Q4 2019 Earnings Call

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Today's conference call at this time.

And sometimes we underway shortly thank you for your patience.

Right.

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Welcome to this Grupo Financiero Galicia fourth quarter 2019 earnings release Conference calls this call is being recorded at this time I would like to try to color to publish Pablo Firvida. Please go ahead Sir.

Thank you.

Good morning, I will come through these conference calls.

I will make a short introduction and then we would take real quick.

Some of the statements made during these conference calls these forward looking statements.

We didn't the meaningful the safe Harbor, we show the U.S. Securities though.

Subject to risks and uncertainties that could go well results to differ materially from those spreads.

According to private if he made the margins I think going I mean recorded its your 0.6% year over year contraction during the fourth quarter.

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That's a consequence, according to a part of it it emits you're going on your company. They did a 2% pool during 2018.

Pretty much <unk> regions to your 0.4% of GBP.

1.9% reduction compared to 28.

The National Consumer price index recorded an 11.7% increase during the quarter accumulating a 53.8%.

Inflation being 20 I see.

On the monetary from the our defense into those aren't expanded the more than 30 days by 500.

85.4 billion pesos to the quarter recording 34.5% increase ended up work month.

Meanwhile, the same rate averaged 59.8, <unk> based off or go dark in December 6% depreciation again, yeah right for September 17 18.

When compared to December 20, <unk>, Yeah, I didn't think pittsboro recorded 58.1% depreciation.

In December the average rate they still do you I mean, they did private sector tend to both seats for up to 59 days was 52%.

18 percentage points below the average recorded last September.

Right It ticked off the books Eugene Batesville amounted to 2.83 jump itself.

Increasing 13.1% during the quarter on 35.4% ended up month.

So it's actually the closer to be so rose, 20.4% during the quarter of 46% in the Oh.

Yeah, Hi, it's something I mean, they tend to both seats increased 6% either Walter increasing 24.9% doing 2019.

Right it ticked off the books its indoors amounted to $19.5 billion decreasing 8.9% during the quarter, 32.8% in the last month.

That's up you end up December they still denominated loans for private sector amounted to one point 85 pretty young people.

Increasing 11.7% in the quarter on 18.6% when compared to December 20.

In turn.

Yes, I mean, it's the loans.

I wanted to $10.3 billion recording it spent 3.2% decrease during the quarter and 32.8% degree into your.

Turning now to booking that's you know Elisha net income for 2019 was 888% how you're letting the previous year, reaching 41.6 billion peaceful which represented 6.5% we've done another exhausted.

6.4 return on average order.

The broke this was mainly due to broke it from unquote each year for 35.2 billion pesos.

Sometimes gets actually analysis for 4.7 billion pesos.

From two I mean, you kind of holding for 1 billion pesos I'm from that each of any threat bundle for 307 million pesos. The.

It broke her she afterwards, if he's got a year amounted to 29 point 13 based on compared to 10 point 11, they still for CRP is kind of year.

Yes.

Well into the fourth quarter net income for four amounted for 9.3 billion peso.

How do I need 7% from the year ago worker.

Maybe due to profits from Banco do you see of course that I'm going to be lumpy. So.

Sometimes it's not because I know this for 1.7 billion pesos.

Let me just kind of holding for 242 million pesos. Some from <unk> of any thoughts on those sports our Q1 medium page.

These brophy represented 5.6% annualized return on average I sit on it 41.4% we've done well now that's helpful dosing.

Suncor, He said that income for the quarter increased 71% from the year. The water that's a restart topic. How your net operating income mainly related to the girls net interest income and they didn't come calling by NASA East Germans partially upset.

We are experiencing a momentary interruption today's conference. Please continue to hold.

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He's got to go or no.

Okay.

Yeah, I think he's got when I was saying that vanguard. He said it income for the quarter increased 71% from the or the water service offering how you'll need to operating income mainly related to the world net interest income and they didn't come from financial instrument.

I would tell you what's it like how your loan loss provisions.

Interest income for the quarter increased 5% that's compared to the same feel like 18 for anybody that's the consequence of hiring just no I don't know repurchase agreements on Texas.

Well the interest expenses were up 20%, mainly due to higher interest rates on time table.

Average interest, earning assets were 90 billion pesos or 31%, you know where he or.

She has increased 302 basis points.

<unk> due to an increase in the yield on because I mean, it didn't know.

It does vary liabilities grew 23 billion pesos or 8% during the same be up I need to Boston we.

But keep going.

Maybe that's how we started off the increase in do you ever to be interest rate on Facebook and every night dependable.

Net income from financial instruments increased 26% from the one recorded and as they work through like they did.

That's the consequence of how you're probably from the government securities due to higher holding so I didn't they send took on paper.

Well, if it's going goes on foreign currency part D somebody frenzy.

Loans due to the point 3 billion peso, including 2.8 medium be so.

Some visible game from foreign currency trading rolling 94% when compared to.

