Grupo Financiero Galicia S.A.

Good morning ladies and gentlemen and welcome to Grupo Financiero Galicia third quarter 2025 earnings call. This conference is being recorded and the replay will be available at the company's website at gfgsa.com. We would like to inform you that our attendees will only be listening to the conference during the presentation and then we will start the Q&A section when further instructions will be provided. Some of the date statements made during this conference call will be forward-looking statements within the meaning of the safe harbor provision of the U.S. federal securities law and are subject to risks and uncertainties that could cause actual results to differ maturely from those expressed. Investors should be aware of events related to the macroeconomic scenario, the finance, sale, industry, and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Now, I'll turn the conference over to Mr. Pablo Fervida, Head of Job-Investor Relations, and Gonzalo Fernandez-Cobarro, CFO. Please, Mr. Fervida, you may begin your conference.

Thank you. Good morning and welcome to this conference call. According to the Monthly Indicator for Economic Activity , the Argentine economy recorded a 5% year-over-year increase during September. In year-to-date terms, the economic expansion reached 5.2%. During the third quarter of 2025, the primary surplus reached 0.5% of GDP and an overall surplus of 0.1% of GDP was recorded. This result was explained by revenues increasing by 32.8% year over year, whereas primary spending rose 30.6%. During the first 10 months of 2025, the primary balance stood at 1.4%, while the financial balance amounted to 0.5% of GDP. The National Consumer Price Index accumulated a 6% increase during the third quarter of 2025, and a 24.8% year-to-date increase as of October. After four consecutive months below the 2% mark, headline inflation was 2.1% in September and 2.3% in October, accumulating 31.3% in the last 12 months, the lowest level since July 2018. The third quarter was marked by high volatility in the months leading up to the midterm elections. The exchange rate came under pressure, at times nearing the upper limit of the floating band, which prompted the central bank to step in with foreign exchange sales. Nonetheless, the exchange rate averaged 1,400 pesos per dollar in September 2025, a 15.6% devaluation compared to June 2025. Meanwhile, peso-denominated interest rates saw sharp swings, reflecting increased uncertainty and liquidity shifts. In fact, the average rate on peso-denominated private sector time deposits for up to 59 days averaged 48.7% in September 2025, up 16.5 percentage points from June 2025 levels. Private sector deposits in pesos averaged 94.1 trillion pesos in September, increasing by 5.6% during the quarter and 53% in the last 12 months. Time deposits in pesos rose 13.1% during the quarter and 76.3% in the year. Peso denominated transactional deposits decreased 2.4% during the third quarter, but increased 31.5% in year-over-year terms. Private sector dollar denominated deposits amounted to $32.6 billion in September 2025, increasing 7.2% during the quarter and rising 38.9% in the last 12 months. Peso denominated loans to a private sector averaged 79.3 trillion pesos in September, showing a 9.7% quarterly increase and a 105.4% year-over-year. Private sector dollar denominated loans amounted to $18.3 billion, recording a 15.8% quarterly growth and a 153.4% annual increase. Turning now to Grupo Financiero Galicia, net loss for the quarter amounted to 87.7 billion pesos due to losses from Banco Galicia for 104 billion pesos, from Naranja X for 6 billion pesos, and from Galicia Seguros for 12 billion pesos, partially offset by the profits from Galicia Asset Management for 25 billion pesos. This loss represented a minus 0.8% annualized return on average assets and a minus 4.7% return on average a whole less equity, while accumulated annualized figures for the fiscal year reached 0.9% and 4.7% respectively. The quarter includes extraordinary restructuring expenses associated with the merger with HSBC for 105.3 billion pesos net of income tax. The quarter ROE without the extraordinary expenses would have been 1%, and the nine-month ROE 6.9%. The results from Banco Valencia included 101.1 billion pesos of extraordinary expenses, and in addition were negatively affected by the increase in the cost of risk, associated with the growth of the loan book and the increase in the non-performing loans in the retail segment, particularly in personal loans and credit card financing, together with a decrease of financial margin associated to an environment of high interest rates and a regulatory increase of reserve requirements. It is also worth noting that most of the comparisons will be made against the second quarter of this fiscal year, as figures for the third quarter of 2024 do not include information about the acquired business of the former HSBC Argentina. Net operating income decreased 23%, as net interest income decreased 10%, net results from financial instruments were down 89%, and loan loss provisions increased 26%, which were partially offset by a 9% growth of net fee income and a 12% increase profits from gold and FX quotation differences. Average interest in assets reached 22.7 trillion pesos, 8% higher than in the previous quarter, primarily due to the increase of the average portfolio of loans, 5% in pesos and 27% in dollars. In the same period, its yield decreased 259 basic points, reaching 30.1%. Interest bearing liabilities increased 27% from June 2025, amounting to 19.9 trillion pesos, primarily due to the increase of time deposits in pesos and of saving accounts in foreign currency. During this period, its cost increased 88 basic points to 16.5%. Net interest income decreased 10% when compared to the second quarter because of a 35% increase in interest expenses due to a 36% higher interest rate on time deposits, partially offset by a 7% increase of interest income, mainly due to a 12% higher interest on loans and other financings to the private sector. Net fee income increased 9% from the previous quarter due to a 6% higher income from credit card fees and off 19% from fees on deposits. Net income from financial instruments decreased 89% due to an 88% lower result from government securities. Gains from FX quotation differences were 12% higher from the year-ago quarter including the result from foreign currency trading following the lifting of exchange restrictions. Other operating income increased 11% in the quarter, mainly due to the 45% increase in other income, primarily corresponding to credits recovered. Provision for loan losses increased 26% due to the growth of the financing portfolio and to an increase in delinquency that is limited to personal loans and credit card financing to individuals in pesos. Personal expenses were 83% higher than in the second quarter due to the voluntary retirement program recorded in connection with the restructuring plan following the acquisition of HSBC's business in Argentina. Administrative expenses were 11% lower than in the previous quarter due to a 32% decrease of expenses for maintenance and repairment of goods and IT, and to 14% decrease of higher administrative services. Other operating expenses increased 5% due to a 7% higher turnover tax. Results from the net monetary position decreased 9% from the second quarter following the declining evolution of inflation. The income tax charge was positive as the pre-tax net income was a loss. The bank's financing to the private sector reached 20.4 trillion pesos at the end of the quarter, up 14% in the last three months, with peso financing increasing by 5% and dollar-denominated financing growing 35%. Net exposure to the public sector was 3% down comparing with the previous quarter, primarily due to a 38% decrease in government securities in pesos measured at fair value through OCI offset by an increase in government securities in pesos at amortized cost. Deposits reached 22.9 trillion pesos 8% higher than a quarter before, mainly due to a 26% increase in dollar denominated deposits, mainly time deposits that were up 72%. The bank's estimated market share of loans to the private sector was 14.8%, 30 basis points higher than at the end of the previous quarter, and the market share of deposits from the private sector was 16.4%, 40 basic points higher than in the second quarter of 2025. The bank's liquid assets represented 94.5% of transactional deposits and 59.2% of total deposits, compared to 94.3% and 65.2% respectively from a quarter report. As regards asset quality, the ratio of non-performing loans to total financing ended the quarter at 5.8%, recording a 140 basic points deterioration as compared to the 4.4% of the second quarter. And as I mentioned before, the deterioration is limited to the personal loans and credit card financing portfolios. At the same time, the coverage with allowances reached 105%, down 16.4 percentage points from the 117.9% recorded a quarter ago. As of September 2025, the bank's total regulatory capital ratio reached 22.1%, decreasing 160 basic points from the end of the second quarter, while the Tier 1 ratio was 21.8%, down 140 basic points during the same period. In summary, the third quarter was marked by high political effects and monetary volatility, and negatively affected margins and asset quality. And in addition, the results were affected by a very high one-time expense due to a restructuring of the merged banks. Despite this, Grupo Financiero Galicia was able to keep liquidity and solvency metrics at healthy levels, and we expect an improvement in profitability during the fourth quarter and next year. And now, Gonzalo Fernandez-Cobaro will make some additional remarks.

