Grupo Financiero Galicia S.A.

Good morning, ladies and gentlemen. Welcome to Grupo Financiero Galicia second quarter 2026 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 that all attendees will only be listening in the conference during the presentation and then we'll start the question and answer session when further instructions will be provided. Some of the statements made during this conference call will be forward-looking statements within the meaning of the safe harbor provisions of the U.S. federal securities laws and are subject to risk and uncertainty that could cause actual results to differ materially from those expressed. Investors should be aware of events related to the macroeconomic scenario, the financial industry and other factors could cause results to differ materially from those expressed in the respective forward-looking statements. Now I will turn the conference over to Mr. Pablo Firvida, Head of Investor Relations. You may begin your conference.

Thank you. Good morning and thank you for joining this conference call. Before reviewing our operating performance, I would like to briefly address the macroeconomic backdrop that shaped the performance of the financial system during the quarter and provide the context for our business trends. According to the Monthly Indicator for Economic Activity, EMAE, the Argentine economy expanded 2.7% year over year in June and recovered 0.8% month over month on a seasonally adjusted basis. Despite this monthly improvement, activity remained 1.1% below December 2025 levels, mainly reflecting the declines recorded in April and May. In the second quarter of 2026, the primary surplus stood at 0.4% of GDP, in line with the level recorded in the second quarter of 2025. On a year-to-date basis, the primary surplus reached 0.8% of GDP. During the first half of the year, total revenues declined 5.7% year-over-year in real terms, while primary spending decreased 2.8% in real terms. The National Consumer Price Index accumulated a 33.5% increase on a year-over-year basis and a 16% increase during the first month of 2026. During the quarter, monthly inflation decelerated from 3.4% in March to 1.9% in June. The monetary base expanded by 4.1 trillion pesos during the second quarter and 8.5 trillion pesos from the end of June 2025, representing a 23% year-over-year growth. In June 2026, the exchange rate averaged 1,450 pesos per dollar, implying an 18.5% year-over-year depreciation. The average rate on 30-day peso-denominated private sector time deposits above 1 billion pesos, Tamar, stood at 22.7%, 10.9 percentage points below the June 2025 average. Turning now to the financial system, private sector peso denominated deposits averaged 117.4 trillion pesos in June, increasing 8.4% during the quarter and 31.8% over the last 12 months. Time deposits grew 8.2% during the quarter and 45.5% year over year, while peso-denominated transactional deposits declined 8.4% during the quarter but increased 17.1% year over year. Private sector dollar denominated deposits amounted to $39.4 billion, increasing 1.9% during the quarter and 29.6% over the last 12 months. Peso denominated loans to private sector averaged 98.7 trillion pesos in June, increasing 6.8% quarter over quarter and 36.4% year over year. Private sector dollar denominated loans amounted to $23.5 billion, recording a 14.6% quarterly growth and a 48.8% annual increase. Overall, the second quarter was characterized by a more stable macroeconomic environment, improving real activity indicators, and continued expansion across key financial system aggregates. Moving on to Grupo Galicia, net income for the second quarter amounted to 258 billion pesos, 12% higher than in the previous year, which represented a 2.1% return on average assets and an 11.3% return on average shareholders' equity. This result was mainly due to profits from Banco Galicia for 158 billion pesos, From Fondo FIMA for 38 billion pesos, from Naranja X for 36 billion pesos, from Galicia Seguros for 23 billion pesos, and from Galicia Securities for 8 billion pesos. Banco Galicia and its income improved by 211% sequentially and 21% compared to the second quarter of 2025. Thank you for watching. Great quality trends also improved, reducing loan loss provisions, while ongoing integration synergies from Galicia Mass, ex-HSBC, drove further efficiency gains. Results additionally benefited from lower inflation-driven monetary losses in a decelerating inflation environment. Average interest in assets reached 30 trillion pesos, 6% higher than in the previous quarter, primarily driven by a 27% higher volume of government securities in pesos and a 37% higher volume of government securities in dollars, together with a 9% growth of dollar-denominated loans, while