under the Regional Economies Competitiveness Program (PROCER, as per its initials in Spanish and IDB San Juan) | 290,249 | 250,732 | ||||||||||
For other transactions | 13,077 | 11,953 |
b) | Special Guarantee 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:
03.31.19 | 12.31.18 | |||||||||||
Special Guarantees Accounts | 5,399,952 | 5,188,169 |
c) | Deposits in favor of the Argentine Central Bank |
03.31.19 | 12.31.18 | |||||||||||
Unavailable deposits related to foreign exchange transactions | 533 | 533 |
d) | Equity Investments |
The account “Equity Investments” includes 1,222,406non-transferablenon-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 Galicia, 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.
03.31.19 | 12.31.18 | |||||||||||
Contributions to the Fund | 390,000 | 390,000 |
Galicia Valores S.A.
03.31.19 | 12.31.18 | |||||||||||
Liquidity required to conduct transactions as agents at the C.N.V. | 10,998 | 9,568 |
Tarjeta Naranja S.A.
03.31.19 | 12.31.18 | |||||||||||
Attachments in connection with lawsuits | 3,494 | 1,803 | ||||||||||
Guarantees related to lease agreements(*) | 5,108 | 4,993 |
Galicia Administradora de Fondos S.A.
03.31.19 | 12.31.18 | |||||||||||
Liquidity required to operate as agent for the management of collective investment products corresponding to mutual funds, as required by the C.N.V.(*) | 7,307,550 | 9,094,885 |
(*) As of March 31, 2019, it relates to 1,490,336 “Fima Ahorro Plus Clase C” mutual fund units.
Total restricted assets for the items stated in the subsidiaries mentioned above as of the indicated dates are as follows:
03.31.19 | 12.31.18 | |||||||||||
Total Restricted Assets | 20,494,632 | 18,348,669 |
40
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
49.3. TRUST ACTIVITIES
The following trusts have been excluded from consolidation for the Group does not have 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 Galicia, 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 | 6,650 | 04.19.21 | |||||||||||||||
04.29.13 | Profertil | 24 | 12.31.19 | |||||||||||||||
09.12.14 | Coop. de Trab. Portuarios | 1,037 | 09.12.20 | |||||||||||||||
04.14.16 | Rios Belt | 193 | 04.14.19 | |||||||||||||||
05.24.17 | MSU | 93 | 07.29.20 | |||||||||||||||
06.28.17 | Dist. Gas del Centro | 16 | 12.31.19 | |||||||||||||||
07.19.17 | Dist. Gas Cuyana | 18 | 12.31.19 | |||||||||||||||
08.08.17 | Dist. Gas del Centro | 19 | 12.31.19 | |||||||||||||||
Total | 8,050 |
(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(*) | |||||||||||||||
06.12.06 | Gas I | 73,449 | 12.31.19 | |||||||||||||||
05.14.09 | Gas II | 5,586,939 | 12.31.22 | |||||||||||||||
02.10.11 | Cag S.A. | 414 | 12.31.19 | |||||||||||||||
06.08.11 | Mila III | 4,609 | 12.31.19 | |||||||||||||||
01.09.11 | Mila IV | 1,352 | 12.31.19 | |||||||||||||||
09.14.11 | Cag S.A. II | 632 | 12.31.19 | |||||||||||||||
02.13.14 | Mila V | 1,111 | 05.20.20 | |||||||||||||||
06.06.14 | Mila VI | 747 | 10.20.20 | |||||||||||||||
06.18.14 | Red Surcos II | 1,356 | 12.31.19 | |||||||||||||||
10.03.14 | Mila VII | 955 | 01.20.21 | |||||||||||||||
01.13.15 | Red Surcos III | 768 | 12.31.19 | |||||||||||||||
01.27.15 | Mila VIII | 3,861 | 12.31.19 | |||||||||||||||
05.18.15 | Mila IX | 3,161 | 09.15.21 | |||||||||||||||
08.24.15 | Mila X | 4,133 | 12.20.21 | |||||||||||||||
10.30.15 | Mila XI | 4,182 | 01.15.22 | |||||||||||||||
01.14.16 | Mila XII | 6,475 | 11.15.21 | |||||||||||||||
02.05.16 | Red Surcos IV | 895 | 12.31.19 | |||||||||||||||
05.13.16 | Mila XIII | 11,234 | 09.15.22 | |||||||||||||||
09.01.16 | Mila XIV | 14,741 | 01.31.23 | |||||||||||||||
10.27.16 | Mila XV | 20,038 | 03.31.23 | |||||||||||||||
01.10.17 | Mila XVI | 23,988 | 06.30.23 | |||||||||||||||
02.24.17 | Mila XVII | 40,003 | 09.30.23 | |||||||||||||||
05.29.17 | Fedeicred Agro Series IV | 94 | 12.31.19 | |||||||||||||||
06.12.17 | Mila XVIII | 52,555 | 01.31.24 | |||||||||||||||
06.21.17 | Mas Cuotas Series VIII | 738 | 12.31.19 | |||||||||||||||
08.16.17 | Mas Cuotas Series IX | 225 | 12.31.19 | |||||||||||||||
10.20.17 | Mas Cuotas Series X | 2,208 | 10.15.19 | |||||||||||||||
10.27.17 | Mila XIX | 397 | 05.31.24 | |||||||||||||||
02.16.18 | Mila XX | 75 | 09.30.24 | |||||||||||||||
Totals | 5,861,335 |
(*) Estimated date, since maturity date shall occur at the time of the distribution of all of trust assets.
41
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
c) Activities as Security Agent:
c.1) Banco Galicia has been appointed Security Agent of the Argentine 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.
Said endorsement guarantees the secure payment of all obligations arising from the above-mentioned trusts.
Banco Galicia, in its capacity 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.
As of March 31, 2019 and December 31, 2018, the balances recorded from these transactions amount to U.S. $1,364,097 and U.S. $408, respectively.
All the transactions detailed above are recorded inoff-balance sheet items-trust funds.
d) | Setting Up of Financial Trusts |
As of March 31, 2019 and December 31, 2018, the Group recorded participation certificates and debt securities of financial trusts held in its own portfolio for $4,968,740 and $5,042,761, respectively, measured at amortized cost.
49.4. COMPLIANCE WITH THE REGULATIONS REQUIRED BY THE C.N.V.
49.4.1. Agents – Minimum Liquidity Requirement
Within the framework of Resolution No. 622/13 of the C.N.V., Banco Galicia 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 March 31, 2019, Banco Galicia’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 the Bank paid with U.S. Dollar – denominated Argentine Bonds, which are registered with Caja de Valores (Depositor No. 100100) in the amount of $24,529.
49.4.2. 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 March 31, 2019, Banco Galicia holds a total of 11,799,455,555 units under custody for a market value of $80,910,329, which is included in the “Depositors of Securities Held in Custody” account. As of December 31, 2018, the securities held in custody totaled 9,623,110,829 units and their market value amounted to $60,431,318.
42
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
The balances of the Mutual Funds as of the indicated dates are detailed as follows:
Mutual Fund | 03.31.19 | 12.31.18 | ||||||||||||||
FIMA Acciones | 335,723 | 328,125 | ||||||||||||||
FIMA P.B. Acciones | 741,688 | 718,431 | ||||||||||||||
FIMA Renta en pesos | 442,871 | 245,333 | ||||||||||||||
FIMA Ahorro pesos | 14,470,519 | 9,891,974 | ||||||||||||||
FIMA Renta Plus | 250,780 | 145,308 | ||||||||||||||
FIMA Premium | 39,462,334 | 29,475,771 | ||||||||||||||
FIMA Ahorro Plus | 13,461,071 | 9,967,609 | ||||||||||||||
FIMA Capital Plus | 283,768 | 205,069 | ||||||||||||||
FIMA Abierto PyMES | 487,542 | 312,788 | ||||||||||||||
FIMA Mix I | 7,229 | 6,686 | ||||||||||||||
FIMA Renta Dólares I(*) | 7,332,092 | 7,373,261 | ||||||||||||||
FIMA Renta Dólares II(*) | 1,864,764 | 1,554,263 | ||||||||||||||
FIMA Renta Fija Internacional | 1,626,880 | 193,618 | ||||||||||||||
FIMA Acciones Latinoamericanas Dólares(*) | 143,068 | 13,082 | ||||||||||||||
Total | 80,910,329 | 60,431,318 |
(*) Stated at the reference exchange rate of the U.S. Dollar set by the Argentine Central Bank.
All the transactions detailed above are recorded inoff-balance sheet items – securities held in custody.
49.4.3. Storage of Documents
Pursuant to General Resolution No. 629 of the C.N.V., Banco Galicia 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.
49.5. ACCOUNTS SHOWING COMPLIANCE WITH MINIMUM CASH REQUIREMENTS
As of March 31, 2019, the balances recorded as computable items are as follows:
Item | Currency | Government Securities | ||||||||||||||||||||||||||||||||||||||
$ | U.S.$ | Euros(*) | $ | U.S.$ | ||||||||||||||||||||||||||||||||||||
Checking Accounts at the Argentine Central Bank | 39,000,000 | 1,483,347 | (1) | 26 | (3) | - | - | |||||||||||||||||||||||||||||||||
Special Guarantees Accounts at the Argentine Central Bank | 4,875,714 | 13,200 | (2) | - | - | - | ||||||||||||||||||||||||||||||||||
Argentine Treasury Bonds in Pesos at Fixed Rate Due November 2020 | 10,222,905 | - | - | - | - | |||||||||||||||||||||||||||||||||||
Liquidity Bills | 22,034,970 | - | - | - | - | |||||||||||||||||||||||||||||||||||
60 EM Subaccount in CRYL (Center of Registration and Settlement) of Government Securities and Debt Instruments Issued by the Argentine Central Bank | - | - | - | 1,277,411 | 1,627 | (4) | ||||||||||||||||||||||||||||||||||
Total Computable Items to Meet Minimum Cash Requirements | 76,133,589 | 1,496,547 | 26 | 1,277,411 | 1,627 |
(*) Stated in thousands of U.S.$.
(1) Equivalent to $64,307,987.
(2) Equivalent to $572,264.
(3) Equivalent to $1,127.
(4) Equivalent to $70,536.
49.6. 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 March 31, 2019:
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 Galicia, 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 Eduardo A. Fanciulli from any liability and reducing the fines imposed. The U.I.F., Banco Galicia and Mr. Enrique M. Garda Olaciregui filed federal extraordinary appeals before Argentine Supreme Court (CSJN). Accounting treatment: As of March 31, 2019 and December 31, 2018, a provision for $5,306, respectively, was set up.
43
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
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 Galicia, three of its directors and certain relevant officers were punished with a fine in the amount of $1,497. Status of the proceedings: On November 26, 2018, the Bank filed a direct 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. Division V of such court of appeals was selected at random to render judgment on the case.
49.7. ISSUANCE OF DEBT SECURITIES
The issuance of Debt Securities is detailed in Notes 26 and 27.
49.8. RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF PROFITS
Pursuant to Section 70 of the General Corporations Law, the Company 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 fiscalyear-end, plus (or less), the adjustments made in previous fiscal years and, less, if any, the loss accumulated at previous fiscalyear-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 authorized 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 $300,000.
Pursuant to the Price Supplement of the Class XXXVII Notes, Tarjeta Naranja S.A. has agreed not to distribute dividends that may exceed 50% of the company’s net income. This restriction also applies in the event of any excess over certain indebtedness ratios.
Notwithstanding the aforementioned, profits resulting from the first-time application of IFRS may not be distributed; instead, such profits, if any, will be appropriated to a special reserve recorded under equity which might only be released for capitalization purposes, or otherwise to offset potential losses.
44
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (U.S.$), Except as Otherwise Stated
NOTE 50. SUBSEQUENT EVENTS
Banco de Galicia y Buenos Aires S.A.U.
The Shareholders’ Meeting held on April 25, 2019, authorized, pursuant to the rules and regulations in force, to allocate Unappropriated Retained Earnings as of December 31, 2018, as follows:
- To Legal Reserve | $ 2,307,236 | |||
- To Cash Dividends | $ 1,500,000 | |||
- To Discretionary Reserve for Future Distributions of Profits | $ 7,728,932 | |||
- To Special Statutory Reserve for First-time Adoption of IFRS | $ 2,723,174 |
45
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE A – BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Holdings | Position | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Level | Carrying Amount | Without Options | Options | Final | |||||||||||||||||||||||||||||||||||||||||||||||||||
03.31.19 | 12.31.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE DEBT SECURITIES WITH CHANGES TO INCOME | 108,810,103 | 75,989,171 | 108,810,103 | - | 108,810,103 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Argentine | 108,810,103 | 75,989,171 | 108,810,103 | - | 108,810,103 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Government Securities | 8,838,594 | 4,699,806 | 8,838,594 | - | 8,838,594 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Government Bonds | Level 1 | 3,543,857 | 1,466,270 | 3,543,857 | - | 3,543,857 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Government Bonds | Level 3 | 977 | 19,137 | 977 | - | 977 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Provincial Bonds | Level 1 | 952,658 | 538,591 | 952,658 | - | 952,658 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Provincial Bonds | Level 3 | - | 445,204 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Autonomous City of Buenos Aires Bonds | Level 1 | 363,162 | 37,166 | 363,162 | - | 363,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Autonomous City of Buenos Aires Bonds | Level 3 | - | 5,073 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury Bills | Level 1 | 3,734,000 | 910,317 | 3,734,000 | - | 3,734,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury Bills | Level 2 | 48,136 | 1,278,048 | 48,136 | - | 48,136 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury Bills | Level 3 | 195,804 | 1,278,048 | 195,804 | - | 195,804 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Argentine Central Bank’s Bills | 99,479,849 | 70,151,772 | 99,479,849 | - | 99,479,849 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lebacs | Level 1 | - | 54,008 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Liquidity Bills | Level 2 | 18,779,072 | - | 18,779,072 | - | 18,779,072 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Liquidity Bills | Level 2 | 80,700,777 | 70,097,764 | 80,700,777 | - | 80,700,777 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Private Securities | 99,479,849 | 1,137,593 | 99,479,849 | - | 99,479,849 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities | Level 1 | 105,056 | 270,470 | 105,056 | - | 105,056 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities | Level 2 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities | Level 3 | 191,458 | 418,728 | 191,458 | - | 191,458 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities of Financial Trusts | Level 1 | - | 38,285 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities of Financial Trusts | Level 3 | 115,853 | 63,559 | 115,853 | - | 115,853 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Participation Certificates in Financial Trusts | Level 1 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Participation Certificates in Financial Trusts | Level 2 | - | 36,270 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Participation Certificates in Financial Trusts | Level 3 | 79,293 | 310,281 | 79,293 | - | 79,293 |
46
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE A – BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES (Continued)
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Holdings | Position | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Level | Carrying Amount | | Without Options | | Options | Final | |||||||||||||||||||||||||||||||||||||||||||||||||
03.31.19 | 12.31.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER DEBT SECURITIES | 16,905,289 | 14,489,766 | 16,620,216 | - | 16,620,216 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Measured at Fair Value with Changes in OCI | 10,662,088 | 9,129,045 | 10,662,088 | - | 10,662,088 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Argentine | 10,662,088 | 9,129,045 | 10,662,088 | - | 10,662,088 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Government Securities | 10,662,088 | 9,129,045 | 10,662,088 | - | 10,662,088 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Government Bonds | Level 1 | 10,589,328 | 9,074,420 | 10,589,328 | - | 10,589,328 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Autonomous City of Buenos Aires Bonds | Level 1 | 72,760 | 54,625 | 72,760 | - | 72,760 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Measurement at Amortized Cost | 6,243,201 | 5,360,721 | 5,958,128 | - | 5,958,128 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Argentine | 6,241,063 | 5,358,890 | 5,955,990 | - | 5,955,990 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Government Securities | 339,755 | 222,588 | 339,755 | - | 339,755 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Government Bonds | - | 3,255 | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury Bills | 339,755 | 219,333 | 339,755 | - | 339,755 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Argentine Central Bank’s Bills | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lebacs | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
Private Securities | 5,486,460 | 5,136,302 | 5,616,235 | - | 5,616,235 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities | 509,564 | 485,923 | 639,339 | - | 639,339 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities of Financial Trusts | 5,058,077 | 4,710,353 | 5,058,077 | - | 5,058,077 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses(*) | (81,181 | ) | (59,974 | ) | (81,181 | ) | - | (81,181 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 2,138 | 1,831 | 2,138 | - | 2,138 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Government Securities | 2,138 | 1,831 | 2,138 | - | 2,138 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury Bills | 2,138 | 1,831 | 2,138 | - | 2,138 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Instruments | 2,516,578 | 161,054 | 2,516,578 | - | 2,516,578 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Measured at Fair Value with Changes in Profit or Loss | 2,516,578 | 161,054 | 2,516,578 | - | 2,516,578 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Argentine | 2,479,998 | 132,839 | 2,479,998 | - | 2,479,998 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Level 1 | 18,119 | 2,030 | 18,119 | - | 18,119 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Level 3 | 2,461,879 | 130,809 | 2,461,879 | - | 2,461,879 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 36,580 | 28,215 | 36,580 | - | 36,580 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Level 1 | 32,698 | 24,765 | 32,698 | - | 32,698 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Level 3 | 3,882 | 3,450 | 3,882 | - | 3,882 |
(*) It includes the allowance for loan losses on the portfolio in normal situation (Communiqué “A” 2729, as amended and supplemented). (See Schedule R).
