Grupo Financiero Galicia S.A. (NASDAQ:GGAL) Q4 2019 Earnings Conference Call - Final Transcript

Feb 21, 2020 • 11:00 am ET

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Grupo Financiero Galicia S.A. (NASDAQ:GGAL) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Grupo Financiero Galicia Fourth Quarter 2019 Earnings Release Conference Call. This call is being recorded. At this time, I would like to turn the call over to Pablo Firvida. Please go ahead, sir.

Executive
Pablo Firvida

Thank you. Good morning, and welcome to this conference call. I will make a short introduction, and then we will take your questions. 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 uncertainties that could cause actual results to differ materially from those expressed.

According to private estimates, the Argentine economy recorded a 0.6% year-over-year contraction during the fourth quarter of 2019. As a consequence, according to private estimates, the economy accumulated a 2% fall during 2019 and the primary deficit reached 0.4% of GDP, a 1.9% reduction compared to 2018. The national consumer price index recorded an 11.7% increase during the quarter, accumulating a 53.8% inflation in 2019.

On the monetary front, the Argentine Central Bank expanded the monetary base by ARS585.4 billion in the quarter, recording a 34.5% increase in the last 12 months. Meanwhile, the exchange rate averaged ARS59.88 per dollar in December, a 6% depreciation against the average for September 2019. When compared to December 2018, the Argentine peso recorded a 58.1% depreciation. In December, the average rate on peso denominated private sector time deposits for up to 59 days was 52%, 18 percentage points below the average recorded last September. Private sector deposits in pesos amounted to ARS2.8 trillion, increasing 13.1% during the quarter and 35.4% in the last 12 months.

Transactional deposits in pesos rose 20.4% during the quarter and 46% in the year. On the other hand, peso-denominated bank deposits increased 6% in the quarter, increasing 24.9% during 2019. Private sector deposits in dollars amounted to $19.5 billion, decreasing 8.9% during the quarter and 32.8% in the last 12 months. As of the end of December, peso-denominated loans to private sector amounted to ARS1.85 trillion, increasing 11.7% in the quarter and 18.6% when compared to December 2018. In turn, U.S. dollar-denominated loans amounted to $10.3 billion, recording a 23.2% decrease during the quarter and a 32.8% decrease in the year.

Turning now to Grupo Financiero Galicia. Net income for 2019 was 188% higher than in the previous year, reaching ARS41.6 billion, which represented a 6.5% return on average assets and 56.4% return on average stockholders' equity. The profit was mainly due to profits from Banco Galicia for ARS35.2 billion; from Tarjetas Regionales for ARS4.7 billion; from Sudamericana Holding for ARS1 billion; and from Galicia Administradora de Fondos for ARS307 million. The profit per share for the fiscal year amounted to ARS29.13 compared to ARS10.11 per share for fiscal year 2018.

Going through the fourth quarter, net income amounted for ARS9.3 billion. Up 111% from the year-ago quarter, mainly due to profits from Banco Galicia for ARS7.2 billion, from Tarjetas Regionales for ARS1.7 billion, from