peso-denominated loans decreased 7% in line with a more selective origination policy and lower demand. In the same period, its yield decreased 190 basic points, reaching 21.1%, 34.8% in peso portfolio and 7.4% in the dollar portfolio, due to lower yields on both local and foreign currency denominated loans. Interest-bearing liabilities decreased 3% from March 2026, amounting to 24 trillion pesos, mainly due to a 10% lower volume of liabilities in dollars, partially offset by an 8% increase in peso-denominated time deposits. During this period, its cost decreased 159 basic points to 10.1%, reflecting the broad-based decline in interest rates that began toward the end of the first quarter of 2026. Net interest income decreased 3% when compared to the prior quarter. Interest income declined 8%, mainly driven by a 17% lower interest income from loans and other financing due to lower volumes and the decline in interest rates during the quarter. This was partially offset by a 20% higher income from government securities, primarily driven by a higher average portfolio and stronger returns from CPI-linked securities. Interest expenses were 16% lower, mainly related to deposits. Net fee income increased by 2% quarter on quarter, mainly due to a 14% decrease of fee expenses. Net income from financial instruments was 275% higher than in the previous quarter. mainly due to lower losses from derivative financial instruments which decreased 85% and 84% rise in results from the derecognition of assets driven by sales of government securities classified at fair value through OCI, 50% higher gains from government securities measured at fair value and a recovery in the results from private sector securities. Results from quotation difference of foreign currency decreased 13% quarter on quarter. This performance was explained by a lower level of transaction activity, given that the previous quarter had registered a higher volume of operations by retail customers. Provision for loan losses declined 8% quarter on quarter, driven by a decrease in loans becoming stage 3, and the associated deterioration of that portfolio, reflecting signs of improvement in the delinquent syndicators observed during the quarter. Personal expenses went up 12% sequentially due to an increase in the provisions for variable payments aligned with improvement in the financial performance, while administrative expenses were flat quarter on quarter. Other operating expenses declined 15% quarter-on-quarter, driven by a 14% lower turnover tax, 13% lower other fee-related expenses, and a 21% decrease in other financial results. The bank's financing to the private sector reached nearly 25 trillion pesos at the end of the quarter, up 4% in the last quarter, with peso financing decreasing 4% and dollar-denominated financing up 19%. Deposits reached 27 trillion pesos, 7% higher than a quarter before, due to a 7% growth of deposits in pesos and a 6% increase in dollar-denominated deposits. The bank's estimated market share of loans to the private sector was 15.1%, 69 basic points higher than at the end of the previous quarter, and the market share of deposits from the private sector was 14.3%, 42 basic points higher than in the first quarter of 2026. The bank's liquid assets represented 93.1% of transactional deposits and 55.2% of total deposits, compared to 95% and 56.6% respectively as of the previous quarter. As regards asset quality, the ratio of non-performing loans to total financing ended the quarter at 8.3%, recording a 60 basic points deterioration as compared to the 7.7% of the first quarter of 2026. The coverage with allowances reached 92.8%, up from 91.4% recorded in the prior quarter. As of the end of June, the bank's total regulatory capital ratio reached 26%, while the Tier 1 ratio was 25.9%, both increasing 48 basic points from the end of the prior quarter. In summary, during the second quarter, profitability improved sequentially, supported by a stronger contribution from financial instruments, lower funding costs, reduced loan loss provisions, and continued efficiency gains from the integration. Business volumes remained resilient, with growth in total financing and deposits, particularly in dollar-denominated loans, while we continued to gain market share in both loans and deposits. At the same time, the non-performing loan ratio increased during the quarter, although coverage levels improved and provisions declined, reflecting early signs of stabilization. Overall, Grupo Galicia maintains strong liquidity and solvency metrics and will remain focused on disciplined growth, preserving capital strength and further improving asset quality and profitability over the coming quarters. Now, Gonzalo Fernández Covaro will make some additional remarks.