47
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE B – CLASSIFICATION OF LOANS AND OTHER FINANCING BY STATUS AND GUARANTEES RECEIVED
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | 03.31.19 | 12.31.18 | ||||||||||||||
COMMERCIAL LOAN PORTFOLIO | ||||||||||||||||
Normal | 166,677,788 | 146,938,007 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “A” | 8,710,024 | 7,695,607 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 8,946,381 | 7,905,793 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 149,021,383 | 131,336,607 | ||||||||||||||
With SpecialFollow-Up – Under Observation | 109,924 | 1,800,930 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 32,659 | 8,000 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 77,265 | 1,792,930 | ||||||||||||||
With Problems | 2,362,669 | 471,695 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 387,179 | 439,072 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 1,975,490 | 32,623 | ||||||||||||||
High Risk of Insolvency | 223,372 | 207,358 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “A” | 7,728 | - | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 3,217 | 29,047 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 212,427 | 178,311 | ||||||||||||||
Uncollectible | 69,516 | 1,321 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 22,072 | - | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 47,444 | 1,321 | ||||||||||||||
TOTAL COMMERCIAL LOAN PORTFOLIO | 169,443,269 | 149,419,311 |
Item | 03.31.19 | 12.31.18 | ||||||||||||||
CONSUMER AND HOUSING LOAN PORTFOLIO | ||||||||||||||||
Normal Performance | 173,618,998 | 174,203,923 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “A” | 296,829 | 242,856 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 14,492,206 | 14,207,918 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 158,829,963 | 159,753,149 | ||||||||||||||
Low Risk | 6,812,893 | 5,795,602 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “A” | 2,916 | 12,629 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 136,488 | 152,754 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 6,673,489 | 5,630,219 | ||||||||||||||
Medium Risk | 5,593,106 | 4,323,373 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “A” | - | 2,265 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 81,756 | 108,582 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 5,511,350 | 4,212,526 | ||||||||||||||
High Risk | 6,372,358 | 4,430,239 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “A” | 8,731 | 11,616 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 122,106 | 49,860 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 6,241,521 | 4,368,763 | ||||||||||||||
Uncollectible | 1,815,929 | 1,180,349 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “A” | 5,193 | 9,916 | ||||||||||||||
Backed by Preferred Guarantees and Counter-guarantees “B” | 60,222 | 64,262 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 1,750,514 | 1,106,171 | ||||||||||||||
Uncollectible due to Technical Reasons | 6,211 | 6,507 | ||||||||||||||
With No Preferred Guarantees or Counter-guarantees | 6,211 | 6,507 | ||||||||||||||
TOTAL CONSUMER AND HOUSING LOAN PORTFOLIO | 194,219,495 | 189,939,993 | ||||||||||||||
GRAND TOTAL(1) | 363,662,764 | 339,359,304 |
(1) Reconciliation between Schedule B and the Balance Sheet:
03.31.19 | 12.31.18 | |||||||||||||||
Net Loans and Other Financing | 301,476,655 | 286,952,476 | ||||||||||||||
Other Debt Securities | 16,905,289 | 14,489,766 | ||||||||||||||
Off-Balance Sheet Agreed Loans and Guarantees Granted | 37,198,478 | 32,554,655 | ||||||||||||||
Plus Allowances for Loan Losses | 16,008,268 | 11,474,477 | ||||||||||||||
Plus Adjustments under the IFRS-based Accounting Framework that Are Not Computable for the Statement of Debtors’ Status | 4,562,596 | 4,239,608 | ||||||||||||||
Less OtherNon-computable Items for the Statement of Debtors’ Status | (1,826,434 | ) | (1,222,633 | ) | ||||||||||||
Less Government Securities Measured at Fair Value with Changes in OCI | (10,662,088 | ) | (9,129,045 | ) | ||||||||||||
Total | 363,662,764 | 339,359,304 |
48
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE C – CONCENTRATION OF LOANS AND OTHER FINANCING
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
LOANS | ||||||||||||||||||||||||||||||||
Number of Customers | 03.31.19 | 12.31.18 | ||||||||||||||||||||||||||||||
Outstanding Balance | % of Total Portfolio | Outstanding Balance | % of Total Portfolio | |||||||||||||||||||||||||||||
10 Largest Customers | 38,572,348 | 11 | 38,508,659 | 11 | ||||||||||||||||||||||||||||
50 Following Largest Customers | 59,926,362 | 16 | 52,229,882 | 15 | ||||||||||||||||||||||||||||
100 Following Largest Customers | 29,112,170 | 8 | 22,627,832 | 7 | ||||||||||||||||||||||||||||
Remaining Customers | 236,051,884 | 65 | 225,992,931 | 67 | ||||||||||||||||||||||||||||
TOTAL(1) | 363,662,764 | 100 | 339,359,304 | 100 |
(1) Reconciliation between Schedule C and the Balance Sheet:
03.31.19 | 12.31.18 | |||||||||||||||
Net Loans and Other Financing | 301,476,655 | 286,952,476 | ||||||||||||||
Other Debt Securities | 16,905,289 | 14,489,766 | ||||||||||||||
Off-Balance Sheet Agreed Loans and Guarantees Granted | 37,198,478 | 32,554,655 | ||||||||||||||
Plus Allowances for Loan Losses | 16,008,268 | 11,474,477 | ||||||||||||||
Plus Adjustments under the IFRS-based Accounting Framework that Are Not Computable for the Statement of Debtors’ Status | 4,562,596 | 4,239,608 | ||||||||||||||
Less OtherNon-computable Items for the Statement of Debtors’ Status | (1,826,434 | ) | (1,222,633 | ) | ||||||||||||
Less Government Securities Measured at Fair Value with Changes in OCI | (10,662,088 | ) | (9,129,045 | ) | ||||||||||||
Total | 363,662,764 | 339,359,304 |
49
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE D – BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
The following table shows the decline in contractual cash flows, including interest and other expenses to be accrued until contractual maturity.
Item | Past-due Loan Portfolio | Terms Remaining to Maturity | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 Month | 3 Months | 6 Months | 12 Months | 24 Months | Over 24 Months | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-financial Public Sector | - | 1,661 | - | - | - |
| - |
| - | 1,661 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Sector | - | 3,027,176 | 2,275,919 | 574,020 | 1,291,728 | 2,295,833 | 1,304,018 | 10,768,694 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-financial Private Sector and Residents Abroad | 10,703,292 | 149,712,354 | 62,160,555 | 57,325,338 | 32,689,122 | 26,866,836 | 40,301,385 | 379,758,882 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TOTAL | 10,703,292 | 152,741,191 | 64,436,474 | 57,899,358 | 33,980,850 | 29,162,669 | 41,605,403 | 390,529,237 |
50
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE F – CHANGES IN PROPERTY, PLANT AND EQUIPMENT
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Value at Beginning of | Estimated Useful Life in Years | Additions | Disposals | Transfers | Depreciation | Net Book Value as of | |||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | Transfers | Disposals | For the Period | At Fiscal Year-end | 03.31.19 | 12.31.18 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Measurement at Cost | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Real Estate | 7,963,782 | 50 | - | - | (257,549 | ) | (765,882 | ) | 115,944 | - | (27,610 | ) | (677,548 | ) | 7,028,685 | 7,197,901 | ||||||||||||||||||||||||||||||||
Furniture and Fixtures | 1,038,056 | 10 | 19,235 | (3,805 | ) | 139,641 | (371,436 | ) | - | 3,448 | (26,569 | ) | (394,557 | ) | 798,570 | 666,618 | ||||||||||||||||||||||||||||||||
Machines and Equipment | 3,189,815 | 3 and 5 | 154,094 | (107 | ) | 7,073 | (1,487,646 | ) | - | 97 | (150,595 | ) | (1,638,144 | ) | 1,712,731 | 1,702,169 | ||||||||||||||||||||||||||||||||
Vehicles | 55,926 | 5 | 2,474 | (1,448 | ) | - | (19,044 | ) | - | 820 | (2,320 | ) | (20,544 | ) | 36,408 | 36,883 | ||||||||||||||||||||||||||||||||
Personal Property Acquired for Financial Leases | 7,956 | 5 | - | - | - | (7,956 | ) | - | - | - | (7,956 | ) | - | - | ||||||||||||||||||||||||||||||||||
Right-of-Use in Real Estate | - | - | 3,265,451 | - | - | - | - | - | (172,844 | ) | (172,844 | ) | 3,092,607 | |||||||||||||||||||||||||||||||||||
Miscellaneous | 594,384 | 5 and 10 | 16,082 | - | 256,905 | (191,635 | ) | (115,944 | ) | - | (34,923 | ) | (342,502 | ) | 524,869 | 402,749 | ||||||||||||||||||||||||||||||||
Work in Progress | 878,695 | - | 121,566 | (262) | (146,070) | - | - | - | - | - | 853,929 | 878,695 | ||||||||||||||||||||||||||||||||||||
Total | 13,728,614 | 3,578,902 | (5,622 | ) | - | (2,843,599 | ) | - | 4,365 | (414,861 | ) | (3,254,095 | ) | 14,047,799 | 10,885,015 |
51
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE F – CHANGES IN PROPERTY, PLANT AND EQUIPMENT (Continued)
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Value at Beginning of Fiscal Year | Estimated Useful Life in Years | Additions | Disposals | Transfers | Depreciation | Net Book Value as of | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Item | Accumulated | Transfers | Disposals | For the Fiscal Year | At Fiscal Year-end | 12.31.18 | 12.31.17 | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Measurement at Cost | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Real Estate | 7,862,752 | 50 | 118,771 | (37,053 | ) | 19,313 | (647,738 | ) | - | 30,013 | (148,157 | ) | (765,882 | ) | 7,197,901 | 7,215,014 | ||||||||||||||||||||||||||||||||
Furniture and Fixtures | 612,714 | 10 | 210,027 | (44,073 | ) | 259,386 | (279,351 | ) | (35,788 | ) | 42,651 | (98,948 | ) | (371,436 | ) | 666,618 | 333,363 | |||||||||||||||||||||||||||||||
Machines and Equipment | 2,599,211 | 3 and 5 | 719,843 | (95,566 | ) | (33,673 | ) | (1,134,515 | ) | 35,788 | 93,672 | (482,591 | ) | (1,487,646 | ) | 1,702,169 | 1,464,696 | |||||||||||||||||||||||||||||||
Vehicles | 36,947 | 5 | 24,561 | (5,749 | ) | 167 | (13,651 | ) | (95 | ) | 3,141 | (8,438 | ) | (19,043 | ) | 36,883 | 23,296 | |||||||||||||||||||||||||||||||
Personal Property Acquired for Financial Leases | 8,123 | 5 | - | - | (167 | ) | (8,051 | ) | 95 | - | - | (7,956 | ) | - | 72 | |||||||||||||||||||||||||||||||||
Miscellaneous | 383,232 | 5 and 10 | 103,918 | (4,276 | ) | 111,510 | (108,458 | ) | - | 645 | (83,822 | ) | (191,635 | ) | 402,749 | 274,774 | ||||||||||||||||||||||||||||||||
Work in Progress | 479,183 | - | 765,847 | (27,821 | ) | (338,514 | ) | - | - | - | - | - | 878,695 | 479,183 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | 11,982,162 | 1,942,967 | (214,538 | ) | 18,022 | (2,191,764 | ) | - | 170,122 | (821,956 | ) | (2,843,598 | ) | 10,885,015 | 9,790,398 |
52
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE F – CHANGES IN INVESTMENT PROPERTIES
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Changes in investment properties recorded in the “OtherNon-financial Assets” account are detailed below.
Item | Value at Beginning of Period | Estimated Useful Life in Years | Additions | Disposals | Transfers | Depreciation | Net Book Value as of | |||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accumulated | Disposals | For the Period | At Fiscal Year-end | 03.31.19 | 12.31.18 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Measurement at Cost | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Real Estate Leased | 165,108 | 50 | - | - | - | (8,408 | ) | - | - | (8,408 | ) | 156,982 | 156,982 | |||||||||||||||||||||||||||||||
Total | 165,108 | - | - | - | (8,408 | ) | - | - | (8,408 | ) | 156,982 | 156,982 |
Item | Value at Beginning of Fiscal Year | Estimated Useful Life in Years | Additions | Disposals | Transfers | Depreciation | Net Book Value as of | |||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accumulated | Disposals | For the Fiscal Year | At Fiscal Year-end | 12.31.18 | 12.31.17 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Measurement at Cost | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Real Estate Leased | 165,108 | 50 | - | - | - | (5,142 | ) | - | (3,266 | ) | (8,408 | ) | 156,982 | 159,966 | ||||||||||||||||||||||||||||||
Total | 165,108 | - | - | - | (5,142 | ) | - | (3,266 | ) | (8,408 | ) | 156,982 | 159,966 |
53
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE G – CHANGES IN INTANGIBLE ASSETS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Value at Beginning of Period | Estimated Useful Life in Years | Additions | Disposals | Amortization | Net Book Value as of | ||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accumulated | Disposals | For the Period | Transfers | At Fiscal Year-end | 03.31.19 | 12.31.18 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Measurement at Cost | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Licenses | 1,858,049 | 5 | 391,671 | (30,649 | ) | (769,686 | ) | - | (91,510 | ) | - | (861,168 | ) | 1,357,903 | 1,088,363 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Intangible Assets Acquired for Financial Lease | 26,352 | 5 | - | - | (26,352 | ) | - | - | - | (26,352 | ) | - | - | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Other Intangible Assets | 3,709,813 | 5 | 304,480 | (5,358 | ) | (1,054,453 | ) | - | (58,149 | ) | - | (1,112,600 | ) | 2,896,335 | 2,655,360 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Total | 5,594,214 | 696,151 | (36,007 | ) | (1,850,461 | ) | - | (149,659 | ) | - | (2,000,120 | ) | 4,254,238 | 3,743,723 | ||||||||||||||||||||||||||||||
Item | Value at Beginning of Fiscal Year | Estimated Useful Life in Years | Additions | Disposals | Amortization | Net Book Value as of | ||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accumulated | Disposals | For the Fiscal Year | Transfers | At Fiscal Year-end | 12.31.18 | 12.31.17 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Measurement at Cost | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Licenses | 1,109,037 | 5 | 948,626 | (199,614 | ) | (656,549 | ) | 174,759 | (287,894 | ) | - | (769,686 | ) | 1,088,363 | 452,488 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Intangible Assets Acquired for Financial Lease | 26,352 | 5 | - | - | (25,753 | ) | - | (599 | ) | - | (26,352 | ) | - | 599 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Other Intangible Assets | 1,438,457 | 5 | 2,272,262 | (906 | ) | (985,683 | ) | 906 | (69,676 | ) | - | (1,054,453 | ) | 2,655,360 | 452,774 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Total | 2,573,846 | 3,220,888 | (200,520 | ) | (1,667,985 | ) | 175,665 | (358,169 | ) | - | (1,850,491 | ) | 3,743,723 | 905,861 |
54
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE H – CONCENTRATION OF DEPOSITS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
DEPOSITS | ||||||||||||||||||||||||
Number of Customers | 03.31.19 | 12.31.18 | ||||||||||||||||||||||
Outstanding Balance | % of Total Portfolio | Outstanding Balance | % of Total Portfolio | |||||||||||||||||||||
10 Largest Customers | 27,421,332 | 7 | 26,929,214 | 7 | ||||||||||||||||||||
50 Following Largest Customers | 35,608,746 | 9 | 21,892,330 | 6 | ||||||||||||||||||||
100 Following Largest Customers | 20,091,824 | 5 | 15,684,961 | 4 | ||||||||||||||||||||
Remaining Customers | 324,647,583 | 79 | 295,590,770 | 83 | ||||||||||||||||||||
TOTAL | 407,769,485 | 100 | 360,097,275 | 100 |
55
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE I – BREAKDOWN OF FINANCIAL LIABILITIES BY REMAINING TERM
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019
Figures Stated in Thousands of Pesos ($), 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.
Item | Terms Remaining to Maturity | Total | ||||||||||||||||||||||||||||||||||||||||
1 Month | 3 Months | 6 Months | 12 Months | 24 Months | Over 24 Months | |||||||||||||||||||||||||||||||||||||
Deposits(1) | 368,407,930 | 35,543,271 | 11,007,695 | 4,469,392 | 53,836 | 46,255 | 419,528,379 | |||||||||||||||||||||||||||||||||||
Non-financial Public Sector | 2,185,405 | 315,980 | 149 | - | - | - | 2,501,534 | |||||||||||||||||||||||||||||||||||
Financial Sector | 699,122 | - | - | - | - | - | 699,122 | |||||||||||||||||||||||||||||||||||
Non-financial Private Sector and Residents Abroad | 365,523,403 | 35,227,291 | 11,007,546 | 4,469,392 | 53,836 | 46,255 | 416,327,723 | |||||||||||||||||||||||||||||||||||
Fair Value Liabilities with Changes to Income | 3,043,462 | - | - | - | - | - | 3,043,462 | |||||||||||||||||||||||||||||||||||
Derivative Instruments | 1,876,088 | - | - | - | - | - | 1,876,088 | |||||||||||||||||||||||||||||||||||
Repo Transactions | 6,016,088 | - | - | - | - | - | 6,016,088 | |||||||||||||||||||||||||||||||||||
Other Financial Liabilities | 55,781,394 | 9,430 | 20,709 | 30,640 | 51,296 | 84,045 | 55,977,514 | |||||||||||||||||||||||||||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 2,104,943 | 2,190,139 | 1,581,659 | 3,814,720 | 2,981,219 | 4,178,667 | 16,851,347 | |||||||||||||||||||||||||||||||||||
Debt Securities Issued | 1,720,978 | 4,429,302 | 8,094,757 | 15,286,710 | 14,205,591 | 8,589,492 | 52,326,830 | |||||||||||||||||||||||||||||||||||
Subordinated Debt Securities | 178,832 | - | 439,575 | 439,575 | 879,150 | 15,639,692 | 17,576,824 | |||||||||||||||||||||||||||||||||||
TOTAL | 439,129,715 | 42,172,142 | 21,144,395 | 24,041,037 | 18,171,092 | 28,538,151 | 573,196,532 |
(1) Maturities in the first month include:
- Checking Accounts $40,035,069
- Savings Accounts $210,853,013
- Time Deposit $114,853,759
- Other Deposits $2,665,995
- Interest to be Accrued $94
56
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE J – CHANGES IN PROVISIONS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Balances at the Beginning of Period | Increases | Decreases | Balances as of 03.31.19 | Balances as of 12.31.18 | |||||||||||||||||||||||||||||||||||||||||||
Reversals | Uses | |||||||||||||||||||||||||||||||||||||||||||||||
INCLUDED IN LIABILITIES | ||||||||||||||||||||||||||||||||||||||||||||||||
For Administrative, Disciplinary and Criminal Penalties | 5,306 | 22 | - | (22 | ) | 5,306 | 5,306 | |||||||||||||||||||||||||||||||||||||||||
Provisions for Termination Benefits | 86,926 | 12,822 | - | (1,380 | ) | 98,368 | 86,926 | |||||||||||||||||||||||||||||||||||||||||
Others | 1,357,091 | 101,072 | - | (5,247 | ) | 1,452,916 | 1,357,091 | |||||||||||||||||||||||||||||||||||||||||
TOTAL PROVISIONS | 1,449,323 | 113,894 | - | (6,649 | ) | 1,556,590 | 1,449,323 |
57
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE L – FOREIGN CURRENCY BALANCES
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Head Office and Argentine Branches | 03.31.19 | 03.31.19 | 12.31.18 | ||||||||||||||||||||||||||||||||||||
Dollar | Euro | Real | Others | |||||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||
Cash and Due from Banks | 84,406,309 | 84,406,309 | 82,083,329 | 2,153,032 | 19,334 | 150,614 | 95,156,786 | |||||||||||||||||||||||||||||||||
Fair Value Debt Securities with Changes to Income | 2,721,387 | 2,721,387 | 2,721,387 | - | - | - | 1,459,314 | |||||||||||||||||||||||||||||||||
Derivative Instruments | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Other Financial Assets | 1,940,729 | 1,940,729 | 1,940,729 | - | - | - | 696,796 | |||||||||||||||||||||||||||||||||
Net Loans and Other Financing | 111,323,726 | 111,323,726 | 111,171,351 | 152,159 | - | 216 | 95,270,654 | |||||||||||||||||||||||||||||||||
Argentine Central Bank | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Other Financial Institutions | 1,127,691 | 1,127,691 | 1,127,691 | - | - | - | 1,019,533 | |||||||||||||||||||||||||||||||||
To theNon-financial Private Sector and Residents Abroad | 110,196,035 | 110,196,035 | 110,043,660 | 152,159 | - | 216 | 94,251,121 | |||||||||||||||||||||||||||||||||
Other Debt Securities | 4,654,760 | 4,654,760 | 4,653,760 | - | - | - | 4,338,728 | |||||||||||||||||||||||||||||||||
Financial Assets Pledged as Collateral | 9,301,521 | 9,301,521 | 9,301,521 | - | - | - | 3,350,460 | |||||||||||||||||||||||||||||||||
Investments in Equity Instruments | 36,580 | 36,580 | 32,698 | 3,882 | - | - | 28,215 | |||||||||||||||||||||||||||||||||
Assets for Insurance Contracts | - | - | - | - | - | - | 2,695 | |||||||||||||||||||||||||||||||||
OtherNon-financial Assets | 29,555 | 29,555 | 29,555 | - | - | - | 23,313 | |||||||||||||||||||||||||||||||||
TOTAL ASSETS | 214,415,567 | 214,415,567 | 211,936,330 | 2,309,073 | 19,334 | 150,830 | 200,326,961 |
58
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE L – FOREIGN CURRENCY BALANCES (Continued)
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Head Office and Argentine Branches | 03.31.19 | 03.31.19 | 12.31.18 | ||||||||||||||||||||||||||||||||||||||
Dollar | Euro | Real | Others | |||||||||||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||||||||||||
Deposits | 181,569,264 | 181,569,264 | - | - | - | - | 162,667,559 | |||||||||||||||||||||||||||||||||||
Non-financial Public Sector | 16,854 | 16,854 | - | - | - | - | 6,225,968 | |||||||||||||||||||||||||||||||||||
Financial Sector | 65,259 | 65,259 | - | - | - | - | 9,866 | |||||||||||||||||||||||||||||||||||
Non-financial Private Sector and Residents Abroad | 181,487,151 | 181,487,151 | - | - | - | - | 156,431,725 | |||||||||||||||||||||||||||||||||||
Fair Value Liabilities with Changes to Income | 247,222 | 247,222 | - | - | - | - | 115,761 | |||||||||||||||||||||||||||||||||||
Derivative Instruments | 622,198 | 622,198 | - | - | - | - | 21,173 | |||||||||||||||||||||||||||||||||||
Repo Transactions | 5,873,381 | 5,873,381 | - | - | - | - | 1,894,876 | |||||||||||||||||||||||||||||||||||
Other Financial Liabilities | 10,681,130 | 10,681,130 | 254,861 | - | - | 22,034 | 8,003,308 | |||||||||||||||||||||||||||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 11,268,915 | 11,268,915 | 204,874 | - | - | - | 13,814,564 | |||||||||||||||||||||||||||||||||||
Debt Securities Issued | 7,954,661 | 7,954,661 | - | - | - | - | 3,850,692 | |||||||||||||||||||||||||||||||||||
Subordinated Debt Securities | 10,983,200 | 10,983,200 | - | - | - | - | 9,767,874 | |||||||||||||||||||||||||||||||||||
Liabilities for Insurance Contracts | - | - | - | - | - | - | 2,967 | |||||||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 329,840 | 329,840 | 67 | - | - | - | 283,327 | |||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 229,529,811 | 229,529,811 | 459,802 | - | - | - | 200,422,101 |
59
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE O – DERIVATIVE INSTRUMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019
Figures Stated in Thousands of Pesos ($), 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(*) | ||||||||||||||||||||||||||||||||
Foreign Currency Forwards | ||||||||||||||||||||||||||||||||||||||||
OTC - Purchases | Brokerage - own account | Foreign currency | Daily settlement of the difference | MAE | 2 | 1 | 1 | 90,200 | ||||||||||||||||||||||||||||||||
OTC - Sales | Brokerage - own account | Foreign currency | Daily settlement of the difference | MAE | 1 | 1 | 1 | 2,536,850 | ||||||||||||||||||||||||||||||||
ROFEX - Purchases | Brokerage - own account | Foreign currency | Daily settlement of the difference | ROFEX | 2 | 2 | 1 | 34,099,031 | ||||||||||||||||||||||||||||||||
ROFEX - Sales | Brokerage - own account | Foreign currency | Daily settlement of the difference | ROFEX | 2 | 2 | 1 | 34,477,021 | ||||||||||||||||||||||||||||||||
Forwards with Customers | ||||||||||||||||||||||||||||||||||||||||
Purchases | Brokerage - own account | Foreign currency | Upon maturity of differences | OTC - Residents in Argentina -Non-financial sector | 3 | 2 | 88 | 1,164,867 | ||||||||||||||||||||||||||||||||
Purchases | Brokerage - own account | Foreign currency | Upon maturity of differences | OTC – Residents Abroad | 3 | - | 88 | 27,696,126 | ||||||||||||||||||||||||||||||||
Sales | Brokerage - own account | Foreign currency | Upon maturity of differences | OTC - Residents in Argentina -Non-financial sector | 4 | 3 | 112 | 8,111,590 | ||||||||||||||||||||||||||||||||
Sales | Brokerage - own account | Foreign currency | Upon maturity of differences | OTC – Residents Abroad | 4 | 3 | 112 | 4,058,260 | ||||||||||||||||||||||||||||||||
Repo Transactions | ||||||||||||||||||||||||||||||||||||||||
Forward Purchases | Brokerage - own account | Argentine government securities | With delivery of the underlying asset | MAE | - | - | - | 6,121,089 | ||||||||||||||||||||||||||||||||
Forward Sales | Brokerage - own account | Argentine government securities | With delivery of the underlying asset | MAE | - | - | - | 10,673,453 | ||||||||||||||||||||||||||||||||
Swaps with Customers | ||||||||||||||||||||||||||||||||||||||||
Fixed for Variable Interest Rate Swaps | Brokerage - own account | Others | Others | OTC – Residents in Argentina – Financial sector | 26 | 12 | 1 | 460,242 | ||||||||||||||||||||||||||||||||
Cross Currency Swaps – Other Forward Purchases | Brokerage - own account | Others | Others | OTC – Residents in Argentina – Financial sector | 60 | 57 | - | 30,941 |
(*) Relates to the notional amount.
