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Balanced / Neutral — The call presented a mixed picture: material near-term challenges (sharp deterioration in asset quality, large provisioning and banking losses, and a 91% YoY decline in net income) were offset by strong liquidity and capital positions, solid deposit and loan growth on a yearly basis, diversified non-bank profit contributors, and management’s clear 2026 guidance (25% loan growth, 10%–11% ROE, cost-of-risk ~8%). Given the severity of recent credit deterioration but the healthy capital/liquidity buffer and credible plans for improvement, the tone is cautious but constructive.
Management's 2026 guidance included macro targets of inflation ~23% and GDP growth ~3.7%, and bank targets of loan growth ~25% (slower in H1, accelerating in H2), deposit growth 15–20% (peso ~20%, dollar ~15%), average bank margin ~16.4% (starting ~17–18% and ending ~16%), cost of risk declining from a Q4’25 peak (~12.5%) to ~8% for 2026, NPLs expected to peak in March 2026, ROE guidance of 10–11% for 2026 (with hopes of ~15% in 2027), efficiency below 40%, administrative expenses down ~10–11% YoY ex‑one‑offs, and a proposed dividend of ARS 190 billion (ARS 40 billion subject to Central Bank approval).
Argentina GDP grew ~4.4% in 2025 and full-year inflation decelerated to 31.5% (vs 117.8% in 2024), providing a firmer macro backdrop despite monthly acceleration in H2 (Dec monthly +2.8%, Jan 2026 monthly +2.9%).
Private sector peso deposits averaged ARS 104.1 trillion in Dec (+40.1% YoY, +10.6% qtr); time deposits +44.8% YoY. Peso-denominated loans to private sector averaged ARS 87.6 trillion (+73% YoY, +10.4% qtr); dollar-denominated loans up ~83.6% YoY.
Liquid assets covered 93.2% of transactional deposits and 59.4% of total deposits. Total regulatory capital ratio reached 25.2% (+310 bps qtr) and Tier 1 ratio 25.1% (+330 bps qtr), indicating strong solvency.
Galicia Asset Management (profit ARS 127b), Naranja X (profit contribution ARS 59b on a yearly basis), and Galicia Seguros (profit ARS 40b) materially contributed to group results and partially offset banking losses.
Operating income rose to ARS 164b in Q4 (from ARS 6b in Q3). Net interest income increased 23% qtr driven by a 7% rise in interest income and a 9% drop in interest expenses; overall yields improved (interest-earning asset yield +130 bps to 31.4%).
Management guided to 25% loan growth for 2026 (slower H1, faster H2), ROE target 10%–11% for 2026 (low-double-digits), average margin ~16.4% for the banking business, cost-of-risk target ~8% by year-end, and efficiency ratio expected below 40%.
Management stated that merger-related one-off expenses from the HSBC acquisition are largely behind, expecting 2026 administrative expenses to fall ~10%–11% YoY excluding last year's one-offs and no similar large one-offs moving forward.
Good morning, ladies and gentlemen. Welcome to Grupo Financiero Galicia Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available at the company's website at gfgsa.com. [Operator Instructions] 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 risks 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 that 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, everyone. I will make a short introduction, and then Gonzalo Fernández Covaro, our CFO, will have some words. Latest figures indicate that Argentina's economy grew by 4.4% on average during 2025 and the primary surplus stood at 1.4% of GDP with an overall fiscal result of 0.2% of GDP. The National Consumer Price Index recorded a 7.9% increase during the fourth quarter of 2025. Inflation for the year stood at 31.5%, significantly decelerating from the 117.8% recorded in 2024 and reaching its lowest level in 8 years. However, monthly inflation accelerated during the second half of the year and displayed a 2.8% increase in December after having reached lows of 1.5% in May and 1.6% in June. In ...