Thank you, Pablo. Talking about our financial performance, as Pablo said, we saw a better quarter as interest rates stabilized at lower levels, with margins slightly increasing too, and also better returns from our one portfolio. Our costs of risk continue going down as we expected, and expenses under control, enjoying the results of last year's restructuring. Talking about volume, loan growth continues to be slow due to the low demand in the commercial credit size in pesos, veteran dollars, and strict origination policies on the consumer side. We expect some recovery in the lending volume in the second half. Our projections for loan growth are now around 10 to 15%. Thank you very much. Stabilization and reduction of NPLs will take one more quarter than expected. We are seeing now the peak in the second quarter, so in June now, with a stabilization and reduction going forward. In the bank, we expect a slight decrease of NPLs ratio in the third quarter and reaching around 6.3% at the end of this year on the NPL ratio. We see a cost of risk for the bank around 8.3% for the full year 2026. That's our expectation for the rest of the year. We are now at 9.3%. So we expect that great losses charges will continue going down in the second half as it has been happening in the first two quarters. On the cost side, we are capturing the benefit of the restructuring made last year, as I said, after the HBC acquisition and expect to end the year 11% lower cost than prior year. We already have the same amount of headcount than the one we had before the acquisition of HSBC. And lastly, regarding returns, we see our ROE around 10% for the year. We trust that the lending volume will pick up to achieve this goal. Of course, while the lending growth is low, we also invest in other earning assets like government bonds and good yields. The goal here is to grow earning assets to be able to continue to improve earnings and results. So with that, I think we are open for questions.

We are going to start the question and answer session for investors and analysts. If you wish to ask a question, please press the button raise hand. If your question has already been answered, you can leave the queue by clicking on put hand down. Please hold while we poll for questions. Our first question comes from Daniel Vaz from Safra.

Hi, everyone. Thanks for the opportunity of making questions. Gonzalo and Pablo, maybe my first question will be on your macro expectations for the year. I guess last quarter you mentioned inflation between 28% and 29%. I'd love to Get your views on that at the margin as we are looking at August. It seems like inflation is a little bit better, but I'd love to hear your thoughts. And secondly, I'd like to touch base on your loan growth between 10% to 15%, as you mentioned right now, and your also appetites to government bond at good yields. Do you think your loan growth could be... Maybe picking up later as you have good government bonds at good yields right now for you to capture, and maybe your asset quality isn't as good as you expect for the beginning of the year. So I guess my question is, maybe 2027 will still... Thank you for the question. Well, first talking about economic projections for the year, we see inflation at 29, around 29% for the year.

GDP growth around 2.6%. So it's around the same numbers you were mentioning regarding inflation. Regarding our portfolio mix, I would say that it's both. I mean, we are concentrated in trying to grow loans because that's the business we want to grow because it's the one that is sustainable. So we are, you know, very close to our customers and mainly commercial customers to see opportunities. We have seen some dollar opportunities that we capture, mainly in the oil and gas arena. And also there have been some privatizations of state-owned companies that we have been, you know, supporting some of the groups, you know, for those that also require some financing. So we are active there. Of course, www.financiero.com We have internal limits, of course, you know, for prudency. So we need to grow lending also. And also to clarify, in the bond portfolio, we have two things. We can have the bond portfolio to buy longer term bonds. Thank you very much. It will be both. The trade activity, of course, we are going to be very, very active as we have been in the second quarter to capture opportunities. You know, as you know, Argentine, we have some volatility between now and the elections because it's usual when elections come closer. So we try to get advantage on that. We will continue to see opportunities to capture new bonds that have good yields and just have them accrue in interest. But at the same time, we'll need to grow our lending portfolio because, as I said, we have internal limits for keeping our bond portfolio. And so we need to do business with clients, with the private sector. I mean, that's something that we'll We will be focused on, and we are very focused on, and will continue to be focused on.

All right, thank you.

The next question comes from Ernesto Gabilondo from Bank of America.