60
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE Q – INCOME STATEMENT BREAKDOWN
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Net Financial Income/(Expense) | OCI | ||||||||||||||||||||||
Originally Designated or According to Point 6.7.1 of IFRS 9 | Mandatory Measurement | |||||||||||||||||||||||
From Measurement of Financial Assets at Fair Value with Changes in Profit or Loss | ||||||||||||||||||||||||
Income (loss) from Government Securities | - | 12,221,443 | 209,356 | |||||||||||||||||||||
Income (loss) from Private Securities | - | 2,720,240 | - | |||||||||||||||||||||
Income (Loss) from Derivative Instruments | - | 794,835 | - | |||||||||||||||||||||
Repo Transactions | - | 794,835 | - | |||||||||||||||||||||
Income from Other Financial Assets | - | 1 | - | |||||||||||||||||||||
From Measurement of Financial Liabilities at Fair Value with Changes in Profit or Loss | ||||||||||||||||||||||||
Income (Loss) from Derivative Instruments | - | (18,604 | ) | - | ||||||||||||||||||||
Repo Transactions | - | - | - | |||||||||||||||||||||
Rate Swaps | - | (18,064 | ) | - | ||||||||||||||||||||
Total as of 03.31.19 | - | 15,718,455 | 209,356 |
Items | Net Financial Income/(Expense) | OCI | ||||||||||||||||||||||
Originally Designated or According to Point 6.7.1 of IFRS 9 | Mandatory Measurement | |||||||||||||||||||||||
From Measurement of Financial Assets at Fair Value with Changes in Profit or Loss | ||||||||||||||||||||||||
Income (loss) from Government Securities | - | 1,696,702 | 14,425 | |||||||||||||||||||||
Income (loss) from Private Securities | - | 269,641 | - | |||||||||||||||||||||
Income (Loss) from Derivative Instruments | - | 424 | - | |||||||||||||||||||||
Repo Transactions | - | 424 | - | |||||||||||||||||||||
Income (Loss) from Other Financial Assets | - | (2 | ) | - | ||||||||||||||||||||
From Measurement of Financial Liabilities at Fair Value with Changes in Profit or Loss | ||||||||||||||||||||||||
Income (Loss) from Derivative Instruments | - | (116,784 | ) | - | ||||||||||||||||||||
Repo Transactions | - | (116,784 | ) | - | ||||||||||||||||||||
Totals as of 03.31.18 | - | 1,846,981 | 14,425 |
61
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE Q – INCOME STATEMENT BREAKDOWN (Continued)
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Interest and Adjustments for Application of Effective Interest Rate of Financial Assets Measured at Amortized Cost | 03.31.19 | 03.31.18 | ||||||||||
Interest Income | ||||||||||||
On Cash and Due from Banks | 535 | 124 | ||||||||||
On Private Securities | 104,090 | 76,269 | ||||||||||
On Government Securities | 719,409 | 72,686 | ||||||||||
On Net Loans and Other Financing | 20,933,292 | 10,846,079 | ||||||||||
Non-financial Public Sector | - | 565 | ||||||||||
Financial Sector | 447,162 | 204,406 | ||||||||||
Non-financial Private Sector | 20,486,130 | 10,641,108 | ||||||||||
Overdrafts | 2,096,813 | 944,209 | ||||||||||
Mortgage Loans | 1,933,309 | 475,058 | ||||||||||
Collateral Loans | 49,702 | 67,918 | ||||||||||
Personal Loans | 2,517,222 | 1,610,588 | ||||||||||
Credit Card Loans | 9,591,516 | 4,620,525 | ||||||||||
Financial Leases | 143,985 | 96,738 | ||||||||||
Others | 4,153,583 | 2,826,072 | ||||||||||
On Repo Transactions | 224,300 | 63,863 | ||||||||||
Argentine Central Bank and Other Financial Institutions | 224,300 | 63,863 | ||||||||||
Total | 21,981,626 | 11,059,021 |
Interest-related Expenses | 03.31.19 | 03.31.18 | ||||||||||
On Deposits | 13,841,541 | 3,629,298 | ||||||||||
Non-financial Private Sector | 13,841,541 | 3,629,298 | ||||||||||
Checking Accounts | - | - | ||||||||||
Savings Accounts | 1,174 | 1,067 | ||||||||||
Time Deposit and Term Investments | 12,672,980 | 3,404,161 | ||||||||||
Others | 1,167,387 | 224,070 | ||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 409,997 | 148,837 | ||||||||||
On Repo Transactions | 171,297 | 23,594 | ||||||||||
Other Financial Institutions | 171,297 | 23,594 | ||||||||||
On Other Financial Liabilities | 2,088,371 | 707,928 | ||||||||||
On Debt Securities Issued | 1,053,934 | 276,672 | ||||||||||
On Subordinated Debt Securities | 207,382 | 102,495 | ||||||||||
Total | 17,772,522 | 4,888,824 |
Fee Income | 03.31.19 | 03.31.18 | ||||||||||
Fee and Commissions Related to Transactions | 1,615,291 | 1,046,663 | ||||||||||
Fee and Commissions Related to Credits | 845,882 | 3,058,165 | ||||||||||
Fee and Commissions Related to Loan Commitments and Financial Guarantees | 77,709 | 40,172 | ||||||||||
Fee and Commissions Related to Transferable Securities | 261,478 | 162,806 | ||||||||||
Fee and Commissions on Collection Proceedings | 4,916 | 6,290 | ||||||||||
Fee and Commissions on Credit Cards | 3,491,970 | - | ||||||||||
Fee and Commissions on Insurance | 182,038 | - | ||||||||||
Fee and Commissions on Foreign and Exchange Rate Transactions | 281,957 | 162,387 | ||||||||||
Total | 6,761,241 | 4,476,483 |
Fee-related Expenses | 03.31.19 | 03.31.18 | ||||||||||
Fee and Commissions Related to Credit Cards | - | - | ||||||||||
Fees and Commissions Related to Transactions with Securities | 39,878 | 8,902 | ||||||||||
Fees and Commissions related to Direct Channels | - | 55,947 | ||||||||||
Others | 709,183 | 68,729 | ||||||||||
Total | 749,061 | 560,739 |
62
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE R – VALUE ADJUSTMENT BY LOSSES – ALLOWANCE FOR LOAN LOSSES
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Balances at the Beginning of Period | Increases | Decreases | Balances as of 03.31.19 | Balances as of 12.31.18 | |||||||||||||||||||||||||||||||
Reversals | Uses | |||||||||||||||||||||||||||||||||||
Other Financial Assets | 35,177 | 1,860,748 | - | - | 1,895,925 | 35,177 | ||||||||||||||||||||||||||||||
Net Loans and Other Financing | 11,414,503 | 5,498,735 | - | 986,151 | 15,927,087 | 11,414,503 | ||||||||||||||||||||||||||||||
Overdrafts | 394,859 | 164,523 | - | 59,902 | 499,480 | 394,859 | ||||||||||||||||||||||||||||||
Mortgage Loans | 83,939 | 21,245 | - | 35,072 | 70,112 | 83,939 | ||||||||||||||||||||||||||||||
Collateral Loans | 10,911 | 2,587 | - | 179 | 13,319 | 10,911 | ||||||||||||||||||||||||||||||
Personal Loans | 842,725 | 453,988 | - | 201,898 | 1,094,815 | 842,725 | ||||||||||||||||||||||||||||||
Credit Card Loans | 5,140,390 | 2,046,594 | - | 587,246 | 6,599,738 | 5,140,390 | ||||||||||||||||||||||||||||||
Financial Leases | 29,185 | 1,603 | - | 99 | 30,689 | 29,185 | ||||||||||||||||||||||||||||||
Others(*)(**) | 4,912,494 | 2,808,195 | - | 101,755 | 7,618,934 | 4,912,494 | ||||||||||||||||||||||||||||||
Private Securities(**) | 59,974 | 47,207 | - | 26,000 | 81,181 | 59,974 | ||||||||||||||||||||||||||||||
TOTAL ALLOWANCES | 11,509,654 | 7,406,690 | - | 1,012,151 | 17,904,193 | 11,509,654 |
(*) It includes Other Loans and Other Financing.
(**) It includes the allowance for loan losses on the portfolio in normal situation (Communiqué “A” 2729, as amended and supplemented).
63
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF MARCH 31, 2019
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
The Company’s purpose is to strengthen its position as a leading company devoted to providing comprehensive financial services and, at the same time, to continue to strengthen Banco Galicia’s position as one of the leading companies in Argentina. This strategy shall be carried out by supplementing the operations and business conducted by Banco Galicia through equity investments in companies and undertakings, either existing or to be created, engaged in financial activities as they are understood in the modern economy.
Net income for the period attributable to the controlling company’s shareholders amounted to $9,037,359. This income has been mainly generated as a consequence of the valuation of equity investments in subsidiaries.
The General Ordinary and Extraordinary Shareholders’ Meeting held on April 25, 2019 authorized, pursuant to the rules and regulations in force, the allocation of Unappropriated Retained Earnings, as of December 31, 2018, as follows:
To Cash Dividends | 2,000,000 | |||||
To Special Reserve for First-Time Adoption of IFRS | 2,827,741 | |||||
To Discretionary Reserve for Future Distributions of Profits | 12,427,034 |
FINANCIAL STRUCTURE – MAIN ACCOUNTS OF THE CONSOLIDATED BALANCE SHEET
Items | 03.31.19 | 03.31.18 | 03.31.17 | |||||||||||||||
Assets | ||||||||||||||||||
Cash and Due from Banks | 131,824,102 | 46,441,210 | 49,888,320 | |||||||||||||||
Fair Value Debt Securities with Changes to Income | 108,810,103 | 31,372,512 | 21,358,415 | |||||||||||||||
Derivative Instruments | 636,124 | 137,474 | 113,244 | |||||||||||||||
Repo Transactions | 10,657,687 | 4,505,248 | 6,592,735 | |||||||||||||||
Other Financial Assets | 10,261,632 | 6,664,485 | 4,179,851 | |||||||||||||||
Net Loans and Other Financing | 301,476,655 | 210,427,233 | 143,633,736 | |||||||||||||||
Other Debt Securities | 16,905,289 | 3,582,367 | 1,508,386 | |||||||||||||||
Financial Assets Pledged as Collateral | 16,703,234 | 8,856,242 | 3,793,818 | |||||||||||||||
Current Income Tax Assets | 184,707 | 343,875 | 997,695 | |||||||||||||||
Investments in Equity Instruments | 2,516,578 | 12,709 | 38,050 | |||||||||||||||
Equity Investments in Associates and Joint Ventures | - | 21,573 | 203,340 | |||||||||||||||
Property, Plant and Equipment and Intangible Assets | 18,302,037 | 10,977,983 | 9,703,691 | |||||||||||||||
Deferred Income Tax Assets | 899,574 | 603,650 | 607,403 | |||||||||||||||
Assets for Insurance Contracts | 1,004,660 | 642,180 | 484,373 | |||||||||||||||
Other Assets | 2,337,204 | 3,032,570 | 3,017,871 | |||||||||||||||
Total Assets | 622,519,586 | 327,621,311 | 246,120,928 | |||||||||||||||
Liabilities | ||||||||||||||||||
Deposits | 407,769,485 | 198,364,119 | 156,693,770 | |||||||||||||||
Fair Value Liabilities with Changes to Income | 3,584,269 | 1,796,550 | - | |||||||||||||||
Derivative Instruments | 1,876,088 | 180,989 | 47,945 | |||||||||||||||
Repo Transactions | 6,016,088 | 2,014,918 | - | |||||||||||||||
Other Financial Liabilities | 56,386,543 | 34,969,838 | 29,394,399 | |||||||||||||||
Loans from the Argentine Central Bank and Other Financial Institutions | 14,626,842 | 11,292,008 | 7,043,343 | |||||||||||||||
Debt Securities Issued | 35,581,406 | 14,372,971 | 13,298,137 | |||||||||||||||
Current Income Tax Liabilities | 6,175,179 | 4,078,536 | 2,269,352 | |||||||||||||||
Subordinated Debt Securities | 10,983,200 | 5,079,134 | 3,864,720 | |||||||||||||||
Deferred Income Tax Liabilities | 509,909 | 319,116 | 1,146,995 | |||||||||||||||
Liabilities for Insurance Contracts | 1,170,943 | 1,020,554 | 651,120 | |||||||||||||||
Other Liabilities | 10,837,842 | 7,881,146 | 5,562,797 | |||||||||||||||
Total Liabilities | 556,912,335 | 281,369,879 | 219,972,578 | |||||||||||||||
Shareholders’ Equity Attributable to the Controlling Company’s Shareholders | 63,709,170 | 44,677,893 | 24,586,948 | |||||||||||||||
Shareholders’ Equity Attributable toNon-controlling Interests | 1,898,081 | 1,573,539 | 1,561,402 | |||||||||||||||
Total Shareholders’ Equity | 65,607,251 | 46,251,432 | 26,148,350 |
64
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF MARCH 31, 2019
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
INCOME STATEMENT – MAIN ACCOUNTS OF THE CONSOLIDATED INCOME STATEMENT
Items | 03.31.19 | 03.31.18 | 03.31.17 | |||||||||||||||
Net Income from Interest | 4,209,104 | 6,170,197 | 4,263,345 | |||||||||||||||
Net Fee Income | 6,012,180 | 3,915,744 | 3,236,824 | |||||||||||||||
Other Financial Income | 15,686,868 | 2,637,528 | 1,137,315 | |||||||||||||||
Other Operating Income | 6,493,748 | 1,454,348 | 999,512 | |||||||||||||||
Underwriting Income from Insurance Business | 672,164 | 642,009 | 524,335 | |||||||||||||||
Loan Loss Provisions | (7,561,394 | ) | (1,621,747 | ) | (1,041,373 | ) | ||||||||||||
Net Operating Income | 25,512,670 | 13,198,079 | 9,119,958 | |||||||||||||||
Personnel Expenses | (4,062,501 | ) | (3,095,064 | ) | (2,472,329 | ) | ||||||||||||
Administrative Expenses | (4,064,888 | ) | (2,924,700 | ) | (2,079,863 | ) | ||||||||||||
Depreciation and Impairment of Assets | (568,644 | ) | (257,481 | ) | (249,189 | ) | ||||||||||||
Other Operating Expenses | (4,260,444 | ) | (2,444,862 | ) | (1,586,651 | ) | ||||||||||||
Operating Income | 12,555,992 | 4,475,972 | 2,731,926 | |||||||||||||||
Results from Associates and Joint Ventures | - | - | 23,948 | |||||||||||||||
Income before Taxes from Continuing Activities | 12,555,992 | 4,475,972 | 2,755,874 | |||||||||||||||
Income Tax from Continuing Activities | (3,341,115 | ) | (1,379,516 | ) | (983,939 | ) | ||||||||||||
Net Income from Continuing Activities | 9,214,877 | 3,096,456 | 1,771,935 | |||||||||||||||
Income from Discontinued Operations | - | 74,776 | - | |||||||||||||||
Income Tax from Discontinued Activities | - | (22,882 | ) | (185,362 | ) | |||||||||||||
Net Income for the Period | 9,214,877 | 3,148,350 | 1,586,573 | |||||||||||||||
Other Comprehensive Income | 209,357 | 14,425 | 3,527 | |||||||||||||||
Total Comprehensive Income, Net | 9,005,520 | 3,133,925 | 1,590,100 | |||||||||||||||
Net Income for the Period Attributable to the Controlling Company’s Shareholders | 8,828,002 | 2,990,746 | 1,430,720 | |||||||||||||||
Net Income for the Period Attributable toNon-controlling Interests | 177,518 | 143,179 | 159,380 |
STRUCTURE OF THE CONSOLIDATED STATEMENT OF CASH FLOWS
Items | 03.31.19 | 03.31.18 | 03.31.17 | |||||||||||||||
Total Operating Activities Cash Flow | 17,142,045 | (21,269,338 | ) | (4,307,199 | ) | |||||||||||||
Total Investment Activities Cash Flow | 1,507,000 | (500,543 | ) | (570,533 | ) | |||||||||||||
Total Financing Activities Cash Flow | (5,694,195 | ) | 1,375,038 | 1,149,578 | ||||||||||||||
Effect of Changes in the Exchange Rate | 13,357,725 | 2,740,094 | (1,063,781 | ) | ||||||||||||||
26,312,575 | (17,654,749 | ) | (4,791,935 | ) |
RATIOS
LIQUIDITY
Since the consolidated accounts mainly stem from Banco Galicia, the individual liquidity ratio for the Bank is detailed as follows:
Items | 03.31.19 | 03.31.18 | 03.31.17 | |||||||||||||||
Liquid Assets(*) as a Percentage of Transactional Deposits | 90.72 | 60.63 | 83.05 | |||||||||||||||
Liquid Assets(*) as a Percentage of Total Deposits | 55.43 | 37.36 | 49.31 |
(*) Liquid Assets include cash and due from banks, Lebacs and Nobacs, net call money, short-term placements in correspondent banks, Special Guarantees Accounts at the Argentine Central Bank and repo and reverse repo transactions with the local market.