1.7 billion piece of profits from the same Walker <unk> <unk>.

Provision for loan losses for 96%, how you're doing the same quarter by you or your mainly due to loosen up by reducing the cost one portfolio onto your regulatory response from the portfolio.

Amortization.

One specific commercial value.

<unk> expenses increased 66% as compared to year before mainly due to start to increase or even with the union.

<unk> expense these little bit hundred seats parts that mainly due to higher maintenance ERP compensation for services.

Runs financing to the probably picked up.

369 billion pesos or do you end up the quarter up 28% the left for fun.

Maybe due to the world. They still do you I mean, if its own dome.

Well you go denominated financing decreased 1% makes it so it's about 38% may start getting daughters.

Exposure that I'd expect increased 29% year over year.

Excluding legal fees represented 4% up to collapse it compared to 3% of the port worked up 18.

Well, she reached 398 billion pesos top 10% than a year.

So the amazing lawsuits growing 27%.

Yes, it's already posted 47% missing piece of 43%.

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The advanced could you maybe like itself no surprise it takes a while you're on 46% hundred six basis points here I know you end up a year ago water on the market itself. The proceeds from the private sector was 9.9% decrease.

16 basis points in the same figure.

With regard to 40 feet <unk> ratio ended the quarter for corn corporate center recording.

You five basis point deterioration as compared with the 2.9% <unk> fourth quarter of off that brought your year.

And the quarter, Japan, Yes, we've done once you reach 10% up from 3.7% from a year ago.

That's up the N. opens the 19 Devons close what they did come to dilute that because it's used by 43.1 billion pesos or how did you have 15%.

The 37.7 billion piece doesn't mean, you wouldn't have to go to requirement.

And it doesn't really left that we got that ratio reached 17.6% increasing by 243 basis points from the end up the same quarter, if he's got to get frenzy.

In summary during that fourth quarter up 29 team to booking. That's you know idea has shown what we saw very challenging and volatile macro environment. He keeping the we'd be solvency I'm, probably WD the metric I tell you that those.

We are now ready to answer the question that you made up thank you.

Thank you.

And if you wish to ask a question you may do so by pressing star one on your telephone keypad excuse me a speakerphone. Please make sure you meet function is turned off two legacy military turn equipment you cannot star one for questions.

I'll take a first question.

She went on so Garcia of credit Suisse.

[noise]. Good morning, everyone. Thank you for taking my question. My first question is regarding your expectations for loan growth.

On on deposit growth compared to your inflation expectations easier comps hearing and a that's surveys of course is lower but but also that my quick chronic conditions in Argentina remain on chicken for for these years and my second question knees.

On 30% of Justice, a accounting that Youre reporting these years and what sort of I really level do you expect for what the Btwenty and what do you think I know, it's hard with what do you think wouldn't be a reasonable yeah. It's just now what are we under these seem pension accounting. Thank you.

Okay. How do you have done so he's done so see loan growth.

In this environment, Oh, a lower interest rate on also focusing some recovering GGB toward the second couple of the year unless you said it coming from very low it's stocking levels. We are forecasting loans growing around 10 percentage point. It then.

Since each point above inflation. So you got any place on a 40% studies that were covering the number the loans, who end up rolling around 50%. This year, they booked seats something lower perhaps if they jump last five in that order.

When we speak about him that was the that far as they've question.

When we speak about the and inflation adjustment, we you form in the press release in the last the age that they would have been the net worth Andy and net income of 29, Dean you inflation adjustment was.

I applied.

That number in east maybe they are are we at around 20% to 21%.

He has done.

It's important to see that it didn't know me not are are we looked at around 56%.

The inflation was around 53.8.

So really the real lateral we have nothing to do with the.

Difference between normally not on inflation.

<unk> for next year.

Depending on on the place turned on.

Also the monthly inflation, because he's very sensitive on each month.

We could be thinking in a nowhere and know me now are we.

And I'm somewhat lower returns are we but really it yeah. Just many it's very difficult to do focus mainly because hearing be able that's usually being the monthly everything.

Great. Thank you very much.

You're welcome.

Thank you again for questions that star one.

Your next question from Carlos Gomez HSBC.

Hi, good morning I.

I want to ask you about I'm, good mix shift and the need to credit card.

Right and the offsetting reduction in Russia requirements that you experienced and do you have it pretty nasty calculation as to the impact that these might have fallen cover shelved and took one I would like to know what do you expect to New York extra week to week for this year and what are you couldn't come friend I should be attacks on day.

Inflation adjusted earnings thinking.

Hi capital D. in it regulation that came in the day before yesterday at night It would a GAAP for in financing we didn't does it for with a great card.

They copies 55%.

That's in can be compared with.

70 around 75% that was the previous number but I guess, then <unk> formula that a joke asked if they do average gospel personal loans.

That's right, what's coming down already.

Really the number we should be comparing with Easter around 71, now 55 of course that that has it and they got <unk> bye bye.

But when we take into account.