Thank you. Hi, good morning, Gonzalo, Pablo, and Etienne, and thanks for the opportunity to ask questions. My first question is one that I made to the other banks, and it was on the political and macro issues. Outlook. So I think it was a couple of weeks ago or three weeks ago, we started to see some surveys or kind of initial polls ahead of the presidential election next year. So I just wanted to hear your thoughts on what you're hearing in terms of the business sentiment, the consumer confidence, the family indebtedness. The financing of the RIGI projects. Is this something that Galicia can actually participate or it will be more the next years? So all of these things ahead of the election. And my second question is on your ROE guidance. So you delivered 7% the first half. You mentioned a number I didn't get it. So if you can also... Thank you, Ernesto. I mean, talking about

The future between now and the elections, I mean, we'll see. But Argentina always, you know, when there is an election, we may have some volatility. We are not seeing it yet. We see that the central bank has a good and a stronger set of reserves. Thank you very much. If there is any volatility that is something that is controlled, that is something that won't generate big disruptions, so I think that's good for what we are seeing. I mean, I think looking at polls at this time is a bit too early. I mean, this can change every minute, so we are not really focusing on that. I mean, as you know, we are here in Argentina for the long term, so... We want to do business regardless of the situation. Of course, we caution when we see that delinquency is going up. Well, we will change our policies and we adapt to each of the moments. But so far, I mean, things are doing fine. I mean, GDP is growing. We are, as I said before, very close to our commercial customers, mainly in the oil and gas arena, trying to serve all the value chains. and all the suppliers also of all the oil companies and something that we are doing and we are of course participating. The RIGI financing is very, very big tickets so at some point the local financial system will participate in a very small portion and some of those financings are already satisfied with international issuances but of course we are there for any local portion of the All the financing that is needed and also, as I said before, to serve the value chain of the bigger companies. But as I said, I mean, so far so good. I mean, we expect some volatility as always, but nothing really big because we see that central bank is better capitalized and we better reserve the ones that have the last elections. And we see, talking about, you also mentioned indebtedness of the families, we see that that's improving, at least in our portfolio, that's improving, and we are seeing our roll rates improving, so that's something that, of course, taking caution on where to lend, I think at least for financial system, the worst is, we are leaving behind the worst, no? Talking about returns, ROE, what we are seeing there for the year is 10%, around 10%. I mean, I cannot measure the exact number, but I would say around 10%. We are seven and something cumulative. Yeah, of course, we see that that We continue improving, I would say around 12%, try to end the year with something around 12%. That's the goal and that's what we are expecting and that's what we are aiming to. For that, we need to continue growing our lending portfolio, of course, at a lower level than what we expected at the beginning of the year, but we are confident that mainly in the commercial side we can... Get some traction from now on. Talking about medium-term ROE, of course, when we talk about next year, I think we are aiming to be at 15%. I think it's too soon to give a guidance for next year, but that's our target and our aim for next year. And we will confirm a guidance In third quarter call that will be closer to year end, but that's at least what we are aiming and when we do our projections and when we try to shape our balance sheet towards that. Again, we confirm that later in the year. But when you talk about medium term, well, medium term is always where our aim is to be above 15%. We always say between 15% and 20%. We need to see when we are going to achieve that. As you know, we have talked in the past, we have the inflation accounting. That is something that is a burden for Argentine banks. And as inflation continues to go down, I would say that in the last year that we have inflation accounting with the lower inflation, Thank you very much. But our long-term ROE target is 15-20. Talking about next year, we are aiming at 15. We'll confirm later in the year if that's something that we'll see.

Perfect. Now, super careful. Thank you very much, Gonzalo.

Thank you.

The next question comes from Chito Labarta from Goldman Sachs.

Hi, good morning, Gonzalo, Pablo, thank you for taking my question. Just, I guess, my question is more on the deposit side of things. You did see a pickup in deposits in the quarter, even in peso deposits, although there was about a 22% jump on the savings deposits. Just to think about, how are you thinking about deposit growth going forward, both in pesos and in foreign currency, and particularly in In terms of liquidity, if loan growth does improve into next year, you have the lead to fund that. And do you think this pickup we saw in the peso deposits in particular, is that sustainable with anything particular in the quarter that jump in the savings deposits? And yeah, I guess I can see that going forward. Thank you.

