Grupo Financiero Galicia S.A.

Grupo Galicia reported 2025 net income of ARS 196 billion, down 91% year over year, implying a 0.4% return on average assets and 2.5% return on average shareholders’ equity. Excluding integration expenses, net income would have been ARS 333 billion and ROE 4.2%. In Q4 2025, the group posted a net loss of ARS 84 billion, or -0.7% annualized ROA and -4.3% ROE. Banco Galicia posted an ARS 105 billion Q4 loss, down 6% versus Q3, while operating income increased to ARS 164 billion from ARS 6 billion in the prior quarter. For the bank, average interest-earning assets were ARS 25 trillion, yield reached 31.4%, cost declined to 14.3%, net interest income rose 23% sequentially, and provisions for loan losses increased 42% quarter over quarter and 220% year over year. At quarter-end, Banco Galicia’s financing to the private sector was ARS 21 trillion, deposits were ARS 26 trillion, NPLs were 6.9%, coverage was 97.4%, total regulatory capital ratio was 25.2%, and Tier 1 was 25.1%. For 2026, management kept loan growth guidance at 25%, expects deposits to grow 15% to 20%, sees the bank’s cost of risk at 8% for the year, and reiterated ROE guidance of 10% to 11%; it also expects bank margins around 16.4% for the year and efficiency a bit below 40%.

Gonzalo Covaro framed 2026 as a year of normalization, with Argentina entering a more stable and predictable policy phase and the banking system positioned to support investment and growth. He said the company expects the macro environment to begin translating into better microeconomic activity, but emphasized that the pace depends on economic recovery rather than regulatory changes. His tone was constructive but cautious: the bank will defend market share, grow more slowly in the first half, and accelerate in the second half if conditions allow.

The CFO highlighted that 2025 results were hurt by the HSBC integration, higher funding costs, reserve requirement changes, and significantly higher loan-loss provisions tied to retail delinquency. He noted that Banco Galicia’s Q4 loss improved versus Q3, operating income rose to ARS 164 billion, NII increased 23% sequentially, and the bank’s capital and liquidity stayed strong, with a 25.2% regulatory capital ratio and liquidity at 93.2% of transactional deposits and 59.4% of total deposits. For 2026, he said one-off restructuring costs are largely behind, efficiency should improve with administrative expenses down around 10% to 11% year over year excluding last year’s one-offs, and the bank expects margins around 16.4%, cost of risk around 8%, and ROE in the 10% to 11% range; he also proposed a dividend of ARS 190 billion, including ARS 40 billion subject to Central Bank approval.

Analysts focused on whether loan growth would slow because of rising asset quality issues, and management said it intends to protect and even increase market share, but at a slower pace in the first half before accelerating later in the year. On credit quality, management said NPLs should peak in March 2026, while cost of risk already peaked in Q4 2025 and should improve from Q1 onward, ending 2026 at about 8% for the bank. Questions also centered on margins, inflation risk, deposit growth, and dollar lending; management said margins are expected around 16.4% for 2026, higher inflation would be a downside risk to profitability, deposit growth is expected at 15% to 20%, and any expansion in dollar lending to non-dollar producers would be done cautiously and case by case, not massively.