SOLVENCY
Items | 03.31.19 | 03.31.18 | 03.31.17 | |||||||||||||||
Solvency | 11.44 | 16.44 | 15.34 |
65
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF MARCH 31, 2019
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
CAPITAL ASSETS
Items | 03.31.19 | 03.31.18 | 03.31.17 | |||||||||||||||
Capital Assets(*) | 2.94 | 3.36 | 3.31 |
(*) Investments in Associates and Joint Ventures plus Property, Plant and Equipment plus Intangible Assets over Total Assets
PROFITABILITY
Items | 03.31.19 | 03.31.18 | 03.31.17 | |||||||||||||||
Return on Average Assets(*) | 6.13 | 2.91 | 2.34 | |||||||||||||||
Return on Average Shareholders’ Equity(*) | 70.27 | 23.06 | 24.72 |
(*) Annualized.
EQUITY INVESTMENTS
BANCO DE GALICIA Y BUENOS AIRES S.A.U.
Founded in 1905, Banco Galicia is one of the major private-sector domestic banks in the Argentine financial system. Through its several physical and digital distribution channels, Banco Galicia markets a broad spectrum of financial products and services for individuals and businesses countrywide.
In comparing the consolidated results of operations for the first quarter of the 2018 fiscal year to the same period of the previous year, consideration should be given to the fact that the Company and Banco Galicia entered into aspin-off/merger agreement, pursuant to which Banco Galicia split from its shareholders’ equity 77% interest of its interests in Tarjetas Regionales S.A. for its later inclusion in Grupo Galicia’s shareholders’ equity, effective as from January 1, 2018. Accordingly, the balance sheet, income statement and statement of cash flows as of March 31, 2017 unconsolidated with Tarjetas Regionales S.A. was included for increased consistency in analyzing the changes.
The Bank’s net income for the period ended March 31, 2019 amounted to $7,838,930, accounting for a $5,877,392 increase compared to net income for the same quarter of the previous year in the amount of $1,961,538, or a 300% increase. The increase in net income, when compared to the same quarter of the previous fiscal year mainly resulted from the increase of $11,437,212 in net operating income (net income from interest plus net fee income, plus other financial income, plus other operating income less loan loss provisions). This effect was mainly mitigated by higher: i) other operating expenses of $1,517,302, and ii) administrative expenses plus personnel expenses of $1,526,944.
Net operating income for the three-month period ended March 31, 2019 amounted to $20,165,872, a 131% increase as compared to the $8,728,660 recorded in the same period of the previous fiscal year. The positive change was due to higher net income arising from i) financial income of $15,244,349 (534%), and ii) net operating income of $5,875,950 (480%), offset by iii) an increase in the loan loss provision in the amount of $6,142,558 (538%).
Total loans to the private sector amounted to $309,429,306, showing a 56% increase during the last twelve months, and total deposits reached $410,170,497, growing 107% when compared to the previous fiscal year. As of March 31, 2019, Banco Galicia’s estimated share in loans to the private sector was 10.91%, while in deposits from the private sector it was 11.47%, when compared to 9.50% and 9.66%, respectively, as of March 31, 2018.
66
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF MARCH 31, 2019
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
TARJETAS REGIONALES S.A.
Tarjetas Regionales S.A. was incorporated as a corporation (sociedad anónima) on September 23, 1997. It is engaged in financial and investment activities, and its core business is maintaining (holding) investments in issuers ofnon-banking credit cards and companies that deliver supplementary services to such activity.
In 2017, Regional Cards continued consolidating their leading position in the Argentine credit card market. As per official surveys and private market research, Tarjetas Regionales S.A. has a privileged market position, as it is the main credit card issuer at the national level and the leading brand in the Argentine provinces.
As of March 31, 2019, Tarjetas Regionales S.A. posted a profit of $1,044 million, accounting for a 24% increase compared to the same quarter of the previous year. Net operating income amounted to $5,376 million, accounting for a 31.8% increase relative to the same period of fiscal year 2018, while net income from interest and net fee income rose by 32% and 33%, respectively. The loan loss provision amounted to $1,379 million, 215% higher than the $641 million recorded in the same period of the previous fiscal year.
SUDAMERICANA HOLDING S.A.
Sudamericana Holding S.A. is a holding company providing life, retirement, property, and casualty insurance and insurance brokerage services. The equity investment held by the Company in Sudamericana Holding S.A. is 87.50%. Banco Galicia holds the remaining 12.50%.
This investment represents another step forward in Grupo Galicia’s plan to consolidate its leadership as a financial services provider.
Joint production of the insurance companies controlled by Sudamericana Holding S.A. in the life, retirement and property insurance business amounted to $1,093,542 during the period commenced on January 1, 2019 and ended on March 31, 2019. As of March 31, 2019, these companies had approximately 1.6 million current policies in all their insurance lines.
From a commercial standpoint, within a more challenging context for the industry, the company maintains its purpose of increasing the companies’ sales. As a result of this effort, the premium volume for the first quarter of 2019 exceeded that for the same period of the previous year by 25%.
GALICIA ADMINISTRADORA DE FONDOS S.A.
Galicia Administradora de Fondos S.A.’s shareholders are the Company, holding 95% of the shares and Galicia Valores S.A., holding the remaining 5%.
Galicia Administradora de Fondos S.A. administers the FIMA mutual funds distributed by Banco Galicia, in its capacity as custodial agent of collective investment products corresponding to mutual funds, through its broad channel network, such as branches, electronic banking, phone banking, and to different customer segments (institutional, corporate and individual customers). New dealers, such as Galicia Valores S.A., Patente de Valores S.A., and Neix S.A., among others, are joining the network.
The mutual funds invest in a variety of assets, depending on their investment goals (such as government and private securities, equity or time deposits, among others).
67
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF MARCH 31, 2019
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
GALICIA WARRANTS S.A.
Galicia Warrants S.A. was established in 1993 and, since then, has become a leading company. It renders services to the productive sector as an additional credit instrument, also rendering a full spectrum of services related to inventory management.
Its shareholders are Grupo Galicia, which holds an 87.5% equity investment in the company, and Banco Galicia, which holds a 12.5% interest.
OUTLOOK
Argentina’s financial program for 2019 seems to be defined in the wake of the funding agreement with the International Monetary Fund (IMF), though debt markets would still remain virtually close to our country.
On the FX market front, we are facing growing demand for foreign currency, with supply being primarily determined by potential auctions by the Argentine Central Bank and the Treasury, pursuant to the agreement with the IMF. The U.S. Dollar exchange rate, after the 2018 depreciation, would remain relatively steady in real terms towards the end of 2019 with volatility periods associated with the election scenario.
About the monetary policy, after a more difficult 2018 as a result of the new scheme to control aggregates, the contractionary trend would continue until inflation levels are brought into line with the Argentine Central Bank’s(non-explicit) objectives.
The financial system will continue to increase gradually the private sector brokerage, which will maintain its funding structure, short-term loans and high liquidity levels. Therefore, we do not project credit growth in terms of gross domestic product for the coming year.
In financial standing terms, net results will help maintain capitalization levels, according to regulations adopted by international financial institutions. In generating income, income from securities, mainly that related to the return on liquidity, would have a higher weight within operating income, whereas entities will continue to work on expenses to improve the operating efficiency.
The macroeconomic scenario will condition the evolution of portfolio quality indicators, although a strong systemic position is expected to continue to prevail, even comparatively with the most important countries in the region.
In short, in 2019, the Argentine financial system will continue to show excellent fundamental indicators. The high levels of coverage with allowances and capital surplus are a strength in a context of increase in arrears. The low leveraging level regionally compared at companies and families evidences the Argentine financial institutions’ potential.
Within this context, the Group will continue with its purpose to strengthen its market leadership position. Our main focus will continue to be on the quality of our products and services provided to current and future customers, while continuing improving the operational efficiency as a key factor to generate value for customers and shareholders.
The Group’s business growth is attained within a framework of sustainable management. In that sense, we will continue to seek out further opportunities to create value, oriented to the public good and environmentally friendly.
Autonomous City of Buenos Aires, May 9, 2019
68
GRUPO FINANCIERO GALICIA S.A.
SEPARATE CONDENSED INTERIM BALANCE SHEET
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Notes | 03.31.19 | 12.31.18 | ||||||||||||||||
Assets | ||||||||||||||||||
Cash and Due from Banks | 30,455 | 6,904 | ||||||||||||||||
Cash | 19 | 19 | ||||||||||||||||
Financial Institutions and Correspondents | 30,436 | 6,885 | ||||||||||||||||
Other Local and Foreign Financial Institutions | 30,436 | 6,885 | ||||||||||||||||
Fair Value Debt Securities with Changes to Income (Schedule A) | 3 | 43,302 | 19,394 | |||||||||||||||
Derivative Instruments | - | - | ||||||||||||||||
Other Financial Assets | 5 | 10,162 | 11,326 | |||||||||||||||
Net Loans and Other Financing(Schedule D) | 6 | 1,253,513 | 849,061 | |||||||||||||||
To theNon-financial Private Sector and Residents Abroad | 1,253,513 | 849,061 | ||||||||||||||||
Current Income Tax Assets | 7 | 12,869 | - | |||||||||||||||
Equity Investments in Associates and Joint Ventures | 8 | 62,877,084 | 54,471,742 | |||||||||||||||
Property, Plant and Equipment(Schedule F) | 4,371 | 1,588 | ||||||||||||||||
Deferred Income Tax Assets | 11 | 4,938 | 4,030 | |||||||||||||||
OtherNon-financial Assets | 12 | 3,508 | 838 | |||||||||||||||
Non-current Assets Held for Sale | - | - | ||||||||||||||||
Total Assets | 64,240,202 | 55,364,883 | ||||||||||||||||
Liabilities | ||||||||||||||||||
Other Financial Liabilities | 3,741 | - | ||||||||||||||||
Current Income Tax Liabilities | 13 | 82,432 | 47,236 | |||||||||||||||
Deferred Income Tax Liabilities | 11 | 1,504 | - | |||||||||||||||
OtherNon-financial Liabilities | 14 | 24,048 | 20,028 | |||||||||||||||
Total Liabilities | 111,725 | 67,264 | ||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||
Capital Stock | 15 | 1,426,765 | 1,426,765 | |||||||||||||||
Non-capitalized Contributions | 10,951,132 | 10,951,132 | ||||||||||||||||
Capital Adjustments | 278,131 | 278,131 | ||||||||||||||||
Profit Reserves | 25,444,177 | 25,444,177 | ||||||||||||||||
Retained Income | 17,254,775 | 2,827,741 | ||||||||||||||||
Other Accumulated Comprehensive Income | (263,862 | ) | (57,361 | ) | ||||||||||||||
Net Income for the Period/Year | 9,037,359 | 14,427,034 | ||||||||||||||||
Total Shareholders’ Equity | 64,128,477 | 55,297,619 |
The accompanying Notes and Schedules are an integral part of these separate condensed interim financial statements.
69
GRUPO FINANCIERO GALICIA S.A.
SEPARATE CONDENSED INTERIM INCOME STATEMENT
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Notes | 03.31.19 | 03.31.18 | ||||||||||||||||
Interest Income | 517 | 5,401 | ||||||||||||||||
Interest-related Expenses | - | - | ||||||||||||||||
Net Income from Interest(Schedule Q) | 517 | 5,401 | ||||||||||||||||
Net Income (Loss) from Measurement of Fair Value Financial Instruments with Changes to Income (Schedule Q) | 7,513 | 42,183 | ||||||||||||||||
Gold and Foreign Currency Quotation Differences | 17 | 23,129 | 23,880 | |||||||||||||||
Other Operating Income | 18 | 1 | 6 | |||||||||||||||
Loan Loss Provisions | - | - | ||||||||||||||||
Net Operating Income | 31,160 | 71,470 | ||||||||||||||||
Personnel Expenses | 19 | (2,020 | ) | (920 | ) | |||||||||||||
Administrative Expenses | 20 | (24,161 | ) | (27,786 | ) | |||||||||||||
Depreciation and Impairment of Assets | 21 | (279 | ) | (60 | ) | |||||||||||||
Other Operating Expenses | 22 | (5,018 | ) | (371 | ) | |||||||||||||
Operating Income | (318 | ) | 42,333 | |||||||||||||||
Results from Associates and Joint Ventures | 9,063,817 | 2,969,677 | ||||||||||||||||
Income before Taxes from Continuing Activities | 9,063,499 | 3,012,010 | ||||||||||||||||
Income Tax from Continuing Activities | 23 | (26,140 | ) | (13,337 | ) | |||||||||||||
Net Income from Continuing Activities | 9,037,359 | 2,998,673 | ||||||||||||||||
Income from Discontinued Operations | - | 1,804 | ||||||||||||||||
Income Tax from Discontinued Activities | - | (989 | ) | |||||||||||||||
Net Income for the Period | 25 | 9,037,359 | 2,999,488 |
Notes | 03.31.19 | 03.31.18 | ||||||||||||||||
Earnings per Share | 9,037,359 | 2,999,488 | ||||||||||||||||
Net Earnings Attributable to the Controlling Company’s Shareholders | - | - | ||||||||||||||||
Plus: Dilutive Effects of Potential Ordinary Shares | - | - | ||||||||||||||||
Net Earnings Attributable to the Controlling Company’s Shareholders Adjusted for Dilution | 9,037,359 | 2,999,488 | ||||||||||||||||
Weighted-Average of Ordinary Shares Outstanding for the Period | 1,426,765 | 1,426,765 | ||||||||||||||||
Basic Earnings per Share | 6.33 | 2.10 | ||||||||||||||||
Diluted Earnings per Share | 6.33 | 2.10 |
The accompanying Notes and Schedules are an integral part of these separate condensed interim financial statements.
70
GRUPO FINANCIERO GALICIA S.A.
SEPARATE CONDENSED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Notes | 03.31.19 |
| 03.31.18 | |||||||||||||||
Net Income for the Period | 9,037,359 | 2,999,488 | ||||||||||||||||
Items of Other Comprehensive Income that will be Reclassified to Profit or Loss for the Period | (209,357 | ) | (14,425 | ) | ||||||||||||||
Income (Loss) for the Fiscal Year attributable to Share of Profit or Loss in OCI of Subsidiaries | (209,357 | ) | (14,425 | ) | ||||||||||||||
Total Other Comprehensive Income (Loss) | (209,357 | ) | (14,425 | ) | ||||||||||||||
Total Comprehensive Income | 8,828,002 | 2,985,063 |
The accompanying Notes and Schedules are an integral part of these separate condensed interim financial statements.
71
GRUPO FINANCIERO GALICIA S.A.
SEPARATE CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Movements | Note | | Capital Stock | | | Non-capitalized Contributions | | | Adjustments to | | | Other Comprehensive Income (Loss) | | Profit Reserves | Retained Income | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding | | Additional Paid-in Capital | | | Shareholders’ Equity | | Others | | Legal Reserve | | Others | | I.F.R.S. Adjustment | | | Income (Loss) |
| | Shareholders’ Equity | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 12.31.18 | 1,426,765 | 10,951,132 | 278,131 | (57,361 | ) | 340,979 | 25,103,198 | 2,827,741 | 14,427,034 | 55,297,619 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive Income for the Period | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income for the Period | 25 | - | - | - | - | - | - | - | 9,037,359 | 9,037,359 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) for the Period | - | - | - | (209,357 | ) | - | - | - | (209,357 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from Sale of Fair Value Securities with Changes in OCI of Subsidiaries | - | - | - | 2,856 | - | - | - | 2,856 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 03.31.19 | 1,426,765 | 10,951,132 | 278,131 | (263,862 | ) | 340,979 | 25,103,198 | 2,827,741 | 23,464,393 | 64,128,477 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 12.31.17 | 1,426,765 | 10,951,132 | 278,131 | 17,279 | 315,679 | 17,999,029 | 2,526,299 | 8,630,911 | 42,145,225 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase ofNon-controlling Interests | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive Income (Loss) for the Period | - | - | - | (14,425 | ) | - | - | - | 2,999,488 | 2,985,063 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income for the Period | 25 | - | - | - | - | - | - | - | 2,999,488 | 2,999,488 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) for the Period | - | - | - | (14,425 | ) | - | - | - | - | (14,425 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of 03.31.18 | 1,426,765 | 10,951,132 | 278,131 | 2,854 | 315,679 | 17,999,029 | 2,526,299 | 11,630,399 | 45,130,288 |
72
GRUPO FINANCIERO GALICIA S.A.