Hi, everyone. Well, continue with what we see for the future. I mean, regarding how we see the rest of the year, October continue with low margins due to the high interest rate that we saw in the third quarter. But we are already seeing a fast improvement in margins in November. We are already really seeing margins at same level than second quarter or the first half of the year in average in November, and we expect the same for December. Portfolio performance still needs some time to get back on track, so we still see a deterioration in the fourth quarter at a lower trend than before, but still some. So overall, bank will be better, will improve returns mainly due to the margins improvement. But Naranja X will have some headwinds in terms of portfolio performance. So with this mix, we are seeing the ROE for the full year 2025 around 4%, the reported one. And if we exclude the non-recovering integration costs that we mainly booked in the third quarter, we should be around 6%. Talking about 2026, we are expecting an ROE in the low teens range, I would say between 11% and 12%. Of course, a lot of moving targets for next year. We will be updating this guidance in future quarters, but this is our base case scenario to be around 11% to 12%. Margins, we see improving them in the first quarter. the first month of the year together what we are seeing in november december then some kind of slight reduction as a consequence of the rate reduction but not not really high the the reduction so we still see healthy margins next year i would say the levels of the second quarter the mpls we expect a peak on mpls in march of next year but then improving as the good portfolio that we are originating is gaining weight in our mix, and that we will end the year with NPS better than the run weight that we are having now. And regarding costs, we are also seeing a reduction in over-earning costs because of all the restructuring we have done, and you saw the restructuring costs we booked in the third quarter, and that generated a 1,000-hertz reduction in the group quarter over quarter, and that's if we add up all the year, we have a headcount reduction of 2,000 heads for the year. So that is, of course, generating reductions, cost reduction for next year. We are seeing already fourth quarter of next year. Our projections shows a fourth quarter of next year ROE run rate already at 15% level. So that would ask with a solid base to start 27 and deliver ROEs above 15, as is the target ROE that we are aiming for the longer future. So with that, I mean, we are also open for any questions you may have.