Then the less reset requirement, we have to do have I'd known remunerated. It that it leaves an equivalent amount in the ball sheets, it's really a percentage of nickel and Samsung Oh, a program called out.

We'll see but really the these improved many weeks every department or the yield induced reserve requirement.

I know obviously it seems that the reduction in interest rate, perhaps something marginally and they I'd be really we've gotten excuse me.

Almost equal.

Okay and on income thing.

If you know crickets.

Hey, what happens to penetrate though.

The traditional price would be the personal loans, plus 25% and therefore, he will be 71%.

Yes, they did it change it doesn't apply.

No one button it great garden.

So it didn't know yet pick up would be the former one a one point and up to one point Ptwenty five times. The weighted average cost of course are launching this weekend with some technicalities that some it probably picked the wrong.

No not including the end up a number but it basically netapp has not affected by these uh huh.

In terms of income tax.

Yeah, the effective tax or they wouldn't be a or that they know me not to income tax rate would be 30 Bucks and if he wants to be reduced to 25%, but there was it a lot that they get the in the same level. So it'd be person I do we.

Got it delayed the income tax laws hearing patient adjustment.

Thank you I think it was much.

You're welcome Carlos.

Thank you and if we have any further questions. Please press star one.

You have another question.

It was from Brian Ferris off city.

Hi, Thank you for 40. Unfortunately, so that's the question.

We supposed somebody separation on Thunder MPLX, then I was wondering if you were guiding for any fewer for 2021 of the drivers behind a joke item. Thank you.

Okay, Hi, Ryan.

We saw it I mean greasy then yes. It this quarter and main do you have done level from 4% to 4.4%.

The coverage is that 110% healthy.

We saw an improvement he then yes.

In the leveled off and that out of huh.

This quarter had did but to be very deal. One go much other case, a white grow that every day. There we had two brothers <unk>, a 1 billion pesos.

We doubt that and yes. It would have been in let's say C media and also the coastal fleet, while the cost of risk instead of being 5.1, it closer to 30.9%.

So going forward with these forecasted growth years old last a recovery into going I mean, it sequentially in the second quarter and B is to be improving on the was the end of the year. These 4.4% that it was mentioning it shouldn't be comparable.

Around 3.8%.

Very few were thank you.

Yes.

You're welcome.

Thank you.

Your next question just going from Ernesto Gabilondo of Bank of America.

Hi, good morning, Pablo Thanks for the opportunity to make questions.

A follow up in the interest rate cap on credit cards.

How much is the average interest rate of your credit card portfolio.

And what are you seeing will be a the reduction.

From the one to George charge into the one that is central bank is proposing thank you.

Well wait when you look at the a and still off loans related to Great Guard.

In December was around 95.6 billion pesos, but that includes everything from a they flow.

Okay, or a lot of a financing would know wins right.

Okay lending when you stole mens.

They also a rumor out of the grey card that we have so really it out of that the yeah. Mount is subject to financing would be it car used afraid that will reduce was something lower than a 10 billion pesos nine point something billion pesos.

Then there is actually on that they said.

Well something between or would it be I believe because we'd we'd beginning in March a problem leather itself, 71% to you 5%.

And yeah, we will be hopes it being that we had a year on parts of the restart requirement that now we don't have too big too close to do it or we would love to cap ex fuel you.

Okay perfect understood. Thank you very much.

You're welcome an adult.

Your next question comes from San Diego Petrie of Franklin.

Hey, Hello Polo, [laughter], well, that's going on it.

The question is related to two financial machine could you. Please bleed what will be the net interest margin from from D.A. consolidated defined as a margin and how do you see.

This yeah.

It seems that much enough and I find minimizing going into twentytwenty with all day.

Yeah, Dan from the central until the yields rates. Thank you.

Yeah, Hi, San Diego it.

When we speak about the there is anymore.

And we see some compression going forward that will be Oh said, the with the volume increased.

When we speak about it means self 20%.

Okay that breakdown, you something around 28% in pesos and 2% indoors, so that breakdown between business and does it.

Important.

Also these yup between a or the evolution of the de friend there what are some between elite.

Butler and laid really was going down faster than but large but putting everything together. It. We they won a with 100 birthday basis point, we'd actually means.

We would need around 5% growth in loans in order to offset that.

And really eating that in a lower interest rate environment is it because the margins compressed about volumes a rebound and it's because you're really for is the this stuff they need really see the and then ease off if I noticed that beat them for that medium term.

Okay. Thanks, Thanks, a lot.

You're welcome thank you.

We have any further questions. Please press star one.

Once again that star one for questions.

[noise] [noise]. It appears we have no further questions Sir.

Okay E.N. Thank you.

Hey, Thank you only for attending these calls if you have any farther west Jones, please do not because he say to contact that.

Yes. Thank you good morning, and <unk> for the ones Love It didn't Wanna sites.

Right.

This concludes todays call. Thank you for your participation.

You may now disconnect.

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