SEPARATE CONDENSED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Notes | 03.31.19 | 03.31.18 | |||||||||||||||
OPERATING ACTIVITIES CASH FLOWS | ||||||||||||||||||
Net Income for the Period before Income Tax | 9,063,499 | 3,012,010 | ||||||||||||||||
Adjustment to Obtain the Operating Activities Flows: | ||||||||||||||||||
Interest Income | (517) | (5,401) | ||||||||||||||||
Net Loss from Measurement of Fair Value Financial Instruments with Changes to Income | (7,513) | (42,184) | ||||||||||||||||
Depreciation and Impairment of Assets | 279 | 60 | ||||||||||||||||
Loan Loss Provisions | - | - | ||||||||||||||||
Other Comprehensive Income from Associates and Joint Ventures | 209,357 | 14,425 | ||||||||||||||||
Results from Associates and Joint Ventures | (9,063,817) | (2,969,677) | ||||||||||||||||
Net Increases/(Decreases) from Operating Assets: | ||||||||||||||||||
Other Financial Assets | (61,106) | 5,598 | ||||||||||||||||
Net Decreases from Operating Liabilities: | ||||||||||||||||||
Other Operating Liabilities | (34,809) | 27,181 | ||||||||||||||||
TOTAL OPERATING ACTIVITIES (A) | 105,373 | 42,012 | ||||||||||||||||
INVESTMENT ACTIVITIES CASH FLOWS | ||||||||||||||||||
Payments: | ||||||||||||||||||
Acquisition of Interests in Associates and Joint Ventures | - | (924,140) | ||||||||||||||||
Collections: | ||||||||||||||||||
Disposal of Interests in Associates and Joint Ventures | - | 28,967 | ||||||||||||||||
Winding-up of Associates | - | 248 | ||||||||||||||||
Collection of Dividends | 364,800 | 415,774 | ||||||||||||||||
TOTAL INVESTMENT ACTIVITIES (B) | 364,800 | (479,151) | ||||||||||||||||
EFFECT OF CHANGES IN EXCHANGE RATE (C) | (23,129) | 23,880 | ||||||||||||||||
INCREASE/(DECREASE) IN CASH, NET (A+B+C) | 447,044 | (413,259) | ||||||||||||||||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 4 | 886,670 | 1,663,438 | |||||||||||||||
CASH AND CASH EQUIVALENTS ATPERIOD-END | 4 | 1,333,714 | 1,250,178 |
73
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
NOTE 1. ACCOUNTING STANDARDS AND BASIS FOR PREPARATION
Grupo Financiero Galicia S.A. (the “Company”) was constituted on September 14, 1999, as financial services holding company organized under the laws of Argentina. The Company’s main asset is its interest in Banco de Galicia y Buenos Aires S.A.U (“Banco Galicia” or the “Bank”). Banco Galicia is a private-sector bank that offers a full spectrum of financial services both to individual and corporate customers. In addition, the Company has a controlling interest in Tarjetas Regionales S.A., which maintains investments related to the issuance of credit cards and supplementary services; Sudamericana Holding S.A., a company engaged in the insurance business; Galicia Administradora de Fondos S.A., a mutual fund manager, and Galicia Warrants S.A., a company engaged in the issuance of warrants.
These separate condensed interim financial statements were approved and authorized for publication through Minutes of the Board of Directors’ Meeting No. 585, dated May 9, 2019.
1.1. | ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) |
In the light of the fact that the Group is subject to the provisions of Article 2 – Section I – Chapter I of Title IV: Periodical Reporting Requirements of the Argentine National Securities Commission (“C.N.V.”) regulations, the Group is required to present its financial statements in accordance with the valuation and disclosure criteria set forth by the Argentine Central Bank. As required by the aforementioned article, we hereby report that:
- | The Company’s corporate purpose is exclusively related to financial and investment activities; |
- | The equity investment in Banco Galicia and Tarjetas Regionales S.A., the latter being subject to the consolidated supervision requirements of the Argentine Central Bank (Communiqué “A” 2989, as supplemented), accounts for 94.75% of the Company’s assets, constituting the Company’s main asset; |
- | 97.29% of the Company’s income is derived from its share of profit (loss) in the entities referred to in the preceding paragraph; and |
- | The Company has a 100% equity interest in Banco Galicia and an 83% equity interest in Tarjetas Regionales S.A., thus having control over both entities. |
The Argentine Central Bank, through Communiqué “A” 5541, as amended, set forth a convergence plan towards compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), addressed to entities under the Argentine Central Bank’s supervision, effective for fiscal years commenced on or after January 1, 2018, except for item 5.5 (Impairment) of IFRS 9 “Financial Instruments” and IAS 29 “Financial Reporting in Hyperinflationary Economies,” both of which have been temporarily waived until January 1, 2020, at which time entities will be required to apply the provisions on Impairment of Financial Assets, and to restate their financial statements into the current unit of measurement.
1.2. | BASIS FOR PREPARATION |
These separate condensed interim financial statements were prepared in accordance with the IFRS-based accounting framework set forth by the Argentine Central Bank described in Note 1.1. and according to the provisions of IAS 34 “Interim Financing Reporting.” These separate condensed interim financial statements do not include all such information required to prepare a full set of annual financial statements, and users are encouraged to read them jointly with the Company’s annual financial statements as of December 31, 2018.
It has been concluded that these separate interim financial statements fairly present the Group’s financial position, financial performance and cash flows, according to the IFRS-based accounting framework set forth by the Argentine Central Bank, as described in Note 1.2(a) Measurement Unit. Net income (loss) for the three-month period ended March 31, 2019 is not necessarily reflective of a proportional share in the Group’s income (loss) for the full fiscal year.
The accounting principles are consistent with those used in the financial statements as of December 2018, except for a change in the accounting principles applicable to leases, as described in Note 1.2(b).
74
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
(a) | Measurement Unit |
The Group’s separate condensed interim financial statements reflect the effects of the changes in the purchasing power of the currency up to February 28, 2003, the date on which the adjustment for inflation was discontinued, as required by Decree No. 664/03 of the Argentine National Executive Branch, Section 268 of General Resolution No. 7/2005 of the Corporation Control Authority, Communiqué “A” 3921 of the Argentine Central Bank, and General Resolution No. 441/03 of the C.N.V. In addition, Resolution M.D. No. 41/03 of the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires (C.P.C.E.C.A.B.A.), establishing the discontinuation of the recognition of the changes in the purchasing power of the currency effective October 1, 2003.
Law No. 27468, enacted in November 2018, abrogated the prohibition to present the financial statements adjusted for inflation, as established by Decree 664/2003, entrusting each regulatory agency with its application. In this regard, on February 22, 2019, through Communiqué “A” 6651, the Argentine Central Bank established that entities subject to its control shall restate the financial statements into constant currency for the fiscal years commencing January 1, 2020.
IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of an entity whose functional currency is that of a hyperinflationary economy be restated in terms of the current measurement unit as of the reportingyear-end, irrespective of whether they are based on the historical cost or the current cost method. Accordingly, in general terms, inflation occurring since the acquisition date or since the revaluation date, as the case may be, should be accounted for innon-monetary items. These requirements are also applicable to the comparative information reported in the financial statements. According to IAS 29, monetary assets and liabilities are not required to be restated, for they are stated in the current unit of measurement as of the end of the reporting year. Assets and liabilities subject to adjustments based on specific agreements will be adjusted on the basis of such agreements.Non-monetary items measured at their current values at the end of the reporting year, such as net realizable value or otherwise, will not be restated. Othernon-monetary assets and liabilities will be restated by applying a general price index. The income (loss) from the net monetary position will be charged to net income for the reporting year under a separate item.
In order to conclude whether a given economy qualifies as hyperinflationary pursuant to the terms of IAS 29, certain factors should be considered, including a three-year cumulative inflation rate reaching or exceeding 100%.
The Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.) through Resolution J.G.539/18 and the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires (C.P.C.E.C.A.B.A.) through Resolution C.D. 107/2018 have pointed out that, effective since fiscal years ending on July 1, 2018 and thereafter, entities reporting under IFRS will be required to apply the inflation adjustment since the conditions for such application have been satisfied. In addition, on December 26, 2018, the C.N.V. issued General Resolution No. 777/2018 authorizing the issuing entities to present accounting information in constant currency for annual financial statements for interim and special periods ending on December 31, 2018 and thereafter, except for financial institutions and insurance companies.
IAS 29 has not been applied in these separate condensed interim financial statements, in compliance with the provisions set forth by Argentine Central Bank’s Communiqué “A” 6651 referred to above. Therefore, in reading and analyzing these financial statements, users should consider the last years’ cumulative inflation rates and certain macroeconomic variables affecting the Company’s business, including labor costs and prices for supplies.
The application of IAS 29 “Financial Reporting in Hyperinflationary Economies” has overall effects on the separate condensed interim financial statements. Accordingly, the reported amounts would be significantly affected. The Company’s shareholders’ equity and its comprehensive results of operations as of March 31, 2019 would amount to about $75,141 million and $4,089 million, respectively.
75
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
(b) | New Accounting Standards, Amendments and Interpretations issued by the IASB that Have Been Adopted by the Company |
The Company has adopted the following standards for the first time since January 1, 2019:
IFRS 16 “Leases”: In January 2016, the IASB issued IFRS 16 “Leases” which sets out a new accounting model for leases. Under IFRS 16, a contract is or contains a lease if the contract confers the lessee a right to control the use of an identified asset for a period of time, for consideration. IFRS 16 requires that the lessee recognize the liability arising from the lease reflecting the lease future payments and a right of use of the assets for substantially all leases, other than certain short-term leases and leases oflow-value assets. Lessor accounting is maintained as provided for in IAS 17. However, the new accounting model for lessee is expected to have an impact on negotiations between lessors and lessees. Entities are required to apply IFRS 16 for fiscal years commencing on or after January 1, 2019.
The Company leases the property on which its principal place of business is established. The lease agreement is typically entered into for fixed terms of 5 years, but may contain renewal options as described below. Lease terms are negotiated on an individual basis and contain a broad variety of different terms and conditions. Lease agreements do not include covenants, but the leased assets may not be used as loan collateral.
Leases are recognized as aright-of-use asset with its related liability on the date on which the leased asset becomes available for use by the Company. Each lease payment is appropriated to the lease liability and to financial cost. The financial cost is charged to profit or loss during the term of the lease resulting in a constant periodic interest rate on the remaining lease liability balance for each period. Theright-of-use asset is depreciated on a straight-line basis over the shorter of the asset useful life and the term of the lease. Lease liabilities are recorded at amortized cost.
Lease assets and liabilities are initially measured at their present values. Lease liabilities include the net present value of the following lease payments:
- | Fixed payments (includingin-substance fixed lease payments), net of lease incentives receivable; |
- | Variable lease payments that depend on an index or a rate; |
- | 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 on early termination, if the lease term reflects the lessee exercising that option. |
Lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or otherwise the Group’s incremental borrowing rate.
Right-of-use assets are measured at cost, which comprises the following:
- | The lease liability amount at initial measurement; |
- | Lease payments made at or before the commencement of the lease (less any lease incentives received); |
- | Any initial direct costs; and |
- | Any repair costs. |
As of the adoption date, the Company recognized the lease liability in respect of leases classified as operating leases under IAS 17. These liabilities were measured at the present value of the remaining payments, discounted using the incremental borrowing rate as of January 1, 2018. The rate weighted average is 37.94% for Argentine peso-denominated contracts and 8.60% for contracts denominated in foreign currency.
IFRIC 23 “Uncertainty over Income Tax Treatment”: This interpretation clarifies how the recognition and measurement requirements of IAS 12 “Income Tax” should be applied when there is uncertainty over the income tax treatment. IFRIC 23 was published in June 2017 and entities will be required to apply it for fiscal years commencing on or after January 1, 2019. The adoption of this standard did not have a material impact for the Company.
Prepayment Features with Negative Compensation – Amendment to IFRS 9: This amendment to IFRS 9 enables entities to measure at amortized cost some prepayable financial assets with negative compensation. The assets affected, which include some loans and debt securities, would otherwise have been measured at fair value through profit or loss to qualify for amortized cost measurement. The negative compensation must be “reasonable compensation for early termination of the contract” and the asset must be held within a ‘held to collect’ business model. Entities are required to apply this amendment to IFRS 9 for fiscal years commencing on or after January 1, 2019. The adoption of this standard did not have a material impact for the Company.
76
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Investments in Associates and Joint Ventures – Amendments to IAS 28: The amendments clarify the accounting for investments in associates and joint ventures for which the equity method is not applied. Entities shall account for such investments according to IFRS 9 “Financial Instruments” rather than applying the requirements for impairment set out in IAS 28 “Investments in Associates and Joint Ventures”. Entities are required to apply these amendments to IAS 28 for fiscal years commencing on or after January 1, 2019. The adoption of this standard did not have a material impact on the Company.
(c) | New Accounting Standards and Amendments issued by the IASB that Have Not Been Adopted by the Company |
As provided for in the Argentine Central Bank’s Organic Charter and the Financial Institutions Law, as new IFRS are approved or amended, or as the IFRS currently in force are repealed, and once these changes are adopted by way of Adoption Circulars handed down by the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.), the Argentine Central Bank will decide whether to approve such changes for financial institutions. In general terms, the early adoption of any given IFRS will not be admitted, unless specifically admitted at the time of adoption.
Below is a detail of the new standards, changes and interpretations which have been published but have not yet come into force for fiscal years commencing on or before January 1, 2019, and which have not been adopted earlier.
IFRS 17 “Insurance Contracts”: On May 18, 2017, the IASB issued IFRS 17 “Insurance Contracts,” establishing a comprehensive accounting framework based on measurement and disclosure principles for insurance contracts. The new standard supersedes IFRS 4 “Insurance Contracts,” and requires that insurance contracts be measured using current fulfillment cash flows and that revenues be recognized as the insurance service is delivered during the term of the coverage. Entities are required to apply IFRS 17 for fiscal years commencing on or after November 1, 2021. The Group believes that the application of this standard will not have a material impact.
Investments in Associates and Joint Ventures – Amendments to IAS 28: The amendments clarify the accounting for investments in associates and joint ventures for which the equity method is not applied. Entities shall account for such investments according to IFRS 9 “Financial Instruments” rather than applying the requirements for impairment set out in IAS 28 “Investments in Associates and Joint Ventures”. Entities are required to apply these amendments to IAS 28 for fiscal years commencing on or after January 1, 2019. The adoption of this standard would not have a material impact for the Company.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
The preparation of these separate condensed interim financial statements in accordance with the IFRS-based accounting framework requires the use of certain significant accounting estimates. It also requires that management make judgments in applying the accounting standards set forth by the Argentine Central Bank to define the Group’s accounting criteria.
In preparing these separate condensed interim financial statements, the Company is required to make estimates and assessments to determine the reported amounts of assets and liabilities, and contingent assets and liabilities disclosed as of the date of these separate condensed interim financial statements, as well as the reported amounts of income and expenses for the period. Therefore, estimates are made in order to calculate, at a given time, the recoverable value of assets, the loan loss provisions and provisions for other contingencies, the depreciation charges and the income tax charge, among other things. Future actual results may differ from estimates and assessments made as of the date these separate condensed interim financial statements were prepared.
77
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
In preparing these separate condensed interim financial statements, the critical judgments made by the Company in applying the accounting policies and the sources of information used for the respective estimates are the same as those applied to the separate financial statements for the year ended December 31, 2018.
NOTE 3. FAIR VALUES
The Company classifies the fair values of financial instruments in three levels, according to the quality of data used to determine them.
Fair Value Level 1: The fair value of financial instruments traded in active markets (such as, publicly-traded derivatives, notes or available for sale) is based on the quoted prices of markets (unadjusted) as of the date of reporting period/year. If the quoted price is available and there is an active market for the instrument, it will be included in Level 1.
Fair Value Level 2: The fair value of financial instruments that are not traded in active markets, for example, the derivatives available over the counter, is determined using valuation techniques that maximize the use of observable information and relies the least possible on the Company’s specific estimates. If all the material variables to establish the fair value of a financial instrument are observable, the instrument is included in Level 2.
Fair Value Level 3: If one or more material variables are not based on observable market information, the instrument is included in Level 3. This is the case for unquoted equity instruments.
Valuation Techniques
Valuation techniques to determine fair values include:
- | Market or quoted prices of similar instruments. |
- | Determining the estimated present value of instruments. |
The valuation technique to determine fair value Level 2 is based on inputs other than the quoted price included in Level 1 that are directly observable for the asset or liability (i.e., prices). For those instruments for which there is no secondary trading and, if positions should be disposed of, the Company should sell to the Argentine Central Bank at the originally agreed-upon rate, as established by the regulatory agency. The price has been prepared based on such rate accrual.
The valuation technique to determine fair value Level 3 of financial instruments is based on the price prepared by curve, which is a method that compares the existing spread between the curve of sovereign bonds and the average hurdle rates of primary issuances, representing the different segments, according to the different risk ratings. If there are no representative primary issuances during the month, the following variants 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; |
(iii) | spread calculated in the prior month and will be applied to the sovereign curve, according to the reasonableness thereof; |
(iv) | a specific margin is applied, determined based on historical returns of instruments of similar conditions, based on justified reasons therefor. |
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 Company’s key personnel.
78
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
The Company’s financial instruments measured at fair value at fiscalyear-end are as follows:
Instruments Portfolio as of 03.31.19 | Fair Value Level 1 | Fair Value Level 2 | Fair Value Level 3 | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||
- Government Securities | 43,302 | - | - | |||||||||||||||||||||
- Other Financial Assets | 6,444 | - | - | |||||||||||||||||||||
Total | 49,746 | - | - |
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 | 19,394 | - | - | |||||||||||||||||||||
- Other Financial Assets | 11,311 | - | - | |||||||||||||||||||||
Total | 30,705 | - | - |
NOTE 4. CASH AND CASH EQUIVALENTS
The table below shows a breakdown of items comprising cash and cash equivalents:
03.31.19 | 12.31.18 | 03.31.18 | 12.31.17 | |||||||||||||||||||||||
Cash and Due from Banks | 30,455 | 6,904 | 5,677 | 3,689 | ||||||||||||||||||||||
Argentine Central Bank’s Bills and Notes Maturing within up to 90 Days | 43,302 | 19,394 | 1,133,395 | 1,565,669 | ||||||||||||||||||||||
Overnight Placements in Banks Abroad | 176,014 | 58,603 | 21,352 | 19,713 | ||||||||||||||||||||||
Mutual Funds | 6,444 | 11,311 | 89,754 | 74,367 | ||||||||||||||||||||||
Time Deposits | 1,077,499 | 790,458 | - | - | ||||||||||||||||||||||
Total Cash and Cash Equivalents | 1,333,714 | 886,670 | 1,250,178 | 1,663,438 |
NOTE 5. OTHER FINANCIAL ASSETS
Other Financial Assets break down as follows, as of the indicated dates:
Item | 03.31.19 | 12.31.18 | ||||||||||
Listed Mutual Funds | 6,444 | 11,311 | ||||||||||
Others | 3,718 | 15 | ||||||||||
Total | 10,162 | 11,326 |
NOTE 6. NET LOANS AND OTHER FINANCING
“Net Loans and Other Financing” break down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
Non-financial Private Sector and Residents Abroad | 1,253,513 | 849,061 | ||||||||||
Loans | 1,253,513 | 849,061 | ||||||||||
Overdrafts | - | - | ||||||||||
Promissory Notes | - | - | ||||||||||
Mortgage Loans | - | - | ||||||||||
Collateral Loans | - | - | ||||||||||
Personal Loans | - | - | ||||||||||
Credit Card Loans | - | - | ||||||||||
Other Loans | 176,014 | 58,603 | ||||||||||
Accrued Interest, Adjustments and Quotation Differences Receivable | - | - | ||||||||||
Documented Interest | - | - | ||||||||||
Financial Leases | - | - | ||||||||||
Other Financing | 1,077,499 | 790,458 | ||||||||||
Less: Allowances | - | - | ||||||||||
Total | 1,253,513 | 849,061 |
The analysis of risk of “Net Loans and Other Financing” is disclosed in Note 44 to the consolidated condensed interim financial statements. Related-party information is disclosed in Note 47 to the consolidated condensed interim financial statements.