Thank you. I mean, yeah, deposits in the second quarter, we expect this to continue. As I said, we expect for this year a total growth of 10% in deposits. I mean... We have been managing also the balance sheet and when we see that the lending is tracking, then we also go and raise deposits. It's not something that we have been managing. At some time, we are not growing deposits because we don't need them. So we prefer to do a more efficient balance sheet management. Of course, we continue to... to work with customers to increase transactional deposits and side deposits, but in terms of time deposit, that is the one that we have been lagging, but lagging on purpose because as we don't see the loans tracking high, we prefer to manage better the balance sheet, but But deposits are there. We have proved that when we go and look for them, we get those deposits. So it's something that will continue rising if the lending is higher, as we expect it will happen. That was pesos. In terms of dollars, we see some growth, but it will be, of course, lower than before. We don't have now a... There is something, but we don't see that it will be that explosive as the ones of years before. But as U.S. dollars lending continues, we're going to also be active in the markets with each one in the local market in dollars. We have been issuing commercial papers and we'll continue that. to fund also lending in dollars that is the one from the wholesale arena with the one that we see tracking better. So it's something that we are not that concerned because we think that we can bring those deposits if the lending is there.

Okay. Thanks, Pintalo. And maybe just one follow-up question. I guess this one on capital. I did see a bit of an increase in your capital ratios recently. This quarter, but, you know, with ROE still below the cost of capital, right? How do you think about the capital ratio evolution from here?

I mean, capital ratio, I mean, as you know, is high, so it allows us to grow faster. We think that we have enough capital for the next three years, I would say this year and three more, with healthy growth, not with the growth that we have been having, which is low. We expect that at some point in Argentina we will start growing its... It's loans as percentage of GDP. So for the year end, we expect to be between 24 and 25, I would say, capital ratio. But then on top of that, with our estimations and paying a reasonable amount of dividends, which is more or less what we have been paying in the past, we expect to have capital for the next three years with a country that is growing in real terms, the lending. Ezequiel Valls But at a point that led us growth and captured the opportunity Argentina may bring if everything continues within the stabilization path. So we think that we have a right level of capital for the growth that Argentina can bring in the next two or three years.

Okay, perfect. Thank you.

The next question comes from Brian Flores from Citi.

Hi, Gonzalo and Pablo. My question is on the net interest margin sustainability, this quarter benefited from funding costs repricing faster than asset yields and from stronger results on CR-linked securities. As rates continue to normalize, how should investors think about the balance between net interest margin pressure from lower loan yields and support from funding costs and treasury positionings?

I would say that, yeah, of course, that margins will continue to have pressures on the downside as inflation goes down. For the year, talking about the bank, I think we see margins at 16% for the year, for the full year. We are a bit higher now, but we still see that the second half maybe have some pressure to the downside. So that full year and average of 16, I think, is fair to say. But then, of course, next year and the forwards and onwards, that will have more pressure to the downside if inflation continues going down, as we expect. But that's fine. I mean, we believe that also the inflation accounting will go down. and the... That's how we are working also in efficiency and expenses reduction in order to compensate that. Of course, total margin is affected by the mix of peso and dollars, no? I mean, it's totally different, as you know, the mix, the margin between peso, which is above 20%, and dollars, which is 3%, 4%. So... Ezequiel Valls Our structure, our cost reduction initiatives and everything for a bank that will have lower margins as will happen with Argentina with a lower inflation. On the other side, we will have a lower accounting inflation impact, so that will also be compensating the effects.

Good, thank you. Now it's much clearer. Just one follow-up, please. Looking ahead, what do you see as the single largest driver for ROE expansion from current levels towards your through-the-cycle profitability ambitions? Credit growth, lower credit costs, operating leverage, or balance sheet optimization?

