Grupo Financiero Galicia S.A.

Grupo Galicia reported Q2 2026 net income of ARS 258 billion, up 12% year over year, equal to a 2.1% return on average assets and 11.3% return on average shareholders' equity. Banco Galicia net income rose 21% year over year and 211% sequentially, helped by lower funding costs, higher gains on government securities and derivatives, and lower inflation-driven monetary losses. At quarter-end, Banco Galicia financing to the private sector was nearly ARS 25 trillion, up 4% sequentially, deposits were ARS 27 trillion, up 7% sequentially, and the NPL ratio was 8.3% versus 7.7% in Q1. Coverage reached 92.8% and total regulatory capital was 26%, with Tier 1 at 25.9%. For guidance, management expects full-year loan growth of 10% to 15%, deposits to grow around 10%, Banco Galicia NPLs to end the year around 6.3%, bank cost of risk to be around 8.3% for full-year 2026, bank margins around 16% for the year, and bank efficiency around 39% for 2026.

Gonzalo Covaro framed the quarter as a better one because rates stabilized at lower levels, margins improved slightly and the bank got better returns on its loan and securities portfolios. He said the business is still prioritizing lending as the core sustainable growth driver, even though management is also active in government bonds and trading opportunities. His tone was cautiously optimistic: Argentina may see election-related volatility, but he said the bank feels the worst in credit deterioration is behind it and that lending demand should improve gradually, especially in commercial and dollar-linked segments.

Pablo Firvida said the macro backdrop improved in the quarter, with June activity up 2.7% year over year, inflation decelerating, and private-sector deposits and loans continuing to expand across the system. He highlighted Grupo Galicia's ARS 258 billion net income, and Banco Galicia’s profit drivers: lower funding costs, stronger securities/derivatives performance, improved credit quality and efficiency gains from HSBC integration. He also cited liquidity and solvency strength, with Banco Galicia liquid assets at 93.1% of transactional deposits and 55.2% of total deposits, and regulatory capital at 26% with Tier 1 at 25.9%.

Analysts pressed management on inflation, loan growth, margins, deposits, capital and the political outlook ahead of elections. Covaro said inflation is still expected at around 29% for the year, loan growth is now expected at 10% to 15% with most growth coming from dollar lending, and deposit growth should be around 10%; he also said the bank has room to keep growing but is constrained by internal prudential limits on bond exposure and dollar liquidity. On ROE, he said the bank is around 7% and something year-to-date, expects around 10% to 12% for 2026, and sees next year as a target year for around 15%, while medium-term ROE remains above 15% to 20%.