79
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Expected Credit Loss Model – Application of Point 5.5 (Impairment) of IFRS 9
Such application is temporarily waived until January 1, 2020 (see Note 1.1.).
The analysis of the adoption of IFRS 9 is disclosed in Note 9 to the consolidated condensed interim financial statements.
NOTE 7. CURRENT INCOME TAX ASSETS
As of the indicated dates, the balances of “Other Financial Assets” relate to:
03.31.19 | 12.31.18 | |||||||||||||||
Tax Advances | 12,869 | - | ||||||||||||||
Minimum Presumed Income Tax – Tax Credit | - | - | ||||||||||||||
Minimum Presumed Income Tax – Advances | - | - | ||||||||||||||
Less: Allowance for Impairment of Minimum Presumed Income Tax – Tax Credit | - | - | ||||||||||||||
Total | 12,869 | - |
Tax credits and their expiration of Minimum Presumed Income Tax – Tax Credit break down as follows:
Date of Generation | Tax Credit as of | Expiration Date | ||||||||||||||||||||||
03.31.19 | 12.31.18 | |||||||||||||||||||||||
2010 | - | 938 | 2020 | |||||||||||||||||||||
2011 | - | 1,057 | 2021 | |||||||||||||||||||||
2012 | - | 762 | 2022 | |||||||||||||||||||||
2013 | - | 467 | 2023 | |||||||||||||||||||||
2014 | - | 264 | 2024 | |||||||||||||||||||||
2015 | - | 1,006 | 2025 | |||||||||||||||||||||
2016 | - | - | 2026 | |||||||||||||||||||||
2017 | - | (4,494 | ) | 2027 | ||||||||||||||||||||
2018 | - | - | 2028 | |||||||||||||||||||||
2019 | - | - | 2029 | |||||||||||||||||||||
Total | - | - |
NOTE 8. EQUITY INVESTMENTS
EQUITY INVESTMENTS
Equity Investments in Subsidiaries
Basic information regarding subsidiaries is detailed as follows:
Company | Direct and Indirect Shareholding | Equity Investment % | ||||||||||||||||||||||||||||||
03.31.19 | 12.31.18 | 03.31.19 | 12.31.18 | |||||||||||||||||||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | 795,973,974 | 795,973,974 | 100.00 | 100.00 | ||||||||||||||||||||||||||||
Galicia Administradora de Fondos S.A. | 20,000 | 20,000 | 100.00 | 100.00 | ||||||||||||||||||||||||||||
Galicia Valores S.A. | 1,000,000 | 1,000,000 | 100.00 | 100.00 | ||||||||||||||||||||||||||||
Galicia Warrants S.A. | 1,000,000 | 1,000,000 | 100.00 | 100.00 | ||||||||||||||||||||||||||||
Sudamericana Holding S.A. | 185,653 | 185,653 | 100.00 | 100.00 | ||||||||||||||||||||||||||||
Tarjetas Regionales S.A. | 894,552,668 | 894,552,668 | 83.00 | 83.00 |
IFRS-based Accounting Framework (*) | ||||||||||||||||||||||||||||||||
Company | 03.31.19 | |||||||||||||||||||||||||||||||
Assets | Liabilities | Shareholders’ Equity | Income (Loss) | |||||||||||||||||||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | 567,329,123 | 515,729,312 | 51,599,811 | 7,838,738 | ||||||||||||||||||||||||||||
Galicia Administradora de Fondos S.A. | 405,689 | 264,739 | 140,950 | 80,356 | ||||||||||||||||||||||||||||
Galicia Valores S.A. | 416,755 | 178,539 | 238,216 | (7,439 | ) | |||||||||||||||||||||||||||
Galicia Warrants S.A.(**) | 317,200 | 132,164 | 185,036 | 45,620 | ||||||||||||||||||||||||||||
Sudamericana Holding S.A.(*) | 1,428,260 | 22,528 | 1,405,732 | 579,083 | ||||||||||||||||||||||||||||
Tarjetas Regionales S.A. | 11,276,700 | 111,534 | 11,165,166 | 1,044,222 |
(*) The balances arise from the information that was used for consolidation purposes.
(**) Balances at December 31, 2018.
80
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
IFRS-based Accounting Framework(*) | ||||||||||||||||||||||||||||||||
12.31.18 03.31.18 | ||||||||||||||||||||||||||||||||
Company | Assets | Liabilities | Shareholders’ Equity | Income (Loss) | ||||||||||||||||||||||||||||
Banco de Galicia y Buenos Aires S.A.U. | 511,338,168 | 467,369,006 | 43,969,162 | 1,955,725 | ||||||||||||||||||||||||||||
Galicia Administradora de Fondos S.A. | 674,108 | 229,514 | 444,594 | 167,654 | ||||||||||||||||||||||||||||
Galicia Valores S.A. | 258,936 | 39,877 | 219,059 | 13,357 | ||||||||||||||||||||||||||||
Galicia Warrants S.A. | 317,200 | 132,164 | 185,036 | 11,566 | ||||||||||||||||||||||||||||
Sudamericana Holding S.A. (**) | 3,133,815 | 1,880,755 | 1,253,060 | 167,354 | ||||||||||||||||||||||||||||
Tarjetas Regionales S.A. | 10,155,713 | 34,769 | 10,120,944 | 842,230 |
(*) The balances arise from the information that was used for consolidation purposes.
(**) Net income for the twelve-month period ended December 31, 2018.
The Company’s General Ordinary and Extraordinary Shareholders’ Meeting, held on April 24, 2018, authorized the amendment to Article 1 of the Bylaws, changing the corporate name of Banco Galicia from “Banco de Galicia y Buenos Aires S.A.” to “Banco de Galicia y Buenos Aires S.A.U.” The Argentine Central Bank did not object to such change of corporate name. On October 2, 2018, the Corporation Control Authority registered the change under Number 18709 of Book 91 of Stock Companies.
NOTE 9. LEASES
OPERATING LEASES
The Company records contractual obligations derived from the lease of administrative offices:
Real Estate | Right-of-use in Leased Real | Furniture and Fixtures | Machines and Equipment | Vehicles | Total | |||||||||||||||||||||||||||||||||||||||||||
Cost | - | 3,062 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Accumulated Depreciation | - | (219) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Balance as of 03.31.19 | - | 2,843 | - | - | - | - |
Real Estate | Right-of-use in Leased Real | Furniture and Fixtures | Machines and Equipment | Vehicles | Total | |||||||||||||||||||||||||||||||||||||||||||
Cost | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Accumulated Depreciation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Balance as of 12.31.18 | - | - | - | - | - | - |
NOTE 10. PROPERTY, PLANT AND EQUIPMENT
Changes in “Property, Plant and Equipment” are detailed in Schedule F.
NOTE 11. DEFERRED INCOME TAX ASSETS/LIABILITIES
Changes in “Deferred Income Tax Assets and Liabilities” during the period/fiscal year ended March 31, 2019 and December 31, 2018 are as follows:
Deferred Tax Assets
Item | 12.31.18 | Charge to Income | Expiration of Tax Loss Carry- forwards | Others | Allowance for Impairment | 03.31.19 | ||||||||||||||||||||||||||||||||||||||||||
Tax Loss Carry-forwards | 6,691 | 875 | - | - | (3,764) | 3,802 | ||||||||||||||||||||||||||||||||||||||||||
Equity Investments in Subsidiaries | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Allowances | 251 | - | - | - | - | 251 | ||||||||||||||||||||||||||||||||||||||||||
Personnel Expenses | 185 | 33 | - | - | - | 218 | ||||||||||||||||||||||||||||||||||||||||||
Totals | 7,127 | 908 | - | - | (3,764) | 4,271 |
81
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Deferred Tax Liabilities
Item | 12.31.18 | Charge to Income | Expiration of Tax Loss Carry- forwards | Others | Allowance for Impairment | 03.31.19 | ||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | - | 1,679 | - | - | - | 1,679 | ||||||||||||||||||||||||||||||||||||||||||
Other Financial Assets | 278 | 152 | - | - | - | 430 | ||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | (87) | (14) | - | - | - | (101) | ||||||||||||||||||||||||||||||||||||||||||
Others | (858) | (313) | - | - | - | (1,171) | ||||||||||||||||||||||||||||||||||||||||||
Totals | (667) | 1,504 | - | - | - | 837 |
An allowance for impairment has been set for the deferred tax asset as of March 31, 2019 amounting to $3,764, as it is believed that the recovery thereof is not likely as of the date of these financial statements.
Deferred Tax Assets
Item | 12.31.17 | Charge to Income | Expiration of Tax Loss Carry- forwards | Others | Allowance for Impairment | 12.31.18 | ||||||||||||||||||||||||||||||||||||||||||
Tax Loss Carry-forwards | - | 3,634 | - | 3,057 | (3,764) | 2,927 | ||||||||||||||||||||||||||||||||||||||||||
Equity Investments in Subsidiaries | 1,425 | (3,301) | - | - | 1,876 | - | ||||||||||||||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 379 | 5,311 | - | (4,054) | - | 1,636 | ||||||||||||||||||||||||||||||||||||||||||
Others | - | 928 | - | (71) | - | 857 | ||||||||||||||||||||||||||||||||||||||||||
Totals | 1,804 | 6,572 | - | (1,068) | (1,888) | 5,420 |
Deferred Tax Liabilities
Item | 12.31.17 | Charge to Income | Expiration of Tax Loss Carry- forwards | Others | Allowance for Impairment | 12.31.18 | ||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | 29 | 58 | - | �� | - | - | 87 | |||||||||||||||||||||||||||||||||||||||||
OtherNon-financial Assets | (451) | - | - | - | (451) | |||||||||||||||||||||||||||||||||||||||||||
Other Financial Assets | (1,026) | - | - | - | - | (1,026) | ||||||||||||||||||||||||||||||||||||||||||
Others | (1,531) | - | - | 1,531 | - | - | ||||||||||||||||||||||||||||||||||||||||||
Totals | (2,979) | 58 | - | 1,531 | - | (1,390) |
An allowance for impairment has been set for the deferred tax asset as of December 31, 2018 amounting to $3,764, as it is believed that the recovery thereof is not likely as of the date of these financial statements.
In addition, the expiration dates of tax loss carry-forwards are as follows:
Year of Generation | Amount | Year Due | Deferred Tax Assets | |||||||||||||||||||||
2015 | 6,488 | 2020 | 1,947 | |||||||||||||||||||||
2016 | 3,703 | 2021 | 1,111 | |||||||||||||||||||||
2018 | 12,115 | 2023 | 3,635 | |||||||||||||||||||||
22,306 | 6,693 |
NOTE 12. OTHERNON-FINANCIAL ASSETS
“OtherNon-financial Assets” break down as follows:
03.31.19 | 12.31.18 | |||||||||||||||
Shareholders | - | - | ||||||||||||||
Value-Added Tax Credits | 202 | 159 | ||||||||||||||
Tax Advances | 814 | 17 | ||||||||||||||
Payments in Advance | 2,492 | 662 | ||||||||||||||
Total | 3,508 | 838 |
82
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
NOTE 13. CURRENT INCOME TAX LIABILITIES
The account breaks down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
Income Tax Payable | 82,432 | 47,236 | ||||||||||
Total | 82,432 | 47,236 |
NOTE 14. OTHERNON-FINANCIAL LIABILITIES
The account breaks down as follows, as of the indicated dates:
03.31.19 | 12.31.18 | |||||||||||
Withholdings and Additional Withholdings Payable | 43 | - | ||||||||||
Salaries and Social Security Contributions Payable | 1,063 | 894 | ||||||||||
Withholdings Payable on Salaries | 43 | 74 | ||||||||||
Sundry Creditors | 21,181 | 16,331 | ||||||||||
Taxes Payable | 1,717 | 2,728 | ||||||||||
OtherNon-financial Liabilities | 1 | 1 | ||||||||||
Total | 24,048 | 20,028 |
NOTE 15. CAPITAL STOCK
The Ordinary and Extraordinary Shareholders’ Meeting of the Company held on August 15, 2017 authorized an increase in capital stock of the Company 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 and also entitled to dividends on an equal footing with such ordinary book-entry 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 U.S. $5 each. On September 29, 2017, such shares were issued and paid in.
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 U.S. $5 each, the issuance and payment of which took place on October 4, 2017.
The capital increase amounted to $11,004,383, the expenses related thereto amounted to $146,347 and were deducted from additionalpaid-in capital.
On November 8, 2017, the capital increase was registered with the Public Registry of Commerce.
The Company has no own shares in portfolio.
The Company’s shares are listed on the Stock Exchanges of Buenos Aires and Córdoba in Argentina and are listed on National Association of Securities Dealers Automated Quotation (Nasdaq) in United States of America, under the American Depositary Receipts (“ADRs”) program, where The Bank of New York Mellon acts as depositary.
NOTE 16. INCOME STATEMENT BREAKDOWN
Breakdown of: Net Income from Interest and Net Income from Measurement of Fair Value Financial Instruments with Changes to Income are detailed in Schedule Q.
83
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
NOTE 17. GOLD AND FOREIGN CURRENCY QUOTATION DIFFERENCES
The account breaks down as follows, as of the indicated dates:
Originated by: | 03.31.19 | 03.31.18 | ||||||||||
Valuation of Foreign Currency Assets and Liabilities | 23,129 | 23,880 | ||||||||||
Total | 23,129 | 23,880 |
NOTE 18. OTHER OPERATING INCOME
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Others | 1 | 6 | ||||||||||
Total | 1 | 6 |
NOTE 19. PERSONNEL EXPENSES
The following are the items included in the account, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Salaries | 1,054 | 662 | ||||||||||
Social Security Contributions on Salaries | 248 | 101 | ||||||||||
Severance Payments and Personnel Bonuses | 599 | 66 | ||||||||||
Services to Personnel and Others | 119 | 91 | ||||||||||
Total | 2,020 | 920 |
NOTE 20. ADMINISTRATIVE EXPENSES
The Company presented its statements of comprehensive income under the expenditure function method. 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:
03.31.19 | 03.31.18 | |||||||||||
Fees and Compensation for Services | 6,929 | 3,668 | ||||||||||
Directors’ and Syndics’ Fees | 11,594 | 21,677 | ||||||||||
Taxes and Assessments | 3,397 | 786 | ||||||||||
Advertising, Promotion and Research Expenses | - | 3 | ||||||||||
Electricity and Communications | 4 | - | ||||||||||
Entertainment and Transportation Expenses | 22 | 65 | ||||||||||
Stationery and Office Supplies | 26 | 363 | ||||||||||
Administrative Services Hired | 418 | 154 | ||||||||||
Insurance | 325 | 151 | ||||||||||
Others(*) | 1,446 | 919 | ||||||||||
Total | 24,161 | 27,786 |
NOTE 21. DEPRECIATION AND IMPAIRMENT OF ASSETS
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||
Depreciation of Property, Plant and Equipment | 279 | 60 | ||||||||||
Total | 279 | 60 |
84
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
NOTE 22. OTHER OPERATING EXPENSES
The account breaks down as follows, as of the indicated dates:
03.31.19 | 03.31.18 | |||||||||||||||
Adjustments and Interest | 4 | - | ||||||||||||||
Turnover Tax on Financial Brokerage | 4,919 | 371 | ||||||||||||||
Turnover Tax on Miscellaneous Income | 32 | - | ||||||||||||||
Interest on Lease Liabilities | 32 | - | ||||||||||||||
Others | 31 | - | ||||||||||||||
Total | 5,018 | 371 |
NOTE 23. INCOME TAX/DEFERRED TAX
The following is a reconciliation of income tax charged to income as of March 31, 2019, presented on a comparative basis to the same period of the previous fiscal year, to that which would result from applying the tax rate in force to book income:
03.31.19 | 03.31.18 | |||||||||||
Income for the Period Before Income Tax | 9,063,499 | 3,013,814 | ||||||||||
Effective Tax Rate | 30% | 30% | ||||||||||
Income for the Period at the Tax Rate | 2,719,050 | 904,144 | ||||||||||
Permanent Differences at the Tax Rate | ||||||||||||
- Loss from Equity Investments in Subsidiaries | (2,692,998) | (891,220) | ||||||||||
- OtherNon-deductible Expenses | 85 | 92 | ||||||||||
- Other | - | (2) | ||||||||||
- Allowance for Impairment | - | 1,888 | ||||||||||
- Law 27430 Rate Adjustment | 3 | (576) | ||||||||||
Total Income Tax Charge for the Period | 26,140 | 14,326 | ||||||||||
03.31.19 | 03.31.18 | |||||||||||
Current Income Tax(1) | 25,544 | 20,277 | ||||||||||
Deferred Tax Charge(2) | 596 | �� | (7,839) | |||||||||
Allowance for Impairment | - | 1,888 | ||||||||||
Adjustment to Prior-Year Tax Return | - | - | ||||||||||
Total Income Tax Charge for the Period | 26,140 | 14,326 |
(1) See Note 13.
(2) See Note 11.
NOTE 24. DIVIDENDS
The Ordinary and Extraordinary Shareholders’ Meeting of the Company, 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 $2,000,000 and represented $1.40 (figure stated in Pesos) per share. The dividends mentioned above will be paid to the Group’s shareholders on May 10, 2018.
The Ordinary and Extraordinary Shareholders’ Meeting of the Company, 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’ Meeting amounted to $1,200,000 and represented $0.84 (figure stated in Pesos) per share. The dividends mentioned above were paid to the Group’s shareholders on May 9, 2018.
NOTE 25. EARNINGS PER SHARE
Earnings per share are calculated by dividing income attributable to the Company’s shareholders by the weighted average of outstanding common shares during the year. As the Company does not have preferred shares or debt convertible into shares, basic earnings are equal to diluted earnings per share.
85
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
03.31.19 | 03.31.18 | |||||||||||
Income attributable to the Company’s Shareholders | 9,037,359 | 2,999,488 | ||||||||||
Weighted-Average of Ordinary Shares Outstanding (Thousands) | 1,426,765 | 1,426,765 | ||||||||||
Earnings per Share | 6.33 | 2.10 |
NOTE 26. CAPITAL MANAGEMENT AND RISK POLICIES
The major risks the Group is exposed to are classified into seven categories: capital risk, financial risks (market risk, currency risk, interest rate risk, and liquidity risk), credit risk, operational risk, IT risk, cybersecurity risk, and reputational risk.
There have not been material changes in the Group’s risk management policies to address the aforementioned risks relative to those disclosed in the financial statements as of December 31, 2018.
NOTE 27. 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 control or may have significant influence on another entity’s financial or operational decisions.
The Company 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 Company considers that it has joint control when there is an agreement between parties regarding the control of a common economic activity.
Finally, the Company considers that it may have control in those cases where the Company has significant influence due to the power of having influence on another entity’s financial and operating decisions, but control over them cannot be exerted. Those shareholders who hold an equity investment equal to or higher than 20% of the total votes of the Company or its subsidiaries are considered to have significant influence.
To determine those situations, not only are certain legal considerations observed, but the nature and substance of the relationship is also observed.
Furthermore, the key personnel of the Company’s Management (Board of Directors members and Managers), as well as the entities over which the key personnel may have significant influence or control are considered as related parties.
27.1 Controlling Entity
The Group is controlled by:
Name | Nature | Principal Line of Business | Place of Business | Equity Investment % | ||||||||||||
EBA Holding S.A. | 55.11% of voting rights | Financial and Investment Activities | Autonomous City of Buenos Aires – Argentina | 19.71% |
27.2 Key Personnel’s Compensation
The compensation earned by the Company’s key personnel as of March 31, 2019 and December 31, 2018 amounts to $11,594 and $70,076, respectively.