I would say that credit growth. I mean, we need to grow our top line, our credits, so that's the main one. Cost of risk reduction. I mean, you know, we are still at high levels of cost of risk. We know that. We need to continue reducing it. It's something that is low. Of course, we are aiming at some point to get it to our 5, 5.5% cost of risk. We ended with 9.3. We are still, you know, at higher levels. and so that will but that will be reducing quarter by quarter as I said before I mean for the year we expect to be at 8.3 and we are at 9.3 now so that will also be helping this year and next year because next year we expect to have another notch down on cost of risk so that will be another big contributor to profitability and we continue you know with our work in efficiency even though we may to also help Thank you very much Thank you

The next question comes from Yuri Fernández from JP Morgan.

Hey, Gonzalo, Pablo, Etienne, everyone. Thank you for the opportunity of asking questions. Just a clarification regarding a few of your guidance, especially the cost of risk. I think you mentioned 8.3%. For the full year, just checking if this is the end of period or if this is the average for the year and if this is Banco Galicia or if this is the entire holding because I guess your cost of risk for the first half for the group has been running around 11, 11 and a half. and for the bank around 9.4%. So just checking 8.3%, this is the fourth Q26 or is this the average of the year? So that's question number one. And the same about margins. You just mentioned NIMS around 16%, but when I look to the NIMS of the group here, I see your NIMS for the first half closer to 18%, like 17.9%, 17.8%. So my question is, is it the average or the end of period? Because if this is the average, this would imply a much lower need in the second half of the year. Thank you.

Yeah, sorry. I was talking about the bank. Maybe I didn't clarify that. So the 8.3 is just the bank, which is at 9.3 now, going to 8.3 for the full year, you know, for the 12 months, let's say, I mean. So H.3 we expect to be the cost of risk of the bank only for the full year. When I was talking about margins, yes, I was talking also about the bank, which is around 17 something. So we expect just to end the year at 16, but in the bank.

And...

The full group will be more or less, you know, around the total group, I think it's almost 18. I think we expect to end the year around 17, let's say. The last quarter at 17% in group and 16% in the bank. And Costa Rica was bank and it's the full year, it's the 12th month.

No, no, super clear. Thank you for the clarification. Thank you.

The next question comes from Eduardo Rezende from UBS.

Hi, everyone. Thanks for taking my questions. I have two on my side. So, first, a quick follow-up on the growth trends that you highlighted. You mentioned some opportunities in corporate dollar loans and expanding the private sector. I just would like to know what we could expect for the retail segment. I mean, if this more restrictive approach that we saw in recent quarters could continue. So this is the first question. And the second one is regarding NPLs. So, you mentioned about some stability trends in the end of the quarter, and we all saw that through the broader SIEM trends. So, if you could provide a quick call on which segments are driving this more significant inflation, it would be very helpful.

Okay. The first was the growth, no? In retail. I mean, no, we are, you know... working hard in trying to grow also the retail portfolio. I mean, mainly in the personal loans arena, working with risk in order to, you know, go to different segments. And we have been seeing our volume in personal loans picking up from the Ezequiel Valls Very carefully going to the right segments. I mean, we have now better products with lower rates for better segments than going after those that even though they have lower rates, they have also lower cost of risk. So profitability is the same. And so we expect, I mean, my point is, we don't expect the growth we used to have. Still this year, of course, at some point we'll resume the growth. But for the second half, I would say that our portfolio of personal loss may grow 4% to 5%. But that's better than what we have been seeing. But it's something that we are working on and doing, you know, champion challengers all the time in order to Thank you very much. And the second point was MPLs, no? I mean, MPLs, yeah, we have seen, we're starting to see the turnaround of that. I mean, this is mainly, the main products we have is credit cards and personal loans. And in both, we are seeing that. Of course, that, as we said before, we are targeting different segments now and we are attacking also different segments, or higher, I would say higher segments, and that's paying back, and that's why we are seeing the improvements. We still continue to do champion challenges to lower segments, and still is not the time to grow, to go back to lower segments, but at some point we will. For the end of the year, we expect to be at 6.3 in the bank of MPLs, So that's a reduction from where we are now. We are at 8.3. And in general, I mean, we are seeing the amounts of customers, you know, going or rolling through stage 2 and stage 3 improving. So it's something that we expect to continue to see and we are monitoring that very, very closely.