27.3 Key Personnel’s Structure
Key personnel’s structure as of the indicated dates is as follows:
03.31.19 | 12.31.18 | |||||||||||
Directors | 9 | 9 | ||||||||||
Total | 9 | 9 |
27.4 Related Party Transactions
86
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
The Company has not been a party to or performed transactions or granted loans to:
(i) | The companies that directly or indirectly, through one or more intermediaries, control or are controlled by the Company. |
(ii) | Associates (i.e., a consolidated company on which the Company has significant influence or that has a significant influence on the Company). |
(iii) | Persons who directly or indirectly have an equity investment with voting power at the Company giving significant influence on the Company and, as the case may be, the person’s ancestors, descendants, spouses or siblings (i.e., close relatives who may have influence o may be influenced by that person in their relationships with the Company). |
(iv) | Key management personnel. |
(v) | Companies with a substantial interest and whose ownership is held by any of the persons described in (iii) or (iv) and/or that are capable of having a significant influence on the Company. For the purposes of this paragraph, it includes companies owned by the directors or majority shareholders of the Company that have a key management member in common with the Company, as applicable. |
27.5 Amounts of Related Party Transactions
The transactions performed with subsidiaries as of the indicated dates are as follows:
Banco de Galicia y Buenos Aires S.A.U. | 03.31.19 | 12.31.18 | ||||||||||
Assets | ||||||||||||
Cash and Due from Banks | 684 | 487 | ||||||||||
Net Loans and Other Financing | 1,077,499 | 790,458 | ||||||||||
Derivative Instruments | - | - | ||||||||||
Total | 1,078,183 | 790,945 | ||||||||||
Liabilities | ||||||||||||
OtherNon-financial Liabilities | - | 85 | ||||||||||
Total | - | 85 | ||||||||||
Income (Loss) | 03.31.19 | 03.31.18 | ||||||||||
Interest Income | 88,095 | - | ||||||||||
Interest-related Expenses | - | - | ||||||||||
Net Income from Measurement of Fair Value Financial Instruments with Changes to Income | - | - | ||||||||||
Administrative Expenses | (936 | ) | (1,058 | ) |
NOTE 28. ADDITIONAL INFORMATION REQUIRED BY THE ARGENTINE CENTRAL BANK
28.1. COMPLIANCE WITH THE REGULATIONS REQUIRED BY THE C.N.V.
28.1.1. Agents – Minimum Liquidity Requirement
Within the framework of Resolution No. 622/13 of the C.N.V., Banco Galicia 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 March 31, 2019, Banco Galicia’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 Galicia 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 $24,529.
87
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
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 March 31, 2019, the minimum liquidity is made up of a sight account opened at the Bank in the amount of U.S. $250.
28.1.2. Custodial Agent of Collective Investment Products Corresponding to Mutual Funds
Furthermore, in compliance with Section 7 of Chapter II, Title V of Resolution No. 622/13 of the C.N.V., 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, 2018, Banco Galicia holds a total of 9,623,110,829 units under custody for a market value of $60,431,319, which is included in the “Depositors of Securities Held in Custody” account. As of previous fiscalyear-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 $67,972,574 and $37,337,855, respectively.
The balances of the Mutual Funds as of the indicated dates are detailed as follows:
Mutual Fund | 03.31.19 | 12.31.18 | ||||||||||
FIMA Acciones | 335,723 | 328,125 | ||||||||||
FIMA P.B. Acciones | 741,688 | 718,431 | ||||||||||
FIMA Renta en pesos | 442,871 | 245,333 | ||||||||||
FIMA Ahorro pesos | 14,470,519 | 9,891,974 | ||||||||||
FIMA Renta Plus | 250,780 | 145,308 | ||||||||||
FIMA Premium | 39,462,334 | 29,475,771 | ||||||||||
FIMA Ahorro Plus | 13,461,071 | 9,967,609 | ||||||||||
FIMA Capital Plus | 283,768 | 205,069 | ||||||||||
FIMA Abierto PyMES | 487,542 | 312,788 | ||||||||||
FIMA Mix I | 7,229 | 6,686 | ||||||||||
FIMA Renta Dólares I(*) | 7,332,092 | 7,373,261 | ||||||||||
FIMA Renta Dólares II (*) | 1,864,764 | 1,554,263 | ||||||||||
FIMA Renta Fija Internacional | 1,626,880 | 193,618 | ||||||||||
FIMA Acciones Latinoamericanas Dólares(*) | 143,068 | 13,082 | ||||||||||
Total | 80,910,329 | 60,431,318 |
(*) Stated at the reference exchange rate of the U.S. Dollar set by the Argentine Central Bank as of March 31, 2019($43.3533-U.S. $1).
All the transactions detailed above are recorded inoff-balance sheet items - securities held in custody.
The mutual funds detailed above have not been consolidated as the Company is not a controlling company thereof.
28.1.3. Storage of Documents
Pursuant to General Resolution No. 629 of the C.N.V., Banco Galicia notes that it has supporting documents regarding accounting and management transactions, which are stored at AdeA (C.U.I.T.No. 30-68233570-6), Plant III located at Ruta Provincial 36 km 31.5 No. 6471 (CP 1888) Bosques, Province of Buenos Aires, with legal domicile at Av. Pte. Roque Sáenz Peña 832, 1st. floor, Autonomous City of Buenos Aires.
28.2. RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF PROFITS
Pursuant to Section 70 of the General Corporations Law, the Company should transfer 5% of the net income for the year to the Legal Reserve until 20% of the capital stock is reached, plus the balance of the Capital Adjustment account. In the event that said reserve is reduced for any reason, no profits can be distributed until its total refund.
88
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
NOTE 29. SUBSEQUENT EVENTS
Allocation of Unappropriated Retained Earnings
The Shareholders’ Meeting held on April 25, 2019 resolved to allocate Unappropriated Retained Earnings as of December 31, 2018, as follows:
- To Cash Dividends | $ | 2,000,000 | ||||
- To Discretionary Reserve for Future Distributions of Profits | $ | 12,427,034 |
89
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE A – BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Holdings | Position | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Level | Carrying Amount | Without Options | Options | Final | |||||||||||||||||||||||||||||||||||||||||||||||||||
03.31.19 | 12.31.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE DEBT SECURITIES WITH CHANGES TO INCOME | 43,302 | 43,302 | 19,394 | 43,302 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Argentine | 43,302 | 43,302 | 19,394 | 43,302 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Letes in USD - U12A9 | 43,302 | Level 1 | 43,302 | - | - | - | 43,302 | |||||||||||||||||||||||||||||||||||||||||||||||||
Letes in USD - LTDF9 | - | Level 1 | 19,394 | - | - | - |
90
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE D – BREAKDOWN BY TERM OF LOANS AND OTHER FINANCING
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019.
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
The following table shows the decline in contractual cash flows, including interest and other expenses to be accrued until contractual maturity.
Item | Past-due Loan Portfolio | Terms Remaining to Maturity | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 Month | 3 Months | 6 Months | 12 Months | 24 Months | Over 24 Months | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-financial Private Sector and Residents Abroad | - | 1,253,513 | - | - | - | - | - | 1,253,513 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TOTAL | - | 1,253,513 | - | - | - | - | - | 1,253,513 |
91
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE F – CHANGES IN PROPERTY, PLANT AND EQUIPMENT
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Item | Value at Beginning of Fiscal Year | Estimated Useful Life in Years | Additions | Disposals | Transfers | Depreciation | Net Book Value as of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | Disposals | For the Fiscal Year | At Fiscal Year-end | 03.31.19 | 12.31.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Measurement at Cost Vehicles | 1,588 | 5 | - | - | - | 364 | - | 60 | 424 | 1,528 | 1,588 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Acquired for Financial Leases | 3,062 | 5 | - | - | - | - | - | 219 | 219 | 2,843 | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 4,650 | - | - | - | 364 | - | 279 | 643 | 4,371 | 1,588 |
Item | Value at Beginning of Fiscal Year | Estimated Useful Life in Years | Additions | Disposals | Transfers | Depreciation | Net Book Value as of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | Disposals | For the Fiscal Year | At Fiscal Year-end | 12.31.18 | 12.31.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Measurement at Cost Vehicles | 1,952 | 5 | - | - | - | 125 | - | 239 | 364 | 1,588 | 1,827 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 1,952 | - | - | - | 125 | - | 239 | 364 | 1,588 | 1,827 |
92
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE L – FOREIGN CURRENCY BALANCES
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Head Office | 03.31.19 | |||||||||||||||||||||||||||||||||||||||
Items | and | |||||||||||||||||||||||||||||||||||||||
Argentine | 03.31.19 | Dollar | Euro | Real | Others | 12.31.18 | ||||||||||||||||||||||||||||||||||
Branches | ||||||||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||
Cash and Due from Banks | 30,052 | 30,052 | 30,052 | - | - | - | 6,663 | |||||||||||||||||||||||||||||||||
Fair Value Debt Securities with Changes to Income | 43,302 | 43,302 | 43,302 | - | - | - | 19,394 | |||||||||||||||||||||||||||||||||
Other Financial Assets | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Net Loans and Other Financing | 176,014 | 176,014 | 176,014 | - | - | - | 58,603 | |||||||||||||||||||||||||||||||||
Non-financial Public Sector | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Argentine Central Bank | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Other Financial Institutions | 176,014 | 176,014 | 176,014 | - | - | - | - | |||||||||||||||||||||||||||||||||
To theNon-financial Private Sector and Residents Abroad | - | - | - | - | - | 58,603 | ||||||||||||||||||||||||||||||||||
TOTAL ASSETS | 249,368 | 249,368 | 249,368 | - | - | - | 84,660 | |||||||||||||||||||||||||||||||||
LIABILITIES | - | - | - | |||||||||||||||||||||||||||||||||||||
OtherNon-financial Liabilities | 17,559 | 17,559 | 17,559 | - | - | - | 12,839 | |||||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 17,559 | 17,559 | 17,559 | - | - | - | 12,839 |
93
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE P – CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019.
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items(*) | Amortized Cost | Fair Value with Changes in OCI | Fair Value with Changes in Profit or Loss | Fair Value Hierarchy | ||||||||||||||||||||||||||||||||||||||||||||||||||
Originally Designated or According to Point 6.7.1 of IFRS 9 | Mandatory Measurement | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Due from Banks | 30,455 | - | - | 43,302 | 43,302 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Cash | 19 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial Institutions and Correspondents | 30,436 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Debt Securities with Changes to Income | - | - | - | 43,302 | 43,302 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Assets | 3,718 | - | - | 6,444 | 43,302 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net Loans and Other Financing | 1,253,513 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Non-financial Private Sector and Residents Abroad | 1,253,513 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Total Financial Assets | 1,287,686 | - | - | 49,746 | 49,749 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Liabilities | 3,741 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Total Financial Liabilities | 3,741 | - | - | - | - | - | - |
94
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE Q – INCOME STATEMENT BREAKDOWN
FOR THE PERIOD COMMENCED JANUARY 1, 2019 AND ENDED MARCH 31, 2019.
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Items | Net Financial Income/(Expense) | OCI | ||||||||||||||||||||
Originally Designated or According to Point 6.7.1 of IFRS 9 | Mandatory Measurement | |||||||||||||||||||||
Net Income from Interest | ||||||||||||||||||||||
Interest on Cash and Due from Banks | - | 517 | - | |||||||||||||||||||
Total as of 03.31.19 | - | 517 | - | |||||||||||||||||||
Items | Net Financial Income/(Expense) | OCI | ||||||||||||||||||||
Originally Designated or According to Point 6.7.1 of IFRS 9 | Mandatory Measurement | |||||||||||||||||||||
From Measurement of Financial Assets at Fair Value with Changes in Profit or Loss | ||||||||||||||||||||||
Income (loss) from Government Securities | - | 6,178 | - | |||||||||||||||||||
Income (loss) from Private Securities | - | 1,335 | - | |||||||||||||||||||
From Measurement of Financial Liabilities at Fair Value with Changes in Profit or Loss | ||||||||||||||||||||||
Income (Loss) from Derivative Instruments | - | |||||||||||||||||||||
Forward Purchase of Foreign Currency | - | - | - | |||||||||||||||||||
Total as of 03.31.19 | - | 7,513 | - |
95
GRUPO FINANCIERO GALICIA S.A.
ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
1. | GENERAL ISSUES REGARDING THE COMPANY’S ACTIVITIES: |
a. | SIGNIFICANT SPECIFIC LEGAL SYSTEMS ENTAILING CONTINGENT EXPIRATION OR RESURGENCE OF BENEFITS ENVISAGED BY THOSE REGULATIONS |
None.
b. | SIGNIFICANT CHANGES IN THE COMPANY ACTIVITIES OR OTHER SIMILAR CIRCUMSTANCES THAT OCCURRED DURING THE FISCAL YEARS COVERED BY THE FINANCIAL STATEMENTS WHICH MAY HAVE AN EFFECT ON THEIR COMPARISON WITH THOSE PRESENTED IN PREVIOUS FISCAL YEARS, OR THOSE THAT SHALL BE PRESENTED IN FUTURE FISCAL YEARS |
None.
2. | CLASSIFICATION OF RECEIVABLES AND DEBT BALANCES INTO THE FOLLOWING CATEGORIES: |
a. | PAST DUE |
As of March 31, 2019 and December 31, 2018, the Company did not have any past due receivables or debts.
b. | WITHOUT DUE DATE |
Receivables: See Schedules B, C, D.
Debts: See Schedules H, I.
c. | TO FALL DUE |
Receivables: See Schedules B, C, D.
Debts: See Schedules H, I.
3. | CLASSIFICATION OF RECEIVABLES AND DEBTS IN SUCH A MANNER THAT ALLOWS KNOWING THE FINANCIAL EFFECTS OF THEIR MAINTENANCE |
Receivables: See Schedules B, C, D.
Debts: See Schedules H, I.
4. | BREAKDOWN OF PERCENTAGE OF EQUITY INVESTMENTS IN COMPANIES UNDER SECTION 33 OF LAW No. 19550, BOTH IN THE CAPITAL STOCK AND THE TOTAL VOTES. DEBIT AND/OR CREDIT BALANCES BY COMPANY AND CONSIDERED IN THE MANNER SET FORTH IN THE AFOREMENTIONED ITEMS 3 AND 4 |
See Note 47 Related Parties to the consolidated condensed interim financial statements.
5. | RECEIVABLES FROM OR LOANS GRANTED TO DIRECTORS OR SYNDICS OR THEIR RELATIVES UP TO THE SECOND DEGREE INCLUSIVE |
As of March 31, 2019 and December 31, 2018, there were no receivables from or loans granted to directors or syndics or their relatives up to the second degree inclusive.
6. | PHYSICAL INVENTORY OF INVENTORIES: FREQUENCY AND SCOPE OF THE PHYSICAL INVENTORIES OF INVENTORIES |
As of March 31, 2019 and December 31, 2018, the Company did not have any inventories.
96
GRUPO FINANCIERO GALICIA S.A.
ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
7. | EQUITY INVESTMENTS IN EXCESS OF WHAT IS SET FORTH BY SECTION 31 OF LAW No. 19550 AND PLANS FOR THE REGULARIZATION OF THIS SITUATION |
The Company is engaged in financial and investment activities, therefore, the restrictions of Section 31 of Law No. 19550 do not apply to its equity investments in other companies.
8. | RECOVERABLE VALUES: CRITERIA FOLLOWED TO DETERMINE THE SIGNIFICANT RECOVERABLE VALUES OF INVENTORIES, FIXED ASSETS AND OTHER ASSETS, USED AS LIMIT FOR THEIR RESPECTIVE ACCOUNTING VALUATIONS |
See Notes 1 and 2 to the separate condensed interim financial statements.
9. | INSURANCE POLICIES FOR TANGIBLE ASSETS |
As of March 31, 2019 and December 31, 2018, the breakdown of insurance policies taken out by the Company for its fixed assets was as follows:
Insured Assets | Risks Covered | Insured Amount as of 03.31.19 | Carrying Amount as of 03.31.19 | Carrying Amount as of 12.31.18 | ||||||||
Vehicles | Theft, Robbery, Fire or Total Loss | 3,750 | 1,528 | 1,588 |
10. | POSITIVE AND NEGATIVE CONTINGENCIES: |
a. | ELEMENTS USED FOR THE CALCULATION OF PROVISIONS, THE BALANCES OF WHICH, EITHER TAKEN INTO CONSIDERATION INDIVIDUALLY OR JOINTLY, EXCEED TWO PER CENT (2%) OF SHAREHOLDERS’ EQUITY |
None.
b. | CONTINGENCIES WHICH, AT THE DATE OF THE FINANCIAL STATEMENTS, ARE NOT OF REMOTE OCCURRENCE, THE EFFECTS OF WHICH ON SHAREHOLDERS’ EQUITY HAVE NOT BEEN GIVEN ACCOUNTING RECOGNITION. IT SHOULD BE STATED WHETHER THE LACK OF ACCOUNTING RECOGNITION IS BASED ON THE LIKELIHOOD OF OCCURRENCE OR ON THE DIFFICULTY TO ANALYZE SUCH EFFECTS |
As of March 31, 2019 and December 31, 2018, there were no contingencies which are not of remote occurrence and the effects of which on Shareholders’ Equity have not been given accounting recognition.
11. | IRREVOCABLE ADVANCES TOWARDS FUTURE SHARE SUBSCRIPTIONS: STATUS OF CAPITALIZATION ARRANGEMENTS |
As of March 31, 2019 and December 31, 2018, there were no irrevocable contributions towards future share subscriptions.
12. | CUMULATIVE UNPAID DIVIDENDS ON PREFERRED SHARES |
As of March 31, 2019 and December 31, 2018, there were no cumulative unpaid dividends on preferred shares.
13. | CONDITIONS, CIRCUMSTANCES OR TERMS FOR THE TERMINATION OF THE RESTRICTIONS ON THE DISTRIBUTION OF RETAINED INCOME, INCLUDING THOSE ORIGINATED DUE TO THE USE OF THE LEGAL RESERVE FOR THE ABSORPTION OF LOSSES WHICH ARE STILL PENDING REIMBURSEMENT |
See Note 49 to the consolidated condensed interim financial statements.
97
GRUPO FINANCIERO GALICIA S.A.
SUPPLEMENTARY AND EXPLANATORY STATEMENT BY THE BOARD OF DIRECTORS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
Pursuant to the provisions of the Rules regarding Accounting Documentation of the Córdoba Stock Exchange Regulations, the Board of Directors of the Company hereby submits the following supplementary and explanatory information.
A. CURRENT ASSETS
a) Receivables:
1) See Schedules B, C, D.
2) See Schedules B, C, D.
b) Inventories:
As of March 31, 2019 and December 31, 2018, the Company did not have any inventories.
B.NON-CURRENT ASSETS
a) Receivables: See Schedule B.
b) Inventories:
As of March 31, 2019 and December 31, 2018, the Company did not have any inventories.
c) Investments:
See Note 6 to the separate condensed interim financial statements.
d) Fixed Assets:
1) As of March 31, 2019 and December 31, 2018, the Company did not have any fixed assets that have been technically appraised.
2) As of March 31, 2019 and December 31, 2018, the Company did not have any obsolete fixed assets which have a book value.
e) Intangible Assets:
1) See Note 17 to these consolidated condensed interim financial statements and Schedule G.
2) As of March 31, 2019 and December 31, 2018, there were no deferred charges.
C. CURRENT LIABILITIES
a) Liabilities:
1) See Schedules D, I.
2) See Schedules B, D, I, R.
D. PROVISIONS
See Schedule J.
E. FOREIGN CURRENCY ASSETS AND LIABILITIES
See Schedule L.
F. SHAREHOLDERS’ EQUITY
1) As of March 31, 2019 and December 31, 2018, the Shareholders’ Equity did not include the “Irrevocable Advances towards Future Share Issues” account.
2) As of March 31, 2019 and December 31, 2018, the Company had not set up any technical appraisal reserve; nor has it reversed any reserve of that kind.
G. MISCELLANEOUS
1) The Company is engaged in financial and investment activities, therefore, the restrictions of Section 31 of Law No. 19550 do not apply to its equity investments in other companies.
98
GRUPO FINANCIERO GALICIA S.A.
SUPPLEMENTARY AND EXPLANATORY STATEMENT BY THE BOARD OF DIRECTORS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($), Except as Otherwise Stated
2) See Note 12 to the consolidated condensed interim financial statements and Note 3 to the separate condensed interim financial statements.
3) As of March 31, 2019 and December 31, 2018, there were no receivables from or loans granted to directors or syndics or their relatives up to the second degree inclusive.
4) See Note 45 to the consolidated condensed interim financial statements and Note 24 to the separate condensed interim financial statements.
5) As of March 31, 2019 and December 31, 2018, the breakdown of insurance policies taken out by the Company for its fixed assets was as follows:
Insured Assets | Risks Covered | Insured Amount as of 03.31.19 | Carrying Amount as of 03.31.19 | Carrying Amount as of 12.31.18 | ||||||||||||
Vehicles | Theft, Robbery, Fire or Total Loss | 3,750 | 1,528 | 1,588 |
6) As of March 31, 2019 and December 31, 2018, there were no contingencies highly likely to occur which have not been given accounting recognition.
7) As of March 31, 2019 and December 31, 2018, the Company did not have any receivables including implicit interest or index adjustments.
The Company has complied with the requirements of Section 65 of Law No. 19550 in these financial statements.
Autonomous City of Buenos Aires, May 9, 2019.
99
REPORT OF THE SUPERVISORY SYNDICS’ COMMITTEE
To the Chairman and Directors of
GRUPO FINANCIERO GALICIA S.A.
Legal Domicile: Tte. Gral. Juan D. Perón 430 – 25th Floor
Autonomous City of Buenos Aires
C.U.I.T.No. 30-70496280-7
DOCUMENTS EXAMINED
1. | In our capacity as Grupo Financiero Galicia S.A.’s syndics, we have reviewed the accompanying consolidated and separate condensed interim financial statements of Grupo Financiero Galicia S.A. (hereinafter, the “Entity”), which include: |
• | The Consolidated and Separate Condensed Interim Balance Sheets as of March 31, 2019. |
• | The Consolidated and Separate Condensed Interim Income Statement, Statement of Other Comprehensive Income, Statement of Changes in Shareholders’ Equity and Statement of Cash Flows for the three-month period then ended. |
• | A summary of significant accounting policies and other explanatory information included in Notes and Schedules, and. |
• | the Informative Review. |
The amounts and other information for fiscal year 2018 and its interim periods are an integral part of the condensed interim financial statements mentioned above and are disclosed to be exclusively construed in connection with the amounts and information for the current interim period.
MANAGEMENT’S RESPONSIBILITY REGARDING THE FINANCIAL STATEMENTS
2. | The Entity’s Board of Directors is responsible for the preparation and fair presentation of the condensed interim financial statements, in accordance with the accounting framework established by the Argentine Central Bank (the B.C.R.A.), and the internal control deemed necessary to allow for the preparation of the financial statements free from material misstatements. |
SYNDIC’S RESPONSIBILITY
3. | Our responsibility is to express an opinion on the documents examined in point 1, based on the reviews we conducted within the scope specified in the following paragraph. |
4. | Our work was conducted in accordance with effective legal standards applicable to syndics and by those set out in Technical Pronouncement No. 15 of the Argentine Federation of Professional Councils in Economic Sciences. These standards require that the review of the quarterly financial statements be conducted observing standards applicable to engagements for review of interim-period financial statements, and verify the consistency of the documents examined with the information concerning corporate decisions, as disclosed in minutes. In addition, they require that corporate decisions entered in minutes conform to the law and the bylaws with respect to formal and documentary requirements. For purposes of our professional work on the documents detailed above, we have considered the review performed by the external auditor, Price Waterhouse & Co. S.R.L., who issued their unqualified limited review report on May 9, 2019, in accordance with auditing standards in force applicable to engagements for review of interim-period financial statements. Such review included verifying the work planning and the nature, scope and timing of the procedures applied and the results of the review performed by those professionals. The above-mentioned external auditors conducted their reviews in accordance with Technical Pronouncement No. 37 of the Argentine Federation of Professional Councils in Economic Sciences for the review of interim-period financial statements. A review of condensed interim financial statements consists in making inquiries to the Entity’s staff, mainly those responsible for the financial and accounting matters and in performing analytic and other review procedures. The scope of this review is substantially more limited than that of an audit and, therefore, does not allow us to obtain assurance that we will be aware of all the significant matters that could be identified in an audit. Therefore, we do not express an audit opinion. |
Given that it is not our responsibility to exercise any management control, the review did not extend to the business criteria and decisions of the different areas of the Entity, as these matters are the exclusive responsibility of the Board of Directors.
We also report that, in compliance with the legality control that is part of our field of competence, during this period we have applied the other procedures described in Section 294 of Law No. 19550, which we deemed necessary according to the circumstances.
CONCLUSION
• | Based on our reviews, with the scope described in point 4., and considering the external auditor’s review report, nothing has called our attention that would make us think that the condensed interim financial statements mentioned in point 1 of this report are not fairly prepared, in all material respects, in accordance with the Argentine Central Bank’s accounting standards. |
• | In compliance with the legality control that is part of our field of competence, we have no observations to make. |
EMPHASIS PARAGRAPHS
Without changing our conclusion:
i) | We call attention to Note 1 to the accompanying consolidated and separate condensed interim financial statements, which states that such financial statements were prepared in accordance with the accounting framework established by the Argentine Central Bank. Such standards differ from the professional accounting standards in force. The Entity has identified in Notes 1 and 9 to the consolidated condensed interim financial statements the effects of the different valuation and disclosure criteria on the financial statements; and |
ii) | We call attention to the fact that the condensed interim financial statements referred to in point 1 were prepared in accordance with the Argentine Central Bank’s accounting reporting framework, and that such framework presents material and overall differences with the professional accounting standards in force (International Financial Reporting Standards—IFRS) adopted by the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.). These differences are attributable to the fact that the Argentine Central Bank’s accounting framework does not contemplate the application of section 5.5 “Impairment” of IFRS 9 “Financial Instruments” or International Accounting Standard No. 29 “Financial Reporting in Hyperinflationary Economies,” as well as to the fact that the valuation of the equity instruments described in Note 21 to the consolidated condensed interim financial statements, measured at the fair value estimated by the Entity, includes an adjustment required by the Argentine Central Bank. The Entity has only quantified the differences related to the application of International Accounting Standards No. 29 “Financial Reporting in Hyperinflationary Economies” in Note 1 to these condensed interim financial statements. For the sake of an accurate interpretation, these condensed interim financial statements should be read in the light of such circumstances. |
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
We report that:
i) | Grupo Financiero Galicia S.A.’s separate condensed interim financial statements as of March 31, 2019 stem from accounting records kept, in all formal aspects, in compliance with legal regulations prevailing in Argentina; and |
ii) | Grupo Financiero Galicia S.A.’s consolidated and separate condensed interim financial statements as of March 31, 2019 have been transcribed to the “Inventory and Balance Sheet” book and are in compliance with the provisions of the General Corporations Law, and pertinent resolutions of the Argentine Central Bank and the National Securities Commission. |
Autonomous City of Buenos Aires, May 9, 2019
Supervisory Syndics’ Committee
INDEPENDENT AUDITOR’S LIMITED REVIEW REPORT
To the Chairman and Directors of
Grupo Financiero Galicia S.A.
Legal Domicile: Tte. Gral. Juan D. Perón 430 – 25th floor
Autonomous City of Buenos Aires
C.U.I.T.No. 30-70496280-7
Introduction
We have reviewed the accompanying separate condensed interim financial statements of Grupo Financiero Galicia S.A. (hereinafter the “Entity”), which include the Separate Condensed Interim Balance Sheet as of March 31, 2019, and the related Separate Condensed Interim Income Statement, Separate Condensed Statement of Other Comprehensive Income, Separate Condensed Interim Statement of Changes in Shareholders’ Equity and Separate Condensed Interim Statement of Cash Flows for the three-month period then ended, as well as a summary of significant accounting policies and other explanatory information disclosed in Notes and Schedules, which supplement them.
The amounts and other information for fiscal year 2018, and the related interim periods, are an integral part of the financial statements mentioned above and, therefore, shall be considered in relation with those financial statements.
Board of Directors’ Responsibility
The Entity’s Board of Directors is responsible for the preparation and presentation of the separate condensed interim financial statements, in accordance with the accounting framework established by the Argentine Central Bank. In addition, the Board of Directors is responsible for the existence of the internal control they may deem necessary to enable the preparation of financial statements free from material misstatements resulting from errors or irregularities.
Scope of our Review
Our review was limited to the application of the procedures set forth in Technical Pronouncement No. 37 of the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.) for the review of interim financial statements and the auditing standards issued by the Argentine Central Bank for limited reviews. A review of interim financial statements consists of making inquiries to the Entity’s staff responsible for the preparation of the information included in the separate condensed interim financial statements and applying analytical and other review procedures. The scope of this review is substantially more limited than an audit examination performed according to Argentine Audit Standard, therefore, a review does not allow us to be certain that we shall be informed of all significant issues that may be identified during an audit. Therefore, we do not express an audit opinion on the Entity’s separate financial position, separate comprehensive income and separate cash flows.
Price Waterhouse & Co. S.R.L., Bouchard 557, piso 8°, C1106ABG - Ciudad de Buenos Aires
T: +(54.11) 4850.0000, F: +(54.11) 4850.1800, www.pwc.com/ar |
Price Waterhouse & Co. S.R.L. es una firma miembro de la red global de PricewaterhouseCoopers International Limited (PwCIL). Cada una de las firmas es una entidad legal separada que no actúa como mandataria de PwCIL ni de cualquier otra firma miembro de la red.
Conclusion
Based on our review, nothing has called our attention that would make us think that the separate condensed interim financial statements mentioned in the first paragraph of this report are not prepared, in all significant aspects, in accordance with the accounting framework established by the Argentine Central Bank.
Emphasis of Matter
Without changing our conclusion, as mentioned in Note 1, the accompanying separate condensed interim financial statements were prepared in accordance with the accounting framework established by the Argentine Central Bank. Such standards differ from the professional accounting standards in force. The Entity has identified in Notes 1 and 6 the effects of the different valuation and disclosure criteria on the separate condensed interim financial statements.
Paragraph on Other Issues
Without changing our opinion, we draw attention to the fact that these separate condensed interim financial statements were prepared in accordance with the Argentine Central Bank’s accounting reporting framework, and that such framework presents material and overall differences with the professional accounting standards in force (International Financial Reporting Standards - IFRS) adopted by the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.). These differences are attributable to the fact that the Argentine Central Bank’s accounting framework does not contemplate the application of section 5.5 “Impairment” of IFRS 9 “Financial Instruments” or International Accounting Standard No. 29 “Financial Reporting in Hyperinflationary Economies.” The Entity has only quantified the difference related to the application of International Accounting Standards No. 29 “Financial Reporting in Hyperinflationary Economies” in Note 1 to these separate condensed interim financial statements. For the sake of an accurate interpretation, these separate condensed interim financial statements should be read in the light of such circumstances.
Report on the Compliance of Regulations in force
As required by the regulations in force, we report that:
a) Grupo Financiero Galicia S.A.’s separate condensed interim financial statements stem from accounting records kept, in all formal aspects, in compliance with legal regulations;
b) Grupo Financiero Galicia S.A.’s separate condensed interim financial statements as of March 31, 2019 have been transcribed to the “Inventory and Balance Sheet” book and, insofar as concerns our field of competence, are in compliance with the provisions of the General Corporations Law, and pertinent resolutions of the Argentine Central Bank and the National Securities Commission;
c) We have read the Additional Information to the Notes to the Separate Interim Financial Statements, as Required by Section 12 of Chapter III, Title IV, of the Regulations of the National Securities Commission (C.N.V.) on which, insofar as concerns our field of competence, we have no observations to make;
d) As of March 31, 2019, Grupo Financiero Galicia S.A.’s accrued debt with the Argentine Integrated Social Security System, which stems from the Entity’s accounting records, amounted to $66,222.82, which was not yet due at that date;
e) As required by Title IV, Section I, Chapter I, Article 2 of the Regulations of the National Securities Commission, we report that:
e.1) | Grupo Financiero Galicia S.A.’s corporate purpose is exclusively related to financial and investment activities; |
e.2) | The equity investment in Banco de Galicia y Buenos Aires S.A.U. and Tarjetas Regionales S.A., the latter being subject to the consolidated supervision requirements issued by the Argentine Central Bank (Communiqué “A” 2989, and supplementary resolutions), represents 94.75% of Grupo Financiero Galicia S.A.’s assets, being the Entity’s main asset; |
e.3) | 97.29% of Grupo Financiero Galicia S.A.’s income stems from the share of profit (loss) of the entities mentioned in e.2); |
e.4) | Grupo Financiero Galicia S.A. holds a 100% equity interest in Banco de Galicia y Buenos Aires S.A.U. and an 83% equity interest in Tarjetas Regionales S.A., thus having control over such entities. |
Autonomous City of Buenos Aires, May 9, 2019
PRICE WATERHOUSE & CO. S.R.L.
INDEPENDENT AUDITOR’S LIMITED REVIEW REPORT
To the Chairman and Directors of
Grupo Financiero Galicia S.A.
Legal Domicile: Tte. Gral. Juan D. Perón 430
Autonomous City of Buenos Aires
C.U.I.T.No. 30-50000173-5
Introduction
We have reviewed the accompanying consolidated condensed interim financial statements of Grupo Financiero Galicia S.A. (hereinafter the “Entity”), which include the Consolidated Condensed Interim Balance Sheet as of March 31, 2019, and the related Consolidated Condensed Interim Income Statement and Statement of Other Comprehensive Income, Consolidated Condensed Interim Statement of Changes in Shareholders’ Equity and Consolidated Condensed Interim Statement of Cash Flows for the three-month period then ended, as well as a summary of significant accounting policies and other explanatory information disclosed in Notes and Schedules, which supplement them.
The amounts and other information for fiscal year 2018, and the related interim periods, are an integral part of the financial statements mentioned above and, therefore, shall be considered in connection with those financial statements.
Board of Directors’ Responsibility
The Entity’s Board of Directors is responsible for the preparation and presentation of the consolidated condensed interim financial statements, in accordance with the accounting framework established by the Argentine Central Bank. In addition, the Board of Directors is responsible for the existence of the internal control they may deem necessary to enable the preparation of financial statements free from material misstatements resulting from errors or irregularities.
Scope of our Review
Our review was limited to the application of the procedures set forth in Technical Pronouncement No. 37 of the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.) for the review of interim financial statements and the auditing standards issued by the Argentine Central Bank for limited reviews. A review of interim financial statements mainly involves making inquiries to the Entity’s staff responsible for the preparation of the information included in the consolidated condensed interim financial statements and the performance of analytical procedures and other review procedures. The scope of this review is substantially more limited than an audit examination performed according to Argentine Audit Standard, therefore, a review does not allow us to be certain that we shall be informed of all significant issues that may be identified during an audit. Therefore, we do not express an audit opinion on the Entity’s consolidated financial position, consolidated comprehensive income and consolidated cash flows.
Price Waterhouse & Co. S.R.L., Bouchard 557, piso 8°, C1106ABG - Ciudad de Buenos Aires
T: +(54.11) 4850.0000, F: +(54.11) 4850.1800, www.pwc.com/ar |
Price Waterhouse & Co. S.R.L. es una firma miembro de la red global de PricewaterhouseCoopers International Limited (PwCIL). Cada una de las firmas es una entidad legal separada que no actúa como mandataria de PwCIL ni de cualquier otra firma miembro de la red.
Conclusion
Based on our review, nothing has called our attention that would make us think that the consolidated condensed interim financial statements mentioned in the first paragraph of this report are not prepared, in all significant aspects, in accordance with the accounting framework established by the Argentine Central Bank.
Emphasis of Matter
Without changing our conclusion, as mentioned in Note 1, the accompanying consolidated condensed interim financial statements were prepared in accordance with the accounting framework established by the Argentine Central Bank. Such standards differ from the professional accounting standards in force. The Entity has identified in Notes 1 and 9 the effects of the different valuation and disclosure criteria on the consolidated condensed interim financial statements.
Paragraph on Other Issues
Without changing our opinion, we draw attention to the fact that these consolidated condensed interim financial statements were prepared in accordance with the Argentine Central Bank’s accounting reporting framework, and that such framework presents material and overall differences with the professional accounting standards in force (International Financial Reporting Standards - IFRS) adopted by the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.). These differences are attributable to the fact that the Argentine Central Bank’s accounting framework does not contemplate the application of section 5.5 “Impairment” of IFRS 9 “Financial Instruments” or International Accounting Standard No. 29 “Financial Reporting in Hyperinflationary Economies,” as well as to the fact that the valuation of the equity instruments described in Note 21, measured at the fair value estimated by the Entity, includes an adjustment required by the Argentine Central Bank. The Entity has only quantified the differences related to the application of International Accounting Standards No. 29 “Financial Reporting in Hyperinflationary Economies” in Note 1 to these consolidated condensed interim financial statements. For the sake of an accurate interpretation, these consolidated condensed interim financial statements should be read in the light of such circumstances.
Report on the Compliance of Regulations in force
As required by the regulations in force, we report that:
f) The consolidated condensed interim financial statements of Grupo Financiero Galicia S.A. stem from accounting records kept, in all formal aspects, in compliance with legal regulations;
g) The consolidated condensed interim financial statements of Grupo Financiero Galicia S.A. as of March 31, 2019 have been transcribed to the “Inventory and Balance Sheet” book and, insofar as concerns our field of competence, are in compliance with the provisions of the General Corporations Law, and pertinent resolutions of the Argentine Central Bank and the National Securities Commission;
h) We have read the Informative Review, on which, insofar as concerns field of competence, we have no observations to make;
i) As of March 31, 2019, Grupo Financiero Galicia S.A.’s accrued debt with the Argentine Integrated Social Security System, which stems from the Entity’s accounting records, amounted to $66,222.82, which was not yet due at that date;
j) As required by Title IV, Section I, Chapter I, Article 2 of the Regulations of the National Securities Commission, we report that:
e.1) | Grupo Financiero Galicia S.A.’s corporate purpose is exclusively related to financial and investment activities; |
e.2) | The equity investment in Banco de Galicia y Buenos Aires S.A.U. and Tarjetas Regionales S.A., the latter being subject to the consolidated supervision requirements issued by the Argentine Central Bank (Communiqué “A” 2989, and supplementary resolutions), represents 94.75% of Grupo Financiero Galicia S.A.’s assets, being the Company’s main asset; |
e.3) | 97.29% of Grupo Financiero Galicia S.A.’s income stems from the share of profit (loss) of the entities mentioned in e.2). |
e.4) | Grupo Financiero Galicia S.A. holds a 100% equity interest in Banco de Galicia y Buenos Aires S.A.U. and an 83% equity interest in Tarjetas Regionales S.A., thus having control over such entities. |
Autonomous City of Buenos Aires, May 9, 2019
PRICE WATERHOUSE & CO. S.R.L.