The next question comes from Carlos Gomez Lopez from HSBC.

Hello, Gonzalo. Pablo, thank you very much, and congratulations on the result, and especially in the cost reduction. It's very spectacular. I had a question about the composition of the loan portfolio. A year ago, about a quarter was in dollars. Now, it's about a third, which is in dollars. Do you have any type of internal limit? Where do you see this portfolio going forward? Thank you, Carlos.

We have internal limits, but in terms of liquidity. So if our deposits grow, we can grow the portfolio. So we are very strict in liquidity and very strict limit in liquidity in dollars because, as you know, Argentina has its history of problems with that. So we are around 40% more liquidity in dollars, that we are always 40% to 50% liquidity, and we are achieving that, complying with that. But our deposit in dollars grew a lot, so that's why we were able to increase portfolio in dollars. Of course, portfolio in dollars, we have a high proportion of the portfolio in dollars, which is short-term. Thank you very much. The current deposits, but we are also, as I said before, issuing the dollar commercial paper so that will give us more capacity to lend in dollars. But the limit again is as a liquidity, you know, liquidity over total deposits that we want to maintain and we are We are complying with that. The other question was? The dollar. I mean, for the end of this year, I think we are expecting like $1,600 and around $2,000 for the end of next year. Very clear.

Thank you.

Thank you, Carlos.

The next question comes from Pedro from Latin Securities.

Hello, Gonzalo, Pablo, Etienne. Thank you for taking my question. I wanted to ask on Naranja X specifically. We saw provisions declining quite significantly despite the increase in MPLs. Obviously, the loan book also went down. But to ask going forward, how is the new MPL formation evolving this month and how And also on coverage, how should we think this 94? I think coverage on Alan Hayek and 90 on Banco Galicia. It's more like a floor and would you expect going back to 100?

Hi, Pedro. We can take the advantage that we have Hernan Garcia, Naranja X CFO, to answer the specific question about Naranja X. And then we can discuss the bank's coverage ratio.

Thank you for the question. As you mentioned, we are already seeing a reduction in the cost of weeks during the second quarter. And for the second half, we still see further reductions on that metric. So in terms of MPLs from the year end, we are expecting to be around 16 or 17 percent from almost 20 percent levels that we have during the second quarter. As I mentioned recently, it's important to stress the trends that we still see in short-term delinquency rates. Three days or four months delinquency rates are still going down, and that's why we are expecting reductions in NGOs. and a recovery in terms of the coverage ratio to the range of 100%.

Perfect. Just to be clear, the number was 17% of MPLs for the year-end? Yes. Perfect. Super clear.

Thank you, Hernán. In the case of the bank, we see a gradual improvement in coverage, perhaps in the next quarter getting to 95% and closer to 100% at year-end.

Perfect. Thank you, Pablo.

You're welcome, Pedro.

The next question comes from Lisandro Lloveras from 1618.

Hi team, I have a question regarding volumes in loans. And if you can please do a double click in the 10 to 15% loan growth. If it's expected peso loans to have a real growth or all real growth will come from dollar loans. Thanks.

I mean, peso alone will be small, the growth. I mean, we'll try to push it, but I would say that peso alone will be small, very small growth in real terms. Then most of the growth will come from the dollar side, I would say.

Okay, perfect. Thanks.

The next question is from Ignacio Izniachowski from Invertir and Bolsa.

Hi, good morning. Thank you, Gonzalo, Pablo, and Etienne for taking my question. I have two questions, quick questions, focusing on the bank. Given the 38.8% in the efficiency ratio that reported in the second quarter, I wanted to know, where do you see this metric by the end of 2026? And also, what is the long-term figure that you have in mind once the synergies with the Galicia Mass and the other initiatives that you are currently fulfilling, that it's like headcount and branch reduction are completed?

I would say that for 2026, something below 40% for the ban. I would say try to keep this like 39, around 39%. I think that that will be for the rest of the year. I mean, checking the long term, of course, the idea is every reduction will cost more every point because, yeah, we'll continue to do efficiencies, but If Argentina continues in this path, margins will go down also. So I say that our, if I can say a longer term target, I would like to be between 37 and 38. But anything below 40 for us is good. We will try to aim 37, 38, but we need to see how fast the margins also go down. But for us, really, it's very important to continue We are pursuing cost reductions and we have now a lot of work streams that implies AI in the customer arena, in the call center and contact teams arena in order to continue reducing costs. But again, that will also go pari passu with the margin reductions in the future. So I would say that aiming around 37, but if we can stay below 40 in the longer run, I think that for us is a good achievement.

Okay, thank you. And the second question, just quickly, I know it's some kind of... Very difficult to answer this, but do you anticipate any regulatory improvements? I am specifically regarding the tax component on lending rates. or potential reduction on reserve requirements. I know this is something that it's very difficult to answer because it implies going on the monetary policy and the fiscal policy, but I'm sure you have it in the agenda and I wanted to know your view on this for the medium and long term.

I mean, it's something that, yeah, talking about regulatory reserves, for example, is something that I believe this is not in the agenda now of the central bank. Of course, talking about longer term, when Argentina continues to grow, it loans to GDP and starts to grow significantly the lending. I think that is something that may come back as an agenda for central bank. Don't see this in the short medium term. But, of course, if Argentina goes to that growth, significant growth in lending we are all expecting, well, that can come back because it may be needed. And talking about tax, I think that, yeah, I mean, I think that the agenda of the government is to reduce taxes. Thank you very much. I think BIT to consumers, in the lending to consumers, we are one of the few countries in the world that charge BIT to interest. And it's something that is coming back in the discussion because of the high interest rates in the market, etc. So something that at some point may be addressed to reduce all the tax burden that the lending has. in order to reduce the cost for customers. So I see more that reduction of cost for customers than a benefit to us. We still have again, as you know, the city taxes and the turnover tax from cities and from provinces, which is a very high burden that we all have. And that's something that we are, as you know, Thank you very much. I don't know when, but it's something that I think that if Argentina continues stabilizing, those high taxes should go down and will go down. And it's something that we will be also, you know, working with the other banks to always raise that on the table. As you know, talking about regulatory things or whatever, this morning the government announced, you know, new financing for mortgages. Thank you very much. For customers and size to be for first housing only, etc. But I think it's a very, very good news that the government is very welcome, that the government thinking means to help mortgages to grow and to help how to solve the problem that the Argentine doesn't have a capital market, a developed capital market that can, you know, buy securitization of mortgages, etc. That's something we have discussed in prior course, so... So, which is good for the financial system and mainly for the country. As you know, mortgages help to develop economies, families, etc. So, again, I cannot talk about the specifics of the program because it wasn't announced this morning, so we need to analyze it. But in general, these initiatives, of course, is a good news and a good sign that is well received by us. Okay, thank you very much.

The next question comes from Federico Cabelli from Edcap.

Hello, Tim. Thanks for taking my question. We've seen a strong growth in dollar loans, and you mentioned that you aim for growth in the second half of the year. I wanted to ask you about the other announcement, the other Caputo's announcement, which allows lending companies Ezequiel Valls

For us, it doesn't change much because we already had, you know, availability of commercial paper, dollar commercial paper issued. And before this announcement, we could lend to non-dollar producers with those commercial papers. And we had availability. So for us, it doesn't bring additional availability. It brings additional availability, but we already had it. So it doesn't change a lot. I mean, we... We go very careful on that, name by name. We have been doing that with a few big names, but it's something that we think we'll continue to go very carefully because, again, you know, lending in dollars in Argentina will be always, it brings an additional risk of potential devaluation, etc. So, I mean, we'll continue as we have been done in the past, analyzing name by name. The question and answer session is over. We would like to hand the floor back to Pablo Firvida for the company's final remarks.

Well, thank you all for attending this call. If you have any further questions, please do not hesitate to contact us. Good morning. Bye bye. Good morning. Bye.

Grupo Financiero Galicia conference is now closed. We thank you for your participation and wish you a nice day.